Good afternoon, ladies and gentlemen, and welcome to the Insulet Corporation Second Quarter 2023 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to your host, Deborah Gordon, Vice President, Investor Relations.

Thank you. Good afternoon, and thank you joining us for Insulet's Second Quarter 2023 Earnings Call. With me today are Jim Hollingshead, President and Chief Executive Officer; and Wayde McMillan, Executive Vice President and Chief Financial Officer. Both the replay of this call and the press release discussing our quarterly results and our guidance will be available on the Investor Relations section of our website. Also on our website is our second quarter supplemental earnings presentation. We encourage you to reference that document for a summary of key metrics and business updates. Before we begin, we would like to inform you that certain statements made by Insulet during the course of this call may be forward-looking and could materially differ from current expectations. Please refer to the cautionary statements in our SEC filings for a detailed explanation of the inherent limitations of such statements. We'll also discuss non-GAAP financial measures with respect to our performance, namely adjusted gross and operating margins, adjusted EBITDA and constant currency revenue, which is revenue growth excluding the effect of foreign exchange. These measures align with what management uses as supplemental measures in assessing our operating performance, and we believe they are helpful to investors, analysts and other interested parties as measures of our operating performance from period to period. Additionally, unless otherwise stated, all financial commentary regarding dollar and percentage changes will be on a year-over-year reported basis, with the exception of revenue growth rates, which will be on a year-over-year constant currency basis. With that, I'll turn the call over to Jim.

Thanks, Deb. Good afternoon, and thank you for joining us. In Q2, we enjoyed another quarter of sustained strong momentum, and we remain on track for another successful and transformative year. The entire global Insulet team is executing at a high level, and we continue to deliver strong financial performance while also achieving several key strategic and innovation milestones. On today's call, I'll touch on 4 main topics: our strong financial performance, our consumer-focused innovation and clinical achievements, how we're continuing to drive penetration of a massive market opportunity with expanded access and awareness and the Omnipod 5 international launch. Starting with our financial performance. Our second quarter revenue exceeded our expectations with total Omnipod growth of 33%, including U.S. growth of 41%. We also achieved total company growth of 32%. Because of these terrific results, we've raised our outlook for the year. Omnipod 5 continues to disrupt the diabetes technology market as the only FDA-approved fully disposable, pod-based automated insulin delivery system. Our flagship offering continues to be the major driver of U.S. revenue growth and was responsible for another record quarter of U.S. and global new customer starts. And Omnipod 5 represented almost 95% of our U.S. new customer starts. Building on our success in the U.S., we are very pleased to have completed the commercial launch of Omnipod 5 in the United Kingdom. We are excited to bring our unmatched AID system to our first international market. Our plans to launch Omnipod 5 in Germany are on track for this fall with a broader staged rollout across our European markets in 2024. We also meaningfully advanced our clinical and innovation initiatives during the second quarter. We had a formidable presence at ADA in June where we presented compelling new real-world data from the first year on Omnipod…

Thanks, Jim. We delivered another strong quarter of financial performance and strategic progress and once again delivered record U.S. and global new customer starts. We generated 32% revenue growth in Q2, finishing above the high end of our guidance range. Our outperformance was driven by global Omnipod growth of 33%. On a reported basis, for total revenue, foreign currency was a 20 basis point tailwind compared to Q2 of last year. U.S. Omnipod revenue growth was 41%, exceeding our guidance range. Revenue growth continues to be driven by our annuity-based model with consecutive record new customer starts and growing U.S. pharmacy volume. This includes an increasing contribution from Omnipod 5 and a premium for the Omnipod 5 and Omnipod DASH pods in the U.S. pharmacy, where we provide the Personal Diabetes Manager at no charge. Omnipod 5 ramp dynamics resulted in an estimated net headwind of approximately $4 million. Similar to last quarter, we benefited from an estimated $16 million net volume benefit associated with new Omnipod 5 customers, in large part due to existing customer conversions from Omnipod DASH and Classic Omnipod who received their starter kits and first refill orders in the quarter as well as some initial stocking in retail pharmacies. This estimate is net of some Omnipod 5 customers skipping an order in the period. This benefit was more than offset by a reduction in estimated channel inventory days on hand of approximately $13 million and another $7 million reduction associated with an increase in actual and expected sales returns for Omnipod DASH and Omnipod Classic as retail pharmacies convert their inventory to Omnipod 5. The benefit of the pharmacy channel continues to be a competitive advantage, and we remain focused on driving increased volume through this channel, which in Q2 represented over 90% of our…

[Operator Instructions]. Our first question comes from Larry Biegelsen from Wells Fargo.

Congrats on another nice quarter here. So Jim, I heard you say you're seeing no signs of slowing down, but as Wayde said, you're going to start lapping some tough comps in the second half of this year. The second half '23 implied worldwide Omnipod 5 -- Omnipod, I'm sorry, growth is about 21%. So how do you keep the momentum going at pod? Do you see yourself as a 20%-plus grower beyond 2023? And how are you thinking about these GLP-1s?

Thanks, Larry. Thanks for your congrats, too, and thanks for your question. We're not seeing any kind of pause. The new customer starts for Omnipod 5 and the demand for Omnipod 5 has -- continues to be terrific. We obviously had record starts in the quarter. We see a lot of momentum across all age groups, as we said. And so we're very bullish on the growth. I know you're asking me a question to guide beyond '23 because you want to ask Wayde that question, but I'm actually going to throw this to Wayde so he can work through the numbers there for the second half.

Sure. Thanks, Jim. And Larry, you're exactly right. We are almost completing 12 months of Omnipod 5, so it's been incredibly exciting to see the ramp here over the first few quarters. And we've got a couple of onetime things to account for. If you recall, in the second half of 2022, the first 2 quarters of Omnipod 5, we're benefiting from a significant contribution from first customers and converting customers, getting 2 scripts in the quarter. And we called those out. They're similar to the benefit we got this quarter, $16 million. What's different is that we're now seeing some reduction in days on hand inventory as well as some increased return reserves in the pharmacy. So a lot of dynamics playing out in the first year as we ramp up Omnipod 5. But as you call out, we've got a really strong guide, 30% for Q3 and implied for Q4 in the U.S. at the high end of the range. And so we're really excited about continuing to grow Omnipod 5 here at these [indiscernible] rates.

Our next question comes from Robbie Marcus from JPMorgan.

And I'll add my congratulations as well on a really nice quarter. I hate to waste the question on this, but given the moves in the stocks today, particularly in diabetes stocks, I thought it would be good, Jim, maybe if you want to just address your view on, I guess, it would be more relevant to type 2 diabetes, particularly increased GLP-1 use. There was some good cardiovascular data today in obesity. Just your views on how GLP-1s may or may not impact the progression to type 2 diabetes and basal and intensive insulin. And just any impact and help investors frame it to your overall business.

Sure. Thanks, Robbie. I know it's a question of high interest. So as we've said before, we think it's terrific to see the pharmaceutical companies continue to innovate with therapies for people with type 2 diabetes. We get up every day to help people with diabetes, people living with type 1 and type 2 diabetes. So we think it's terrific that innovation is happening across all fronts. And the GLP-1 class of drug has actually been out for a while, but this latest generation of GLP-1s is clearly having a really big impact and has additional efficacy from the existing class. And obviously, they're off to a start. So we think all that innovation is really good. Having said that, we're confident it doesn't impact our TAM. And just to give you a couple of reasons why, the first 1 is the global problem with type 2 diabetes is enormous. There are more than 0.5 billion people living with diabetes around the world, and that number continues to grow. Most of them have type 2 diabetes. So it's a massive unmet medical need globally and in the U.S. and massively underserved as a population. So that's the first thing. The second thing is, when you look at our offerings, even in the U.S. alone, there are 2.5 million people living with type 2 diabetes who also need intensive insulin therapy today. So intensive therapy in basal plus bolus, so that's 2.5 million people in a U.S. TAM whose condition has progressed to where their relevant target market for us to help them with Omnipod DASH and soon with Omnipod 5. And so we're just scratching the surface of that market. Pump penetration in that market is in the low single digits, maybe the mid-single digits. And the Omnipod platform has a right to win in that market because of its simplicity and its channel access and et cetera. And the other third thing I'd point to is that we know that GLP-1 class of drugs has long coexisted with insulin. We saw that in our own type 2 feasibility trial, which we published 2 ATTDs ago. A lot of that population that used Omnipod 5 in that trial was already also using. That was an all-comer study in terms of the population. And many, many of those patients who were using GLP-1s has still got great benefit from the Omnipod 5 in that trial. So we're very confident that we have a huge market of people who need our help with our Omnipod platform and when we get the label of Omnipod 5. And we don't see the GLP-1s changing our TAM.

Our next question comes from Malgorzata Kaczor from William Blair.

I wanted to go a little bit deeper into the guidance on the U.S. I know I appreciate your comments to Larry. But the midpoint of the guide, obviously, is quite sizable relative to the beat this quarter, and you listed a variety of benefits. But can you give us just a rough sense, on a percentage basis, how meaningful each of those impacts is to the guidance range? And then whether you're seeing kind of some more meaningful, I guess, sequential increases in new patient adds that maybe is atypical for a traditional Insulet year?

Okay. Margaret, I can start that one off and just give you a little bit more insight to how we think about the guidance, the first part of your question related to the impact of the guide. Depending on high end or low end, the headwind from the tough comp in last year's Omnipod 5 ramp benefits in Q3 and Q4, between a 5% and 10% headwind to our guidance range. But really, the reason we have confidence in still being at 30% growth at the high end and continuing to grow at these accelerated rates is the result of our durable business model and the annuity factor. And so we've had record new customer starts for several quarters, which gives us momentum into the second half here. And we're going to continue to build momentum. The high end of our range assumes we'll continue to see record level new customer starts. And given the momentum that we have today, we've got high confidence in doing that. So those are really the major factors. As we called out in our prepared remarks, we see stable attrition and utilization, so we're assuming that continues at the high end as well. We don't see any major impact to attrition or utilization. A couple of other things to think about in the second half is we've had a good contribution to the premium moving into the pharmacy channel by converting a lot of our existing customers from the DME channel. We'll still continue to get that benefit. That benefit has grown each quarter as we've moved more and more volume into the pharmacy channel. And again, as we said in our prepared remarks, 90% of our volume is now in the pharmacy channel, so a significant increase from this time last year. So that premium is benefiting us here and will continue to benefit us in the second half, but it will be to a lesser extent because we're starting to reduce the number of converting customers each quarter. And as you recall, we have planned to be through most of our existing customers converting to Omnipod 5 in the pharmacy channel through the end of this year. We think most of those conversions will be done by the end of '23, and we think that will wane and, to a lesser extent, be a benefit here in the second half. So those are the major changes when you look at the growth rate. But again, we are a volume business and, by far, the largest contributor to our growth rate is our volume growth, which is based on our customer base growing. And we continue to see that growing with new customer starts throughout the second half of this year again. So strong guide, strong momentum in the business, lots of tailwinds to help us continue here based on our annuity model.

Our next question comes from Chris Pasquale from Nephron Research.

Congrats on the quarter. I wanted to talk a little bit about the International business and the O5 rollout there. Curious how much of your current international footprint U.K. and Germany represents. And I understand the comment about the installed base model and it taking some time to flow through, but if we just look at the U.S. example, the Omnipod 5 launch led to a pretty immediate growth inflection. So why couldn't we see something earlier than back half of next year outside the U.S.?

Thanks, Chris. I'll start with that one and then maybe Wayde will provide some color. So we're really excited about the Omnipod 5 launch in the U.K. It's going really well. I'll just share 1 story with you. There's so much pent-up demand for Omnipod 5 across our European markets and all of our markets. And one of the clinics we work really closely with was -- had so many customers waiting to get on therapy. They actually put up decorations all over their office and put up a disco glitter ball as they brought people in to get set up on therapy. It was a huge celebration. And as we said in our prepared remarks, our order rate has doubled. So it's off to a great start in the U.K. We're really excited about Germany. As to the percentages, we haven't broken those out. I don't think you'd find them materially different from a lot of medtech markets, but we haven't materially -- we haven't broken out those specific numbers for the markets. In terms of the growth in the U.S. versus the growth in European markets, every market is a little bit different. One of the reasons, maybe the main reason we had such an effect on anticipated growth with Omnipod 5 in the U.S., it was all of the customer sources in the U.S. were at the high end or above the high end of our expectations, and that's because of the pharmacy channel. So in most of the European markets, customers who are on a therapy are locked into a contract. And in the U.S., if you're locked into a contract with your tubed pump, you can cross over into a pharmacy benefit. And so that's what -- that's in the U.S., what's allowed us to have so many competitive conversions in our new customer starts. In the European markets, it's a little different everywhere, but it's less flexible for patients who are on a therapy. So they have to typically wait for their contract to come up. So therefore, most of our new customer starts are customers who are new to therapy and were getting some upgrades from our own products. And then we'll be bringing in new customer starts who are converting, but they're converting in that whatever the annual cycle is, whether it's a 4-year cycle, in some markets, it's a 5-year cycle. So when they come available, they're really relevant targets for us to move off of competitive pumps. But that just changes. It changes the dynamic of the flow.

Our next question comes from Jeff Johnson from Baird.

Wayde, maybe I think we're all trying to kind of feel you out, obviously, on U.S. growth rates for next year, and I know you're not guiding to next year. But a couple of the moving pieces that you talked about this quarter, that reduction in channel inventory of $13 million, the $7 million in returns. How much of that do you think is left to play out, to go away as a headwind maybe as we get deeper into this year and heading into next year? And then I know you keep calling out every quarter this patient behavior of doubling up and getting maybe 4 months of inventory in a 3-month period when you first start O5. But that behavior has stayed pretty consistent now for the better part of the year, so it doesn't seem like there's a whole lot of change going on there. So to me, it almost feels like this net kind of neutralizing of those 2 factors should drop away on the headwind side and maybe you keep a little bit of that tailwind. So I guess my point on all that is you seem to be guiding to about 25% growth in the U.S. Omnipod business for the back half of this year. Obviously, a very strong number against that low to mid-40% comps. Is that crazy to think that could be a starting-off point on how we think of next year as you get the tough comps? You maybe get a little bit less of that premium upgrade from DME to pharmacy, but you also get a little drop-off of those headwinds that I was talking about?

Jeff, happy to talk about guidance a little bit more here and certainly a lot of dynamics moving, and you've called out several of them. So why don't we just touch on them -- each of them again and make sure it's clear. So as we think about the days inventory on hand, and I'm glad you brought that one up, because it is something that we obviously don't have control over the distribution channel. And we are seeing the pharmacy channel be more efficient. And so maybe just to summarize what we've seen to date with Omnipod 5. In Q2 of last year, we saw a $7 million inventory build and so it was a bit of a headwind for us this quarter. And then we saw really stable inventory days. We've estimated pretty stable inventory days up until last quarter when we saw a reduction in days inventory on hand. And we thought that, that was pretty settled out at that point. But then we again saw days inventory on hand, a few days reduction again this quarter. So we're curious to see if this is where the pharmacy distribution channel settles out, or if they're down a couple of days and we'll see that come back. But we don't factor that into our guidance going forward because we can't predict it. So days inventory in hand from here, we don't know. However, we do see it trending a few days lower than we have seen over the past several quarters. And so there is potential that we could see some of that come back. You mentioned the 2 scripts. Again, this was another dynamic that we were curious to see how it would play out. As you said, on the growth side of it or the total…

Our next question comes from Jayson Bedford from Raymond James.

This is Glenn Shell on for Jayson. And I just had a quick question with regard to moving the Omnipod Classic users to Omnipod 5. Where are we in that conversion? And are you seeing higher attrition from the Omnipod Classic as it's discontinued?

Yes, Glenn. Sure, happy to start this one, Glenn. So we are through most of the Omnipod Classic exchange to either DASH or Omnipod 5 in the U.S. And so we have announced in the U.S. that our plan is to move our customers and discontinue the product in the U.S. Having said that, we're going to wait and see where we're at by the end of the year to make a final determination there. Obviously, we're going to take care of all of our Omnipodders, our customers that had been with us for some time. But they've got great options to move to DASH and Omnipod 5. Given the coverage levels that we have in the pharmacy channel now for both DASH and Omnipod 5, it is a lot easier for our former Omnipod Classic customers to move on to DASH. And so we are not seeing a higher attrition rate. In fact, our early estimates show us that our converting customers are staying with the product and really either Classic to DASH or Classic to Omnipod 5. In both cases, we've seen that at accelerated rates and the attrition has been really strong.

Our next question comes from Travis Steed from Bank of America.

A quick clarification, Wayde. When I put up all the numbers that you gave in adjustments, I got to like 48% U.S. growth. Just wanted to clarify that number to make sure that was right, what I accounted for all the adjustments. And then on the Q4 guide, it looks like if you look at the Q4 implied guide, you're somewhere around 20% U.S. growth. Is that the right way to think about the starting point for 2024 and next year as you think about lapping some of the tougher comps?

Travis, I wasn't quite tracking with you on which quarter for the 48%. But you may be thinking about the net headwind of $4 million, which just adds a couple of percentage basis points on a normalized basis to this quarter. So it does benefit us. I think that's the direction you're heading is we do get a benefit because of that net headwind this quarter. And I guess if you're adding in the tough comp for the second half, that also benefits us. But maybe what I would focus on out of your question was just the implied guide for Q4. So of course, we don't guide to Q4 at this point. We just do Q3 and Q4. But in that implied guide, you should be near 30% at the high end of the range. And that's our expectation is that, given the strong momentum in the business here, we have 30% at the high end of the range for Q3 and close to 30% in the range for the implied Q4 as well. Thanks, Travis.

Our next question comes from Joanne Wuensch from Citigroup.

I'm a little bit curious about the timing of the iOS application, the integration with G7 and the integration with L2. And what do you think -- once those next steps come along, what you think the benefit may be to the franchise?

Thanks, Joanne. We're really excited about all 3 of those programs. And as you know, as we said in the prepared remarks and we said at ADA, the iOS app is filed with the FDA. And so we're waiting clearance there and then we'll be prepping for launch as soon as we can, as soon as we practically can. So really excited about that, very requested feature. It's interesting. On that one, specifically, there are a lot of customers out there in Omnipod 5 who have made the decision to not pull back. And so when I talk to physicians when I'm out in the field, there's a lot of patients who are carrying their controller and their phone. They just -- they want to not have to carry both. And so that's a big requested feature. Having said that, there -- I'm sure there are some people who are waiting for iOS to come on to Omnipod 5. So it's hard for us to estimate what that is, but we do think that will give us a boost, and it'll certainly be a big customer satisfier for us and certainly help us to continue with such great retention rates and customer experience. So we're really bullish on that. With the 2 -- with G7 and with the FreeStyle, with our 2 partners, Abbott and Dexcom and FreeStyle family of sensors, obviously, we're working hard, working really well with both of them, great collaboration with both of them. We want to get on -- we want to get to a sensor of choice just as quickly as we can and the programs are proceeding really, really well. As you know, we don't forecast timings or talk about that -- talk about timings for those things. But it's obvious we have to be fairly far along with FreeStyle Libre 2 to be embarking on that study we're doing in the U.K. We're very bullish on that. But the partnership with both of them goes really well, and we're working hard to get those to market as quickly as we can. And we think that both of them provide a boost for us. Obviously, when you think about G7, it's off to a very quick launch and is a good -- a really good customer experience. And when you think about the FreeStyle Libre family of sensors, very, very well positioned, particularly in other geographies. And so we think they provide sustained growth for us, and they provide a great customer experience for us to be able to provide that kind of choice as quickly as we can to our customers.

Our next question comes from Steve Lichtman from Oppenheimer.

On the HCP prescriber increase, I thought the sequential increase was notable. Can you talk about what you're seeing that's driving that prescriber expansion? Is it use of Omnipod 5 in type 2 even before formal labeling there? And are you calling on these HCPs or is this sort of more organic?

Thanks, Steve. Yes, we're really heartened to see that. I think that there are a number of things driving it. The first one is Omnipod 5 is just so accessible as a product and as an experience. And we're seeing increasing confidence with the writing of prescriptions for Omnipod 5 across the whole range of HCPs. So you'll see endocrinologists and physicians writing the scripts. You'll see nurse practitioners, physician extenders, physician assistants writing those scripts. So it's very broad. And it's because of the ease of use of Omnipod 5, it's an easy thing to write for. And that's what we're seeing in the expansion of our prescribing population. And I'll tell you, the interest is really robust all across the board. And so just as an example, our team was just down in Houston over the weekend at the ADCES conference, which is the conference for diabetes educators. And we just had phenomenal interest in the product platforms and in Omnipod 5. All of our workshops and showcases were sort of standing room-only attendance beyond what was like better -- bigger than the room space kind of attendance. And that just demonstrates the broad reach and the ease of use of the Omnipod 5 product, which is, of course, a huge advantage for us. Because the Pod platform, the product experience is so easy compared to our tubed pump competitors, and that's why we're seeing the expansion of prescribers in the market.

And Jim, I can pick up on the type 2 part of Steve's question as well. As you saw in our reported results here, type 2 making up 20% of our new customer starts, and that's a tick-up from what we've seen in the last 3 quarters. We've been running in at 15% to 20%. And so with a record new customer start quarter, we are still seeing good new customer starts. That is partially driven by DASH. But as you said, HCPs are writing for type 2. We cannot market for type 2 yet. As you know, we do not have the label. And so we don't condone it by any means. And our team is working incredibly hard, as Jim touched on in his prepared remarks, to get our type 2 pivotal trial for Omnipod 5 completed and submit that to the FDA so that we can get on label and start to market type 2 for -- or Omnipod 5 for type 2 patients. And so it is certainly core to our strategy. And a lot of people with diabetes with type 2 that we would like to bring Omnipod 5 to, and we're certainly working as hard as we can to do that.

Our next question comes from Josh Jennings from TD Cowen.

I wanted to just ask about segment of the new patient starts and just on competitive pump conversions. Do you have any data on those conversions being end-of-warranty conversions versus middle-of-warranty conversions and how that's trending? And then potentially, just how are you thinking about a direct-to-consumer campaign for Omnipod 5? Any historic successes with DTCs in the past as a reference would be helpful, too.

Sure. Josh, I can start with that one on the new customer start question and pass it to Jim for an update on our DTC or direct-to-consumer strategy. So we continue to see strong competitive conversions. Although the mix has changed in our reported numbers somewhat, the total number of competitive conversions continues to be strong and certainly elevated above the levels that we saw before Omnipod 5. And so we don't break out the specific numbers for you there about -- like we don't actually track from them whether they're in warranty or not in warranty. That's just not part of our data set. We just know customers that tell us if they're converting from a competitive pump or not. So we don't have that insight for you, Josh, even to give any color on in-warranty or out-of-warranty. We make estimates, but it would be too much of a stretch to try to quantify that. And then, Jim, maybe a little bit on our DTC strategy?

Yes. Thanks for the question, Josh. DTC is a very effective tool for us, and we're really confident that we have a strong return on investment in our DTC program. One thing that I'll just flag is that DTC doesn't just mean TV for us, right? We have a very robust mix of the way we reach out to customers and consumers, and that includes social. It includes what is called over-the-top or streaming media. It will include more broadcast TV. And it includes influencers. We have a really active campaign with influencers and so on. And we have a really good sense of which levers to pull and so on. And I'm very confident in what our team is able to produce, and we're getting really good at dialing it up and down based upon the results. And so you'll continue to see us doing DTC campaigns. You might periodically see us ramp up on TV as we feel like we need to, but we have a very broad mix and a very effective approach to it.

Our next question comes from Matthew O'Brien from Piper Sandler.

I know we're getting a little late here. Just Wayde or Jim, just as you talk about the key growth drivers for the business being on the volume side, if I think back -- I think it was 3 or 4 quarters ago, 60-40 was the split between MDI and conversions and then 70-30, I think, last quarter, now 75-25. So what I'm asking for, and I know the denominator is getting a lot bigger, but are you seeing any kind of slowdown in your ability to convert competitive pumpers right now? And I don't know if it's because of Medtronic being in the market or something like that. And then it seems like the enthusiasm for O5 from the MDI patient population is as strong, if not stronger, than this time last year when you first launched it, is that fair? Just maybe talk about the trajectory of those 2 groups of patients.

Thanks, Matt. We're not seeing any kind of pause in the enthusiasm for Omnipod 5, and we continue to garner a lot of competitive conversions from both of our tubed pump competitors. And so the patient demand is really strong. Physician demand is really strong. And it's across all age groups really interestingly. And so no pause, great positioning. And I've already forgotten the second half of your question. Can you repeat the second half of your question for me?

Yes. I think it was just -- go ahead, Matt.

Sorry, the enthusiasm around O5 within MDIs, is it even stronger?

Within MDI? Yes. If anything, the enthusiasm is even stronger. We're seeing record new customer starts. We're seeing the percentage mix is changing more because of MDI on the top, right? And so I think we're just so well positioned, and we're not -- the momentum for the business is terrific, and Omnipod 5 is just very, very broadly adopted and accepted. I'll give you an example. I was just out in the field last week, and I was in a pediatric clinic sitting with a physician who's been writing for us and for one of our main competitors for a long time. And she said to me, "Listen, Omnipod 5 is so good. But at this point, I'm not writing really for your competitive pump, unless somebody specifically asks for it. And not just that, but everybody I've converted from the competitor pump on Omnipod 5 just does better." And I started to probe around why and the details, so they just do better. They just have better outcomes, they have a better experience. And so I think that's a really good sign for us in terms of how the learning curve of the market. Here, a year in, I think the market has learned a lot about Omnipod 5, how easy to see is what kind of great real-world outcomes it's driving. And we just see a ton of momentum across age groups and across all sources of customers, including MDI.

Our next question comes from Danielle Antalffy from UBS.

Congrats on continuing to deliver really strong results here. Wayde, this question, I think, is for you. And it's, again, I appreciate you're not giving guidance for 2024. But just qualitatively, looking at the different potential tailwinds that could offset some of the headwinds from a comp perspective and the benefit from the 2 scripts for every new patients added in 2023. And just want to make sure we are thinking about these offsets correctly. So thinking -- appreciating not giving timing, but L2, G7 integration, [indiscernible], you have the GO. Like maybe walk us through qualitatively how to think about the headwinds and tailwinds that will be coming international from a tailwind perspective in 2024.

Yes. It's a great way to look at it, Danielle. And I think you're right. The tailwinds vastly outweigh the headwinds for next year. As we think about the business where we sit today after halfway through 2023, we've had really strong new customer starts for several quarters. So that gives us great momentum into the second half. I think the answer to your question will lie in the second half. If we continue to see strong new customer starts, record new customer starts in the second half of this year, that will give us great momentum into next year. And then as you teed up there, we have a significant pipeline of new innovations teed up. We haven't given the timing on those, whether they'll be '23 or '24 or even beyond yet. But as those new innovations start to layer in, and of course, with our annuity model, they don't have an immediate sizable increase but they do start to help us accrue more customers over time. And so we're going to continue to build momentum. On the other side of the coin, obviously, AID competition is really strong for us outside the U.S., on the international side. And so what we provided an update in our prepared remarks today is that as a result of lower new customer starts than we usually had internationally, we've got lower growth rates to contend with there for the next 4 quarters. So that you can see our guide for the second half for international, and that will continue into the first half of '24. But given Omnipod 5 launching internationally, and we're going to add more countries next year, we expect the second half to start to inflect internationally. And so now we've moved into the mid- to low single digits. We think the second half of next year should be approaching that high single digits, low double digits type of range. And so again, we're not providing specific guidance. But that gives you a feel for what we think is really strong momentum for the U.S. and improving positioning as we'll be able to compete in the AID side of the market internationally better at the end of this year and into next year. And then as that builds into the annuity model, we'll see an inflecting growth rate in the second half of 2024 internationally. So with all that in, again, it's such a dynamic launch here. We know it's going to be strong. We just don't know how strong, and so we can't provide numbers at this point. We'll typically give some color at the end of the Q3 call on what we're seeing going into 2024, and then we'll provide our guidance like we do every year for 2024 at the end of the Q4 call.

Our next question comes from Matt Taylor from Jefferies.

This is Mike Sarcone on for Matt. I just had a question on Omnipod GO. Can you just talk about what's left to do commercially ahead of the full market release in 2024? And maybe comment on how you're thinking about the financial contribution next year.

Sure. I'll start on the pilot plan and then I'll let Wayde talk about financial contribution. So we're really bullish on getting that market out in the hands of our pilot physicians and clinics. And the great thing about GO is that it solves a lot of problems for people who are initiating insulin therapy, as we said before. It resolved the needle phobia. It resolves dosing and so on. But it's new to world and it's new for us and it's new for those clinics because some of those clinics are places where we don't necessarily have a very strong call point footprint. And so what we need to do is get it out in the clinics. We need to go out and educate the clinics on the use of GO, which is incredibly simple experience. And we need to kind of test the waters with a couple of things about the dosing SKUs and some other things. So we need to see it in the real world, in the hands of the clinics, in the hands of our reps and make sure we just have -- we have the approach to the selling pitch correct, make sure we understand how to support the clinics that we're going into and so on. And we're giving ourselves time because it's a new-to-world offer and it's a new -- and there's some things about it that are kind of new commercial model for us. And so that's why we're saying we're going to pilot it here in the near term. We're going to learn what we learn, give ourselves some time to adjust and then commercialize in 2024. And Wayde, if you want to talk about what we're modeling for financial impact.

Yes. So Matt, we would love to know where Omnipod GO is going to go in 2024. We have many financial scenarios internally. But as Jim just said, we're going to take our time. We want to do this right. It's a new-to-world product, and so it's really difficult to know how fast Omnipod GO will ramp. We've obviously got the limited market release. As Jim said this year, we're going to learn a lot there and that's going to help us start to dial in our models for 2024. But I think at this point, I would say really thinking about Omnipod GO as a light contributor to our 2024 growth rates. And let's just give it some time to see how fast it does ramp. And when it starts to become a material contributor, that's when we certainly will start to layer it into our guidance, and we'll talk about more of it from a financial contribution standpoint. But until then, just given the new-to-world concept, we're not going to be communicating financial numbers for it at this time.

And we have time for one last question, it will come from Matt Miksic from Barclays.

Just one maybe on that on the Omnipod question. That's just -- maybe as you build inventories, is that something that we'd expect to go up in any of your sort of days inventory numbers. Understanding that it's a pilot launch, but I'm sure you want to be prepared for demand to pick up. And I'll just leave it at that last follow-up.

You bet, Matt. It's Wayde. I can certainly take that one, and it is something that our teams are working through today. And in fact, we're going to learn a lot through this limited market release. One of the key things or key learnings that we're working on is what is the optimal staging or building of inventory in the channel to support the GO launches. But I think just qualitatively, you're right. Just like with Omnipod 5, we're going to have enough inventory in the channel to serve the customers. And so like we saw in Q2 last year, when we did the limited market release for Omnipod 5, we called out a days inventory-on-hand build for Omnipod 5. Assuming the same plays out for Omnipod GO, we'll let you guys know if there's a material amount of inventory that has to go into the channel to launch with Omnipod GO. But nonetheless, it's an exciting program. The teams internally are really excited to see how the limited market releases go. We're going to learn a lot. There's certainly a very large market, an underserved market that needs better technology. We are the natural owner. We've got many benefits with Omnipod and our auto-injection as well as our fluid mechanics. And I think the teams have done a really nice job of simplifying the Omnipod for this group of customers. And so we'll see how the limited market releases go. We'll have probably a lot more to say after that as we start to get into more of a full market release in 2024.

I'm showing no further questions at this time. I would like to turn the conference back to Jim Hollingshead.

Thanks, everyone, for joining us today. We are incredibly proud of the milestones we've achieved and the progress we've made. And thanks to our disruptive offerings and dedicated team who worked further along than our original expectations and setting our sights higher than ever before. Insulet has come a long way, and we are energized by the enormous market opportunity we are pursuing and the opportunity to drive rapid growth and substantial value for Insulet shareholders while fulfilling our mission to improve the lives of people with diabetes around the world. We look forward to continuing to update you on our progress over the year and next quarter. Thank you all for joining, and have a great evening.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.