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TD

TANDEM DIABETES CARE INC (TNDM)·Q3 2025 Earnings Summary

Executive Summary

  • Record Q3 sales and margin expansion with reaffirmed FY25 outlook: revenue $249.3M (+2% YoY; +3.6% QoQ), GAAP gross margin 54% (+300 bps YoY; +200 bps QoQ), and positive adjusted EBITDA; full-year ~$1.0B sales, GM 53–54%, and -5% adj. EBITDA margin maintained .
  • Clear beat vs Street on revenue and EPS; Revenue $249.3M vs $235.8M consensus; EPS -$0.31 vs -$0.34; SPGI “EBITDA” missed (SPGI actual -$18.4M vs +$5.6M consensus) while company adj. EBITDA was +$2.8M, highlighting definitional differences between SPGI EBITDA and company adjusted EBITDA (values from S&P Global)* .
  • Pharmacy channel traction accelerating (Mobi coverage >40% of U.S. lives; pharmacy ~5% of U.S. sales in Q3) and t:slim supplies launched through pharmacy in September; Q4 gross margin expected to be an all-time high in the mid-to-high 50s, with a path to ~60% GM in Q4’26 .
  • 2026 catalysts: Android mobile control 510(k) filed; broader Libre 3 Plus integration rolling out; Mobi Tubeless prioritized with seven-day extended wear and 2026 launch target. Near-term stock drivers include pharmacy adoption, Q4 gross margin realization, and visibility on 2026 product cadence .

What Went Well and What Went Wrong

  • What Went Well

    • Record Q3 sales both U.S. and international; GM up to 54% on higher ASPs, channel mix, and Mobi cost scaling; adjusted EBITDA positive .
    • Pharmacy access and execution: Mobi pharmacy coverage >40% of U.S. lives; launched t:slim supplies in pharmacy in Sept; pharmacy ~5% of U.S. sales in Q3 with early uptake “encouraging” .
    • Strategic/product momentum: Libre 3 Plus integration launched in U.S.; Android control for Mobi 510(k) filed; seven-day Mobi Tubeless prioritized for 2026 .

  • What Went Wrong

    • U.S. pump revenue down 2% YoY as new pump starts remained pressured; renewals >50% of shipments, with competitor retention cited as a headwind for competitive conversions .
    • Operating loss persists (-$22.9M) despite margin gains; SPGI-standardized EBITDA missed consensus (SPGI actual -$18.4M vs +$5.6M), although company adj. EBITDA was +$2.8M (values from S&P Global)* .
    • Safety/recall overhang: Aug voluntary device correction (Malfunction 16) for select t:slim X2 pumps (700 confirmed adverse events; 59 injuries; no deaths), a potential reputational/operational risk .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Q3 2025 Consensus
Revenue ($M)$244.0 $240.7 $249.3 $235.8*
Diluted EPS ($)-0.35 -0.78 -0.31 -0.34*
Gross Margin %51% 52% 54% —
Operating Income (Loss) ($M)-$26.1 -$51.8 -$22.9 —
Adjusted EBITDA ($M)$4.0 -$1.9 $2.8 $5.6 (SPGI EBITDA)∧*
  • Notes: Consensus from S&P Global. ∧SPGI “EBITDA” is standardized and not directly comparable to company’s adjusted EBITDA (which excludes certain items). Values retrieved from S&P Global.*

Segment sales mix

Geography / ProductQ3 2024 ($M)Q3 2025 ($M)YoY
U.S. Pump$86.7 $84.8 -2%
U.S. Supplies & Other$83.9 $90.8 +8%
Total U.S.$171.7 $175.6 +2%
OUS Pump$28.1 $25.3 -10%
OUS Supplies & Other$44.2 $48.3 +9%
Total OUS$72.3 $73.6 +2%
Total Worldwide$244.0 $249.3 +2%

KPIs and cash flow

KPIQ2 2025Q3 2025
U.S. Pump Shipments~21,000 >20,000
OUS Pump Shipments~9,000 >9,000
GAAP Gross Margin52% 54%
Adjusted EBITDA Margin-1% 1%
Free Cash Flow ($M)—$4.2
Cash & Investments ($M)$315.4 (6/30) $319.1 (9/30)
Pharmacy as % of U.S. Sales—~5%

Guidance Changes

MetricPeriodPrevious Guidance (Q2’25, Aug 6)Current Guidance (Q3’25, Nov 6)Change
Sales (Total)FY 2025≈$1.0B ≈$1.0B Maintained
U.S. SalesFY 2025≈$700M ≈$700M Maintained
OUS SalesFY 2025≈$300M (incl. ~$10M headwind) ≈$300M (incl. ~$10M headwind) Maintained
Gross MarginFY 202553%–54% 53%–54% Maintained
Adjusted EBITDA MarginFY 2025≈-5% (recast from ≈3% to include Q1 IPR&D) ≈-5% (unchanged) Maintained
Non-cash ChargesFY 2025≈$115M (≈$95M SBC; ≈$20M D&A) ≈$115M (≈$95M SBC; ≈$20M D&A) Maintained
Q4 Gross Margin CommentaryQ4 2025—“All-time” mid-to-high 50s (CFO) New color

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
Pharmacy channel~30% Mobi lives covered; building pull-through Plan to add t:slim supplies as pharmacy benefit in Q4; scaling access Mobi >40% lives; t:slim supplies launched via pharmacy; ~5% of U.S. sales in Q3; early uptake “encouraging” Accelerating
Gross margin outlookFY GM ~54% guide FY GM 53–54% guide; sequential improvement GM 54%; Q4 to mid–high 50s; path to ≥60% in Q4’26 Improving
Product integration—Early access: Libre 3 Plus integration for t:slim X2 (U.S.) Libre 3 Plus live in U.S.; global rollout beginning Broadening
Android control——510(k) filed for Mobi Android control Advancing
Mobi Tubeless & extended wear——Prioritized ahead of SteadiSet; 7-day wear at launch; 2026 commercialization targeted Advancing
OUS direct model—Preparations ongoing; CE Mark for Mobi Launch U.K./Switzerland/Austria early 2026; ASP uplift from going direct Building
Type 2 strategy——Expanded to full promotion; positive real-world feedback and GLP-1 synergy Scaling
Safety/regulatory——Aug device correction (Malfunction 16) disclosed earlier in Q3 timeframe Watch item

Management Commentary

  • “Tandem delivered a strong third quarter performance marked by record quarterly sales, significant gross margin improvement, and meaningful progress on our key strategic initiatives.” — John Sheridan, CEO .
  • “Pricing alone increasingly contributed to year-over-year revenue growth this year…driving 2% growth in Q1, 4% in Q2, and 5% in Q3…as our pharmacy business scaled to 5% of U.S. sales this quarter.” — Leigh Vosseller, CFO .
  • “We are reaffirming our 2025 gross margin expectation in the range of 53%–54%…with Q4 expected to be an all-time gross margin record in the mid to high 50s…Our goal is to deliver gross margin of at least 60% in Q4 2026.” — Leigh Vosseller .
  • “We have prioritized [Mobi Tubeless] ahead of SteadiSet…It will have seven days when it does come to market…we are doing everything we can…to bring it to market as fast as possible [in 2026].” — John Sheridan .

Q&A Highlights

  • 2026 cadence: Multiple in-flight catalysts (pharmacy expansion, MDI conversions, new products, OUS direct) “building across the year” with operating leverage alongside revenue growth .
  • Pricing and pharmacy uplift: Pricing benefits shifted from DME earlier in the year to pharmacy in Q3; Q4 supplies pricing uplift provides baseline for 2026 modeling .
  • Seasonality and Q4 shipments: Using 2024 as a template (~30% of annual shipments in Q4); renewals slightly more than half of shipments; step-up underpinned by renewals .
  • Mix/new starts: Renewals >50% of shipments; new starts pressured by lower competitive conversions as a rival retains more customers; focus on MDI conversions for 2026 return to growth .
  • Pharmacy structure: Contracts currently DME-like reimbursement split (pump upfront, supplies ongoing); may consider pay-as-you-go variants to optimize access .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue $249.3M vs $235.8M; EPS -$0.31 vs -$0.34; SPGI EBITDA actual -$18.4M vs +$5.6M consensus; company reported adjusted EBITDA +$2.8M (values from S&P Global and company release)* .
  • Implications: Street likely raises revenue and gross margin assumptions for Q4 and 2026 given pharmacy mix/pricing; need to reconcile SPGI-standardized EBITDA with company adjusted EBITDA when adjusting models (SPGI often does not reflect company-specific non-GAAP adjustments). Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Beat-and-raise narrative without the “raise”: solid revenue/EPS beat and GM step-up while FY guide held; focus shifts to Q4 gross margin execution and 2026 cadence .
  • Pricing and pharmacy are working: measurable ASP uplift and pharmacy at ~5% of U.S. sales underpinning margins; Q4 supplies pricing uplift should be visible in GM .
  • 2026 product flow is the medium-term thesis: Mobi Android, Libre 3 Plus rollout, and prioritized Mobi Tubeless (7-day) should re-accelerate MDI conversions and bolster competitive position .
  • Operating leverage inflecting: restructuring and commercial process changes plus channel mix are driving adj. EBITDA towards breakeven/positive; CFO targets ≥60% GM by Q4’26 .
  • Watch risks: new pump starts still pressured; OUS transition entails ~$10M 2H’25 headwind and potential Q4 inventory buybacks; device correction adds reputational/operational risk .
  • Trading setup: Q4 GM delivery and pharmacy ramp data points are near-term catalysts; any acceleration in Android approval or Tubeless timeline would be incremental positives .

Appendix: Additional Detail

Other relevant press releases in/around Q3

  • Voluntary medical device correction for select t:slim X2 pumps (Malfunction 16) issued Aug 7, 2025; 700 confirmed adverse events, 59 injuries, no deaths reported .
  • t:slim X2 + Abbott FreeStyle Libre 3 Plus integration launched in U.S. on Oct 29, 2025; global rollout initiating .

Prior quarters for trend context

  • Q1 2025: Revenue $234.4M; GM 51%; GAAP op loss -$120.9M (incl. $75.2M IPR&D); adjusted EBITDA -$4.7M; initial FY25 guide: ~$997M–$1.007B sales, GM ~54%, adj. EBITDA ~3% .
  • Q2 2025: Revenue $240.7M; GM 52%; GAAP op loss -$51.8M; adjusted EBITDA -$1.9M; FY25 recast to ~$1.0B sales, GM 53–54%, adj. EBITDA ≈-5% including IPR&D impact .

Footnote: All consensus/target price data marked with an asterisk (*) are values retrieved from S&P Global.