SAN DIEGO / Aug 03, 2023 / Business Wire / Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a global insulin delivery and diabetes technology company, today reported its financial results for the quarter ended June 30, 2023 and updated its financial guidance for the year ending December 31, 2023.

Second Quarter and Recent Highlights

• Worldwide installed base increased 16 percent to approximately 437,000 in-warranty customers compared to the second quarter 2022.
• Commenced U.S. launch of Tandem Source, a data management application designed to be a centralized digital ecosystem for customers and healthcare providers worldwide.
• Enrolled first participant in pivotal study for people living with type 2 diabetes using Control-IQ technology.
• Received U.S. Food and Drug Administration clearance for Tandem Mobi, the world’s smallest durable insulin delivery system.
• $507.2 million in cash, cash equivalents & short-term investments as of June 30, 2023.

“In the second quarter, we demonstrated exceptional progress with our new technology innovations, while driving operational improvements throughout our business and achieving sales expectations,” said John Sheridan, president and chief executive officer. “We are navigating 2023 to position Tandem for future growth and long-term success by delivering on the most exciting portfolio in insulin therapy management, while furthering our mission to offer choice and simplified solutions to improve the lives of people with diabetes.”

Second Quarter 2023 Financial Results Compared to 2022

In September 2022, the Company began offering the Tandem Choice Program (Tandem Choice) to eligible t:slim X2 customers to provide a pathway to ownership of its newest hardware platform, Tandem Mobi, for a fee when available. As a result of this program, and as previously announced, the Company is providing select financial results for both GAAP and non-GAAP. Additional information, including the accounting treatment of this program and other non-GAAP measures, can be found under the heading “Reconciliation of GAAP versus Non-GAAP Financial Results” in this press release.

• Gross profit: GAAP gross profit was $101.7 million, compared to $101.9 million. GAAP gross margin was 52 percent, compared to 51 percent.
  
  Non-GAAP gross profit⁽¹⁾ was $104.0 million. Non-GAAP gross margin⁽¹⁾ was 52 percent.

• Operating income (loss): GAAP operating loss totaled $38.8 million, or negative 20 percent of sales, compared to operating loss of $12.2 million, or negative 6 percent of sales.
  
  Non-GAAP operating loss⁽¹⁾ totaled $22.4 million, or negative 11 percent of sales.
  
  Adjusted EBITDA⁽¹⁾ was $5.3 million, or 3 percent of sales, compared to $11.4 million, or 6 percent of sales.

• Net income (loss): GAAP net loss⁽¹⁾ was $35.8 million, compared to net loss of $15.1 million.
  
  Non-GAAP net loss⁽¹⁾ was $19.4 million.

See tables for additional financial information.

2023 Financial Guidance

“The upcoming addition of four new offerings to our portfolio sets a path for renewed momentum as we bring the benefits of Tandem technology to more people living with diabetes worldwide,” said Leigh Vosseller, executive vice president and chief financial officer. “In the near-term, we anticipate that our measured rate of market releases has the potential for disruption and reduced sales visibility. We are resetting our guidance to provide our minimum sales expectation for the remainder of the year, while focusing on driving the success of our new offerings and operational efficiencies across the business.”

For the year ending December 31, 2023, the Company is updating its 2023 financial guidance as follows:

• Non-GAAP sales⁽¹⁾ are estimated to be at least $785 million with sales in third quarter of at least $190 million.
  • Sales inside the United States of at least $575 million with sales in the third quarter of at least $135 million.
  • Sales outside the United States of at least $210 million with sales in the third quarter of at least $55 million.
• Non-GAAP gross margin⁽¹⁾ is estimated to be approximately 51 percent.
• Adjusted EBITDA margin⁽¹⁾ is estimated to be at least breakeven as a percent of sales.
  • Includes approximately 3 percent from the impact of operating costs associated with the acquisitions of Capillary Biomedical and AMF Medical.
• Non-cash charges included in cost of goods sold and operating expenses are estimated to be approximately $110 million. This includes:
  • Approximately $95 million non-cash, stock-based compensation expense.
  • Approximately $15 million depreciation and amortization expense.

Non-GAAP Financial Measures

Certain non-GAAP financial measures are presented in this press release to provide information that may assist investors in understanding the Company’s financial results and assessing its prospects for future performance. The Company believes these non-GAAP financial measures are important operating performance indicators because they exclude items that are unrelated to, and may not be indicative of, the Company’s core operating results. These non-GAAP financial measures, as calculated, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to the Company. These non-GAAP financial results are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent the Company uses such non-GAAP financial measures in the future, they will be calculated using a consistent method from period to period. A reconciliation of each of the GAAP financial measures to the most directly comparable non-GAAP financial measures has been provided in Table E “Reconciliation of GAAP versus Non-GAAP Financial Results” attached to this press release.

In particular, the accounting treatment for Tandem Choice has a high degree of complexity. In September 2022 when the program was launched, the Company began deferring a portion of sales for each eligible t:slim X2 pump shipped in the United States. Such deferrals will be recognized on a customer-by-customer basis following the commercial launch of the Company’s new hardware platform, Tandem Mobi. The timing of recognition will be based on either a) an affirmative election to participate in Tandem Choice or b) expiration of the right to participate. Notably:

• Offering the program does not impact the economics associated with how or when the initial pump sale is reimbursed.
• Customer eligibility is automatic and no election is necessary to participate in Tandem Choice at the time of a t:slim X2 purchase. An affirmative election is only required when the new hardware platform, Tandem Mobi, is commercially available, at which time any customer fees will be received and recognized as a sale.
• The expiration date of Tandem Choice is December 31, 2024.

Consistent with SEC regulations, the Company has not provided a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures in reliance on the “unreasonable efforts” exception set forth in the applicable regulations, because there is substantial uncertainty associated with predicting any future adjustments that may be made to the Company’s GAAP financial measures in calculating the non-GAAP financial measures.

Conference Call

The Company will hold a conference call and simultaneous webcast today at 4:30pm Eastern Time (1:30pm Pacific Time). The link to the webcast will be available by accessing the Events & Presentations tab in the Investor Center of the Tandem Diabetes Care website at http://investor.tandemdiabetes.com, and will be archived for 30 days. To access the call by phone, please use this link (https://register.vevent.com/register/BIb61cfe435b0f43f5a67b990141f26d3d) and you will be provided with dial-in details, including a personal pin.

About Tandem Diabetes Care, Inc.

Tandem Diabetes Care, Inc., a global insulin delivery and diabetes technology company headquartered in San Diego, California, creates new possibilities for people living with diabetes, their loved ones, and healthcare providers through a positively different experience. The Company’s human-centered approach to design, development, and support delivers innovative products and services for people who use insulin. Tandem manufactures and sells the t:slim X2 insulin pump with Control-IQ technology. For more information, visit tandemdiabetes.com.

Tandem Diabetes Care, the Tandem logo, Control-IQ, Tandem Mobi and t:slim X2 are either registered trademarks or trademarks of Tandem Diabetes Care, Inc. in the United States and/or other countries.

Follow Tandem Diabetes Care on Twitter @tandemdiabetes; use #tslimX2 and #TandemDiabetes.
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Follow Tandem Diabetes Care on LinkedIn at https://www.linkedin.com/company/tandemdiabetes.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that concern matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statements. These forward-looking statements include statements regarding, among other things, the Company’s projected financial results and the ability to achieve other operational and commercial goals for this year, including the launch of multiple new products. The Company’s actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties. For instance, the Company’s ability to achieve projected financial results will be impacted by market acceptance of the Company’s existing products and products under development; products marketed and sold or under development by competitors; the Company’s ability to establish and sustain operations to support international sales, including expanding into additional geographies; changes in reimbursement rates or insurance coverage for the Company’s products; the Company’s ability to meet increasing operational and infrastructure requirements from higher customer interest and a larger base of existing customers; the Company’s ability to complete the development and launch of new products when anticipated; risks associated with the regulatory approval process for new products; the potential that newer products, or other technological breakthroughs for the monitoring, treatment or prevention of diabetes, may render the Company’s products obsolete, less desirable; or may otherwise negatively impact the purchasing trends of customers; reliance on third-party relationships, such as outsourcing and supplier arrangements; global economic conditions; and other risks identified in the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other documents that the Company files with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Tandem undertakes no obligation to update or review any forward-looking statement in this press release because of new information, future events or other factors.