미니메드(MMED) 2027 회계연도 1분기 실적 발표 콘퍼런스 콜: 성장 가이던스 상향

핵심 요약

• 2027 회계연도 1분기 매출은 8억 4,300만 달러로 자체 기준(organic) 15.8% 증가했습니다. 회계연도상 추가 1주일이 약 4~6%포인트를 기여했으며, 이를 제외하면 성장률은 10%대 초반을 유지했습니다.
• 미국 자체 매출은 4분기 1.5%에서 가속화되어 13.1% 증가했습니다. 미니메드 플렉스(MiniMed Flex) 출시의 영향으로 미국 신규 펌프 판매량은 20% 이상 증가했습니다.
• 해외 자체 매출은 16.9% 증가했으며, 서유럽은 10%대 후반의 높은 성장률을 보였습니다. 심플레라(Simplera) 공급 확대와 인스팅트(Instinct) 출시가 펌프 및 연속혈당측정기(CGM) 수요를 뒷받침했습니다.
• 조정 EBITDA는 8,300만 달러로 9.9%의 마진을 기록했습니다. 조기 투자와 외환 재측정 손실을 제외하면 마진은 12.2%였을 것입니다.
• 미니메드(MiniMed)는 2027 회계연도 자체 매출 성장률 전망치를 기존 약 10%에서 약 10.5%로 상향 조정했으며, 조정 EBITDA 마진 가이던스는 약 16%로 재확인했습니다.
• 회사는 여러 파이프라인 프로그램을 진척시켰습니다. 미니메드 플렉스는 CE 마크 승인을 받았고, 미니메드 핏(MiniMed Fit)은 FDA에 승인 신청서를 제출했으며, 비베라(Vivera)는 피보탈 임상시험 환자 등록을 완료했고, 차세대 장기 착용 센서는 IDE 승인을 받았습니다.

핵심 재무 데이터

사업 및 영업 실적

미니메드 플렉스(MiniMed Flex)는 미국 실적 가속화의 주요 동인이었습니다. 6월 말 심플레라(Simplera)와 함께 출하되기 시작해 해당 분기 동안 약 5주간의 출하 실적에 기여했습니다. 플렉스 판매의 대부분은 펌프 치료를 처음 접하는 다회 인슐린 주사(MDI) 환자에게 이루어졌으며, 경쟁사의 주사관식(tubed) 및 무관식(tubeless) 시스템에서의 전환이 그 뒤를 이었습니다.

미국 내 미니메드 신규 처방의 수는 전년 동기 대비 24% 증가했습니다. 회사는 또한 1분기 말 메디케어(Medicare) 및 메디케어 어드밴티지(Medicare Advantage) 수혜자에게 플렉스 공급을 확대했으며, 8월 17일부터 인스팅트(Instinct) 센서가 포함된 플렉스 출하를 시작했습니다.

미니메드 고(MiniMed Go)는 미국 출시 초기 단계에 진입했습니다. 현재까지 주문의 절반 이상이 미니메드를 처음 이용하는 환자로부터 들어왔습니다. 경영진은 스마트 MDI 플랫폼을 독립적인 성장 기회이자 자동 인슐린 투여(AID) 시장으로 진입하는 유입 경로로 평가하고 있습니다.

2형 당뇨병 환자는 미국 신규 치료 시작 환자의 약 40%를 계속 차지했습니다. 경영진은 1형 및 2형 사용자 모두에서 환자 유지율이 개선되었다고 설명했습니다. 회사는 이 같은 추세가 300유닛 용량의 인슐린 저류조 및 장기 착용 등의 제품 특성과 스타트라이트(StartRight) 및 스테이라이트(StayRight) 환자 지원 프로그램 덕분이라고 분석했습니다.

해외 성장은 펌프, 센서, 소모품 전반에서 광범위하게 나타났습니다. 심플레라 공급량은 전년 대비 3배 늘었습니다. 프랑스 펌프 매출은 20% 이상 증가했으며, 영국은 인스팅트 출시 후 50% 이상의 성장을 기록했습니다. 미니메드 고 또한 유럽 MDI 입찰에서 여러 건의 수주를 확보했습니다.

펌프와 CGM은 각각 20%대 초반, 10%대 후반의 성장률을 기록했습니다. 소모품은 10%대 초반의 증가율을 나타냈으며, 누적 펌프 설치 기반 확대에 따라 향후 반복 매출 기회도 늘어났습니다.

제품 파이프라인

• 미니메드 플렉스: 연말 목표보다 앞서 CE 마크 승인을 받았습니다. 미니메드는 11월 유럽 상업 출시를 시작으로 초기에는 심플레라와, 이후에는 인스팅트와 연계해 출시할 것으로 예상합니다.
• 미니메드 핏: 510(k) 신청이 예정보다 일찍 완료되었습니다. 경영진은 2027년 여름까지 미국 전역에 본격 출시할 것으로 예상하고 있으며, 추가 확장을 계획하는 동시에 초기 2만 명의 환자를 위한 생산 능력을 준비하고 있습니다.
• 비베라: 미국 내 3개월 피보탈 임상시험 환자 등록이 예정보다 일찍 완료되었습니다. 경영진은 완전 폐쇄루프 알고리즘이 2027년 하반기에 플렉스 및 핏 사용자를 대상으로 미국 시장에 출시될 것으로 예상합니다.
• 장기 착용 센서: 차세대 센서가 FDA IDE 승인을 받았으며, 10월에 피보탈 임상시험이 시작될 예정입니다. 회사는 이 제품이 기존 제조 플랫폼을 활용할 것이며 시간이 지남에 따라 마진 확대를 뒷받침할 수 있다고 밝혔습니다.

경영진 가이던스

미니메드는 2027 회계연도 자체 매출 성장률 전망치를 기존 약 10%에서 약 10.5%로 상향 조정했습니다. 이 가이던스에는 1분기 추가 1주일에 따른 1~1.5%포인트의 수혜가 반영되어 있습니다.

경영진은 추가 1주일의 수혜가 지속되지 않으므로 2분기 보고 성장률이 정상화될 것으로 예상합니다. 추가 1주를 제외한 1분기 성장률을 고려할 때, 미국과 해외 시장의 기저 성장률은 보다 유사한 수준을 보일 것이라고 설명했습니다.

회사는 2027 회계연도 조정 EBITDA 마진 가이던스를 약 16%로 재확인했습니다. 경영진은 매출 증가, 매출총이익률 개선, 영업 레버리지 확대에 따라 하반기에 성장의 많은 부분이 이뤄지며 마진이 분기별로 개선될 것으로 예상합니다.

리스크 및 주요 관전 포인트

1분기 조정 EBITDA 마진은 두 가지 항목으로 인해 약 230bp의 압박을 받았습니다. 미니메드는 예정되어 있던 플렉스 및 핏 투자금 800만 달러를 당겨 집행하면서 마진이 약 90bp 감소했습니다. 또한 1,200만 달러의 외환 재측정 손실로 인해 추가로 140bp가 감소했습니다. 회사는 환헤지 프로그램을 시행하고 있으나 영업 통화 변동 역시 1분기 수익성에 영향을 주었습니다.

심플레라는 현재 기존 센서보다 마진율이 낮습니다. 하지만 경영진은 제조 수율이 예상보다 빠르게 개선되고 있어 연간 영향 추정치가 줄어들고 있다고 언급했습니다.

분사 및 독자 법인 구축 활동에 1억 1,100만 달러가 소요되면서 잉여현금흐름은 계속 음수를 나타냈습니다. 미니메드는 메드트로닉(Medtronic)과 약 160건의 전환 서비스 계약(TSA)을 맺고 출발해 1분기 말까지 17건을 종료했습니다. 남은 계약의 대부분은 2027년 중에 종료될 예정입니다.

규제 승인 시점은 여전히 불확실합니다. 경영진은 FDA가 미니메드 핏을 언제 승인할지 예측할 수 없다고 전하면서도, 승인 즉시 출시할 수 있도록 준비 중이라고 덧붙였습니다. 1억 6,200만 달러 상당의 핏 상용화 비용은 2027 회계연도 전망치에 포함되지 않았습니다.

애널리스트 Q&A 주요 내용

경영진은 미니메드 핏 생산이 이미 수율 및 생산량 대비 단계에 진입했다고 밝혔습니다. 또한 예상보다 일찍 승인받는 시나리오에 대비해 초기 2만 명 규모 이상의 생산 능력을 구상 중입니다.

비베라의 경우 남은 절차는 3개월 연구 완료, 데이터베이스 잠금, 결과 분석 및 규제당국 제출 준비입니다. 경영진은 패치 펌프와 완전 폐쇄루프 알고리즘의 결합이 신규 환자 유입을 이끄는 핵심 동력이 될 것으로 기대합니다.

경쟁 제품으로부터의 전환에 대한 질문에 경영진은 경쟁 시스템에서의 전환이 전년 동기 대비 2배 증가했다고 밝혔습니다. 신제품이 MDI 환자층에서의 시장 확대와 치열한 펌프 시장에서의 점유율 확대를 모두 견인할 것으로 보고 있습니다.

경영진은 유럽 플렉스 출시를 앞두고 발생할 수 있는 구매 연기 가능성을 실적 전망치에 반영했습니다. 서유럽 수개국에서 확인된 인스팅트 채택의 현 모멘텀이 그 영향의 일부를 상쇄해 줄 것으로 예상됩니다.

실적 발표 컨퍼런스 콜 전문(Transcript)

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and welcome to MiniMed's First Quarter and Fiscal Year 2027 Earnings Webcast. At this time, all participants on a listen-only mode. [Operator Instructions] Today's call is being recorded. I will now hand the conference over to your speaker host, Ryan Weispfenning, VP of Investor Relations.

Ryan Weispfenning

Hello, everyone, and thanks for joining us today for our fiscal '27 quarter earnings webcast. I'm 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 statements 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 nonrecurring 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 these 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, Que.

Que Dallara

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 time frame 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 competitor systems, all of which grow our installed 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 discrete 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're seeing strong engagement in social media and hearing directly from patients who are excited about Flex's sleek and discrete form factor.

And patients pediatrics and people with Type 2 especially appreciate Flex's large 300-unit insulin reservoir and our long-lasting 7-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're seeing that interest translate into a broader and growing prescriber base with new MiniMed prescribers up 24% year-over-year.

We're 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. And 2 weeks ago, on August 17, 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 recommend 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 at 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're 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're still at a relatively early stage in realizing its full potential. It's also an area where analysts and investors have had questions, particularly around long-term adoption and retention.

Importantly, the trends we're seeing in our own data are very encouraging. As we've 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 reservoir and up to 7 days of wear, a plus for type 2 patients that typically require more insulin in Type 1 patients and benefit from fewer change-out.

We also designed our algorithms to be easier to use, which helps both patients and their physicians. And that's 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 timing range well above the ADA guidelines without [ bolusing ], in effect running in fully closed loop.

Within this cohort, those Type 2 users that use our recommended settings achieved a 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 pump sensors and consumables.

Importantly, this growth is occurring in markets where automated insulin delivery remains significantly underpenetrated and where our commercial infrastructure, reimbursement capabilities and clinical evidence are real advantages. In many of these markets, we believe the AID opportunity is still ahead of us.

We had notable strength in Western Europe, our largest international market, which grew in the high teens. These are contested markets, and our new products are performing very well in them. European growth this quarter was driven by increased availability of new sensors, which is driving both strong CGM growth and strong pump revenue growth.

Our Simplera sensor supply increased by 3x versus last year, and this is making an impact in countries like France, where our pump sales increased over 20%. In addition, we began our European commercial launch of the Instinct 15-day sensor at the start of July. As a reminder, this allows us to reach more than 4.5 million avid sensor users on intensive insulin therapy and bringing them into the MiniMed ecosystem.

In the countries where Instinct has launched, we're seeing meaningful increases in pump sales, including over 50% growth in the United Kingdom. Q1 was also our first full quarter of our European launch of MiniMed Go, which resulted in several MDI tender wins.

Now turning to our pipeline, which represents the next phase of our growth. Earlier today, we announced that MiniMed Flex received CE Mark approval well ahead of our calendar year end target, and we now expect to begin our European launch in November of this year.

We've also advanced 2 significant products that will come to the U.S. market next. MiniMed Fit, our patch pump; and Vivera, our fully closed-loop algorithm. Both are expected to be on the market in calendar year '27, at which point we will have completely upgraded every aspect of our product portfolio. with a full offering across every form factor for insulin-taking patients.

Starting with MiniMed Fit, we have an important update to share with you today. We completed the 510(k) filing for Fit with FDA ahead of our four targets, and we now expect a full U.S. launch by summer next year.

Fit brings MiniMed's differentiated therapy platform to the fastest-growing segment of the insulin pump market. Patients should not have to choose between convenience and outcome, and Fit is designed to deliver both.

Fit combines several important advantages, including the only 300-unit reservoir on a patch pump up to 7 days of wear, waterproof design, persistent Bluetooth connectivity and iOS and Android availability from day 1, seamless integration with both Simplera and Instinct and importantly, access to our industry-leading algorithms.

We believe many patients are simply not looking for the convenience just a patch pump, they're also looking for the best outcomes. It will pay a highly differentiated patch platform with our SmartGuard algorithm at launch and a simple over-the-air upgradability to fully closed-loop capabilities when Vivera is available. As we said in June, we expect to have manufacturing capacity to support 20,000 patients at launch. And we have designed our production line to scale efficiently as demand grows.

Now moving to Vivera fully closed loop algorithm. I have more good news to share with you today. We have recently completed enrollment in our U.S. pivotal trial ahead of schedule. Having roughly half enrolled when we spoke to you in June, this achievement further reinforces our leadership in AID as MiniMed is the only company with a fully enrolled U.S. pivotal trial for a fully closed-loop algorithm.

This represents a major milestone for toward what we believe will be the most meaningful advancement in diabetes management since no fingersticks came to CGM. Vivera has the potential to expand the penetration of automated insulin delivery by dramatically reducing the burden in place in both patients and providers. We expect to have Vivera on the U.S. market in the second half of calendar year '27 for both MiniMed Flex and MiniMed Fit users.

Vivera is our third-generation algorithmic platform leveraging our meal detection technology to achieve the original vision behind automated insulin delivery, and that is the delivery of outstanding glycemic outcomes with very little burden on the user or prescriber.

Unlike competitors' AID systems that still rely on meal announcements or counting, extensive physician programming and patient interaction, the only thing that Vivera requires to get started is a patient's total daily insulin dose and does not require meal announcement.

And we expect Vivera to reduce these burdens while still delivering a timing range above ADA guidelines. In feasibility data that we presented at ATTD in March, Type 1 users on average exceeded ADA guidelines with no user input at all and were able to achieve 74% timing range.

Vivera is designed to meet people where they are. You can let Vivera handle meals on its own or count [ cars ] when you want more control while it keeps learning in the background. That is the advantage of the architecture. One system can deliver simplicity for the least engaged user and positioned for the most without forcing either into a separate product.

We believe Vivera's outcomes are possible because of advantages competitors simply cannot replicate quickly, including over a decade of proprietary insulin and CGM data, our digital twin technology that allows us to simulate millions of patient scenarios before entering clinical trials and an algorithm architecture originally designed to mimic the function of a healthy pancreas.

Vivera will launch through an over-the-air upgrade to our installed base, creating a powerful combination of clinical differentiation, scalability and commercial leverage. We do not view Vivera as the next version of an algorithm. We view it as a category-defining platform that brings fully closed-loop therapy to both Type 1 and Type 2 patients at scale, further expanding the gap between MiniMed and the competition.

Our fully closed-loop algorithm with either tubed or tubeless device options will be attracted to people on MDI and especially Type 2 users with the ultimate ease of use without compromising on glycemic control.

Finally, we're often asked what comes after Flex, Go, Fit and Vivera. Today, we can begin to answer that question. Our next-generation MiniMed extended wear sensor recently received IDE approval from the U.S. FDA, and we expect to begin our pivotal trial in October.

While we're not prepared to discuss the target wear duration or features at this stage, the sensor incorporates a new chemistry sensing platform relative to Simplera and represents the next step in our long-term sensor road map.

In addition to improving the user experience, our next-generation extended wear sensor will leverage the same manufacturing platform and production lines we use today, creating a direct path to both scale and margin expansion. As we continue to increase manufacturing output and improved yields, our longer wear sensor also allows us to spread sensor manufacturing costs over more days of use.

We expect this to be accretive to margins while strengthening our competitive position in a market where sensor longevity remains a key purchasing criterion.

Most importantly, this program demonstrates the innovation at MiniMed does not stop with the products scheduled to launch next year. We continue to invest aggressively in technologies that will define the next generation of diabetes management, including sensors, reinforcing our confidence in the durability of our product leadership, our long-term margin expansion opportunity and our ability to sustain growth well beyond our current product cycle. Flex, Go, Fit, Vivera and now our next-generation sensor. At MiniMed, we are building for the next quarter, the next year and the next decade.

With that, I'll turn it to Chad to walk through the Q1 financials and our guidance.

Chad Spooner

Thanks, Que. Q1 revenue was $843 million, up 15.8% organic, driven by an acceleration in our U.S. business which grew 13.1% and a strong 16.9% growth in international markets. As Que noted, our Q1 growth benefited from an extra week, giving our 52, 53-week fiscal calendar. We estimate the extra week added 1 to 1.5 percentage points of growth to the fiscal 2027, which translates into 4 to 6 points to Q1, consistent with our previous estimate.

Importantly, even excluding the benefit of the extra week, we saw accelerating demand trends across the business. Organic growth, excluding the extra week, was in the low double digits compared with 8.7% growth in Q4. Growth was driven by both pumps and CGM, which grew in the low 20% and the high teens, respectively, reflecting the success of our recent product launches.

Our continued sensor launches drove pump adoption globally, while the launch of MiniMed Flex in the U.S. further accelerated new pumps sold growth. This growth in pumps expands our installed base and creates future recurring revenue opportunities through CGM and consumables. Consumables grew low double digits in the quarter and together with CGM, represented 82% of our revenue, continuing to provide a durable and growing reoccurring revenue stream.

Q1 adjusted EBITDA was $83 million, resulting in an adjusted EBITDA margin of 9.9%. This included an approximate 230 basis points impact from two specific items: The acceleration of planned investment and a nonoperational FX remeasurement charge.

First, we elected to pull forward approximately $8 million of investment in support of key growth initiatives, including the Flex launch as well as accelerating the Fit FDA submission to deliver this milestone ahead of plan. This reduced Q1 EBITDA margin by approximately 90 basis points, but does not change our full year spending plans or EBITDA expectations as this was a timing shift of planned investment, not incremental spending.

Second, we recorded a $12 million FX remeasurement charge on balance sheet items, which reduced EBITDA margin by approximately 140 basis points. This nonoperational charge reflected changes in the value of foreign currency balances held on our balance sheet as exchange rates moved during the quarter.

Excluding these two timing-related and nonoperational items, adjusted EBITDA margin would have been 12.2% for the quarter, reflecting the underlying operational performance of the business. Our operational performance was affected by less favorable operating foreign exchange movements during the quarter, which had roughly similar impact to EBITDA margins as the balance sheet remeasurement.

During the quarter, we implemented our foreign exchange hedging program, which we expect will reduce the earnings impact of future currency volatility, including balance sheet remeasurement effects.

Importantly, our underlying business performance remains strong. Gross margin is trending ahead of the assumptions embedded in our original full year outlook, and we continue to deliver meaningful operating leverage across the business.

Together with the timing-related nature of the accelerated investment and the implementation of our foreign exchange hedging program, these factors support our confidence in delivering our full year EBITDA margin guidance.

Walking through Q1 P&L, our adjusted gross margin was 55.9%, ahead of our expectations. As we discussed previously, Simplera currently carries a lower margin than our legacy and interesting sensors, and that mix impact is reflected in our gross margin this year. However, Simplera yields are trending better than expected, resulting in less impact than we previously modeled for the full year.

Adjusted SG&A was 36.1% of revenue, an improvement of 30 basis points versus Q1 fiscal '26 or 70 basis points, excluding the pull forward of sales and marketing investments as we continue to drive efficiencies and leverage.

Adjusted R&D was 13.6% of revenue, R&D spend was down $2 million versus the prior year as we continue to drive efficiencies in clinical, engineering and operations R&D. R&D drove 260 basis points of improvement versus Q1 fiscal '20 or 300 basis points, excluding the pull forward of Fit investments.

Turning to our key business metrics. Q1 new pumps sold, or NPS, was 34,000, up 7.7% year-over-year. On a sequential basis, NPS was down, given normal Q4 to Q1 dynamics. As Que mentioned, U.S. NPS grew over 20% year-over-year, driven by the launch of Flex. NPS grew internationally as well as pump sales increased in Europe on new sensor launches.

Q1 CGM attachment rate was 69%, up 100 basis points from Q4 and an increase of 500 basis points year-over-year. As we launch our new products we expect our CGM attachment rate to continue to trend upwards as nearly every new MiniMed pump user is using our CGM to get the benefit of our SmartGuard automation.

Let me next talk about our readiness as a stand-alone company, including the progress we're making on TSA exits. As we've previously mentioned, we started with approximately 160 TSAs with Medtronic. Our dedicated teams have already exited 17 TSAs and continue to work alongside Medtronic to make significant progress across the remaining TSA portfolio. We remain confident that we'll exit the TSAs within the timelines we've established, most of which will occur in calendar 2027.

Importantly, these efforts continue to enhance our stand-alone capabilities while reducing our reliance on transition services over time, and they are allowing us to build a more focused, efficient and fit-for-purpose operating model for MiniMed.

Through this process, we continue to maintain a strong balance sheet and significant liquidity, ending the quarter with approximately $207 million of cash, no debt and an undrawn $500 million revolver.

As we continue to build out our stand-alone capabilities, we're also gaining increased visibility into underlying cash generation profile of the business. Operating cash flow in the quarter was a use of cash of $49 million and capital expenditures were $41 million. As a result, free cash flow was a use of cash of $90 million.

As we've discussed previously, our near-term cash flow profile reflects separation and stand-alone company build-out activities that are not indicative of the ongoing cash generation of the business. To provide additional transparency, we've included a cash flow bridge in today's earnings presentation.

Separation and standup-related activities consumed $111 million of cash during the quarter. Excluding those items, we generated $21 million of positive free cash flow. We're providing this additional visibility to illustrate the underlying cash generation of the stand-alone business and the rapidly improving cash flow profile that we expect to emerge as temporary separation and build-out activities roll off.

As we continue to execute our separation, exit TSAs and benefit from higher revenue, profitability and operating leverage; we expect cash generation to improve meaningfully over time.

Next, let's cover our outlook for the remainder of fiscal 2027. Given our strong start to the year and execution across the business, we're raising our fiscal 2027 organic revenue growth outlook to approximately 10.5% from our prior guidance of approximately 10%. This outlook continues to include the expected 1 to 1.5 percentage points benefit from the Q1 extra week.

Our increased revenue outlook is supported by accelerating growth in the U.S., strength in international markets and the successful execution of our recent product launches. We continue to see strong demand for MiniMed Flex and increasing adoption of our CGM sensors globally. As we look to Q2, reported growth rates will naturally normalize from Q1 as the extra benefit does not repeat.

Importantly, based on the positive trends we continue to see in the business today, we would expect organic revenue growth in both the U.S. and international markets to be more comparable to the underlying growth rates we delivered in Q1, excluding the extra week.

As I mentioned earlier, we are reaffirming our fiscal 2027 adjusted EBITDA margin guidance of approximately 16%. The underlying performance of the business remains strong. Gross margin is trending ahead of the assumptions embedded in our original outlook and is offsetting the foreign exchange impacts we experienced in Q1.

Combined with the continued operating leverage across the business, and our improved full year revenue growth outlook, these factors support our confidence in delivering our fiscal '27 EBITDA margin guidance.

As we look at quarterly cadence, we continue to expect EBITDA margin expansion over the course of the year. We expect EBITDA margins to improve from Q1 levels as we move throughout fiscal '27, with a larger portion of the improvement occurring in the second half of the year, similar to what we saw last year. This reflects building revenue and revenue growth contributions from our recent product launches, sequential gross margin improvement and increasing operating leverage across the business.

While we do not provide specific guidance in our key business metrics, we continue to expect growth in both new pumps sold and CGM attachment rates as we expand our installed base and continue rolling out our new products globally. For details on our guidance, see the guidance slide in our earnings presentation.

Que, back to you.

Que Dallara

Thanks, Chad. We're encouraged by the momentum we're seeing across the business. We delivered another quarter of strong growth, accelerated adoption of our newest products and advance our pipeline across multiple fronts. Most importantly, we continue to do what we said. Across both our commercial portfolio and pipeline, we are delivering against the commitments we made to investors and are doing so ahead of schedule.

2 weeks ago, we announced that we began shipping Flex with the Instinct sensor in the U.S. And today, we shared several important updates with you. We submitted the MiniMed Fit patch pump to the FDA ahead of our full target, and we expect the full U.S. launch next summer.

MiniMed Flex received CE Mark well ahead of our target of the end of the calendar year, and we expect full commercial launch starting in November of this year. We finished enrollment in Vivera U.S. pivotal trial and expect U.S. launch in the second half of calendar '27. And we received U.S. IDE approval for our next-generation extended wear sensor with a pivotal starting this October.

Taken together, these milestones highlight both the pace of innovation at MiniMed and our ability to consistently move the calendar to the left. More importantly, they reinforce the strategy we have been discussing for some time. We are building a complete platform for insulin-taking patients, smart pen, durable pump, patch pump, one algorithm, one app, one ecosystem.

What excites me most is that all these pieces are starting to come together. Flex is expanding our reach into new patients and helping us engage with many new accounts. Go is opening the door to millions of people on multiple daily injections. Fit will bring our differentiated technology platform to the fastest-growing segment of the insulin delivery market. And Vivera has the potential to make automated insulin delivery simpler and more accessible.

We believe the opportunity ahead remains significant. Automated insulin delivery remains greatly underpenetrated globally. Type 2 diabetes is still in the early stages of AID adoption, and millions of people continue to manage their diabetes with injections every day without the help of smart technology. We believe we're uniquely positioned to serve each of these populations with a broader portfolio better outcomes and a simpler user experience.

As we do that, we believe we create long-term shareholder value. We are expanding our installed base, we are increasing recurring revenue streams we are driving operating leverage, and we are investing behind the products and technologies that we believe will support sustainable growth for many years to come.

Before we open the line for questions, I'd like to thank our employees around the world. This quarter, our team launched products, advanced clinical programs, expanded manufacturing capacity, increased patient access and continue to deliver for customers while operating as a newly stand-alone company. Their commitment, dedication and passion for the people we serve continue to be one of MiniMed's greatest strength.

We talked today about growth. We've talked about innovation, and we've talked about execution. What gives me confidence is that all three are moving in the right direction at the same time. The opportunity remains large. The roadmap is strong, and our focus remains the same, do what we say, continue innovating and continue creating long-term value for patients, providers and shareholders.

With that, let's go to Q&A. Operator?

Operator

[Operator Instructions] Our first question in queue coming from the line of Travis Steed with Bank of America.

질의응답

Travis Steed

Congrats on the updates on the pipeline. I guess with Fit, just the 20,000 at launch reiterated, if it gets approved early, could that launch 20,000 still be the case? Are you going to be ready at launch no matter when the approval comes and how does that scale over time?

And for Vivera, what else is left between now and approval and the kind of key milestones that you need to complete? And when you have kind of both of those product in the portfolio, how do you think about new patient starts accelerating in this business?

Que Dallara

Thanks, Travis. In terms of the Fit launch volume capacity, we're working on that. We're focused on getting ready for commercial launch. Obviously, we run multiple scenarios. I think you've seen from our track record that we want to be prepared for if a happy event and things are early that we're ready. So that's one of the tenors that we run. And so now we're running water through the pipes, making sure that our yields and output are there, and we're already planning for additional capacity beyond the 20,000.

On Vivera, the last -- we've completed enrollment. The study is 3 months, and we're very excited with this trial, we're excited to see the data. So once the last patient is completed, we locked down the database, we obviously run a lot of analytics and prepared for the submission. But those are the steps.

And I think the combination of the patch pump with a fully closed-loop algorithm is really a killer app in the market. And we think that the product will do extremely well. It's not just the patch form factor, but the fact that patients really without any input can achieve above the ADA guidelines.

Travis Steed

Great. That's helpful. And Chad, maybe a follow-up on margins. I don't know any other color on the $8 million in investment this quarter on Fit and Flex acceleration that you'd provide and -- but more importantly, kind of moving forward, calling for gross margin expansion, more leverage on the P&L later in the second half of this year; just give any other color building confidence in the margin expansion moving forward would be helpful.

Chad Spooner

Yes, of course. Thanks, Travis. From an investment standpoint, we felt it was important for us to really support our innovation and the pull forwards that we've seen with both Flex and Fit.

So for example, for Fit, we used $4 million with outside vendors to help accelerate the submission. And they do things like actually testing the units and validation, so things that we can use third parties to accelerate our submissions for. We actually used those and brought those in a little bit early to make sure that we hit that early submission date that we wanted to do.

And then from a Flex investment standpoint, we want to make sure since we pulled it forward, we went out as strong as possible and did things at sales and marketing with ads and online where you can do investments and pull those in. We did another 4 million in things of that sort. So very targeted, very specific monies that we were going to spend in the next quarter or so that will not repeat, so they do not have an impact on the full year EBITDA.

And then from a gross margin standpoint, yes, we're very happy, excited by the progress we've seen on two fronts. First is on Simplera, we've talked about his Simplera will have a negative impact on the margin for the current year, but we're seeing better yields than we had anticipated initially. We're doing a lot of work from a manufacturing side, and that's resulting in better yields.

So the second half of the year, we'll have better gross margins. And also, our warranty expense is much better than we expected as product reliability goes up. So things that we have clear line of sight to that gives us confidence in those numbers.

Operator

Next question coming from the line of Patrick Wood with UBS.

Patrick Wood

Beautiful. I'll keep it just to one. Were you guys surprised by the incremental pump shipments following Instinct? I mean you mentioned the U.K. and other side of things. And I guess the way I'm sort of thinking about it is looking forward and thinking about Flex, Vivera and everything else like that; do you think the ability to take share of patients is perhaps faster than you might have thought otherwise? Or put another way, people are just more willing to switch than maybe we had thought when you have a better solution in the market?

Que Dallara

Patrick, I think, look, the market is expanding. And I think if we just look at the data that we're seeing in the U.S. for Flex, we are seeing the majority of our new customers coming from MDI. So that shows you that's an expanding market.

What we've also seen is that our competitive conversions, competitive conversions systems, have doubled versus a year ago. So that's very encouraging from building the installed base. And we expect a similar experience when Flex is launched in November in Europe. Obviously, new CGMs help that as well. That's been Achilles' heel for a very long time. But the new form factors coming out there, that's also driving pump growth.

When you look at new pumps sold in the U.S., as an example, up 20%, another indicator, I would say that's very consistent is our new -- the number of prescribers writing MiniMed Flex is up 24%. So when we look at all these indicators, they are moving in the same direction. And so I think net-net, with all these new products coming out, we believe our ability to drive share gains as well as growth in the expanding market is enhanced.

Operator

Our next question comes from Lawrence Biegelsen with Wells Fargo.

Larry Biegelsen

Congrats on a nice quarter here. Two for me. I'll ask upfront. Just one on MiniMed. How are you thinking about deferrals ahead of the launch, we saw a little bit with Flex?

And second, Que, please, given that I think you said over 40% or 40% of new starts are Type 2. Just give us a little more color on Type 2 attrition? How does it compare to Type 1? Why do you think your retention would be higher than one of your competitors?

Que Dallara

Larry, on Fit the waiting mode, we actually think that Fit will address the new segment of patients that want a pathform factor. I think if you look at our installed base, I'm sure some of them may want a path, but the reality is if they wanted a patch, they would have gone to a patch by now. So we think that MDI patients and people who really like that form factor will be new to MiniMed and that's what Fit will address.

On your question about Type 2 attrition, I would say a couple of things. One is we've seen our retention improve quite a bit from both Type 1 and Type 2 versus, say, a few years ago. And that's really driven by two things. One is the -- obviously, the new product innovations help that a lot. You need to have that. But that's a necessary but not sufficient condition.

We have a very large clinical team. And for years, we run a program called StartRight. It's really helping customers onboard the therapy very quickly and that they're successful on therapy through sensor changes and troubleshooting with strategic touch points. And then we have [ StayRight ] program that also, again, from 6 months to 4 years, we also keep in touch with them because this is a long -- lifelong relationship, and we want them to do well.

And so the programs in addition to the innovation really helped us improve retention, and we're not seeing anything alarming at all from an attrition standpoint in Type 2. If anything, it's improved.

And then I would also say that the product portfolio we have with the larger reservoir, the longer wear; it really has a better product market fit with Type 2s, which is why we're excited with Fit, we've cited with the outcomes. But also just I think we're the only patch pump coming to the market with a 300-unit reservoir.

Operator

Our next question is coming from the line of Marie Thibault with U.S. Bank of BTIG.

Marie Thibault

The OUS launch of Flex that we'll have coming up here in November. Just how should we think about that ramp relative to the U.S. experience and then again, I guess, the question of potential deferrals as maybe patients look forward to that pump in the next fiscal quarter?

Que Dallara

Yes, let me take the first part. It will be similar to the U.S. We have plenty of capacity. We typically roll out in ways of countries. And we expect that we'll have a very similar ramp. Again, it starts -- the launch will be with Simplera initially, followed by Instinct. And then, Chad, maybe you can comment on the waiting line.

Chad Spooner

Yes. So we've actually incorporated waiting mode into our forecast for OUS. One of the things that we do have with OUS having such a variety of different countries, we have very strong quarters starting in certain Western European countries, given the adoption and integration of Instinct.

So we have a lot of momentum right now in certain countries, which is really putting us off to a strong start to this quarter, which helps us offset some of the waiting mode that we may see, which we've incorporated in our forecast.

Que Dallara

I think we're going to take two more questions here. So we'll go to the next question, please, Olivia.

Operator

Next question coming from the line of Anthony Petrone with Mizuho Group.

Unknown Analyst

This is Dimitry on for Anthony. Once again, congrats on the quarter. It's good to see the performance and growth in the U.S. But I had a quick one on international. I know last quarter, you gave some color on new pump starts, quarter-on-quarter, was high single digits. I don't know if it was you're providing any color for that quarter-on-quarter growth this quarter.

And I know at least one of your competitors increasing their efforts in the international arena. And I wanted to know if you're seeing any competitive pressures there with new pump starts attrition.

Que Dallara

Yes. I think -- look, we are very encouraged with new pump starts. I think, in the commentary, we mentioned that in France, pumps were up 20%; in the U.K., up 50%, and these are contested market. So CGM is having an impact. And I think the pump is eagerly -- the Flex pump is eagerly anticipated as well will be the first upgrade in 60 years. And so we expect it to do incredibly well even in contested markets.

Unknown Analyst

Okay. Sounds great. And just a quick follow-up. I know you guys said you expect to ramp -- have many benefit at full launch mid-'27. So is the timing for approval -- what are you guys expecting like a 3-month or a 6-month approval and then kind of just to get an idea of the pace of the ramp?

Que Dallara

We can't really predict what the agency process will be. We're always hopeful for early approval, of course. But that's not something we can predict. But as we -- as I mentioned, we always plan for different scenarios and we want to be ready as soon as approval comes, we'll be ready to launch commercially.

Operator

Last question will come from the line of Joanne Wuensch with Citi.

Joanne Wuensch

Based on your commentary for summer of '27 FDA approval, it sounds like your milestone payment will be more of a first quarter fiscal year '28 than the second quarter of fiscal year '28 event. Can you just confirm if I'm thinking about that correctly?

And then just a quick follow-up, which is if your physicians are talking to patients and they have to talk about new Flex option and Fit coming, how do you guide or suspect that they are having those conversations?

Chad Spooner

Joanne, first in regarding to the Fit charges, we do not have it in our fiscal year '27 because as Que said, we can't predict when the agency will approve. But obviously, once they do approve just like with Flex, we'll announce that, and then we will -- once we commercialize, we'll have a $162 million charge for Fit, but that is not in our forecast for this year.

Que Dallara

Joanne, I think, look, I've done a lot of visits in the field, I would say there's just renewed interest starting with CGM. We saw just excitement around that. And with Flex coming out, again, an uptick in interest, then I suspect that there's going to be a large addressable audience from a patch pump standpoint that love our algorithm.

They want to be part of our ecosystem, but they want the patch form factor, and we'll have that starting with SmartGuard, but with a quick follow with Vivera. So we're really excited with really the rolling thunder that's coming out in the full stack experience they're going to have.

The other thing I'll mention is the apps that you get from MiniMed Go, from Flex, very similar look and feel. And so that really helps users when they onboard into our system to stay within our ecosystem.

Ryan Weispfenning

Okay. Thank you, Joanne. And for those analysts we didn't get to today, we're happy to follow up with you after the call. I'd also like to thank everyone for joining us today and for your continued interest in MiniMed. We appreciate the engagement and thoughtful dialogue as we continue to execute against our roadmap. We look forward to updating you on our progress and sharing more color with you on our Q2 earnings call later this fall. So with that, thank you for your time today, and have a great rest of your day.

Operator

This concludes our conference call. Thank you for your participation. You may now disconnect.