Hi everyone. I'm Steve Lichtman, a medical devices analyst at Oppenheimer. Welcome back to the 35th Annual Oppenheimer Healthcare Conference. Up next for us, we're very happy to have Tandem Diabetes. With us today is Leigh Vosseller, Executive Vice President and CFO, and Katie Nicoletti, Vice President of Investor Relations. We're going to do this in a fireside chat format. If you do have any questions, please just key them in, and I'll make sure to get them over to Leigh and Katie. With that, thanks so much for being with us today. I thought I'd kick it off with ATTD going on right now. You've had some announcements, and just the first one I wanted to ask you about is the algorithm enhancement. Can you talk about the importance of that enhancement that was just approved this week? Yes, and thanks for having us today, Steve. Yeah, we're on a high today at Tandem with all the good news that just came out at ATTD. First, I just want to speak about the clinical trial for a second and why it's so meaningful. We are the only ones that did a randomized controlled trial. That gives a lot more validity and credibility to the data that we're presenting. It's been endorsed. It's the fourth time Control-IQ has been published in the New England Journal of Medicine. We're super proud of what we've accomplished there. What's meaningful about this enhancement, Control-IQ + is what we're calling it. It's already rolling out into the field right now. First of all, it lowers our age indication to two and up, but even more so, it expands our population to the insulin-intensive Type 2 community, which more than doubles the market opportunity for us in the U.S. It gives us a lot broader reach. With the strength of the data, I think it's going to make us very successful when we're talking to physicians about the clinical value of what we demonstrated in the trial. With Control-IQ, the first time we launched it, what we saw in the real world was just as good as, or better in some cases, than what we saw in our original clinical trial. It gives us a lot of confidence of how this will perform in the market in a real-world setting. There were so many great pieces of information in the subpopulations. I don't think we need to go into all those details today other than it's great as we kick off our Type 2 launch. Is there any one or two of the sort of secondary outcomes that you would highlight that stood out or anything beyond the sort of the time and range data that we saw in the press release? Sure. I think one thing, because GLP-1s have been such a big question in the market over how that might impact the Type 2 population. 44% of the participants were using GLP-1s also in the trial. We saw great clinical benefit and improvement in time and range and lowering of A1Cs in those populations as well. When you look at the population of people who came into the trial that were greater than 9% A1Cs, that dropped 2.3%. Great reduction in A1Cs across the board. I think those are a couple of the highlights I might share. It will be great for us as we go out and talk to physicians to be able to share this information, maybe dispel any preconceived notions they have about usability of a pump at the same time as other drugs are being prescribed. Great. Kind of bringing it back to sort of near-term dynamics. As we think about the sales force expansion and realignment that you discussed on the fourth quarter call, you mentioned that you built in some potential disruption in the 2025 guidance. Can you talk to us about what you did build in or how you thought about sort of bookending the potential impact of that sales force change? Sure. Maybe I'll start with what was the sales force expansion just to help people understand. As we surveyed the market, and we have new commercial leadership that started about a year ago, and they've been evaluating our position in the market versus some of our competitors and saw that we had a meaningfully lower size sales force. We needed to increase our reach and our share of voice in the community. We added territories. Also, across the board, we realigned some territories. It does not mean we took territories and we completely changed their call points. What it means is we kind of cleaned up around the edges, if you will. Someone may have been calling on 20 physicians before. Maybe they're calling on 15 physicians now and only a few different from where they were in the first place. I would not call this something that we would expect to be greatly disruptive, but anytime you make changes, it can have some level of disruption. What we thought about this in 2025 is there could be a bit of disruption in the first quarter just as people are getting trained, learning Tandem, learning the Tandem way, figuring out how to engage with their internal support sales teams. As everyone gets settled in their territories, their productivity will start to grow across the year. Probably the majority of the disruption will happen in Q1 factored into our expectations. Maybe some moderate disruption in Q2, but we should be well past that in the back half of the year. Okay. That kind of leads to my next question. In terms of when you'll be able to evaluate whether that disruption has been less or more than expected, is it some point during Q2 or when do you think you'll feel comfortable either way that you have a good sense of what the impact actually is? Yeah, I think coming out of the first quarter, we will have a really strong sense and we'll see what direction it's trending and feel good about that. What gave you the confidence that the impact would be restricted to the first quarter and maybe a little into the second versus longer term? Sure. It is not the first time we have done a sales force expansion. Over the years, we have expanded on multiple occasions. This one is a bit larger than what we have done in the past couple of years, but we did this in the early years where there were times when we almost doubled our sales force in the early days. We also have very experienced commercial leadership who has been through this before as well in other organizations, some here at Tandem. We have that group experience to know how to best manage through it and minimize this disruption as much as possible. Fair to say from where you guys sit today, sort of remain confident in that execution? Absolutely. Okay, great. Also just coming off of the fourth quarter call, wondering how you guys see the impact of sort of macroeconomic factors on patient behavior. Are you seeing any uncertainty impacting new patient starts? I would say not necessarily something pivotal in recent months or quarters. Over the years, cost and affordability have always been a challenge, particularly for people interested in durable pump therapy. It's something that we've seen in the past few, in particular too, the world has evolved more to high deductible plans. That does influence to some extent the impact on patients. That is why in the last 12 to 24 months, we really started looking at the pharmacy opportunity because that's our best path to help mitigate. We put payment plan offerings in place a few years ago to the broad population so that people could spread out those payments. We can go a step further with pharmacy because there's the possibility there of offering copay assistance. It is either how you negotiate your contract, which puts you on a tier that impacts the patient out of pocket, and/or the complement of using copay assistance to reduce what they actually owe. Pharmacy is our strategy as we go ahead to think about how we can fare in times where there is high inflation, more cost sensitivity, and also expand our reach in the market overall. Yeah, I wanted to follow up on that relative to the pharmacy and understanding that the contracts, I guess, can vary a bit. Can you talk generally about how you're able to keep the revenue recognition relatively the same as what you've had while also reducing that upfront cost outlay for patients? I think it has to do with sort of the overall pricing. Can you walk through some of those dynamics? Yes. You're correct. There's not a one-size-fits-all solution. There's no set structure for how durable pumps should be reimbursed in the pharmacy channel. DME has been very rigid. There wasn't much latitude or flexibility at all to change those dynamics. In pharmacy, you're going to see a range of contracts that look just like DME, where there is a capital outlay for the pump itself and then reimbursement for the supplies along the way. It could go to the far other end of the spectrum where there's no reimbursement for the pump and it's all supply-based only, so a subscription-like model. We have initially entered with contracts that look much more like DME. Therefore, there's no disruption when you compare that to the business we've been reporting and the business we'll have going forward. As we look at the profitability opportunity, when we talk about our contracts being as good as or better than DME, that factors in the impact that we may see from offering copay assistance to patients. We have taken all of that into consideration when we talked about how to think about this for 2025 at least. The net upfront for you guys will be similar, but the components are different because the reimbursement will be higher, but you're going to be offering copay assistance on the back end. I just want to make sure I understand and investors understand a little bit more about that and how it compares to sort of the pay-as-you-go model because will patients feel that it sounds like they will, but will patients feel the difference versus the DME model in terms of the upfront? They absolutely will. I'm not going to get into too many specific details about our contracts other than there will be no change in cash flow, no change in revenue recognition, no headwinds to discuss with the contracts that we have in place today. Think about it as profit opportunity with the same DME-like structure that we have. That is factoring in all elements when you think about the rebates, the admin fees, data fees, copay assistance that could come along with that. We've been very intentional about the contracts we would accept that fit the model that we have today. The impact of this on the ground is potentially, hopefully, more demand, right? Because it's a better model. Relative to your 2025 guidance, you haven't built in anything explicit as it relates to increased tailwind from it. That's correct. It is twofold. First of all, we do have 20% of lives covered in the U.S. with our pharmacy contracts for Mobi only. On one hand, it is not super material, although it is a great start for us with that level of coverage, and we expect to continue to build that in the coming years. That is one piece of it. The other piece is we still have a lot to learn, to your point, about how much business we can draw in because of it that we have not gotten before. We are going to be very focused on patients coming into the funnel. Let's just say if we did not have pharmacy, we will be able to check to see if they have their benefits, and maybe more of them will convert into an actual sale because the out-of-pocket can be lower than DME. We will also be able to go out into the market, speak to physicians directly and patients, and let them know, "Hey, if you've never considered pump therapy before because you heard it was expensive or you think it's not affordable, let us at least check your benefits because now we have this new option, which means you could have little to no out-of-pocket when it comes to buying a durable pump." It is kind of twofold in terms of the opportunities. We want to make sure we have good data and grounding before we start factoring those into the expectations. You also did not build, I think, a lot in for Type 2. You talked at the beginning about the data that you just presented. I think historically you have said about 10% of your install base has been around Type 2, but trying to get a little bit more sense of the near term, if you have it, what percentage of your new patient starts in 2024 were Type 2? What are you assuming for 2025? Is it basically going to be the same and thus why you are not building any upside? How should we think about the near-term dynamics on that? Sure. We have noted that we already, before we got approval, have 30,000 individuals on our pump who are Type 2. We have seen these new starts be around 5-10% of our install base. We think that if you look at it, that is in line with what the penetration is right now. It will continue to scale. We think there is a tremendous opportunity. Now that we are in Type 2, it essentially doubles our served available market. A really great opportunity there for us. Again, relative to the 2025 guide, not assuming a step up in that new patient mix from Type 2. Is that right? We want to see data-driven trends. Right now, historically, that's what we've seen. As we continue to get more data, we'll obviously share more if those expectations change. Okay. Shifting to international, you received a lot of questions as to why Tandem is making a number of changes at once, right? Including the U.S. sales force change that we discussed and the move to direct in select geographies internationally. Why was now the right time to start making the move to direct? What are the biggest positives to this move as you come out from the change? Yes. I think first and foremost, it's just a natural progression in the maturity of the business as we grow. The timing is somewhat influenced by when existing contracts are expiring. Thinking about when there are natural renewal points within distributor arrangements, sometimes tied to reimbursement and when reimbursement renews or tenders need to be submitted. A lot of those factors came into play as well. It was the right time for us. We believe this brings an opportunity because we believe with our own team, we can sell Tandem better. We can help drive that market penetration even more so. We've had great partners in the past, but we'll be closer to the physician and the patient. It is the right time for us to start this progression. The opportunity it also brings to us is profit improvement. Today, we do give up profit for our distributors to be able to support their own infrastructure. This gives us a chance to get that reimbursement directly from the reimbursement bodies, and we can take that benefit into gross margin as well. Thinking about renewals outside of the U.S., because that's going to be a dynamic, of course, you continue to build toward the 70% renewal rate in the U.S. Any early signs or thoughts of where that can go internationally? We have the same goals for our international business, which is to achieve that 70% renewal rate. It did take us a number of years in the U.S. when we first started having renewal customers with warranties expiring to really hone those processes, learn best practices, and deploy those. Now we are very consistently achieving at least 70% renewal within about 18 months of when warranties expire. Outside the U.S., I expect us to get there, but not right off the bat. In the first few years, it will probably take us longer to move up that trajectory, which is why this is the first year really we're talking about renewals starting to become a more meaningful contributor. Still a lot to learn. You have to think about each market has to be trained on these dynamics. We have no reason to believe that we'll see anything different than we do here in the U.S. We have great customer retention, great stickiness. Once people get on our product, they're very happy with it. We feel like we'll be very successful with renewals outside the U.S. Wanted to shift a bit to the pipeline. What were the driving factors in moving Mobi Tubeless up in front of t:slim X3 in your pipeline? Sure. We are constantly evaluating our product roadmap. The goal is to bring more MDI users to pump technology and to bring the benefits of our technology to the community. With Mobi, we believe that the tubeless feature is going to be an important optionality to add more choice for our customers, more versatility with that same pump, right? We are prioritizing this feature because we think that this is going to be a great way to bring more MDI to the market. At the same time, back to our portfolio approach, we have a very strong customer base of t:slim users, loyal users. I would think of X3 as more as continuous improvement to our t:slim platform. We are prioritizing our whole product portfolio, but the next pump platform that you should expect would be the tubeless functionality for Mobi. I think you mentioned at another investor conference that you've moved some development staff off of Mobi Tubeless and onto Sigi Patch. Is that a sign of confidence in how the Mobi Tubeless program is progressing, or how should we think about that move? The commentary was really that we are focused on Sigi being our third pump platform to be part of our portfolio. The comment regarding resources is that with Mobi, we do have such expertise here in San Diego. We do want to make sure that we're utilizing that talent. There is some Sigi development now occurring in San Diego. I know no timelines, but can you talk about the regulatory pathway for tubeless? Will you need additional clinical trials? Has anyone outside of Tandem actually utilized the device? Because I know that obviously there's been some preference testing done on Tandem employees, but any color on those things you can provide? Sure. Can definitely share. It will require a 510(k) filing. It will not require a clinical trial, but we will do human factor testing. Okay. Is it just currently still being used by Tandem employees, or has anyone outside of the organization actually utilized it? Yeah. For our normal course of action before FDA approval, we're focused on development before we would get that approval. Okay. Okay. Not yet. Okay. Are you targeting, just shifting again on the pipeline, are you targeting both t:slim X2 and Mobi to have connectivity with Libre 3 in the U.S. by the end of the year? It sounds like X2 is first, maybe before Mobi, but why is that? How close can they be? I just want to get a better sense of the cadence there. Sure. Yep. That is exactly right. You should expect that t:slim in the U.S. will have integration with Libre 3, then followed by t:slim OUS. Mobi, we absolutely are planning to have Libre 3 integration. Thinking about that with timing, first, we just submitted our CE mark for Mobi. That is step one. We will bring the integration with Libre 3. Okay. I wanted to shift to actually a couple of other pipeline things and get into some financials, but how broad will the Mobi launch be outside of the U.S. upon that approval? Will you launch just in the countries that you're moving direct to now, or what will be sort of the cadence of that rollout? We will definitely provide more information as we get closer, but I would say probably think about it how we have historically launched, where it is more of a scaled launch, and we will give more information as we get closer. Leigh, what gave you the confidence that I think you've guided to gross margin expansion of over 300 basis points this year. What are you seeing mix-wise or other that gave you that confidence? Yep. The major underpinnings of that come from, first of all, the traction on Mobi. As we exited 2024, coming into 2025, we started to see the pump become accretive to gross margin. As we sell more Mobis across the year, we'll continue to build up that scale and see additional leverage. That's a piece of just Mobi as a part of the portfolio. Also, as we look at the mix of pumps versus supplies that we anticipate, that greatly influences the margin benefit. The last piece, I would say, comes from our pricing initiatives. We still expect some tailwinds from the DME price increases that we've seen in the last couple of years coming through into 2025. Pharmacy, while we talk about it as being pricing improvement in time, we've only factored in a modest amount in 2025, but as we build that capability up, it will be a future driver of price improvement. It is the combination of those factors, I would say, mostly pointed towards Mobi becoming accretive and no longer a headwind, the Mobi pump at least this year. Shifting back to Q4, I know you guys have talked a lot about full year 2024 and how you guided initially and came in ahead ultimately, both in the U.S. and internationally. Clearly, sort of the unexpected softness at the end of the year has been the big focus for investors. With some more time now, has there been any further intelligence as to what was different than maybe you expected? I guess just as importantly, what gave you the confidence that the seasonal changes would not continue into first quarter, meaning the normal step down from Q4 to Q1 may be bigger this year than it was in prior years? Any more color that you have been able to gather? I would say nothing additional since the earnings call, but maybe just a little more color to think about. December, even though the weeks did not steeply tick up across the year like we usually see, they kind of flattened out. It was still by far the biggest shipment month of the year and grew year- over- year. There was not a decline, just a flattening at the very end there in the last couple of weeks. We factor that in rather than assuming it could have been something higher or it gets made up in the first quarter. We said, you know what, let's look at normal seasonal trends where pretty broad range, but U.S. pump shipments will step down 25-30%. We factor that into the first quarter expectations. Keep in mind, when we set expectations, we already had almost two months under our belt within the quarter. We felt really good about how things were trending. The thing that still gives us confidence is, despite a little softness at the end, when we look at the trends, renewals are still very consistent with historical capture rates. No change to that there, and we feel confident about that going ahead. MDI had strong double-digit growth. That is the piece that we continue to focus on, looking at those trends we were seeing with MDI. We fully expect that competitive conversions will continue to decline as an opportunity for us. We still get some. There will always be some sort of share shifting. This year, we might still see a little bit more headwind. That is probably, I think, the hardest part. People can't see that that was masking the great progress we're making with MDI conversions. With a lot of that decline behind us and maybe a lesser so going forward, that's why we're confident in the guide that we built, which is for new starts in total, we'll still see mid-single-digit growth in 2025. I know you guys have been pretty adamant that nothing changed competitively, sort of, I guess, at the very end of the year that caused that additional or that unexpected softness, again, relative to your expectations. I think that's certainly one of the biggest concerns for investors as they see Beta Bionics becoming more visible at the same time that you guys come in a little soft. Again, what did you hear from the field to give you that confidence that it's not just simply a pickup in competitive dynamics? Yeah. It would have to be an event that everyone knew about for there to be that kind of change. There was no special promotional activities, no change in how competitors were behaving. From the field, it was the same dynamics we've been hearing all year long, which is it's a very competitive market. It's something we've been operating under and that we will continue to operate under. That's part of also why we move forward with the sales force expansion. We want to make sure that we have that same share of voice as everyone else, so we're on the level playing ground as we're out talking to physicians and patients about what we have to offer. Again, no specific change across the year. It was just the same kind of dynamics, and we expect similar dynamics in 2025. Okay. We talked about, obviously, some of the concerns around the sales force expansion, but when should we potentially see some of the benefits of the expansion and realignment? I mean, how soon do you think we could see that? Yeah, I would say we would look to the back half of the year as we get through this first period, which could be a little bit disruptive, but we'll start to see that we'll be past the disruption, and then the new territories themselves should start to demonstrate productivity. Obviously, a brand new rep coming in the door doesn't have the same productivity as a tenured rep who's been here for years. As they build their relationships and can work to grow and seed the market, you'll begin to see the benefit of that later in the year. As we're coming down to time again, I want to kind of frame things. As you think about 2025, the potential headwinds that you factored in, can you again, maybe not quantify it, but at least talk about what you factored on that side. On the upside, some of the things that we've talked about today, what is not in the guidance explicitly heading into this year? Absolutely. I'll start with what I call the risk, and I'll end with the opportunities on a high note. Thinking about what we factored in, it will be a continued highly competitive environment. We anticipated that. We knew the sales force would likely have some level of disruption early in the year. We always have some level of caution around unknowns that we can't foresee. Will cost pressures become more intense? We're using pharmacy to remedy that. That flips us to the opportunity side, which are not factored in yet, which would be this new wonderful type two opportunity, which doubles the market size for us. The pharmacy opportunity, which gives us a better selling message against competitive products where we can lower that patient out-of-pocket cost. Then just the new product offerings. Between the continued traction with Mobi, the items Katie laid out, the Freestyle Libre 3 integration, Mobi with Android, all of those things coming to market can give us additional opportunity that we really did not factor into the guidance yet. We want to see how those trends develop. I think what is different about this year is we have not only products, but we have business model and market expansion opportunities that were not necessarily available to us in years past. While the beginnings of these, you might not see the greatest strength in the first year, they are going to be building, and these are good solid foundations for us to build on in 2026, 2027, and beyond. Great. That's right at time, perfect way to end it. Leigh and Katie, thanks so much for being with us today. Thanks, everyone, for joining us. Hope you have a great rest of the week. Thanks so much. Thanks, Steve.