Rising from the ashes

Rising from the ashes

This afternoon Insulet (NASDAQ: PODD) conducted their earnings call and for a moment we thought we had dialed into the wrong call. When Pat Sullivan took over as CEO he basically inherited a company in complete disarray. To say he inherited a boatload of problems is like saying the Titanic had a small leak after it hit the iceberg. It seemed everywhere he turned there was nothing but problems.

On the positive side given the condition of the company when he took over no one felt he could do any worse than the previous management team. The ship was already sinking so even if he couldn’t bail fast enough no one was really expecting all that much anyway.

Pat immediately went to work, first fully acknowledging publicly the mess he inherited. Next, he cleaned house and brought in an entirely new management team. Finally realizing that he couldn’t blame previous management for everything he took command and started the rebuilding process.

It wasn’t surprising that this new team which was devoid of any diabetes experience made more than their fair share of mistakes. They had been thrown into the deep end of the pool and were told to swim. And for a while it seemed they were sinking. Yet somehow they found their sea legs and began to swim.

Today it was plain shocking to hear just how far they have swum. Sales are improving, the problems in manufacturing are being fixed, margins are showing signs of improvement and most importantly of all the team has taken ownership of the task that lies ahead. They know they aren’t ashore yet but land is in sight.

Although this may seem like a small item to many the team really impressed Diabetic Investor when during the Q&A they were asked about whether distributor stocking was one of the reasons for better than expected sales. In the past Insulet was notorious for playing with numbers and stuffing the channel wasn’t unusual, heck it was commonplace. Not only did they state that the increased sales were not due to stuffing the channel. They were emphatic that they will never ever return to the shenanigans used by the previous management team.  To this we say GREAT JOB.

Now this doesn’t mean it will be smooth sailing ahead and the company must continue to execute. They must make a full court press to get the sensor augmented OmniPod to market and continue to improve margins. The many strategic initiatives that were outlined today must continue to move forward. Plus, they must be cognizant of the challenges with payors.

Yet, we are impressed and yes we did just write that. Management has correctly acknowledged that as innovative as the OmniPod is being the only tubeless insulin pump that alone will not drive sales. That the systems that work with the OmniPod, the apps and software must be equally innovative. That the customer service experience cannot be a nightmare. Not just getting patients properly trained on how to use the OmniPod but how they are treated when something goes and something always goes wrong. The OmniPod is after all a medical device and medical devices fail and malfunction.

So kudos to Insulet, and yes we did just that write that too. The swim isn’t over yet and there will likely be some choppy water ahead but for the first time in a long time we actually think they will hit land.