Biegelsen, the Medical Device Analyst at Wells Fargo, and it is my pleasure to host this fireside chat with the management team from Insulet. With us, we have Ashley McEvoy, President and CEO, and Flavia Pease, Executive Vice President and CFO, and Clare Trachtman, Head of Investor Relations. Ashley and Flavia, thanks so much for being here. Thanks, Larry. Thanks, Larry. Pleasure. Ashley, it is hard not to start with the Q2 update. Let us start there. You took down guidance because of three issues, lower retention and utilization in type 2, lower new starts due to softness in Q1, and less pricing. Two-thirds of the change was due to the type 2 issue, and probably the number one question we have been getting, and my guess is you, why was this such a surprise? Larry, first of all, it's great to be here in Boston, our hometown. Before I get into the timing and the data, let me just first share our perspective on the type 2 market, which we see as a tremendous growth opportunity for Omnipod, as well as the AID category. It's the largest TAM in the category with the lowest penetration. If you look at the 2.5 million people who are using basal bolus insulin, AID has around a 5% penetration, and CGM is well north of 50%+ in that area. In the basal-only population, we have the indication we haven't yet promoted that, and CGM is around 30% penetration. So collectively, that represents about a $28 billion TAM. The second is the American Diabetes Association guidelines recommend AID for people with type 2 diabetes because that has a superior clinical and economic value proposition to MDI patients. We pioneered this indication on behalf of the industry. We have tens of thousands of very satisfied Podders with type 2 diabetes, and so we are very committed to nailing the first 90 days so more people can benefit. As you know, we enjoy a reoccurring revenue business model, so it's really about the lifetime value of the patient. Now, when it comes to timing and the data, Larry, we saw late in Q2 some of the trends start to elevate versus our expectations. We did a very strong forensic. We identified with the root cause. We've implemented actions on those. One of the areas that we've innovated on is really the transparency and the frequency of some of our KPIs. Attrition, as one example, is a bit of a lagging indicator. It allows for people to have a pump holiday, if you will, and so we've addressed that, of looking at some of the more real-time data of our KPIs. I will tell you it's early on. It's been less than 30 days, and some of these programs are going to have time before they have a durable fact. So in the headline, I'd say this is an execution challenge, nothing to do with the structural advantage or attraction of the market, and we're acting with urgency. That's helpful. Why was there an uptick at the you just mentioned a minute ago an uptick at the end of Q2? Why do you think there was an uptick? Yeah. I would say it happened, we saw it trending ahead of our expectations at an elevated rate in Q2. We've identified several root causes of why we saw some elevated attrition levels, and we're taking actions. Those five actions I spoke about on the Q2 call, I'm happy to elaborate more. That's helpful. Yep, we definitely want to hear about the actions and the progress. First, the math. Historically, we've had about a 10% attrition rate in our model for Insulet when you were mostly a type 1 company. You also on the call confirmed that type 2 attrition runs at least double type 1. So it looks like the type 2 attrition is, by our math, close to 40%, which is pretty high. Are we in the right ballpark? Again, maybe now, talk about the progress you're making turning to addressing that. Yeah. Again, we've been at type 1 for 25 years. We're newer to type 2. When we were setting our expectations, we studied the CGM analogs. Again, they've been at serving the type 2 community, both basal bolus as well as basal only, for more years than we have. We looked at what good would look like. We, again, as I said, we saw an elevation versus that. They're not near the levels that you mentioned, Larry. Importantly, we're getting after that. Again, we have a reoccurring revenue model, so it's worth it for us to nail the first 90 days. As I shared, the demand is really strong, and the data will show that once we get them past 90 days, retention rates really stabilize. So there's several things that we're doing. The first thing is sampling. We deployed a sample program to kind of demystify the fear of trying AID therapy. The vast majority of the volume in AID is coming from the MDI category, and so for some, there's a fear factor of wearing insulin on your body. So we deployed samples. We uncovered, when we did a territory analysis, that in certain territories that we had a prescription that accompanied the sample, and when we adjudicated the health insurance, we had much higher retention rates. So we've tightened up that best practice and are now deploying that across the country. The second thing we did is related to our sales force incentives. Again, going from a type 1 company to a type 2, we needed to evolve. We are still ensuring that we have good quality new customer starts, but we are also going to hold them accountable for durable starts that first month, that first 30 days. I was in the field last week. They are very enthusiastic to win with the company on patient success. We have augmented our customer service reps to make sure that we have the right kind of resourcing and staffing. We have also added clinical retention specialists that we are now deploying in the field. Then we have launched a new data platform, which enables really strong patient engagement and clinician engagement, and that is called Omnipod Discover. In our limited market review that we were doing in quarter two, we had around 12,000 people with diabetes in the program and around 1,600 clinicians. We saw not only just stronger customer satisfaction, but we saw elevated retention levels. It is worth it for us to nail the first 90 days. We see a tremendous opportunity of growth ahead of us. That is helpful. Okay, I have to go back to the 40%, which you said was too high, because we have used 10% for type 1, and when we talked after the Q2 call, you said that the blended U.S. attrition is likely higher than mid-teens. We just tried to back into the 40%. Help me understand where my assumptions are wrong. No, I think we said that it is more than double. It is trending more than double that. We do not disclose what our retention rates are now. It is something that we are looking at maniacally, so have confidence in that. We are going to talk more about how these programs are progressing on the quarter three call. But importantly, we are looking, Larry, at what our active customer base. All of our data goes to the cloud, so we can see live time the health of what our active customer base is and then see the flows in and out. You will see us continue to start to drive the business more on real live time data sources. Blended attrition rate, mid-teens, is that a good number? I think what I would say is, the 10% on type 1 is what we've talked about before. As we said, type 2, we had already assumed that it would be higher than that. It was elevated versus our assumption, and it's not as high as the 40% that you. Okay disclosed. Basically, your competitors are saying they're not seeing the same issue with type 2 retention. You've probably heard that. What do you think the disconnect is? Yeah, I think they're very early on. We have a little bit of a head start from them. We were the first to pioneer the indication. Again, we have tens of thousands of very satisfied people with type 2 diabetes using Omnipod. We have very strong demand. We did some of this when we didn't have really tight governance on our sampling, so we're addressing that. I would say we're ahead of the curve of making sure that we deliver delightful customer service the first 90 days, and all of our commercial leaders line up to what company success looks like. Your guidance for 2026 assumes no improvement from the Q2 trends. Do you think you can start to see a benefit in 2026 from the actions you are taking, and therefore, the updated guidance is fairly de-risked? Larry, I think the way we think about guidance is we took a prudent approach. As we said, we are not assuming, as you just stated, any impact of these measures. They will occur over time at different speeds. Some of the things that Ashley mentioned, the change in the commercial incentives and the change in sampling are already being executed, but we expect that they will have an impact by the end of the year. Discover will go into full market release next month, so the impact is probably more next year. Similarly, with the customer care and retention specialists, we are ramping up their onboarding, so it takes some time to get them onboarded, to get them productive, so the impact will be more next year. So that is why the approach to the guidance is to assume that we are executing on these strategies, but that the impact will not be felt this year and is not contemplated on the guidance. Got it. More of a maybe check-the-box question, but GLP-1s continue to be a hot topic, especially for the type 2 population. What gives you confidence that it is this execution issue that you talked about, not GLP-1 usage showing up in your base, once patients are a few months in? Larry, we saw very healthy demand, as I talked about on quarter 2 and year to date. They are staying post 90 days. Retention stabilizes. We do not see the use of GLP-1s having an impact on the first 90-day experience. We view GLP-1s as very complementary and not a substitute to insulin. The data and the evidence would show that it can slow the progression by about a year to when insulin is initiated. But we have seen very stable rates of insulin initiation over the past two decades, where GLP-1s have been indicated for diabetes. The unmet need is that the vast majority of people with type 2 on insulin, they are using a GLP-1, but predominantly, their primary source of insulin delivery is MDI. Two-thirds of those are not achieving glycemic control. That is why the ADA guidelines recommend AID as the standard of care. We think that there is a tremendous opportunity ahead for the category, as well as Omnipod as the market leader, to take advantage of that opportunity for the 5.5 million people on insulin and the vast majority of them not benefiting from AID therapy. All right. Helpful. We will move on. Sounds good. Next topic is quality and manufacturing. Manufacturing scale has been a key advantage for Insulet. But there have been concerns about quality as you scale. You've had two Class I Pod corrections this year, and investors are taking a closer look at public adverse event data, the MAUDE database, which we know is flawed. You can say that again, but that's- Yeah. But look, we're getting the question, and I'd be surprised if you're not getting the question. Has anything changed, Ashley, operationally, and why are you confident these issues are isolated rather than indicative of a broader quality trend? Listen, as I mentioned, we weren't proud of those two Medical Device Corrections. We did identify root cause analysis. We've implemented interventions to address that. We have a very rigorous post-market surveillance program. I see no new signals or no new quality events. There were no reported fatalities related to those two MDCs. I'm very familiar with the MAUDE database. It's helpful for a surveillance tool. It does not establish causality in adverse events, nor does it establish a change in rates. Any kind of MDR that was associated with a fatality, we've assessed it, and we haven't identified any kind of issue related to Omnipod 5 safety. Okay. Fair enough. I would be surprised if you are not getting the question, too. Absolutely. I had to ask. Of course. You gave some helpful color on 2027 on the Q2 call. I think you said you expect growth next year to be similar or better than the Q4 exit rate, which is mid-teens. We are assuming U.S. grows about 10%, international grows about 20%. Is that generally how you are thinking about the base case for next year? Yep. I think the way you took our framework for 2027 is the correct approach, Larry. We talked about, for both total company, U.S., and international, using the exit rates of the fourth quarter as a consistent way to think of 2027. We are not suggesting any acceleration of growth next year. If you look at the updated guidance that we provided in the second quarter, it would suggest an exit rate for the total company between 12% and 17% on a constant currency basis. You can apply the same math for international and the U.S. Excuse me. Let me provide a little bit more color on the U.S. and international, what it means on those ranges. The U.S., at the low end of the guidance, would be at a 9% exit in 2026. That would contemplate essentially flat to down NCS growth next year, a mid-single-digit share loss of NCS, and attrition and retention rates consistent with where we are today, and price to be stable versus where we are today. At the top end of the range for the U.S. would suggest an exit of 14%. Same assumptions around NCS, but it would contemplate attrition and utilization improving slightly and price to be slightly positive. So those are the building blocks as you think about the range for the U.S. When I turn to international, we see continued momentum and opportunity internationally, but at a more, I would say, moderate rate. The reason for that, we have been talking about we are anniversarying the launch of Omnipod 5 in most of our large markets in Europe. In addition to that, we have been benefiting from price mix realization as we convert from DASH into Omnipod 5. We are about 75% converted, Larry, on that install base, so that price mix realization will slow down a bit. Having said that, we still have a tremendous opportunity internationally. It will happen over time. We just launched in Spain, as you know, in July. We are also continuing to grow in Saudi and the Middle East. We have launches planned for Libre 3 in a couple of our large markets in Germany and in Canada. All of those will continue to fuel momentum in our international business, but it will be at a more moderate pace. To summarize it, we see our framework for 2027 as a jump-off point consistent with the growth rates that will exit 2026. That is helpful. What is the range for international, that exit rate? You gave- 19 to 24. 19 to 24. Going back to the U.S., the mid-single-digit share loss for both scenarios. Yep. What is the thought process behind that? What are the assumptions? There are three potential competitors. Obviously, as you just said, we know the market will become more crowded. We continue to have confidence in the differentiation of Omnipod, and we believe that competitors are going to continue to enhance the attractiveness of AID as a source of growth from MDI. What we did model is obviously, we have the benefits of our product launches this year. We did the enhancement on the algorithm of Omnipod 5, as well as our sales force expansion, and we essentially are assuming that those give us no benefit, and that it will be offset by the more crowded market next year. So we will continue to have NCS in actual numbers. It is just that the growth rate of that NCS will be flat to down. Okay. The attrition, basically the low end, no improvement in attrition. Attrition and utilization. On the high end would be attrition and utilization both improve from where they are. Price stable, I think. Stable on the low end and slightly positive in the high end. Got it. Okay. Super helpful. Despite the reduction in the top-line outlook, you maintain your operating margin goal of 100 basis points per year. Yeah. What is giving you the confidence in that, and why is that the right decision for the business? We have a really strong financial profile, Larry. We are delivering top-tier growth. We continue to have gross margin expansion behind manufacturing efficiencies. We are disciplined in cost management, and we are investing in the activities that drive long-term growth, like innovation, like commercial capabilities, like the investments in type 2 that Ashley described. We are in this envious position where we actually can do both. We can continue to invest in the business to support that top-tier growth that I talked about, and we can deliver 100 basis points of margin expansion. In fact, as you know, we actually also increase our adjusted EPS growth target to be better than 30%, showing the earnings power of the business that we have. Okay. Dexcom recently committed to a 10% revenue growth floor through 2030, 100-150 basis points of margin, annual margin expansion, and pledged at least 50% of annual free cash flow to buybacks. I guess my question for you, Ashley, is would you consider a similar kind of model algorithm that Dexcom has put out there? Yeah, I would just build off of what Flavia said, which is we are committed to. Again, we're not guiding for 2027, but we think that we can deliver top-tier growth for the industry. We have a very compelling, I think, quality of earnings profile around really strong gross margin on efficiencies in manufacturing, really strong G&A efficiencies that allow us to continue to invest in the business. We have a very healthy EBITDA profile with a good, attractive runway ahead of us that we are calibrating based upon the investments that we want to keep plowing in to drive category expansion and keep innovating on the S-curve while investing in capacity. We're standing up our fourth plant. We enjoy a reoccurring revenue business model, and we're on the first 90 days, I would tell you, in T2, but that is going to be a meaningful growth opportunity for the industry, as well as disproportionately for Insulet. Maybe just to build on a couple of things, Larry. I think when you look at our financial profile, top-tier growth with a framework that delivers margin expansion, EPS growth, strong free cash flow, and that puts us in a position from a balance sheet that is, I would say, enviable. We have a lot of flexibility to continue making investments, but we're also disciplined and thoughtful around capital allocation. When, going back to your question, our focus is on long-term shareholder value creation. We look at all options, and we're committed to continue doing that. Got it. Remind me of when we're going to get the reset on the LRP. Post-completion of our strategic plan, which is ongoing right now. I think in the second earnings call, we talked about providing an update, likely in our fourth quarter earnings call. Okay, early next year. Yep. Ashley, maybe one high-level question for you. Obviously, sentiment on Insulet has changed recently. What are you going to do to regain investor confidence? Yeah. Listen, it's obviously a good buy opportunity right now. Let me first say that. I think that we're undervalued. One, we're focused on execution, and keeping to deliver the profitable growth profile. We see ourselves as having very strong, durable competitive advantages. One, it starts with the attractiveness of the end state market in which we're the market leader. Our market leadership is a very strong basis of competition. We have a meaningful lead versus others in the category. Three, we have, I would say, the most robust pipeline in our company's history about to hit, not just the next three years, but the next five years. We enjoy manufacturing and operational scale that we've earned over many years that are going to be very difficult to replicate. And our financial position is really unrivaled, and that gives us flexibility to continue to invest in innovation. Our best years are ahead, and it is a good buy opportunity. Okay. When you look at the revenue build, new starts, if you have attrition, 10%-15%, call it, pricing flat, new starts have to grow, otherwise revenue decelerates. You said next year the assumption is flat to down for new starts. No, let me clarify. Our new customers, we will add new customers. Flavia was mentioning that the rate at which we are adding new customers, you should assume that that rate is flat to slightly down. New- We will add new customers to our Omnipod business next year. I got it. The new NCS, new customer starts, I heard flat to down in that 9%. New customer starts, the growth rate of our new customer starts will be flat to down. Flat to down. Yeah. Okay. We're still adding, like remember new customers are- No, I got it. Yeah, we anticipate to extend our customer base next year. Yep. And extend our customer base share next year. But I think that if new customer starts or decline flat to down, that the growth slows over time. Is that fair? Yeah, the growth- The revenue growth slows over time. Correct. As we said, if you look at the parameters that I gave for 2027, it is a slowdown in growth versus 2026. Okay. Got it. Ashley, let's turn to the pipeline. You've got three major programs, new algorithm this year, Omnipod 6 next year, and the type 2 fully closed loop algorithm in 2028. How are you thinking about the impact of each? Yeah, Larry, thanks. As the market leader, again, trying to continue to drive the growth for the category, there is really three things that matter to drive adoption from MDI into the category. Number one, are clinical outcomes, improving clinical outcomes. Number two is really reducing the burden of diabetes distress. Said differently, this is about improving quality of life. The third is around extending access to more prescribers and more patients. All of our pipeline initiatives address all three of those. Beginning with this year, we are launching our second algorithm improvement. It improves time and range. It is a lower set point. It keeps people in automated mode. We are integrating with Libre 3 Plus, which gives us access to a patient pool of over 450,000 patients that are not using AID. They are predominantly using MDI. Then we are launching our Omnipod Discover platform, which is patient engagement, and that keeps people, has stronger retention and stronger engagement. We are then going to follow on next year, we will be on our sixth generation Omnipod, Larry, next year, which will be our third algorithm improvement. Again, we share data at the ADA and feasibility of and we have gotten approval on the algorithm. We are waiting to get approval on systems integration. That is forthcoming for our launch next year. But in essence, it has improved time and range, improved time and tight range with 40% less bolusing. What people love about it, particularly type 1, is the antenna is improved. It lets you have a lot broader wear flexibility for anywhere on your body. What docs like about it is it is only one prescription versus two prescriptions. Then we will be following that with the industries, just like we pioneered for the industry, the type 2 indication, we will be launching the industry's first fully, truly closed loop for the type 2 community. It is very analogous to a CGM experience. We share data again at the ADA on our feasibility. It is in a pivotal clinical trial right now. We showed evidence of 12 points of improvement in time and range. We showed clinically meaningful improvement in A1C reduction, 30% less insulins used. We maintained weight. In addition to that, there is zero bolus. You do not manually intervene with the product at all. The algorithm does 100% of the work. There is no manual titration, and importantly, there is no settings, which really unlocks the entire primary care audience. So we think that that will really open up. Clearly, there are things that we are spending money on that we have not disclosed yet that will make sure that we keep addressing those three fundamental areas that are going to unlock really adoption for this category. On the fully closed loop, you are obviously pursuing type 2. Some of your competitors are doing type 1 and type 2. What is the plan for type 1, and how do you avoid being at a competitive disadvantage when they have that? Yeah, no, important question, Larry. Let me clarify. We view our portfolio of having the industry's best hybrid closed loop and having the best industry's truly, fully closed loop. Omnipod 6, which is our hybrid closed loop that we are launching next year, again, I mentioned that we will have 40% less bolusing. We are working on another algorithm improvement to that which will be bolus optional, and that would be a really nice application predominantly for the type 1 community that always wants to have bolus optionality. We do not call that a fully closed loop because our definition of fully closed loop is what we are launching in the U.S. in two years, predominantly for the type 2. Some type 1s might use it, and that really is absolute no bolusing. No mealtime announcements. No mealtime announcements. No set points. No set points, no manual intervention, and you can train at home for less than 40 minutes. That's a big unlock for the type 2 community. We will also have a solution of a bolus optionality version on hybrid closed loop for the type 1 community. Okay. You recently received clearance for the Omnipod 6 algorithm. That's correct. What needs to be done from a regulatory standpoint to launch the system? Yeah, really, the team's executing according to plan. We're doing systems integration right now and validation, and we're doing launch readiness and pleased to share that for next year. But you still need to get some. There's still a clearance. Systems. Yes, we got our algorithm approved, and now we're working on our systems validation that does not have approval yet. Okay. And then maybe, we didn't talk about pricing much. Flavia, you talked about next year being stable- Yep -in the U.S. I think less price outside the U.S. I think the concern's been mostly in the U.S. with more entrants in the pharmacy channel. Just give us a refresher on why you're not concerned. Yeah, Larry. We continue to experience a very preferred position in the pharmacy channel. Even as we adjusted slightly our outlook for price for the U.S. this year, we still believe we're going to have positive price in the U.S. As I provided the framework for 2027, I said flattish to slightly up, depending if you're on the low end or the high end. What gives us confidence in that is a couple of things. One, we have contemplated a more competitive environment. Having said that, from all the conversations that we have had with PBMs so far, there's no signal of any significant change in the pricing dynamics. Even as competitors have already launched in the pharmacy channel, we haven't seen any change. The environment has remained disciplined. As we talk to PBMs and work on formulary for 2027, we haven't seen any change. More broadly, going further into the future, what gives us confidence is a couple of things. The value proposition of Omnipod 5 and AID therapy in general is still very compelling for payers and for providers. When we source from MDI, we deliver a significant clinical and economic benefit of AID therapy. We have a preferred position. We have built that position over almost a decade. We are not playing for exclusionary positions. We believe in open access, and we believe we're going to continue to win based on the strength of the clinical and product that we provide, clinical evidence in the product, features that we provide, and we're going to continue to innovate. With this innovation that we're going to launch, we believe it's going to continue to drive value for the category. Okay. That's helpful. Ashley, one more question, just a strategy question. Just curious, you've got one competitor that's vertically integrated. The rest are pure play pump companies and pure play CGM companies. What are your thoughts on vertical integration in the diabetes space? Are there benefits? Are there trade-offs? Larry, I would tell you, as a market leader, what we've learned is that prescribers and patients want choice always. We want to be the world's best AID therapy, and we partner with the world's best sensor companies. Some people are on iOS, some people are on Android, and we deliver a highly integrated customer experience, taking the best of those. Ashley, international, Flavia talked about slowing growth next year, but you still have a long runway. What are some of the new geographies you're going to enter next year? Thank you. We've had, I would say, extraordinary growth in international. We raised our guidance this year to 30%-32%. A lot of that was driven, obviously, by bringing Omnipod 5 to new patients with type 1. We're going to see really strong growth, but more moderated growth at a moderated pace, not really due to one launch. We're going to launch new countries. I mentioned Spain, I mentioned going deeper into Saudi Arabia. We also have integration with Libre 3 Plus, which opens up a lot of sensor activity. We're going to have very attractive, profitable growth, just not at the high levels that we're coming off of an anniversary of a launch. Asia? We're assessing those, but right now- It was on the roadmap, by the way. It's on the roadmap. We're assessing. We've done a lot of work. But I would tell you, we see so much opportunity. It's on our roadmap in U.S. type 1, U.S. type 2, OUS type 1. We are filing an indication in the markets that we compete on type 2, and obviously, we have a plant in Malaysia, we have a plant in China that we're always assessing to make sure we've got a good durable value proposition there, and what's the phasing of that. Okay. We covered a lot of ground. Got a minute and a half left. You can go over if you want, but Ashley, I wanted to give you the last word, give you an opportunity to say anything, communicate anything that we didn't have a chance to discuss or just summarize. No, thank you, Larry. I always think about maybe what are some things that are maybe not fully appreciated. I think the AID, I have been in healthcare for 30 years, and automated insulin delivery is one of the most attractive end-state markets in the med tech industry. We are still early on in the innings. I think, listen, market leadership has been earned over years, and we know that we take that as a huge responsibility that we have to continue to execute to extend that lead. A lot of that is innovation. You heard we have one of the best innovation pipelines in the company's history. A lot of that is commercially. What we have demonstrated is we have expanded our prescriber base, we have expanded new patients. We have the largest field force. We have just retrained all of our field clinically, so we are selling not just on passion and the differentiating of the Omnipod, but those four algorithm improvements that are coming down. Then making sure that we can say yes to demand day one, not multiple years later, but day one. We produce at scale in the tens and tens of millions, and given our reoccurring revenue model, we enjoy just an unrivaled cash position to be able to continue to invest. It is a great buy opportunity. Thank you, Larry. All right. Thank you for being here. Thank you.