Tandem Diabetes Care Reports Second Quarter 2016 Financial Results, Updates 2016 Guidance and Announces New t:slim X2™ Insulin Pump and Associated Technology Upgrade Program
Second Quarter 2016 Highlights
-
Sales grew 46 percent to
$23.0 million from$15.7 million - Total pump shipments grew 38 percent to 4,582 pumps from 3,331 pumps
- Operating margin improved to negative 74 percent from negative 119 percent
First Half 2016 Highlights
-
Sales grew 54 percent to
$43.0 million from$28.0 million - Total pump shipments grew 48 percent to 8,624 pumps from 5,818 pumps
- Operating margin improved to negative 84 percent from negative 140 percent
"We are defining a revolutionary approach to customer care by
combining our next generation t:slim X2 Pump with the Tandem Device
t:slim X2 Insulin Pump Platform
The t:slim X2 Pump features new hardware advancements, including a new two-way Bluetooth® wireless technology radio for communicating with more than one external device at a time. The Company expects that these advancements, together with future anticipated applications of the recently approved Tandem Device Updater, which enables the Company to roll out remote software updates, will provide its customers upgrade-ability to continuous glucose monitoring integration and artificial pancreas pump algorithms. The Company anticipates that the commercial launch of the t:slim X2 Insulin Pump will commence in the fourth quarter of 2016.
Technology Upgrade Program
The Company is implementing a Technology Upgrade Program that will allow
eligible t:slim and t:slim G4 Pump customers access to features and
capabilities of a t:slim X2 Pump for a fee, ranging from no cost to
Additional information regarding the terms of the Upgrade Program is provided in the attached Exhibit and on the Company's website at www.tandemdiabetes.com/upgrade.
Second Quarter 2016 Results
Sales grew 46 percent to
Gross margin was 36 percent for the quarter ended
For the second quarter of 2016, operating expenses totaled
Operating loss for the second quarter of 2016 was
As of
2016 Guidance
"Our new Upgrade Program underscores Tandem's commitment to deliver
ongoing innovation to both our existing and new customers, and we
anticipate that it will contribute to our momentum as the fastest
growing insulin pump company1," said
The Company's annual guidance for 2016 was previously provided in
accordance with
For the year ending
-
Non-GAAP sales are now estimated to be in the range of
$105 million to$110 million . The Company's prior GAAP sales guidance range was$108 million to$115 million . -
Non-GAAP operating margin is estimated to be in the range of negative
52 percent to negative 62 percent, which is the same as guidance
previously provided on a GAAP basis, both of which include:
-
Approximately
$13.0 million to$14.0 million in non-cash, stock-based compensation expense; and -
Approximately
$5.0 million to$6.0 million of depreciation and amortization.
-
Approximately
Additional information regarding the anticipated accounting treatment associated with the Upgrade Program is provided in the attached Exhibit.
Conference Call
The Company will hold a conference call and simultaneous webcast today
at
Use of Non-GAAP Measures
The Company presents certain non-GAAP financial measures in this press
release, including projected non-GAAP sales and operating margin, to
provide information that may assist investors in understanding its
financial results, assessing its prospects for future performance and
allowing for a meaningful comparison of projected results to historical
results. As discussed above, the Upgrade Program will create
unpredictable GAAP-based results for the duration of the Upgrade Program
due to accounting complexities that result in the GAAP results being
dependent on a number of future events and variables that are difficult
to estimate or predict. Due to this accounting complexity, and the
resulting uncertainty in GAAP results, the Company is now providing
guidance for the year ending
These non-GAAP financial measures will be used internally by the Company to analyze its operating performance and prospects for future performance for the duration of the Upgrade Program. The principal limitation of these non-GAAP financial measures is that they do not necessarily reflect, and may not be a good estimate of, the amount that will actually be recorded in the Company's financial statements in accordance with GAAP. The non-GAAP financial guidance is not intended to be considered in isolation or as a substitute for, or superior to, financial information and guidance prepared and presented in accordance with GAAP. To the extent the Company utilizes such non-GAAP financial measures in the future, it expects to calculate them using a consistent method from period to period. Because of the difficultly in estimating the accounting impact from the Upgrade Program, the Company cannot provide a reconciliation of non-GAAP sales and operating margin guidance to GAAP sales and operating margin guidance with any level of certainty and without unreasonable efforts.
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1 dQ&A
Forward Looking Statement
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
relate to, among other things, the timing of the commercial launch of
the t:slim X2 Insulin Pump, the ability of the t:slim X2 Insulin Pump to
offer certain features and deliver the intended benefits, potential
future uses of the Tandem Device Updater, the impact of the
implementation of the Technology Update Program on the Company's
financial results, and the Company's projected financial results,
including its projected sales and operating margins. The Company's
actual results may differ materially from those indicated in these
forward-looking statements due to numerous risks and uncertainties. For
instance, successful commercialization of the t:slim X2 Insulin Pump may
be negatively impacted by a number of factors, including lack of market
acceptance by physicians and people with diabetes; the potential that
newer products that compete with this product, or other technological
breakthroughs for the monitoring, treatment or prevention of diabetes,
may render this product obsolete or less desirable; and the potential
that the pump purchasing process, including insurance verification
approval for individual customers, may delay or prevent the sale of the
pump. In addition, factors that will affect the impact of the Technology
Update Program on the Company's financial results include the mix of
pumps sold during the Program period, the percentage of customers that
choose to upgrade, the upgrade option chosen by the customer, and the
timing of the launch of the t:slim X2 Insulin Pump. Other risks and
uncertainties include the Company's inability to manufacture products in
commercial quantities at an acceptable cost and in accordance with
quality requirements; the Company's inability to contract with
additional third-party payors for reimbursement of the Company's
products; uncertainty associated with the development of new products
generally; possible future actions of the
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| CONDENSED BALANCE SHEETS | ||||||||||
| (in thousands) | ||||||||||
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| 2016 | 2015 | |||||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents and short-term investments | $ | 54,318 | $ | 71,106 | ||||||
| Restricted cash | 2,000 | 2,000 | ||||||||
| Accounts receivable, net | 9,426 | 14,055 | ||||||||
| Inventory, net | 21,692 | 17,543 | ||||||||
| Other current assets | 3,445 | 2,280 | ||||||||
| Total current assets | 90,881 | 106,984 | ||||||||
| Property and equipment, net | 16,242 | 15,526 | ||||||||
| Other long term assets | 2,067 | 2,215 | ||||||||
| Total assets | $ | 109,190 | $ | 124,725 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable, accrued expense and employee-related liabilities | $ | 19,970 | $ | 19,116 | ||||||
| Deferred revenue | 1,763 | 1,822 | ||||||||
| Other current liabilities | 5,332 | 5,582 | ||||||||
| Total current liabilities | 27,065 | 26,520 | ||||||||
| Notes payable-long-term | 44,398 | 29,275 | ||||||||
| Other long-term liabilities | 5,654 | 5,462 | ||||||||
| Total liabilities | 77,117 | 61,257 | ||||||||
| Total stockholders' equity | 32,073 | 63,468 | ||||||||
| Total liabilities and stockholders' equity | $ | 109,190 | $ | 124,725 | ||||||
|
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| CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Sales | $ | 22,985 | $ | 15,706 | $ | 43,043 | $ | 28,014 | ||||||||||||
| Cost of sales | 14,809 | 10,905 | 27,939 | 20,406 | ||||||||||||||||
| Gross profit | 8,176 | 4,801 | 15,104 | 7,608 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling, general and administrative | 21,087 | 19,599 | 43,084 | 38,954 | ||||||||||||||||
| Research and development | 4,142 | 3,873 | 8,310 | 7,735 | ||||||||||||||||
| Total operating expenses | 25,229 | 23,472 | 51,394 | 46,689 | ||||||||||||||||
| Operating loss | (17,053 | ) | (18,671 | ) | (36,290 | ) | (39,081 | ) | ||||||||||||
| Other income (expense), net: | ||||||||||||||||||||
| Interest and other income | 107 | 61 | 225 | 160 | ||||||||||||||||
| Interest and other expense | (1,379 | ) | (923 | ) | (2,744 | ) | (1,821 | ) | ||||||||||||
| Total other expense, net | (1,272 | ) | (862 | ) | (2,519 | ) | (1,661 | ) | ||||||||||||
| Net loss | $ | (18,325 | ) | $ | (19,533 | ) | $ | (38,809 | ) | $ | (40,742 | ) | ||||||||
| Net loss per share, basic and diluted | $ | (0.60 | ) | $ | (0.65 | ) | $ | (1.28 | ) | $ | (1.47 | ) | ||||||||
| Weighted average shares used to compute basic and diluted net loss per share | 30,489 | 29,902 | 30,392 | 27,723 | ||||||||||||||||
Press Release Exhibit
Summary of Technology Upgrade
Program and Anticipated Accounting Treatment
Program Overview
Eligibility and Terms*
A summary of the eligibility and terms of the Upgrade Program is provided in the following tables:
|
t:slim Pump Customers |
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| Offer | Purchase Date | Fee to Upgrade | ||
|
Exchange existing t:slim Pump for new t:slim X2 Pump |
On or after |
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Purchased prior to |
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t:slim G4 Pump Customers |
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| Offer | Effective Date | Fee to Upgrade | ||
|
Option A: Exchange Option |
Effective following the launch of the t:slim X2 Pump |
|
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Option B: Service Plan |
Effective following |
|
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*Subject to applicable regulatory approvals of future products. Pricing
terms and conditions for the Upgrade Program are subject to change at
any time, without notice. Limitations apply. This offer is not available
for t:slim customers under 6 years of age or t:slim G4 customers under
12 years of age. Offer is not valid for prescriptions reimbursed or paid
under
Anticipated Accounting Treatment of Upgrade Program
Under
Under GAAP rules, the opportunity for a customer to receive future upgrades and services represents a right of return or guarantee at the time of the initial product purchase. Tandem has not offered an upgrade program in the past and does not have sufficient history with similar programs to estimate the number of customers that will participate. As a result, the Company anticipates that sales and cost of goods sold for all eligible t:slim Pump and t:slim G4 Pump shipments will be subject to deferral as summarized in the following table:
| Anticipated Upgrade Program Accounting Treatment | ||||
|
for Eligible Shipments on or After |
||||
| Product | Sales Deferral | Cost of Goods Sold Deferral | ||
| t:slim Pump | 100% of each sale as a right of return. |
100% of the cost of goods sold as a right of return. |
||
| t:slim G4 Pump |
A portion of each sale will be deferred. Determination of the amount of the deferral primarily based on the date of initial sale relative to the anticipated availability of the t:slim X2 with G5 integration. |
No deferral. | ||
The Company expects to recognize the deferred amount of sales and costs
of goods sold at the earlier of when the Company's obligations under the
Upgrade Program are satisfied or when the Upgrade Program expires on
The above summary of anticipated accounting treatment represents the Company's current expectations, but is preliminary and subject to future modification.
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Media Contact:
ssabicer@thesabicergroup.com
or
Investor
Contact:
smorrison@tandemdiabetes.com
Source:
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