News Release

SAN DIEGO--(BUSINESS WIRE)--Feb. 21, 2024-- Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a global insulin delivery and diabetes technology company, today reported its financial results for the quarter and year ended December 31, 2023 and provided its financial guidance for the year ending December 31, 2024.

Fourth Quarter and Recent Highlights

• Worldwide installed base increased 7 percent to approximately 452,000 in-warranty customers compared to the fourth quarter 2022.

• Launched Tandem Mobi, the world’s smallest, durable Automated Insulin Delivery (AID) System in the United States.

• Achieved first-to-market launch with multiple, next-generation continuous glucose monitoring sensor integrations.

• Launched Tandem Source, a new diabetes management platform for customers and healthcare providers in the United States.

• $467.9 million in cash, cash equivalents & short-term investments as of December 31, 2023.

“We exited the year on a high note, demonstrating positive momentum across key areas of our business, including the unprecedented accomplishment of introducing four new products in the United States,” said John Sheridan, president and chief executive officer. “2024 is positioned to be a year of tremendous opportunity for Tandem. Our portfolio of devices, applications, and insights positions us to improve the lives of more people living with diabetes worldwide, while driving operational improvement across our business.”

Fourth Quarter and Year End 2023 Sales 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, 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 Table E “Reconciliation of GAAP versus Non-GAAP Financial Results” attached to this press release. See also “Non-GAAP Financial Measures” below.

	Three Months Ended														Year Ended
	December 31,														December 31,
($ in millions)	2023							2022							2023							2022
	GAAP			Non-GAAP				GAAP			Non-GAAP				GAAP			Non-GAAP				GAAP			Non-GAAP
Pump Shipments
United States		21,000			N/A				24,000			N/A				74,000			N/A				84,000			N/A
Outside United States		6,000			N/A				12,000			N/A				30,000			N/A				44,000			N/A
Total Worldwide		27,000			N/A				36,000			N/A				104,000			N/A				128,000			N/A
Sales
United States	$	150.9		$	163.5			$	165.8		$	168.7			$	554.9		$	580.0			$	588.8		$	592.3
Outside United States		45.9			45.9				54.7			54.7				192.8			192.8				212.4			212.4
Total Worldwide	$	196.8		$	209.4			$	220.5		$	223.4			$	747.7		$	772.8			$	801.2		$	804.7

Fourth Quarter 2023 Additional Financial Results Compared to Fourth Quarter 2022

• Sales: In the United States, GAAP sales include a $12.5 million deferral relating to Tandem Choice, compared to a deferral of $3.0 million. Non-GAAP sales do not include Tandem Choice related deferrals.
  
  Outside the United States, both GAAP and non-GAAP sales reflect an $8.5 million reduction in sales due to a new rebate structure in a single market.

• Gross profit: GAAP gross profit was $93.3 million, compared to $115.5 million. GAAP gross margin was 47 percent, compared to 52 percent.
  
  Non-GAAP gross profit⁽¹⁾ was $105.8 million compared to $118.5 million. Non-GAAP gross margin⁽¹⁾ was 51 percent compared to 53 percent.

• Operating income (loss): GAAP operating loss totaled $35.1 million, or negative 18 percent of sales, compared to operating loss of $17.8 million, or negative 8 percent of sales.
  
  Non-GAAP operating loss⁽¹⁾ totaled $22.5 million, or negative 11 percent of sales, compared to $2.4 million or negative 1 percent of sales.
  
  Adjusted EBITDA⁽¹⁾ was $4.3 million, or 2 percent of sales, compared to $25.7 million, or 11 percent of sales.

• Net income (loss): GAAP net loss was $30.0 million, compared to net loss of $15.9 million.
  
  Non-GAAP net loss⁽¹⁾ was $17.5 million compared to $0.5 million.

Full Year 2023 Additional Financial Results Compared to Full Year 2022

• Sales: In the United States, GAAP sales include a $25.1 million deferral relating to Tandem Choice, compared to a deferral of $3.5 million. Non-GAAP sales do not include Tandem Choice related deferrals.
  
  Outside the United States, both GAAP and non-GAAP sales reflect a $8.5 million reduction in sales due to a new rebate structure in a single market.

• Gross profit: GAAP gross profit was $367.7 million, compared to $413.0 million. GAAP gross margin was 49 percent, compared to 52 percent.
  
  Non-GAAP gross profit⁽¹⁾ was $392.8 million compared to $416.5 million. Non-GAAP gross margin⁽¹⁾ was 51 percent compared to 52 percent.

• Operating income (loss): GAAP operating loss totaled $233.2 million, or negative 31 percent of sales, compared to $92.8 million, or negative 12 percent of sales.
  
  Non-GAAP operating loss⁽¹⁾ totaled $112.6 million, or negative 15 percent of sales, compared to $45.8 million, or negative 6 percent of sales.
  
  Adjusted EBITDA⁽¹⁾ was negative $9.2 million, or negative 1 percent of sales, compared to $53.4 million, or 7 percent of sales.

• Net income (loss): GAAP net loss was $222.6 million, compared to $94.6 million.
  
  Non-GAAP net loss⁽¹⁾ was $102.0 million, compared to $47.6 million.

⁽¹⁾ A reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures and additional information can be found in Table E “Reconciliation of GAAP versus Non-GAAP Financial Results” attached to this press release. Also see “Non-GAAP Financial Measures” below for additional information.

See tables for additional financial information.

2024 Financial Guidance

“2024 marks an exciting opportunity for Tandem to return to growth, with our 10 percent sales guidance primarily reflecting recurring revenue streams,” said Leigh Vosseller, executive vice president and chief financial officer. “Investing in the launch of multiple new products is reflected in our margin expectations and are important for setting the foundation for these offerings to serve as catalysts for additional growth.”

The Company’s non-GAAP guidance for the fiscal year ending December 31, 2024 is set forth below. The most directly comparable GAAP financial measures are not accessible on a forward-looking basis due to the high degree of complexity in the accounting treatment for the Tandem Choice program. For a description of Non-GAAP sales, Non-GAAP gross margin, and Adjusted EBITDA margin, as well as an illustration of the reconciliation from the most directly comparable GAAP financial measures, refer to Table E “Reconciliation of GAAP versus Non-GAAP Financial Results” attached to this press release. Also see “Non-GAAP Financial Measures” below for additional information.

For the year ending December 31, 2024, the Company is providing its 2024 financial guidance as follows:

• Non-GAAP sales are estimated to be approximately $850 million for the full year and $175 million in the first quarter.
  • Sales inside the United States of approximately $625 million for the full year and $122 million in the first quarter.
  • Sales outside the United States of approximately $225 million for the full year and $53 million in the first quarter.
• Non-GAAP gross margin is estimated to be approximately 51 percent for the full year and approximately 48 percent in the first quarter.
• Adjusted EBITDA margin is estimated to be breakeven as a percent of sales for the full year and approximately negative 15 percent in the first quarter.
• Non-cash charges included in cost of goods sold and operating expenses are estimated to be approximately $120 million. This includes:
  • Approximately $100 million non-cash, stock-based compensation expense.
  • Approximately $20 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 historical GAAP financial measures to the most directly comparable historical 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/BIa95db72e0b404258a57afd8b48cc6915) and you will be provided with dial-in details, including a personal pin.

About Tandem Diabetes Care, Inc.

Tandem Diabetes Care, a global insulin delivery and diabetes technology company, manufactures and sells advanced automated insulin delivery systems that reduce the burden of diabetes management, while creating new possibilities for patients, their loved ones, and healthcare providers. The Company’s pump portfolio features the Tandem Mobi system and the t:slim X2 insulin pump, both of which feature Control-IQ advanced hybrid closed-loop technology. Tandem Diabetes Care is based in San Diego, California. 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.

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. 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 outside the United States 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.

TANDEM DIABETES CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Table A
(in thousands)
	December 31,			December 31,
	2023			2022
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	467,912		$	616,901
Accounts receivable, net		105,555			114,717
Inventories		157,937			111,117
Other current assets		16,585			7,241
Total current assets		747,989			849,976
Property and equipment, net		76,542			68,552
Operating lease right-of-use assets		87,791			110,626
Other long-term assets		40,336			23,631
Total assets	$	952,658		$	1,052,785
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable, accrued expenses and employee-related liabilities	$	105,742		$	104,007
Operating lease liabilities		17,060			13,121
Deferred revenue		43,994			18,837
Other current liabilities		28,462			29,325
Total current liabilities		195,258			165,290
Convertible senior notes, net - long-term		285,035			283,232
Operating lease liabilities - long-term		113,572			123,524
Deferred revenue - long-term		13,331			16,874
Other long-term liabilities		31,830			23,918
Total liabilities		639,026			612,838
Total stockholders’ equity		313,632			439,947
Total liabilities and stockholders’ equity	$	952,658		$	1,052,785

TANDEM DIABETES CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Table B
(in thousands, except per share data)
	(Unaudited)
	Three Months Ended December 31,								Twelve Months Ended December 31,
	2023				2022				2023				2022
Sales	$	196,796			$	220,502			$	747,718			$	801,217
Cost of sales		103,501				104,979				380,028				388,231
Gross profit		93,295				115,523				367,690				412,986
Operating expenses:
Selling, general and administrative		85,751				97,692				352,503				335,681
Research and development		42,604				35,585				169,667				139,114
Acquired in-process research and development expenses		—				23				78,750				31,039
Total operating expenses		128,355				133,300				600,920				505,834
Operating loss		(35,060	)			(17,777	)			(233,230	)			(92,848	)
Total other income (expense), net		3,750				1,664				12,976				(4	)
Loss before income taxes		(31,310	)			(16,113	)			(220,254	)			(92,852	)
Income tax expense (benefit)		(1,308	)			(261	)			2,357				1,742
Net loss	$	(30,002	)		$	(15,852	)		$	(222,611	)		$	(94,594	)
Net loss per share - basic and diluted	$	(0.46	)		$	(0.25	)		$	(3.43	)		$	(1.47	)
Weighted average shares used to compute basic and diluted net loss per share		65,369				64,384				64,969				64,146

TANDEM DIABETES CARE, INC.
SALES BY GEOGRAPHY
Table C(1)
	(Unaudited)
($'s in thousands)	Three Months Ended December 31,											Twelve Months Ended December 31,
		2023				2022			% Change				2023				2022			% Change
United States:
Pump	$	82,366			$	92,614			(11	)%		$	289,546			$	329,061			(12	)%
Supplies and other		81,087				76,117			7	%			290,439				263,253			10	%
Deferral for Tandem Choice		(12,539	)			(2,950	)		325	%			(25,107	)			(3,549	)		607	%
Total GAAP Sales in the United States	$	150,914			$	165,781			(9	)%		$	554,878			$	588,765			(6	)%
Adjustment for Tandem Choice		12,539				2,950			325	%			25,107				3,549			607	%
Total Non-GAAP Sales in the United States	$	163,453			$	168,731			(3	)%		$	579,985			$	592,314			(2	)%
Outside the United States:
Pump	$	17,513			$	27,347			(36	)%		$	84,748			$	102,846			(18	)%
Pump rebate		(8,452	)			—			—	%			(8,452	)			—			—	%
Supplies and other		36,821				27,374			35	%			116,544				109,606			6	%
Total Sales Outside the United States	$	45,882			$	54,721			(16	)%		$	192,840			$	212,452			(9	)%
Total GAAP Worldwide Sales	$	196,796			$	220,502			(11	)%		$	747,718			$	801,217			(7	)%
Adjustment for Tandem Choice		12,539				2,950			325	%			25,107				3,549			607	%
Total Non-GAAP Worldwide Sales	$	209,335			$	223,452			(6	)%		$	772,825			$	804,766			(4	)%
(1) A reconciliation of non-GAAP financial measures to their closest GAAP equivalent and additional information can be found in Table E and under the heading “Reconciliation of GAAP versus Non-GAAP Financial Results.”

TANDEM DIABETES CARE, INC.
PUMP SHIPMENTS (Unaudited)
Table D
	Three Months Ended December 31,						Twelve Months Ended December 31,
	2023		2022		% Change		2023		2022		% Change
Pumps Shipped:
United States	21,000		24,000		(13)%		74,000		84,000		(12)%
Outside the United States	6,000		12,000		(50)%		30,000		44,000		(32)%
Total Pumps Shipped	27,000		36,000		(25)%		104,000		128,000		(19)%

TANDEM DIABETES CARE, INC.
Reconciliation of GAAP versus Non-GAAP Financial Results (Unaudited)
Table E
($'s in thousands)	Three Months Ended December 31,								Twelve Months Ended December 31,
		2023				2022				2023				2022
GAAP sales	$	196,796			$	220,502			$	747,718			$	801,217
Adjustment for Tandem Choice (1)		12,539				2,950				25,107				3,549
Non-GAAP sales	$	209,335			$	223,452			$	772,825			$	804,766
GAAP gross profit	$	93,295			$	115,523			$	367,690			$	412,986
Adjustment for Tandem Choice(1)		12,539				2,950				25,107				3,549
Non-GAAP gross profit	$	105,834			$	118,473			$	392,797			$	416,535
Non-GAAP gross margin(2)		51	%			53	%			51	%			52	%
GAAP operating loss	$	(35,060	)		$	(17,777	)		$	(233,230	)		$	(92,848	)
Acquired in-process research and development(3)		—				23				78,750				31,039
Non-recurring facility consolidation costs(4)		—				12,420				14,099				12,420
Severance costs - cash and noncash		—				—				2,680				—
Adjustment for Tandem Choice(1)		12,539				2,950				25,107				3,549
Non-GAAP operating loss	$	(22,521	)		$	(2,384	)		$	(112,594	)		$	(45,840	)
Non-GAAP operating margin(2)		(11	) %			(1	)%			(15	) %			(6	)%
GAAP net loss	$	(30,002	)		$	(15,853	)		$	(222,611	)		$	(94,594	)
Income tax expense (benefit)		(1,308	)			(261	)			2,357				1,742
Interest income and other, net		(5,553	)			(3,243	)			(22,858	)			(6,204	)
Interest expense		1,803				1,579				9,882				6,208
Depreciation and amortization		4,031				3,641				15,715				14,330
Stock-based compensation expense		22,742				24,441				87,688				84,918
Acquired in-process research and development(3)		—				23				78,750				31,039
Non-recurring facility consolidation costs(4)		—				12,420				14,099				12,420
Severance costs - cash and noncash		—				—				2,680				—
Adjustment for Tandem Choice(1)		12,539				2,950				25,107				3,549
Adjusted EBITDA	$	4,252			$	25,697			$	(9,191	)		$	53,408
Adjusted EBITDA margin(2)		2	%			12	%			(1	)%			7	%
GAAP net loss	$	(30,002	)		$	(15,853	)		$	(222,611	)		$	(94,594	)
Acquired in-process research and development(3)		—				23				78,750				31,039
Non-recurring facility consolidation costs(4)		—				12,420				14,099				12,420
Severance costs - cash and noncash		—				—				2,680				—
Adjustment for Tandem Choice(1)		12,539				2,950				25,107				3,549
Non-GAAP net loss	$	(17,463	)		$	(460	)		$	(101,975	)		$	(47,586	)
(1) The accounting treatment for Tandem Choice has a high degree of complexity. Additional information can be found under the heading “Non-GAAP Financial Measures.”
(2) Non-GAAP margins including non-GAAP gross margin, non-GAAP operating margin, and adjusted EBITDA margin are calculated using non-GAAP sales.
(3) Acquired in-process research and development charges representing the value of acquired in-process research and development assets with no alternative future use and acquisition related expenses recorded in connection with the acquisitions of AMF Medical SA in 2023, and Capillary BioMedical, Inc. in 2022.
(4) The Company recorded $14.1 million of facility consolidation costs related to our Vista Sorrento lease in San Diego, California in 2023, and $12.4 million of facility consolidation costs primarily related to our office space in Boise, Idaho in 2022.

 

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Source: Tandem Diabetes Care, Inc.