Q1 2025 Tandem Diabetes Care Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Tandem Diabetes Care First Quarter 2025 Earnings Conference Call.

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Good day, and thank you for standby welcomed.

Welcome to the tandem diabetes care first quarter 2025 earnings conference call at.

Operator: At this time, all participants are in a listen-only mode. 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. To withdraw your question, please press star 11 again.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Ask a question during this session you will need to press star one one of your telephone you will then hear an automated message advising your hand is waste.

Your question. Please press star one again please.

Operator: Please be advised that today's conference is being recorded.

Please be advised that today's conference is being recorded.

Susan Morrison: 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.

Speaker Change: 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 first quarter 2025 earnings call. Today's discussion will include forward-looking statements. 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. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statement. 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 and quarterly report on Form 10-Q.

Susan Morrison: Hello, everyone and thanks for joining tandem's first quarter 2025 earnings call. Today's discussion will include forward looking statements. These statements reflect management's expectations about future events, our product pipeline development timelines and financial performance and operating plans and speak only as.

Speaker Change: As of today's date.

Speaker Change: There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward looking statements.

Speaker Change: 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, and quarterly report on form 10.

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

Speaker Change: <unk>.

Speaker Change: 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. to a number of GAAP and non-GAAP finances. 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-gap financial measures facilitate better comparisons of operating results across reporting. Any non-GAAP information presented should not be considered as a substitution, independently or superior, to results prepared in accordance with GAAP.

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

Speaker Change: 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.

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

Speaker Change: The 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 earlier today and available on the Investor Center portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measures.

Speaker Change: Please refer to our earnings release issued earlier 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: Leading today's call is John Sheridan, Tandem's President and CEO, who will be joined by Leigh Vosseller, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, the operator will open up the call for Thank you in advance for limiting yourself to one question before getting back in the queue.

John Sheridan: 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.

Speaker Change: Following their prepared remarks, the operator will open up the call for questions.

Speaker Change: Thank you in advance for limiting yourself to one question before getting back in the queue. John you may begin.

John Sheridan: John, you may begin.

John Sheridan: Thank you, Susan, and thanks, everybody, for joining us today. In the first quarter, we demonstrated strong execution throughout our business. We delivered more than 20% growth for the third quarter in a row, with record first quarter sales in the United States and our highest quarter ever internationally. In addition to driving top line growth, we are delivering on key operational initiatives to strengthen and enhance our business while increasing profitability. And in the first quarter, we demonstrated meaningful improvement and adjusted EBITDA year over year.

Speaker Change: Thank you Susan and thanks, everybody for joining us today.

Speaker Change: In the first quarter, we demonstrated strong execution throughout our business, we delivered more than 20% growth for the third quarter in a row with record first quarter sales in the United States and our highest quarter ever internationally.

Speaker Change: In addition to driving topline growth, we are delivering on key operational initiatives to strengthen and enhance our business, while increasing profitability and in the first quarter, we demonstrated meaningful improvement in adjusted EBITDA year over year.

John Sheridan: Another highlight of the quarter was FDA's clearance of control IQ plus for people living with type 2 diabetes. followed by the New England Journal of Medicine's publication featuring the benefits of Control IQ Plus.

Another highlight of the quarter was fda's clearance of control IQ plus for people living with type two diabetes.

Speaker Change: Followed by the New England Journal of Medicine's publication, featuring the benefits of control IQ plus.

John Sheridan: I'd like to thank our employees for an impressive start of the year, which positions us to deliver on our goals in 2025 and beyond, while improving the lives of people with diabetes. Starting with a deeper look at our Q1 performance in the U.S., we continue to see growth year over year in new pump starts and achieved a double-digit increase in customers converting from multiple daily injections for the last four quarters in a row. This strength is from demand for our newest offering, Tandem Mobi, as well as our flagship pump, the T-Slim X2. The product mix between these two offerings is healthy, and the demand for Mobi is on track to contribute meaningfully to our near and longer term financial goals.

Speaker Change: I'd like to thank our employees for an impressive started the year, which positions us to deliver on our goals in 2025 and beyond while improving the lives of people with diabetes.

Speaker Change: Starting with a deeper look at our Q1 performance in the U S. We continue to see growth year over year, and new pump starts and achieved a double digit increase in customers converting from multiple daily injections for the last four quarters in a row.

Speaker Change: This strength is from demand for our newest offering tandem movie as well as our flagship pump. The T. Slim next to the product mix between these two offerings is healthy and the demand for mobi is on track to contribute meaningfully to our near and longer term financial goals for.

John Sheridan: Our products are expanding the large and underpenetrated insulin pump market as approximately two-thirds of our new starts are coming from people converting from multiple daily injections. We also continue to see great loyalty from T-SLIM customers coming up for renewal. Renewal rates have remained at a consistently high level, along with our customer satisfaction scores. Our mix of new and renewing customers remains roughly 50-50, which we anticipate will continue throughout the year.

Our products are expanding the large and underpenetrated insulin pump market is approximately two thirds of our new starts are coming from people converting from multiple daily injections.

Speaker Change: We also continue to see great loyalty from tier one customers coming up for renewal.

Speaker Change: Renewal rates have remained at a consistently high level, along with our customer satisfaction scores.

Speaker Change: Our mix of new and renewing customers remains roughly 50, 50, which we anticipate will continue throughout the year.

John Sheridan: Q1 was also our first quarter operating under our newly expanded field sales and clinical structure. This expansion and a realignment of existing territories has progressed according to plan and is now complete. We welcomed a high caliber of talent to complement our more tenured field employees, and our territories are now poised to realize productivity gains throughout the remainder of this year.

Speaker Change: Q1 was also our first quarter operating under our newly expanded field sales and clinical structure.

Speaker Change: This expansion and realignment of existing territories has progressed according to plan and is now complete.

Speaker Change: We welcomed a high caliber of talent to complement our more tenured field employees and our territories are now poised to realize productivity gains throughout the remainder of this year.

John Sheridan: Another successful commercial initiative in Q1 was the launch of our best algorithm yet, Control IQ+. This algorithm makes better control easy, easy to start, easy to use, and easy to personalize. For example, our Profile Setting Calculator is a software wizard that only requires a person's total daily insulin and weight to get them started on Control IQ Plus. This is a feature that benefits both patients and health care providers and simplifies and streamlines onboarding to our AID technology, which is tested, trusted, and now better than ever. Control IQ Plus launched in late March and is indicated for use by people with type 1 diabetes ages 2 and older.

Speaker Change: Another successful commercial initiative in Q1 was the launch of our best algorithm, yet control IQ plus.

Speaker Change: This algorithm makes better control easy easy start easy to use and easy to personalize for.

Speaker Change: For example, our profile setting calculator is a software wizard that only requires a person's total daily insulin and wait to get them started on control IQ plus.

This is a feature that benefits, both patients and healthcare providers as it simplifies and streamlines onboarding to our AI technology, which is tested trusted and now better than ever.

Speaker Change: So our Q plus launched in late March and is indicated for use by people with type one diabetes ages two and older.

John Sheridan: Following FDA's recent clearance, it's also now cleared for adults living with type 2 diabetes. The pivotal study supporting this clearance is the first and only large-scale randomized control trial of automated insulin delivery in people with type 2 diabetes. It was also the most rigorous evaluation of AID for people with type 2 ever conducted, and the outcomes were incredible. Significant improvements in time and range in A1C were demonstrated for the people using Control IQ+, compared to a control group. These results were seen cumulatively and across a broad range of ages. They were also equally demonstrated in people who chose to count carbohydrates in the study compared to people who had used a more simplified approach by entering fixed dosing at meals.

Speaker Change: Following fda's recent clearance. It's also now cleared for adults living with type two diabetes.

Speaker Change: The pivotal study supporting this clearance is the first and only large scale randomized controlled trial.

Speaker Change: Insulin delivery in people with type two diabetes.

Speaker Change: He was also nomura's rigorous evaluation at AIG for people with type two ever conducted and the outcomes were incredible.

Speaker Change: Significant improvements in time and range, even see where demonstrated for the people using control IQ plus compared to a control group.

Speaker Change: These results were seeing cumulatively and across a broad range of ages.

Speaker Change: We're also equally demonstrated in people who chose to account carbohydrates. In this study compared to people who had used a more simplified approach by entering fixed dosing at meals. This is significant as it makes the bolus process, even easier without sacrificing improvement in clinical outcomes.

John Sheridan: This is significant as it makes the BOLUS process even easier without sacrificing improvement in clinical outcomes. Also, the synergy between Control IQ Plus and GLP-1 receptor agonist use was highlighted at our ATTD presentation in March, showing how well these therapies work together.

Speaker Change: Also the synergy between control IQ plus <unk> one receptor agonist use was highlighted at our ATT deep hesitation in March showing how well these therapies work together.

John Sheridan: We are proud of the outcomes from our pivotal study and the tremendous accomplishment of being featured in the New England Journal of Medicine. This most recent publication marks the fourth time that our Control-IQ technology has been featured in the journal, which is an unprecedented accomplishment in our industry and speaks to the strength of our studies and our AID algorithm. We are excited about the growth potential this Type 2 indication provides, as it more than doubles our addressable mark. Control IQ Plus is now broadly available, and we have begun initial commercial efforts to people with type 2 in select areas.

Speaker Change: We are try to be outcomes from our pivotal study and a tremendous accomplishment by being featured the new England Journal of Medicine.

Speaker Change: This most recent publication marks the fourth time that our control IQ technology has been featured in the journal, which is unprecedented accomplishment in our industry and speaks to the strength of our studies and our AI algorithm.

Speaker Change: We are excited about the growth potential this type two indication provides as it more than doubles, our addressable market.

Speaker Change: <unk> plus is now broadly available and we have begun initial commercial efforts to people with type two and select areas.

John Sheridan: We are using this early phase of launch to gather customer experience data on training and onboarding, as well as reimbursement and channel access to inform our expanded launch plans and expectations for the remainder of the year.

Speaker Change: We are using this early phase of launch together customer experience data on training and Onboarding as well as reimbursement and channel access to inform our expanded launch plans and expectations for the remainder of the year.

John Sheridan: Channel Access continues to be a top initiative for our company, and Leigh will discuss our Q1 progress more in her prepared remarks. Turning to our business outside the United States, the strong sales momentum we saw exiting 2024 continued in the first quarter, where we delivered our highest quarterly sales results ever. This was driven by demand for our T-Slim X2 platform, which is available with Dexcom G6 and G7 sensor integration in approximately 25 countries. In addition to attracting new customers, We are also beginning to see customers renewing with Tandem, who first bought a pump when we entered these markets four or five years ago.

Speaker Change: Channel access continues to be a top initiative for our company and Lee will discuss our Q1 progress more in her prepared remarks.

Speaker Change: Turning to our business outside the United States. The strong sales momentum we saw exiting 2024 continued in the first quarter, where we delivered our highest quarterly sales results cover.

Speaker Change: This was driven by demand for our <unk> two platform, which is available with <unk> <unk> sensor integration and approximately 25 countries.

Speaker Change: In addition to attracting new customers. We are also beginning to see customers renewing with tandem who first bought a pop when we entered these markets four or five years ago.

John Sheridan: It's a meaningful opportunity when you look at the historical pump adoption rates outside the United States, and it will serve as an additional source of growth as we look to the future. Operationally, our plans to begin direct sales OUS in select countries are progressing well. Transition service agreements are now in place in the select countries where we would go direct in 2026. And we are developing and executing joint transition plans that are designed to ensure the proper business continuity and minimize potential disruption. We've also been furthering the efforts we began last year to hire in-country talent.

Speaker Change: It's a meaningful opportunity when you look at the historical pump adoption rates outside the United States and it will serve as an additional source of growth as we look to the future.

Speaker Change: Operationally our plants to begin direct sales O U S and select countries are progressing well.

Transition service agreements are now in place and the select countries, where we'll go direct in 2026 and.

Speaker Change: And we are developing and executing joint transition plans that are designed to ensure the proper business continuity and minimize potential disruption.

Speaker Change: We've also been furthering the efforts we began last year to hire in country talent, we are preparing to enhance our sales efforts to support and technology offerings outside the United States, both for our direct and distributor led countries. It's.

John Sheridan: We are preparing to enhance our sales efforts, support, and technology offerings outside the United States, both for our direct and distributor-led countries.

John Sheridan: It's a pivotal step for our company as we deepen relationships within the European diabetes community, while strengthening our financial position to accelerate sales growth and drive margin expansion.

Speaker Change: It is a pivotal step for our company as we deepen relationships within the European diabetes community, while strengthening our financial position to accelerate sales growth and drive margin expansion.

Leigh Vosseller: I'd now like to turn the call over to Leigh to talk about quarter one results and expectations for the year. Thanks, John. As a reminder, unless otherwise noted, the financial metrics I'll be discussing today are on a non gap basis. Reconciliations from GAAP to non-GAAP results can be found in today's earnings release as well as on the Investor Center portion of our website. Please note that 2025 sales and margins in the U.S. are not impacted by the Tandem Choice Program, which ended in 2024. Our Q1 performance was a strong start to the year, exceeding our guidance for both top-line sales and bottom-line EBITDA, and we are on track to deliver our 2025 commitment.

Lee: I'd now like to turn the call over to Lee to talk about quarter, one results and expectations for the year.

Lee: Thanks, John.

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

Lee: Please note that 2025 sales and margins in the U S are not impacted by the attendance rates program, which ended in 2024.

Lee: Our Q1 performance with a strong start to the year exceeding our guidance for both topline sales and bottom line EBITDA and we are on track to deliver our 2025 commitments.

Leigh Vosseller: Worldwide, we achieved record first quarter sales of 234 million or 22% year over year growth. We also improved EBITDA five percentage points year over year while investing in market expansion efforts, demonstrating our commitment to profitable growth. Focusing on the US first, we delivered another Q1 record with $151 million in sales, representing a 15% increase year over year. This growth was driven by three factors that position us for longer term growth. First, we add healthy pump shipments to both new and renewing customers. Second, we had strong supply sales driven by a high rate of retention and improved customer utilization across our sizable install base, which was the primary factor contributing to our output.

Lee: Worldwide, we achieved a record first quarter sales of $234 million or 22% year over year growth.

Lee: We also improved EBIT of five percentage points year over year, our investing in market expansion efforts, demonstrating our commitment to profitable growth.

Lee: Focusing on the U S. First we delivered another Q1 record with $151 million in sales, representing a 15% increase year over year.

Lee: This growth was driven by three factors that position us for longer term growth.

First we had healthy pump shipments to both new and renewing customers.

Lee: Second we had strong supply sales driven by a high rate of retention and improve customer utilization across our sizable installed base, which was the primary factor contributing to our outperformance and third we continue to improve our average selling prices.

Leigh Vosseller: And third, we continue to improve our average selling price. The favorable pricing came largely from our DME Channel efforts, but we did realize meaningful pharmacy pricing benefit, even on the small volumes we fulfilled this quarter. This continues to reinforce that our newly launched pharmacy channel initiative provides a significant opportunity for the future. We are pleased to report that we now have approximately 30% of U.S. lives covered under the pharmacy benefit with a mix of commercial and government lives, compared to the 20% that we shared on our last The contracts we have in place, plus ongoing negotiations, confirm that durable pumps are well accepted under this benefit, and flexibility exists for the structure of reimbursement across pumps and supplies.

The favorable pricing came largely from our E&E channel efforts that we did realize meaningful pharmacy pricing benefit even on the small volumes with Lasalle just acquire.

Lee: This continues to reinforce that our newly launched pharmacy channel initiatives provides a significant opportunity for the future.

Lee: We're pleased to report that we now have approximately 30% of U S lives covered under the pharmacy benefit with a mix of commercial and government life compared to the 20% that we shared on our last call.

Lee: The contracts, we have in place plus ongoing negotiations confirm that durable pumps are well accepted under the benefits and flexibility exists for the structure of reimbursement across pumps and supplies.

Leigh Vosseller: The contracts we have entered into so far continue to be similar in structure to our DME agreements, which are not subscriptions. We continue to scale our capabilities and gather data on our increasing pharmacy channel access. Our early experience in processing orders has been encouraging, enabling us to serve customers at significantly reduced out-of-pocket costs. This lowers the financial barrier that historically may have prevented people from adopting AID technology. We are focused on advancing our pharmacy capabilities as part of our broader market access strategy, which remains centered around having a multi-channel approach to best serve our customers while driving volume growth and profitability through improved pricing.

Lee: The contracts, we have entered into so far continue to be similar in structure Cherokee in the agreements, which are not subscription models.

Lee: We continue to scale, our capabilities and gather data on our increasing pharmacy channel access our early experience in processing orders has been encouraging enabling us to serve customers at significantly reduced out of pocket costs.

Lee: This lowers the financial barrier that historically may have prevented people from adopting AIG technology.

Lee: We are focused on advancing our pharmacy capabilities as part of our broader market access strategy, which remains centered around having a multichannel approach to best serve our customers, while driving volume growth and profitability through improved pricing.

Leigh Vosseller: Turning to markets outside the United States, we started the year off strong with all-time record sales of $84 million. This 35% year-over-year growth was driven by continued demand for Teflim, strong supply sales, and early positive momentum for renewals. The first quarter benefited from nearly $5 million in orders that we originally anticipated would be placed in Q2. This shift in timing was the largest part of our outperformance relative to Q1 guidance, and we're maintaining our expectations for the full year. Moving on to margins, our Q1 performance demonstrated progress on our path to achieving our near and long term profitability goal.

Speaker Change: Turning to markets outside the United States, We started the restaurant with all time record sales of $84 million.

Speaker Change: 35% year over year growth was driven by continued demand for T. Slim strong supplies and early positive momentum for renewables.

Speaker Change: The first quarter benefited from nearly $5 million in orders that we originally anticipated would be placed in Q2.

Speaker Change: The shift in timing with the largest part of our outperformance relative to Q1 guidance and we're maintaining our expectations for the full year.

Speaker Change: Moving on to margins, our Q1 performance demonstrated progress on our path to achieving our near and long term profitability goals.

Leigh Vosseller: Our 51% growth margin was a significant accomplishment, as it's in line with Q4, where we have historically seen a seasonal decline from the fourth to the first quarter. This was primarily driven by a reduction in the per unit cost of pumps with efficiencies gained in both manufacturing and non-manufacturing costs. Demonstrating improvement in profitability is a key objective for us this year, which we delivered in Q1 as our adjusted EBITDA margin expanded at an even higher rate than gross margin, improving five percentage points year over year. This improvement was primarily driven by leverage gained within R&D, which was also an important offset to SG&A as we invested in our U.S.

Speaker Change: Our 51% gross margin was a significant accomplishment and it's in line with Q4, where we have historically seen a seasonal decline from the fourth to the first quarter.

Speaker Change: This was primarily driven by a reduction in the per unit cost of pumps with efficiencies gained in both manufacturing and nonmanufacturing costs.

Speaker Change: Demonstrating improvement in profitability is a key objective for us this year, which we delivered in Q1 as our adjusted EBITDA margin expanded at an even higher rate than gross margin improving five percentage points year over year.

Speaker Change: This improvement was primarily driven by leverage gained within R&D, which was also an important offset to SG&A as we invested in our U S sales force expansion and the infrastructure for our direct European operations, beginning next year.

Leigh Vosseller: Salesforce expansion and the infrastructure for direct European operations beginning next year. In addition, we began executing our plan to drive greater efficiency within our customer support functions, which are designed to modernize the customer experience while driving cost savings. The benefits from these initiatives will begin to be realized in the second half of this year. As a reminder, adjusted EBITDA does not include the impact of certain non-recurring transactions primarily associated with the amendment of our agreement with AMS Medical's original shareholder. As you can see, we achieved our objectives for Q1 on both the top and bottom line and are well positioned for the remainder of the year.

Speaker Change: In addition, we began executing our plan to drive greater efficiency within our customer support functions, which are designed to modernize the customer experience, while driving cost savings the.

Speaker Change: The benefits from these initiatives will begin to be realized in the second half of this year.

Speaker Change: As a reminder, adjusted EBITDA does not include the impact of certain nonrecurring transactions, primarily associated with the amendment of our agreement with <unk> Medical's original shareholders.

Speaker Change: As you can see we achieved our objectives for Q1 on both the top and bottom line and are well positioned for the remainder of the year.

Leigh Vosseller: We ended the quarter with nearly $370 million in total cash and investments and anticipate returning to positive free cash flow both for the second half of 2025 and on a full year basis. With that, we remain confident in our ability to support key commitments, including repayment of convertible notes due in the second quarter. As we look to the remainder of 2025, we are reaffirming our sales, gross margin, and EBITDA guidance. The broader environment is very dynamic, but the building blocks for our original guidance assumptions remain intact. Starting with worldwide sales, we expect a range of $997 million to just over $1 billion, reflecting our goal to deliver double-digit growth for the second year in a row.

Speaker Change: We ended the quarter with nearly $370 million in total cash and investments and anticipate returning to positive free cash flow both for the second half of 2025 and on a full year basis with that we remain confident in our ability to support key commitments, including repayment of convertible notes during the second quarter.

Speaker Change: As we look to the remainder of 2025, we are reaffirming our sales gross margin and EBITDA guidance. The broader environment is very dynamic, but the building blocks for our original guidance assumptions remain intact.

Speaker Change: Starting with worldwide sales, we expect a range of 997 million to just over $1 billion, reflecting our goal to deliver double digit growth for the second year in a row.

Leigh Vosseller: This includes U.S. sales in the range of $725 million to $730 million, where more than 70% of our sales for the year are expected to be generated from predictable and recurring revenue streams from supplies and renewals. Similar to years past, we anticipate sales will step up in Q2, highlighting that the average increase across the last three years was 13%. Then we anticipate sales will increase modestly from Q2 to Q3 with our highest sales achievement in Q4. This cadence comes from multiple factors that are the building blocks of our guidance. First is overall seasonality associated with insurance benefits.

Speaker Change: This includes U S sales in the range of 725 million to $730 million, where more than 70% of our sales for the year are expected to be generated from predictable and recurring revenue streams from supplies and renewals.

Speaker Change: Similar to years past, we anticipate sales will step up in Q2, highlighting that the average increase across the last three years with 13%.

Speaker Change: And then we anticipate sales will increase modestly from Q2 to Q3 with our highest sales achievement in Q4.

Speaker Change: This cadence comes from multiple factors that are the building blocks of our guidance first is overall seasonality associated with insurance benefits. We assume this will be consistent with 2024, along with the progression of renewables, which are back half loaded based on the timing of pump sales four years ago.

Leigh Vosseller: We assume this will be consistent with 2024, along with the progression of renewals, which are back half loaded based on the tightening of pump sales four years ago. Next, and unique to this year, is the scaling productivity of our expanded sales force. Disruption from adding and realigning territories was well managed in the first quarter, and we anticipate it will take 9-12 months for territories to scale to full productivity, which puts the greatest benefit in the fourth quarter. The last of the factors I'll highlight are all of our new growth opportunities, which are more heavily weighted to the second half of the year.

Speaker Change: Next and unique to this year is the scaling productivity of our expanded sales force disruption from adding and realigning territories with well managed in the first quarter and we anticipate it will take nine to 12 months for territories to scale to full productivity, which puts the greatest benefit in the fourth quarter.

Speaker Change: The last of the factors I'll highlight our all of our new growth opportunities, which are more heavily weighted to the second half of the year. These include new technology launches benefit from our encouraging ASP trends as well as broader pharmacy channel access and tight to commercial efforts.

Leigh Vosseller: These include new technology launches, benefit from our encouraging ASP trends, as well as broadened pharmacy channel access and type 2 commercial efforts. Sales outside the U.S. are expected to be in the range of $272 million to $277 million. We anticipate sales to be relatively flat across the remainder of the year, which reflects the timing shift of approximately $5 million in sales originally anticipated for Q2 that were for full in Q1, as well as approximately $15 to $20 million of potential headwinds in the back half of this year as we prepare to transition to direct sales in select markets beginning in 2026.

Speaker Change: Sales outside the U S are expected to be in the range of 272 million to $277 million.

Speaker Change: We anticipate sales to be relatively flat across the remainder of the year, which reflects the timing shift of approximately $5 million in sale. Originally anticipated for Q2 that were fulfilled in Q1 as well as approximately $15 million to $20 million of potential headwinds in the back half of this year as we prepare to transition to direct sales and select markets beginning in.

Speaker Change: 2026.

Leigh Vosseller: Incorporating these factors into the second quarter specifically, we anticipate worldwide sales of approximately $238 million. For gross margin, we are reaffirming our 2025 expectations to improve gross margin to approximately 54% and adjusted EBITDA to approximately 3% of sales. We expect to see continued margin progress across the year as pump sales increase. Efficiencies are gained as MOBI scales, and we demonstrate further operating leverage. Our margin expectations incorporate minimal impact from tariffs, which we believe will be immaterial as we are employing a number of strategies for our supply chain structure and product category, including a well-established tariff exemption.

Speaker Change: Incorporating these factors into the second quarter, specifically, we anticipate worldwide sales of approximately 238 million.

Speaker Change: For gross margin, we are reaffirming our 2025 expectations to improve gross margin to approximately 54% and adjusted EBITDA to approximately 3% of sales.

Speaker Change: We expect to see continued margin progress across the U S pump sales increase efficiencies are gained as <unk> scales and we demonstrate further operating leverage.

Speaker Change: Our margin expectations incorporate minimal impact from tariffs, which we believe will be immaterial as we are employing a number of strategies for our supply chain structure and product category, including a well established tariff exemption.

Leigh Vosseller: It's been a strong start to the year and our results are beginning to reflect the benefits of our strategy as we deliver on our technology portfolio, demonstrate strong retention and enhance our business. As our business continues to mature, in addition to driving pump growth, we remain focused on improved profitability through increased pricing, executing our margin improvement initiatives, and discipline cost management.

Speaker Change: It's been a strong start to the year and our results are beginning to reflect the benefits of our strategy as we deliver on our technology portfolio demonstrates strong retention and enhance our business model as our business continues to mature in addition to driving pump growth. We remain focused on improved profitability through increased pricing executing our margin improvement initiatives.

And disciplined cost management.

John Sheridan: I'll now hand the call back to John. Thanks, Leigh. As you can see, we are delivering on our key objectives for 2025. This is a testament to the rigorous planning and thoughtful execution of our team. We are continuing to transform our business to achieve our longer term goals. As we look to the future, our pipeline remains the most innovative and robust in insulin therapy management. Our distinctive technology ecosystem includes an insulin pump systems. Advanced Algorithms, and Digital Health Solutions. And we are rolling out new commercial offerings under each of these pillars in 2025. Starting with our pump systems, we intend to offer two new sensor integrations in 2025.

Speaker Change: I'll now hand, the call back to John.

John Sheridan: Thanks Lee.

Speaker Change: As you can see we are delivering on our key objectives for 2025. This.

Speaker Change: This is a testament to the rigorous planning and thoughtful execution of our team.

Speaker Change: We are continuing to transform our business to achieve our longer term goals.

Speaker Change: As we look to the future our pipeline remains the most innovative and robust in insulin therapy management.

Speaker Change: Our distinctive technology ecosystem that includes an insulin pump systems.

Speaker Change: Advanced algorithms and digital health solutions, and we are rolling out new commercial offerings under each of these pillars in 2025.

Speaker Change: Starting with our pump systems, we intend to offer to new sensor integrations in 2025.

John Sheridan: We will begin our U.S. launch of Freestyle Libre 3 integrated with the T-Slim in the second quarter, and that will be followed by Moby. Internationally, we plan to begin offering Libre3 integration with T-SLIM in the third quarter. We also intend to support the 15-day Dexcom G7 sensor at launch. Another feature enhancement we intend to begin offering for MOBI this year is an Android application, which will require an FDA 510K clearance before launch. Moby is currently under CE Mark review. Following approval, we will begin country registration and reimbursement discussion. Let's bring our newest pump platform to all the countries we serve.

We will begin our U S launch of freestyle Libre III integrated with the T. Slim in the second quarter and that will be followed by Middleby.

Speaker Change: Internationally, we plan to begin offering libre through integration with T slim in the third quarter.

Speaker Change: We also intend to support the 15 day <unk> seven sensor at launch.

Speaker Change: Another feature enhancement, we intend to begin offering for <unk>. This year is an Android application, which will require an FDA 500 10-K clearance before launch.

Speaker Change: <unk> is currently under CE Mark review.

Speaker Change: Following approval, we will begin country registration and reimbursement discussions.

Speaker Change: Bring our newest pump platform to all the countries we serve.

John Sheridan: Our goal is to begin launching MOBI outside the United States with multiple sensor integrations by the end of this year and continue the rollout through 2026. infusion sets are another key part of our system. And we have been developing proprietary technology to extend where it's We made an FDA submission for a three-day indication using this technology late last year. Following its clearance, we are planning to quickly file another submission in pursuit of a seven-day indication. Advanced algorithms and our commitment to AID leadership also continue to be a top priority in 2025. As discussed, we launched our ControlIQ Plus algorithm in the U.S.

Speaker Change: Our goal is to begin launching maybe outside of the United States with multiple sensor integrations by the end of this year and continue the rollout through 2026.

Speaker Change: And infusion sets are another key part of our system and we have been developing proprietary technology to extended wear time we've.

Speaker Change: We made an FDA submission for a three day indication using this technology late last year.

Speaker Change: Following its clearance we are planning to quickly file another submission in pursuit of a seven day indication.

Speaker Change: Advanced algorithms and our commitment to AIG leadership also continues to be a top priority in 2025.

Speaker Change: As discussed we launched our control IQ plus algorithm in the U S. In the first quarter and are planning to begin launching internationally by the end of the year pending regulatory approval.

John Sheridan: in the first quarter and are planning to begin launching internationally by the end of the year, pending regulatory approval. The last area of our portfolio I'd like to highlight is our progress in digital health solutions. TandemSource is the foundation of our digital offerings, serving as the hub for patient therapy information, healthcare provider reporting, payer analytics, and as a portal for customer sales support. Tandem has offered a cloud platform for the past decade in the U.S., and last year we began rolling out these capabilities internationally. It's an important step for our launch of the T-Slim mobile bolus outside the United States that we are planning for the second quarter of this year, as well as our international launch of Mobi.

Speaker Change: The last area of our portfolio I'd like to highlight is our progress in digital health solutions tandem.

Tandem source is the foundation of our digital offerings, serving as the hub for patient therapy information health care provider reporting.

Speaker Change: Analytics is a portal for customer sales support.

Speaker Change: Tandem has offered a cloud platform for the past decade in the U S and last year, we began rolling out these capabilities internationally.

Speaker Change: It is an important step for our launch of the T. Slim <unk> mobile bolus outside the United States that we are planning for the second quarter of this year as well as the international launch of <unk>.

John Sheridan: Rounding out our pipeline are the technology solutions we plan to launch beyond 2025 that are designed to further expand our portfolio and bring the benefits of our technology to more people living with diabetes. We're making great progress on our tubeless feature for Mobi, which is now in the verification testing and manufacturing build out stage in support of a future 510 filing. Development for our durable patch pump, CIGIE, has moved to San Diego, allowing us to best leverage the expertise of our advanced pump development team. Lastly, we remain steadfast in our commitment to bring an industry leading fully closed loop algorithm to market.

Speaker Change: Rounding out our pipeline or the technology solutions, we plan to launch beyond 2025 that are designed to further expand our portfolio and bringing the benefits of our technology to more people living with diabetes.

We're making great progress on our tubular feature from Obi, which is now in the verification testing and manufacturing build out stage in support of our future <unk> filing.

Speaker Change: Development for our durable patch pumps Siggi has moved to San Diego, allowing us to best leverage the expertise of our advanced pump development team.

Speaker Change: Lastly, we remain steadfast in our commitment to bring an industry, leading fully closed loop algorithm to market.

John Sheridan: We recently completed a fully closed loop feasibility trial.

Speaker Change: We recently completed a fully closed loop feasibility trial and in Q1, we signed a collaboration agreement with the University of Virginia Center for diabetes technology to advance our R&D efforts on fully automated closed loop systems.

John Sheridan: And in Q1, we signed a collaboration agreement with the University of Virginia's Center for Diabetes Technology to advance our R&D efforts on fully automated closed loop systems. In conclusion, you can see that it's both a busy and exciting time at Tandem. The opportunities in front of us are numerous as we execute on our sales strategy, increase pharmacy channel access. scale growth into type 2 and commercialize our robust pipeline. By doing so, we are creating new possibilities for people living with diabetes, while achieving record results that align with our 2025 and longer term financial goals to deliver sustained double digit sales growth and profitability.

Speaker Change: In conclusion, you can see that it's both a busy and exciting time at tandem.

Speaker Change: The opportunities in front of us are numerous as we execute on our sales strategy.

Speaker Change: Increased pharmacy channel access.

Speaker Change: Scale growth into type two and commercialize our robust pipeline.

Speaker Change: By doing so we are creating new possibilities for people living with diabetes, while achieving a record results that align with our 2025 and longer term financial goals to deliver sustained double digit sales growth and profitability.

John Sheridan: Thank you for joining us today. We look forward to keeping you updated as the company continues to progress.

Speaker Change: Thank you for joining us today, we look forward to keeping you updated as the company continues to progress operator, we'd now like to turn the call over for questions.

Operator: Operator, we'd now like to turn the call over for questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question. You may recue for any additional questions.

Speaker Change: Thank you as a reminder to ask a question. Please press star one one of your telephone wafer name to be announced towards our your question. Please press star one again.

Speaker Change: That you. Please limit yourself to one question you may re queue for any additional questions. Please standby, while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A raw file.

Matt Miksic: Our first question comes from the line of Matt Miksic with Barclays, your line is now open. Oh, great. Thanks so much for taking the question.

Matt: Our first question comes from the line of Matt <unk> with Barclays. Your line is now open.

Speaker Change: Great. Thanks, so much for taking the question.

Matt Miksic: So I wanted to try to get a sense of, you know, how, in addition to the performance you outlined in the quarter, how some of the salesforce changes, salesforce realignment, you know, any sort of one-time issues that came about in the fourth quarter have kind of moderated or gotten behind you? Or, you know, are they still in process? That's just kind of an update on that.

Matt: So I wanted to try to get a sense of.

Matt: How in addition to the performance you outlined in the quarter.

Matt: How some of the.

Matt: The sales force changes to sales force realignment.

Matt: Any sort of one time issues that.

Matt: This came about in the fourth quarter have kind of.

Matt: Moderated or we've gotten behind you or are they still on process that just kind of an update on on that and I'll skip the follow up in the next person.

Matt Miksic: And I'll skip the follow up and pass to the next person. Thanks, Matt.

John Sheridan: Well, first of all, I want to say that there were really no disruptive events that occurred in the fourth quarter. All we were doing at that point in time was hiring people. And, you know, as of the beginning of the year, most of those people were on board. And, you know, as we as we exit the first quarter, you know, the expansion is essentially complete, the territory realignment is complete. And, you know, we saw some modest disruption, but nothing more than we anticipated. I would say that now, you know, it takes salespeople that are new to the company and new to the territories, you know, about 9 to 12 months to just get accustomed up to speed.

Matt: Thanks, Matt well first of all I would say that there were really no disruptive events that occurred in the fourth quarter. While we were doing at that point in time with hiring people and.

Matt: As of the beginning of the year and most of those people onboard.

Matt: And as we as we exit the first quarter.

The expansion is essentially complete the territory realignment is complete.

Matt: And we saw some modest.

Matt: Disruption, but nothing more than we anticipated I would say that now it takes salespeople at that are new to the company or new to the territories.

Matt: About nine to 12 months to just get accustomed up to speed and we will see gradual improvement in their productivity over the next several quarters and the good news is that we expect them to be fully onboard and producing in the fourth quarter. So it's a high quality team that complement our existing team and we're very happy to have him on board and we think this is just.

John Sheridan: And we'll see gradual improvement in their productivity over the next several quarters. And the good news is that we expect them to be fully on board and producing in the fourth quarter. So it's a high quality team, they complement our existing team. And we're, we're very happy to have them on board. And we think this is just a logical thing for the company to do based on where we are in the market. Thank you.

A logical thing for the company to do based on where we are in the market.

Matthew Blackman: Our next question comes from the line of Matthew Blackman with Stiefel. Your line is now open. Good afternoon, everybody. Can you hear me okay? We can. Great.

Speaker Change: Thank you. Our next question comes from the line of Mathew Blackman with Stifel. Your line is now open.

Mathew Blackman: Hi, Good afternoon, everybody can you hear me okay.

Leigh Vosseller: Leigh, I wanted to ask specifically how much price played a role in the U.S. I think our math says about... is that roughly right? And I guess the follow up there is, is that the right magnitude for us to layer in going forward?

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: I wanted to ask specifically how much.

Speaker Change: Price played a role in the U S. I think our math says about three.

Speaker Change: 3% for pumps, maybe upwards of a 10% lift for supplies is that roughly right and I guess the follow up here is that the right magnitude for us to layer in going forward is this sustainable or is there something unique about the first quarter.

Leigh Vosseller: is there something unique about the first quarter? Thanks. Thanks, Matt. I would say you're in the ballpark there on the pump side and the supplies are probably closer to what you are thinking from a pump perspective. And so it's really performing again, like we did last year in terms of price increase. And I think this is the new bar to think about as we look to the rest of the year from a pricing perspective. I'll say in the US in particular, the majority of the price benefit did come from our work in the DME channel.

Speaker Change: Thanks, Matt I would say you're in the ballpark there on the pump side and the supplies are probably closer to what you are thinking from a pump perspective and.

Speaker Change: And so it's really.

Speaker Change: Performing again like we did last year in terms of price increase and I think this is the new bar to think about as we look to the rest of the year from a pricing perspective.

Speaker Change: In the U S. In particular, the majority of the price benefit that come from our work in the <unk> channel, but even though we only had very small volumes in pharmacy. At this time, we did see a meaningful contribution from a price perspective in the first quarter. So it gives us a lot of encouragement for what this can do for the business in the long term.

Leigh Vosseller: But even though we only had very small volumes in pharmacy at this time, we did see a meaningful contribution from a price perspective in the first quarter. So it gives us a lot of encouragement for what this can do for the business in the long term. Thank you.

Steve Lichtman: Our next question comes from the line of Steve Lichtman with Oppenheimer. Your line is now open. Thank you. Evening, evening, guys. So just on the Salesforce expansion and realignment, great to hear it's going as expected.

Speaker Change: Thank you. Our next question comes from the line of Steve Lichtman with Oppenheimer. Your line is now open.

Steve Lichtman: Thank you Jimmy evening evening guys.

Steve Lichtman: So just on the sales force expansion and realignment great to hear it's going as expected.

John Sheridan: Understanding the ramp that you mentioned, you know, through the year, but can you talk about where you're deploying the new individuals, where you expect to see benefits, and in particular, you know, how that will dovetail with with with type two expansion? I would say that, you know, we've done a lot of analysis to see exactly where there is opportunities to realign and make the territories more productive. We're not going to speak specifically to that, nor will we talk about the numbers, et cetera. I would say that we are, as I indicated in the prepared remarks, we are now in the process of actually doing the the Salesforce pilot.

Steve Lichtman: Understanding the ramp that you mentioned.

Steve Lichtman: Through the year, but can you talk about where you are deploying the new individuals where do you expect to see benefits and in particular, how that will dovetail with.

Steve Lichtman: Type two expansion.

Steve Lichtman: I would say that we've done a lot of analysis to see exactly where there is opportunities to realign and make the territories more productive we're not going to speak specifically to that nor will we talk about the numbers et cetera.

Steve Lichtman: I would say that we.

Steve Lichtman: We are as I indicated in the prepared remarks, we are now in the process of actually.

Steve Lichtman: Doing the sales force pilot, it's live it's in a meaningful number of territories and we've trained our internal people and they're out there selling right now so.

John Sheridan: It's live. It's in a meaningful number of territories. We've trained our internal people and they're out there selling right now. So, you know, that that's happening with our existing team. And, you know, typically we evaluate the Salesforce size and it's something that's traditionally done near the end of the year. But I think right now we feel good with where we're at. We've got a good plan for the existing type one and type two populations in terms of supporting them. And, you know, as we said, we're moving forward.

Steve Lichtman: That's happening with our existing team and typically we evaluate the sales force size and its something Thats traditionally done near the end of the year, but I think right now we feel good with where we're at we've got a good plan for the existing type one and type two populations in terms of supporting them and as we said we're moving forward.

John Sheridan: Thank you.

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

Steve Lichtman: Thank you.

Speaker Change: Our next question comes from the line of Brooks O'neil with Lake Street Capital markets. Your line is now open.

Aaron: Your line is now open. Hey, good afternoon, guys. This is Aaron on the line for Brooks. Thanks for taking our questions and congrats on the progress. I'd be curious if you maybe had a mix in mind in terms of what you expect from Pharmacy versus other channels longer term, you know, appreciate the color and commentary and the progress from last quarter to now. But I guess my question is, how do you see that dynamic sort of playing out over the next 12 months or so? Any additional color there, there would be great.

Aaron: Hey, Good afternoon, guys. This is Aaron on the line for Brooks, Thanks for taking our questions and congrats on the progress Q.

Aaron: Curious if you maybe had a mix in mind in terms of what you expect from pharmacy versus other channels longer term and I appreciate the color.

Aaron: Inventory in the progress from last quarter, So now but.

Aaron: I guess my question is how do you see that dynamic playing out over the next 12 months or so any additional color there that would be great. Thanks.

Leigh Vosseller: Great, thanks for the question. So when we think about pharmacy this year, as we put together our assumptions from a guidance perspective, we only factored in modest contribution, and we're really just getting started there. The first quarter was really a lot about the operationalizing of it and making sure we are putting in an effective and efficient infrastructure to support this for the long term. But I'll say from the very, very early, very small volumes and very early learnings, it gives us, you know, it makes me super excited about this opportunity long term. And it's something that we think, you know, as we think about the risks and opportunities for the year could pose more of an opportunity than we originally even anticipated.

Oh, great. Thanks for the question. So what do we think about pharmacy. This year as we put together our assumptions from a guidance perspective, we only factored in modest contribution.

Aaron: Just getting started there the first quarter was really a lot about the operationalization of it and making sure we are putting in an effective and efficient infrastructure to support this for the long term, but I will say from the very very early very small volumes in very early learnings it gives us.

Aaron: Makes me Super excited about this opportunity long term and it's something that we think.

Aaron: As we think about the risks and opportunities for the year could pose more of an opportunity than we originally even anticipated. So we look forward to continuing on this journey.

Leigh Vosseller: So we look forward to continuing on this journey and talking more in the future about what kind of impact it can have on the business long term.

Aaron: And talking more in the future about what kind of impact it can have on the business long term.

Matthew O'brien: Thank you.

Matthew O'brien: Our next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open. Afternoon, thanks for taking the questions.

Speaker Change: Thank you. Our next question comes from the line of Matthew O'brien with Piper Sandler. Your line is now open.

Matthew O'brien: And I know Susan's going to kill me for asking too, but I'm going to there to get one, please. Just one. All right. I hate to burn it on this one then, but just the AMS write-off. Is that saying anything about timing of CIGIE? Because I think John or Leigh, we kind of had it in our heads that that would be out sometime in 2027. But given the write-off, does that mean that the timeframe to get this thing to market is even further out, maybe very end of the decade? I mean, how do we interpret that write-off and what it means for timing?

Matthew O'brien: Afternoon, Thanks for taking the questions and I know Susan is going to kill me for asking too, but im going to just one please.

Speaker Change: One.

Speaker Change: Alright.

Speaker Change: I hate to burn it on this one then just.

Speaker Change: The Ams write offs.

Speaker Change: Is that saying anything about timing of Siggi, because I think John are alleviated.

Speaker Change: Our hedge that that would be out some time in 2027, but given the write off does that mean that the timeframe to get this thing to market is even further out maybe very end of the decade, I mean, how do we interpret that write off and what it means for timing of Siggi. Thanks.

John Sheridan: Thanks, Matt.

John Sheridan: I think it's actually the opposite, Matt. It turns out that the agreement we had in place had a number of contingent liabilities in it. And by terminating the agreement, it just gave us more control and flexibility over the development path. It was it was a great, I think it was a great deal for both parties. But now we've brought the development activity back here to San Diego. We have a very experienced team of pump and system developers that are working on it. And so as I said, if anything, this is going to improve our, our time to market.

Speaker Change: Thanks, Matt I think it's actually the opposite Matt It turns out that the agreement we had in place had a number of contingent liabilities.

Speaker Change: And by terminating the agreement that just gave us more control and flexibility over the development path. There was it was a great I think it was a great deal for both parties, but now we brought the development activity back here to San Diego, we have a very experienced team of pumping system developers that are working on it and so as I said if anything this is <unk>.

Speaker Change: Going to improve our our time to market not reduce it.

John Sheridan: And we cannot reduce it. Thank you.

David Roman: Our next question comes from the line of David Roman with Goldman Sachs. Your line is now open. Thank you. Good afternoon, everybody. I wanted to talk on the gross margin line here for a second. Given the strength you saw in the quarter, can we almost understand what were the puts and takes keeping the gross margin at the 51% level that you had indicated given the significant strength you saw in the U.S. here and the traction you're seeing with Mobi? I'm sure.

Speaker Change: Thank you. Our next question comes from the line of David Roman with Goldman Sachs. Your line is now open.

Speaker Change: Thank you and good afternoon, everybody I wanted to talk on the gross margin line here for a second given the strength you saw in the quarter carrying all of US understand what were the puts and takes keeping the gross margin at 51% level that you had indicated given the significant strength you saw in the U S here and the traction youre seeing with bogey.

Leigh Vosseller: So I would say, first of all, we're very excited to have Mobi as part of the mix, and a growing part of the mix of our business, because it's one of the most important factors in delivering on our long-term gross margin targets. So as we look at how we came in in Q1, it really was, especially compared to a year ago, showing an improvement in pump costs, but actually both in T-SLIM and in Mobi, because Mobi's just beginning on its journey of becoming accretive to the business. So this year, you think about the Mobi pump driving accretion.

Speaker Change: Sure. So I would say first of all we're very excited to have <unk> as part of the mix in a growing part of the mix of our business because it's one of the most important factors in delivering on our long term gross margin targets. So as we look at how we came in in Q1, it really was especially compared to a year ago, showing an improvement in per cost, but actually.

Speaker Change: Both <unk> and <unk>, because <unk> just beginning on its journey of becoming accretive to the business. So this year you think about the mobi pump driving accretion in 2026 do you think about it coming from the perspective of this.

Leigh Vosseller: In 2026, you think about it coming from the perspective of the cartridges. And so those will continue to build up over time. And we've often said that Mobi gets us more than halfway to our long-term gross margin target of 65%. And maybe another piece of color today as well that I don't think we've shared before is thinking about how to think about that progression. And with Mobi in the mix, with what we are thinking about from a pharmacy perspective, from this early evidence, and also thinking about going direct in 2026, we believe we see a pathway to get to a 60% gross margin as early as next year.

The cartridges and so those will continue to build up over time, and we've often said that <unk> gets us more than halfway to our long term gross margin target of 65%.

Speaker Change: And maybe another piece of color and today as well that I don't think we've shared before is thinking about how to think about that progression and with movie in the mix with what we are thinking about from a pharmacy perspective from this early evidence and also thinking about going direct in 2026, we believe we see a pathway to get to a 60% gross margin.

Leigh Vosseller: So we're really excited about where we are right now and where we're progressing and our ability to deliver on that. Thank you.

Speaker Change: Early as next year. So we're really excited about where we are right now and where we're progressing in our ability to deliver on that.

Matt Taylor: Our next question comes from the line of Matt Taylor with Jeffries. Your line is now open. Hi, thanks for taking the question.

Speaker Change: Thank you our next.

Speaker Change: Question comes from the line of Matt Taylor with Jefferies. Your line is now open.

Matt Taylor: I guess I wanted to ask, you know, you made some comments in the prepared remarks about the pharmacy progress and hoping to just double click on that. He talked about, excuse me, lives covered. It does sound like you're just really getting started with with those patients.

Matt Taylor: Hi, Thanks for taking the question.

Speaker Change: I guess I wanted to ask I know you made some comments in the prepared remarks about the pharmacy progress and doping to just double click on that he talked about.

Matt Taylor: He lives covered it.

Leigh Vosseller: I was wondering if you could give us some color on the early experience and maybe talk about how you think the uptake will be through this year and next, when it when it could actually be sort of a material portion of your business. Yeah, thanks for the question, Matt. So first of all, we were excited to share that we've increased our percentage of lives covered in the US under pharmacy going from 20%, which was what we shared at our last earnings call to 30% now. So we're starting, I would say, at a really high mark in terms of coverage.

Speaker Change: It does sound like you are just really getting started with those patients I was wondering if you could give us.

Matt Taylor: Color on the early experience and maybe talk about.

Matt Taylor: But how you think the uptake will be through this year and next when it when it can actually be sort of a material portion of your business.

Matt Taylor: Yes. Thanks for the question, Matt. So first of all we were excited to share that we've increased our percentage of lives covered in the U S under pharmacy coming from 20%, which with what we shared at our last earnings call Q, 30% now. So we're starting I would say at a really high mark in terms of coverage.

Leigh Vosseller: What we were learning in the first quarter, particularly as we were testing out the benefits with different people coming to Tandem, was that it really does dramatically offer a lower out-of-pocket cost for patients. And so that can be one of the most pivotal factors in terms of addressing one of the bigger barriers to adopting pump therapy, particularly durable pump therapy. So we think it can increase our access or our MDI expansion over time in that regard. The other element of it is in the pharmacy channel, as you're probably seeing and hearing from many of the competitors in this space, there is a pricing premium associated with it with the value that they put on these advanced algorithms and the clinical benefits from the patients.

Matt Taylor: We're learning in the first quarter, particularly as we were testing out the benefits with different people coming to handle with that it really does dramatically offer a lower out of pocket costs for patients.

Matt Taylor: That can be one of the most pivotal factors in terms of addressing one of the bigger barriers to adopting from Derby, particularly durable pump therapy. So we think it can increase our access of our MDI expansion over time in that regard.

Matt Taylor: Other element of it is in the pharmacy channel as you're probably seeing and hearing from many of the competitors in this space. There is a pricing premium associated with it with the value that they put on these advanced algorithms and the clinical benefits from the patient and so that that really can help drive profitability for us and so like we said, it's very early right now but.

Leigh Vosseller: And so that really can help drive profitability for us. And so, like we said, it's very early right now, but the contracts that we have in place are really good, solid contracts that can deliver on that profitability and will continue to drive it forward and give more color in the future as it becomes a bigger piece of our business.

Matt Taylor: The contracts that we have in place are really good solid contracts that can deliver on that profitability and will continue to drive it forward and give more color on the future as it becomes a bigger piece of our business, but for 2025. So think about it is only a modest contributor.

Leigh Vosseller: But for 2025, still think about it as only a modest contributor. Thank you.

Chris Pasquale: Our next question comes from the line of Chris Pasquale with Nephron Research. Your line is now open. Thanks.

Speaker Change: Thank you. Our next question comes from the line of Chris Pasquale with Nephron Research. Your line is now open.

Chris Pasquale: It was something to talk about the decision to just reiterate guidance after the good one, Q. You beat consensus by about $14 million, back out to $5 million that got pulled forward. OUS, you're still up nine.

Thanks, I was hoping you could talk about the decision to just reiterate guidance. After the good <unk> consensus by about $14 million back out the $5 million that got pulled forward or U S.

Leigh Vosseller: Is there anything that you're looking at now that you're more concerned about than you were at the end of the year, maybe in terms of the economy? And then does the margin guidance contemplate any impact from tariffs? Yeah, thanks for the question. So when, when we look at the building blocks for how we put together our guidance at the beginning of the year, there's nothing that's changed about our competence level, our ambition this year, what we think we can deliver on. It really was looking at the broader economic environment, and just thinking about how dynamic it has been and how dynamic it may continue to be across this year.

Speaker Change: Were still up nine is there anything that youre looking at now that you're more concerned about when you were at the end of the year, maybe in terms of the economy.

Speaker Change: And then does the margin guidance contemplate any impact from tariffs. Thanks.

Speaker Change: Yes, thanks for the question.

Speaker Change: When we look at the building blocks for how we put together our guidance at the beginning of the year. There's nothing that's changed about our confidence level. Our ambition. This year, what we think we can deliver on it really was looking at the broader economic environment and just thinking about how dynamic it has been and how dynamic. It may continue to be aircraft. This year. So we got at this point.

Leigh Vosseller: So we thought at this point, despite the nice deliverable in Q1, that it was more prudent to reaffirm at this time, and then we'll continue to execute on that as we look across the year. And then from a tariff perspective, factored in at the beginning of the year and still factored in is the minimal impact that we expect from tariffs this year. So we really don't see it being a big headwind for us. Thank you.

Speaker Change: And despite the nice deliverable in Q1 that it was more prudent to reaffirm at this time and then we'll continue to execute on that as we look across the year and then from a tariff perspective factored in at the beginning of the year and still factored in is the minimal impact that we expect from tariffs. This year. So we really don't see it being a big hurdle.

Speaker Change: And for Us.

Anthony Patron: Our next question comes from the line of Anthony Patron with Mizzouho Financial Groups. Your line is now open. Anthony, your line is open, please check your mute button. Sorry about that, I was on mute. Thank you for fitness in and congrats on a solid quarter.

Speaker Change: Thank you. Our next question comes from the line of Anthony Petrone with Mizuho Financial Group. Your line is now open.

Speaker Change: Anthony Your line is open please check your mute button.

Speaker Change: Hello.

Speaker Change: Sorry about that I was on mute. Thank you for fitness and then congrats on the solid quarter, maybe a little bit just on control IQ type two indication early days out there.

Anthony Patron: Maybe a little bit just on control IQ, type two indication, early days out there. Just a review and recap on what's baked in for guidance for type two MDI conversion specifically for this year and how you expect that to progress into the second half specifically within the PBM world. I'll start off by saying, you know, it's been approved now for about a month. We have already provided about 300,000 people in the marketplace access to Control IQ Plus and all of our new pump shipments are underway. I think that, you know, when it comes to the actual benefit right now, it's too early for us to measure.

Speaker Change: Just a re review and a recap on what's baked in for guidance for type two MDI conversion specifically for this year.

Speaker Change: And how you expect that to progress.

Speaker Change: Into the second half specifically within the <unk> world. Thanks again.

Speaker Change: Yeah.

Speaker Change: I'll just start off by saying.

Speaker Change: It's been approved now for about a month.

Speaker Change: We have already provided about 300000 people in the marketplace access to control IQ plus.

Speaker Change: And all of our new pump shipments are underway.

Speaker Change: I think that when it comes to the actual.

John Sheridan: But I think Leigh, you may want to comment a little bit on just what's planned and guidance and things like that. Sure. So from the perspective of this year, I mean, we really just launched not too long ago, and we've only factored in modest contribution in 2025. One of the areas that you mentioned from a PBM perspective is really focused on the reimbursement element of it. So from a commercial perspective, the coverage for a type two patient is very similar to type one in terms of access. And so no concerns there. From a Medicare perspective, there is coverage, but it is a little more onerous to get someone approved.

Speaker Change: Benefit right now it's too early for us to measure.

Speaker Change: And I think Lee you may want to comment a little bit on just what's planned in guidance sure. So from the perspective of this year.

Speaker Change: We just launched not too long ago, and we've only factored in modest contribution in 2025, one of the areas that you mentioned from a TBM perspective, it's really focused on the reimbursement element of it so from a commercial perspective the coverage for type two patients is very similar to type one in terms of access and so no concerns there from a Medicare perspective.

Speaker Change: There is coverage, but it is a little more onerous to get someone approved and so that's where our efforts our focus is really on that.

Leigh Vosseller: And so that's where our efforts are focused is really on actually from an industry wide perspective, we're all focused on trying to improve that access through Medicare. And so that could be a bit of a gating factor initially as we think about the opportunity, but we're confident in our ability to drive it in the longer term, both through the DMV and the pharmacy channel.

Speaker Change: From an industry wide perspective, we're all focused on trying to improve that access through Medicare and so that could be a bit of a gating factor initially as we think about the average unit EBIT, we're confident in our ability to drive it in the longer term.

Speaker Change: Through the <unk> and the pharmacy channel I'll just add.

John Sheridan: I'll just add one next, one other thing, and that is that when you look at the type two study we did, we actually produced the first clinical data that's been available that actually evaluates the effectiveness of the C-peptide test. And so we monitor people with high and with low C-peptide results. And in both cases, we saw great results from Control-IQ. So I think this arms us and individuals that are seeking to reduce some of the burden and hurdles that people have to get over to get onto a pump of type two. And we're excited about having that data.

Speaker Change: One other thing and that is that when you look at the type two study we did we actually produce the first clinical data that's been available that actually evaluated the effectiveness of the C peptide test and so we monitor people with them.

Speaker Change: Hi, and with low C-peptide results and in both cases, we saw great results from control IQ. So I think this this arms us.

Speaker Change: Individuals are seeking to reduce some of the burden and hurdles that people have to get over to get onto a pump with type two and we're excited about having that data.

John Sheridan: Thank you.

Josh Jennings: Our next question comes from the line of Josh Jennings with TD Cowen. Your line is now open. Good afternoon. Thank you. Let's just follow up on your comments, Leigh, on the contracts with the pharmacy access. You mentioned that the revenue recognition will be similar to the D&E channel. Has there been any limitations or have there been any pushback in terms of your negotiations with payers? Or is it smooth sailing and you expect every contract going forward to mirror what you have in place today? Thanks. Sure. Thanks for the question, Josh. So first off, I'll confirm there are a couple of things we've learned in our early negotiations, which are DME pumps or durable pumps are widely accepted in the pharmacy channel.

Speaker Change: Thank you. Our next question comes from the line of Josh Jennings with TD Cowen. Your line is now open.

Josh Jennings: Hi, good afternoon. Thank you.

Speaker Change: Wanted to.

Speaker Change: Just.

Speaker Change: Follow up on your comments Lee.

Farm the contracts with pharmacy access.

Speaker Change: Have you mentioned that the revenue recognition will be similar to the <unk> channel.

Speaker Change: Has there been any limitations or have there been any pushback in terms of your negotiations with payers.

Speaker Change: Is it smooth sailing and do you expect every contract going forward.

Speaker Change: To mirror, what you have in place today. Thanks.

Speaker Change: Sure. Thanks for the question Josh So.

Josh Jennings: First I'll confirm there were a couple of things we've learned in our early negotiations, which are DNA pumps are durable pumps are widely accepted in the pharmacy channel and secondly, you can employ a variety of reimbursement structure than the channel. There's no one set solution and so to your point the contracts you have in place today, you followed more of <unk> like model they are not subscription.

Leigh Vosseller: And secondly, you can employ a variety of reimbursement structures in the channel. There's no one set solution. And so to your point, the contracts we have in place today do follow more of a DME-like model. They're not subscription-based. It doesn't mean that we might not consider something like that in the future. But for now, that's what it looks like for us as a business. And so we don't anticipate any headwinds that you may hear when people transition to a subscription model in the future. Thank you.

Speaker Change: Based.

Speaker Change: That doesn't mean that we might not consider something like that in the future, but for now that's what it looks like for us as a business and so we don't anticipate any headwinds that you may hear when people transition to a subscription model in the future.

Issie Kirby: Our next question comes from the line of Issie Kirby with Bradburn Atlantic. Your line is now open. Hi guys, thanks for taking my question. I wanted to touch upon OUS International, a lot going on there with respect to new launches. Just wanted to ask about sort of the competitive dynamics and the win rate you're seeing internationally. And then how should we think about retention internationally? Is this going to be, based on what you've seen so far, roughly comparable with the US renewal retention rate?

Speaker Change: Thank you. Our next question comes from the line of Etsy Kirby with Redburn Atlantic. Your line is now open.

Etsy Kirby: Hi, guys. Thanks for taking my question I wanted to touch upon.

Speaker Change: Yes.

Speaker Change: A lot going on now with respect to new launches just wanted to ask about sort of the competitive dynamics in the win rate you're seeing internationally and then how should we think about retention internationally is this going to be based on what you've seen so far roughly comparable with the U S renewal retention rate. Thanks.

John Sheridan: Thanks. Right. Well, I'll say that, first of all, it's a very large market that's less penetrated than the U.S. And, you know, the good news about it is that the health care systems in the OUS countries seem to see the benefit of AID systems for their patients as well as for the economics for their, you know, for the various country systems. So we're excited about being there. I would say that, you know, our two main competitors exist in the U.S. markets and, you know, we're competing against them. There is the third player, a smaller player that's up and coming, that's doing reasonably well.

Speaker Change: Alright, well I'll say that first of all it's a very large.

Speaker Change: Market, that's less penetrated than the U S.

Speaker Change: The good news about it is that the health care systems in the U S countries.

Speaker Change: Seem to see the benefit of Tid systems for their patients as well as with the economics were there.

Speaker Change: The various country systems. So we're excited about being there I would say that there are.

Speaker Change: Sure.

2 million competitors exist in their markets.

Speaker Change: We're competing against them there is the third player a smaller player that's up and coming.

John Sheridan: But I would say that the competitive environment really hasn't changed, you know, in the last couple of quarters. We're holding our own and, you know, I think it's just as it is.

Speaker Change: It's doing reasonably well, but I would say that the.

Speaker Change: Competitive environment really hasn't changed.

Speaker Change: Last couple of quarters, we're holding our own.

Speaker Change: I think it's.

John Sheridan: The other thing I'll say, though, is that if you look at the technology that we're planning to bring to market, we have MobileBOLUS, we have SOURCE, we have Freestyle Libre 3, we have G7 15-Day. We've also got, you know, Mobi OUS under review. So we have a tremendous amount of technology that is under review right now or in the process of being transferred. And we think that, as I said, we feel very competitive in that market today. You can see the results we're experiencing are quite good. And when we have this new technology there, it'll even be better.

Speaker Change: It's just as it is.

Speaker Change: The other thing I will say, though is that if you look at the technology, we are planning to bring to market.

Speaker Change: Have.

Speaker Change: Mobile bolus, we have source, we have freestyle libre three we have G $7 15 day.

Speaker Change: We've also got.

Speaker Change: <unk> under review so we have a tremendous amount of technology that is under review right now or in the process of being transferred and we think that as I said, we feel very competitive in that market. Today you can see the results. We're experiencing are quite good and when we have this new technology that will even be better.

John Sheridan: Thank you.

Nathan Trabeck: Our next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is now open. Hi, this is Nathan Trabeck on for Larry. Congrats on a strong quarter. Just a question on competition in the U.S. What are you seeing today?

Speaker Change: Thank you. Our next question comes from the line of Larry <unk> with Wells Fargo. Your line is now open.

Speaker Change: Hi, This is Nathan turning back on for Larry Congrats on a strong quarter.

Speaker Change: Just a question.

Speaker Change: On competition in the U S.

John Sheridan: And I guess your outlook for the rest of the year, you know, when we think about data bionics and the Medtronic, is there some Flare Sync approval? Thanks. I think that, you know, it's a large, expanding and underpenetrated market, the US and, you know, it's not a zero sum game. I mean, multiple players can be successful in this market. And but I said, it's very much like the US countries right now. It's, it's very competitive. But in this, but there hasn't been a lot of changes in the last couple of quarters. And I think that we're holding our own.

Speaker Change: What are you seeing today and I guess your outlook for the rest of the year. When we think about beta bionics and then Medtronic.

Speaker Change: There are some players think approval thanks.

Speaker Change: Sure I think that it is a.

Speaker Change: A large expanding and underpenetrated market the U S.

Speaker Change: Zero sum game I mean multiple players can be successful in this market.

Speaker Change: But I said, it's very much like the <unk> countries right now it's very competitive.

Speaker Change: But in this but there hasn't been a lot of changes in the last couple of quarters.

Speaker Change: I think we're holding our own.

John Sheridan: I mean, currently, there continues to be two large players, a scaling startup is working on it. I'm just making progress in the market.

Speaker Change: Currently there continues to be two large players.

Speaker Change: <unk> startup is working on it.

John Sheridan: And we also acknowledge that there's a new competitor coming. But you know, but we're ready for it. We, we've understood this for a while, and we're prepared.

Speaker Change: I'm, just making progress in the market and we also.

Speaker Change: Technology is a new competitor coming.

Speaker Change: But we're ready for it we understood this for a while and we're prepared.

John Sheridan: You know, relative to some player approval, as I understand it, it's probably a second half commercial launch. You know, right now, we're very close to launching Freestyle Libre 3 in the US market. And we've got the 15 day Dexcom sensor, G7 sensor coming as well. So, you know, I think when it comes to sensor technology, we are, you know, we have the very best on our products. And I think that when you look at the actual technology that is used to pump, I think we feel very confident that the pump technology that we're using is very competitive with the devices that are in the market.

Speaker Change: Relative to <unk> approval as I understand it is probably a second half <unk>.

Speaker Change: <unk> launch right now, we're very close to launching freestyle libre three in the U S market.

Speaker Change: And we've got the 15 day decks com sensor <unk> seven are coming as well so.

Speaker Change: I think when it comes to sensor technology.

Speaker Change: We have the very best on our products and I think that when you look at the actual technology that is used to pump I think we feel very confident that the pump technology that we're using is very competitive with the devices that are in the market.

Mike Kratky: Thank you.

Mike Kratky: Our next question comes from the line of Mike Kratky with Levering Partners.

Speaker Change: Thank you. Our next question comes from the line of Mike Kratky with Leerink Partners. Your line is now open.

Leigh Vosseller: Your line is now open. Hey, everyone. Thanks for taking our questions. Maybe just one on the U.S. new starts. And sorry if I missed this. Can you just confirm whether you're still tracking that mid-single-digit percent growth in the U.S. for new starts this year? And what does that assume between MDI starts versus competitive conversion?

Mike Kratky: Hey, everyone. Thanks for taking my question, maybe just one on the U S. New starts and sorry, if I missed this can you just confirm whether you are still tracking that mid single digit percent growth in the U S for new starts this year and what does that assume between MDI starts versus competitive conversions.

Leigh Vosseller: Sure, happy to speak to that. So I'll start with in the first quarter, we saw double-digit growth in MDI conversions, which is the fourth quarter in a row of that since we returned to growth last year in the second quarter. We do still, in our guidance, assume that new starts will be mid-single-digit growth year over year. And as you think about new starts as a mix of the business between new and renewal, it's roughly a 50-50 mix within that new population. It's starting to lean more towards the MDI conversions, which are roughly about two-thirds of new starts.

Mike Kratky: Sure happy to speak to that so I'll start with in the first quarter, we saw double digit growth in MDI conversions, which is the fourth quarter in a row of that since we returned to growth last year in the second quarter.

Mike Kratky: We do still hit our guidance assumed that.

Mike Kratky: That new starts will be mid single digit growth year over year, and as you think about and you start with the mix of the business between new and renewal. It's roughly a 50 50 mix within that new population is starting to lean more towards the MDI conversions, which are roughly about two thirds of new starts so im feeling very good about our <unk>.

Leigh Vosseller: So I'm feeling very good about our opportunities there and our ability to continue driving that with the products that we have and all the great products that John just listed out that we'll be adding this year.

Mike Kratky: <unk> Zara in our ability to continue driving that with a product that we had and all the great products that John just with Apple will be added this year.

Joanne Wuensch: Thank you.

Anthony: Our next question comes from the line of Joanne Wuensch with Citi.

Speaker Change: Thank you. Our next question comes from the line of Joanne Wuensch with Citi. Your line is now open.

Anthony: Your line is now open. Hey, good afternoon. This is Anthony on for Joanne.

Speaker Change: Hey, good afternoon, Mr. Anthony on for Joanne.

Jayson Bedford: I know it's early days for OUS renewals, but are you expecting sort of a similar high rate of renewals OUS as we've been seeing in the US? Thank you.

Speaker Change: I know, it's early days for us for Newell's, but are you expecting sort of a similar high rate of renewals.

Speaker Change: As we've been saying in the U S.

Speaker Change: Yes, I would say again, we're just at the beginning of the renewal opportunity and we're starting to see the early momentum we are hearing from our distributors their success there.

Speaker Change: Witnessed dissipate that we'll get to that vaccine measure immediately that we share in the U S, which is that we get to about 70% capture rate within 18 months.

Speaker Change: Thats a few years to build to that here in the U S and I think the same will occur outside the U S. But we have no reason to be concerned about our ability to hit that goal long term.

John Sheridan: Our next question comes from the line of Jayson Bedford with Raymond James and Associates. Your line is now open. Good afternoon and congrats on the progress here. Just a quick one for me. Have you seen, I know it's early, but have you seen any change in the mix of your Type 1 versus Type 2 new user mix? I would say, Jason, it's probably it's too early for us to say. As I said, we have started the programs that people are out selling right now into the into the type two community. You know, we continue to see good progress on the type one side.

Speaker Change: Thank you. Our next question comes from the line of Jayson Bedford with Raymond James and Associates. Your line is now open.

Jayson Bedford: Good afternoon, and congrats on the progress here just a quick one for me have you seen I know, it's early but have you seen any change in the mix of your type one versus type two new user mix.

Jayson Bedford: I would say, Jason it's probably it's too early for us to say.

Jayson Bedford: As I said, we have started to programs that people are out selling right now into the into the type two community.

Jayson Bedford: Continue to see good progress on the type one side, but I think that there is really we don't really have any data here, we could share at this point in time.

John Sheridan: But I think that there's really we don't really have any data here. We can share this point in time. But I would imagine in the next call, that'll be a different story.

Jayson Bedford: I would imagine in the next call that will be a different story.

William Plovanic: Thank you.

William Plovanic: Our next question comes from the line of William Plovanic with Canaccord Genuity. Your line is now open. Great, thanks. Good evening.

Speaker Change: Thank you. Our next question comes from the line of William Slavonic with Canaccord Genuity. Your line is now open.

Leigh Vosseller: Just to switch over to the P&L. I'm wondering, we did see a pretty good healthy jump up in SG&A nominally. Is this a new normal? is we should look at a nominal level for the rest of the year or where there's some one-time charges that we should think about backing out as we go into the forward quarter. Sure. When you look at SG&A on a non-GAAP basis, it did increase year over year, and that's tied mostly to our salesforce expansion in the U.S., also starting to make the investments in building our OUS infrastructure, all hitting that SG&A line.

William Slavonic: Great. Thanks, good evening.

Speaker Change: Switchover to the P&L I'm wondering we did see a pretty good healthy jump up in SG&A.

Speaker Change: <unk> is this a new normal.

Speaker Change: As we should look at as a nominal level for the rest of the year or were there. Some one time charges that we should think about backing out as we go into the fourth quarters.

Lee: Sure Lee.

Lee: Look at SG&A on a non-GAAP basis.

Lee: It did increase year over year in that tied mostly to our sales force expansion in the U S.

Lee: So starting to make the investments and building <unk> infrastructure, all getting that SG&A line.

Leigh Vosseller: That step-up it took from a year ago was pretty hefty, but when you look across the rest of the year, it won't be as much of an increase across the quarters. And that comes particularly from the fact that we have some other cost-saving initiatives underway in support of our customer service operations that will help to fund these investments that we're making in the field. So this year, we're still very focused on delivering on our profitability, even with these investments, and I think you'll see that come through in the P&L.

Lee: Stefan <unk> from a year ago was pretty hefty, but when you look across the rest of the year it won't be as much of an increase across the quarters and that comes particularly from the fact that we have some other cost saving initiatives underway.

Lee: Part of our customer service operations that will help to fund these investments that we're making in the field. So so this year, we're still very focused on delivering on our profitability even with these investments and I think you'll see that come through in the P&L.

Michael Polark: Thank you.

Michael Polark: Our next question comes from the line of Michael Polark with Wolf Research.

Lee: Thank you. Our next question comes from the line of Michael <unk> with Wolfe Wolfe Research. Your line is now open.

John Sheridan: Your line is now open. Good afternoon. Thank you. I want to make sure I understand this CIGI charge. If I look at the original agreement, there was up to 130 million Swiss Frank of Earn Out Potential. It looks like the renegotiated agreement is 68 million. And so the question is, why would the AMF shareholders agree to this? If I put words in your mouth, it seems like they're getting something sooner, so not waiting as long. And the trade off for you is you get to maybe go faster than you otherwise would have. And I'm tying together, tying this with the San Diego move for CIGIE development.

Speaker Change: Hey, good afternoon. Thank you I want to make sure I understand this siggi charge.

Speaker Change: If I look at the original agreement there was up to $130 million.

Speaker Change: Swiss franc of earn out potential it looks like the renegotiated agreement is $68 million.

Speaker Change: And so the question is why would the IMF shareholders agree to this.

Speaker Change: I put words in your mouth, it seems like Theyre getting something sooner so not waiting as long.

Speaker Change: The trade off for you as you get to maybe go faster than you otherwise would have and I'm tying together.

Speaker Change: This with the San Diego move for Siggi development. So I have the numbers correct do I have the why you took this deal correct any color would be welcome.

John Sheridan: Do I have the numbers correct? Do I have the why you took this deal correct? Any color would be welcome. Yeah, I think that's roughly the numbers. And I would say, if you look at it on a discounted cash flow basis, it's not a bad deal for either party. And I think it's, like I said, there's the opportunity to take control over this ourselves and not be linked to another entity, which is primarily the reason we did it. And as I said, we did it in a way that both parties I think were pleased with the results.

Speaker Change: That's roughly the numbers and I would just say if you look at it on a discounted cash flow basis.

Speaker Change: It's not a bad deal for either party.

Speaker Change: And I think it's like I said, there is the opportunity to take control over this ourselves and not.

Speaker Change: Be linked to another entity, which is the primarily the primary primarily the reason we did it.

Speaker Change: As I said, we did it in a way that both parties I think were pleased with results.

Danielle Antalffy: Thank you.

Leigh Vosseller: Our next question comes from the line of Danielle Antalffy with UBS. Your line is now open. Hey, good afternoon, guys. Thanks so much for taking the question. And I was hoping, Leigh, if you could bridge us a little bit. So you commented on potentially reaching 60% gross margins by early next year, or by next year. I appreciate that Moby's a part of that. But you also have the potential headwinds from shift to the pharmacy. So and you know, that's 10 points from where we are today.

Speaker Change: Thank you. Our next question comes from the line of Danielle <unk> with UBS. Your line is now open.

Danielle: Hey, good afternoon, guys. Thanks, so much for taking the question and I was.

Speaker Change: <unk> Lee if you could bridge us a little bit you commented on potentially reaching 60% gross margins by early next year or by next year. I. Appreciate that movies are a part of that but you also have the potential headwinds from shift to the pharmacy.

Leigh Vosseller: So just wondering if you give a little bit more color about the puts and that could get you there when when you do get get there. Thank you so much. Yes, great question. So I would say there are three main drivers that I would say give us the confidence that we can get to 60% as early as next year. And I'll start with Mobi, and we have demonstrated proof with Mobi on the market. As we're seeing the volume scale, we're achieving that cost efficiency that we anticipated. The Mobi pump this year will become accreted, which is why we are guiding to a three margin point improvement over last year, getting to 54%.

Speaker Change: The 10 points from where we are today. So just wondering if you could give a little bit more color about the puts and takes that could get you. There when you do get get there. Thank you so much.

Speaker Change: Yes, great question. So I would say there are three main drivers that I would say give us the confidence that we can get to 60% as early as next year and I'll start with <unk> and we have demonstrated proof with <unk> on the market that we're seeing the volume scale, we are achieving that cost efficiency that.

Speaker Change: We anticipate that the loading this year will become accretive which is why we are guiding to a four margin points or three margin points, sorry improvement over last year getting to 54% as we turned the corner in 2026, the cartridges will start to show their benefit as well becoming more so.

Leigh Vosseller: As we turn the corner into 2026, the cartridges will start to show their benefit as well, becoming more accretive. And so that alone is one of the most significant pieces. Then, as we look at the early learnings from pharmacy, and you've categorized pharmacy as a headwind, but in our world, it's actually a tailwind. So our structure is very much CME-like, meaning that we get reimbursement for the pump as well as for the supply. And as we look at the nature of our contracts, the early evidence of what we're seeing as we are checking patient benefits, we believe that we will get meaningful price improvement as we look ahead.

That alone is one of the most significant pieces then as we look at the early learnings from pharmacy, and you categorize them via the headwind, but in our world. It's actually a tailwind. So our structure is very much CME like meaning that we get reimbursement for the pump as well as for the supply and as we look at the nature of our contracts.

Speaker Change: Early evidence of what we're seeing as we are checking patient benefits. We believe that we will get meaningful price improvement has been as we look ahead as we continue to penetrate pharmacy that will also really help from a profitability perspective, and then the last piece I will only be the early beginning with as we go direct in select markets outside the U S. We will see.

Leigh Vosseller: And so as we continue to penetrate pharmacy, that will also really help from a profitability perspective. And then the last piece that will only be the early beginnings of it, but as we go direct and select markets outside the US, we will see a revenue and a margin benefit there.

Speaker Change: Your revenue and a margin benefit.

Operator: And so the combination of those three factors together are what can help us to deliver on that 60% as early as 2026. Thank you. As a reminder to ask a question at this time, please press star 11 on your touchtone telephone.

Speaker Change: And so the combination of those three factors together are what can help us to deliver on that 60% is as.

Speaker Change: Or at least 2026.

Speaker Change: Thank you as a reminder to ask a question at this time. Please press star one one are your Touchstone telephone. Our next question comes from the line of Travis Steed with Bank of America Securities. Your line is now open.

Stephanie Piazzola: Our next question comes from the line of Travis Steed with Bank of America Securities. Your line is now open.

Leigh Vosseller: Hey, this is Stephanie Piazzola for Travis. Thanks for taking the question. I just wanted to clarify or follow up on the new patient numbers in the quarter. I heard the comment on double digit growth in MDI, but curious about overall growth in new patients when you consider the competitive conversions as well. Thank you. Yes, so when we looked at new patients, they were up year over year with the biggest driver or contributor being those NDI conversions. We do continue to see some headwinds from a competitive conversion perspective. But really, I would say that's in line with what we anticipated, starting last year, going into this year and in our long term models.

Speaker Change: Hey, this is definitely appears on for <unk>. Thanks for taking the question.

Speaker Change: Just wanted to clarify.

Follow up on the new patient numbers in the quarter I heard the comment on double digit growth in MDI, but curious about overall growth in your patients.

Speaker Change: When you consider the competitive conversions as well thank you.

Speaker Change: Yes, so when we look at new patient starts were up year over year with the biggest driver or contributor being the MDI conversions, we do continue to see some headwinds from a competitive conversion perspective.

Speaker Change: Really I would say back in line with what we anticipated starting last year going into this year and in our long term model. So everything is moving in the right direction here.

Leigh Vosseller: And so everything's moving in the right direction there. Thank you.

Shagun Singh: Our next question comes from the line of Shagun Singh with RBC. Your line is now open. Great. Thank you so much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of <unk> Singh with RBC. Your line is now open.

John Sheridan: I was wondering if you could maybe elaborate a little bit more on your Type 2 opportunity, go-to-market strategy, you know, how you're positioning yourselves versus competition. You know, obviously, the massive MDI population there, but, you know, how are folks deciding between your offering and competition, especially batch forms? Any detail there? Well, I guess I would say that, first of all, it is a large opportunity. It's, I think, roughly 3 million people in the U.S. that have insulin-intensive diabetes. And, you know, we are working aggressively to, you know, to get out there and take advantage of it.

Speaker Change: Great. Thank you. So much I was wondering if you could maybe elaborate a little bit more on your <unk>.

Speaker Change: Type two opportunity go to market strategy, how you're positioning yourself versus competition.

Speaker Change: Obviously be massive MDI population, there, but how are folks deciding between your offering.

Competition, especially patch pumps any any detail there would be helpful.

Speaker Change: Well I guess I would say that first of all it is a large opportunity.

Speaker Change: It's I think roughly 3 million people in the U S a that insulin intensive.

Speaker Change: Diabetes, and we are working aggressively to.

John Sheridan: We think our pipeline lines up very well with the community. One of the things that was very interesting about our Type 2 study was just the number of subgroups we looked at. And I think the subgroups certainly indicate that it is a very segmented market. And as a result of that, we feel that having a portfolio approach to our product strategy is the right the right one for the this significant segmentation. So I think that right now, as we indicated, we have began our sales initiative. We have a meaningful number of sites that we're doing.

Speaker Change: To get out there to take advantage of it we think our pipeline lines up very well with the with the community one of the things that was very interesting about our type two study, whereas just the number of subgroups, we looked at and I think the subgroups certainly indicate that it is a very segmented markets and as a result of that we feel that having a portfolio approach.

Speaker Change: To our product strategy is the right one for.

Speaker Change: Yes.

Speaker Change: Significant segmentation, so I think that right now as we indicated we have began our sales initiative, we have a meaningful number of sites that we're doing.

John Sheridan: I'd say a pilot study. We're evaluating the training, evaluating the materials we're using. We're basically understanding the messaging towards HCPs. And we're also looking at reimbursement and market access. And so as we refine that, our intent is to move that out beyond just just these these sites and have it deployed throughout the entire country. So, you know, as I said, these are this is just early going. It's the right thing to do. We want to make sure that when we do step on the gas, that we have an effective program that will catch on. And as I said, we you know, we expect this to drive significant growth for the business going forward.

Speaker Change: I would say a pilot study we are evaluating the training evaluating the materials. We're using we're basically understanding the messaging towards Hcp's and we're also looking at reimbursement and market access and so as we refine that our intent is to move that out beyond just.

Speaker Change: Just these these sites.

Speaker Change: And have it deployed throughout the entire country.

Speaker Change: As I said. These are this is just early going it's the right thing to do we want to make sure that when we do step on the gas that we have an effective program that will catch on.

Speaker Change: As I said.

Speaker Change: We expect this to drive significant growth for the business going forward I'll also just finishing that saying that are a lot of the research that we've done recently has indicated that people who have type two have seen the results of these AI systems and I think that they're very concerned about their own health and I think the ease of use and simplicity simplicity that.

John Sheridan: I'll also just finish in that saying that are, you know, a lot of the research that we've done recently has indicated that, you know, people who have type two have seen the results of these AID systems. And I think that they're very concerned about their own health. And I think the ease of use and simplicity and simplicity that comes along with the therapy benefits is making them more likely to consider that. And so we're excited. Thank you. And I'm currently showing no further questions at this time. This does conclude today's conference call.

Speaker Change: Along with the therapy benefits is making them more likely to consider them and so we're excited about that.

Thank you and I'm currently showing no further questions. At this time. This does conclude today's conference call Shannon, Let me just say one thing before we leave I just.

John Sheridan: Shannon, let me just say one thing before we leave. I just want to say that, you know, this is a busy and exciting time for Tandem. The team is executing at a very high level. There's numerous opportunities in front of us, such as the sales strategy, the pharmacy channel access, the type 2 expansion. We've got a robust pipeline. And these enable us to continue achieving our results, and more importantly, helping people with diabetes in general. These opportunities are also, they align with our plans to deliver sustained double-digit growth and profitability in 2025 and beyond. We're excited about where we are.

Speaker Change: Wanted to say that this is a busy and exciting time for tandem.

Speaker Change: And the team is executing at a very high level.

Speaker Change: There are numerous opportunities in front of us such as the sales strategy. The pharmacy channel access that type two expansion, we've got a robust pipeline and these enable us to continue achieving our results and more importantly, helping people with type two diabetes with diabetes in general.

Speaker Change: These opportunities are also they align with our plans to deliver sustained double digit growth in profitability in 2025 and beyond we're excited about where we are thank you.

Operator: Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Thank you. This does conclude today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: [music].

Mhm.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.