It seems as though we can now call Insulet (NASDAQ:PODD) a fully grown up insulin pump company. Just as Medtronic (NYSE:MDT) and Animas, a unit of Johnson and Johnson (NYSE:JNJ), are facing tough market conditions so too is Insulet. While the fourth quarter is traditionally the strongest quarter for diabetes device companies, insulin pump companies in particular, sequentially Insulet’s sales increased just 9% from the third quarter. This is hardly surprising as no one in the insulin pump arena is enjoying strong growth.
Looking on the bright side – Insulet – Medtronic and Animas – see what’s going on at the FDA and realize that it’s unlikely they will be facing any new competition in the near future. The reality is the FDA is not only preventing new systems from getting to the market, they are preventing most insulin pump companies from raising the capital they need. While there are always exceptions to this rule, i.e. CellNovo, but for every CellNovo there is a Tandem.
Sadly the FDA is becoming the focus of diabetes device companies earnings calls, as it was today with Insulet who still is waiting on the FDA for their newer, smaller, cheaper to make pod.
In a somewhat related area the Dexcom (NASDAQ:DXCM) OmniPod combo product looks to be delayed but not for FDA reasons. Today Insulet noted that they would move forward when their new pod is ready and Dexcom has their fourth generation device. Given the environment at the FDA, this is a nice way for Insulet, who does not want to spend any more money than they have to, while still looking like they are moving forward. As we have noted previously this situation is not about technology or the regulatory situation – this is all about money.
Diabetic Investor also suspects Insulet is buying some time to let Charlie Liamos get his feet wet. Although familiar with the company, being on site provides a far different perspective than the occasional board meeting. While there were no hints of any further management changes during today’s call, nothing would surprise Diabetic Investor. Using history as guide management change at diabetes device companies is standard operating procedure. This as they say, is the nature of the beast.
As has become customary with an Insulet call the story is all about increasing margins, lowering COGS, adding patients and ultimately selling the company. No matter how they want to dress it up this has always been the goal from day one. Diabetic Investor suspects at some point they will get there the only real questions are who will buy Insulet and what the multiple is. All this talk about the FDA, new pods and combo products are interesting distractions but not much has changed at Insulet- At least not yet.