New Insulet CEO Making Waves

New Insulet CEO Making Waves

In what really shouldn’t be surprising news Patrick Sullivan, the new CEO at Insulet (NASDAQ:PODD) is making immediate changes at the company. Just after the company released earnings news came that Brian Roberts has resigned as CFO and will be replaced by Allison Dorval, additionally the company has created a new position Executive Vice President, Human Resources and Organizational Development, which will be filled by Brad Thomas. According to a company issued press release this new position will “be responsible for implementing strategies that directly improve P&L performance and create a long-term competitive advantage designed to position the Company for continued growth.”

Diabetic Investor suggested that when Mr. Sullivan was appointed CEO his number one goal was to sell the company and these moves confirm this as before Insulet is sold it has to get its house in order first. The company must be consistently profitable, improve margins and stop any further dilution to the stock.

As we noted just the other day Insulet remains the only company to successfully commercialize a wireless insulin pump, a system which continues to gain share in the ultra-competitive insulin pump market.

Taking a look at third quarter results it appears Mr. Sullivan is having an immediate here as well as he is refocusing the company and clearing up old issues from the previous management team. Last quarter the company acknowledged an issue with a major payor that was adversely impacting sales of the OmniPod; according to the company this issue has been resolved. They further acknowledged the development of a new Bluetooth enabled Personal Diabetes Manager (PDM), the unit that controls the pod. The company stated since the new PDM will be Bluetooth enabled it will able to communicate with the recently approved SHARE device from Dexcom (NASDAQ:DXCM). Furthermore manufacturing continues to improve another step towards improving margins.

Just as exciting is the company is expanding their non-insulin delivery partnerships. While Diabetic Investor does not anticipate these partnerships will yield significant revenue in the near term, however expanded non-diabetes uses for the OmniPod does make the company more saleable.

About the only negative is the company continues to pursue the development of an integrated continuous glucose sensor into the pod. As we have noted before the CGM experts we’ve spoken with are highly skeptical this can be done successfully. While we understand the need for a product like this patients using both the OmniPod and CGM would prefer if the CGM sensor was integrated with the pod, we just hope Mr. Sullivan does not allocate too much time and money to this project.

All along Insulet’s goal was to be acquired, a goal which for a time seemed impossible for a variety of reasons.  Now it would be unfair to say that the reasons the company has not been acquired were all tied to the previous management team as market forces also played a role. Suffice it to say the previous management team was part of the reason but not the only reason.

While Mr. Sullivan has been on the job for just 50 days there is no question he’s jumped into the deep end of the pool and isn’t afraid to swim. Our guess is the board has given him clear marching orders; do whatever it takes to make this company an attractive takeover target. It’s early in his tenure but so far so good.