Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tandem Diabetes Care Inc (NASDAQ:TNDM) achieved more than 20% growth for the third consecutive quarter, with record first-quarter sales in the U.S. and internationally.
• The FDA cleared Control-IQ plus for people with type two diabetes, expanding Tandem's addressable market significantly.
• The company reported a meaningful improvement in adjusted EBITDA year over year, demonstrating increased profitability.
• Tandem's pharmacy channel initiative is progressing well, with approximately 30% of U.S. lives now covered under the pharmacy benefit.
• International sales reached an all-time high, driven by demand for the t:slim X2 platform and strong supply sales.

Negative Points

• There are potential headwinds anticipated in the back half of the year due to the transition to direct sales in select international markets.
• The company faces challenges in scaling its sales force productivity, which is expected to take nine to 12 months to fully realize.
• Despite progress, the reimbursement process for type two diabetes under Medicare remains onerous, posing a barrier to wider adoption.
• Competitive pressures remain strong in both U.S. and international markets, with new entrants expected.
• SG&A expenses increased due to sales force expansion and investments in international infrastructure, impacting short-term profitability.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with TNDM.

Q: Can you provide an update on the sales force changes and any disruptions from Q4? A: John Sheridan, President and CEO: There were no significant disruptions in Q4. We completed the expansion and realignment of our sales territories by the end of Q1. New salespeople typically take 9 to 12 months to reach full productivity, and we expect them to be fully onboard by Q4.

Q: How much did pricing impact U.S. sales, and is this trend sustainable? A: Mike Letoff, Executive Vice President and CFO: You're in the ballpark with a 2-3% increase for pumps and a higher percentage for supplies. This pricing trend is expected to continue, driven by our work in the DME channel and early contributions from the pharmacy channel.

Q: Can you discuss the pharmacy channel's contribution and future expectations? A: Mike Letoff, Executive Vice President and CFO: We factored in modest contributions from the pharmacy channel for this year. Early learnings are promising, and we see it as a significant long-term opportunity. We now have about 30% of U.S. lives covered under the pharmacy benefit.

Q: What are the expectations for the Type 2 diabetes market and Control-IQ plus? A: John Sheridan, President and CEO: Control-IQ plus has been approved for about a month, and we've provided access to 300,000 people. We expect modest contributions this year, with significant long-term growth potential. Efforts are focused on improving Medicare access and reimbursement.

Q: How do you see the competitive landscape internationally, and what are your renewal expectations? A: John Sheridan, President and CEO: The international market is less penetrated but receptive to AID systems. We face competition from two main players and a smaller up-and-coming competitor. We expect renewal rates to eventually match U.S. levels, with no current concerns about achieving long-term goals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.