Q2 2024 Earnings Summary
- Significant Market Growth Potential: Tandem's CEO, John Sheridan, highlighted that the insulin pump market is currently underserved, with penetration rates at 35% to 40%, which could increase to 60% to 65% in the next couple of years. Tandem aims to reach 1 million users in the next 5 years, requiring annual user growth to eclipse 100,000. This indicates substantial growth opportunities for the company.
- Strong Demand and Successful Launch of Mobi: The company's new product, Tandem Mobi, is experiencing steady growth in demand. The launch has not faced any supply chain issues, and Tandem is confident in meeting even the most aggressive demand forecasts for Mobi this year. The differentiation and patient resonance of Mobi are expected to drive strong demand in the second half of the year.
- Expansion of Prescriber Base and Increased MDI Conversions: Mobi's value proposition is resonating with an expanded prescriber audience, attracting new prescribers and accounts. The company is also seeing its highest rate of MDI conversions in the last 1.5 to 2 years, indicating Mobi's effectiveness in converting patients from multiple daily injections to pump therapy, which is expected to contribute to new patient growth in the back half of the year.
- Decline in New Patient Pump Shipments: Despite the launch of Tandem Mobi, new patient pump shipments were still down approximately 10% to 11% year-over-year in Q2 2024. Management acknowledged that while the decline has decelerated, they expect to see new patient growth again only in the second half of the year.
- Uncertainty Around Long-term Impact of Mobi Launch: Management expressed caution regarding early sales data from Mobi, stating that "it's still early" and that "there's a lot of data points and not necessarily suggestive of what long-term trends may look like". This uncertainty may imply that the positive initial reception might not translate into sustained long-term growth.
- Reluctance to Provide Specific Numbers on Key Metrics: When asked about the expansion of the prescriber base due to Mobi, management declined to provide specific numbers, stating, "I won't comment on actual numbers". This lack of transparency on important growth metrics could suggest the impact may be less significant than anticipated.
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Mobi's Impact on New Patient Growth
Q: How is Mobi affecting new patient growth?
A: Management reported that more than half of Mobi customers are new to Tandem, with over half of these new customers coming from multiple daily injections (MDI). This indicates that Mobi is expanding the market by attracting new patients and prescribers. They are encouraged by the positive feedback and expect strong demand for Mobi in the second half of the year. -
Guidance Including Mobi Expansion
Q: Is guidance updated to reflect Mobi's impact?
A: They raised their annual growth guidance to 15%, factoring in early positive trends from Mobi's launch. While it is still early, they are confident in including Mobi's contribution in expectations for the remainder of the year. -
Margin Expectations with Mobi
Q: How will Mobi affect margins?
A: Mobi is expected to have a meaningful impact on gross margins, contributing toward long-term targets. As Mobi scales, it will positively influence margin expansion due to its favorable cost structure. -
Supply Constraints and Meeting Demand
Q: Are there any supply constraints for Mobi?
A: Management confirmed there are no supply chain problems or product shortages for Mobi. They are confident in meeting even the most aggressive demand, with any pauses during the launch being short and not related to product shortages. -
Competitive Dynamics
Q: How are competitive conversions trending?
A: While conversions from Medtronic have declined due to their 780G launch, Tandem is seeing a notable increase in conversions from disposable patch pumps driven by Mobi. This shift aligns with expectations and highlights Mobi's appeal to users of patch devices. -
Type 2 Market Opportunity
Q: What is the outlook for the Type 2 market?
A: Tandem has completed enrollment for the Type 2 study and plans to file with the FDA before year-end, expecting approval in 2025. They believe Mobi's discretion and convenience will be appealing to Type 2 patients and are preparing their clinical and commercial strategies accordingly. -
Renewals as Predictable Revenue Stream
Q: How are renewals contributing to revenue?
A: Renewals are up about 40% year-over-year, showing strong double-digit growth. Management highlights renewals as a very predictable revenue stream with consistently high capture rates over the past two years, reflecting high customer loyalty and satisfaction. -
Expansion of Prescriber Base
Q: Is Mobi expanding the prescriber base?
A: Mobi is resonating with an expanded prescriber audience, attracting new prescribers to Tandem. While primarily focusing on endocrinologists, they are also engaging with primary care providers, nurse practitioners, and physician assistants, leveraging insights to target their commercial model effectively. -
Future Product Developments
Q: Any updates on Mobi Tubeless and Libre 3 integration?
A: Management is excited about Mobi Tubeless, expecting it to be a significant differentiator and to create an inflection in Mobi demand in the near future. They are also working aggressively on integrating with Freestyle Libre 3, aiming to capture a large population of users not currently on automated insulin delivery systems. -
Market Growth Outlook
Q: How does Tandem view market growth?
A: They view the market as underserved and expect penetration rates to rise from 35–40% currently to 60–65% in the next few years. They aim to reach one million users in the next five years, implying the need to surpass 100,000 annual new users, facilitated by advancing technologies.