Q2 2024 Tandem Diabetes Care Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to Tandem Diabetes Care Quarter 2 2024 Earnings Conference Call.
Operator: 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Operator: After the speaker's 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. You will then hear an automated message advising your hand is raised. These statements reflect management's expectations about future events, our product pipeline, development timelines, financial performance, and operating plans, and speak only as of today's date. We believe these non-gap financial measures facilitate better comparisons of operating results across reporting periods. However, any non-GAP information presented should not be considered as a substitution, independently or superior, to results prepared in accordance with GAAP.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
Susan Morrison: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Morrison, Executive Vice President and Chief Administrative Officer. Please go ahead.
Susan Morrison: Hello everyone, and thanks for joining Tandem's second quarter 2024 earnings call. Today's discussion will include forward-looking statements.
Susan Morrison: These statements reflect management's expectations about future events, our product pipeline, development timelines, and financial performance and operating plans, and speak only as of today's date.
Susan Morrison: There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements.
Susan Morrison: A list of factors that could cause actual results to be materially different from those expressed
Susan Morrison: or implied by any of these forward-looking statements.
Susan Morrison: 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 as updated by our most recent quarterly report on Form 10-Q .
Susan Morrison: We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or other factors.
Susan Morrison: 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.
Susan Morrison: We believe these non- GAAP financial measures facilitate better comparisons of operating results across reporting periods.
Susan Morrison: Any non-GAAP information presented should not be considered as a substitution, independently or superior, to results prepared in accordance with GAAP.
Susan Morrison: Please refer to our earnings release issued today and available on the Investor Center portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure.
Susan Morrison: John Sheridan, Tandem's President and CEO , will be leading today's call, and he'll be joined by Mark Navarro, Executive Vice President and Chief Commercial Officer, and Leigh Vosseller, Executive Vice President and Chief Financial Officer. I'll now turn the call over to John .
John Sheridan: Thank you, Susan, and welcome everyone joining today's call.
John Sheridan: It's been a tremendous first half of 2024. We began the year with meaningful aspirations for growth, new product introductions, and operational progress. And I am proud to say that in the first two quarters, we delivered on all fronts.
John Sheridan: We're successfully executing our strategy to offer a leading portfolio of automated insulin delivery systems.
John Sheridan: Reinforced by an ecosystem of data driven products and services for our customers and health care providers.
John Sheridan: It's the result of our entire organization maintaining focus and executing at an extremely high level. And I'd like to thank our employees for their continued dedication and hard work.
Unknown Executive: Q2 was a particularly exciting quarter for Tandem as we progressed the rollout of multiple new product introductions, including our new pump platform, Tandem Mobi, new sensor integrations, and the launch of Tandem Source outside the United States. Our financial outperformance in the quarter was largely driven by the strong demand for our latest technologies. During the product theater, key opinion leaders from the Barbara Davis Center for Diabetes shared survey data on early MOBI users. Moby offers users the freedom to disconnect and choice in wearability. The most popular way to wear it was as a patch using an adhesive sleeve.
John Sheridan: Q2 was a particularly exciting quarter for Tandem, as we progressed the rollout of multiple new product introductions, including our new pump platform Tandem Mobi, new sensor integrations, and the launch of Tandem Source outside the United States.
John Sheridan: Our financial outperformance in the quarter was largely driven by the strong demand for our latest technologies.
John Sheridan: We had an opportunity to showcase these new offerings at the recent American Diabetes Association Scientific Sessions, where Moby took center stage as the world's smallest durable automated insulin delivery system. The positive feedback from POP users and healthcare providers continues to be incredible.
Speaker Change: During the product theater, key opinion leaders from Barbara Davis Center for Diabetes shared survey data on early MOBI users.
Speaker Change: The survey found that 86% of participants were satisfied, or very satisfied, with MOBI, regardless of prior therapy, and agreed that MOBI helps improve their quality of life.
Speaker Change: Nearly all MDI users reported that MOBI experiences were consistent or better than expected.
Speaker Change: Mobi offers users the freedom to disconnect and choice in wearability. The most popular way to wear it was as a patch using an adhesive sleeve.
Unknown Executive: To date, our users have shared 18 different ways to wear Mobi. It's this type of flexibility, discretion, and comfort that's attracting people from all segments of the market, along with the results for our automated insulin delivery technology, Control IQ. In fact, former patch users said Control IQ is the highest driver of satisfaction with the system. These real-world insights are extremely valuable as they provide evidence that MOBI not only meets but exceeds user expectations.
Speaker Change: To date, our users have shared 18 different ways to wear Movi.
Speaker Change: It's this type of flexibility, discretion, and comfort that's attracting people from all segments of the market along with the outcomes for automated insulin delivery technology, Control-IQ. In fact, former patch users said Control-IQ is the highest driver of satisfaction with the system.
Speaker Change: These real-world insights are extremely valuable as they provide evidence that MOBI not only meets but exceeds user expectations.
Mark Navarro: To help provide color on how these insights are translating over into the commercial environment, I've asked Mark Navarro, our EDT and Chief Commercial Officer, to join today and share his thoughts.
Mark Navarro: Mark has had a substantial impact on our business since he joined last November , with a focus on delivering worldwide growth, along with building scalable global commercial operations, and best-in-class customer experiences. Mark.
Mark Navarro: Thanks, John. I'm happy to have joined Tandem at such a transformative time for the company. The technology is compelling, the people are passionate, and the market is large, growing, and under-penetrated.
Speaker Change: This combination provides meaningful opportunity to bring the benefits of our automated insulin delivery systems to people living with diabetes worldwide.
Speaker Change: To do so, we recognize there is no one-size-fits-all solution in diabetes management, and we're executing our strategy to provide people choice through our portfolio of diabetes technologies.
Speaker Change: We offer choice and form factor.
Speaker Change: Choice in how they interact with their pump, and Choice in CGM integration, all backed by our best-in-class Control-IQ technology.
Speaker Change: In the second quarter, we saw strong demand for both T-Slim X2 and Tandem Mobi, demonstrating the value of our expanding product portfolio.
Speaker Change: We have taken a staged and rigorous approach to launching MOBI, and we saw its contribution increase meaningfully across the quarter. I'm also encouraged by the emerging purchasing trends from customers and prescribing trends of health care providers.
Unknown Executive: HBPs have long contended that Control IQ is the best algorithm on the market with its strong clinical outcomes. We hear other comments like, "It's so small you can wear it anywhere, and that it provides meaningful improvements in quality of life."
Speaker Change: HBPs have long contended that control IQ is the best algorithm on the market with its strong clinical outcomes.
Speaker Change: Like our enthusiastic customers, HCPs are also responding positively to MOBI based on its small size and wearability.
Speaker Change: MOBI is resonating really well across their patient population, kids, teenagers, and adults, for both first-time pumpers coming from MDI and current AID users seeking more from their system.
Speaker Change: Some of the verbatim feedback I've gotten from HCPs refer to MOBI as the pump that reduces diabetes burden, but also the pump to give you the best time and range.
Speaker Change: We hear other comments like, it's so small you can wear it anywhere, and that it provides meaningful improvement to quality of life.
Speaker Change: We have also seen an increase in new unique prescribers for MOBI, demonstrating that MOBI's new compelling value proposition is resonating with an expanded prescriber audience.
Speaker Change: When we look at who chose Moby, more than half were people new to tandem.
Unknown Executive: This supports our research that Mobi's form factor and versatile wearability will drive AID market penetration by addressing previously unmet needs in the diabetes community. We also continue to see healthy conversion rates from the competition, with a notable increase from disposable patch pumps. New sensor integration has also been a commercial highlight for us in 2024. We are proud to offer our customers best-in-class AID technology while providing choice in CGM sensors. For people who are insulin dependent, the adoption of CGM can be a first step towards interest in using AID technology.
Speaker Change: This supports our research that Moby's form factor and versatile wearability will drive AID market penetration by addressing previously unmet needs in the diabetes community.
Speaker Change: We also continue to see healthy conversion rates from the competition, with a notable increase from disposable patch pumps.
Speaker Change: Another encouraging early data point is that MOBI is attracting a younger demographic compared to T-SLIM, which is in line with our market research and product positioning.
Speaker Change: As you can see, MOBI is beginning to serve as a catalyst for our business, allowing us to further our mission to improve the lives of people with diabetes. And, we are just getting started.
Speaker Change: New sensor integration has also been a commercial highlight for us in 2024.
Speaker Change: We are proud to offer our customers a best-in-class AID technology while providing choice in CGM sensor.
Speaker Change: For people who are insulin dependent, adoption of CGM can be a first step towards interest in using AID technology.
Speaker Change: Both DECCCOM and AVID have been great in helping promote the power of AID, and we appreciate their partnership.
Speaker Change: I would also like to highlight Tandem Source as an important part of our strategy with our global launch starting in the U.S. late last year.
Unknown Executive: Source provides a fast and easy way to visualize diabetes therapy management data from our pumps and integrated CGM. We use this information to demonstrate to HCPs and payers the powerful clinical outcomes of our AID system across a wide and varied population. This allows us to see real-world data from the entire MOBY user base on a daily basis, and it opens up opportunities to deliver value-added services in the future. Another new international product introduction in 2024 will be the launch of T-Slim X2 with G7 integration.
Speaker Change: Source provides a fast and easy way to visualize diabetes therapy management data from our pumps and integrated CGMs.
Speaker Change: This is an important differentiator for Tandem, as health care providers typically have very full days and only a short amount of time with patients, so their time is precious.
Speaker Change: We recently began scaling SOURCE outside the U.S. and are already hearing the same positive feedback.
Speaker Change: Source is foundational to our comprehensive understanding of the tandem patient base.
Speaker Change: Today, we have more than 200 million days of real-world patient data on Control-IQ with nearly 90% of customers uploading their data.
Speaker Change: We use this information to demonstrate to HCPs and payers the powerful clinical outcomes of our AID system across a wide and varied population.
Speaker Change: The utility of the data improves with Mobi since it's continuously uploaded automatically through the phone control app.
Speaker Change: This allows us to see real-world data from the entire Movie User Base on a daily basis and it opens up opportunities to deliver value-added services in the future.
Speaker Change: Another new international product introduction in 2024 is the launch of T-Slim X2 with G7 integration.
Speaker Change: which began in Q1 and was announced as approved in Canada earlier this week. We are pleased with the growth contribution from offering this integration and continue to prepare for additional new product offerings internationally.
Speaker Change: In addition to the worldwide product launch activities, our commercial organization has also been focused on applying best practices in sales force effectiveness and commercial excellence.
Speaker Change: In the U.S., we are taking a rigorous, data-driven approach to segmentation and targeting, equipping our sales teams with new tools and capabilities, and bringing greater discipline to channel management.
Unknown Executive: Outside the U.S., we've been taking steps to expand our sales and marketing resources as we work to fortify our international business. With that, I'll turn the call over to Leigh to discuss more about our second quarter results and increased guidance expectations.
Speaker Change: Outside the U.S., we've been taking steps to expand our sales and marketing resources as we work to fortify our international business.
Speaker Change: We also welcome new leadership based in Switzerland.
Speaker Change: who are focused on advancing how we work with our distributor partners with increased attention on aligning and executing on clear commercial plans, maturing our business processes and partnerships, and leveraging global best practices.
Speaker Change: Overall, we are encouraged by the worldwide commercial environment that Tandem is operating in.
Speaker Change: which remains highly underpenetrated. It's a competitive market, but we are confident that our product leadership and customer care solutions position Tandem to drive both near and longer term growth.
Leigh Vosseller: With that, I'll turn the call over to Leigh to discuss more about our second quarter results and increased guidance expectations. Leigh, please.
Leigh Vosseller: Thanks, Mark. As a reminder, unless otherwise noted, many of the financial metrics I will be discussing today are on a non-GAAP basis.
Leigh Vosseller: Reconciliations from GAAP to non-GAAP results can be found in today's earnings release, which is available on the Investor Center portion of our website.
Leigh Vosseller: We started 2024 with a plan to return to growth, and as you can see in today's results, we are delivering on that goal. We have now achieved two quarters in a row of 12 percent worldwide sales growth, reaching $222 million this quarter. This is the second highest sales quarter in Tandem's history, exceeded only by a seasonally strong fourth quarter in 2022. On a year-to-day basis, worldwide sales were $415 million on approximately 55,000 pump shipments.
Leigh Vosseller: We started 2024 with a plan to return to growth. As you can see in today's results, we are delivering on that goal.
Speaker Change: We have now achieved two quarters in a row of 12% worldwide sales growth, reaching $222 million this quarter. This is the second highest sales quarter in Tandem's history, exceeded only by a seasonally strong fourth quarter in 2022.
Leigh Vosseller: On a year-to-date basis, worldwide sales were $415 million on approximately 55,000 pump shipments. We are now on pace to deliver 15% sales growth in 2024 and set quarterly sales records for the remainder of the year.
Leigh Vosseller: We are now on pace to deliver 15% sales growth in 2024 and set quarterly sales records for the remainder of the year. Beginning with our sales performance in the U.S., we continued to see strength from the launch of our new products, with Tandem Mobi in particular gaining momentum across the first half of this year. Consistent with the first quarter, pump shipments to new customers exceeded renewals, and people choosing pump therapy from MDI exceeded competitive conversions.
Leigh Vosseller: Beginning with our sales performance in the U.S., we continued to see strength from the launch of our new products, with Tandem Mobi in particular gaining momentum across the first half of this year.
Leigh Vosseller: In the second quarter, total pump shipments surpassed 20,000 in the U.S., growing sequentially more than 30 percent.
Leigh Vosseller: Consistent with the first quarter, pump shipments to new customers exceeded renewals and people choosing pump therapy from MDI exceeded competitive conversions.
Leigh Vosseller: This quarter reflected our highest number of customers from MDI choosing Tandem compared to the last six quarters. We saw meaningful improvement in shipments to new customers across the first two quarters of this year and are on track to return to growth from new customers in the second half. On a gap basis only, we ceased deferring any portion of sales upon Moby's availability in the first quarter. In the second quarter, we began recognizing sales and cost of goods sold with each individual election to switch to Moby. The opportunity to switch was only offered to a limited number of customers in the second quarter, so the difference between our GAAP and non-GAAP financials associated with the program was negligible this quarter.
Leigh Vosseller: This quarter reflected our highest number of customers from MDI choosing Tandem compared to the last six quarters.
Leigh Vosseller: We saw meaningful improvement in shipments to new customers across the first two quarters of this year and are on track to return to growth from new customers in the second half.
Leigh Vosseller: As anticipated, our retention of existing customers remained high, with renewal shipments increasing nearly 40% year-over-year on a growing number of warranty expirations.
Leigh Vosseller: U.S. sales in the second quarter grew 20% sequentially and 8% year-over-year to $157 million due largely to these strong pump shipment trends and an increase in supply sales in line with install-based growth.
Leigh Vosseller: ASPs also generated additional tailwinds from both price increases and favorable mix within the DME channel.
Leigh Vosseller: Offering Mobi through the Pharmacy Channel remains a top priority for Tandem as we look ahead. We view success in the Pharmacy Channel as profitable access, achieving the goal of lowering patient out-of-pocket costs while also realizing the health economic value of Control IQ through improved pricing.
Leigh Vosseller: We will be intentional and selective about the contracts that we will accept. We have already made meaningful operational progress this year and feel confident we will achieve the associated goals we set for 2024 that position us to begin recognizing benefit from these efforts in 2025.
Leigh Vosseller: With the launch of MOBI Now Scaling, we've also begun taking next steps with our Tandem Choice Program. Late in the second quarter, we began offering eligible TESOL Next 2 customers the choice to switch to MOBI.
Leigh Vosseller: As a reminder, the pump shipments and non-GAAP financials do not include any impact from the Tandem Choice Program.
Leigh Vosseller: On a gap basis only, we ceased deferring any portion of sales upon MOBI's availability in the first quarter. In the second quarter, we began recognizing sales and cost of goods sold with each individual election to switch to MOBI.
Leigh Vosseller: The opportunity to switch was only offered to a limited number of customers in the second quarter, so the difference between our GAAP and non-GAAP financials associated with the program was negligible this quarter.
Leigh Vosseller: This difference will increase in the third quarter as we offer the opportunity to switch to more customers.
Leigh Vosseller: The previous revenue deferrals totaling $31 million at the end of the second quarter will be fully captured by the end of 2024.
Leigh Vosseller: For further details on the GAP accounting for this program, please refer to the accounting policy discussion in our 10-Q. Outside the US, our sales grew 22% year over year to $65 million, primarily driven by an increase in supply sales of 50%. We shipped approximately 10,000 pumps in the 25 markets in which we operate outside the U.S., which aligned with actual pump demand in the quarter as measured by pumps placed with patients. While reported shipments were down 6% year over year, actual pump demand grew nearly 10%.
Leigh Vosseller: For further details on the GAP accounting for this program, please refer to the accounting policy discussion in our 10-Q.
Leigh Vosseller: Outside the U.S., our sales grew 22% year-over-year to $65 million, primarily driven by an increase in supply sales of 50%.
Leigh Vosseller: The prior year baseline reflected variability in distributor ordering patterns for both pumps and supplies through the end of the second quarter when the European Distribution Center transition was completed.
Leigh Vosseller: Therefore, comparisons to the prior year are not particularly meaningful. With the operational efficiencies in effect, orders in 2024 have begun to more closely mirror true market demand and geography mix.
Leigh Vosseller: We shipped approximately 10,000 pumps in the 25 markets in which we operate outside the U.S., which aligned with actual pump demand in the quarter as measured by pumps placed with patients.
Leigh Vosseller: While reported shipments were down 6% year over year, actual pump demand grew nearly 10%.
Leigh Vosseller: The majority of pump shipments in the quarter came from customers new to Tandem, with a growing opportunity from renewals in the coming year, considering we commenced operations in two of our largest markets just four years ago in late 2020. In the first half of 2023, the European Distribution Centre transition created a sales headwind of approximately $20 million, with the majority occurring in the first quarter. Turning to gross margin, we exceeded initial expectations, reaching 51% in the second quarter on higher sales.
Leigh Vosseller: The majority of pump shipments in the quarter came from customers new to Tandem with a growing opportunity from renewals in the coming year, considering we commenced operations in two of our largest markets just four years ago in late 2020.
Leigh Vosseller: On a year-to-date basis, our sales outside the U.S. grew 39% to $127 million, compared to $92 million in the prior year.
Leigh Vosseller: In the first half of 2023, the European Distribution Centre transition created a sales headwind of approximately $20 million with the majority occurring in the first quarter.
Leigh Vosseller: Turning to gross margin, we exceeded initial expectations, reaching 51% in the second quarter on higher sales.
Leigh Vosseller: We continue to make progress on fundamentals impacting gross margin with pricing and cost improvement initiatives.
Leigh Vosseller: The margin improvements are temporarily being offset by the higher manufacturing costs of MOBI at the volumes we are building today.
Leigh Vosseller: We have had sufficient capacity to support MOBI volumes year-to-date and are well-positioned based on our expectations for the remainder of the year and a range of $245 million to $247 million outside the U.S., an increase of 27 to 28 percent. From a profitability perspective, we are maintaining our full-year expectation of 51% for gross margin and break-even for adjusted EBITDA. Outside the U.S., we anticipate seasonal pressure due to the typical European summer holiday season in the third quarter and therefore anticipate a sequential step down to approximately $60 million. With worldwide sales relatively in line with the second quarter, we anticipate gross margins to remain relatively flat at 51% and break-even adjusted EBITDA.
Leigh Vosseller: We have had sufficient capacity to support MOBI volumes year-to-date and are well-positioned based on our expectations for the remainder of the year. We anticipate MOBI pumps will become accreted to gross margin as we leverage this overhead exiting 2024 and begin driving benefit in 2025.
Leigh Vosseller: From an operating expense perspective, we are focused on investing in growth through sales and marketing to support the new product launches this year.
Leigh Vosseller: We are also continuing to advance our product pipeline to enhance longer-term market expansion opportunities. Even so, operating expenses increased only 9% versus 2023 on a year-to-date basis, compared to 12% sales growth.
Leigh Vosseller: This resulted in adjusted EBITDA of negative 4% of sales for the first half of 2024. We saw a sequential improvement to negative 1% of sales in the second quarter.
Leigh Vosseller: As pump sales increase across the remainder of the year, we expect to turn the corner to positive EBITDA and free cash flows in the second half.
Leigh Vosseller: We ended the second quarter with more than $450 million in total cash and investments.
Leigh Vosseller: Looking ahead, we are again increasing our 2024 sales guidance in consideration of the early market trends from our multiple new product launches.
Leigh Vosseller: Worldwide, we expect sales in the range of $885 million to $892 million, or 15% growth year-over-year compared to the 10% growth we anticipated when we began this year.
Leigh Vosseller: This breaks down to a range of $640 million to $645 million in the U.S., reflecting an increase of more than 10% year-over-year, and a range of $245 million to $247 million outside the U.S., an increase of 27% to 28%.
Leigh Vosseller: From a profitability perspective, we are maintaining our full-year expectation of 51% for gross margin and break-even for adjusted EBITDA.
Leigh Vosseller: This continues to be a dynamic market, and so we are also providing sales guidance for the third quarter in the range of $222 million to $225 million worldwide, which is an increase of 15 to 16 percent compared to the third quarter of 2023.
Leigh Vosseller: For the US, we are anticipating sales in the range of $162 million to $165 million, reflecting a continuation of trends we have gathered from early data in the MoBI launch.
Leigh Vosseller: Outside the U.S., we anticipate seasonal pressure due to the typical European summer holiday season in the third quarter and, therefore, anticipate a sequential step down to approximately $60 million.
Leigh Vosseller: With worldwide sales relatively in line with the second quarter, we anticipate gross margins to remain relatively flat at 51% and break-even adjusted EBITDA.
John Sheridan: I'll now turn the call back to you, John. Thanks, Leigh. As you can see, we delivered a strong financial performance with positive commercial trends in the first half of the year and are set up for an exciting second half of 2024. After the issue was identified, we were able to quickly implement a software solution, and more than 98% of users updated their mobile app with a fix within days.
Leigh Vosseller: I will now turn the call back to you, John .
John Sheridan: Thanks, Leigh. As you can see, we delivered a strong financial performance with positive commercial trends in the first half of the year and are set up for an exciting back half of 2024.
John Sheridan: In addition to the growth trends and operational progress we are demonstrating, I am proud of how our organization steps up to quickly correct issues when they do arise.
John Sheridan: In March, we had an FDA recall for our T-SWIM iOS app due to a software issue that caused the pump's battery to drain faster than typically expected.
John Sheridan: After the issue was identified, we were able to quickly implement a software solution, and more than 98% of users updated their mobile app with a fix within days.
John Sheridan: The fix resulted in meaningful improvement, but this recall is still open as we continue to implement additional solutions. As we look to our new product initiatives, we are delivering on the most innovative and robust portfolio in insulin therapy management. This study uses our enhanced version of Control IQ, which is now FDA cleared for people living with type 1 diabetes down to age 2 and offers greater settings personalization.
John Sheridan: The fix resulted in meaningful improvement, but this recall is still open as we continue to implement additional solutions.
John Sheridan: Next week we'll be releasing an update to our T-SLIM iOS app that's designed to resolve the issue.
John Sheridan: These recall activities did not impact sales, but I'm mentioning it today as you'll likely see a press release or other FDA notifications within the next two weeks and a follow-up to help raise customer awareness of our iOS app update.
John Sheridan: Our team is committed to continuous improvement of our current offerings in addition to delivering new technologies in the future.
John Sheridan: As we look to our new product initiatives, we are delivering on the most innovative and robust portfolio in insulin therapy management.
John Sheridan: We're making great progress towards bringing integration with Abbott's Freestyle Library 3 Plus sensor to market. It will be a scaled launch in 2025, starting with T-Slim X2 integration, both in the U.S. and OUS, followed by integrations with Tandem Mobi.
Speaker Change: Having multiple pumps with multiple C-gems in multiple countries has certainly increased the complexity of our system launches and I'm impressed how our organization has built experience to handle this complexity.
John Sheridan: We've also been active clinically in the second quarter. Our extended infusion set trial is actively enrolling and we aim to finish the study by the end of the year. In addition, enrollment in our type 2 pivotal study, which is a randomized control trial, is now complete and we are targeting an FDA filing by the end of this year.
John Sheridan: This study uses our enhanced version of Control-IQ, which is now FDA cleared, for people living with type 1 diabetes down to age 2, and offers greater settings personalization.
John Sheridan: Initially, it will serve the 2-plus community, and when we receive FDA clearance for people living with type 2 diabetes, it will also serve these individuals. Lastly, we put substantial effort into our digital health platform. As Mark discussed, Source delivers analytical insights to people using our pumps, but its primary value proposition is physician-facing, offering deep patient therapy insights and the capabilities to manage the population of tandem users in a given practice.
John Sheridan: We will launch our newest algorithm on both T-Slim X2 and Mobi. Initially, it will serve the 2-plus community, and when we receive FDA clearance for people living with type 2 diabetes, it will also serve these individuals.
John Sheridan: We remain committed to developing a fully closed loop AID system, which has and will continue to generate periodic feasibility studies around the globe.
John Sheridan: Driving innovation and maintaining our leadership in AID systems is a top priority for our organization.
John Sheridan: Lastly, we put substantial efforts into our digital health platforms.
John Sheridan: which first launched more than a decade ago with our T-Connect data management system and now our Tandem source platform.
John Sheridan: As Mark discussed, SOURCE delivers analytical insights to people using our pumps, but its primary value proposition is physician-facing, offering deep patient therapy insights and the capabilities to manage the population of tandem users in a given practice.
John Sheridan: Looking forward, our roadmap includes greater customization of reporting and data insights for physicians, target integrations with EMR platforms to improve practice workflows, and using our real-world data to demonstrate health economic benefits to pay our community. We certainly have an extraordinary opportunity at Tandem, and I believe we have the right products and the right people to achieve the company's near and longer-term goals. Expanding our management team and welcoming new talent has been a key step in this endeavor. Most recently, we welcomed J.C. Carrillos as our new EVP and Chief Operating Officer.
Speaker Change: Looking forward, our roadmap includes greater customization of reporting and data insights for physicians, target integrations with EMR platforms to improve practice workflows, and using our real-world data to demonstrate health economic benefits to pay our communities.
Speaker Change: We certainly have an extraordinary opportunity at Tandem, and I believe we have the right products and the right people to achieve the company's near and longer term goals.
Speaker Change: Expanding our management team and welcoming new talent has been a key step in this endeavor. Most recently, we welcomed J.C. Carrillos as our new EVP and Chief Operating Officer.
John Sheridan: JC brings deep experience in healthcare and a great balance of technical, operational, and leadership skills from multiple roles in large and small medical technology companies. He shares our passion for improving the lives of people with diabetes by continuing to offer smaller, more advanced insulin delivery technologies, along with our commitment to delivering profitable growth while market fundamentals are strong. Our products are outperforming, and we're executing operationally to get Moby in the hands of our customers. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. We ask that you please limit yourselves to one question.
Speaker Change: JC brings deep experience in healthcare and a great balance of technical, operational, and leadership skills from multiple roles in large and small medical technology companies.
Speaker Change: He shares our passion for improving the lives of people with diabetes by continuing to offer smaller, more advanced insulin delivery technologies, along with our commitment to delivering profitable growth.
Speaker Change: As you can see, in the second quarter, we made meaningful steps toward delivering on our strategy and in improving lives of people with diabetes.
Speaker Change: Market fundamentals are strong, our products are outperforming, and we're executing operationally to get Moby in the hands of our customers. As we look to the future, our positive momentum positions us well for the remainder of 2024 and beyond.
Speaker Change: I'll now ask the operator to open up the call for questions.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 11 again.
Operator: Please stand by while we compile the Q&A roster. Our next question comes from the line of Matthew Blackman from Stiefel. Perfectly met. Oh, great. Maybe if I could, Leigh, I just want to push a little bit, maybe.
Speaker Change: We ask that you please limit yourselves to one question.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Brooks O'Neill from Lake Street Capital Markets.
Brooks O'Neill: Good afternoon everyone. Congratulations on a strong first half. It's great. I guess I'm curious, John , I think I heard you say that you're seeing some switching from the patch pump competitor to Moby.
Brooks O'Neill: And I'm curious what your salespeople or your market researchers are telling you about what is driving that.
Speaker Change: Yeah, sure. It's good to hear from you, Brooks. You know, when we were in the ADA, we actually had several physicians from Barber-Davis Center talk about the product.
Speaker Change: And, you know, there's a great deal of excitement and interest. It really does redefine wearability.
Speaker Change: But the one thing that people, you know, the former patch users are saying is that it's the same size, it has improved wearability, but it's the Control IQ algorithm that really is appealing to them. They really do feel it's a better performing algorithm, and that's really what's been driving it. So it's, you know, it's something that we haven't seen really ever. We haven't seen a significant number of people coming from the patch devices to Tandem.
Speaker Change: But this, there's been a meaningful jump in the last two quarters.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Matthew Blackman from Stiefel.
Matthew Blackman: Good afternoon, everybody. Thanks for taking my question. Can you hear me okay?
Speaker Change: Did you hear it perfectly Matt? Oh great, maybe if I could Leigh, I just want to push a little bit maybe
Speaker Change: See if we're coming in Sort of the right ballpark for for new patients. I mean just think about the math and some of the metrics you gave us
Speaker Change: I mean, we're coming out with roughly 11,000 new pumps, which would be, call it down, you know, 10, 11% year over year. Is that, are we in the right ballpark? Is that the right message you want to send about greater than 50% mix being new patients or is there a number, another number we should be working with?
Speaker Change: I'm sure. Thanks for the question, Matt. You're correct that our new patients were still down year over year, although that has declined substantially or decelerated, I guess I would say, compared to the prior quarters, and we're moving in the right direction. As we turn into the third quarter and back half of the year, we expect to see new patient growth.
Speaker Change: Again, but I would like to highlight even with that decline that from MDI conversions in particular, we saw our highest rate of capture since late or for the last year and a half or two years. So it definitely is moving in the right direction and we're excited about how Moby's helping to drive this.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Steve Lichtman from Oppenheimer and Company.
Matthew Blackman: We're coming out with roughly 11,000 new pumps, which would... Thanks. I'm going to ask my question and follow up so I don't get cut off. Hi, guys. On Moby, did you see a pickup exiting the quarter with the G7 launch?
Steve Lichtman: Thanks. I'm going to ask my question and follow-up so I don't get cut off. Hi guys. Did, on Moby, did you see a pickup exiting the quarter with G7 launch?
Matthew Blackman: And also on that, on Moby, are you seeing more attraction in the Type 2 community? I know you're not on the label yet there, but just to give an aside. And then the quick follow up, you know? It sounds like you're getting more visibility on reintegration. Am I reading that right? And anything more in terms of, you know, the U.S. versus the O.U.S. as we enter 2020? Mark, I think you're muted.
Speaker Change: And also on that, on Moby, are you seeing more attraction in the Type 2?
Speaker Change: Community. I know you're not on label yet there, but just to give an aside, and then the quick follow-up, you know, it sounds like you're getting more visibility on link grade 3 integration. Am I reading that right? And anything more in terms of, you know, US versus OUS as we enter 2024?
Speaker Change: Thanks.
Speaker Change: Steve, I think I'm going to let Mark talk about MOBI and the MOBI uptake through the quarter.
Mark: Yeah, thank you, John, for passing on and Steve for the question. Yeah, I think, you know, overall, I'd say we're very encouraged with Moby, you know, in terms of the source of growth and the patient mix. But in terms of competitive conversions, I mean, we're pleased overall, right across, you know, all competitors, but especially the higher number of conversions from disposable patch pumps versus our T-Slim platforms. And Steve, I'll just briefly answer the question on type 2.
Speaker Change: Mark, I think you're muted.
Mark Navarro: Yeah, thank you, John , for passing on and Steve for the question. Yeah, I think, you know, overall, I'd say we're very encouraged with MOBI, you know, in terms of the source of growth and the patient mix.
Mark Navarro: You know, the funnel's been healthy and just, you know, the feedback from both HCPs and
Mark Navarro: Patients has been really positive. And so, you know, I think an important point I think as well is that, you know, more than half of the MOBI customers are our new customers to Tandem.
Mark Navarro: and of these new customers, more than half are coming from NDI. So, you know, we look at that as an important leading indicator, right, because we're expanding the market by attracting new customers and prescribers. I always remind myself that and others that, you know, we're operating in a growth market.
Mark Navarro: But in terms of competitive conversions, I mean, we're pleased overall, right, across, you know, all competitors, but especially the higher number of conversions from disposable patch pumps versus our T-Slim platform.
Mark: Yeah, we are, as we've said in the script, we are, we've completed enrollment, and we expect the study to be done in the relatively near future. You know, our goal is to get the product filed with the FDA before the end of the year. We feel good about that. And, you know, the FDA has seen Control IQ 3 at least three times now.
Mark Navarro: And Steve, I'll just briefly answer the question on type two. Yeah, we are, as we've said in the script, we've completed enrollment.
Mark: So we would expect that it's going to move through pretty quickly. And, you know, our commercial teams are doing a great job getting ready. We're looking at channel access, the clinical and commercial strategies, and doing everything we can. So then when we do get approval in 25, we'll be ready to jump on it. So thank you.
Steve Lichtman: and we expect the study to be done in the relatively near future.
Speaker Change: You know, our goal is to get the product filed with the FDA before the end of the year. We feel good about that. And, you know, the FDA has seen Control I Q3 at least three times now. So we would expect that it's going to move through pretty quickly.
Mark Navarro: And you know, our commercial teams are doing a great job getting ready. We're looking at channel access, the clinical and commercial strategies, and doing everything we can so that when we do get approval in 2025, we'll be ready to jump on it. So thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Matt Miksic from Barclays. I think it's an exciting quarter. I think that's the word you used, John, at the outset.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Matt Miksic from Barclays.
Matt Miksic: Hey, good evening. Thanks so much for taking the questions, guys. And congrats on a really
Matt Miksic: So great to see, you know, the traction picking up. Maybe it's, you know, one of the things that we all were thinking about, and I think talking to you about, and trying to understand, heading into the back half of the second quarter, was, you know, how much of the demand, say, that might have been on the sidelines or building up around the G7 integration with Moby, how much of that could be fulfilled in the second quarter, and how much of that might come through into the third quarter.
Matt Miksic: I think exciting quarter. I think that's the word you used, John , at the outset. So great to see
Speaker Change: you know, the traction picking up. Maybe if, you know, one of the things that we all were thinking about and I think talking to you about and trying to understand, heading into the back half of the second quarter, was, you know, how much...
Speaker Change: How much of the demand, say, that might have been on the sidelines or building up around the G7 integration with Mobi, how much of that
Matt Miksic: And I'm so sorry if you've hit on this topic already; I've been bouncing back and forth between a few calls, but we appreciate any color you can provide on that sort of dynamic. Thanks. I'll just say, Matt, that we did see sort of steady growth in demand for Moby through the quarter, and certainly in the June timeframe, we saw that continue. June was obviously the last month of the quarter, and that was really the first month that we had G7.
Speaker Change: could be fulfilled in the second quarter and how much of that might come through into the third quarter. And I'm so sorry if you've hit on this topic already. I've been bouncing back and forth between a few calls.
Speaker Change: We appreciate any color you can provide on that sort of dynamic. Thanks.
Speaker Change: I'll just say, Matt, that we did see sort of steady growth and demand on MOBI through the quarter, and certainly in the June timeframe, we saw that continue. June was obviously the last month of the quarter, and that was really the first month that we had G7.
John Sheridan: You know, I think it's a bit early to sort of say specifically that it was about pent-up demand for G7, but I do say, just based on everything that we've seen, Moby is, it differentiates, and I think that people really are relating to it, and so I think we expect to see strong demand for it in the second half, and we're excited about that. Terrific. If I could, um, just on the longer term pipeline, I think you don't love getting into things that happen after the end of this year, but everyone has to ask if someone hasn't asked already about the tubeless platform for Moby. You know, any hints or thoughts on whether we could see that at some point during next year or whether that's a, Sure.
Speaker Change: You know, I think it's a bit early to sort of say specifically that it was it was about pent-up demand for G7 But I do I do say just based on everything that we've heard we've seen
Speaker Change: You know, MoVI is, it's differentiating, and I think that people really are relating to it, and so I think we expect to see strong demand for it in the second half, and we're excited about that.
Speaker Change: Terrific.
Speaker Change: If I could.
Speaker Change: Just on the longer-term pipeline, I think you don't love getting into things that happen after the end of this year, but everyone has to ask, if someone hasn't asked already, just about the tubeless platform for Moby.
Speaker Change: You know any any hints or thoughts on whether we could see that at some point during next year or whether that's a 26 event any color would be welcome. Thanks again
Speaker Change: Yeah, I don't think we're going to talk about the dates. You know, I will say that we're excited about tubeless. Our market research suggests it's going to have a, it's going to be another differentiator and we'll see, you know, as a result, inflection and Mobi demand because of it.
Speaker Change: Our team is doing a fantastic job. I will say that we are completely aware of the benefit and the priority. So, you know, I think that, you know, we want to develop an excellent product that provides a very positive customer experience. And that's exactly what we're working on. So we expect to see it not too distant future.
Speaker Change: Thank you. One moment for our next question.
John Sheridan: And then, John , you mentioned how Moby was expanding your prescriber base. You also talked about some of the prep work you're doing ahead of Type 2 approval. How are you feeling about your sales force and whether you might need to invest additional resources to get the coverage that you're going to need over the next 12 to 18 months? Thanks.
John Sheridan: Well, let me just say definitively that there was no Mobi supply chain problem, and there were no product shortages. Yeah, thanks, John. So, yeah, I mean, as you'd expect, we're evaluating, you know, many aspects of the commercial and go-to-market model here, you know, in the U.S. as well as O.U.S. And so, you know, in the U.S. specifically, it's too early to say, but, you know, we're taking a very analytical and fact-based approach to determine the optimal commercial model.
Speaker Change: Well, let me just say definitively that there was no MOBI supply chain problem and there was no product shortage.
Speaker Change: And I have seen the reports, and I understand it was one physician that had issues. We're not familiar with what exactly went on there, so I'm not going to speculate. But we will contact him to find out.
Speaker Change: We have over 10,000 people prescribing our pumps today, and so if one person has a problem, while we're not happy with it, it's definitely not reflective of what's going on.
John Sheridan: And, you know, and of course, in addition to evaluating future expansion, we're also very focused on salesforce effectiveness and putting new tools and capabilities in the. Thank you. As a reminder, we ask that you please limit yourselves to one question. Our next question comes from the line of Mike Kratky from Lyric Partners. Hey, this is Simran on behalf of Larry.
Speaker Change: And relative to Salesforce, I'll just let Mark answer that briefly.
Mark Navarro: Yeah, thanks, John . So, yeah, I mean, as you'd expect, I mean, we're evaluating, you know, many aspects of
Mark Navarro: But, you know, we're taking a very analytical and fact-based approach to determine the optimal commercial model. And, you know, of course, in addition to evaluating future expansion, you know, we're also very focused on Salesforce effectiveness and putting new tools and capabilities in the hands of our sales team.
Speaker Change: Thank you for joining us. Thank you. Thank you.
Speaker Change: Thank you. As a reminder, we ask that you please limit yourselves to one question.
Speaker Change: Our next question comes from the line of Mike Kratky from Lyric Partners.
Mike Kratke: Hi everyone, thanks for taking our questions and let me start by saying I appreciate the color on the supply.
Speaker Change: Thanks for the question, Mike.
Speaker Change: So when we put together the guidance expectations for this year going up to 15% annual growth, we did obviously factor in the amount of that we beat by in the second quarter, but we raised by an increased factor.
Speaker Change: Based on the early trends that we're seeing from the new product launches. And so it is still early. And there's a lot of data points and not necessarily suggestive of what long term trends may look like. But we felt confident putting this in the expectations for the remainder of the year.
Speaker Change: Thank you. One moment for our next question.
Operator: Thanks for taking the question. And so I just wanted to ask a follow-up question on us new starts. How are you thinking about new start trends through Q3 and Q4? And do you still expect us new starts to be flat to slightly down year over year for the full year? Hi, thanks for the question.
Speaker Change: So I just wanted to ask a follow-up on U.S. New Start. How are you thinking about New Start trends through Q3 and Q4, and do you still expect U.S. New Starts to be flat to slightly down year-over-year for the full year?
Unknown Executive: So as we look ahead to the third and the fourth quarter, we do expect to see trends in the U.S. of new starts growing year over year, and that will be mostly driven by the MDI conversion still being the leader compared to the competitive conversions. And so we have factored that into our guidance expectations. So the original expectations you're referring to as being flat to slightly down were based on how we started the year.
Speaker Change: Hi, thanks for the question. So, as we look ahead to the third and the fourth quarter, we do expect to see trends in the U.S. of new starts growing year over year, and that will be mostly driven by the MDI conversion still being the leader compared to the competitive conversions.
Speaker Change: And so we did, we factored that into our guidance expectations, so the original expectations you're referring to as being flat to slightly down were based on how we started the year, but now basically we're, we're assuming some level of improvement in those new pumpers coming to Tandem based on the early trends that we're seeing from the Moby launch.
Unknown Executive: But now, basically, we're assuming some level of improvement in those new pumpers coming to tandem based on the early trends that we're seeing from the MoBI lot. Thank you. One moment for our next question. Hi, thanks for taking the question. Did you exit the quarter basically at full scale, or were you not at full scale through the quarter?
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Matt Taylor from Jeffries.
Matt Taylor: Hi, thanks for taking the question.
Matt Taylor: I just wanted to clarify two things that were already asked about in part. The first is...
Matt Taylor: And John , we were talking about the scaled launch through the quarter, and you said you had no disruptions, but I guess I think people are trying to get at, you know,
Speaker Change: Did you exit the quarter basically at full scale where you weren't at full scale through the quarter, you know, just to inform what could happen in the second half of the year. And then the other clarification question was, Leigh, on the guidance,
Unknown Executive: guiding philosophy and guiding basically to renewal and supply growth. And I guess I'm just asking, is that changing now? And if so, could you articulate how you're changing the way you're guiding?
Speaker Change: You know, in the past few quarters, you've really been taking this different guidance philosophy and guiding basically to renewal and supply growth. And I guess I'm just asking, is that changing now? And if so, could you articulate how you're changing the way you're guiding?
Speaker Change: Hey, Matt. I'll just, I'll say that, you know, we actually introduced Moby Midway through
Speaker Change: February and it was a direct only
Speaker Change: for that time, for the first several weeks. We moved to a direct MDME at the very beginning of the second quarter.
Speaker Change: And then, really, the month of June was when?
Speaker Change: We went to G7. You know, we have a number of things that are planned. Of course, there's Moby-Tubeless.
Speaker Change: There's an Android version. There's a Mobi Freestyle Libre 3. There's OUS Mobi. These things are all coming, but I think Mobi with G7 right now in the U.S. is a fantastic product and we're seeing great results from it. So, I think that that's a great product that is going to drive.
Speaker Change: Demand in the second half, and I think that as we add these other elements and features that I just spoke about, it'll only improve the product's performance and make it, you know, available for the OUS markets at the same time.
Speaker Change: And in the midst of launching a new product, it's hard to really say how things will perform, and it can be a little bit up and down at the very beginning, and so we wanted to gather more data before we put any of that into our guidance expectations. And so now we have some early data points. I would say they're not necessarily suggestive of long-term trends, but it was enough to give us confidence.
Speaker Change: to improve our expectations a little bit through the back half of the year based on the early learnings from the MOBI launch.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Issy Kirby from Redburn, Atlanta. Thank you. One moment for our next question. It's a, thanks Joanne, it's actually going to be an interoperable algorithm.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: for the new into new accounts. And then any comment on whether those new accounts are more in the specialist space or more on the primary care side of things. Thanks.
Speaker Change: Hi Izzy, I'm going to let Mark take that question.
Mark Navarro: You know, any product launch. And so, you know, I won't comment on actual numbers, but, you know, we're confident that Moby's value proposition is resonating with, you know, an expanded prescriber audience. It's too early, but we have some, you know, really good, compelling early signals.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Good afternoon and thank you so much for taking the question.
Speaker Change: And very nice quarter. I'm trying to get my head around what happens when you get the type 2 label from Moby. We clarify first if it is for Moby or for T-SEN. And then the second piece of it is how do you view that market opportunity and how do you view uptake of it? Thank you.
Unknown Executive: And so it'll be approved for use on T-SLIM and MOBI, and eventually on CIGIE. So we would expect all of our products to have the latest generation algorithm working on that. You know, we're certainly looking at a lot of different variables when it comes to the market. We think, however, that Mobi, with discretion and convenience that comes along with that, is going to be a very appealing product, but at the same time, it only has 200 units, where T-Slim has three.
Speaker Change: Thanks, Joanne. It's actually going to be an interoperable algorithm, and so it'll be approved for both use on T-SLIM and MOBI, and eventually on CIGIE. So we would expect all of our products to have the latest generation algorithm working on that.
Speaker Change: You know, we're certainly looking at a lot of different variables when it comes to market. We think, however, that Moby...
Unknown Executive: So I think, you know, there's likely to be, you know, interest in both products. We have about 20,000 people today that are currently using T-Slim. And so, you know, we're in the throes of the planning process right now. We would expect the product to be available sometime in 2025. And I think when we get there, you know, we'll be more specific about, you know, commercial strategy, product strategy, clinical strategy, et cetera. But those are things that we're working through as we speak.
Speaker Change: We would expect the product to be available sometime, you know, in 2025, and I think when we get there, you know, we'll be more specific about
Operator: Thank you. One moment for our next question. Our next question comes from the line of Matthew O'Brien from Piper Sandler. Hey, this is Sean from Matt.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes in the line of Matthew O'Brien from Piper Sandler.
Sean: Thanks for taking our questions and congrats on the great quarter. I guess, for one, you know, in the past, you've made comments about Mobi expanding the market for pumps. Has this been your experience with Mobi early on here? You know, what patient might that be, if you had to characterize it?
Matthew O'brien: Has this been your experience with MOBI early on here, you know, what patient might that be, if you had to characterize it, and then...
Unknown Executive: And then on this, on these new prescribers, you talked about are they traditional endo practices you might not have been in before? Are they, you know, maybe a new type of prescriber, maybe a PCP? Hey, I'll take the first half, and I'll let Mark answer the second.
Speaker Change: We saw the highest number of MDI conversions this quarter, and we have seen in the last six quarters.
Unknown Executive: But I just want to reinforce what Leigh and Mark said in the opening comments, and that is that this is the second highest revenue quarter we've ever had, and it was topped by the second quarter of the fourth quarter of 2022. And that's obviously seasonal.
Speaker Change: And as Mark had said, about over half of the new users of Mobi were
Unknown Executive: We saw the highest number of MDI conversions this quarter, and we have seen in the last six quarters. And, as Mark had said, about half of the new users of MOBI were new to Tandem, and then over half of those were MDIs. So I think that the early data absolutely suggests absolutely that MOBI is going to drive MDI conversions. I think that's the thing that we expect it to accomplish, and certainly in the early days, we're seeing that.
Speaker Change: They were new to Tandem, and then over half of those were MDI. So, I think that the leading data suggests absolutely that Mobi is going to drive MDI conversions, and that's really, you know, I think that's the thing that we expect it to accomplish, and certainly in the early days we're seeing that.
Unknown Executive: Mark, I'll let you just wrap up the second half in terms of some of the characteristics of the users. Yeah, I mean, we are, you know, calling on endosis PCPs, but also, you know, support providers, NPs, and PAs. And so, you know, it's a pretty mixed audience, but primarily we're calling on endosis.
Speaker Change: Mark, I'll let you just wrap up the second half in terms of some of the characteristics of the users.
Mark Navarro: you know, calling on endos, PCPs, but also, you know, support
Mark: And, you know, I think what we're doing is just getting more data-driven and understanding that prescriber base, in terms of behaviors, in terms of overall potential, and are just bringing more insight to, you know, how we look at targeting our commercial model. But for the time being, you know, we're focusing primarily on endos. And any broader expansion into primary care is something that, you know, we're not commenting on.
Mark: providers, NPs and PAs. And so, you know, it's a it's a pretty mixed audience, but primarily we're calling on endos. And, you know, I think what we're doing
Speaker Change: in terms of behaviors, in terms of overall potential.
Speaker Change: are just bringing more insight to how we look at targeting our commercial model. But for the time being, we're focusing primarily on endos, and any broader expansion into primary care is something that we're not commenting on at this point.
Operator: Thank you. One moment for our next question. Our next question comes from Travis Steed from Bank of America Security.
Speaker Change: Thank you. One moment for our next question.
Travis Steed: Hey, thanks for taking the question. I wanted to ask about the new patient growth. Transcripts provided by Transcription Outsourcing, LLC.
Speaker Change: Hey, thanks for taking the question. I wanted to ask about the new patient growth.
Speaker Change: and trying to think about how that kind of carries forward into next year. Is the second half of this year, new patient growth, the right way to think about that as a jumping-off point?
Unknown Executive: New patient starts and how those kind of carry forward in the next year and any color on how to quantify the margin benefit and 25 from over. Yeah, thanks for the questions, Travis. I'll just start by saying it's a little early for me to give too much in terms of numbers for 2025 expectations, but maybe just a little more information to help you think about it the way we think about it.
Speaker Change: [inaudible]
Speaker Change: Yeah, thanks for the questions, Travis. I'll just start by saying it's a little early for me to give too much in the terms of numbers for 2025 expectations, but maybe just a little more information to help you to think about it the way we think about it.
Unknown Executive: I would say right now it's still a little bit early for us to think about what those trends might look like into next year. We're just getting early insights into MOBI, and we have enough visibility to think about some benefits for the remainder of this year, but we want to see how more of that comes together before we think about contribution in 2025 and beyond. But when you think about next year, the way we look at it, the way we started this year, thinking about how our business has evolved so much. We now have a much larger piece of our sales that come from recurring sources.
Speaker Change: But when you think about next year, the way, you know, we look at it, the way we started this year, thinking about how our business has evolved so much, we now have a much larger piece of our sales that come from recurring sources. And so when you think about our supply sales.
Unknown Executive: And so when you think about our supply sales and think about our renewal opportunities, which are growing significantly again into 2025, I think you can get a good, solid baseline or starting point for how to think about growth for next year. And then we look forward to learning more about the new products and what kind of a trajectory they can drive for the business. And as you mentioned about margins, MOBI is particularly important because it has such a meaningful impact on gross margin towards our long-term target.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jayson Bedford from Raymond James. Good afternoon.
Speaker Change: Thank you. One moment for our next question.
Jayson Bedford: Apologize if I missed anything. Clarification, Leigh Vosseller, I thought I heard you mention renewals were up, but I'm not sure if I have the right context.
Jayson Bedford: Good afternoon Apologize if I miss this just a clarification Lee
Unknown Executive: Unknown Speaker: Sure. Thanks for the question, Jason. Renewals still continue to be a bright spot for us. They were actually up about 40% year-over-year, so really strong double-digit growth.
Unknown Executive: I can say that as we look at the new opportunities coming to market, we're still seeing the same consistently high capture rates that we've been seeing for the past two years. So renewals, like I was just mentioning in the last question, have become a very predictable revenue stream for us. It shows the high loyalty of our customer base. I think how good our products are, how good our customer service is, and we're very proud of how far we've progressed with the renewal.
Unknown Executive: I can say that as we look at the new opportunities coming to market, we're still seeing the same consistently high capture rates that we've been seeing for the past two years. So renewals, like I was just mentioning on the last question, have become a very predictable revenue stream for us. It shows the high loyalty of our customer base. I think
Operator: Thank you. Please take a moment for our next question. Our next question comes from the line of Jeff Johnson from Bayer. Thank you, and good evening, guys. Leigh, you gave us some good information, I think, on the new pump starts in the second quarter. When I plug that into my model, I get competitive conversions probably down, I don't know, maybe 30% or so. That's somewhat consistent with last quarter. I'm just trying to reconcile that map.
Speaker Change: Our next question comes from the line of Jeff Johnson from Baird.
Jeff Johnson: Well, one, am I in my ballpark accurate on that? And two, I think we all understand that Medtronic, your biggest tube pump competitor, is doing a better job of holding on to their patients with some of their new CGM lines. Yeah, great questions, Jeff.
Unknown Executive: So the way we think about it is, first of all, I would say the trends that we're seeing across the different elements are pretty much in line with our expectations. I will say that the notable increase in disposable patch pump conversions was maybe a bit more than we anticipated, but we're certainly pleased with that performance and that people are moving in our direction because of Moby in particular. But you mentioned Medtronic; we did anticipate with 780G on the market, and again, just with the size of their installed base, that we would see a decline in our opportunities there. So nothing is an outlier.
Unknown Executive: Disposable Patch Pump Conversions was
Unknown Executive: But you mentioned Medtronic, we did anticipate with 780G on the market. And again, just with the size of their install base, that we would see a decline in our opportunities there. So nothing is an outlier. We're very pleased with the mix. It was exactly, you know, how we were thinking things would trend as we move into the future with a much more reliance on the NDI expansion.
Unknown Executive: We're very pleased with the mix. It was exactly how we were thinking things would trend as we move into the future with much more reliance on the NDI expansion. Thank you. One moment for our next question. Our next question comes from the line of Joshua Jennings from T.D. Cowan. Thanks. This is Brian for Josh.
Brian: I heard your earlier comments on MobiSupply, but can you speak specifically to your ability to scale in the very near term for the upcoming Libre integrations when they come? Just given that there's likely a lot of pent-up demand for these. Thanks.
Brian: Thanks. This is Brian for Josh. I heard your earlier comments on MobiSupply, but can you speak specifically to your ability to scale in the very near term for the upcoming Libre integrations when they come?
Unknown Executive: So I'll comment on our, so for MOBI in particular, as John mentioned, we have had no supply constraints. We came into the year with sufficient capacity to meet the targets and the goals, and even upside scenarios to that for MOBI through all of this year, getting us right as we head into 2025. So while we would love to be challenged with having pent-up demand come to the market and push on the limits that we have, we feel very good about what we have in place. And you're right; we are excited about the Freestyle Libre 3 Plus implementation. You know, so there's a large population of people who use that sensor that don't use AID systems, both in the US and abroad.
Unknown Executive: And so we, you know, we're moving as aggressively as we can to get that product into the market. Thank you. One moment for our next question. Our next question comes from the line of Danielle Antalffy from UBS. Hey guys, good afternoon.
Danielle Antalffy: Thanks so much for taking the question. Congratulations on a really strong quarter here. Just a question on my favorite question on market growth. I mean, we now have your numbers as well as a pre-announcement from one of your competitors. I mean, it just really feels like the market continues to accelerate here. Any comments you can make on market growth and what you've seen, how it's evolved over the last few quarters, and where you see it going from here?
Danielle Antalffy: Our next question comes from the line of Danielle Antalfi from UBS.
Danielle Antalffy: Hey guys, good afternoon. Thanks so much for taking the question. Congrats. Honor really strong.
Danielle Antalffy: quarter here.
Danielle Antalffy: Just a question on, my favorite question, on market growth. I mean, we now have your numbers as well as the pre-announcement from one of your competitors. I mean, it just really feels like the market continues to accelerate here. Any comments you can make on market growth and what you've seen, how it's evolved over the last few quarters and where you see it going from here? Thanks so much.
Danielle Antalffy: Thanks so much. Yeah, I think, you know, at the end of last year, we decided not to even talk about that anymore because we were the only company that was really talking specifically about the number of new pumps that we had seen and where they came from. It's also midway through the year, and it's typically something you've got to wait till the end for, and you've got to hear everybody talk about their situation before we can actually estimate what it looks like.
Danielle Antalffy: Yeah, I think that, you know, at the end of last year, we decided not to even talk about that anymore because we were the only company that was really talking specifically about the number of new pumps that we had seen and where they came from. It's also midway through the year, and it's typically something you've got to wait till the end.
Danielle Antalffy: Yeah, and you've got to hear everybody talk about their situation before we can actually estimate what it looks like.
Unknown Executive: That being said, I think that this is an underserved market and it has a great deal of growth potential. And we think that the penetration rates can get up from 35 or 40 today to 60 to 65 in the next couple of years. And we think the technology that we, our partners, and our competitors are bringing to market is certainly going to have a favorable impact on that, and also help people living with diabetes.
Unknown Executive: That being said, I think that this is a...
Unknown Executive: It's an underserved market. It has a great deal of growth potential, and we think that the penetration rates can get up from 35 or 40 today up to 60 to 65.
Unknown Executive: And so I think that we said we could get to a million users, you know, we took the time away from that. That's still our objective. And, you know, I think that in order for that to happen, let's say in the next five years, the number has got to eclipse 100,000 annually. And so, as I said, with new technologies, that's very possible.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.