MiniMed Group, Inc. Common Stock 2027 Q1 Earnings Call

Please go ahead. Hello, everyone, and thanks for joining us today for our fiscal 2027 first quarter earnings webcast.

I am Ryan Weispfenning, vice president and head of MiniMed Investor Relations. Joining me today are Que Dallara, chief executive officer, and Chad Spooner, chief financial officer. Today's program will last no longer than 45 minutes so that we may complete the call before the market opens. Earlier this morning, we issued a press release discussing our results and containing several financial schedules. We also posted an earnings presentation that provides additional details on our performance. Both can be accessed on our website at investors.minimed.com. During today's program, many of the statements we make may be considered forward-looking statements, which are subject to risks and uncertainties, and actual results may differ materially from those projected in any forward-looking statement.

Please take a moment to review the cautionary statements regarding forward-looking statements included in our earnings press release and the presentation. Additional information concerning factors that could cause our actual results to differ is contained in the periodic reports and other filings we make with the SEC. Forward-looking statements speak only as of the date they are made, and we do not undertake to update any forward-looking statement or any of the information contained in today's program. In today's program, unless we say otherwise, all comparisons are made on a year-over-year basis, and references to revenue growth are to organic revenue growth, a non-GAAP financial measure. A reconciliation of organic revenue growth to the most directly comparable GAAP financial measure is included in today's earnings press release.

With our organic revenue growth and adjusted EBITDA margin guidance, we do not provide reconciliations to the comparable GAAP measures because certain items in these forward-looking non-GAAP measures cannot be predicted without unreasonable effort. We operated as part of Medtronic until our IPO in early March, so our GAAP financial statements for historical periods were prepared on a carve-out basis and include certain historical cost allocations from Medtronic for centralized support functions. On today's program, unless we say otherwise, year-over-year and sequential comparisons of P&L line items will be made to historical period financials that are presented on an adjusted stand-alone basis, which replaced historical Medtronic cost allocations with the expected run rate cost structure for stand-alone MiniMed. This information also eliminated the impact of certain incremental non-recurring costs.

These stand-alone P&L items are non-GAAP financial measures and are included to provide consistency and comparability while evaluating operational performance on a run rate stand-alone basis for reporting periods after MiniMed's fiscal year 2026. A reconciliation of the stand-alone non-GAAP financial measures to their most directly comparable GAAP financial measures is included in today's earnings presentation. With that, over to you, Q.

Thank you, Ryan, and hello everyone. It's good to be speaking with you today to update you on the momentum we have at MiniMed with our commercial growth, our innovation pipeline, and our execution. We had an excellent start to our fiscal year in our first full quarter as a stand-alone public company. Organic growth was 16% and ahead of expectations. The extra week in our fiscal calendar contributed approximately 4 to 6 points of that growth. Excluding it, we grew low double digits, an acceleration of roughly a couple of hundred basis points from Q4 and ahead of the outlook we gave you in June. Our U.S. growth accelerated on the strength of our MiniMed Flex with Simplera launch, which started shipping late June and represented about 5 weeks of shipping for the quarter.

In our international region, we delivered another quarter of double-digit growth as we significantly increased sensor supply to meet strong customer demand, increasing Simplera supply throughout the quarter and launching Instinct with MiniMed™ 780G in July, well ahead of the calendar 2027 timeframe we outlined during our IPO roadshow. We also advanced 4 separate pipeline programs. We are releasing next generations of every part of our integrated system: sensors, insulin delivery devices, algorithms, and apps. We are not launching individual products. We are building the next generation of MiniMed, one company, every option, one ecosystem. Now looking at our Q1 growth in more detail, starting with the U.S. Last quarter, we told you to expect an acceleration in revenue growth from Q4, and we delivered. U.S. revenue grew 13%, up from 1.5% in Q4. Excluding the extra week, U.S. growth was in the high single digits.

In addition, U.S. new pumps sold increased by over 20% year over year. This was driven largely by the launch of the MiniMed Flex insulin pump system, which started shipping in late June with our Simplera sensor. The majority of Flex sales are going to MDI patients that are new to pump therapy, followed by conversions from tubed and tubeless competitive systems, all of which grow our install base. Importantly, Flex is doing exactly what we designed it to do. It is expanding our reach into new patients, driving competitive conversions, and strengthening our position in AID. The reason is simple. Patients have been telling us for years what they wanted. The outcomes of MiniMed in a simpler, smaller, more discreet form factor with the convenience of app control. And MiniMed Flex is doing exactly that.

Our new small insulin pump is half the size of the MiniMed™ 780G and our leading SmartGuard™ adaptive algorithm, the most clinically validated algorithm in the world. The early patient response to Flex has been very encouraging. We are seeing strong engagement in social media and hearing directly from patients who are excited about Flex's sleek and discreet form factor. Patients, pediatrics, and people with type 2 especially, appreciate Flex's large 300 unit insulin reservoir and our long-lasting seven-day extended infusion sets and the strong outcomes they get with our SmartGuard™ algorithm. Physicians are responding to Flex as well, particularly with the simplicity of the setup. We are seeing that interest translate into a broader and growing prescriber base with new MiniMed prescribers up 24% year-over-year. We are still in the early innings of the Flex U.S. launch with a strong growth runway in front of us.

Late in Q1, we expanded the availability of Flex to Medicare and Medicare Advantage beneficiaries. Two weeks ago, on August 17th, we announced that we started shipping MiniMed Flex with the Instinct sensor, a combination that many patients have been waiting for. In Q1, we also began the U.S. launch of MiniMed Go™, our smart MDI solution that remembers, reminds, and recommends and can help us reach more than 2.5 million people in the U.S. who are using multiple daily injections. We are in the early stages of that launch. Our dedicated primary care sales force was fully deployed near the end of Q1 and is now gaining traction at target accounts, many of which are new to MiniMed. Providers are prescribing MiniMed Go™ directly from their EMR to MiniMed Pharmacy, where we handle the billing and ship directly to the patient.

Encouragingly, more than half of orders to date have come from patients who are new to MiniMed, reinforcing our ability to expand beyond our traditional customer base. Through our smart pen CGM and connected app, MiniMed Go™ serves as a new entry point to the MiniMed ecosystem. We are also beginning to see early examples of patients progressing to our AID therapies, reinforcing our vision of MiniMed Go™ as both a meaningful MDI opportunity in its own right and a pathway to our AID therapy for those who prefer to advance their care. Now, let me spend a moment on type 2 because it represents one of the largest opportunities in AID, and we believe we are still at a relatively early stage in realizing its full potential. It is also an area where analysts and investors have had questions, particularly around long-term adoption and retention.

Importantly, the trends we are seeing in our own data are very encouraging. As we have discussed previously, approximately 40% of new starts in the U.S. come from type 2 patients, and that trend continued into Q1. In addition, we continue to see retention improve over time across both type 1 and type 2 patient populations. We believe that reflects the strength of our differentiated insulin delivery devices, which have specific features geared at type 2 patients and their physicians. Flex and Fit both have 300 unit insulin reservoirs and up to seven days of wear. A plus for type 2 patients that typically require more insulin than type 1 patients and benefit from fewer change-ups. We also designed our algorithms to be easier to use, which helps both patients and their physicians, and that is evident already today.

Real-world data was published on over 6,500 Type 2 patients using our SmartGuard™ algorithm in Diabetes Care earlier this year, which show that these Type 2 users achieved, on average, time in range well above the ADA guidelines without bolusing, in effect, running in fully closed loop. Within this cohort, those Type 2 users that used our recommended settings achieved time in range of 82%, a remarkable 12 points above ADA guidelines. We expect Vivera, our fully closed loop algorithm currently under study, to build on this foundation and reduce burden placed on both patients and providers. Turning to international, we grew 16.9% organic, including the benefit of the extra week. Excluding it, we grew low double digits. This was a strong, broad-based growth across pumps, sensors, and consumables.