It’s no secret that our friends at Tandem (NASDAQ: TNDM) are in a pickle. The company is running out of money and is in desperate need of additional capital. Based on their most recent public statements and/or SEC filings they are down to just a little over $14 million in available cash. Back on the 16th of January the company filed and S-1 which was later amended on the 29th. In the amended S-1 they stated they intended to raise $46 million by issuing another 13.5 million shares.
That is the last we have heard as they have yet to execute this offering, which is not shocking given the plethora of issues facing the company. Yet just when it looked like things couldn’t get any worse they now must deal with a crazy stock market which has no appetite for deals which will dilute and destroy shareholder value. Listen we may not be market analysts by any stretch of the imagination, but it does not take an advanced degree in finance from the University of Chicago to figure this one out.
Even without all this market craziness Oppenheimer, the lead underwriter for the offering had a herculean task ahead of them. Listen these folks are pretty good at shoveling corporate crapolla but with Tandem this is more than putting lipstick on a pig. This is like convincing Diabetic Investor that Sanofi (NYSE: SNY) isn’t as dumb as they look in diabetes.
But that’s not the only thing as we noted earlier today there continues to be a host of insulin pump newbies. Yep, companies are spending millions, so they too can get their heads bashed in going up against Medtronic (NYSE: MDT).
Listen while everyone is celebrating the Eagles victory over the hated Patriots, the fact is the Patriots have won 5 Superbowls and are favored to win next year’s Superbowl even though they are about lose both their offensive and defensive coordinators plus one of their best players is contemplating retirement. While underdogs do occasionally prevail in the NFL, the fact is Medtronic is to insulin pumps what the New England Patriots are to football, damn good.
Think about this just for a moment, had it not been for two controversial calls, some missed extra points and a missed field goal everyone would be bemoaning yet another Patriots championship. We don’t want to take anything away from the Eagles who we predicted to win but the facts are what they are.
The same goes for Medtronic who like the Patriots are hated by almost everyone for their dominance. We do not refer to them as the evil empire by accident. Like the Patriots, a team that has been known to play fast and lose with the rules, Medtronic is not as pure as Creaser’s wife. Still like the Patriots it is difficult to argue they are not dominate and the team everyone wants to be, the team everyone wants to beat. As several Eagles players noted after the game until the last hail Mary hit the ground they couldn’t believe they had won the game.
The harsh reality for Tandem is even with a complete make over, more money combined with a new management team, winning will be difficult. Heck just staying alive would be an accomplishment. Perhaps this is why combined with crazy markets the company and their underwriters are having a difficult time selling space on the lifeboats after the ship has hit the iceberg.
Perhaps potential investors are asking a simple question; After we give you our money what’s the plan? How will you fix all the problems? How will you make money in the future when the only thing you have demonstrated consistently is your ability to lose money? Ok that’s three questions.
Shares of Tandem have fallen over 13% since they filed the original S-1 was filed while the NASDAQ has declined just under 5% over the same time frame. Throw another 13.5 million shares into the mix, the company currently has just over 10 million shares outstanding, and the numbers even with very fuzzy math don’t add up. Throw in the company’s negative worth, market cap slightly over $26 million debt outstanding over $80 million and its no wonder the sales team at Oppenheimer is downing Pepto Bismol by the gallon. Listen if this team pulls this one off it will be a bigger upset than the Eagles beating the Patriots.