Tandem Diabetes at Goldman Sachs Conference: Strategic Growth Insights

Published 10/06/2025, 15:42
Tandem Diabetes at Goldman Sachs Conference: Strategic Growth Insights

On Tuesday, 10 June 2025, Tandem Diabetes Care (NASDAQ:TNDM) presented at the Goldman Sachs 46th Annual Global Healthcare Conference, highlighting its strategic initiatives and financial performance. The company reported a robust start to 2024 with significant growth, while also addressing challenges related to international sales transitions and competitive dynamics.

Key Takeaways

  • Tandem Diabetes reported an 18% growth in 2024, surpassing its initial 10% guidance.
  • The company is transitioning to a direct sales model internationally, expecting a $15 million to $20 million impact in Q3 and Q4.
  • Mobi’s introduction has driven four quarters of double-digit growth in MDI starts.
  • Gross margins are targeted to reach 60% as early as one of the quarters in 2026.
  • The company is focusing on the Type 2 diabetes market, estimating it could double the U.S. market.

Financial Results

  • 2024 Performance: Tandem Diabetes achieved 18% growth, exceeding the initial guidance of 10%. Q4 2024 saw a slight demand softening but was still the highest fourth quarter for the company.
  • Q1 2025 Performance: The company reported over 20% growth in Q1 2025.
  • Future Guidance: Tandem Diabetes expects approximately 7% growth for the remainder of the year, with U.S. growth projected at 13%. International sales will face a $15 million to $20 million impact due to the direct sales model transition.
  • Gross Margin: The gross margin was approximately 51% in Q1 2025, with a target to increase to 54% for the full year 2025 and reach 60% as early as one of the quarters in 2026.
  • Pharmacy Channel: About 30% of covered lives are under contract for the pharmacy channel.

Operational Updates

  • Tandem Mobi: The introduction of Tandem Mobi has resulted in four quarters of double-digit growth in MDI starts. Android compatibility is expected later this year, and international market entry will begin following the CE mark OUS.
  • Type 2 Diabetes: Approval for Type 2 diabetes was received earlier this year, with a pilot program underway to assess market access and physician training. Broad sales coverage is anticipated by year-end.
  • International Expansion: The transition to a direct sales model in select countries is underway, with leadership and operational resources being established.
  • Partnership with Avid: Tandem Diabetes is collaborating with Avid for ketone monitoring, with a phased launch planned for freestyle integration.

Future Outlook

  • International Transition: The company anticipates a $15 million to $20 million headwind in Q3 and Q4 due to the international transition.
  • Type 2 Market Expansion: Tandem Diabetes expects a steady increase in the Type 2 market, aiming to penetrate 25% to 30% of the insulin-intensive population.
  • Gross Margin Improvement: Mobi’s increasing business mix and reduced manufacturing costs are expected to drive gross margin improvement, targeting 60% as early as one of the quarters in 2026.
  • Algorithm Advancement: The integration of the AdaNet algorithm from UVA is expected to enhance performance and user experience.

Q&A Highlights

  • Growth Drivers: Strong Q1 growth was driven by improvements in supply sales and MDI growth from Mobi.
  • Competitive Dynamics: The company anticipates short-term disruption from a competitor’s business separation but expects them to become more effective once established.
  • Pharmacy Channel: The shift to the pharmacy channel is viewed as a crucial growth driver, offering reduced costs for patients and increased average selling prices for Tandem Diabetes.

For further details, please refer to the full transcript below.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Operator: Okay.

David, Analyst: Well, good morning, everyone. I wanna welcome president and CEO of Tandem Diabetes and Susan Morrison, senior vice president executive vice president, excuse me, and chief administrative officer. We’ll obviously open this up to questions. If people if people have them, feel free to just wave at me, and we’ll get we’ll get a mic over to you so those participating in the webcast can can can hear that feedback as well. So I I I thought maybe we’d spend a little bit of time just talking about recent performance, go into the pipeline a little bit and then kind of wrap up with how to sort of contextualize performance.

And you had a sort of set of twenty twenty seven goals out there, but obviously, markets have evolved, etcetera. So maybe we’ll just sort of start with kind of the Q4 to Q1 dynamic. I think Q4 had some factors that didn’t come in as expected, which all seemed to reverse in Q1 with Q1 coming in quite a bit ahead of your expectations as well as external expectations. Expectations. Maybe just help us think about the evolution of the business over the past six months.

And is the right way to think about take the two quarters together and that’s a better representation of kind of underlying trends? Or how should we think about how you started the year versus how you ended the year?

John Sheridan, President and CEO, Tandem Diabetes: Well, of all, I think that we had a great year in 2024. We basically guided at beginning of the year to 10% growth. We ended with 18%. Even though Q4, we had a little bit of a seasonality blip, I would say, it was still an exceptional quarter for us. It was, I think, the highest fourth quarter we’ve ever had.

We just saw a sort of softening of the demand in the very end of the quarter, and we have never seen that before. So that was certainly unfortunate. But I think that we’ve got a lot of very exciting things that are going on with the business today. I think the first quarter is representative of what we can expect as we go forward. We’re changing the way we do business in many different ways.

I think one of the things that happened in 2024 was we introduced Tandem Movi, which is a smaller device. It’s much more discreet, and it still uses sort of the game changing Control IQ technology. And what Mobi has done for us is we’ve seen a substantial increase in the amount of MDI starts that we’ve been getting since Mobi came to market. And so we have since it’s been on the market for four quarters now, and we’ve seen four quarters of double digit growth in MDI starts. And prior to that, we were definitely feeling additional pressure.

So that’s an exciting part of it. The other thing about Mobi that’s exciting as well is the it is less expensive to build. We do expect to see substantial marketing benefits of that. So the substantial opportunity as we go into ’twenty five and beyond. We just got the type two approval, which is very exciting as well.

We expect to see meaningful growth for that over the next couple of years. The pharmacy channel is something that there was a point in time where we weren’t sure we could take advantage of it. Now we’re absolutely certain we can, and we’re going to do everything we can to fully get into the pharmacy channel and make to take advantage of the benefits for the people who use our product as well as for the business because our ISPs are so. So there’s a lot of things that we’ve changed in the business over the last couple of years, and I think we’re starting to finally see the benefits of those, and we expect to continue to see them happen this year and next.

David, Analyst: Okay. Maybe we could unpack a few of those different pieces. I think given, like, the first quarter, you grew over 20%, really strong start to the year. How should we think about the some of the drivers that contributed to that? Because Type two, you got kind of midway through the quarter, so I wouldn’t think that, that had big Yes, Type two was a impact.

So maybe just give us a little bit of flavor of what contributed to that performance in Well,

John Sheridan, President and CEO, Tandem Diabetes: we saw we have seen steady improvement in supply sales over the last couple of years. And I think it’s indicative of the fact that once people start to use our product, there’s very little attrition. They continue to use it. And I think the supply sale growth certainly does that. We also saw, again, MDI growth, driven by Mobi.

So I think that the two of those, I think, are probably the core of the growth that

David, Analyst: And then as we think about Mobi specifically, I know you’ve been out four quarters now, but what is a good like framework to use to think about when the product hits its strike? You obviously have some early adopters, but when you launch a new product, takes time to educate the market, get your customers excited, train people, etcetera. Where are we in sort

John Sheridan, President and CEO, Tandem Diabetes: of the ramp to inflection? I think we’re still in the early innings. And I say that because we still have Android. It’s iOS only today. Android’s coming later this year.

We have now received CE mark, OUS, and so we’ll begin to get it into the OUS countries. We’ve got the FreeStyle Liberty three integration coming as well, which we think is gonna be meaningful. And then finally, we have, the tubeless version of Mobi, which we think that really is a game changer. I think when the tubeless Mobi is on the marketplace, we expect that we will begin to take competitive share from other patch oriented companies.

David, Analyst: And what about some of time length, timing of tubeless Movi?

John Sheridan, President and CEO, Tandem Diabetes: We haven’t said specifically. It’s not too far out in the future. Right now, I’d say you want to the design is completed. We’re doing validation testing, all of the work that you have to do to prepare the dossier for the FDA. We’re building out the manufacturing capacity.

And when you think about Mobi, it’s the exact same pump that’s on the market today. All Mobi is or excuse me, Tobee. Tobee is a it’s supply change. Instead of an infusion set, you have a tubeless infusion site and a cartridge that’s modified to fit into it. So with Mobi, you can use a tubeless or a tubed option.

And I think that gives people maximum versatility. When you combine that with the algorithm that we have, we think it’s going

David, Analyst: be a winning product. And maybe just talk a little bit about the type 2s. You’ve had the approval now for five ish, four point five months, I think. Maybe just how what

John Sheridan, President and CEO, Tandem Diabetes: are you

David, Analyst: seeing in terms of uptake? I know you had some data also at ATTD. What’s in the response to that? And how is that progressing?

John Sheridan, President and CEO, Tandem Diabetes: I’d say it’s still it’s only been a few months. It’s actually I think it was in the February, March time frame when we got it. So it’s relatively early. The team is actually we’ve decided to move forward with Type two using a pilot. And so the pilot’s fully deployed.

What we’re looking at as we do this is we’re looking to look at market access, what is the best way to get market access, how do we drive, find what preferences that people have. We’re also looking at just training physicians, making people aware of the benefits of the technology. So we’re in this pilot phase right now. And I think that as we get more and more confident that we’re doing these that these decisions we’re making are the correct ones, we’ll begin to expand it. And we would I would think by the end of the year have broad sales coverage for the product.

David, Analyst: And then maybe sort of I know it’s very early since the announcement of one of your competitors to separate their diabetes business. How should we think about the competitive dynamic unfolding as that transaction materializes?

John Sheridan, President and CEO, Tandem Diabetes: Well, I think that they’re a very capable company. The group that works in diabetes has done a nice job over the last couple of years. They’ve got a more competitive product in the market today. And I think what’s happening is they’re retaining their own renewables more effectively than in the past. So I think any time you have to separate an entity, you’ve got to spend quite a bit of work to figure out what exact is what’s being separated, what are the organizational elements, how do things continue to go, how can you resource everything that you’ve been you’ve been doing before.

So there’s likely to be disruption here in the short term is what what I would anticipate. But I think once they’re in the market, they’ve got a separate team, they’re likely to be a more effective competitor. That’s how I would characterize it. And so I think the good news, though, is when you look at our pipeline, when you look at the initiatives that we have underway, I feel that we will have the benefit, all of that, by the time they’re on the market kind of up and running.

David, Analyst: Okay. I want to come back to the pipeline in a But if I just sort of reflect a little bit on what you shared so far about the drivers for Q1, You look at the rest of the year, and it’s like, what’s going on? Like I think your guidance implies about 7% growth for the balance of the year compared to the 22% in Q1. Maybe just give us a sense of what are some of the factors you considered when preparing the outlook for the rest of the year? And where are the puts and takes?

John Sheridan, President and CEO, Tandem Diabetes: Susan, do want take that?

Susan Morrison, Senior Vice President, Executive Vice President, and Chief Administrative Officer, Tandem Diabetes: Sure. So when you look at our guidance expectations for the remainder of the year, it’s important to break out what we expect in The U. S. From internationally. In The U.

S, it’s actually about 13% growth expectations. Outside The United States, we’re preparing to go direct internationally in select countries. And so with that, there’s an expectation that there may be either a slowdown in sales as we move towards that direct operation or that there may be inventory that we need to buy back. And so in the third and fourth quarter, we expect somewhere between 15,000,000 and $20,000,000 of headwind. And so that’s what’s really impacting when you look

David, Analyst: at it from an overall guide growth perspective. And on that transition internationally, do you have the sales force in place? Are you ready to make that transition so it’s a quick any disruption would be it’s almost an accounting disruption, right, buying back inventory or some destocking that’s not an underlying business trend dynamic.

John Sheridan, President and CEO, Tandem Diabetes: We’re in the process of doing that right now. We’ve got a leadership team that’s essentially in place for the countries that we will be going direct in. We’re building on just all of the operational resources necessary to support an entity that’s independent. That’s all going on. We’re establishing all of the IT infrastructure to support OUS.

And so I think that the plan is that as soon as January 1 hits, we’re going to be ready to go. And that’s what we’re up to. And I think that this is a natural transition that occurs in companies of our size. I mean, we’ve been in that market now for five years. We’ve used we have great partnerships with our distributors.

I think it makes sense from a margin benefit point of view for the business as well as I think that our own sales force can do a better job servicing the customers and just doing a better job of introducing all of the new technology that we plan to bring to the OUS markets here in the next year or two.

David, Analyst: And I think even if you adjust for that potential headwind, you’re still reflecting a slowdown in the balance of the year. So what are the factors that would contribute that beyond the adjustment on either inventory or other kind of one off matters?

Susan Morrison, Senior Vice President, Executive Vice President, and Chief Administrative Officer, Tandem Diabetes: Absolutely. And so we’re really looking at overall opportunities and risk. And I’d say overall in our guidance philosophy, what you see is us putting a greater weighting towards the risk side as we see things prove out.

Operator: Okay. If you

John Sheridan, President and CEO, Tandem Diabetes: think historically, you’ve been conservative, and I think it’s the right way. We we are not gonna put assumptions into the into the guidance, and we haven’t unless we have high confidence that we can achieve them, that we’ve already seen them in the market. We’ve seen the performance. And that’s just typically what we have a number of things that are exciting that are happening this year that aren’t in the guidance. And I think that that’s essentially what happened last year as well, where we started up at 10% and ended up at 18%.

So

David, Analyst: Okay. One of the questions I’ve gotten on the type two population is how do we how do investors break out, like, early enthusiasm for having the indication for you one of one of your competitors? And then it’s we just see sort of like a flash in the pan kind of bolus of growth, for lack of a better way to put it, and then kind of petering out after that. How are you thinking about the build in type 2s?

John Sheridan, President and CEO, Tandem Diabetes: Well, so when you look at the market in The U. S, there’s two point three million people that have insulin intensive type two, which means they have to basically bolus for meals and they need basal insulin every few minutes. So it’s very much like the type one community. And it’s getting larger over time. Today, roughly one hundred thousand people of the two point three million use pumps.

And so it’s incredibly underpenetrated. And when you compare that to the type one, there’s like maybe one point nine million people with type one. About forty percent of them use pumps today. And we have seen steady progress over the last couple of years as AID technologies have become more and more popular. So I don’t think there’s going be a bolus.

I think it’s going to be steady increase as the companies continue to develop new technology that’s easy, that’s discrete, and that provides great therapy. And we’ve looked real carefully at the community, the type two community, and what we have found is that as awareness of the benefits of these AID systems is just more and more available, They’re more willing to consider it. And we would have said a couple of years ago that it’s 5% penetrated today, maybe it can get to 15%. I would say we think it’s been 25% to 30%, even more. And so I think the more people that are out there selling to the market only helps improve the market awareness.

So I think this is a long term, substantial it basically doubles the size of The U. S. Market for us, and it’s even larger OUS. So I think it’s meaningful benefit for the company.

David, Analyst: And how about the go to market strategy? I think if you look at the evolution of type one to type two MDIs to now the broader type two population, you’re going from kind of a market where you’re serving endos more so now you’re kind of toggling over to serving PCPs, potentially some in the pharmacy versus the DME channel. How does that influence your go to market strategy? Have you made the sales force investments in a PCP channel, etcetera? I think when you look

John Sheridan, President and CEO, Tandem Diabetes: at Type two, that there are a number of people who are managed by PCPs. But there’s a substantial number that once they start to use insulin, move from PCPs to endos. And so I think that we have a pilot underway right now to answer many of the questions that you just brought up, and that is what is the right size of the sales force, who are the people we’ll be contacting, what market access approaches do we use, all of that is underway today. So I think that it’s a again, it’s a large market that’s out there. We’re evaluating it.

I think as we have more confidence with the levers that we can use that are going to be more effective, we will do that, and we’ll expand it. We typically look at Salesforce expansions at the end of the year. I think we just expanded in the first quarter primarily for type one to increase our share of voice in this market. I think that it’s definitely something we’ll be looking at. But when you look at today, the people we call on, we call on endos and high prescribing, high insulin prescribing PCPs.

So we already have PCPs that are out there who have a substantial number of type 2s in their practice. And so it’s a I think there’s with who we just who we cover today, there’s a big opportunity out there as of today.

David, Analyst: Excellent. Maybe maybe we could talk about the the pipeline. I think sometimes we look at the pipeline, we think it’s Mobi, Tovi, and Siggy. But I think when you go actually beneath there, there’s a lot of subcomponents to that integration with CGMs, integration with Android and iOS. I mean, there’s sort of a of other pieces to some these products.

But maybe you sort of talk us through Movie sounds like you’re that’s sort of progressing as expected, but kind of give us a lay of the land across the rest of the portfolio. Sure.

John Sheridan, President and CEO, Tandem Diabetes: Well, it’s a large market, of course, but it’s highly segmented. And because of that, I mean, people want to wear, interact with, control their devices differently. And it’s very subtle. When you talk to people, there there are small things about these devices that people love, and it’s why they choose it. And we think having a single device in this very diverse market is not the effective strategy.

So we are planning to have a portfolio approach. So we have t:slim, which has been on the market for a while, for ten years now. It’s doing very well. We expect it’ll continue to have a long life. We’re bringing Mobi to market right now.

Mobi is a device that has incredible versatility in terms of how you wear it, where you wear it, and it gives people a lot of flexibility. And we do believe there’s a meaningful number of people out there who would not come to pump therapy unless there’s a patch device in the market. And so we see having all three. And as you’ve mentioned, when you look at there’s different sensor technologies. We want all of these devices to be able to use the best sensor technology that’s available.

Our algorithm is, fortunately, it’s an interoperable algorithm, so it can be deployed on all three of these devices. So I there’s I think the portfolio approach is what we’re taking, and we think that’s going to be more meaningful in terms of just addressing the various needs of the market.

David, Analyst: And you had an announcement this morning on partnership with Avid to measure ketones. Maybe just talk through that a little bit, the announcement this morning.

John Sheridan, President and CEO, Tandem Diabetes: Sure. Well, we have been working with Avid for years now, and we’re just about ready. In fact, we’re on the verge in the next couple of days of deploying the Freestyle Libre three into The US market, which we think is a it’s big deal for us. You’ll see that the ADA and we’ll it’s a we have a phased launch where we kinda go slow at and gradually pick up momentum as we hit more and more KPIs for the launch. Abbott recently has indicated that they’re developing a sensor that has the ability to measure insulin or glucose and ketones.

And so the benefit of that is that when you look at the performance of all the algorithms on the market today, the newer algorithms really have done a good job of eliminating hypoglycemia. And most of the time and range problem is highs. And highs indicative of ketone presence. And so if there’s a way for us to actually see and measure ketones earlier, we could potentially respond, of all, just let the patient know that there’s ketones, you may want to consider doing a bolus. There’s something as simple as that.

But there’s also consideration for incorporating the information into the algorithm. So it does it for you. And again, I think that the time and range improvement by reducing that high hyperglycemia is meaningful. So I think it’s a very exciting development, and certainly we want to deploy it. And I

David, Analyst: know you’ve pulled back from giving specific timelines or target approval dates across different products in the pipeline. But maybe you can you talked a little bit about where you are with tubeless on sounds like you’re at you’re at design freeze and getting ready to prepare a filing. What what’s the next update we’re gonna get on SIGI?

John Sheridan, President and CEO, Tandem Diabetes: Yeah. I think that SIGI is a device that is in the it’s in the design phase at this point in time. We’ve transitioned all of the work on SIGI’s pump from Switzerland back to our facility in in San Diego. We have a team of people that just finished developing Mobi, and they’re available, and they’re now you know, they’re jumping on on SIGI as an opportunity. You know?

So I think that, it’s an important part of development. We’re very pleased with where we are today. One of the things that we’ve done over the last two years is substantially reduce the risk of the design. And that’s now that we’ve done that, we can move more aggressively into the implementation and finalization of the design. But I think risk risk reduction is what we’ve been doing this past couple of years, and we’re very satisfied with the performance.

David, Analyst: And and some of the the when you say risk reduction, this is on product performance or manufacturability?

John Sheridan, President and CEO, Tandem Diabetes: On both. Both. On I’d say that there’s you wanna make sure it’s a safe, efficacious device, highly reliable, and that it’s gonna meet your performance requirements over a four year period.

David, Analyst: But if you think about kinda trying to put a guess on timelines, if you complete the design, you you have you gone through V and V or is that We haven’t gone

John Sheridan, President and CEO, Tandem Diabetes: through V and V yet. We’re still in the design process.

David, Analyst: Okay. So it seems and these are five ten ks? It’s five ten Okay. But it sounds like you wouldn’t be in a position to file for another eighteen months? I’m trying

John Sheridan, President and CEO, Tandem Diabetes: to because it’s hard say. Yeah. Don’t think we’re going talk about it. And I think that every single time we talk about our dates, we basically are telling our competitors what’s going on. And I would just prefer to we’ve decided not to do that.

Understood.

David, Analyst: Okay. Maybe we can talk about ADA coming up here. One thing I would like to

John Sheridan, President and CEO, Tandem Diabetes: talk about, though, that I think that’s really important, I think that the growth that Tandem saw over the last, from, like, let’s say, ’eighteen through 2023 time frame was really driven by the performance of the algorithm and the fact that the algorithm really differentiated itself from anything else that was in the marketplace. We licensed the algorithm for Control IQ from a company called TypeZero, which was a spin off out of UVA. And we did that back then because we didn’t have algorithm developers. And it was also the algorithm that had the most clinical data on it in terms of research studies, and it’s something that the FDA was very familiar with. So we just recently entered into another agreement with UVA, and they have another algorithm called AdaNet, which has the most clinical data of any fully closed loop system that’s on the marketplace.

And so we as a company are really this is the North Star, we think. We think we have to have the most exciting and interesting pumps on the market, the best performance, most discretion, most innovative. But you’ve also got to have the best algorithm. And the team is really working hard to get this to market as quickly as possible. And we successfully partnered with UVA in the past, and we anticipate that that’s going to happen again.

So I think it’s a really important part of the business, and I think that something that’s important to keep in mind.

David, Analyst: And that’s a good segue, I think, to talk about ADA a little bit. I know one of your competitors is going to have this unveiling of sorts to the investor community about on their patch pump, there’s always a series of different data that come out during that meeting. What are some of the things that you want to highlight to folks ahead of ADA that you want them paying attention to for Tandem?

John Sheridan, President and CEO, Tandem Diabetes: Yeah. of all, we’re going to show the type two data again in The US. It’s only been presented in Amsterdam, so I think there’s an opportunity for us just to show a broader community here in The US the benefits of the type two performance. That’s exciting. We’ve also got a pregnancy study that we’ve collaborated with University of Montreal in Canada to look at the effects of Control IQ in managing diabetes in pregnant women.

So that’s big deal for us, which we think is going be a meaningful market opportunity as time goes forward. There’s a lot of studies that are out there as well about Control IQ, benefits of Control IQ on children, etcetera. And I think that the other big thing, I believe, will be just the freestyle integration. So I think there’s lot We’re excited about it. I would say that, you know, when it comes to, you know, people demonstrating patch pumps, like, it just it’s like the we we have acquired AMF Medical two years ago.

And two years ago, their patch pump pumped. It pumped saline. You know? Yeah. It pumped insulin.

And it’s you know, pumping is not a big deal. It’s not hard. What’s hard is to make sure it’s reliable and safe. And, I think that’s that takes time. It’s not something that you can do, you know, overnight.

And so I think that if there’s I’m sure it’ll be exciting, I think you have to understand it’s easy to show that performance, but not necessarily meaningful at this point in time.

David, Analyst: Understood. And on your point on the algorithm, we’ve heard the same thing in our kind of checks on the market. What are some of the either data you’re working on or studies you’re working on that can further drive that point home?

John Sheridan, President and CEO, Tandem Diabetes: Well, I’m remiss in saying, because we just talked about the ADA. UVA will be presenting a number of papers there that show the performance of the AdaNet algorithm. And basically, the system is set up basically to set it and forget it. I mean, you do not have to bolus for meals if you don’t want to. And the algorithm has been tested in situations where people are at home, they’re eating a lot of carbs, and they’re not bolusing.

And so the performance is real world data. So it’s substantial improvement in simplicity, experience, and a reduction of the cognitive burden. The way we’re looking at this, though, is that there are devices on the market today that talk about simplicity, and you can’t change anything. And that’s very frustrating for the people using it because at times, they’re not performed, they’re not their diabetes isn’t being managed well, and they want to have the ability to make changes. So do the physicians.

So with the system that we’re looking at, you can go into a fully closed loop mode and operate that way. But if you feel like you need to make iterative or small improvements in terms of you can do that at the same time. So we think that’s the best of both worlds, and it’s really what we’re pursuing right now. And we think it’s going to be the next step in diabetes therapy.

David, Analyst: Okay. And there will be those data at ADA

John Sheridan, President and CEO, Tandem Diabetes: also from Yeah, mean, UVA has presented it They were at the ATTD. They’ll be presenting it here. There’s been quite a bit of studies. They’re kind of prolific when it comes to generating data, and I think that’s really important. That’s because when you generate data in these clinical studies, you have to do it with knowledge of the FDA.

So the FDA has now been they’ve been taking along through all of these different studies, and they’re aware of it. And that just helps improve the or reduce the time to market.

David, Analyst: Okay. I want to cover a few P and L items before we go there. But we’re talk about just the channel. There’s a lot of focus on this shift to pharmacy and implications. Where where how important is that?

You you made a reference to that earlier on on just channel channel and patient access. How important is that to you, and where are we in that Yeah. Developing that opportunity?

John Sheridan, President and CEO, Tandem Diabetes: So we have been looking at this now for a couple of years. And the real turning point for us was approval of Mobi last year. And Mobi allowed us to actually work with payer organizations to get contracts in place for pharmacy channels. And so we have about 30% of cover lives under contract today, and that’s in a relatively short period of time. We really didn’t start actively selling through the pharmacy channel until the first quarter.

I think that we view it so from a patient point of view, it’s less out of pocket. And from the patient and an HCP point of view, it’s easier access. So that’s really the reason we’re going after it. But from a company point of view, the real benefit is that the ASPs of both the supplies and the pump are higher. So selling the same number of products, we will now see a benefit to the top line of the business.

So it’s something that you might imagine that we’re moving as aggressively as we can. We’re excited about it. There was a question, I think, maybe a year or two ago as to whether or not the pharmacy channel would even accept a durable product. That’s certainly been answered, and now they want us in it, and they want us in it aggressively. So we’ve brought on a number of team members that have done this before in many companies, and we’re moving as quickly as we can.

But again, it’s ease of access for the patient and ease of and reduction in the payment point or the out of pocket. So there’s a lot of benefits, and we expect this to drive meaningful growth in the business.

David, Analyst: And what are some of the barriers that you have to knock down to broaden access to the pharmacy for you? And what are the are there any implications to consider as it relates to relationships with the DMEs and how that transition might impact the core business?

John Sheridan, President and CEO, Tandem Diabetes: Yeah. I think that there are operational requirements that you’ve got to get in place, which we’re, of course, working on now. There’s also additional covered lives. We have we have 30%. We need to get that number up.

So there’s new agreements that we’re working to get in place, and we think we will. And so there’s definitely and there’s also a learning curve. I mean, it’s new to us. I mean, we have all these experienced people in doing it. It’s still new to us.

So there’s a there’s a we wanna move aggressively, but we wanna move cautiously cautiously at the same time. Interestingly enough about the DME suppliers, many of the distributors that are in DME to the DME today are also creating hybrid business models where they do both. You And I think that they see the writing on the wall to a certain extent. And so I think it makes sense for them to do that. And then we can as we adjudicate the sale, we can decide which channel is better for the patient.

And with these distributors that have the hybrid model, we can choose either sort of a DME or a pharmacy, whatever

David, Analyst: is best for Got it. And is there any risk of an air pocket in growth as this transition happens? I appreciate that. I’m sure you maintain the same guidance philosophy, you would contemplate that. But is there any dynamic that we have to that might come into play as it relates to inventory dynamics or anything else that might disrupt the transition?

John Sheridan, President and CEO, Tandem Diabetes: I don’t think so. I think that the I mean, we have our managed care team manages both the pharmacy and the DME relationships. And so I think maintaining open dialogue, transparency, etcetera, with your partners is really important. I think that’s something that the team’s done a good job on. Relative to the again, we’re in the implementation phase at a certain level on the operational side.

There’s different packaging, different labeling and things like that that have be done. We’ve done that, We’re continuing to expand in that area. But I think that it’s really covered lives. Let’s get more contracts. Let’s increase the covered lives.

And then as you start to actually sell into the pharmacy channel, there’s things you just learn. You have to it doesn’t go as perfectly as you expect. You’ve got to knock down these barriers and keep moving. But that’s kind of where we are today. So I think it’s a big opportunity for us this year and beyond.

David, Analyst: Okay. Excellent. Maybe we could go over to the P and L, Susan, and talk a little bit about let’s start with gross margins. The Q1 revenue came in much better, I think, than what people had expected and where you had kind of targeted gross margin was roughly in line at the 51 ish percent from what you had kind of laid out earlier in the year. Does this ramp from 51% to 54% for the full year, so presumably that implies a number above that in Q4.

Maybe just sort of talk us through the moving parts here on the gross margin line. Sure.

Susan Morrison, Senior Vice President, Executive Vice President, and Chief Administrative Officer, Tandem Diabetes: And I think that’s one of the things that’s exciting about 2025 is you’re actually starting to see the benefit and evidence of initiatives that we started putting in place twelve to eighteen months ago. And so a big piece of that is Mobi and Mobi becoming a larger mix of our business. John talked through some of the benefits there. But on the pump side, the cartridges are actually about 20% less cost of manufacturing. And on the pump, it’s 10% to 15% less.

And so as you see that become a greater portion of our business, you’re gonna see that in the gross margin. But also, we’re seeing even greater benefit in the operating margin as we drive greater leverage within our business, particularly within SG and A. And I’d highlight that some of the benefit of that we’re able to actually achieve while we’re doing things like sales force expansion and while we’re investing and going direct internationally. And so a lot of these is just time as you’re starting to see that evidence of pull through from these prior initiatives.

David, Analyst: And is the gross margin as straightforward as I mean, obviously, revenue scale matters, but Mobi becomes a bigger percentage of total, Mobi has significantly higher gross margins, so the total corporate margin goes up? Or what are the other factors?

Susan Morrison, Senior Vice President, Executive Vice President, and Chief Administrative Officer, Tandem Diabetes: Yes. That’s the big piece, but also pharmacy, when you have the pricing benefit. And also, we’ve seen great pricing benefit even within DME, 2% to 3% increase as we’re able to demonstrate the value of our products. We’re able to see that nice increase in pricing. We previously had put out a longer term target of a 65% gross margin, and I think there’s been question of how and when do you get there.

And now with a nice milestone, we’ve been able to share that we expect to hit a 60% gross margin as early as one of the quarters in 2026. And how that impacts the full year, of course, depends on which quarter we achieve that. But you can see that you see the benefit of this pretty meaningfully pretty quick.

David, Analyst: And what are sort of the operational factors that need to play out to get to even this year, you got to be in like a high-50s gross margin in Q4 just to average out to get there? What are some of the just operating dynamics that need to unfold to get to that number?

John Sheridan, President and CEO, Tandem Diabetes: I think it’s just primarily scale. I mean right now, we’ve had Mobi on the market for roughly a year, and I think that today, the pump is accretive to the t:slim pump. And we’ve seen the benefit of that. I think this year, it’s really the supply side. And so it’s just really overhead absorption.

I mean, as you start a new product, you have a lot of overhead in place that’s not being fully utilized, and you’ve got to ramp up volume to do that. I think we’re at that point now where we have the volume we anticipate for the capacity we have on the pump, and we’re doing the same thing this year for the supplies. And so I think that you’re exactly right, though. For this year, in order for us to hit 54, we’ve got to exceed and end the year at a pretty high margin. And I think that we feel confident in doing that.

All of the new products that we’re bringing to market are designed in a way that they’re less expensive to build than the previous ones. And as Susan mentioned, I think the pharmacy channel is another big opportunity for us to really I would say we have high confidence in getting the 65 percent gross margin and that we also have high confidence and commitment to getting the operating margins that we’ve committed to as well.

David, Analyst: And as we think about the gross and adjusted EBITDA margin, is it pretty linear that gross margin goes up, adjusted EBITDA margin should go up at a pretty similar pace?

John Sheridan, President and CEO, Tandem Diabetes: I would say that it’s a I mean, there’s certainly going to be that relationship. But the other thing that we’ve been doing internally, we’ve been doing a lot of business process redevelopment. And we’re looking at using new technologies to reduce the human involvement in customer interactions. And we expect that that’s going to drive additional leverage on the bottom line. And so I think that we could see more benefit to the bottom line based on some of these other programs that we’ve got going on that aren’t necessarily tied to gross margin.

David, Analyst: And is there a revenue level that you could sort of lay out for people that gets you to double digit margins, that 1.2 1.5

John Sheridan, President and CEO, Tandem Diabetes: We really haven’t said revenue. We’ve said number of customer installed customer base. And when we set the goals for the company a couple of years ago, we set a million customers. I think the thing we are happy to report today is it’s less than that now for us to get to those double digit improvements that we’ve talked about. Again, I think we have a great deal of focus on this in the company, something we take very seriously, I think you’re going to start to see steady progress

David, Analyst: in that area. Excellent. Well, think with that, we are just out of time. John and Susan, thank you for Good to see you, David. You.

Thank you, everybody. Thanks, everybody. Thank you.

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