Q3 2023 Tandem Diabetes Care Inc Earnings Call

Thank you for standing by and welcome to Tandem's third quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one one on your telephone to remove yourself from the queue. You May press Star one one again.

I'd now like to hand, the call over to EVP and Chief administrative officer, Susan Morrison Madam you may begin.

Okay.

Okay.

Hello, everyone and thanks for joining tandem's 2023 third quarter earnings call.

As a reminder, today's discussion will include forward looking statements. These statements reflect management's expectations about future events product development timelines and financial performance and operating plans and speak only as of today's date, there are risks and uncertainties that could cause actual results to differ materially from.

Those anticipated or projected in our forward looking statements.

A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward looking statements is highlighted in our press release issued earlier today and under the risk factors portion and elsewhere in our most recent annual report on Form 10-K quarterly report on Form 10-Q.

And in our other SEC filings.

We assume no obligation to publicly update any forward looking statements, whether as a result of new information future events or other factors.

Today's discussion will also include references to a number of GAAP and non-GAAP financial measures.

non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core operating performance and reflects our ongoing business operations.

We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting periods.

The non-GAAP information presented should not be considered as a substitution independently or superior to results prepared in accordance with GAAP.

Please refer to our earnings release quarterly report on Form 10-Q, and the Investor Center portion of our website for a reconciliation of these measures to their most direct comparable GAAP financial measure.

Leading today's call is John Sheridan, Tandem's, President and CEO, who will be joined by Lee Vossler, Our executive Vice President and Chief Financial Officer, Dr. Jordan Pinsker, our medical director will also be joining for the Q&A portion of today's call I'll now turn the call over to John.

Thanks, Susan and welcome everyone to today's call.

In the third quarter and throughout 2023 tandem has focused on bringing the benefits of our number one rated aig's system to more people living with diabetes worldwide.

Along with providing customer care excellence, and making operational progress throughout our business.

It's been a transitional time for tandem as we.

We prepare for the company's next phase of growth to our portfolio of innovation.

We are executing on multiple near term product launches, while implementing scalable systems and processes to support our global operations and leverage our infrastructure.

Reflecting on our third quarter results. Our overall performance was above our baseline expectations, primarily due to the U S market.

Over the past few weeks I've had an opportunity to attend some of our regional sales meetings across the United States and was excited and encouraged by my conversations.

My first takeaway is that the T Slim <unk> with control IQ continues to be the best AI system available.

This is also reflected in third party research and our own customer satisfaction surveys.

It is evident in our low attrition and higher percentage of customers choosing to purchase a new T. Slim X two from tandem after their warranty expires.

My next takeaway is that overall competitive dynamics remained stable.

Some products are newer than others, but the noise from the other AI offerings is in line with our expectations and the diabetes community is learning more about what these products are and what they are not.

Lastly, and most overwhelmingly it's the high level of enthusiasm and anticipation for our new sensor integrations and for multi pump platform.

Our sales team shared that some new and renewing T slim customers are causing as they wait for <unk> and <unk> launches and are excited for their availability. These.

These products are at various stages in the release process and we are highly encouraged by the performance in the hands of our early users.

Starting with CGM additions I am proud of our teams to have demonstrated leadership and Aig's sensor integration.

Developing comp and algorithm software for the compatibility with the New center is an extensive process.

And the technical work is just part of the effort it takes to bring a newly integrated system to market.

I would like to express our thanks to our CGM partners for their collaborations as we worked to launch the T Slim X too with a <unk>, 7% and Abbott freestyle Libre sensors.

The steps to bring the <unk> seven integrated system to market are well underway and.

And we've made great progress in the early release phases, we are proud to be rolling out their first aig's system in the world to use the <unk> sensor data and are planning for full availability of <unk> across the U S by year's end.

We have also been preparing for the launch of the T. Slim X two integration with Abbott freestyle Libre two sensor.

Based on where we are and being mindful of the upcoming holiday season, we plan to initiate a U S launch of T. Slim as freestyle Libre. Two later this quarter with broad availability early in the new year.

This new integrated offering is an incredible accomplishment for our teams as we bring the benefits of AI technology to have its customers in the U S for the first time.

Now turning to Mobi in my 10 years with tandem I've had the privilege of being part of launching many new innovations that have reduced the burden of diabetes and improved clinical outcomes.

The excitement around the launching of Mobi is among the highest I've ever seen and there is incredible interest by the health care providers people using MDI and current pump to learn more and gain access to our new pump technology.

The most common feedback we hear is that people are surprised and thrilled about.

About <unk> size and the option that enables for wearables, including on body, where via a patch accessory or clipped onto a waistband or easily tucked into a gene coin pocket.

The on body, where options combined with the ability to disconnect if needed as a new paradigm.

This distinguishes tandem mobi from bond market patch pumps.

And of course, they also appreciate the benefit discretion of its mobile App operation for these reasons, we believe that tandem Obi is positioned to expand the insulin pump market and further our mission to improve the lives of more people living with diabetes.

Our release of tandem Ob began in October with a limited number of users and will scale through the quarter.

Throughout this process, we monitor key criteria and performance metrics not only for the pump, but also for all the surrounding systems and processes across the company.

We feel this rigor ultimately leads to a stronger commercial offering for customers and health care providers and delivers a positively different experienced that tanner has built its reputation upon.

We are tracking to our plan to begin offering <unk> more broadly in the U S. Beginning early in 2024.

Simultaneously with each of these new launches we are developing plans for our new products and countries we serve internationally.

Reflecting on our overall business outside the United States, our third quarter aligned with our base expectation, which contemplates the European summer holiday season, as well as competitive activities.

During this period, our distribution partner in one of the largest European countries experienced capacity constraints and disruptions switch sales activities because our focus was on rolling out a T slim software update to their installed base.

Software update ability is still a relatively new offering outside the United States, especially at such a large scale in individual health care system, sometimes have different requirements for who does the update where and how they occur.

Our commercial team has been very responsive and helping this distribution partner identify opportunities for process efficiency and to minimize constraints based on best practices from the U S and other geographies.

We're also working through the timing of <unk> seven integration availability at our key European markets.

Just like the U S enthusiasm is high for this new offering and our preparations for launch are actively underway.

This is impacting our distributors fourth quarter forecasts, which they are adjusting anticipation of this launch occurring just after the first of the year.

It is rare and exciting to have an opportunity to like this one in front of us with so many new product launches in flight worldwide.

Each of which individually has the opportunity to change the trajectory of our business going forward.

It is also an ideal time for us to welcome Mark Novara, as our EVP and Chief commercial officer.

Mark will succeed Brian Hansen, who we think for his passion and leadership along with laying the foundation for <unk> long term success at tandem.

As you saw from the press release issued this afternoon, Mark brings strategic and operational global experience in diabetes as well as medical devices.

Our successful track record of delivering above market growth.

Best in class customer experience and scalable commercial operations there.

His knowledge and leading global commercial functions will be critically important as we prepare for the launch of multiple new products in the coming weeks and months and we welcome him to our leadership team.

2023 has been a complicated year of transition, but we remain focused on executing diligently to scale our operations in preparation for this exciting next phase of growth.

I would now like to turn the call over to Lee to share more on the <unk> results and financial expectations.

Thank you John.

As a reminder, unless otherwise noted the financial metrics I'll be discussing today are on a non-GAAP basis reconciliations to GAAP can be found in today's earnings release as well as on the Investor Center portion of our website.

Third quarter sales were above our baseline expectation is at 194 million worldwide, primarily due to sales in the U S.

Up to 25000 pump enterprise sales grew 10% in line with our installed base, which is now nearly 445000 customers.

U S sales in the third quarter were $138 million on 70000 pump shipments.

The anticipated near term pressure previously discussed as customer enthusiasm builds for the upcoming broad availability of our new products.

There were also a number of highlights in our performance first we continue to expand the use insulin pump market as half of our new customers reported adopting pump therapy for the first time, but the remaining half converting from competitors.

Next our consistently strong retention rate is reflected in our supply sales, which grew 10% in line with our U S installed base that has now reached 308000 people.

Another highlight with our continued high capture rate of renewal opportunities.

In fact renewables grew sequentially to nearly half of the pumps to be shipped in the quarter.

Consistent with our expectations, our renewal customers have shown the greatest interest in using our kingdom great progress.

This program offers in warranty T Slim X few customers the ability to take advantage of any of your health insurance benefits with a lower switching costs for tandem will be in the future.

New customers have been more inclined to defer the timing of their purchases until our new products are fully available forecasting the timing of customer purchases remains a challenge in the near term.

Trends as deductibles are met and consistency of renewal enterprise ordering patterns provide a level of predictability, particularly as our renewal opportunities stepped up nearly 20% in the fourth quarter compared to the third quarter.

We are reaffirming our U S sales baseline of $575 million for 2023.

Outside the U S sales in the third quarter were $55 million in alignment with our base expectation, which contemplated typical commercial dynamics during the European summer holiday season, as well as competitive activities.

We shipped 8000 pumps across our U S markets and grew our installed base year over year by more than 10% to 136000.

As John discussed in the back half of this year, we are working through some disruptions in Europe. For example, we were recently notified that one of our largest distributors materially reduced pump orders for the fourth quarter when planning for the upcoming release of <unk> seven just after the first of the year.

Unknown Executive: Thank you for standing by, and welcome to Tandem's third quarter, 2023 Earnings Conference Call. At this time, all participants aren't a listen, only mode. After the speaker presentation, there will be a question and answer session.

While we have not included <unk> in a meaningful way and our 2023 forecast. We also did not include an assumption for a meaningful disruption to orders in Europe in advance of <unk> seven.

Unknown Executive: To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again.

In addition, we are analyzing the potential financial impact of the newly enacted reimbursement for control IQ in France with its related rebate structures.

Susan Morrison: I would now like to hand the call over to EVP and Chief Administrative Officer, Susan Morrison.

With these factors in mind, we are updating our baseline expectation outside the us to $190 million for the year, which assumes no meaningful new orders are placed by our distributors outside the U S for the remainder of the year and allows for up to $10 million for the initial impact of the change in reimbursement in France.

Unknown Executive: Madam, you may begin.

Susan Morrison: Hello, everyone, and thanks for joining Tandem's 2023 third quarter earnings call. As a reminder, today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, product development timelines, and financial performance, and operating plans, and speak only as of today's date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today.

Moving on to margins, our gross margin of 51% of sales in the third quarter was consistent with the prior year.

We have spoken to certain high cost raw materials over the last year, which we're creating margin pressure of up to two percentage points in any given quarter.

In the third quarter east costs fell to less than 1% of sales, we continued making meaningful progress by driving additional operational cost savings across all products through lean activities and other manufacturing efficiencies as well as improving average selling prices.

These benefits were offset by the impact of geography, and product mix with pumps worldwide, representing 45% of sales in the third quarter of 2023 compared to 53% in the prior year.

Susan Morrison: And, under the risk factors portion and elsewhere, in our most recent and annual report on form 10K, quarterly report on form 10Q, and in our other SEC filings. We assume no obligation to publicly update any forward-looking statements, whether there's a result of new information, future events, or other factors.

Our adjusted EBITDA margin remained positive this quarter at 1% of sales as we continued to benefit from cost savings initiatives across the organization and as we prioritize investments in R&D and marketing.

Our operating expenses sequentially declined for a second time this year to $121 million and were flat compared to the third quarter of the prior year despite year over year increases in costs associated with our acquisitions.

Susan Morrison: Today's discussion will also include references to a number of gap and non-gap financial measures. Non-gap financial measures are provided to give our investors information that we believe is indicative of our core operating performance. And reflects our ongoing business operations. We believe these non-gap financial measures facilitate better comparisons of operating results across reporting periods. Any non-gap information presented should not be considered as a substitution independently or superior to results prepared in accordance with gap. Please refer to our earnings release, quarterly report on form 10Q, and the investor-centered portion of our website for reconciliation of these measures to their most direct comparable gap financial measure.

We are reaffirming both our gross margin and adjusted EBITDA expectations for the full year 2023.

We ended the quarter with approximately $500 million in total cash and investments and our strong balance sheet provides us financial flexibility to strategically invest in our business.

In summary, our worldwide sales expectations for the full year 2023, or $765 million, which includes sales outside the U S of $190 million.

Our gross margin guidance remains unchanged at 51% and adjusted EBITDA is expected to be at least breakeven.

The margins include recurring noncash P&L charges of about $110 million of which $95 million is associated with stock compensation at $15 million depreciation and amortization.

Susan Morrison: Leading today's call is John Sheridan, tandem's president and CEO, who will be joined by Lee Vossler, our executive vice president and chief financial officer.

John Sheridan: Dr. Jordan Pinsker, our medical director, will also be joining for the Q&A portion of today's call. I'll now turn the call over to John.

As we look through opportunities for future growth, we have strong conviction in tandem the ability to lead in diabetes management. We believe it was important and critical for us to set early expectations for baseline 2024 sales growth starting at 10% at our last earnings call.

John Sheridan: Thanks Susan and welcome everyone to today's call. In the third quarter and throughout 2023, tandem has focused on bringing the benefits of our number one rated AID system to more people living with diabetes worldwide, along with providing customer care excellence and making operational progress throughout our business. It's been a transitional time for tandem as we prepare for the company's next phase of growth through our portfolio of innovation. We are executing on multiple near term product launches, while implementing scalable systems and processes to support our global operations and leverage our infrastructure.

We will learn a great deal in the next six months that will better inform our thoughts on the catalysts for growth next year as we scale the launches of multiple new products, both in the United States and internationally.

We look forward to sharing these earnings with you in the upcoming quarters as we pursue the longer term goals, we've set for our business.

With that I'll turn the call back to you John Thanks Lee.

As we look at tandem's near and longer term strategy. We are focused on meaningfully expanding the insulin pump adoption by people living with type one diabetes across all our markets and evolving our products and services to attract people living with type two diabetes, who use insulin intensive therapy.

John Sheridan: Reflecting on our third core results, our overall performance was above our baseline expectations, primarily due to the U.S, market. Over the past few weeks, I have had an opportunity to attend some of our regional sales meetings across the United States and was excited and encouraged by my conversations. My first takeaway is that the Tesla Next 2, with Control IQ, continues to be the best AID system available. This is also reflected in third-party research and our own customer satisfaction surveys.

Our analysis shows that in the U S. There are more than 1 million people living with type one diabetes, who are currently not getting the benefits of insulin pump therapy, and three times that opportunity in the countries we serve internationally.

John Sheridan: It's evident in our low attrition and higher percentage of customers choosing to purchase a new Tesla Next 2 from Tandem after their warranty expires. My next takeaway is that overall competitive dynamics remains stable. Some products are newer than others, but the noise from the other AID offerings is in line with our expectations, and the diabetes community is learning more about what these products are and what they are not. Lastly, and most overwhelmingly, if the high level of enthusiasm and anticipation for our new sensor integrations and for mobile pump platform, our sales teams shared that some new and renewing Tesla customers are pausing as they wait for MOV and G7 launches and are excited for their availability.

In addition, there are well over 2 million people in the U S living with type two diabetes were already insulin dependent and do not use a pump today, it's an immense worldwide opportunity.

To expand pump penetration from its minority position today requires innovation as people have vastly different needs and preferences that motivate their pump purchasing decision.

Our new pump platforms, and CGM sensor integrations address many of these current unmet customer needs. We also believe our industry, leading algorithm the user and payer facing benefits of our durable device portfolio and the degree of flexibility afforded by the modularity of the tandem system will help us to drive demand in the years ahead as we are.

The next products right.

To further drive our pump adoption opportunity would have also been busy advancing our clinical initiatives results.

John Sheridan: These products are at various stages in the release process, and we are highly encouraged by the performance in the hands of our early users. Starting with CGM additions, I am proud of our teams to demonstrate leadership in the AID sensor integration. Developing pump and algorithm software for the compatibility with the new sensor is an extensive process, and the technical work is just part of the effort it takes to bring a newly integrated system to market.

John Sheridan: I would like to express our thanks to our CGM partners for their collaborations, as we work to launch the Tesla Next 2 with the Dexcom G7 and Abbott's freestyle Libre sensors. The steps to bring the Dexcom G7 integrated system to market are well underway, and we made great progress in the early release phases. We are proud to be rolling out the first AID system in the world to use Dexcom's G7 sensor data and are planning for full availability of G7 across the US by years end.

John Sheridan: We've also been preparing for the launch of the Tesla Next 2 integration with the Abbott freestyle Libre 2 sensor. They've done where we are and being mindful of the upcoming holiday season. We plan to initiate the US launch of Tesla with freestyle Libre 2 later this quarter with broad availability early in the new year. This new integrated offering is an incredible accomplishment for our teams, as we bring the benefits of AID technology to Abbott's customers in the US for the first time.

Both devices and therapeutics as part of a broad continuum of care for people living with diabetes.

This was reflected in the clinical diabetes publication earlier this year of a study on Glycemia outcomes people with type two diabetes or.

John Sheridan: Now turning to MoV, in my 10 years with tandem I've had the privilege of being part of launching many new innovations that have reduced the burden of diabetes and improved clinical outcomes. The excitement around the launching of MoV if among the highest I've ever seen. And there is incredible interest by the healthcare providers, people using MDI and current pumpers to learn more and gain access to our new pump technology. The most common feedback we hear is that people are surprised and thrilled about MoV's tiny size and the option enables for wearability including on-body wear via a patch accessory or clipped onto a waistband or easily tucked into a jean coin pocket.

Most participants were using G. L. P. One and R. S. D. L. T. Two therapy. In addition to insulin delivered by our T X two with control I Q technology.

John Sheridan: The on-body wear options combine with the ability to disconnect if needed, as a new paradigm. This distinguishes Tandem Movy from on-market patch funds. And, of course, they also appreciate the benefit and discretion of its mobile app operation. For these reasons, we believe that Tandem Movy is positioned to expand the insulin pump market and further our mission to improve the lives of more people living with diabetes. Our release of Tandem Movy began in October with a limited number of users, and will scale through the quarter.

Is also highlighted the benefits of using control I Q with these additional therapies, which gave the best outcomes when used together with time in range of 76% with no hypoglycemic events.

Heading up our clinical efforts this Dr. Jordan Pinsker, who joined tandem in 2021 and is a leading endocrinologist and prominent thought leader an artificial pancreas research.

He's been a primary investigator and numerous clinical trials on automated insulin delivery systems prior to joining tandem and brings extensive knowledge in patient care and the epidemiology of type one and type two diabetes.

We've asked Dr. <unk> joined the Q&A portion of our call today as he has been helping us to contextualize, how the different drugs currently available along with those in the research stages play in our longer term mark opportunity.

As you can see this is an extremely busy time at tandem.

I would like to thank our employees for their perseverance diligent focus on execution and continued heartfelt care for our customers.

John Sheridan: Throughout this process, we monitor key criteria and performance metrics, not only for the pump, but also for all the surrounding systems and processes across the company. We feel this rigor ultimately leads to a stronger commercial offering for customers and healthcare providers, and delivers a positively different experience that Tandem has built its reputation upon. We are tracking, toward plan to begin offering Movy, or broadly, in the U.S., beginning early in 2024. Simultaneously, with each of these new launches, we are developing plans for our new products and countries we serve internationally.

Together, we will be working hard to close out 2023 with I in the future in the next chapter at tandem.

I would like to now turn the call back to the operator for questions.

Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the question queue. You May Press Star one one again, we ask that you. Please limit yourself to one question and one follow up.

Please stand by while we compile the Q&A roster.

John Sheridan: Reflecting on our overall business outside the United States, our third quarter aligned with our base expectation, with contemplate the European summer holiday season, as well as competitive activities. During this period, our distribution partner, in one of the largest European countries, experienced capacity constraints and disruptions to its sales activities, because their focus was on rolling out a T-slum software update to their install base. Software updateability is still a relatively new offering outside the United States, especially at such a large scale, and individual healthcare systems sometimes have different requirements for who does the update, where and how they occur.

Our first question comes from the line of <unk>, Steve <unk> of Oppenheimer and company.

Thank you I guess I guess you start starting in the U S shipments held up better than expected given the.

The acute headwinds, particularly on the renewal side I guess, so can you talk to what you're seeing in terms of the patterns. There are our patients taking advantage of tandem choice.

And what what are you seeing on the renewal side that is.

Is is driving the the particular strength during this period.

John Sheridan: Our commercial team has been very responsive in helping this distribution partner identify opportunities for process efficiency and to minimize constraints based on best practices from the U.S, and other geographies. We are also working through the timing of G7 integration availability in our key European markets, much like the U.S, enthusiasm is high for this new offering, and our preparations for launch are actively underway. This is impacting our distributors' fourth quarter forecasts, which they are adjusting anticipation of this launch occurring just after the first of the year.

And yes, and thanks for the question.

And what we're seeing is pretty much thought we anticipated, which renewable customers and they may be more inclined to take advantage of their end of year insurance benefits considering they already know how to use <unk>. They already know how to use control like you so much easier proposition for them to consider buying a keith and today, while they're out of work.

<unk> and then using the <unk> program to switch when <unk> is available. So that's why we didn't see much if any description on the renewal site in fact, I renewal rates were consistently strong with what we've been seeing for the past 456 quarters now and it's the new customers, where we expected to see the pressure and then your customer potential I would say when you think about.

John Sheridan: It is rare and exciting to have an opportunity to like this one in front of us, with so many new product launches in Flight Worldwide, each of which individually has the opportunity to change the trajectory of our business going forward.

John Sheridan: It's also an ideal time for us to welcome Mark Novara as our EVP and Chief Commercial Officer. Mark will succeed Brian Hanson, who we thank for his passion and leadership, along with laying in the foundation for Mark's long-term success at tandem. As you saw from the press release issued this afternoon, Mark brings strategic and operational global experience and diabetes, as well as medical devices. He has a successful track record of delivering above market growth, best in class customer experience, and scalable commercial operations.

The transition to a new pump the fact that they have to learn a whole new pump today and then we can switch to a different path around the turn of the year. So those are the folks that we expect to take more advantage of our actually differ and wait until 2024, I can make that purchase or sell things played out pretty much like me anticipated in that regard.

Okay got it and then as a follow up email for for your John or Doctor Pinsker, you talked about.

The G. L. P. One discussion over the last few months I think relative to pumps one thing.

John Sheridan: His knowledge in leading global commercial functions will be critically important as we prepare for the launch of multiple new products in the coming weeks and months, and we welcome him to our leadership team. 2023 has been a complicated year of transition, but we remain focused on executing diligently to scale our operations and preparation for this exciting next phase of growth.

Locate your opinion on is is what drives.

Penetration. So overall the penetration is slow it can be we estimate five or 6% in the intensive type too. So regardless, if it's sort of the impact on top of G. O. P wants what do you see as the drivers of a pump utilization from where it is today.

Lee Vossler: I'd now like to turn the call over to Lee to share more on the three key results and financial expectations. Lee?

Steve I think it's largely driven by.

Reducing the burden of diabetes.

Lee Vossler: Thank you, John. As a reminder, unless otherwise noted, the financial metrics I'll be discussing today are on a non-gap basis. We shipped 25,000 pumps and supply sales grew 10% in line with our install base, which is now nearly 445,000 customers. US sales in the third quarter were 138 million on 17,000 pump shipments. We experienced the anticipated near-term pressure previously discussed as customer enthusiasm builds for the upcoming broad availability of our new products.

Managing diabetes is complex.

Basically every moment of every day, you've got to think about it.

And and the pumps.

These systems are basically providing better therapy and there again less burdensome to use you don't have to think as much about Angie diabetes.

So we think technology drives adoption and continue to develop technology to reduce the burden of diabetes is really the way to get the top the pump adoption from mid thirties today to the mid sixties in the next couple of years.

Jordan you want to add anything to it I would <unk> I'd like to offer some insights into G. L. T. One use that we are seeing John alluded to earlier, our data shows the effects of these newer medications are really complimentary with control actually to use we saw that recently published paper and clinical diabetes that were in control.

Lee Vossler: There were also a number of highlights in our performance. First, we continue to expand the US insulin pump market as half of our new customers reported adopting pump therapy for the first time with the remaining half converting from competitors. Next are consistently strong retention rate is reflected in our supply sales, which grew 10% in line with our US install base that has now reached 308,000 people. Another highlight was our continued high capture rate of renewal opportunities.

<unk> was used by people with type two diabetes those using the G. O P. Wyles had even better final results semi overall cohort.

Timing range improved some 61% not meeting their glycemia targets to 76% after six weeks.

Now these individuals still needed insulin they were not meeting their glycemia calls a baseline and they show tremendous improvement with control X you use so.

Lee Vossler: In fact, renewals grew sequentially to nearly half of the pumps we shipped in the quarter. Consistent with our expectations, our renewal customers have shown the greatest interest in using our tandem choice programs. This program offers in warranty TSMX2 customers the ability to take advantage of end-of-year health insurance benefits with a low switching cost for tandem mobility in the future. New customers have been more inclined to defer the timing of their purchase until our new products are fully available, forecasting the timing of customer purchases remains a challenge in the near term.

So we think providers are really aren't you realize how well patients do with our system and as we move forward toward progressing in our type two diabetes pivotal trial, we expect to see similar results in that larger trial as well.

Would like to add we're seeing very meaningful number of participants and are pivotal trial, using these adjuvant medications, others and insulin and.

They're also using quite a bit of insulin and they're in the trial because they are not meeting their glycemia targeted baseline. So we expect that they're going to show significant improvements in their outcomes as well.

Lee Vossler: Seasonal trends as deductibles are met and consistency in renewal and supplies ordering patterns provide a level of predictability particularly as our renewal opportunity step up nearly 20% in the fourth quarter compared to the third quarter. As a result, we are reaffirming our US sales baseline of 575 million for 2023. Outside the US, sales in the third quarter were 55 million in alignment with our base expectation, which contemplated typical commercial dynamics during the European summer holiday season as well as competitive activities.

And I think that gives us great confidence in the future and his awareness of these outcomes becomes more pronounced over time.

We intend to highlight these results from the studies.

Great. Thank you.

Next week.

Thank you.

Our next question.

It comes from the line of Brooks O'neill Lake Street capital markets.

Lee Vossler: We shipped 8,000 pumps across our OUS markets and grew our install base year over year by more than 10% to 136,000. As John discussed in the back half of this year, we are working through some disruptions in Europe. For example, we were recently notified that one of our largest distributors materially reduced pump orders for the fourth quarter when planning for the upcoming release of TSMG7 just after the first of the year.

Oh, good afternoon, everyone I guess.

To try to get a little bit of clarification.

What I think are two pauses now.

I want to clarify and be sure I understand that.

The pause that we anticipated related to mow be in <unk>.

Four.

Lee Vossler: While we had not included G7 in a meaningful way in our 2023 forecast, we also did not include an assumption for a meaningful disruption to orders in Europe in advance of G7. In addition, we are analyzing the potential financial impact of the newly enacted reimbursement for control IQ in France with its related rebate structures. With these factors in mind, we are updating our baseline expectation outside the US to 190 million for the year, which assumes no meaningful new orders are placed by our distributors outside the US for the remainder of the year and allows for up to 10 million for the initial impact of the change in reimbursement in France.

Pretty much what you're seeing.

In the.

The U S.

It sounds to me like the additional.

$20 million reduction in guidance for the year, all of which will obviously come or most of the guests will come in Q4 is related to a pause related to the larger G. Seven.

You can just help us understand.

Exactly when you think mobile will launch in the U S and <unk> when it might launch O U S.

And then also when you're thinking about integrations with Dexcom and App.

Lee Vossler: Moving on to margins, our gross margin of 51% of sales in the third quarter was consistent with the prior year. We have spoken to certain high-cost raw materials over the last year, which were creating margin pressure of up to two percentage points in any given quarter. And the third quarter of these costs fell to less than 1% of sales. We continued making meaningful progress by driving additional operational cost savings across all products through lean activities and other manufacturing efficiencies, as well as improving average sales.

Thanks.

Hi.

Right now, we actually have people using lovey and our sort of our early access space, we talked about this before that.

The fourth quarter, we would have people using it probably for the entire quarter and the idea here is really to understand how the system of forms.

And make sure that.

Excellent customer experience and so during this time frame are issues that surface will fix them and we do not want to go to higher numbers of people using the product.

Lee Vossler: These benefits were also by the impact of geography and product mix with pumps worldwide representing 45% of sales in the third quarter of 2023 compared to 53% in the prior year. I adjusted even to margin, remained positive this quarter at 1% of sales as we continue to benefit from cost savings initiatives across the organization and as we prioritize investments in R&D and marketing. Our operating expenses sequentially declined for a second time this year to 121 million and were flat compared to the third quarter of the prior year, despite year-over-year increases in costs associated with our acquisitions.

Confidence that it's running the way we expect it too so I would say that <unk> is going to be.

More of a first quarter product for us in terms of revenue.

That being said when it comes to G. Seven.

G. Seven is also it's all further along in terms of its launch and we would anticipate that we have a number of people using it today that number is growing and I think that before the end of the quarter will have full availability to the market for G. Seven.

And so you know I think that as we said in the call we are <unk>.

Lee Vossler: We are reaffirming both our gross margin and adjusted EBITDA expectations for the full year 2023. We ended the quarter with approximately 500 million in total cash and investments and our strong balance sheet provides us financial flexibility to strategically invest in our business. In summary, our worldwide sales expectations for the full year 2023 are 765 million, which includes sales outside the US of 190 million. Our gross margin guidance remains unchanged that 51% and adjusted EBITDA is expected to be at least break even. The margins include recurring, non-cash, PNL charges of about 110 million of which 95 million is associated with stock compensation and 15 million with depreciation and amortization.

We're seeing pausing the U S for both <unk> and four G. Seven we think that you know.

Again.

He was more of a Q1 product and <unk>, we'll start to see sales near the end of this quarter.

Okay.

Have it.

Yeah, well with that but I think that avid is going to enter into that early access phase here in the next few weeks and I think that.

So that's going to be roughly on the closer to the holiday season, we're definitely going to have people wearing it but we won't really begin to see revenue until we hit the first quarter.

Okay.

Literally I didn't mean to interrupt you.

Oh, you're fine I wanted to add a point of clarification on the change in guidance outside the U S and.

Lee Vossler: As we look to opportunities for future growth, we have strong conviction and can of the ability to lead and diabetes management. We believe it was important and prudent for us to send early expectations for baseline 2020 sales growth starting at 10% at our last earnings call. We will learn a great deal in the next six months that will better inform our thoughts on the catalyst for growth next year as we scale the launches of multiple new products both in the United States and internationally.

I would say, it's not all pointed to add to the timing of G. Seven although that with a meaningful peace I think there are a few different leaving Pakistan.

About half of it is related to new product launches.

It's not just whenever elaborate awesome, how they are rolled out and what we find is that in our distributor market at times, when you're pushing any offering they may be distracted from kind of a poverty filing activities at their supporting your existing installed base and we saw some of that in the third quarter, which contributed to this change. We're also seeing some order timing change my <unk>.

John Sheridan: We look forward to sharing these earnings with you in the upcoming quarters as we pursue the longer-term goals we've set for our business. With that, I'll turn the call back to you, John.

John Sheridan: Lastly, as we look at attendance near and longer-term strategy, we are focused on meaningfully expanding the insulin pump adoption by people living with type 1 diabetes across all our markets and evolving our products and services to attract people living with type 2 diabetes who use insulin intensive therapy. Our analysis shows that in the US, there are more than one million people living with type 1 diabetes who are currently not getting the benefits of insulin pump therapy and three times that opportunity in the countries who serve internationally.

Launch coming right. After the first of the year and then the other element is related to a reimbursement change that we are anticipating in France.

Multifactorial in terms of its not all because at G seven necessarily.

Okay I got that that's very helpful clarification.

Thank you.

Our next question.

Comes from the line of Joanne lunch up city.

John Sheridan: In addition, there are well over 2 million people in the US living with type 2 diabetes who are already insulin dependent and do not use a pump today. It's an immense worldwide opportunity. To expand pump penetration from its minority position today requires innovation as people have vastly different needs and preferences that motivate their pump purchasing decisions. Our new pump platforms and CGM's Spencer Integrations address many of these current unmet customer needs.

Hey, good afternoon. This is actually Anthony on for Joanne Thanks for taking our questions one on the the EBITDA guidance.

Got into see that breakeven for the year was maintained that implies a pretty substantial step up I think in the fourth quarter <unk> comprehensive entering that breakeven goal for the year.

Sure happy to talk about it.

Smith, and we do expect to step back and forth quite herself in the third quarter, an athlete somewhere comforter drop more profit.

John Sheridan: We also believe our industry leading algorithm, the user and payer-facing benefits of our durable device portfolio, and the degree of flexibility afforded by the modularity of the tandem system will help us to drive demand in the years ahead as we enter the next product supply.

I'll also add that we can and stated Anthony Anthony incredible progress across our operating expenses. This year and this will be the second corner and around we've seen a reduction of operating.

Any expenses that we continue to manage cost implement efficiencies and which allows us to slow down and some of the hiring that we've been doing particularly in some of our customer support functions. What are the benefits of our infrastructure and kind of source I really starting to help them with that efficiency opportunity and our expenses in the third quarter actually flat enter the prior year.

John Sheridan: To the drive our pump adoption opportunity, we've also been busy advancing our clinical initiatives. Results from the Control IQ post-market study were recently published in diabetes, technology and therapeutics. The data showed that in approximately 3,000 people would type 1 diabetes down to age 6 using control IQ for one year. Adverse events related to severe hypoglycemia and DKA occurred at much lower rates than historic public data for people on standard of care therapy.

So as we look at continued cost containment I'm in treatment on the top line all of that could you repeat sir that'll be can meet our adjusted EBITDA guidance of at least I think for this year and you've seen now for Q T. Thank you three <unk> quarters.

John Sheridan: We are in lay stage discussions with the FDA regarding a submission under review for enhancements to our control IQ algorithm. These advancements represent another exciting milestone for Tandem as we will lower the age indication for our algorithm and expand its features set with options for greater personalization. It's part of our ongoing commitment to expanding the user reach of our AID system portfolio and bringing new features to people with diabetes across all the markets we serve.

Great. That's helpful and then on U S New pampers.

Correct me, if I heard you wrong, but I heard about a little maybe a little less than half for renewals if I plugged it in I get U S New pampers.

<unk> down here over a year and like the high forties Uhm, a is that correct math and then b as that how we should be thinking about the fourth quarter in terms of <unk>.

John Sheridan: We also made progress on enrolling participants in our clinical trial in support of expanding our label indication for our next generation control IQ algorithm to include people living with type 2 diabetes. In the past few months, we've seen meaningful research on the use of GLP ones and SCLT2s in the treatment of insulin-dependent diabetes. At Tandem, we look at both devices and therapeutics as part of a broad continuum of care for people living with diabetes.

<unk>. Thank you.

Uhm, Yes, you are correct in that renewable just under half of our shipmates this quarter, which does imply that new <unk>, new pampers decline again that goes back to an earlier point in the conversation about the impact that we're seeing for people waiting for me will be even to some extent people waiting for G. Seven actually get charcoal availability here on the fourth.

<unk> that 10th the impact of new pampers more so than the renewable pampers.

John Sheridan: This was reflected in the clinical diabetes publication earlier this year of a study on glycemic outcomes people with type 2 diabetes. For most participants, we're using GLP1 and or SCLT2 therapy in addition to insulin delivered by our T1x2 with control IQ technology. The results highlighted the benefits of using control IQ with these additional therapies which gave the best outcomes when used together with time and range of 76% with no hypoglycemic events.

As we go into the fourth quarter part of the reasons, we have confidence in getting you to drive that step up from two three to Q4 is that a renewal opportunities will grow so the number of new warranties expiring in the fourth quarter actually is stepping up from two three about 20 per cent and so it could be that renewables will continue to.

Closer to that 50, 50, Mark I'm in terms that versus new pampers.

Tuned on that as we see the behavior of people that are considering can them for the first time at their meeting there ended here deductible.

Jordan Pinsker: Getting up our clinical efforts is Dr. Jordan Pensker who joined Tandem in 2021 and is a leading enter canologist and prominent thought leader in artificial pancreas research. He's been a primary investigator in numerous clinical trials and automated insulin delivery systems prior to joining Tandem and brings extensive knowledge in patient care and the epidemiology of type 1 and type 2 diabetes.

Great. Thank you very much.

Thank you please stand by for our next question.

Our next question comes from the line of Matt Taylor up Jeffries.

Hi, Thanks for taking the question Uhm.

John Sheridan: We've asked Dr. Pensker to join a Q&A portion of our call today as he's been helping us to contextualize how the different drugs currently available along with those in the research stages play in our longer term mark opportunity. As you can see, this is an extremely busy time at Tandem. I'd like to thank our employees for their perseverance, diligent focus on execution and continued heartfelt care for our customers.

Because I wanted to ask you a little bit for high level help on the phasing your contributions next year.

<unk> and the sensors I guess just given this pause that we've seen.

Do you expect a snap back as you get full release, it is going to be different than normal.

Analogy or should we think about more normal seasonality you know on the back of all these new products.

Unknown Executive: Together, we will be working hard to close out 2023 with an eye on the future and a next chapter at Tandem. I'd like to now turn the call back to the operator for questions. Thank you as a reminder to ask a question. You will need to press star 11 on your telephone. To remove yourself from the question cubes, you may press star 11 again. We ask that you please limit yourself to one question and one follow up. Please stand by while we compile the Q&A roster.

Through the year next year.

Yeah. Thanks for the question that so when you think about when you have a new product. Once you have a number of things happen and so even though we're seeing <unk> right now at Kansas there'll be data by People's insurance, Uhm and when they will meet their data to what it looks like at the beginning of the year and so I would say two factors with <unk>.

Need to think at this point that we might have a heavier back half loaded year, which would be and people you know working with their insurance plans, but also just add momentum grows on these products that there's more awareness as people begin to experience it physician to the experiences with it it will start encouraging more more people asking me for my purchases and so I still think about it.

Steve Lichtman: Our first question comes from the line of Steve Lichtman of Oppenheimer in company. Thank you. Hi guys. I guess you're starting in the U.S. Cumpshipment held up better than expected given the acute headwinds, particularly on the renewal side. Can you talk to what you're seeing in terms of the pattern there or our patients taking advantage of Tandem Choice? What are you seeing on the renewal side? Is driving the particular strength during this period?

Scale across the year and you know like we typically see with attack and being more have potentially.

Potentially with the back and being more heavily loaded and in years past because of the timing of product matches.

Alright, maybe just one follow up with you you have the sensory integration the M L B.

Big catalysts can you help us understand the relative impact of <unk>, a lot bigger than the sensors or vice versa or they both equal contributors help us understand which is gonna be the bigger.

Driver and approximately how much he cared.

That I would say that the.

The feedback we've received so far on mobius, but overwhelmingly positive.

Steve Lichtman: Yes. Thanks for the questions, Steve. And so what we're seeing is in pretty much what we anticipated with renewal customers, they would be more inclined to take advantage of their end of year insurance benefits considering they already know how to use a Tandem piece on next to there. They already know how to use control like you so it's a much easier proposition for them to consider buying a piece on today while they're out of warranty and then using the Tandem Choice Program to switch when Moby is available.

People have been really surprised by a small it is.

Flexibility in terms of locating on their body.

Really extended hours, we knew it was going to be positive.

Really exceeded our expectations and so I would expect that movie is going to be a positive driver of revenue as soon as it's available and then I would I would expect to see you know.

A turnaround driven by it.

Steve Lichtman: So that's why we didn't see much if any disruption on the renewal side. In fact, our renewal rates were consistently strong with what we've been seeing for the past, you know, four, five, six quarters now. It's the new customers where we expected to see the pressure, the new customer potential, I would say when you think about the transitioning to a new pump, the fact that they have to learn a whole new pump today and then would switch to a different pump around the turn of the year.

That being said I. There's also a lot of interest that we're hearing from the field and the G seven integration.

So you know I think that the people were pausing waiting for it now so I think it's definitely going to have an effect as well probably not as much as as <unk>.

I think that added is there was a lot of people out there today that usually out of sensor hundreds of thousands of don't use pump technology. So it might be slower to get those people into tandem product over time, but it's a meaningful longer term opportunity for us.

Steve Lichtman: So those are the folks that we expect to take more advantage of or actually differ and wait until 2024 to make their purchase. So things played out pretty much like we anticipated in that regard. Okay, got it.

John Sheridan: And then as a follow up me for for your John or Dr. Pinsker, you talked about, you know, certainly the GLP one discussion of the last few months. I think relative to pumps, you know, one thing, I look at your opinion on is what drives penetration. So overall the penetration is low. I think we have to make five or six percent in the intensive type two. So, you know, regardless if it's sort of the impact on top from GLP ones, what do you see as the drivers of a pump utilization from where it is today?

So I think that you know Moby is going to be the driver. We're gonna definitely see very favorable benefits from from the G. Seven implementation and then Abbott a longer term is going to really have a favorable effect on growth.

Alright, thanks, Sir.

Yep.

Thank you.

Our next question.

Comes from the line of Connor Chamberlain of Craig Harlem.

Hey, good afternoon, everyone. This is connor on for Alex. Thanks for taking my questions can you compare the current market pause to similar dynamics that you've seen in the past with control I Q, Basil I Q or even Medtronics 670 G launch.

John Sheridan: Steve, I think it's largely driven by reducing the burden of diabetes of just managing diabetes is complex. It's basically every moment of every day you've got to think about it. And the pumps in the AID systems are basically providing better therapy. And they're, they're, again, less burdensome to use. You don't have to think it's much about engine diabetes.

Jordan Pinsker: So we think technology drives adoption and continue to develop technology that reduces the burden of diabetes is really the way to get the pump adoption up from mid 30s today to the mid 50s in the next couple of years. Jordan, you want to add into it?

Sure and you just highlighted I think all of them that we've been through or across the years.

And the level of impact from any new product launch does vary depending on the circumstances around it is 670 G. I would say, what's the most impact books at that time for a variety of reasons. The <unk> with much lighter considering that it was purely a software update and so you would think that people.

Jordan Pinsker: I would. Hi, Steve. I'd like to offer some insights into GLT one use that we are seeing. John alluded to earlier, our data shows the effects of these newer medications are really complimentary with control IQ use. We saw in the recently published paper in clinical diabetes that when control IQ was used by people with type two diabetes, those using the GLP ones had even better final results than the overall cohort. Their time and range improved from 61% not meeting their glycemic targets to 76% after six weeks. Now these individuals still needed insulin. They were not meeting their glycemic goals at baseline and they showed tremendous improvement with control IQ use.

Would be okay with moving forward.

It's pretty simple, but still many times you may see people, who decided that it's just easier to write when they buy the next touch so for a sensory integration, we do see some level of passing uhm and so we're excited to bring it onto market with that new staffer on it for the people who are waiting for it but I would say movies on that the higher end at the past with the change in form factor.

And the excitement is building is more and more people are hearing about it.

The momentum is growing on that and so I would say it on that I just want to call. It the more extreme or the higher end up for the card might look like.

Great got it.

And then do you have any visibility on how long the disruptions for the whole U S distribution distribution partners.

Jordan Pinsker: So we think providers are really going to realize how well patients do with our system, and as we move forward, progressing in our type 2 diabetes pivotal trial, we expect to see similarly results in that larger trial as well. I'd like to add, you know, we're seeing very meaningful number of participants in our pivotal trial using these adjuvant medications, others and insulin, and they're also using quite a bit of insulin, and they're in the trial because they're not meeting their glycemic target of baseline.

Is expected to last and then when can we expect a normalization.

Sure. So this with.

Recent information has been ever learning about some of these disruptions they were seeing in Europe and really contains two key markets and you know Unfortunately, it's S. Fortunately they are growing very rapidly and have large installed basis, but at that happens uhm, they're still adjusting to that so they're kind of one of your current startup faith and we're working expeditiously to help them with.

Jordan Pinsker: So we expect that they're going to show significant improvements in their outcomes as well, and I think that gives us great confidence in the future and as awareness of these outcomes becomes more pronounced over time, you know, we intend to highlight these results from studies.

Practices, how to manage your product rollout and so I think that once we get past the back half of this year, we will be three that particularly because part of it is is really about the G. Seven tiny coming right. After the first of the year Uhm. It's just something that we're working through right now and and hope that we'd have C. D. Four test disruptions in the future, but considering they were two of our larger markets when they have Andy.

Unknown Executive: Great, thank you. Thank you.

Brooks O'Neill: Our next question comes from the line of Brooks O'Neill of Lake Street Capital Markets.

Types of activities going on it's obviously much more material to the business overall.

Great. That's all I have thank you.

Brooks O'Neill: Oh, good afternoon, everyone. I guess I'd like to try to get a little bit of clarification around what I think are two pauses now. I want to clarify and be sure I understand that the pause that we anticipated related to Moby in Q4 is pretty much what you're seeing in the US. It sounds to me like the additional 20 million reduction in guidance for the year, all of which will obviously come or most of it guess will come in Q4 is related to a pause related to the launch of G7. So maybe you could just help us understand exactly when you think mobile will launch in the US and when it might launch OUS. And then also when you're thinking about integrations with DEXCOM and app.

Thank you.

Our next question.

Comes from the line of Jason Bedford Raymond James.

Good afternoon, just on the international dynamic.

Does the distributor so other pumps or is it just <unk> and I'm just wondering <unk> tandem distributor issue or do you think competition is at play here.

So this is truly am I hate account issue I can't I'm distributor and situation or disruption and it's really about they they are selling on the tandem pulsed and so for example in the third quarter there with a software rollout in one of the markets and so because their installed base of large and just the way the system works.

In that particular market.

The distributors had to be more hands on with those rollouts with the customers as opposed to the way the process works in the U S, where it's very simple within the customer's hands. We are here to support as needed but in this case in many cases the person I had to be there with the customer. So long story short they are very focused on that software update activity and what that means is they don't get you uhm two per.

John Sheridan: Thanks. Hi, Brooks. Well, right now we actually have people using Moby in our sort of our early aspects phase. We talked about this before that in the fourth quarter, we would have people using it probably for the entire quarter. And the idea here is really to understand how the system informs and make sure that, you know, it's an excellent customer experience. And so during this time frame, if our our issues that surface will fix them and we do not want to go to higher numbers of people using the product and who are confident that it's running the way we expected to.

<unk> normal spelling activities and so that's the sort of disruption that name or seeing their and and from a competitive perspective, we weren't seeing any different dynamics and what we've been seeing in in you know up to now in terms of competition in the markets and Jason That'd be that'd behavior is driven by the health care system and that is a requirement the data.

In terms of the way software updates are actually perform.

Okay. That's helpful. And then just a quick one and I hate to put you on the spot.

John Sheridan: So I would say that Moby is going to be more of a first quarter product force in terms of revenue. That being said, when it comes to G7, you know, G7 is also it's a little further along in terms of its launch and we would anticipate that it was we have a number of people using it today that numbers growing. And I think that before the end of the quarter will have full availability to the market for G7.

Start with this but.

10 per cent bogey for next year is the new baseline the 765 here in in in twenty-three.

Yes office any baseline uhm at this point and thinking about the fact that we put that 10% out very early and it was meant to be directional only at the baseline.

I would encourage people to use that now at <unk> off of let's check out the 10 per cent.

John Sheridan: And so, you know, I think that as we said in the call, we're we're seeing pausing the US for both Moby and for G7. We think that, you know, again, Moby is more of a Q1 product and G7 will start to see sales near the end of this quarter. Yeah, well, with Abbott, I think that Abbott is going to enter into that early access phase here in the next few weeks. And I think that, you know, as that, you know, so that's going to be roughly in the closer to the holiday season. We're definitely going to have people wearing it, but we won't really begin to see rather than you until we hit the first quarter.

Alright, thank you.

Thank you.

Our next question.

Comes from the line of Danielle.

Uhm UBS. Please go ahead go ahead Danielle.

Hi, this is actually pretty on for Danielle. Thanks for taking the question I guess, if I could continue on 2024 and that 10 per cent growth. If you guys could maybe just lay out some of the headwinds and <unk> and what it assumes from sure lost perspective versus current rate stabilization or improvement and then one follow up if I could.

Sure so that 10% direction baseline that we put out there was really just to give people a starting point based on the assessments, we make a guidance. This year, what we needed to do is for people to I'll get into the same places essentially and when you think about it and to get to that 10%, it's really about it's assuming that.

Lee Vossler: Okay, you're fine, Brooks. I wanted to add a point of clarification on the change in guidance outside the US. I would say it's not all pointed to the timing of the seven, although that was a meaningful piece of it. There are a few different moving parts there about half of its related to new product launches. It's, it's not just when they roll out, but it's also how they're rolled out what we find is that in our distributor markets at times.

The market environment next year is similar to what we're seeing this year and obviously, we have much greater ambition about next year with all of these products, we have coming to market each of them individually can make a substantial change in our opportunity and growth profile, but for now we wanted to set the baseline off of which we can we.

Lee Vossler: When they're pushing a new offering, they may be distracted from what I would call routine selling activities as they're supporting their existing install base. And we saw some of that in the third quarter, which contributed to this change. We're also seeing some order timing change because of the G7 launch coming right after the first of the year. And then the other element is related to a reimbursement change that we are anticipating in France. And so it's really multifactorial in terms of it's not all because of a G7 necessarily.

We can talk about future opportunities as me you have more clarity on timing prolapse, and and those types of pieces of information.

Okay, great. Thank you and then I guess on international is there any way that you could quantify underlying demand Oh, you asking what growth could have been axes capacity constraints and how confident you are and continued strong double digit growth Sir.

Brooks O'Neill: Okay, I got that very helpful clarification. Thank you.

That's all thanks, Sir sure Uhm I think one piece of information I can sure right. So we have had it it's difficult to see as an outsider looking in from a shipment perspective, what's really happening behind the scenes and while we are seeing disruption in a couple of.

Joanne Wuensch: Next question comes the line of Joanne lunch of city.

Anthony: Hey, good afternoon. This is actually Anthony on for Joanne. Thanks for taking our questions. One on the, the Yvourard guidance to see that break even for the year was maintained that implies a pretty substantial step up. I think in the fourth quarter to talk to look to confidence in having that break even goal for the year. I'm sure happy to talk about it. It starts with and we do expect to step up in fourth quarter sales from the third quarter.

Top markets, it's more about timing.

I can tell you that in a in a handful of markets that make up a substantial portion of R. O U S business.

Seeing growth rates, when we look at their placements at <unk>.

<unk> strong double digit I'm talking about 20 to 30 per cent, we even have one pretty significant market burly 30 per cent plus year over year. So the demand is still very strong there's people really love control like you. It's a it's a vastly underpenetrated market the opportunity exists and we have to work through some of these near term disruptions that we're seeing that we still feel very.

Anthony: And as we sell more comfort does drop more profit to the bottom line. I'll also add that we've demonstrated pretty I would say incredible progress across our operating expenses this year. This will be the second quarter in a row. We've seen a reduction of operating expenses as we continue to manage cost implement efficiencies, which allows us to slow down on some of the hiring that we've been doing particularly in some of our customer support functions.

Confident in the growth potential for that part of the business.

Great. Thank you.

Thank you.

Our next question.

Comes from the line of <unk> Ah Barclays.

Anthony: Where the benefits of our infrastructure and hand of source are really starting to help with that efficiency opportunity. And our expenses in the third quarter are actually flat to the prior year. So as we look at continued cross containment improvement on the top line, all of that contributes to our ability to meet our adjusted EBITDA guidance of at least break even for this year. And you've seen now for Q2 and Q3. We've been positive in both quarters.

Hi, Thanks for taking my question so.

Lee Vossler: Great. That's helpful.

Try to get a sense of relief and some.

Some questions around turning the corner.

24.

New product launches.

Growth and so I had a couple of questions are on that subject.

Lee Vossler: And then on US new pumpers. Correct me if I heard you wrong, but I heard about a little maybe a little less than half over new rules. If I plugged that in, I'd get US new pumpers and I eat pumpers down year over year in like the high 40s. A is that correct math and then B is that how we should be thinking about the fourth quarter in terms of renewal versus new pumpers.

First because it seemed like.

Uhm.

<unk>, you're talking about the essentials required for integration. It felt like those you know we're gonna be available this quarter, but maybe a touch later than originally planned.

Planned or something like that and I just wanted to make sure.

We understand is that was in alignment with your original planning and most recent planning or.

Lee Vossler: Thank you. Yes, so you're correct and that renewals were just under half of our shipments this quarter, which does imply that new pump new pumpers decline. And that goes back to an earlier point in the conversation about the impacts that we're seeing for people waiting for Moby even to some extent people waiting for G7 as we get our full availability here in the fourth quarter that tends to impact the new pumpers more so than the renewal pumpers.

Very good.

With words.

<unk> that's.

The amount of data.

One follow up.

Hey, Matt.

On the call they had last week, they indicated that they're shipping the new hardware globally.

And we have been coordinating product availability for our early access launch customers.

And use them at the end of your channels. So you know we don't think it's gonna have an issue on the quarter or for next year's availability as well and you know.

Lee Vossler: As we go into the fourth quarter part of the reasons we have confidence in the data to drive that step up from Q3 to Q4 is that our renewal opportunities will grow. So the number of new warranties expiring in the fourth quarter actually is stepping up from Q3 about 20%. And so it could be that renewals will continue to move closer to that 50 50 mark in terms of versus new pumpers, but stay tuned on that as we see the behavior of people that are considering tandem for the first time as they're meeting their end of year deductible.

I think it's we anticipate things are going to move smoothly.

Get more and more people on the system.

Okay. So this was a maybe what was he.

The end of the quarter later in the quarter kind of expectations and on that basis, you still comfortable.

And then obviously.

Next year with with supply coming in to support the lunch that sounds like yeah, I think that we're expecting that as we progress through this quarter will be moving to general availability and it'll be there.

Unknown Executive: Thank you very much.

Unknown Executive: Thank you, please stand by for our next question.

<unk> Oh, you want to use it.

And that system going forward.

Matt Taylor: Next question comes from the line of Matt Taylor up Jeffries. I think she's taking the question. Yes, I wanted to ask you a little bit for high level help on the stasing of contributions next year from Moby and the sensors. I guess, you know, just given this, this pause that we've seen, be expect a snapback as you get pull release is going to be different than normal seasonality or should we think about more normal seasonality.

That's great.

Then I guess you know.

I should I should have.

Mentioned also just like the Libra.

Any any sort of nuances and your and your updated guidance related to her expectations there.

<unk> and <unk>.

And so in fact, let me think about 2023, we didn't factor in any new product opportunities into the guidance that we laid out and sell anything that would add <unk> would've occurred. This year is going to be upside to the numbers that we have insurance that new product launches.

Matt Taylor: You know, on the back of all these new products through the year next year. Yeah, thanks for the question, Matt. So when you think about when you have a new product launch, you have a number of things happen. And so even though we're seeing some some pent up demand right now, it tends to still be gated by people's insurance. And when they will meet their deductible, what it looks like at the beginning of the year.

Okay. That's cleared <unk> follow up just into the next year.

Gotcha.

That will be <unk>.

Process of.

Sales of cheese, one with sort of.

Matt Taylor: And so I would say two factors would cause me to think at this point that we might have a heavier backpack loaded year, which would be people, you know, working with their insurance plans. But also just as momentum grows on these products as there's more awareness as people begin to experience it, the decision CD experiences with it, it will start encouraging more more people to move forward with purchases. And so I would still think about it as a, you know, a scale across the year.

Option for movie.

We get into the first quarter, and we started thinking about what kind of demand growth.

There's an uptick.

There you go.

How <unk>, how should we be thinking about sort of the cross currents or or off says to that that my.

Transfer revenues, but in terms of like new movie cause some of that is gonna be sort of.

John Sheridan: You know, like we would typically see with the back and being more heavily, potentially with the back and being more heavily loaded than in years past because of the kind of your product launches. All right, then maybe just one follow up to you have the sensor integrations and mobile, you know, both big catalyst. Can you help us understand the relative impact of each is mobile, a lot bigger than the sensors or vice versa.

I guess conversions and some of that is gonna be you know new mobile users any way that you could sort of sketch out.

Various puts and takes to that early I'm thinking first quarter, maybe first half performance metrics that can help us maybe cetera expectations properly.

John Sheridan: And they both equal contributors, help us understand which is going to be the bigger driver and approximately how much if you could. And I would say that the feedback we've received so far on mobile is but overwhelmingly positive. And people have been really surprised by how small it is. The flexibility in terms of locating on their body and I mean, it's really exceeded our, we knew it was going to be positive.

Uhm sure Uhm instead of I think I'm understanding your question correctly.

Really how will we be discussing the business next year. When we have these moving parts related to tandem choice as well as selling pumps do people for the first time, if you will.

We actually talked about hand them choice on a long, it's an opportunity for people to switch and so for example, if we have a person who buys a cheese plant here in the in the fourth quarter and they become a switcher Timothy we won't be reporting that as a.

John Sheridan: But it's really exceeded our expectations. And so I would expect that movie is going to be a positive driver of revenue as soon as it's available. And that I would, I would expect to see, you know, a turnaround driven by it. That being said, there's also a lot of interest that we're hearing from the field and the G7 integration. And so, I think that people are pausing waiting for it now. So I think it's definitely going to have an effect as well, probably not as much as as Moby Will.

<unk> unit for sale will we will take that out of the numbers and what we will share with you with the information related to people that are actually purchasing tops for for it with insurance that you had attached to it.

B Commingling switchers with Uhm and switchers meeting people from a tandem pumped Sheila.

If they are truly a renewal and out of warranty that would be a different situation at a normal sale. So we'll be talking about metrics that would be very comparable to what we've discussed this year and what would we would be discussing in the future for the business.

John Sheridan: I think that Abbott is, there's a lot of people out there today that use the Abbott sensor, hundreds of thousands that don't use pump technology. So it might be slower to get those people out there. So I think that we're going to be able to get people into a tandem product over time, but it's a meaningful longer term opportunity for us. So I think that, you know, Moby's going to be the driver. We're going to definitely see very favorable benefits from, from the G7 implementation and, and then Abbott longer term is going to really have a favorable effect on growth. All right. Thanks, John.

Okay that is helpful color. Thanks, so much for taking my questions.

Take care of that.

Thank you.

Our next question.

Comes from the line obtain Rinehart bird.

Hey, good afternoon, guys. Thanks for the questions I guess the first one could you just help clarify maybe the France for a little bit I know going into that market or with the recent study you were kind of expecting.

Connor Chamberlain: Thank you. Our next question comes from the line of Connor Chamberlain of Craig Hollow. Hey, good afternoon, everyone. This is Connor on for Alex. Thanks for taking my questions.

Premium reimbursement and now kind of based on a disclosure in the 10-K, it's talking about potentially affecting your ability to generate revenues there with the rebate. So can you just kind of help us flesh that issue out a little bit and get a better understanding there.

Connor Chamberlain: Can you compare the current market pause to similar dynamics that you've seen in the past with control IQ, basal IQ, or even the Toronto 670G launch? Sure. You just highlighted, I think all of them that we've been through across the years. And the level of impact from any new product launch does vary of kind of depending on the circumstances around it. The 670G, I would say, was the most impactful at that time for a variety of reasons.

Sure I can give you a bit more color uhm as soon as you know anytime you bring the rebate conversation into everyday conversation actually means complexity.

And what we're talking about that we have the potential to see him coming up here in the fourth quarter.

Is really thinking about our installed base that we already have to think about it if you want to call it pumps and the channel or people already on sunset assessing and how many people already have control like you. How many people can update to control I Q the timing of when they might the length of time. They have left in there once you need to be eligible for that opportunity and just how the value gets allocated across.

Connor Chamberlain: The pause we saw in advance of control IQ was much lighter considering that it was purely a software update. And so you would think that people would be okay with moving forward and buying the pump because the software updates pretty simple, but still many times you may see people who decide that it's just easier to wait when they buy the next pump. So for a sensor integration, we do see some level of pausing.

The entire selling chain here and so there's a lot of complexity that come into it and what we wanted to do is make you aware that you can think of is almost like an implementation type.

Connor Chamberlain: And so we're excited to bring it on to market with that new software on it for the people who are waiting for it. But I would say movies on the higher end of the pause with the change in form factor. And the excitement that's building it's more and more people are hearing about it. The momentum is growing on that. And so I would say it's on the, if you want to call it the more extreme or the higher end of what a cause might look like.

Activity that we have to assess what is the impact today on day, one of what that rebate structure looks like on our business and so and there's a wide range of possibilities here and so we're giving you it could be up to $10 million, but we will have that work out by the end of the year and and be able to better clarify the impact of that on our business.

John Sheridan: Great. Got it.

Okay. Thank you and then the second one kind of going back to that 10% baseline for next year and I know, it's kind of a baseliner or even maybe floor for that but I think you could almost probably get to that 10% just based on renewals, that's drawing you'll even have potentially some intern.

John Sheridan: And then do you have any visibility on how long the disruption is for the US to distribute some distribution partners is expected to last. And then what can we expect a normalization there? Sure. So, you know, this was very recent information as we were learning about some of these disruptions we were seeing in Europe and really contained two key markets. It's, you know, unfortunately, as fortunately, they're growing very rapidly and have large installed basis.

National renewals and then with supply.

Revenue growth. So can you just help us understand and that 10% as a baseline would that even kind of take into consideration new users in the U S being down year over year and then if you do get growth that's kind of all upside from there what does that imply just on a new user perspective. Thanks.

John Sheridan: But as that happens, they're still adjusting to that. So they're kind of what I would call an startup phase. And we're working, you know, expeditiously to help them with that practices, how to manage through product rollouts. And so I think that once we get past the back half of this year, we will be through that, particularly because part of it is really about the G7 timing coming right after the first of the year.

Yeah. Thank you I mean actually spell it out perfectly well there it's really predicated very heavily on that uhm reoccurring pieces of our revenue, which are supplied that they've been very predictable, it's a step up and renewal opportunities growing from 50000 ish warranty expirations. This year to 70000 plus next.

John Sheridan: It's just something that we're working through right now and and hope that we don't see these sorts of disruptions in the future, but considering they were two of our larger markets. When they have these types of activities going on, it's obviously much more material to the business overall.

Unknown Executive: Great, that's all I have. Thank you.

And the U S alone and to your point, we'll start to see renewal opportunities for the Lus markets become available to us and so in order to achieve that 10% you don't have to believe that new pampers, even grow next year and and that was the point is you said is setting the baseline because we have we're very convicted that with our new products, we will turn that trajectory around but.

Jason Bedford: A next question comes from the line of Jason Bedford of Raymond James.

John Sheridan: Good afternoon, just on the international dynamic, the distributor tell other pumps, or is it just Tandem? And I'm just going to come back. Is this a Tandem distributor issue, or do you think competition is a play here? So this is truly a, I hate to call it issue, a Tandem distributor situation or disruption, and it's really about they are selling only Tandem pumps. And so for example, in the third quarter, there was a software rollout in one of the markets.

As a starting point is that we wanted to put it out there at the number that people can see a line of sight to pretty easily.

Thank you.

Thank you.

Our next question.

Comes from the line of Joshua Jennings of T D Cohen.

Hi, good afternoon, thanks for taking the questions.

To discuss the four.

Pharmacy channel.

Just.

John Sheridan: And so because there is fall basis so large and just the way the system works in that particular market, the distributors had to be more hands on with those rollouts with the customers as opposed to the way the process works in the US where it's very simple. It's in the customer's hands. We're here to support as needed, but in this case in many cases, a person had to be there with the customer.

There are there any updates on discussions for negotiation repairs on an opening that door for <unk> <unk>.

Any change to the team's optimism or <unk>, what cannot be opened and that's what the next steps to that process.

Sure Yeah. Thank you, it's a great great question.

John Sheridan: So long story short, they're very focused on that software update activity. And what that means is they don't get you to pursue their normal selling activities. And so that's the sort of disruption that we were seeing there. And from a competitive perspective, we weren't seeing any different dynamics than what we've been seeing in, you know, up to now in terms of competition in the market. And Jason, that behavior is driven by the healthcare system and that it's a requirement that they have in terms of the way software updates are actually performed.

We've talked about the possibility of moving into the pharmacy channel with movie, which is something that people.

John Sheridan: Okay, okay, that's helpful.

People see at the challenge potentially because it's a durable pump much like the <unk> <unk>.

As we've been starting these conversations now that we have approval from O B and can really talk about it in earnest with a different pair and PVM organizations are confidence spells every single day in terms of the opportunity for us to make that sort of transition and so all I can sure. Today's we're still in the early phases that were actively engaged in conversations were building out the organizational capabilities.

Unknown Executive: And then just a quick one and I hate to put you on the spot with this, but the 10% Vogue for next year is the new baseline for 765 here in 23. Yes, off of the new baseline. At this point, and thinking about the fact that we put that 10% out very early and it was meant to be directional only at the baseline. But I would I would encourage people to use that now to offer what should grow the 10% right off. Thank you.

<unk>, making sure that we're ready and can and make this a reality and so no specific updates that can all for today and you know stay tuned on that but our optimism is really high.

Yeah, I just have one of our key strategic initiatives for the business.

And we have a lot of resources focused on it.

Understood appreciate that.

Just.

Thank you is there are no further questions in queue that does conclude the Q&A portion in our call for today. Thank you for participating you may now disconnect.

Danielle Antalffy: Next question comes from the line of Danielle and selfie of UBS, please go ahead, Danielle. Hi, this is actually pretty on for Danielle. Thanks for taking the question.

Lee Vossler: I guess if I could continue on 2024 and that 10% growth, if you guys could maybe just lay out some of the headwinds and tailwinds and what it assumes from a share loss perspective versus current race, you know, stabilization or improvement and then one follow up if I could. I'm sure. So the 10% direction, although I'll call it baseline that we put out there was really just to give people a starting point based on the adjustments we made to guidance this year.

Mmm.

[music].

Lee Vossler: What we needed to do is for people to all get into the same place as essentially. And when you think about it to get to that 10%. It's really about it's assuming that the market environment next year is similar to what we're seeing this year. And obviously we have much greater ambition about next year with all these products. We have coming to market each of them individually can make a substantial change in our opportunity and growth profile.

Lee Vossler: But for now we wanted to set the baseline off of which we can we can talk about future opportunities as we give more clarity on timing of rollouts and in those types of pieces of information. Okay, great. Thank you.

Lee Vossler: And then I guess on international, is there any way that you could quantify, underlying demand, OUS, and what growth could have been, XC's capacity, constraints, and how confident you are and considered strong global digit growth there. And that's all thanks. Sure. I think one piece of information I can share, right? So we have had, it's difficult to see if an outsider looking in from a shipment perspective, what's really happening behind the scenes.

Lee Vossler: And while we are seeing disruption in a couple of top markets, it's more about timing. But I can tell you that in a handful of markets that make up a substantial portion of our OUS business, we're seeing growth rates when we look at their placements of pump spawn patients, in strong double digits. I'm talking about 20 to 30%. We even have one pretty significant market growing, you know, 30% plus year over year.

Lee Vossler: So the demand is still very strong. There's a people really love control like you. It's a vastly under penetrated market. The opportunity exists. We have to work through some of these near term disruptions that we're seeing, but we still feel very confident in the growth potential for that part of the business. Great. Thank you.

Matt Mixick: Our next question comes from the line of Matt Mixick of Barclays. Hi, thanks for taking the question. So I wanted to try to get a sense. And there's been some questions around turning the corner into 2024. And these, and these product launches and having might start to impact growth. And so I had a couple of questions around that subject. And first of all, it seemed like Dexcom, when they were talking about the sensors required for integration, it felt like those, you know, we're going to be available this quarter, but maybe a touch later and originally planned or something like that.

Matt Mixick: And I just wanted to make sure, you know, we understand that that was an alignment with your original planning and most recent planning or if, you know, your current guide and guidance reflects, you know, absorbing that, you know, any delay that they might have been and they have one follow up. Hey, Matt, yeah, yeah, I think like on the call they had last week, they indicated that they're shipping the new hardware globally.

Matt Mixick: And we have been coordinating product availability for our early access and was launch customers through them at using the DMEH house. So, you know, we don't think it's going to have an issue on the quarter or next year's availability as well. And, you know, I think it's we anticipate things are going to move smoothly. As we get more and more people on the system. Okay, so this was a maybe what was a, you know, by the end of the quarter later in the quarter kind of expectations and on that basis, you're still comfortable.

Matt Mixick: And then obviously handing it to next year with supply coming and discipline the launch. It sounds like. Yeah, I think that we're expecting that as we progress through this quarter, we will be moving to general availability and it will be available for all who want to use. The product and that system going forward. That's great. And then, I guess, you know, I should have mentioned also just like the Libra side. Any, any, any sort of nuances in your updated guidance related to prior expectations there.

Matt Mixick: What could that be? And so in fact, when we think about 2023, we didn't factor in any new product opportunities. And so the guidance that we laid out. And so anything that would have, would have occurred this year is going to be upside to the numbers that we have in terms of new product launches. Okay, that's clear. Then the one follow up just into the next year. Not to not, you know, just the movie, the process of sales of a piece one with sort of.

Matt Mixick: An option for Moby, as you get into the first quarter, I'm sure thinking about, you know, what kind of demand growth I can show in terms of units and uptake. Is there, you know, how, how, what sort of what, how should we be thinking about sort of the cross currents or the offsets to that that might not in terms of revenues, but in terms of like new Moby. Because some of that's going to be sort of Moby, I guess, conversions and some of that's going to be, you know, new Moby users.

Matt Mixick: Anyway, that you can sort of sketch out, you know, the, the various puts and takes to that, you know, early, I'm thinking first quarter, maybe first half performance metrics that can help us maybe better expectation properly. Sure. And so I think I'm understanding your question correctly. It's really, how will we be discussing the business next year when we have these moving parts related to tandem choice as well as selling pumps to people for the first time, if you will.

Matt Mixick: And so as we've talked about tandem choice all along, it's an opportunity for people to switch. And so, for example, if we have a person who buys a teaspoon here in the fourth quarter, and they become a switcher to Moby, we won't be reporting that as a sale, a unit for sale. We will, we will take that out of the numbers and what we will share with you would be information related to people that are actually purchasing pumps for with insurance value attached to it.

Matt Mixick: And so we won't be commingling switchers with and switchers being people from a tandem pump to a Moby pump. If they're truly a renewal and out of warranty, that would be a different situation. That's a normal sale. So we'll be talking about metrics that would be very comparable to what we've discussed this year and what we would be discussing in the future for the business. Okay. That is helpful color. Thanks so much. And for taking the questions. Thank you, Matt. Thank you.

Matt Mixick: Our next question comes from the line of Dane Reinhardt. Up Baird. Hey, good afternoon guys. Thanks for the questions. I guess the first one. Could you just help clarify maybe the Francis to a little bit. I know, you know, going into that marketer with the recent study or kind of expecting, you know, premium reimbursement and now kind of based on the disclosure and the 10 K. It's talking about, you know, potentially affecting your ability to generate revenues there with the rebate.

Matt Mixick: So can you just kind of help us flesh that issue out a little bit and get a better understanding there. Sure. I can give you a bit more color. And so, as you know, anytime you bring the rebate conversation into it rebates into a conversation actually means complexity. And what we're talking about that we have the potential to see coming up here in the fourth quarter is really thinking about our install base that we already have.

Matt Mixick: So think about if you want to call pumps in the channel where people are already on pumps. It's assessing how many people already have control IQ, how many people can update to control IQ, the timing of when they might, the length of time they have left and they're warranty to be eligible for that opportunity. And just how the value gets allocated across the entire selling chain here. And so there's a lot of complexities that come into it.

Matt Mixick: And what we wanted to do is make you aware that you can think of it as almost like an implementation type activity that we have to assess what is the impact today on day one of what that rebate structure looks like on our business. And so there's a wide range of possibilities here. And so we're giving you it could be up to $10 million.

Lee Vossler: But we will have that worked out by end of the year and be able to better clarify the impact of that on our business. Okay. Thank you. And then the second one kind of going back to that 10% baseline for next year. And I know it's kind of a baseline or or even maybe slower for that. But I think you could almost probably get to that 10% just based on renewals that's growing.

Lee Vossler: You'll even have potentially some international renewals and then with supply revenue growth. So can you just help us understand in that 10% as a baseline, would that even kind of take into consideration new users in the US being down year over year. And then if you do get growth, that's kind of all upside from there. What does that imply just on a new user perspective? Thanks. Yeah. Thank you. I mean, actually you spelled it out perfectly well there.

Lee Vossler: It's really predicated very heavily on the reoccurring pieces of our revenue, which are supplies that have been very predictable. It's the step up and renewal opportunities growing from 50,000-ish warranty expressions this year to 70,000 plus next year in the US alone. And to your point, we'll start to see renewal opportunities for the OUS markets become available to us. And so in order to achieve that 10%, you don't have to believe that new pumpers even grow next year. And that was the point, as you said, of setting the baseline, because we're very convicted that with our new products, we will turn that trajectory around.

Lee Vossler: But just as a starting point, it's that we want to put this out there as a number that people could see a line of sight to pretty easily. Thank you.

Joshua Jennings: And next question comes from the line of Joshua Jennings of TD Cohen. Hi. Good afternoon. Thanks a lot for taking the questions. I wanted to discuss the pharmacy channel and just learn if there are any updates on discussions and negotiations with pairs on an opening that door from OB and SIGI. Any change to the team's optimism or confess that door can be opened and that's what are next steps for that process.

Joshua Jennings: Thanks a lot. Sure. Yeah, thank you. It's a great question. We've talked about the possibility of moving into the pharmacy channel with Moby, which is something that people see as a challenge potentially because it's a durable pump, much like the T-sum pump. But as we've been starting these conversations now that we have approval for Moby and can really talk about in earnest with a different pair and TBM organizations, our confidence builds every single day in terms of the opportunity for us to make that sort of transition.

Joshua Jennings: And so all I can share today is we're still in the early stages, but we're actively engaged in conversations. We're building out the organizational capabilities, making sure that we're ready and can and make this a reality. And so no specific updates I can offer today, and you know, stay tuned on that, but our optimism is really. Hi. Yeah, I just underline it's one of our key strategic initiatives for the business and we have a lot of resources focused on it. Others to appreciate that. Here, Josh.

Unknown Executive: Thank you as there are no further questions in queue that does conclude the Q&A portion and our call for today. Thank you for participating. You may now disconnect. Thank you, Patrick.

Unknown Executive: Thank you.