TANDEM DIABETES CARE INC [TNDM] Filings

10-Q 1 tndm-20240630.htm 10-Q tndm-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 001-36189

_____________________________________________________________________________________________

Tandem Diabetes Care, Inc.

(Exact name of registrant as specified in its charter)

_____________________________________________________________________________________________


Delaware		20-4327508
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
12400 High Bluff Drive		92130
San Diego,	California	(Zip Code)
(Address of principal executive offices)

(858) 366-6900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.001 per share	TNDM	Nasdaq Global Market

_____________________________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 29, 2024, there were 65,464,900 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS


Part I	Financial Information	1
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets at June 30, 2024 (Unaudited) and December 31, 2023	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4	Controls and Procedures	36

Part II	Other Information	37
Item 1	Legal Proceedings	37
Item 1A	Risk Factors	37
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 5	Other Information	76
Item 6	Exhibits	77

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

TANDEM DIABETES CARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


	June 30,		December 31,
	2024		2023
Assets	(Unaudited)		(Note 1)
Current assets:
Cash and cash equivalents	$	47,697	$	58,868
Short-term investments	404,718		409,044
Accounts receivable, net	98,117		105,555
Inventories	161,661		157,937
Prepaid and other current assets	21,195		16,585
Total current assets	733,388		747,989
Property and equipment, net	78,626		76,542
Operating lease right-of-use assets	88,243		87,791
Other long-term assets	37,246		40,336
Total assets	$	937,503	$	952,658
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	47,776	$	49,586
Accrued expenses	13,225		12,726
Employee-related liabilities	42,871		43,430
Current portion of convertible senior notes, net	40,540		—
Operating lease liabilities	17,790		17,060
Deferred revenue	44,200		43,994

Other current liabilities	34,208		28,462
Total current liabilities	240,610		195,258

Convertible senior notes, net - long-term	307,392		285,035
Operating lease liabilities - long-term	111,392		113,572
Deferred revenue - long-term	11,736		13,331
Other long-term liabilities	32,498		31,830
Total liabilities	703,628		639,026
Commitments and contingencies (Note 13)	—		—
Stockholders’ equity:
Common stock, $0.001 par value; 200,000 shares authorized, 65,435 and 65,552 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively.	65		66
Additional paid-in capital	1,260,392		1,263,997
Accumulated other comprehensive income (loss)	(1,253)		1,369
Accumulated deficit	(1,025,329)		(951,800)
Total stockholders’ equity	233,875		313,632
Total liabilities and stockholders’ equity	$	937,503	$	952,658

See accompanying notes to unaudited condensed consolidated financial statements.

TANDEM DIABETES CARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Sales	$	221,910	$	195,917	$	413,584	$	365,300
Cost of sales	109,116		94,182		206,118		180,658
Gross profit	112,794		101,735		207,466		184,642
Operating expenses:
Selling, general and administrative	94,242		97,610		184,348		187,424
Research and development	49,326		42,933		95,570		85,093
Acquired in-process research and development expenses	—		—		—		78,750
Total operating expenses	143,568		140,543		279,918		351,267
Operating loss	(30,774)		(38,808)		(72,452)		(166,625)
Other income (expense), net:
Interest income and other, net	2,824		5,784		8,138		11,649
Interest expense	(1,793)		(1,605)		(3,690)		(3,239)
Loss on extinguishment of debt	—		—		(1,268)		—

Total other income (expense), net	1,031		4,179		3,180		8,410
Loss before income taxes	(29,743)		(34,629)		(69,272)		(158,215)
Income tax expense	1,071		1,146		4,257		1,433
Net loss	$	(30,814)	$	(35,775)	$	(73,529)	$	(159,648)
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments	$	(463)	$	(298)	$	(1,759)	$	1,451
Foreign currency translation gains (losses)	145		(802)		(863)		(827)
Comprehensive loss	$	(31,132)	$	(36,875)	$	(76,151)	$	(159,024)

Net loss per share - basic and diluted	$	(0.47)	$	(0.55)	$	(1.13)	$	(2.47)

Weighted average shares used to compute basic and diluted net loss per share	64,994		64,830		65,160		64,690

See accompanying notes to unaudited condensed consolidated financial statements.

TANDEM DIABETES CARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

Three Months Ended June 30, 2024


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2024	64,563	$	65	$	1,238,449	$	(935)	$	(994,515)	$	243,064

Exercise of stock options	55	—		1,149		—		—		1,149
Vesting of restricted stock units, net of shares withheld for taxes	415	—		(10,438)		—		—		(10,438)
Issuance of common stock for Employee Stock Purchase Plan	402	—		6,286		—		—		6,286


Stock-based compensation expense	—	—		24,946		—		—		24,946


Unrealized loss on short-term investments	—	—		—		(463)		—		(463)
Foreign currency translation gains	—	—		—		145		—		145
Net loss	—	—		—		—		(30,814)		(30,814)
Balance at June 30, 2024	65,435	$	65	$	1,260,392	$	(1,253)	$	(1,025,329)	$	233,875

Six Months Ended June 30, 2024


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2023	65,552	$	66	$	1,263,997	$	1,369	$	(951,800)	$	313,632
Stock repurchase and retirement of shares	(1,107)	(1)		(29,999)		—		—		(30,000)
Exercise of stock options	70	—		1,397		—		—		1,397
Vesting of restricted stock units, net of shares withheld for taxes	518	—		(12,197)		—		—		(12,197)
Issuance of common stock under Employee Stock Purchase Plan	402	—		6,286		—		—		6,286


Stock-based compensation expense	—	—		46,537		—		—		46,537
Purchase of capped call options related to convertible notes due 2029	—	—		(15,813)		—		—		(15,813)
Unwind of capped call options related to convertible notes due 2025	—	—		184		—		—		184
Unrealized loss on short-term investments	—	—		—		(1,759)		—		(1,759)
Foreign currency translation losses	—	—		—		(863)		—		(863)
Net loss	—	—		—		—		(73,529)		(73,529)
Balance at June 30, 2024	65,435	$	65	$	1,260,392	$	(1,253)	$	(1,025,329)	$	233,875

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended June 30, 2023


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2023	64,609	$	65	$	1,191,843	$	(93)	$	(853,062)	$	338,753

Exercise of stock options	18	—		305		—		—		305
Vesting of restricted stock units, net of shares withheld for taxes	186	—		(3,163)		—		—		(3,163)
Issuance of common stock for Employee Stock Purchase Plan	249	—		6,804		—		—		6,804


Stock-based compensation expense	—	—		23,410		—		—		23,410
Unrealized loss on short-term investments	—	—		—		(298)		—		(298)
Foreign currency translation losses	—	—		—		(802)		—		(802)
Net loss	—	—		—		—		(35,775)		(35,775)
Balance at June 30, 2023	65,062	$	65	$	1,219,199	$	(1,193)	$	(888,837)	$	329,234

See accompanying notes to unaudited condensed consolidated financial statements.

Six Months Ended June 30, 2023


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2022	64,513	$	65	$	1,170,888	$	(1,817)	$	(729,189)	$	439,947

Exercise of stock options	63	—		1,162		—		—		1,162
Vesting of restricted stock units, net of shares withheld for taxes	237	—		(4,561)		—		—		(4,561)
Issuance of common stock under Employee Stock Purchase Plan	249	—		6,804		—		—		6,804
Exercise of common stock warrants	—	—		—		—		—		—

Stock-based compensation expense	—	—		44,906		—		—		44,906
Unrealized gain on short-term investments	—	—		—		1,451		—		1,451
Foreign currency translation losses	—	—		—		(827)		—		(827)
Net loss	—	—		—		—		(159,648)		(159,648)
Balance at June 30, 2023	65,062	$	65	$	1,219,199	$	(1,193)	$	(888,837)	$	329,234

See accompanying notes to unaudited condensed consolidated financial statements.

TANDEM DIABETES CARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2024		2023
Operating Activities
Net loss	$	(73,529)	$	(159,648)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	8,151		7,661
Amortization of debt issuance costs	1,085		1,009
Provision for expected credit losses	3,723		2,758

Operating lease termination and other impairment charges	2,000		14,099
Accretion of discount or premium on short-term investments	348		1,755

Stock-based compensation expense	46,936		44,594
Loss on extinguishment of debt	1,268		—
Acquired in-process research and development expenses	—		78,750
Other	335		(280)
Changes in operating assets and liabilities:
Accounts receivable, net	2,862		13,553
Inventories	(5,157)		(35,945)
Prepaid and other current assets	(4,782)		(3,147)
Other long-term assets	93		(1,659)
Accounts payable and accrued expenses	241		5,557

Employee-related liabilities	(462)		(2,711)
Deferred revenue	(1,261)		2,946
Operating leases and other current liabilities	3,967		5,023
Other long-term liabilities	911		1,036
Net cash used in operating activities	(13,271)		(24,649)
Investing Activities
Purchases of short-term investments	(177,724)		(235,525)
Proceeds from maturities and redemptions of short-term investments	180,051		303,110

Purchases of property and equipment	(10,923)		(16,205)
Acquisitions, including in-process research and development, net of cash acquired	—		(69,496)
Purchases of intangible assets and strategic investments	—		(2,515)
Net cash used in investing activities	(8,596)		(20,631)
Financing Activities
Proceeds from issuance of convertible senior notes due 2029, net of $9,400 debt issuance costs	306,850		—
Repurchase of $246,740 principal amount of convertible senior notes due 2025	(246,123)		—
Payment for capped call transactions related to convertible senior notes due 2029	(15,813)		—
Repurchase and retirement of common stock	(30,000)
Proceeds from issuance of common stock under Company stock plans, net of cash used to settle withholding taxes on vested restricted stock	(4,513)		3,407

Other financing activities	183		—
Net cash provided by (used in) financing activities	10,584		3,407
Effect of foreign exchange rate changes on cash	112		107
Net increase (decrease) in cash and cash equivalents	(11,171)		(41,766)
Cash and cash equivalents at beginning of period	58,868		172,517
Cash and cash equivalents at end of period	$	47,697	$	130,751
Supplemental disclosures of cash flow information

Income taxes paid	$	1,183	$	1,771
Supplemental schedule of non-cash investing and financing activities
Operating lease right-of-use assets obtained in exchange for operating lease obligations	$	3,783	$	—
Purchases of property and equipment included in accounts payable	$	1,505	$	3,027

See accompanying notes to unaudited condensed consolidated financial statements.

TANDEM DIABETES CARE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

The Company

Tandem Diabetes Care, Inc. is a medical device company focused on the design, development and commercialization of technology solutions for people living with diabetes. Tandem Diabetes Care, Inc. is incorporated in the state of Delaware. Unless the context requires otherwise, the terms the “Company” or “Tandem” refer to Tandem Diabetes Care, Inc., together with its wholly-owned subsidiaries.

The Company manufactures, sells, and supports insulin pump products that are designed to address the evolving needs and preferences of differentiated segments of the insulin-dependent diabetes market. The Company recently expanded its portfolio, which now includes both the t:slim X2 Insulin Delivery System (t:slim X2) and the Tandem Mobi insulin pumps. Both pumps have an advanced algorithm for managing insulin delivery, using information received from integrated continuous glucose monitoring (CGM) sensors. The software on the insulin pump products may be updated remotely by the individual users as new advancements become available and are compatible with other complementary digital health offerings, such as the mobile application and cloud-based diabetes management applications. The Company’s insulin pump products are generally considered durable medical equipment and have an expected lifespan of at least four years. In addition to insulin pumps, the Company sells single-use products that are used together with the pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body.

Basis of Presentation and Principles of Consolidation

The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments which are of a normal and recurring nature and considered necessary for a fair presentation of the financial information contained herein, have been included.

Interim financial results are not necessarily indicative of results anticipated for the full year or any other period(s). These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (Annual Report), from which the balance sheet information herein was derived. The condensed consolidated financial statements include the accounts of Tandem Diabetes Care, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The functional currency of the Company’s foreign subsidiaries is their respective local currency. The Company translates the financial statements of its foreign subsidiaries into U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates for each period for revenue, costs and expenses. Translation related adjustments are included in other comprehensive income (loss) in the condensed consolidated statements of operations, and in accumulated other comprehensive income (loss) in the stockholders’ equity section of the Company’s condensed consolidated balance sheets. Foreign exchange gains or losses resulting from balances denominated in a currency other than the functional currency are recognized in interest income and other, net in the Company’s condensed consolidated statements of operations.

2. Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2024, as compared to those disclosed in the Company’s 2023 Annual Report.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes as of the date of the condensed consolidated financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

Accounts Receivable

The Company grants credit to various customers in the ordinary course of business and is paid directly by customers who use its products, distributors and third-party insurance payors. The Company maintains an allowance for its current estimate of expected credit losses. Provisions for expected credit losses are estimated based on historical experience, assessment of specific customer-related risks, review of outstanding invoices, forecasts about the future, and various other assumptions and estimates that are believed to be reasonable under the circumstances, including changes to credit risks as a result of recessionary concerns, changes in discretionary spending, increased interest rates, and other macroeconomic factors. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible.

Operating Lease Right-of-Use Assets and Liabilities

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized when the Company takes possession of the leased property (Commencement Date) based on the present value of lease payments over the lease term. For lease agreements that contain lease and non-lease components, the Company accounts for both of those components as a single lease component. Rent expense on noncancelable leases containing known future scheduled rent increases is recorded on a straight-line basis over the term of the respective leases beginning on the Commencement Date. The difference between rent expense and rent paid is accounted for as a component of operating lease right-of-use assets on the Company’s condensed consolidated balance sheets. Landlord improvement allowances and other similar lease incentives are recorded as a reduction of the right-of-use leased assets, and are amortized on a straight-line basis as a reduction to operating lease costs.

Intangible Assets Subject to Amortization

Finite-lived intangible assets are recorded at cost, net of accumulated amortization and, if applicable, impairment charges. Amortization of finite-lived intangible assets is recognized over their estimated useful lives on a straight-line basis. The Company did not recognize any intangible asset impairment losses during the three and six months ended June 30, 2024 and 2023.

Strategic Investments

The Company held equity investments totaling $30.4 million and $10.1 million in private companies at June 30, 2024 and December 31, 2023, respectively. The investments were included as a component of other long-term assets on the condensed consolidated balance sheets at June 30, 2024 and December 31, 2023. The investments are carried at cost minus impairment, if any, adjusted for changes in observable prices. The Company monitors these investments to evaluate whether any increase or decline in its value has occurred, based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

During the three and six months ended June 30, 2024, the Company recorded an impairment charge of $2.0 million related to one of its investments in a private company. The Company did not record any impairment charges related to its strategic investments in the three and six months ended June 30, 2023.

Approximately $22.2 million of the total strategic investments balance was previously held in the form of subordinated convertible notes of one private investee company. The subordinated notes were converted into equity of the private company at final maturity, which occurred in June 2024. As a result of the note conversion, the Company received shares of the private investee company. As of June 30, 2024, and December 31, 2023, each of the Company’s equity investments in private companies represented less than 15% of the outstanding equity of the respective private company.

Revenue Recognition

Revenue is generated primarily from sales of insulin pumps, single-use insulin cartridges and infusion sets to individual customers with third-party insurance coverage and through a network of distributors that resell the products to insulin-dependent diabetes customers. The Company recognizes revenue when it transfers control of the promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, net of estimated rebates and returns.

Revenue Recognition for Arrangements with Multiple Performance Obligations

The Company considers the individual deliverables in its product offerings to be separate performance obligations. The transaction price is determined based on the consideration expected to be received, based either on the stated value in contractual arrangements or the estimated cash to be collected in non-contracted arrangements. The Company allocates the consideration to the individual performance obligations and recognizes the consideration based on when the performance obligation is satisfied, considering whether or not this occurs at a point in time or over time. Generally, insulin pumps, cartridges, infusion sets, and accessories are deemed performance obligations that are satisfied at a point in time when the customer obtains control of the promised good, which typically is upon shipment for our distributor arrangements and upon receipt for sales directly to individual customers. Complementary products, such as the Company’s data management and software update platforms, are considered distinct performance obligations that are satisfied over time, as access and support for these products is provided throughout the typical four-year warranty period of the insulin pumps. Accordingly, revenue related to the complementary products is deferred and recognized over a four-year period. Where there is no standalone value for the complementary product, the Company determines its value by applying the expected cost plus a margin approach and then allocates the residual to the insulin pumps.

Revenue Recognition for Tandem Choice Program

In September 2022, the Company launched a new technology access program referred to as Tandem Choice, that provides eligible, in-warranty t:slim X2 customers in the United States with the flexibility to obtain the newest hardware platform, Tandem Mobi, when commercially available. Participating customers have the right to purchase the alternative Tandem pump for a fee, referred to as a choice right. The program was determined to create a material right for which a portion of each t:slim X2 pump transaction price was allocated and deferred.

The Company determined that the ability for a customer to upgrade to a new technology represents a material right because the pricing inherent in such option provides the customer with a discount that is incremental to the range of discounts that would otherwise be granted for the related goods and services to comparable customers. The standalone selling price for the choice right was estimated based on the adjusted market assessment approach and contemplated the likelihood that the respective option will be exercised.

The Company began selling Tandem Mobi insulin pumps in the first quarter of 2024 and eligibility for the Tandem Choice program ended in February 2024. Consequently, the Company ceased to allocate and defer a portion of the transaction price for the material right for pumps sold after that date. Eligible customers who purchased a t:slim X2 insulin pump during the program period will have until December 31, 2024 to exercise the option to switch to the Tandem Mobi for a stated fee.

The Company will recognize the deferred amount of sales at the earlier of when the obligations under the Tandem Choice program are satisfied or when the program expires. If a customer elects to participate in the program, the Company will recognize upgrade fees received, and the associated cost of goods sold at the time of fulfilling the obligation. For the six months ended June 30, 2024, the Company deferred $1.1 million of pump sales that qualified for Tandem Choice, and recognized incremental sales of $0.2 million from individual Tandem Choice fulfillments.

At June 30, 2024 and December 31, 2023, current deferred revenue balance was $31.0 million and $30.6 million, respectively, related to the Tandem Choice program.

Sales Rebates

The Company is subject to certain rebates on pricing programs with managed care organizations, such as governmental and third-party commercial payors. The Company estimates provisions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data. Estimated sales rebates included in other long-term liabilities have an estimated payment due date beyond twelve months from the balance sheet date. Accordingly, actual rebates paid may differ from estimated amounts recorded in the accompanying condensed consolidated financial statements.

As of June 30, 2024 and December 31, 2023, total estimated sales rebates were included in the following condensed consolidated balance sheet accounts (in thousands):


	June 30, 2024		December 31, 2023
Other current liabilities	$	490	$	505
Other long-term liabilities	8,494		8,042
Total sales rebate	$	8,984	$	8,547

Warranty Reserve

The Company generally provides a four-year warranty on its insulin pumps to end-user customers and may replace any pumps that do not function as intended in accordance with the product specifications within the warranty period. Additionally, the Company offers a six-month warranty on single-use insulin cartridges and infusion sets. Estimated warranty costs are recorded at the time of shipment, and the Company reevaluates the estimate of the warranty reserve obligation at each reporting period. Warranty costs are estimated primarily based on the current expected product replacement cost and expected replacement rates using historical experience. Insulin pumps returned to the Company may be refurbished and redeployed. Experience has shown that initial data for any given pump version or pump platform may be insufficient; therefore, the Company’s process relies on long-term historical averages of existing platforms until sufficient data are available. As actual experience becomes available, the Company uses the data to update the historical averages. The Company may make further adjustments to the warranty reserve when deemed appropriate, giving additional consideration to revised future expectations of performance based on enhanced hardware components, or new features and capabilities that may become available through Tandem Device Updater. Warranty expense is recorded as a component of cost of sales in the condensed consolidated statements of operations.

The following table provides a reconciliation of the changes in product warranty liabilities for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Balance at beginning of the period	$	37,638	$	37,152	$	37,173	$	36,537
Provision for warranties issued during the period	9,581		8,915		19,990		17,288
Settlements made during the period	(9,062)		(7,385)		(18,099)		(15,068)
Increases (decreases) in warranty estimates	(801)		235		(1,708)		160
Balance at end of the period	$	37,356	$	38,917	$	37,356	$	38,917

As of June 30, 2024 and December 31, 2023, total product warranty reserves were included in the following condensed consolidated balance sheet accounts (in thousands):


	June 30, 2024		December 31, 2023

Other current liabilities	$	18,155	$	18,135
Other long-term liabilities	19,201		19,038
Total warranty reserve	$	37,356	$	37,173

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award, and the portion that is ultimately expected to vest is recognized as compensation expense over the requisite service period on a straight-line basis. The Company estimates the fair value of stock options issued under the Company’s stock incentive plans, and the fair value of the employees’ purchase rights under the Company’s Employee Stock Purchase Plan (ESPP) using the Black-Scholes option pricing model on the date of grant. The Black-Scholes option pricing model requires the use of assumptions about a number of variables, including stock price volatility, expected term, dividend yield and risk-free interest rate (see Note 8, “Stockholders’ Equity”). The fair value of restricted stock unit (RSU) awards issued under the Company’s stock incentive plans that vest solely based on service, is estimated based on the fair market value of the underlying stock on the date of grant. The fair value of RSU awards that vest based upon the Company’s actual performance relative to predefined performance metrics and the awardee’s continuing service through the measurement date is generally estimated based on the fair market value of the underlying stock on the date of grant and the probability that the specified performance criteria will be met. At each reporting period, the Company reassesses the probability of the achievement of such performance metrics. Any expense change resulting from an adjustment in the estimated shares to be released is recorded in the period of adjustment.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income or loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net income (loss) per share reflects the potential dilution that would occur if securities exercisable for or convertible into common stock were exercised for or converted into common stock. Dilutive common share equivalents are comprised of stock options and unvested RSUs outstanding under the Company’s stock incentive plans, potential awards to be granted pursuant to the ESPP, and common stock warrants, each calculated using the treasury stock method, and shares issuable upon conversion of the convertible senior notes calculated using the if-converted method.

For the three and six months ended June 30, 2024 and 2023, there was no difference in the weighted average number of shares used to calculate basic and diluted net loss per share due to the Company’s net loss position for each of the periods presented.

Potentially dilutive securities outstanding and not included in the calculation of diluted net loss per share (because inclusion would be anti-dilutive) are as follows (in thousands, in common stock equivalent shares):


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Options to purchase common stock	804	138	129	138
Unvested restricted stock units	3,322	2,032	2,865	1,677
Warrants to purchase common stock	194	194	194	194
Awards granted under the ESPP	59	32	29	16
Convertible senior notes (if-converted)	9,513	2,554	6,877	2,554
	13,892	4,950	10,094	4,579

3. Short-Term Investments

The Company invests in marketable securities primarily consisting of debt instruments of the United States Government, United States Government-sponsored enterprises, and financial institutions and corporations with strong credit ratings. The following represents a summary of the estimated fair value of short-term investments at June 30, 2024 and December 31, 2023 (in thousands):


At June 30, 2024	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available-for-sale securities:
United States Government-sponsored enterprises	$	176,311	$	37	$	(754)	$	175,594
United States Treasury securities	90,505		14		(189)		90,330
Commercial paper	45,520		1		(52)		45,469
Corporate debt securities	93,392		70		(137)		93,325

Total	$	405,728	$	122	$	(1,132)	$	404,718


At December 31, 2023	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available-for-sale securities:
United States Government-sponsored enterprises	$	181,851	$	518	$	(215)	$	182,154
United States Treasury securities	114,714		318		(28)		115,004
Commercial paper	72,505		33		(27)		72,511
Corporate debt securities	39,225		156		(6)		39,375

Total	$	408,295	$	1,025	$	(276)	$	409,044

The contractual maturities of available-for-sale debt securities as of June 30, 2024, were as follows (in thousands):


	Years to Maturity
At June 30, 2024	Within One Year		One to Two Years		Two to Three Years		Estimated Fair Value
United States Government-sponsored enterprises	$	66,707	$	30,914	$	77,973	$	175,594
United States Treasury securities	54,404		34,941		985		90,330
Commercial paper	45,469		—		—		45,469
Corporate debt securities	53,092		40,233		—		93,325

Total	$	219,672	$	106,088	$	78,958	$	404,718

The Company has classified all marketable securities, regardless of maturity, as short-term investments based upon the Company’s ability and intent to use any of those marketable securities to satisfy the Company’s liquidity requirements.

The Company reviews the portfolio of available-for-sale debt securities quarterly to determine if any investment is impaired due to changes in credit risk or other potential valuation concerns. Unrealized losses on available-for-sale debt securities at June 30, 2024 were primarily due to an increase in market interest rates after certain debt securities were purchased. The Company does not intend to sell the available-for-sale debt securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell these debt securities before recovery of their amortized cost bases, which may be at maturity. Based on the credit quality of the available-for-sale debt securities in an unrealized loss position, and the Company’s estimates of future cash flows to be collected from those securities, the Company believes the unrealized losses are not credit losses. Accordingly, the Company did not record an allowance for credit losses related to its available-for-sale debt securities at June 30, 2024 and December 31, 2023.

4. Composition of Certain Financial Statement Items

Accounts Receivable

Accounts receivable, net consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):


	June 30,		December 31,
	2024		2023

Accounts receivable	$	103,342	$	110,453
Less: allowance for credit losses	(5,225)		(4,898)
Accounts receivable, net	$	98,117	$	105,555

Allowance for Credit Losses

The following table provides a reconciliation of the changes in the allowance for estimated accounts receivable credit losses for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Balance at beginning of the period	$	4,923	$	4,467	$	4,898	$	4,327
Provision for expected credit losses	1,525		1,372		3,723		2,758
Write-offs and adjustments, net of recoveries	(1,223)		(997)		(3,396)		(2,243)
Balance at end of the period	$	5,225	$	4,842	$	5,225	$	4,842

Inventories

Inventories consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):


	June 30,		December 31,
	2024		2023

Raw materials	$	45,457	$	42,783
Work-in-process	28,455		44,026
Finished goods	87,749		71,128
Total inventories	$	161,661	$	157,937

5. Fair Value Measurements

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in thousands):


	Fair Value Measurements at June 30, 2024
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents(1)	$	34,513	$	34,513	$	—	$	—
United States Government-sponsored enterprises	175,594		—		175,594		—
United States Treasury securities	90,330		90,330		—		—
Commercial paper	45,469		—		45,469		—
Corporate debt securities	93,325		—		93,325		—

Total assets	$	439,231	$	124,843	$	314,388	$	—


	Fair Value Measurements at December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents(1)	$	48,033	$	48,033	$	—	$	—
United States Government-sponsored enterprises	182,154		—		182,154		—
United States Treasury securities	115,004		115,004		—		—
Commercial paper	72,511		—		72,511		—
Corporate debt securities	39,375		—		39,375		—
Supranational bonds	—		—		—		—
Total assets	$	457,077	$	163,037	$	294,040	$	—

(1)Generally, cash equivalents include money market funds and investments with a maturity of three months or less from the date of purchase.

The Company’s Level 1 financial instruments, which are in active markets, are valued using unadjusted quoted market prices for identical instruments.

The Company’s Level 2 financial instruments are valued using market prices on less active markets with observable valuation inputs such as interest rates and yield curves. The Company obtains the fair value of Level 2 financial instruments from quoted market prices, calculated prices or quotes from third-party pricing services. The Company validates these prices through independent valuation testing and review of portfolio valuations provided by the Company’s investment managers.

There were no transfers into or out of Level 3 assets during the three months ended June 30, 2024 and 2023, respectively.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and employee-related liabilities are reasonable estimates of their fair values because of the short-term nature of these assets and liabilities. Short-term investments are carried at fair value.

The Company’s convertible senior notes are carried at amortized cost on the condensed consolidated balance sheets (see Note 7, “Debt”). The Company estimated the fair value of its convertible senior notes based on Level 2 quoted market prices as follows (in thousands):


	Fair Value Measurements at
	June 30, 2024		December 31, 2023
Convertible Senior Notes due 2025	$	39,130	$	271,688
Convertible Senior Notes due 2029	438,701		*
Total fair value of outstanding convertible senior notes	$	477,831	$	271,688

* Not applicable as no notes were outstanding at this date.

In March 2024, the Company issued $316.3 million aggregate principal amount of the Company’s Convertible Senior Notes Due 2029, and repurchased $246.7 million of principal of the Company’s Convertible Senior Notes due 2025 (see Note 7, “Debt”).

6. Leases

The Company's leases consist of operating leases for general office space, research and development, manufacturing and warehouse facilities, and equipment. These noncancellable operating leases have initial lease terms from two years to thirteen years. Certain leases include an option to renew, with renewal terms that can extend the lease term for additional periods at the Company’s sole discretion. The Company includes the renewal option period in the lease term for those leases reasonably expected to be extended at the time of lease commencement.

Supplemental Lease Disclosure Information

The Company’s lease costs recorded in the condensed consolidated statements of operations were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	3,564	$	4,299	$	7,081	$	8,774
Short-term lease cost	21		124		43		220
Loss on lease termination and right-of-use asset impairment charges	—		11,224		—		11,224
Total lease cost	$	3,585	$	15,647	$	7,124	$	20,218

Maturities of operating lease liabilities at June 30, 2024 were as follows (in thousands):


Years Ending December 31,
2024	$	8,874
2025	18,046
2026	17,946
2027	18,229
2028	14,714
Thereafter	90,004
Total undiscounted lease payments	167,813
Less: amount representing interest	(38,631)
Present value of operating lease liabilities	129,182
Less: current portion of operating lease liabilities	(17,790)
Operating lease liabilities - long-term	$	111,392

The weighted-average remaining lease term and weighted-average discount rate for operating leases were as follows:


	June 30, 2024		December 31, 2023
Weighted-average remaining lease term (in years)	9.9		10.2
Weighted-average discount rate used to determine operating lease liabilities	5.3	%	5.4	%

Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were $4.7 million and $4.4 million for the six months ended June 30, 2024 and 2023, respectively.

7. Debt

Convertible Senior Notes Due 2029

On March 8, 2024, the Company completed an offering of $316.3 million aggregate principal amount of 1.50% Convertible Senior Notes due 2029 (the 2029 Notes). The proceeds from the issuance of the 2029 Notes were $306.8 million, net of debt issuance costs. The Company used approximately $246.1 million of the net proceeds to repurchase approximately $246.7 million in aggregate principal amount of its Convertible Senior Notes Due 2025 (the 2025 Notes) concurrently with the pricing of the 2029 Notes in privately negotiated transactions.

Concurrently, the Company also paid $1.3 million of accrued interest due at time of the note repurchase. As a result of the repurchase, the Company recognized a $1.3 million loss on extinguishment of debt in the condensed consolidated statement of operations for the six months ended June 30, 2024. The loss on extinguishment of debt included the unamortized debt issuance costs related to the portion of the 2025 Notes repurchased.

The Company used $30.0 million of the net proceeds to repurchase shares of the Company’s common stock from certain purchasers of the 2029 Notes at a purchase price equal to the last reported sale price per share of the Company’s common stock on March 5, 2024, which was $27.105 per share. In addition, the Company used $15.8 million of the net proceeds to pay the cost of the capped call transactions (2029 Capped Call Transactions) discussed below.

The 2029 Notes are the Company’s senior unsecured obligations. Interest is payable in cash semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2024, at a rate of 1.50% per year. The 2029 Notes mature on March 15, 2029 unless repurchased, redeemed, or converted in accordance with their terms prior to the maturity date.

The initial conversion rate for the 2029 Notes is 28.9361 shares of common stock per $1,000 principal amount of the 2029 Notes, which is equivalent to an initial conversion price of approximately $34.56 per share of the Company’s common stock (2029 Notes Conversion Price). The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2029 Notes.

The Company may not redeem the 2029 Notes prior to March 22, 2027. The Company has the option to redeem for cash all or any portion of the 2029 Notes on or after March 22, 2027 if the last reported sale price of the Company’s common stock has been at least 130% of the 2029 Notes Conversion Price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest. No sinking fund is provided for the 2029 Notes.

Holders of the 2029 Notes may convert all or a portion of their 2029 Notes at their option prior to December 15, 2028, in multiples of $1,000 principal amounts, only under the following circumstances:

•during any calendar quarter commencing after the quarter ending on June 30, 2024 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the 2029 Notes Conversion Price on each applicable trading day;

•during the five business day period after any ten consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of the 2029 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate of the 2029 Notes on such trading day;

•if the Company calls such 2029 Notes for redemption, at any time before the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2029 Notes called (or deemed called) for redemption; or

•on the occurrence of specified corporate events.

On or after December 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2029 Notes, in integral multiples of $1,000 principal amount, at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the 2029 Notes.

During the three months ended June 30, 2024, the conversion feature of the 2029 Notes was triggered and therefore the 2029 Notes are currently convertible, in whole or in part, at the option of the holders from July 1, 2024 through September 30, 2024. Whether the 2029 Notes will be convertible following the stated period will depend on the continued satisfaction of this condition or another conversion condition. The Company has not received any conversion notices through the issuance date of its condensed consolidated financial statements. The Company may elect to settle conversions of the 2029 Notes in shares of common stock. Since the Company has the ability and intent to settle conversions in shares of common stock, it continued to classify the 2029 Notes as long-term debt on its condensed consolidated balance sheet as of June 30, 2024.

Convertible Senior Notes Due 2025

In May 2020, the Company completed an offering of $287.5 million aggregate principal amount of 1.50% Convertible Senior Notes due 2025 (the 2025 Notes). The proceeds from the issuance of the Notes were $244.6 million, net of debt issuance costs and cash used to pay the cost of the capped call transactions (Capped Call Transactions) discussed below.

In March 2024, the Company repurchased for cash $246.7 million in aggregate principal amount of the 2025 Notes, concurrently with the pricing of the 2029 Notes in privately negotiated transactions.

The 2025 Notes are the Company’s senior unsecured obligations. Interest is payable in cash semi-annually in arrears beginning on November 1, 2020 at a rate of 1.50% per year. The 2025 Notes mature on May 1, 2025 unless repurchased, redeemed, or converted in accordance with their terms before the maturity date. As of June 30, 2024 the outstanding balance of the 2025 Notes was classified in current liabilities on the Company’s condensed consolidated balance sheets.

The 2025 Notes are convertible into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion rate of 8.8836 shares of common stock per $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of $112.57 (2025 Notes Conversion Price) per share of the Company’s common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2025 Notes.

The Company has the option to redeem for cash all or any portion of the 2025 Notes on or after May 6, 2023 if the last reported sale price of the Company’s common stock has been at least 130% of the 2025 Notes Conversion Price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period, at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest. No sinking fund is provided for the 2025 Notes.

Holders of the 2025 Notes may convert all or a portion of their 2025 Notes at their option before November 1, 2024, in multiples of $1,000 principal amounts, only under the following circumstances:

•if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2025 Notes on each such trading day;

•during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2025 Notes for each day of that five consecutive trading day period was

less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate of the 2025 Notes on such trading day;

•if the Company calls any or all of the 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•on the occurrence of specified corporate events.

On or after November 1, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the 2025 Notes.

Holders of the 2025 Notes who convert in connection with a make-whole fundamental change or in connection with a redemption are entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the 2025 Notes may require us to repurchase all or a portion of the 2025 Notes at a price equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest.

The net carrying amount of the Company’s convertible senior notes on the condensed consolidated balance sheets consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Principal amount:
Convertible Senior Notes Due 2025	$	40,760	$	287,500
Convertible Senior Notes Due 2029	316,250		*
Total principal amount	357,010		287,500
Unamortized debt issuance costs	(9,078)		(2,465)
Total debt, net	$	347,932	$	285,035
Less: current portion	$	(40,540)	$	—
Long-term senior convertible notes	$	307,392	$	285,035

* Not applicable as no notes were outstanding at this date.

As of June 30, 2024 and December 31, 2023, the if-converted value of the 2025 Notes did not exceed the principal amount. As of June 30, 2024, the if-converted value of the 2029 Notes exceeded the principal amount by $52.4 million.

The following table summarizes the effective interest rates for each of our convertible senior notes for the periods shown:


	June 30, 2024		June 30, 2023
Effective interest rate:
Convertible Senior Notes Due 2025	2.2	%	2.2	%
Convertible Senior Notes Due 2029	2.1	%	*

* Not applicable as no notes were outstanding at this date.

The following table details interest expense related to the Notes recognized for the three and six months ended June 30, 2024, and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Contractual interest expense	$	1,339	$	1,078	$	2,484	$	2,156
Amortization of debt issuance costs	435		450		902		897

Total interest expense	$	1,774	$	1,528	$	3,386	$	3,053

2029 Capped Call Transactions

In connection with the issuance of the 2029 Notes, the Company entered into Capped Call Transactions in March 2024 with certain counterparties at a net cost of $15.8 million (2029 Capped Call Transactions). The 2029 Capped Call Transactions are expected generally to reduce potential dilution to the Common Stock upon any conversion of the 2029 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $42.0128 per share, and is subject to certain adjustments under the terms of the 2029 Capped Call Transactions.

2025 Capped Call Transactions

In connection with the issuance of the 2025 Notes, the Company entered into Capped Call Transactions in May 2020 with certain counterparties at a net cost of $34.1 million (2025 Capped Call Transactions). The 2025 Capped Call Transactions are expected generally to reduce potential dilution to the Common Stock upon any conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2025 Notes, as the case may be, with such reduction or offset subject to a cap. The cap price of the 2025 Capped Call Transactions is initially $173.18 per share of the Company’s common stock, and is subject to certain adjustments under the terms of the 2025 Capped Call Transactions.

In connection with the repurchase of certain 2025 Notes, the Company entered into unwind agreements with the existing option counterparties on March 5, 2024 to terminate a portion of the existing 2025 Capped Call Transactions in a notional amount corresponding to the amount of 2025 Notes repurchased (the Unwind Transactions). In connection with the Unwind Transactions, the Company received $0.2 million in cash as a termination payment in respect of the portion of the existing 2025 Capped Call Transactions that were unwound. The amount received was based generally on the termination values of the unwound portions of the existing 2025 Capped Call Transactions.

For accounting purposes, each of the capped call transactions described above are separate transactions, and not part of the terms of the 2029 Notes or the 2025 Notes. As these transactions met certain criteria under the applicable accounting guidance, each of the capped call transactions were recorded in stockholders' equity and were not accounted for as derivatives. The cost of the transactions was recorded as a reduction of the Company’s additional paid-in capital in the Company’s condensed consolidated balance sheet and will not be remeasured.

8. Stockholders’ Equity

Shares Reserved for Future Issuance

The following shares of the Company's common stock were reserved for future issuance at June 30, 2024 (in thousands):


Shares reserved for issuance upon conversion of Convertible Senior Notes			9,513
Shares underlying outstanding warrants			194
Shares underlying outstanding stock options			3,711
Shares underlying unvested restricted stock units			4,260
Shares authorized for issuance pursuant to awards granted under the ESPP			3,052
Shares authorized for future equity award grants			1,895
Total			22,625

Common Stock Warrants

Warrants outstanding to purchase shares of the Company's common stock as of June 30, 2024 were as follows:

Issue Date

Exercise Price Per Share

Warrants Outstanding

Expiration Date of Warrants Outstanding

March 2017

$23.50

193,788

March 2027

Each warrant allows the holder to purchase one share of common stock at the per share exercise price of the warrant.

Stock Incentive Plans

In May 2023, the Company’s stockholders approved the 2023 Long-Term Incentive Plan (2023 Plan), under which 2,602,184 shares of common stock were initially reserved for issuance. Under the 2023 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units to individuals who are then employees, officers, directors or consultants of the Company. The 2023 Plan replaced the Company’s Amended and Restated 2013 Stock Incentive Plan (2013 Plan), and no further equity awards will be granted under the 2013 Plan. In May 2024, the Company’s stockholders approved the 2023 Long-Term Incentive Plan, as amended, to increase the number of shares authorized for issuance under the plan by 3,000,000 shares.

Stock-Based Compensation

The following table summarizes the allocation of stock-based compensation expense included in the condensed consolidated statements of operations for all stock-based compensation arrangements (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of sales	$	1,760	$	1,749	$	3,830	$	3,343
Selling, general and administrative	15,518		14,871		28,807		28,982
Research and development	7,619		6,781		14,299		12,269
Total stock-based compensation expense	$	24,897	$	23,401	$	46,936	$	44,594

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $1.6 million at June 30, 2024, and $2.0 million at December 31, 2023.

Restricted Stock Units

Restricted stock units (RSUs) have a grant value equal to the closing price of the Company’s common stock on the award date.

The total number of RSUs granted and the respective weighted average grant date fair value were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
RSUs granted	1,694,239		1,635,679		2,052,298		1,789,825
Weighted average grant date fair value (per share)	$	48.30	$	27.61	$	44.30	$	28.92

Employee Stock Purchase Plan

In May 2024, the Company's stockholders approved the 2013 Employee Stock Purchase Plan, as amended, to increase the number of shares authorized for issuance under the plan by 3,000,000 shares. The Company records stock-based compensation expense associated with the ESPP using the Black-Scholes option pricing model. Valuations are performed on the grant date at the beginning of the purchase period, which generally occurs in May and November of each year. The assumptions used in the Black-Scholes option pricing model for the ESPP were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Weighted average grant date fair value (per share)	$	21.45		$	12.52		$	21.45		$	12.52
Risk-free interest rate	5.1		%	4.7		%	5.1		%	4.7		%
Dividend yield	0.0		%	0.0		%	0.0		%	0.0		%
Expected volatility	70.2		%	60.9		%	70.2		%	60.9		%
Expected term (in years)	1.3			1.3			1.3			1.3

9. Employee Benefits

Employee 401(k) Plan

The Company has a defined contribution 401(k) plan for employees in the United States who are at least 18 years of age. Employees are eligible to participate in the plan beginning on the first day of the calendar month following their date of hire. Unless they affirmatively elect otherwise, employees are automatically enrolled in the plan following 30 days from date of hire or entry date. Under the terms of the plan, employees may make voluntary contributions as a percent of compensation and the Company may elect to match a discretionary percentage of employee contributions.

10. Income Taxes

For the three and six months ended June 30, 2024, the Company recognized income tax expense of $1.1 million and $4.3 million, respectively, on a pre-tax loss of $29.7 million and $69.3 million, respectively. The Company calculated the provision for income taxes for the three and six months ended June 30, 2024 by applying an estimate of the annual effective tax rate for the full year to ordinary income (loss) adjusted by the tax impact of discrete items. Income tax expense for the three and six months ended June 30, 2024 was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

For the three and six months ended June 30, 2023, the Company recognized income tax expense of $1.1 million and $1.4 million, respectively, on a pre-tax loss of $34.6 million and $158.2 million, respectively. Income tax expense for the three and six months ended June 30, 2023 was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions. The Company calculated the provision for three and six months ended June 30, 2023 using a discrete effective tax rate method as the annual effective tax rate method would not provide a reliable estimate.

The Company continues to maintain a full valuation allowance against its net deferred tax assets as of June 30, 2024, based on the current assessment that it is not more likely than not these future benefits will be realized before expiration.

11. Business Segment and Geographic Information

Segment Reporting

Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance. The Company is organized based on its current product portfolio, which consists primarily of insulin pumps, single-use insulin cartridges and infusion sets for the storage and delivery of insulin. The Company views its operations and manages its business as one segment and a single reporting unit because key operating decisions and resource allocations are made by the CODM using consolidated financial data.

Disaggregation of Revenue

The Company primarily sells its products through national and regional distributors in the United States on a non-exclusive basis, and through distribution partners outside the United States. In the United States and Canada, the Company also uses a direct sales force. The Company disaggregates its revenue by geography, major sales channel and product as management believes these categories best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors.

Revenues by Geographic Region and Customer Sales Channel

During the three and six months ended June 30, 2024 and 2023, no individual country outside the United States generated revenue that represented more than 10% of total revenue. The table below sets forth revenues for the Company’s two primary geographical markets, based on the geographic location to which its products are shipped (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	156,711	$	142,501	$	286,472	$	273,743
Outside the United States	65,199		53,416		127,112		91,557
Total Sales	$	221,910	$	195,917	$	413,584	$	365,300

Sales to distributors accounted for 63% and 62% of the Company’s United States sales for the three and six months ended June 30, 2024, respectively, and 64% and 65% of the Company’s United States sales for the three and six months ended June 30, 2023, respectively. Sales to distributors accounted for the vast majority of the Company’s sales outside the United States for the three and six-month periods ended June 30, 2024 and 2023.

Revenues by Product

During the three and six months ended June 30, 2024 and 2023, sales by product were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Pump	$	107,875	$	101,677	$	195,162	$	186,379



Supplies and other	113,881		96,549		219,414		183,253
Net revenue recognized (deferred) for Tandem Choice program	154		(2,309)		(992)		(4,332)
Total Sales	$	221,910	$	195,917	413,584		365,300

12. Acquisitions

AMF Medical Acquisition

On December 10, 2022, the Company entered into a Share Purchase Agreement (Purchase Agreement) with AMF Medical SA, a corporation organized and existing under the laws of Switzerland (AMF Medical), and its shareholders to acquire all of the registered shares of AMF Medical (Transaction). AMF Medical is the developer of the Sigi Patch Pump, which is designed to be an ergonomic, rechargeable patch pump that reduces the burden of managing diabetes through its use of pre-filled insulin cartridges. The Sigi Patch Pump is under development and not commercially available.

On January 19, 2023, the Company completed the acquisition of AMF Medical under the terms of the Purchase Agreement. The total aggregate consideration for the Transaction includes a previous strategic investment of Swiss Francs (CHF) 8.0 million made in the third quarter of 2022, a cash payment of CHF 62.4 million paid at the closing of the Transaction, and additional contingent earnout payments of up to CHF 129.6 million. The contingent earnout payments become payable upon the achievement of certain milestones, and are comprised of a payment of up to CHF 38.4 million upon the successful completion of key development milestones over the two years following the closing date of the Transaction, and a payment of up to CHF 91.2 million upon obtaining regulatory clearance from the FDA of an automated controller enabled (ACE) pump. The contingent consideration will be recognized as each contingency is resolved and the respective consideration is paid or becomes payable. As of June 30, 2024, the contingencies related to the earnout milestones were not yet resolved and, therefore, the related amounts were not included in the fair value of the asset acquired and were not recognized as a liability on the consolidated balance sheet at June 30, 2024. The Company funded the initial closing payment using existing cash balances.

The transaction was accounted for as an asset acquisition as substantially all the value of the gross assets was concentrated in a single asset. The Company recorded a $78.8 million charge in 2023 representing the value of acquired in-process research and development assets with no alternative future use, and acquisition related expenses, on its condensed consolidated statements of operations in acquired in-process research and development expenses. The Company’s results of operations included the operating results of AMF Medical since the date of acquisition.

13. Commitments and Contingencies

Legal and Regulatory Matters

On September 8, 2023, a purported stockholder of the Company filed a putative securities class action complaint (captioned Lowe v. Tandem Diabetes Care, Inc., et al., Case No. 23-cv-1657 (“Lowe”)) in the United States District Court for the Southern District of California against the Company and certain of the Company’s current executive officers (“defendants”). On December 6, 2023, the court appointed Mason Raines, Thomas O. Martel, and Linna Rae Martel to serve as co-lead plaintiffs (“plaintiffs”). On February 1, 2024, the plaintiffs filed their amended complaint. In the amended complaint, the plaintiffs allege violations of the Securities Exchange Act of 1934, as amended, based on alleged materially false and misleading statements relating to our sales trends and financial forecasts. The plaintiffs seek to represent a class of persons who purchased or otherwise acquired Tandem common stock during the period between August 3, 2022, and November 2, 2022, inclusive. The plaintiffs also seek unspecified monetary damages, pre- and post-judgment interest, costs and fees, including attorneys’ fees and expert fees, and other relief. The defendants filed their motion to dismiss the amended complaint on March 11, 2024. The plaintiffs filed a response in opposition to defendants’ motion to dismiss on March 27, 2024, and on April 10, 2024, defendants filed their reply. On April 29, 2024, the court granted defendants’ motion to dismiss with leave to file a second amended complaint within 30 days. The plaintiffs did not file a second amended complaint within 30 days. On June 4, 2024, the Court entered final judgment dismissing the action in its entirety with prejudice. On July 5, 2024, the plaintiffs’ deadline to appeal the final judgment expired.

Two shareholder derivative cases were filed in the United States District Court for the Southern District of California on March 29, 2024 (captioned Bushansky v. John F. Sheridan et al., Case No. 24-cv-608) and on April 23, 2024 (captioned Amersi v. John F. Sheridan et al., Case No. 24-cv-726) against the individual members of Tandem’s Board of Directors and the Company. These shareholder derivative lawsuits piggyback on the Lowe case, and allege that Tandem’s Board breached its fiduciary duties by failing to properly oversee and monitor the risks affecting the Company’s business, which resulted in reduced guidance, an associated stock drop, and the Lowe case. On May 16, 2024, the parties in the derivative actions filed a joint motion regarding consolidation and appointment of counsel. On June 13, 2024, the joint motion was granted and the derivative actions were consolidated. On July 12, 2024, the parties filed a joint request for voluntary dismissal of the consolidated derivative actions without prejudice. On the same day, July 12, 2024, the court granted the parties’ joint request and dismissed the consolidated derivative actions without prejudice.

Although the Company intends to vigorously defend against these claims, there is no guarantee that the Company will prevail. Accordingly, the Company is unable to determine the ultimate outcome of these lawsuits or determine the amount or range of potential losses associated with these lawsuits.

From time to time, the Company is involved in various other legal proceedings, regulatory matters, and other disputes or claims arising from or related to claims incident to the normal course of the Company’s business activities, including actions with respect to intellectual property, data privacy, employment, regulatory, product liability and contractual matters. Although the results of such legal proceedings and claims cannot be predicted with certainty, as of June 30, 2024 the Company believes it is not currently a party to any legal proceedings, regulatory matters, or other disputes or claims for which a material loss was considered probable or for which the amount (or range) of loss was reasonably estimable. However, regardless of the merit of the claims raised or the outcome, legal proceedings may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors.

Letters of Credit

As of June 30, 2024, in connection with one of the Company’s operating leases (see Note 6, “Leases”), the Company had a $4.9 million unsecured irrevocable standby letter of credit arrangement with a bank, under which the landlord of the building is the beneficiary. The Company is required to maintain the standby letter of credit throughout the term of the lease, which expires in April 2035.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis together with our financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (Quarterly Report).

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Quarterly Report, other than statements of historical fact, are forward-looking statements. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. In particular, forward-looking statements contained in this Quarterly Report may relate to, among other things, our future or assumed financial condition, results of operations, liquidity, trends impacting our financial results, business forecasts and plans, research and product development plans, product pipelines, development timelines, manufacturing plans, strategic plans and objectives, capital needs and financing plans, product launches, geographic expansion, distribution plans, production capacity, clinical trials, regulatory approvals, competitive position and the impact of changes in the competitive environment, supply chain, and the businesses of our contract manufacturers and suppliers, integration of acquisitions and partner technologies, and the application of accounting guidance. We caution you that the foregoing list may not include all of the forward-looking statements made in this Quarterly Report.

Our forward-looking statements are based on our management’s current assumptions and expectations about future events and trends, which affect or may affect our business, strategy, operations or financial performance. Although we believe that these forward-looking statements are based upon reasonable assumptions, they are subject to numerous known and unknown risks and uncertainties and are made in light of information currently available to us. Our actual financial condition and results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below in the section entitled “Risk Factors” in this Quarterly Report, as well as in the other public filings we make with the Securities and Exchange Commission. You should read this Quarterly Report with the understanding that our actual future financial condition and results may be materially different from and worse than what we expect.

Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Forward-looking statements speak only as of the date they were made and, except to the extent required by law or the rules of the Nasdaq Global Market, we undertake no obligation to update or review any forward-looking statement because of new information, future events or other factors.

We qualify all of our forward-looking statements by these cautionary statements.

Overview

We are a medical device company focused on the design, development and commercialization of technology solutions for people living with diabetes. We consider our primary addressable market to be people who live with type 1 diabetes. Through our product development efforts, we are seeking to expand our addressable market to include people living with type 2 diabetes who require intensive insulin therapy. Diabetes management can vary greatly from person-to-person, creating multiple market segments based on clinical needs and personal preferences. Our goal is to address the individual needs of people with insulin-dependent diabetes by offering flexibility and choice in intelligent insulin delivery systems, through an accessible portfolio of market-leading pumps, applications, and insights.

From inception in 2012 through June 2018, we derived nearly all of our sales from the shipment of insulin pumps and associated supplies to customers in the United States. Starting in the third quarter of 2018, we began selling in select geographies outside the United States and our technology solutions are now available in approximately 25 countries worldwide.

Through our portfolio approach, we offer people living with diabetes a choice in their therapy management system based on their individual needs and preferences. In support of this strategy, we recently expanded our portfolio which now includes both the t:slim X2 and the Tandem Mobi insulin pumps. The Tandem Mobi insulin pump is the world’s smallest durable automated insulin delivery (AID) system. At approximately half the size of our t:slim X2 pump, Tandem Mobi is designed for people who seek even greater discretion and flexibility, and includes features such as expanded pump-control from our iOS mobile application, inductive charging, and an on-pump button that can be used for bolusing and other actions. Throughout the first half of 2024, we scaled the commercial release of Tandem Mobi in the United States, first offering integration with the Dexcom G6 sensor beginning in February followed by the Dexcom G7 beginning in June.

The majority of our customers use their insulin pump with CGM integration. This allows their insulin pump to receive CGM sensor readings, which can then be used in our AID algorithms, including our Control-IQ technology. Control-IQ is an advanced hybrid-closed loop feature designed to help increase a user’s time in their targeted glycemic range. Multiple studies, including three publications in the New England Journal of Medicine, have demonstrated that use of Control-IQ technology provides people across all demographics with improved clinical outcomes that are both immediate and sustained.

The t:slim X2 was the first pump on which remote software updates were made commercially available in the United States and is now also available in the countries we serve worldwide. This has allowed our t:slim X2 and Tandem Mobi customers to update their own pump software. We believe this offering is a competitive advantage that allows us to bring our customers clinical and lifestyle enhancements, such as new developments in our AID technology, CGM integrations and mobile app features. As an example, we recently launched pump software updates to allow Tandem pump users access to integrate with new CGM sensors.

Our insulin pump products are generally considered durable medical equipment (DME) and have an expected lifespan of at least four years. In addition to insulin pumps, we sell single-use products that are used together with our pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body. Because of the DME classification, our pumps and supplies are typically reimbursed through a medical benefit. As our portfolio expands, we are pursuing a multi-channel managed care strategy and are in discussions to begin serving Mobi customers through the pharmacy channel.

For more than a decade we have offered our customers, their caregivers and healthcare providers a data management application to provide a fast, easy and visual way to display diabetes therapy management data from our pumps and integrated CGMs. In the second quarter of 2023, we expanded our digital technology solutions with the launch of Tandem Source in the United States. In addition to displaying diabetes therapy management data, Tandem Source is also designed to serve as a portal for supplies reordering and pump software updates. In the second quarter of 2024, we began a scaled launch of Tandem Source outside the United States.

Our Strategy & Future Technology

Diabetes management can vary greatly from person-to-person, creating multiple market segments based on clinical needs and personal preferences. Our goal is to address the individual needs of people with insulin-dependent diabetes and their care team, by providing flexibility and choice in intelligent insulin delivery systems through an accessible portfolio of market-leading pumps, applications, and insights.

In support of this strategy, our portfolio of future technologies includes:

t:slim X3

Advancing our flagship t:slim platform, the t:slim X3 is planned to include enhanced technology, such as greater processing power and capacity to support our advanced algorithms, as well as increased battery life and improved durability.

Mobi: Tubeless

This offering is intended to provide an alternative tubeless infusion site option for Tandem Mobi pump users. It will allow a Tandem Mobi pump to be worn completely on the user’s body with no tubing, while still providing the benefit of detachability. A goal of this design is to allow people living with diabetes to customize the way they wear their pump with each cartridge change, switching between tubed and tubeless wear configurations, to best suit their personal preferences and lifestyle.

Sigi

The ergonomic, rechargeable and detachable Sigi Patch Pump is intended to reduce the burden of managing diabetes through its use of pre-filled insulin cartridges and compatibility with AID technology.

Extended Wear Infusion Sets

Infusion sets provide additional choice and flexibility to people living with diabetes. We are currently developing extended wear infusion set technology. Our goals for future infusion set innovations include solutions that enhance user experience, while reducing occlusions, body burden and waste.

Control-IQ Advancements

We are continuing to drive innovation in our algorithms, emphasizing automation, personalization and simplification to continue to improve therapeutic outcomes and provide a positive patient experience. In late 2023, our Control-IQ technology was cleared with additional features for people with type 1 diabetes age 2 and older. In the second quarter of 2024, we completed enrollment for a pivotal study to support expanding indications to include people living with type 2 diabetes. We are also pursuing the use of different insulins with our Control-IQ technology. For example, in the second quarter of 2024, Health Canada approved the addition of Trurapi U-100 to the list of compatible insulins that can be used with our t:slim X2 pump with Control-IQ technology in Canada.

Pump Reimbursement Cycle

Insulin pumps in the markets we serve worldwide are generally subject to a four-year reimbursement cycle, imposed by the third-party insurance carrier, government plan or healthcare system that serves as the primary payor. At the end of the typical four-year reimbursement cycle, customers may be eligible to purchase a new insulin pump, subject to the rules and requirements of their primary insurance payor. While warranties generally expire four years from the original pump shipment date, those customers that renew take on average up to one year from date of warranty expiration to purchase a subsequent pump. While the majority of our insulin pump sales from initial commercialization through the current period have been generated by sales to new customers, the opportunity to make subsequent sales of renewal insulin pumps to existing customers increases each period as an escalating number of customer warranties expire. With programs dedicated to customer retention efforts, we expect such renewal purchases to represent an increasing portion of our pump shipments over time.

At the end of 2023, we had approximately 450,000 users in our in-warranty installed base, approximately one-third of whom live outside the United States.

The ordering patterns of, and levels of inventory carried by, our distributors outside the United States for pumps and supplies have historically been highly variable from period to period due to a number of factors, including summer vacations, the timing of product launches into new geographies and variability due to supply chain logistics, particularly during the global pandemic. This also influences the timing in which renewal eligibility begins for existing customers, which may not initially be consistent with trends in the United States market. We recently began completing a full four-year reimbursement cycle in an increasing number of our markets outside of the United States.

Trends and Uncertainties Impacting Financial Results

Our financial condition and operating results have historically fluctuated on a quarterly or annual basis. We expect these periodic fluctuations will continue to be impacted by a number of trends and uncertainties, including the following:

Regulatory Approvals and Actions

•Sales of new products are subject to local government regulations. The requirements and timelines to receive regulatory clearance can vary substantially from country to country and delays may impact our ability to expand our worldwide customer base and bring products to market in a competitive timeframe. These delays, or failure to receive regulatory approval could adversely impact our revenue and results of operations.

•Any adverse event involving any products that we distribute could result in future corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action. Any action by regulatory bodies against us, and any regulatory challenges we encounter could have a negative impact on our product sales and harm our reputation.

Product - Launches and Reimbursement

•We expect our business to be impacted by the introduction of new diabetes devices and treatments by us or our competitors. The success of our products is variable and we believe it correlates to market acceptance, anticipated product launches and commercial availability. We anticipate that our Tandem Choice program, and its related financial and accounting impact, may continue to materially impact our business until the conclusion of the program.

•We have historically experienced higher net sales in our third and fourth quarters compared to the first half of the year. We believe our July 2023 announcement of U.S. Food and Drug Administration (FDA) clearance of Tandem Mobi and its anticipated launch impacted the timing of purchasing decisions by our current and prospective customers in the second half of 2023 up through the United States commercial availability of Tandem Mobi in February 2024, resulting in delays that were unlike historical seasonal patterns or purchasing behaviors. Regulatory approval and/or upcoming launches of other new Tandem or competitor products could also adversely impact timing of purchasing decisions.

•In periods following new product launches, particularly with new hardware platforms, our cost of sales may increase on a per unit basis until the new products achieve manufacturing scale and operating expenses may be elevated by increased sales and marketing spend to support the product launches.

•Our revenue and results of operations may be impacted by the failure to secure or retain adequate coverage or reimbursement for our current and future products from third-party payors, as well as changes in reimbursement structures.

Foreign Markets

•We have expanded our business and launched new products in select geographies outside the United States. The ordering patterns of our distributors outside the United States has historically been highly variable from period to period. For example, we began operations of a European distribution center which led to a reduction of inventory levels at our distributors, significantly impacting sales patterns in the second half of 2022 and first half of 2023.

Seasonality

•Seasonality in the United States is associated with annual insurance deductibles and coinsurance requirements of the medical insurance plans used by our customers and the customers of our distributors. In the United States, we typically experience a higher volume of pump shipments in the third and fourth quarters due to the nature of the reimbursement environment. Other factors that may impact sales across the year include the timing of winter, summer and other seasonal holidays, particularly in our markets outside the United States.

Macroeconomic Factors

•Global economic and market uncertainty, such as recessionary concerns, inflation, changes in discretionary spending and increased interest rates have impacted our customers’ purchasing decisions and the buying patterns of our distributors.

•High inflation and the effects of other macroeconomic factors and concerns has disrupted and may continue to disrupt our relationships with suppliers, third-party manufacturers, healthcare providers, distributors and our existing or potential customers.

Components of Results of Operations

Sales

We offer products for people with insulin-dependent diabetes, including a portfolio of hardware platforms, single-use insulin cartridges and infusion sets, data management platforms and mobile applications. Our primary customers are the end users of our products, non-exclusive distribution partners whose level of service varies based on geography, the healthcare professionals who prescribe our products and the healthcare systems or payors who provide insurance coverage and access to our products. Our sales may fluctuate from period to period, particularly due to seasonality in the United States associated with the timing of insurance deductible resets, which generally reflect in a significant decline in pump shipments from any fourth quarter to the following first quarter. Therefore, the lowest percentage of sales is typically reported in the first quarter of each calendar year and the highest percentage is typically reported in the fourth quarter. See also “Trends and Uncertainties Impacting Financial Results—Seasonality” above.

From September 2022 through February 2024, we offered the Tandem Choice program to eligible t:slim X2 customers to provide a pathway to ownership of our newest hardware platform, Tandem Mobi, for a fee when available. Eligible customers who purchased a t:slim X2 insulin pump during the program period have until December 31, 2024 to exercise the option to switch to the Tandem Mobi for a stated fee. The accounting treatment for Tandem Choice is complex (see Note 2, “Summary of Significant Accounting Policies”). The program required the deferral of some portion of sales for shipments of eligible pumps between the third quarter of 2022 and the first quarter of 2024. No election was made by the customer at the time of the initial sale, nor did the right offered to the customer impact the economics associated with how or when the initial pump sale was reimbursed. If a customer elects to participate in Tandem Choice, we will recognize the existing sales deferral, incremental fees received and the associated costs of goods sold of providing the new insulin pump, Tandem Mobi, at the time of fulfillment. Qualifying cu

TANDEM DIABETES CARE INC [TNDM] Filings
10-Q	[2024-08-01]
10-Q	[2024-05-02]
10-K	[2024-02-21]
10-Q	[2023-11-01]
10-Q	[2023-08-03]
10-Q	[2023-05-03]
10-K	[2023-02-22]
10-Q	[2022-11-02]
10-Q	[2022-08-03]
10-Q	[2022-05-04]
10-K	[2022-02-22]
10-Q	[2021-11-03]
10-Q	[2021-08-04]
10-Q	[2021-05-05]
10-K	[2021-02-24]
10-Q	[2020-11-05]
10-Q	[2020-07-30]
10-Q	[2020-04-30]
10-K	[2020-02-24]
10-Q	[2019-11-04]
10-Q	[2019-08-01]
10-Q	[2019-04-30]
10-K	[2019-02-26]
10-Q	[2018-11-01]
10-Q	[2018-07-30]
10-Q	[2018-04-26]
10-K	[2018-03-01]
S-1	[2018-01-16]
10-Q	[2017-10-26]
10-Q	[2017-07-27]
10-Q	[2017-04-27]
10-K	[2017-03-08]
S-1	[2017-03-08]
10-Q	[2016-11-01]
10-Q	[2016-07-28]
10-Q	[2016-04-28]
10-K	[2016-02-24]
10-Q	[2015-10-29]
10-Q	[2015-07-30]
10-Q	[2015-04-30]
10-K	[2015-02-24]
10-Q	[2014-11-06]
10-Q	[2014-07-31]
10-Q	[2014-05-06]
10-K	[2014-03-06]
S-1	[2013-10-07]