Tandem Diabetes Care(TNDM) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Third quarter sales reached $194 million worldwide, exceeding baseline expectations, primarily driven by U.S. sales of$138 million from 17,000 pump shipments [9][28] - Supply sales grew by 10%, aligning with the installed base of nearly 445,000 customers [9][27] - Gross margin remained stable at 51%, consistent with the prior year, despite pressures from high-cost raw materials [29][13] - Adjusted EBITDA is expected to be at least breakeven for the year, with operating expenses flat compared to the previous year at $121 million [13][152] Business Line Data and Key Metrics Changes - The installed base in the U.S. reached 308,000 people, with renewals growing sequentially to nearly half of the pumps shipped in the quarter [27][28] - International sales in the third quarter were$55 million, with 8,000 pumps shipped, reflecting typical commercial dynamics during the European summer holiday season [28][11] - The proportion of pumps worldwide represented 45% of sales in Q3 2023, down from 53% in the prior year [12] Market Data and Key Metrics Changes - The company anticipates worldwide sales expectations for the full year 2023 to be $765 million, including$190 million from outside the U.S. [13][28] - The company is experiencing strong double-digit growth rates in several international markets, despite some disruptions [84][105] Company Strategy and Development Direction - The company is focused on expanding pump penetration and addressing unmet customer needs through innovation, including the launch of the t:slim X2 integration with DexCom's G7 sensor and Abbott's FreeStyle Libre 2 sensor [5][15] - The company is in late-stage discussions with the FDA regarding enhancements to the Control-IQ algorithm, aiming to lower age indications and expand feature sets [16][15] - The company is preparing for the broader launch of Mobi in the U.S. in early 2024, with significant interest from healthcare providers and users [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted that 2023 has been a year of transition, with a focus on scaling operations for future growth [9][138] - The management expressed confidence in meeting the adjusted EBITDA guidance due to expected sales increases and cost containment efforts [66][67] - There is a high level of enthusiasm for new product launches, with customers waiting for Mobi and G7, which may impact near-term sales [142][141] Other Important Information - The company is analyzing the potential financial impact of newly enacted reimbursement changes in France, which may affect revenue generation [151][125] - The company ended the quarter with approximately $500 million in total cash and investments, providing financial flexibility for strategic investments [30][13] Q&A Session Summary Question: Can you discuss the pattern of U.S. pump shipments and the impact of the Tandem Choice program? - Management indicated that new customers are expected to defer purchases until 2024, while renewals remain strong, contributing to overall stability [19][37] Question: What gives confidence in hitting the breakeven goal for adjusted EBITDA? - Confidence stems from expected sales increases in Q4 and continued cost containment efforts [66][67] Question: How should we think about the renewal versus new pumpers in Q4? - Renewals are expected to grow, with a 20% increase in warranty expirations compared to Q3, which may encourage new purchases [68][150] Question: Can you clarify the impact of the G7 launch on guidance? - The G7 launch is anticipated to contribute positively, but there may be some initial disruptions as distributors adjust to new product offerings [62][40] Question: What is the expected timeline for Mobi and G7 launches? - Mobi is expected to be a first-quarter product for revenue, while G7 is anticipated to have full availability by the end of the current quarter [60][41]