Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tandem Diabetes Care Inc (TNDM, Financial) achieved the highest quarterly sales in its history during Q3 2024, driven by strong execution and positive feedback on the newly launched Tandem Mobi.
- The company returned to positive free cash flow in the third quarter, highlighting improved operational performance.
- There was a significant increase in new pump growth in the United States, with more than half of pump shipments going to new customers.
- Tandem Mobi's tiny size and versatility are attracting a younger demographic, contributing to high satisfaction scores.
- Internationally, Tandem Diabetes Care Inc (TNDM) demonstrated growth in pump placements and customer retention, with new tenders awarded to enhance customer access in select countries starting in 2025.
Negative Points
- Despite record sales, the gross margin remained at 51%, with expectations of margin pressure related to the Mobi launch continuing through 2024.
- The company anticipates a significant step down in both sales and profits from Q4 to Q1 due to deductible-driven seasonality in the US market.
- The pharmacy channel strategy is still in its early stages, with only one contract signed and more work needed to drive profitable access.
- The impact of the Tandem Choice program on GAAP financials was not meaningful in Q3, indicating limited immediate financial benefit.
- There are ongoing challenges related to scaling Mobi production, which currently acts as a headwind on gross margins until volumes increase.
Q & A Highlights
Q: Can you provide more details on new patient starts in the third quarter compared to the second quarter?
A: Leigh Vosseller, CFO, explained that the third quarter marked a return to new start growth year-over-year, with more than half of the pump shipments being new pumpers, and over half of those were MDI conversions. The pump shipments increased modestly from Q2 to Q3 due to seasonal dynamics.
Q: Can you discuss the significance of the pharmacy contract and its impact on your broader pharmacy strategy?
A: Leigh Vosseller, CFO, highlighted the pharmacy contract as an important first step in their strategy. The focus now is on executing the pull-through strategy for this contract, and more details on its impact will be provided as they progress into 2025.
Q: How does your pricing in the pharmacy channel compare to your competitor's pricing?
A: Leigh Vosseller, CFO, stated that they are selective about contracts, ensuring they lower patient out-of-pocket costs and maintain economic parity with DME contracts. Specific pricing details were not disclosed.
Q: Can you provide insights on the Mobi tubeless cartridge option and its integration with SteadySet technology?
A: John Sheridan, CEO, expressed excitement about the Mobi tubeless development and mentioned that they are considering integrating longer wear sets. The SteadySet clinical study is on track, and they have filed a three-day set as a risk mitigation strategy with the FDA.
Q: Why does the 2025 growth outlook seem conservative despite multiple growth drivers?
A: Leigh Vosseller, CFO, explained that their approach to guidance focuses on predictable revenue streams like supply sales and renewals. They assess new growth opportunities as they develop sustainable trends before factoring them into guidance.
Q: What is the expected impact of the pharmacy channel on your business next year?
A: Leigh Vosseller, CFO, indicated that while it's too early to quantify the impact of the initial pharmacy contract, they are pursuing additional opportunities. The pharmacy channel is part of a multi-year strategy, primarily focused on Tandem Mobi.
Q: How do you view the type 2 diabetes market opportunity and its potential growth?
A: John Sheridan, CEO, noted that the type 2 diabetes market is underpenetrated, with current penetration at 5%. They anticipate it could exceed 25% over time, driven by increased awareness and clinical benefits of their technology.
Q: Is the adoption of pump therapy accelerating in the US and internationally?
A: John Sheridan, CEO, acknowledged that last year's product introductions caused market pauses, but this year shows growth. The type 2 indication and new product launches are expected to drive further adoption.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
