Insulet (US:PODD)2022-11-03 16:00Revenue Performance - U.S. Omnipod revenue for Q3 2022 increased by $70.9 million, or 42.4%, to $238.1 million compared to Q3 2021, driven by higher volumes and conversions to Omnipod 5 [85]. - Total revenue for Q3 2022 was $340.8 million, a 23.7% increase from $275.6 million in Q3 2021, with constant currency revenue growth of 28.5% primarily due to higher volume [83]. - International Omnipod revenue for Q3 2022 decreased by $5.1 million, or 5.5%, to $88.0 million, but showed an 8.9% increase when excluding the unfavorable impact of currency exchange [90]. - Total revenue for the nine months ended September 30, 2022 increased by $144.5 million, or 18.3%, to $935.6 million compared to the same period in 2021, with constant currency revenue growth of 22.0% [84]. - The company expects strong U.S. Omnipod revenue for the full year 2022, driven by new customer starts and conversions to Omnipod 5 [89]. Expenses and Margins - Gross margin for Q3 2022 was 55.3%, down from 68.5% in Q3 2021, primarily due to a $36.8 million charge related to a voluntary medical device correction notice [95]. - Operating expenses for Q3 2022 included $152.5 million in cost of revenue, representing 44.7% of total revenue, compared to 31.5% in Q3 2021 [94]. - Research and development expenses for the three months ended September 30, 2022 increased by $7.5 million, or 20.0%, to $45.0 million compared to the same period in 2021 [99]. - Selling, general and administrative expenses for the nine months ended September 30, 2022 increased by $99.2 million, or 28.8%, to $443.5 million compared to the same period in 2021 [102]. - For the full year 2022, the company expects gross margin to be in the range of 63% to 64%, impacted by a $36.8 million charge related to a voluntary medical device correction [98]. Cash Flow and Financing - As of September 30, 2022, the company had $722.0 million in cash and cash equivalents, with no amounts outstanding under its $70.0 million credit facility [115]. - Net cash provided by operating activities was $68.3 million for the nine months ended September 30, 2022, compared to a cash outflow of $42.6 million for the same period in 2021 [118]. - Capital expenditures were $58.5 million for the nine months ended September 30, 2022, a decrease from $80.1 million in the same period in 2021 [121]. - Net cash used in financing activities was $25.8 million for the nine months ended September 30, 2022, compared to $42.2 million cash provided in the same period in 2021 [125]. - Total proceeds from option exercises and employee stock purchase plan shares were $9.2 million for the nine months ended September 30, 2022, a decrease of $5.2 million from $14.4 million in 2021 [127]. Risks and Liabilities - The company continues to face risks including supply chain disruptions, dependence on a principal product platform, and challenges in securing adequate reimbursement from third-party payors [138]. - The company accrued an estimated liability of $5.7 million related to a contractual dispute involving in-licensed intellectual property, with settlement offers ranging from $5.7 million to $36 million [129]. - The outcomes of forward-looking statements are subject to various risks and uncertainties that could materially affect the company's results [140]. Warranty and Product Issues - In October 2022, the company issued a warranty reserve of $36.8 million related to the Omnipod DASH PDM battery issue, with $10.5 million allocated for replacing older devices [136]. - The company maintains a four-year warranty on PDMs sold in the U.S. and Europe, and a five-year warranty for those sold in Canada, with warranty expenses recorded in the cost of goods sold [135]. International Expansion - The company is focused on expanding its international presence, with plans to launch Omnipod 5 in its first international market in 2023 [78]. - The company is optimizing its manufacturing capabilities, including consolidating production in China and building a new plant in Malaysia to support international expansion [79].