It doesn’t have to make sense
The business of diabetes as we say is a wacky one. Many times companies will do things that just make you sit back scratch your head and wonder just what the heck are they thinking. In the past we used to obese over these things thinking that we must be missing something. That there must be something we don’t know, that even with all the research we do and all the sources we speak too something got by us. Then we realized that sometimes companies do things that make absolutely no sense whatsoever, that they have not thought things through.
We have experienced this feeling a lot recently when we look at Tandem (NASDAQ: TNDM). By all practical purposes Tandem is on its last legs, their lenders are closing in and they are running out of money. Everyone we have spoken too cannot believe they have lasted this long. People who have a deep understanding of not just Tandem’s situation but the insulin pump business as well. Yet the company continues to insist everything is just fine and there is nothing to worry about.
Just today comes a press release that states;
“ Tandem Diabetes Care®, Inc. (NASDAQ: TNDM), a medical device company and manufacturer of the only touchscreen insulin pumps available in the United States, today announced the commencement of full manufacturing operations at its new facility located on Barnes Canyon Road in San Diego. In support of the Company’s growing operations, the 50,000 square foot Barnes Canyon facility doubles its previous manufacturing capacity for both insulin pumps and cartridges and expands warehousing for additional infusion set supplies related to the launch of the Company’s new t:lock™ connector.”
Now one just might wonder how a company which appears to be burning cash and has $80 million in debt can afford to open a whiz bang fancy new facility. Well the fact is Tandem a company that is burning cash and has $80 million in debt is spending almost $20 million on facilities and in all honesty they cannot afford any of this.
Listen we have spoken to many who have an intimate knowledge of what’s going on in beautiful San Diego. And the best quote we got was “They aren’t even firing the people who should be fired.” By all outward appearances nothing is wrong, there have been NO major cost cutting efforts, no panic, no nothing. Yet cash continues to dwindle and no one seems to be coming to the rescue.
Our concern here is threefold. First the company will lose control of the situation and be forced to shut down leaving patients to fend for themselves. Second patients will see these announcements and be deluded into a false sense of security. Third that we have lost what’s left of our mind. That we are missing something, that the numbers aren’t as bad as they look and that my sources are as blind as we are.
Let’s be very clear here WE DO NOT WANT TANDEM TO FAIL. However the fact remains they are running out of money, no one has come in to provide additional capital, they cannot go back to the capital markets and no help appears to be coming. As we have stated everyone has come in and kicked the tires but so far at least all these prospective buyers have said no thank you. The general consensus is that a buyer will come in AFTER the company declares bankruptcy.
This is why we no longer obese over situations like this as Tandem is becoming the poster child for willful blindness. Yes the ship has struck the iceberg, is taking on water and is sinking. Yet the band plays on as if nothing is wrong. Never mind that there aren’t enough life boats or that no distress signals have been sent. This ship is unsinkable or at least that’s what management wants everyone to believe. Well we can assure everyone that this ship is VERY sinkable. That no matter what they say publicly ALL IS NOT GOOD.
Yes we are astonished as everyone else that they have lasted this long. And yes we suppose its possible that they will get a last minute reprieve, that a white knight will come along and save the day. However one thing we won’t be doing is doubting those pesky facts. We have been around too long, have too many gray hairs and have seen this movie before.