Tandem Diabetes Care, Inc. Q1 FY2026 earnings call

• Modernization of commercial organization: Globally, a talented team is working on strengthening systems, infrastructure, and processes. In the U.S., upgrading sales and customer management infrastructure. Internationally, launched direct commercial operations in the UK, Switzerland, and Austria, with plans to expand later. - Reshaping U.S. business model through multi-channel strategy: Transition to pay-as-you-go in the pharmacy channel, with approximately 40% formulary coverage, and working to improve efficiency and customer satisfaction. - New technology updates: Tandem Mobi fully available for use with Android smartphones in the U.S. In Q2, received FDA clearance for use of Control IQ Plus in pregnant women with Type 1, awaiting CE mark in Europe. Preparing for international launch of Abbott's Freestyle Libre 3 Plus integration with T-Slim. Beginning commercial rollout of Tandem Mobi outside the U.S. Upgrading T-SWIM and Mobi for compatibility with Dexcom's G7 15-day sensor. Progress on pipeline products like Movi Tubeless, with plan to file 510K submission in Q2 and preparing pivotal study for first fully closed-loop system.

In the first quarter of 2026, Tandem achieved new first quarter records for pump shipments and sales. Worldwide, there were more than 29,000 pump shipments and $247 million in sales. U.S. performance saw more than 19,000 pump shipments, representing approximately 10% year-over-year growth, with U.S. sales at $161 million, growing 7% year over year. International shipments were more than 10,000 pumps, with international sales totaling $86 million, representing 3% growth year over year. Gross margin for the quarter was 55%, an improvement of nearly 5 percentage points year over year, and the highest first quarter gross margin in company history. Adjusted EBITDA was approximately 1% of sales, and operating margin improved to negative 7% of sales. Free cash flow was $5 million this quarter, and the company ended the quarter with $570 million in total cash and investments.

• Worldwide sales expected to be in the range of $1.65 billion to $1.85 billion for 2026, including U.S. sales $730 to $745 million and international sales $335 to $340 million. - Second quarter worldwide sales expected to be approximately $255 million. - Gross margins expected to be 56 to 57% and adjusted EBITDA 5 to 6% for the year. - Second quarter margins expected to remain consistent with the first quarter.

• Infusion set supplier shortages, which have impacted a small percentage of customers and healthcare providers, and are expected to continue for a quarter or two. - Risks and uncertainties that could cause actual results to differ materially from forward-looking statements, as described in the press release and risk factors portion of the annual and quarterly reports.

Q: Matt Missick with Barclays asked about market perception and major drivers of growth in the quarter.

A: John and Lee responded that the market is growing, no unusual seasonality in DME space, and major drivers are a bit of all of the above including new product launches and business model transformations.

Q: Chris Pasquale with Nepron Research asked about international business.

A: John discussed currency fluctuations, timing differences in go-direct headwinds, and favorability in Swiss market.

Q: Matthew O'Brien with Piper Sandler asked about Toby filing and launch.

A: John said on track to submit in Q2, clearance in second half, and phased commercialization process.

Q: Mike Kretzky with Learing Partners asked about U.S. pharmacy sales.

A: John explained difference from 2025, focus on coverage and operational execution, and expectation of future growth.

Q: David Roman with Goldman Sachs asked about pricing.

A: Lee said pricing is rational, 350 per month per patient assumption is modeling assumption with varying rebate structures.

Q: Richard Nooter with Truro Securities asked about infusion set shortage and Salesforce expansion.

A: John talked about infusion set shortage and Lee discussed guidance, and John talked about Salesforce expansion opportunity.

Q: Jess Johnson with Baird followed up on infusion set impact.

A: John and Lee said impact is modest, working through it.

Q: Matthew Taylor with Jefferies asked about product expansion.

A: John talked about pregnancy clearance and Android capability.

Q: Joanna Winch with Citi asked about Toby launch preparation.

A: John talked about phased commercial process and opportunity.

Q: Siraj Khalia with Oppenheimer asked about Toby low-hanging fruit and U.S. sales.

A: John talked about financial and customer experience benefit of Toby, and Lee talked about U.S. sales growth.

Q: Barry Bejelsen with Wells Fargo asked about new starts.

A: Lee said new starts down due to seasonality but expect return to growth.

Q: Michael Polark with Wolf Research asked about converting to pharmacy.

A: John talked about process of converting to pharmacy including checking benefits, sharing out-of-pocket, and getting new prescription.

Q: Priya Sachdeva with UBS asked about cash flow generation.

A: Lee said cash flow generation due to cost discipline.

Q: Jason Bedford with Raymond James and Associates asked about gross margin cadence.

A: Elaine and Lee talked about product mix and contributors to gross margin.

Q: John Block with Stifel asked about international pump ASP.

A: Lee talked about FX, direct transition, and expected ASP range.

Q: Anthony Petroni with Mizuho Financial Group asked about competitive dynamics.

A: John talked about recalls and competition.

Q: Matthew Blackman with TD Cowan asked about formulary coverage.

A: Lee talked about formulary coverage progress.

Q: Bill Plovenic with Canaccord Genuity asked about Type 2 RAMP.

A: John talked about Type 2 market opportunity and progress.

Q: Travis Steed with Bank of America asked about PAYGO in pharmacy.

A: John talked about PAYGO progress and tiering.

Q: Shagan Singh with RBC Capital Markets asked about Mobi Tubeless.

A: John and Lee talked about mix, pricing, and go-to-market strategy.