Shaymus Contorno

Shaymus Contorno asked about the actions Tandem Diabetes Care needs to take to accelerate patient migration from DME to the pharmacy channel, and whether any accounting for bad debt or uncollectible amounts is necessary when switching to PayGo contracts.

Answer

EVP and CFO Leigh Vosseller stated that no unusual accounting treatment for bad debt is expected, as it will be a normal revenue stream. To move patients, Tandem focuses on highlighting financial benefits (lower, more consistent out-of-pocket costs, co-pay subsidies) and reassuring them about maintaining customer service. The primary 'friction' is obtaining a new prescription from the physician. She emphasized that while it's not an overnight change, they are confident in their ability to shift customers over time as access builds.

Shaymus Contorno asked what actions Tandem Diabetes Care needs to take to accelerate the movement of patients from the DME to the pharmacy channel, and whether the company needs to account for bad debt or uncollectible amounts when switching to pay-as-you-go contracts.

Answer

EVP and CFO Leigh Vosseller stated that there are no unusual accounting treatments for bad debt with the pay-as-you-go model, as it's treated as a normal revenue stream from supply purchases. To move patients, the company focuses on highlighting the financial benefits of lower and more consistent out-of-pocket costs in pharmacy, often subsidized by Tandem, and reassuring customers that the same high level of customer service will be maintained. The main 'friction' is obtaining a new prescription from the physician, which is manageable but requires effort, making it a gradual transition.

Shaymus Contorno from Oppenheimer & Co. Inc. asked how the new mapping code has specifically changed TriNav usage patterns and inquired about the timeline and ideal partner profile for the nalotolimod program.

Answer

CEO Mary Szela explained that while it's too early for definitive claims data, rep-reported information shows a 'big acceleration' in mapping usage since May, supported by educational webinars from a reimbursement consultant. Regarding nalotolimod, Szela stated final data will be ready in Q3 to begin partnership discussions, with the ideal partner being one focused on liver and pancreas cancer that understands the TLR9 mechanism.

Shaymus Contorno from Oppenheimer & Co. Inc. inquired about the sustainability of the capital spending environment into fiscal 2026, the specific modalities driving strength in the Medical segment, and requested more concrete timelines for photon counting commercialization.

Answer

CFO Shubham Maheshwari characterized the demand environment as healthy and expects a decent start to fiscal 2026, noting that the inventory destocking from fiscal 2024 is over. He identified CT and the Industrial segment as key areas of strength. CEO Sunny Sanyal and Maheshwari reiterated the $150 million revenue target for photon counting by 2029 and confirmed they are now actively engaged with two major medical OEMs on system design and integration.

Shaymus Contorno of Oppenheimer asked for an update on the India plant and whether its development could be accelerated to mitigate tariff impacts. He also inquired about the current business environment, specifically if Varex is passing on tariff-related costs to customers and if there has been any pushback.

Answer

CEO Sunny Sanyal confirmed the India project is on schedule and the company is exploring accelerating certain aspects to help with tariff mitigation, including qualifying local suppliers. CFO Sam Maheshwari stated that the strategy is to pass tariff costs to customers without a markup. He noted that Varex has already begun this process and is in active discussions with its large customers.

Shaymus Contorno questioned the confidence behind the significant full-year guidance increase, given factors like the Artegraft approval and the Aleutia agreement cessation. He also sought an update on the M&A pipeline and clarification on the 'strategic optionality' provided by the company's cash balance.

Answer

CEO George LeMaitre attributed the confidence to several factors: a strong Q1 beat, better-than-expected price increases, increased sales rep hiring targets, and the new Artegraft CE Mark approval. He clarified that the 'strategic optionality' comment was not a hint at a specific deal. President Dave Roberts added that the M&A pipeline is strong, focusing on open vascular surgery and adjacent cardiac surgery, with a sweet spot for targets with revenues of $15 million to $150 million.