Major Happy Dance

Looking at the results announced by Tandem this afternoon we think its safe to say two things; the company has completed their transformation and the folks in Northridge should be worried, very worried.

Let’s take a look at what can only be described as astonishing numbers;

“Worldwide pump shipments increased 290 percent to 21,258 pumps from 5,447 pumps

Sales increased 173 percent to $93.3 million from $34.1 million

Operating margin improved to negative 2 percent from negative 41 percent

Adjusted EBITDA(1) improved to 13 percent of sales from negative 29 percent of sales

Sales are estimated to be in the range of $350 million to $365 million, which represents an annual sales growth of 90 percent to 99 percent compared to 2018. The Company’s prior sales guidance for 2019 was estimated to be in the range of $300 million to $315 million.”

As strong as these results were things will only get better when the Control IQ hits the market. The company thankfully is not sitting around congratulating themselves, although they should, they are preparing for even greater growth adding new sales territories, additional capacity and greater investment in reimbursement services plus customer support.

Initially we believed that Tandem’s growth was directly related to Medtronic screwing up Animas conversions and while there is no doubt this has helped there is just too much growth for this to be the sole reason. The reality is that patients, physicians and CDE’s have all come to the same conclusion when it comes to sensor augmented insulin pumps the 670G sucks when compared to systems that work with the Dexcom sensor i.e. Tandem’s Basal IQ and soon to be Control IQ.

Medtronic is making an all out effort to fix the mess they created with the Animas conversions as the deadline for when Animas will stop fulfilling supply orders is quickly approaching. To counter this push Tandem today announced the following;

“Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a leading insulin delivery and diabetes technology company, today announced it is offering no-cost feature updates for t:slim X2 insulin pump customers in the United States through the end of 2020.

All software updates approved by the U.S. Food and Drug Administration (FDA) through the end of 2020 will be offered for no cost

Customers who purchase a pump prior to December 31, 20201, including current customers, are eligible for software updates while in-warranty

Software updates will be offered through the Tandem Device Updater”

This move combined with coming of Control IQ should help counter the incentives being offered by Medtronic. Add in the fact that patients, physicians and CDE prefer the Dexcom sensor and Tandem looks to be in pretty good shape.

The real surprise here is given the growth rate and what we know about what’s going on at Insulet we may have to rethink our growth rates for the insulin pump market. Previously we had projected low to mid single digit growth rates which may need to be revised upward to low double digit rates. While we have no hard evidence of this our gut tells us that 670G raised patient awareness yet failed to deliver when it came to actually performing. The Basal IQ came along and showed that with an accurate reliable CGM these systems are worth the effort.

With the Control IQ coming there is no question the future looks very bright for Tandem. It also isn’t hurting any that Tyler hasn’t gotten here yet. The fact is insulin using patients want simple and these systems that combine accurate reliable CGM and insulin dosing algorithms make insulin therapy easier than ever.

What’s truly ironic here is that all the hype for the 670G has helped everyone but Medtronic. This way cool whiz bang toy never lived up to expectations. Overall the negative experiences with the 670G are getting more play than the positive ones. Now that the company has also issued a recall over possible hacking concerns the perception is becoming that Medtronic has inferior technology which just happens to be an accurate belief.

All in all this turnaround already astonishing is taking on mythic propositions. While it seems hard to believe it was not that long ago that the company was literally on deaths doorstep, they were in serious danger of becoming a member of the insulin pump graveyard. Fast forward to today the company is solid financially, growing like a weed and has the best technology in the market with even better technology coming.

Kudos Tandem a job very well done.