Kevin Sayer: Jereme can probably get into more detail than me. It is a part of our business today, Malgaret. We do have some non-insulin users. Our product, we have some plans that actually cover non-insulin users for CGM, and we’ve seen and had wonderful experiences there. We’ve also have not an aggressive cash pay program, but a cash pay program nonetheless where non-insulin users have access to our product through some very traditional distribution channels outside the pharmacy and outside traditional DME. So some of those individuals have purchased CGM and use it on the non-insulin front as well, and we continue to support programs. But it is not a remarkable chunk of our business. It has not been a tremendous driver of our growth.
It has grown, but it hasn’t been a significant percentage. As we look going forward, certainly again, we gave guidance of 1% for 2024. And we’re committed to that and that certainly is our forecast and what we’ve guided. We’re most committed to learning because what we’re really interested in is a number like $200 million like you’re talking about for 2025 and to be positioned with the right product there. With respect to pricing and how offer that product we’re going to have tremendous flexibility as this is a cash pay program. And it’s not labeled for the current population where we have reimbursement and where we’re reimbursed for our products. So we believe we’ll have again flexibility to grow that and grow it profitably is again we have a 15-day product going into that market.
So we will have lower COGS and we’re developing a lot of things around that that is a roll out as you see we really are changing the business model to serve this type of individual versus those we’ve served up to this point in time. We’re going to offer a different experience that will definitely meet their needs across the board. So we’re bullish on it over time. I mean it could be very big number in 2025. That’s what we’re — that’s what we’re planning on.
Operator: We’ll take our next question from Jayson Bedford with Raymond James.
Jayson Bedford: Good afternoon. Excuse me. Just on gross margin. I think we came in the last year thinking gross margin would be lower in the second half. It wasn’t. I’m guessing revenue levels play a part there. But outside of price and mix what weighs on gross margin in ’24? And then just the related question, you had some encouraging comments on Malaysia and I think you alluded to it. But at what point do we see Malaysia and G7 starting to have a positive impact on gross margin.
Jereme Sylvain: Hey Jayson. Yes, thanks for the question. Last year when we made the assumption on what the margin look like, the assumption was is the G6 to G7 transition. We had a range of assumptions. But the assumption was the G6 to G7 transition would take place perhaps a little bit earlier. And some of that had to do with timing of when the AID systems were available in the market and coverage and how that that goes over time. And so it took a little bit longer. And as a result, we outperformed on margin and it gets back to G6 cost less to make the G7 today. And it’s still majority of our user, our legacy base still sits on the G6 system. With the launch of Tandem and Control-IQ integrated with G7 and obviously the limited launch with the Omnipod 5 coming out here in the back half of Q1, and then obviously a launch sometime later in the year, we do believe that base starts to move over quicker.
And so what you have there is as that takes place, Jayson, you have that shift from a lower cost to a higher cost product weighing in the start of the year. And hence that’s why the margin goes where it goes. Now in the back half of the year, assuming that base transitions and our models show that over the course of the year that should, that equilibrium should balance then tilt in the favor of G7. It puts us in a position exiting the year where G7 should be and we’ll have to give you updates on the base as the year progresses, but it should be lower than G6, but then at that point it should be accretive. And that would be the exit rate leading out of ‘24. And then of course, then bodes well as we move into 2025 and beyond. So that’s the big driver.
It’s just, when does that base transition and when it does, when do we have that cost kind of equilibrium? So again, we thought it was going to happen in the back half in 2023. It didn’t take place. We outperformed there in 2023 as a result, probably going to take place here in the first half of 2024.
Operator: And we will take our next question from Bill Plovanic with Canaccord Genuity.
Bill Plovanic: Great, thanks for taking my question. Congratulations on the quarter. Just kind of a follow-up, just trying to get a color granularity, if possible, on, as you look at the growth in the business and kind of the Matt O’Brien’s question, but the contribution from Basal, Hypo, Intensive and Type 1, just, is it kind of shifting to that order these days where it’s more of the Basal and Hypo and the Intensive Type II is really the new patient growth, and then if so, how should we think about that cadence as you continue to move forward? Thanks.
Jereme Sylvain: Yes. I mean, if you think about 2024, at least, 2024, the main contributor to new patients, or at least revenue from new patients, is still going to sit in the intensive insulin. So the type 1 and the type 2 insulin-intensive patients, and that still is where the combination of those two makes up a majority of the new revenue over the course of the year. Basal is catching up, and Basal doing a nice job of catching up, but those are still part of our core business, and it’s still actually driving the underlying business. Now, over time, we do expect basal, given it’s a larger population, to do very, very well. We’ll have to give you more of an update as we get into 2025 and beyond as we get closer to that. So incredibly bullish on the long-term opportunity there with basal.
But think about at least 2024. Our core business is actually still driving a lot of the growth with obviously longer-term opportunities in basal and then to your point Hypo which is quite frankly still a low contributor and then with Stelo kind of coming online as well. All of those are real opportunities in 2025 and beyond.
Operator: And we will take our next question from Michael Polark with Wolfe Research.
Michael Polark: Good afternoon, thank you. I want to ask a follow-up on Kevin your response to the prior question on 15-day and timing. I heard we won’t provide a lot of color until we’re filed and see a path to approval. There kind of had been, it seemed like there was a thought that Stelo was kind of the appetizer this year for 15-day and maybe a broader rollout in 2025 and I don’t want to, I’m not asking you to pin down timing but is 2025 a year where a broader transition to 15-day could be affected or might all this testing and innovation take a little longer?
Kevin Sayer: We would like to go as fast as possible. If it were on my time frame it’d be it’d be yesterday. Stelo at 15-day is a primer for that so we can learn and gather data from those users as they use it particularly with our current sensor configuration. As we go through the technology changes that we’re making as we dial in on those features that we’re going to put in the final product we’ll get a pivotal trial started and we’ll go but we’re learning each and every day. We are not in a position like we were with G7 where we’re submitting an entire new system with completely new hardware and new features and new manufacturing lines, new suppliers, new everything. This 15-day product we’ve built on the same platform our current G7 has built.
So the time from finishing a pivotal to filing is not going to be near as intense and difficult as it was with the last product being such as security and Bluetooth and stuff. We worked through all those issues already. So right now it’s really refining the science and getting the 15 days and getting that reliability and quality level that our patients expect from us. We don’t view this as an extremely, I think ‘25 is a reasonable assumption, but I’m not going to give you an end date or as to when, because there’s too many variables, but we’re certainly headed down a path along that type of speed, and then we’ll see where we land and give you more updates along the way. I just, filing things or starting things, what’s important to us is getting things done, and those should be your milestones as well.
So we’ll keep you posted, but that’s where we are.
Operator: We will take our next question from Chris Pasquale with Nephron.
Chris Pasquale: Thanks, and congrats on the quarter. I want to ask a couple of questions about Dexcom ONE and the progress there. I think you had said you expected it to account for about 30% of international new patient starts in ‘23. Curious if that’s where you ended up and what portion of new patient starts you expected to be in ‘24.
Jereme Sylvain: Sure, Chris, thanks for the question. Yes, we did, we thought it was going to be about a third of patient starts in 2023 outside the US. It was closer to about a quarter of new patient starts, so a little bit behind there. Some of the tenders took a little bit more time to get on, and so it was still a really good year for us, but a little bit behind, where we had started the year, at least in the expectations. This year, we expect it to be more and a bigger contributor as a percentage. So if you think about last year, that was certainly the case that was on the G6 form factor, very excited about obviously coming out here on the G7 form factor here in 2024 and the four countries that we are to launch in. So our expectation is it’s a bigger percentage while we haven’t necessarily given that number, expect it to be bigger and the team wants it to be bigger as a percentage of new patients outside the US in 2024.
Operator: We’ll take our next question from Josh Jennings with TD Cowen.
