Tandem Diabetes Care

Tandem Diabetes Care, Inc. is a medical device company dedicated to improving the lives of people with diabetes through relentless innovation and revolutionary customer experience. The Company takes an innovative, user-centric approach to the design, development and commercialization of products for people with diabetes who use insulin. Tandem manufactures and sells the t:slim X2 Insulin Pump, the only pump capable of remote feature updates using a personal computer, and the t:flex Insulin Pump, the first pump designed for people with greater insulin requirements. Tandem is based in San Diego, California.
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Tandem Diabetes Care, Inc., a medical device company, designs, develops, and commercializes various products for people with insulin-dependent diabetes in the United States. The company's flagship product is the t:slim X2 insulin delivery system that comprises t:slim X2 pump, its 300-unit disposable insulin cartridge, and an infusion set. It also provides t:flex insulin delivery system that includes t:flex pump, its 480-unit disposable insulin cartridge, and an infusion set; t:slim X2 with G5 integration; and Tandem Device Updater, a PC and Mac-compatible tool that allows users to update their pump's software. In addition, the company offers t:connect diabetes management application, a cloud-based data management application, which provides a visual way to display therapy management data from the pump and supported blood glucose meters for users, their caregivers, and their healthcare providers; t:lock cartridge and infusion set products; and various pump accessories. Its products in development include automated insulin delivery systems; t:slim X2 with Basal IQ; t:slim X2 with control IQ; t:sport insulin delivery system; and connected (mobile) health mobile application. The company was formerly known as Phluid Inc. and changed its name to Tandem Diabetes Care, Inc. in January 2008. Tandem Diabetes Care, Inc. was founded in 2006 and is headquartered in San Diego, California.
(Summary) (Company) (Chart)

20 May 2018
Price $12.83
1yr Target $7.64
Analysts 7
Dividend $0.00
Payout Ratio 0.00%

1yr Cap Gain %
Yield 0.00%
1yr Tot Return %

P/E ---
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Beta -0.14

EPS (ttm) $-16.04
EPS next yr $-0.78
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EPS next 5yr 53.20%
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Market Cap $522.44 Mil
Revenues $115.90 Mil
Earnings $-133.50 Mil
Profit Margin ---

Quick Ratio 2.00
Current Ratio 2.60
Debt/Equity 6.47

1yr RevGR 27.71%
3yr RevGR 29.01%
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ROA -76.80%
ROE 515.80%

​Tandem Diabetes Care is a medical device company with an innovative approach to the design, development and commercialization of products for people with insulin-dependent diabetes. Their competitive advantage lies in their unique consumer-focused approach, and the incorporation of modern and innovative technology into product offerings. Their manufacturing and sales activities primarily focus on their flagship product, the t:slim X2 Insulin Delivery System which is based on a proprietary technology platform. The t:slim X2 is the smallest durable insulin pump available, and the only pump currently available that is capable of remote feature updates, which positions the Company to address the evolving needs and preferences of differentiated segments of the insulin-dependent diabetes market. By delivering innovative hardware and software solutions, as well as best-in- class customer support, Tandem Diabetes Care aims to improve the lives of people with diabetes.

The Company has commercially launched five insulin pumps since inception, all of which have been developed using their proprietary technology platform. Two of these pumps have featured continuous glucose monitoring technology, or CGM. Since the launch of the first product in August 2012 through December 2017, the Company has shipped nearly 68,000 pumps to customers in the US. In 2017, they announced plans to begin commercialization of t:slim X2 in select countries outside the United States, including Canada, during 2018.

The Company began commercial sales of their first insulin pump, the t:slim Insulin Delivery System, in August 2012. During 2015, they began sales of two additional insulin pumps: the t:flex in May 2015 and the t:slim G4 in September 2015. In October 2016, they began sales of t:slim X2 and discontinued new sales of the t:slim. In September 2017, the Company began sales of the t:slim X2 integrated with the Dexcom G5 Mobile CGM system and discontinued new sales of t:slim G4. In 2017, t:slim X2 represented approximately 95% of the Company's new pump shipments. In September 2017, they also began sales of cartridge and infusion set products using the custom t:lock, which replaces the standard Luer-lok connector that historically joined an infusion set to the cartridge.

All people with type 1 diabetes require daily rapid-acting insulin, but only a subset of people with type 2 diabetes require daily rapid-acting insulin, as a majority manage their therapy through improvements in diet and exercise, oral medications, or injectable therapies such as long acting insulin. According to the CDC approximately 23 million people in the US had been  diagnosed with diabetes, of which type 1 diabetes accounts for approximately 5% to 10%. Of people with type 2 diabetes in the US, the CDC reports that approximately 14%, or 3.2 million people, manage their diabetes with insulin only. The International Diabetes Federation estimates that in 2017 approximately 425 million people had diabetes worldwide, of which approximately 10%, or 42.5 million, had type 1. Tandem Diabetes Care's target market consists of people in the US and select countries who require daily rapid- acting insulin.

The Company's insulin pump products are generally considered durable medical equipment, and have an expected lifespan of at least four years. In addition to selling insulin pumps, the Company sells disposable products that are used together with the pumps and replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body. 

Each insulin pump is compatible with the Tandem Device Updater, a unique tool that allows pump users to update their pumps’ software quickly and easily from a personal computer. The Tandem Device Updater provides customers access to new and enhanced features and functionality faster than the industry has been able to do in the past. Its first cleared use by the FDA was to update t:slim pumps purchased before April 2015 to the latest software. In September 2017, the Company set a new standard of care by offering all existing t:slim X2 customers integration with the Dexcom G5 Mobile CGM system through a software update using the Tandem Device Updater. Within the first 30 days more than 30% of t:slim X2 customers who purchased their pump prior to its availability had updated their pump. By the end of 2017 more than 40% of t:slim X2 customers had updated their pump and now have access to Dexcom G5 Mobile CGM integration. In October 2017, the Company announced that they intend to make any new features approved by the FDA in 2018 available to all in-warranty users of t:slim X2 at no cost through the Tandem Device Updater. 

The Company has developed products to provide specific features people with insulin-dependent diabetes seek in a next-generation insulin pump. Use of modern consumer technologies, and a proprietary pumping technology, has allowed Tandem to design the slimmest and smallest durable insulin pump on the market, without sacrificing insulin capacity. Of the customers who converted from another manufacturers’ pump, the greatest percentage converted from Medtronic, followed by Animas. 

For the years ended December 31, 2017, 2016 and 2015, sales were $107.6 million, $84.2 million, and $72.9 million, respectively. For the years ended 2017, 2016 and 2015, net loss was $73.0 million, $83.4 million, and $72.4 million, respectively. For the year ended December 31, 2017, Tandem recorded $5.0 million with a corresponding increase in gross profit of $3.1 million as a result of the Company's Technology Upgrade Program. For the year ended December 31, 2016, they recorded net sales deferrals of $4.3 million and recognized an additional net cost of sales of $0.3 million as a result of the Technology Upgrade Program. Pump sales accounted for 66%, 74%, and 83% of sales, respectively, for the years ended December 31, 2017, 2016 and 2015, while pump-related supplies primarily accounted for the remainder in each year. Sales of accessories were not material in any of these periods. 

Tandem has rapidly increased sales since their commercial launch by expanding the sales, clinical and marketing infrastructure, by developing, commercializing and marketing multiple differentiated products that utilize our proprietary technology platform and consumer-focused approach, and by providing strong customer support. In their research, 86% of healthcare providers surveyed believe that providing great customer support is the most important attribute in an insulin pump manufacturer. Tandem believes that by demonstrating their product benefits and the shortcomings of existing insulin therapies, more people will choose their insulin pumps for their therapy needs, allowing Tandem to further penetrate and expand the market.
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My Perspective

These shares are now only about 1/20th of what they were a few years ago and normally that would not be the kind of company I'd look at. But this company has married technology and insulin pumps in a way that no other company is doing. They've also recently opened up a new manufacturing plant that has doubled their manufacturing capacity. To me that signals an aggressive attitude for the product and sales going forward -  both great news to an investor like me. 

The chart also looks like the shares bottomed at the beginning of the year and is now reversing higher on a significant volume increase. That also is confirmation that this move may be for real. My perspective is that this is the kind of company that belongs aside other companies in my portfolio.