International Omnipod revenue increased by 16.9%, driven by the launch of Omnipod 5 in the U.K. and Germany. The company is working on further international expansion.

The company completed the type 2 pivotal trial for Omnipod 5 and expects to submit results to the FDA by the end of 2024. This represents a significant market expansion opportunity.

The company is in the final stages of validating manufacturing lines at its new plant in Malaysia, with production expected to begin in 2024. This will increase capacity to meet growing demand and support international expansion.

The 230 basis point increase in gross margin was attributed to higher average selling prices and improved manufacturing efficiencies. This indicates effective management of pricing and production costs.

Research and development expenses remained level year-over-year, indicating a focus on leveraging existing investments while driving revenue growth. R&D expenses as a percentage of revenue decreased from 14.0% to 11.4%.

The company continues to experience challenges stemming from global supply chain disruptions, but has been able to mitigate these disruptions by increasing inventory levels and taking other measures. This suggests effective supply chain management.

Management identified a material weakness in internal control over financial reporting related to information technology general controls (ITGCs) outside of North America. Remediation activities are underway, but the weakness is not yet considered remediated.

The Organization for Economic Co-operation and Development (OECD) and G20 international forum released the Model Global Anti-Base Erosion (GloBE) rules under Pillar Two. While the company currently does not expect the Model Rules for Pillar Two and related legislation to have a significant impact on our financial statements, we are continuing to evaluate their potential impact.

For full year 2024, the company expects Drug Delivery revenue to decline $18 million to $22 million due to a lower forecast from their partner and a lower selling price.

The company notes that international growth was partially offset by higher attrition in countries where Omnipod 5 has not yet launched, as they continue to be impacted by competition from AID systems. This indicates a competitive disadvantage in certain markets.

Selling, general, and administrative expenses increased by 22.7% to $199.7 million, primarily attributable to year-over-year headcount additions to support commercial operations and international growth. This suggests potential inefficiencies or increased investment in growth initiatives.

Investments in developed software were $1.9 million for the three months ended March 31, 2024, and primarily related to investments in projects to support the cloud-based capabilities. This reflects ongoing efforts to enhance technological capabilities.

The company expects capital expenditures for 2024 to increase compared with 2023 given the timing of spending on machinery, equipment and tooling for our new Malaysia manufacturing facility. This indicates a focus on expanding production capacity.

The company continues to experience challenges stemming from the global supply chain disruption. While mitigation efforts are in place, these disruptions negatively impact gross margins and net income.