Insulet Reports

Insulet Reports

Again before we go into the details of this afternoon’s earnings call by Insulet (NASDAQ: PODD) something has to be done about this classical music fixation. We have a twist on the idea we floated yesterday as the music heard should match the tone of the news about to be shared. For example, when Sanofi (NYSE: SNY) reports the music should be a great Hank Williams song “Why Don’t You Love Me”. Given the nature of today’s Insulet call we would have recommended a classic Aerosmith song “Dream On.”

Now onto business.

At first glance just by looking at the numbers it would seem like Insulet had a great quarter. Total revenue exceeded guidance with domestic OmniPod sales up 21%, international sales up 16%. On a year over year basis domestic sales were up 8% yet internationally DOWN 19%. Two quick comments here first no one should be surprised with strong fourth quarter results as this is traditionally a good quarter for all diabetes device companies. The full year results are more telling and 8% growth domestically is hardly impressive nor is a 19% DECREASE in international sales.

Listening to their plans for the future we were reminded of a great song by the Fifth Dimension, “Up, Up & Away, My Beautiful Balloon” as they were full of hot air. Like everyone else in the insulin pump space they are getting more involved with … wait for it … interconnected diabetes management (IDM). Like every other insulin pump company, they are moving closer to …wait for it … having a smartphone controlled pump. Like every other pump company, they are moving closer to developing … wait for it … an artificial pancreas. Like every other pump company, they are going to have …wait for it … a way cool whiz bang app. Like every other pump company, they are going to … wait for it … differentiate their system from the competition.

The one thing Insulet doesn’t have and NEEDS to have which every other pump does have is a sensor augmented pump. Yes, the one thing they really need they don’t have and who knows when it will get here. The reality is the longer it takes to bring this to market the farther behind they will get, the more patient starts they will miss. As we stated yesterday and earlier today when it comes to insulin pumps sensor augmented pumps are where it’s at and the only pump company without one is Insulet.

Since we have written about the insulin pump market the past two days there is no need to repeat the issues with the market or the problems Insulet must overcome. Suffice it to say we heard nothing this afternoon that leads us to believe that Insulet has anything special or unique. Basically the company has validated there is a demand for a wireless pump but they have not proven one can make money with a wireless pump.

We should also point out that they while the non-insulin side of the business is getting better, their partner Amgen just signed a deal with another wireless pump company, Unilife (NASDAQ; UNIS). A company which also happens to have … wait for it … a wireless insulin pump. So even in the non-insulin area Insulet isn’t special or unique.

So dream on Insulet for all the talk it’s action, execution and innovation (and not just from a product standpoint) that counts. If they don’t do something and do it soon they will be singing another great tune by Little Big Town; “Day Drinking” as that’s what happens when a company fails to perform. Or to quote their ex-CEO at the end of the day … well it will be the end of something anyway.