Morningstar | We're Unconcerned About Insulet's Recent Speed Bump; No Change to Our FVE
Despite the near-term glitch with excess OmniPod inventory in Europe, we remain comfortable with our projections for Insulet’s full-year performance and are holding steady on our fair value estimate. Considering how flawlessly the Insulet team has executed its turnaround since CEO Patrick Sullivan joined in late 2014, we think it is difficult to fault the firm for this minor issue that only came to light as Insulet assumed all European distribution operations in July. In the bigger picture, this situation will unwind itself over the next few quarters as that inventory is sold. We think underlying demand is a more critical dimension, but fortunately, European demand remains solid. Despite this temporary slowdown in European sales, we still think Insulet is well on its way to digging a narrow economic moat.While quarterly revenue growth of 13% fell short of our expectations, thanks to the excess inventory situation, Insulet delivered gross margin improvement beyond our estimates, to the tune of 700 basis points. This was partially driven by one-time margin capture from the transition to an all-direct distribution model, and we were pleased to see efficiencies in manufacturing and the supply chain also playing a role. We anticipate steady incremental improvement in gross margin through 2025, as Insulet’s new U.S.-based manufacturing facility becomes operational and volume continues to grow.
Insulet continues to make progress on both the innovation front and the payer front, including the recent regulatory approval of OmniPod Dash and its mobile applications that allow patients and their families to see status information on a smartphone, and display Dexcom’s glucose monitor information along with OmniPod data on an iPhone. These are all important steps toward a user-friendly system that, ultimately, integrates the Dexcom monitor with the OmniPod pump.
Insulet is engaged in the development, manufacturing and sale of its Omnipod? System, an insulin delivery system for people with insulin-dependent diabetes, which consists of two product lines: the Omnipod Insulin Management System and Omnipod DASH? Insulin Management System. The Omnipod System features a self-adhesive disposable tubeless Pod, which is worn on the body and provides up to three days of non-stop insulin delivery without the need to see or handle a needle, and a handheld Personal Diabetes Manager. The Omnipod System communicates wirelessly, provides for automated cannula insertion and eliminates the need for multiple daily injection therapy or the use of pump and tubing.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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