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Dexcom, Insulet and Tandem kick off 2022 with revenue growth after weathering omicron push

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Diabetes tech companies started 2022 the way they closed 2021 – growing revenue year over year as the use of wearable diabetes management devices continues to take off.

Dexcom, Insulet and Tandem Diabetes Care posted double-digit revenue growth in the first quarter, although each company faced challenges from the ramp-up of omicron in January. This indicates that the diabetes technology space continues to be one of the most pandemic-resistant submarkets of the medical device industry.

Dexcom, which manufactures continuous blood glucose monitors, grown up revenue up 25% to $628.8 million in the quarter. While the company’s sales were down 10% from the fourth quarter of 2021, Dexcom reported lower first-quarter revenue from the previous three-month period over the past four years.

Although Dexcom’s business does not include any procedures, the company still faces pressure as COVID-19 cases rise.

In an earnings call on April 28, executives said the omicron push had slowed the influx of new patients earlier this year, though the pressure eased as the quarter progressed and the surge subsided.

“In December we saw the impact of omicron, and that continued quite strongly into January in terms of outreach and presentation to prescribers,” chief financial officer Jereme Sylvain said on the call. “As the quarter went on, each month got a little bit better as things really opened up…January was a bit tough, February was better and March was even better than that.”

CEO Kevin Sayer told investors that new customer additions finally met internal expectations despite the pressure at the start of the quarter.

In the last quarter, the company’s G7 CGM system has received a CE marking for Europe, an announcement that was expected in 2021 but delayed throughout the second half. The product was first launched in the UK and will be further expanded in the coming months.

The G7 is also under review with the Food and Drug Administration. After the postponement of CE marking last year, anticipation for the product in the United States has grown, with JP Morgan analysts writing in an April 28 note that the G7 is likely the “biggest new product launch for the appliance industry this year.

Sayer said the company doesn’t expect a decision from the FDA until June.

SVB Securities analysts wrote in an April 28 report that they would not be surprised if challenges such as labor and currency headwinds continue in the coming quarters, but added that Dexcom long-term revenue forecast of “$4.0 billion to $4.5 billion by 2025 will likely prove prudent.”

For reference, Dexcom grown up year-over-year revenue by 27% to $2.45 billion in 2021.

“The supply chain is still a bit turbulent. It really hasn’t stabilized. We hope that will happen here in the next month or so – maybe in the second half of this year – but it has certainly still been a bit of a problem for distributors.

John Sheridan

CEO, Tandem Diabetes Care

Abbott Laboratories, Dexcom’s rival, also reported an increase in first-quarter sales for its diabetes care unit. The medical technology company said Year-over-year sales of FreeStyle Libre CGM increased approximately 20% on a reported basis to approximately $1 billion.

The medtech company’s newest CGM, called FreeStyle Libre 3, is also in limited launch in Europe. Abbott CEO Robert Ford said in an April 20 earnings call that the product would launch at a faster pace than FreeStyle Libre 2. However, the CEO did not give a specific timeline or discuss future markets.

Ford also did not provide details regarding a US release or launch for Libre 3.

Tandem vs Island

Tandem and Insulet, both of which make insulin pumps, also posted similar quarters to the CGM companies.

Tandem CEO John Sheridan said on a May 4 earnings call that the company is still navigating COVID-19 and supply chain challenges in the United States and international markets. However, the company grown up year-over-year sales up 25% to $175.9 million last quarter.

The company still encounters healthcare providers in a mix of virtual and in-person interactions, as the environment “varies wildly” by practice or region of the country, according to Sheridan.

Tandem’s chief financial officer, Leigh Vosseller, said the company was forced to deal with “heavy” staff shortages in the last quarter, mainly due to a higher rate of sick staff amid the outbreak. COVID-19 in January which affected getting new patients on insulin pumps.

“This is where our field tries to help supplement as much as possible as they work with their physician customers to ensure that we can always bring new patients onto the product as planned,” Vosseller said. “I think we did very well, again not without challenges, but the team worked very hard.

Tandem’s insulin pump shipments increased 11% year over year to 28,095 devices. Still, shipping growth in the first quarter slowed compared to each quarter of last year.

Tandem’s insulin pump shipment growth has slowed over the past three quarters
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022
Total shipments
(annual growth)

SOURCE: Tandem Diabetes Care Revenue Reports

Tandem CEO Sheridan also flagged pressures on international shipping last quarter and noted that getting back to normal may take longer.

“The supply chain is still a bit turbulent. It really hasn’t calmed down,” Sheridan said. “We hope that will happen here in the next month or so – maybe in the second half of this year – but it has certainly still been a bit of a problem for distributors.”

Tandem will also soon face stiffer market competition as Insulet expands its Omnipod 5 pump launch. The product received FDA clearance in January and is rolling out in stages in 2022.

SVB Securities analysts wrote that Tandem continues to “prove us wrong when it comes to the company’s ability to sustain strong double-digit growth despite competitive momentum”, but they still question the future. of the company.

“With the limited release of Omnipod 5 underway, we continue to be concerned that we may have less visibility and lower sales upside conviction over the medium term (2023+) as the competitive environment intensifies. hardens,” analysts wrote in a May 4 note. .

Rival Island grown up year-over-year revenue by 17% to $295.4 million last quarter. After also facing pressure from omicron at the start of the year, the company expects revenue growth of 12% to 15% in the second quarter compared to the year-ago period.

Regarding the Omnipod 5 launch, CEO Shacey Petrovic said on a May 5 earnings call that the company is growing from hundreds of patients with the device to thousands, with Insult moving closer to a full launch.

Petrovic, who also announcement that she will leave the company at the end of the month, said the product is not yet available in the retail channel or in pharmacies, where about 80% of her business happens.

Petrovic said in an interview in March that the limited launch will take between three and nine months depending on how each stage unfolds. The CEO did not provide a more specific timeline for the final earnings call.

Tandem’s Sheridan said the “new product” in the US – the CEO didn’t name it specifically – hasn’t changed the competitive landscape so far. He added that the company has “heard conversations about it, but there are so few systems out there that it’s really, really hard for us to get a sense of how it actually works.”

Analysts at William Blair wrote in a May 5 note that demand for Omnipod 5 will increase in the second quarter as Insulet moves into the next stage of the launch.

“In our view, although Insulet doesn’t call it a full market release, we expect Omnipod 5 to ramp up [direct to consumer] spending and opening prescriptions to all physicians should begin to drive noticeable additional demand in Q2, which is unlikely to be meaningfully priced into guidance and could contribute to the upside,” wrote the analysts.

island forecasts a revenue growth range of 12% to 16% for 2022. In 2021, the company reported full-year sales of $1.1 billion.

Medtronic, which makes CGMs and insulin pumps, has not yet released sales figures for the quarter. The company’s diabetes business has recently suffered a series of setbacks, including a warning letter from the FDA due to product safety concerns and loss of market share.

The medical technology company will release its results on May 26 at 8 a.m. ET.