Thanks, everyone, for joining. My name is Mike Kratky. I'm our Senior Med Tech Analyst here at Leerink. Today, I'm thrilled to be joined by Tandem CEO John Sheridan and VP of IR Katie Nicoletti. Hey, Mike. Thank you both very much for joining. Thanks for having us. Great. Maybe it'd be helpful just to start to kick it off with a few opening remarks on the company for those maybe less familiar or just revisiting. Sure. Tandem has been around from about 2007. We actually commercialized our first product in 2012. Our belief is that diabetes is not a one-size-fits-all condition. As a result of that, people want to control, interact, and wear their devices differently. We believe in a portfolio approach. We have designed our devices to be simple, intuitive, and easy to use, very much like a consumer device. We think that ease of use drives adoption. It's still a very underpenetrated market, roughly 35%-40% penetrated in the U.S., meaning people who have type 1 diabetes, about 40% of them use pumps. It's less penetrated OUS. We just recently got the type 2 indication, which we're excited about, which essentially doubles the TAM. We'll be rolling out products this year to support that. Great. Why don't we jump into the 4Q results? On the positive side, one thing that stood out was MDI represented 60% of your new starts in 2024. You saw double-digit growth in MDI, and MDI starts also grew sequentially every quarter from 2Q to 4Q. What were the key factors that drove that strength in 2024? I think that it was primarily resulting from a new product introduction that we had in the beginning of the year. We have a new product called Mobi that we brought to market in the first quarter, late first quarter. It is about half the size of the t:slim pump, and it has mobile control. I mean, the whole intent of Mobi was to drive MDI conversions. We have definitely had some challenges over the last two years in terms of MDI growth, but we certainly saw great progress. Mobi's been incredibly well received. People who have it love it. They forget they have it on. It is one of the more common things that people say about it, which is a very positive statement when you are wearing a body-worn device. The mobile app gives you great flexibility and convenience, as well as discretion. I'd say most of the growth has been just driven by Mobi's emergence onto the market. Got it. You mentioned a couple of challenges. I wanted to address some of your recent commentary regarding the muted seasonality in the last couple of weeks of December. Can you just help unpack what happened and what may have contributed to some of that irregular cadence of new starts in the last part of the quarter? Yeah. As you said, we had a great year. In fact, it was a record year for us. The fourth quarter was a record quarter, and December was a record month. We track seasonality very carefully. If you look at the quarter, the fourth quarter in particular, every week we see a growth in opportunities, and it just steps through the entire quarter. We were in the December time frame, and about halfway through December, we still thought we were going to hit the high end of guidance. Unfortunately, what happened in the last two weeks of the quarter or the month, we saw softening in demand. I think there's been some belief it might be a competitive issue. It's absolutely not related to competition. The competition hasn't changed. There's nothing really different in December than there was throughout the entire year. I think we competed effectively against the three main competitors that we have in the US. I think we probably would ascribe the issues to two things. One, there's concern about the economy, inflationary pressure, as well as, I think, potential recession, some concern and anxiety about the current administration, I think, lead to people just being more cautious about spending. The other thing that we believe happened is as time has gone on, people are getting higher deductible insurance plans. As you look at the purchase of the transition for sensors to pharmacy channel, they were spending less out of pocket or spending less of their deductibles on the purchases for sensors and insulin, in fact. I think what we believe happened is that the high deductibles were not met in some cases, and then there were less people who were willing to purchase a pump in combination with the economic adjustments. Okay. Yeah, understood. I mean, in terms of that irregular pattern that you saw, can you talk about just maybe quantifying the magnitude of that or if any of that has carried into the first quarter so far? I think that we always see a seasonal drop into the first quarter, which we anticipated. I think that in the first quarter, basically nobody has met their deductibles at this point. That is why we see the drop. We really have not seen any continuation of what happened in the fourth quarter. When we did indicate guidance for the first quarter in the year, we were roughly two months into the quarter. We had a pretty good idea of where things were going. I think we feel pretty confident with what we stated. Okay. You mentioned the competitive landscape. What gives you the confidence that this isn't some competitive pressure that you're seeing as you've got other competitors coming to market or new product offerings? Yeah. I think that, well, we haven't seen changes. There's no new products. The same competitors are there. In fact, this month we're bringing to market a brand new version of Control-IQ algorithm, which we're excited about. It's going to have meaningful effect. If you look at the pipeline through the year, we have a number of other additions. We have FreeStyle Libre 3 coming to market. We have Android coming to market with Mobi. We also have we filed CE mark for an OUS availability of Mobi, which will happen before the end of the year. We have a lot of things going on from a product point of view, which we think is going to have a meaningful effect on our competitive positioning. The other thing that we've got going on is the type 2 indication, which we think is going to drive revenue beginning here in the not too distant future. The pharmacy channel is something that we've done, the team has done a great job in getting access to pharmacy. We're going to be really stepping on the gas, I think, this year to get as much of our product through it. That just gives us a level playing field when it comes to access and lower out-of-pocket costs for patients, which we think will also help drive demand. I think the competitive situation is not going to change. In fact, it probably will become more competitive over time. I think that we feel very good about where we stand with our products and our business strategy to deal with it. Understood. Yeah. A lot we'll circle back to on that just in terms of future growth drivers. Quickly, in terms of the renewals standpoint, how have those trends compared to what you've seen historically? I think we have done a great job in renewals. I think we have high confidence that we're able to achieve roughly a 70% renewal rate for people who are coming off of warranty. I think that if you look through the year, we've seen continued progression and great performance when it comes to renewals. The other thing about it that I think is really fantastic is that this is occurring in a very competitive environment. I think that if anybody were to choose a different pump, it would be somebody coming off of renewals. We're seeing very strong performance there. We think that's a great indication about the products we have, as well as the service we provide. Really good performance by the team in that area. Great. Talking about some of the great performance, your OUS business has continued to track well ahead of expectations. How much of that is market expansion versus higher penetration within your existing markets? It's really higher penetration in existing markets. We haven't added any markets in the last year, but we have added we have a new team in the OUS countries. We have a new leader. We've actually been bringing people into the OUS countries that are in-country versus having people travel from the US. These are clinical people, marketing people, people who interact with KOLs, et cetera. That has been very beneficial. The team, without any new products this year, has really done a fantastic job because we have seen really strong growth at OUS. Got it. Let's get into your 2025 guidance a bit. You're expecting 13%-14% revenue growth in the U.S. Can you help frame what's being considered there just in terms of your type 2 increased adoption in the pharmacy channel? What's really being considered? Katie, you want to take that? Sure. I'd be happy to. If you start with our recurring revenue streams, as John mentioned, we're seeing really strong trends continue with renewals. We have a large install base, and with that, we see growing supply revenue. For new starts, we see growth in the single mid-digits. We like to see sustained data-driven trends before we're going to put growth drivers into our guide. We have minimal impact for type 2 and for pharmacy. Understood. Really helpful. I'd love to jump into that a little bit. During your 4Q call, you talked about expecting that mid-single-digit growth in new pump starts in 2025. We had a note earlier this week just trying to break out the math a little bit between MDI and competitive conversions. Can you help parse out the math just in terms of what is being considered between MDI and competitive conversions in 2025, and what gives you the confidence that you can really drive that mid-single-digit growth? Sure, absolutely. When we look at new starts, we break it into competitive conversions and MDI. Historically, competitive conversions has been a growth driver for us. Moving into 2024, we realized that while that split historically has been 50/50, we were going to see MDI start to outpace competitive conversions. That is what we saw in 2024. In 2024, about 60% of our new starts were MDI. We would assume that that would continue going forward. We feel like we have good momentum because in 2024, we saw MDI increase quarter over quarter, and we saw double-digit growth. That kind of gives us momentum going into 2025. Understood. Is there a way to kind of quantify the degree of growth that you saw in either MDI or competitive conversions in 2024? The degree for MDI? Basically just how much it grew or how much competitive conversions fell, if that's something you can quantify. I mean, just that the split definitely changed, and we expect that MDI is going to be really where we're focused. That's where our KPIs are related in the company. We want to see that continue to grow. We did say MDI was 60% of our total new starts for the year. Got it. We saw consecutive growth each quarter. Yeah. No, that was certainly really encouraging. In terms of your OUS revenue guidance, can you just walk through quickly the underlying puts and takes there? On the back of some really strong growth in 2024, what's keeping the growth from being a little bit higher in 2025? Sure. I mean, it's definitely a large and under-penetrated market, and we're excited about the opportunities that we have. We also are going through a transition, and we're going to go direct. Because of that, we have some headwinds baked into our guidance to the tune of $15 million-$20 million. We think that with that, we still are absolutely focused on getting growth OUS, but we also want to make sure that we've got expectations in 2025 that we're comfortable with given the transition. Understood. Maybe turning to your Salesforce realignment, what was the rationale for implementing that when you did, and where do you stand in the process there? I think when you look at the market, there's additional competition. There's new players out there that have their Salesforces. If you look at our main competitors, our two main competitors, they've got a larger Salesforce than us. We have new sales leadership in the US, and it just was a logical step in my mind to expand the Salesforce. It wasn't a massive, it was, I'd say, a modest expansion. We basically hired the people in the fourth quarter, and they started work roughly January 2nd and have been trained now and are all on board. I'd say that there's probably 95% plus of the people have been hired. They're in place. They're actually contributing. It was just a logical thing to do just based on the competitive nature of the market. The other thing that we've done is we've been looking at the tools that enable the Salesforce to be more efficient. Over the last six months, the last two quarters of 2024, we really spent a lot of time piloting these tools in the marketplace. These are data-driven tools that help the sales organization prioritize who they should speak to and not only what is the message and messaging when they get there. I think that that's another thing that's being rolled out across the entire Salesforce this year. People have already been trained. We think that the combination of the Salesforce expansion and also the benefits we're going to see in reach and frequency from the training is really going to have a favorable impact on the year. Understood. It sounds like a major consideration of the Salesforce realignment was to focus on some of your higher ROI call points. Is it fair to think that this move better positions you in type 2 or some of the PCPs moving forward? I think it's the former. I think we realign the Salesforce so that there's a higher dense - smaller areas, higher density of physicians, just so that, again, it's more about a matter of managing the efficiency of the team that we've got. I think that we're certainly looking at type 2. We intend to move into the type 2 space here shortly, probably at the beginning of the second quarter. We're going to pilot it. We're going to have multiple territories that will be piloting the use of clinical training, training to the sales organization, marketing materials, and advertising. We're going to be evaluating the effectiveness of that. As we see things that may need tweaking, we will. We'll fix those. Then we'll move more broadly beyond that to the rest of the Salesforce. I think that's another opportunity I think we'll be looking at during the year. At this point in time, it's going to be managed by the existing team. Understood. I'm sure you can appreciate some investor trepidation after seeing some disruption last year from a CGM company following a Salesforce realignment. What makes this different, and what steps did you implement to mitigate some of the potential disruption? Certainly we were aware of it. I have to say that we were very cautious in terms of our plans to implement the realignment as well as the additional salespeople. I think the biggest source of disruption is obviously having new physicians that you do not know in your territory. You have to spend time getting to know them, getting them to know us. That is the source of disruption typically. As we did realign and expand, we made sure that there was a finite amount of new physician adds to each of these territories. The majority of the territory, the people who are in there already know the people. There is just continued business as usual. There is a small number that are new. By doing that, we think we have carefully planned for and managed the potential impact of disruption. The disruption's already contemplated as well in our guide for the year. We don't think it's going to be a major problem. Okay. Yeah, that's helpful. In terms of when you'd expect to start seeing a benefit from that Salesforce realignment, how do you think about how that could play out? I'll say that the people we hired are very experienced. They have come from the diabetes community. They already know the KOLs themselves. They need to learn the company. They need to learn the product. That typically takes a quarter or two. I think that roughly it'll probably be the first half of this year where there's more just increasing awareness of the company and the product. The second half, we'll see the benefit. Understood. I think one of the things that we heard that was really encouraging on the Q4 call was just around the 20% of covered lives in the U.S. having pharmacy access. What are the factors there that you think are going to help people move to the pharmacy and what is being considered there just in terms of how quickly that could grow? I think the team, again, has done a great job there. We had indicated that our goal is to get a million lives, and we've substantially beat that. We're going to continue to focus on additional agreements, additional covered lives throughout the year. The reason we moved to the pharmacy channel is, one, most importantly, to reduce the out-of-pocket for the patient. I mean, I think the copays for the devices in the pharmacy channel are just less than they are through the DME. That's a big advantage I think one of our competitors has. It's a main reason for us to go there. The other is just access. It's just easier to get onto the pharmacy channel than it is through the DME. The combination of those two really leveled the playing field, I think, for us and also just provide more market opportunity. The added benefit, though, is that in the pharmacy channel, we do anticipate seeing higher ASPs. I think that as a result of those three opportunities, I think we're going to be moving aggressively. We're in the process of establishing the operational systems to support pharmacy labeling, packaging, and things like that. That's all going quite well. I think that as we get through the year, we're going to be focused on more aggressive movement of products through that channel versus DME. Where do you think your pharmacy mix could be if we're thinking about the back part of this year or next year? I mean, it's one of those things where it doesn't happen overnight. I mean, the transition can take a year or two or three. When you look at some of our competitors, that's pretty much how long it took them to really get a meaningful percentage of their business. I will say, though, it's a priority. We do want to move aggressively in that area. I think that, again, just based on the opportunities that we just discussed, the organization will be moving as aggressively as possible. It's one of those things that just doesn't happen overnight. Understood. You also mentioned the higher ASPs in the pharmacy channel. Would love to hear how you're thinking about quantifying that. How much higher is the ASP going to be over the course of a four-year warranty as you think about pharmacy versus DME? One of the things that we've done when we interacted with the organizations and doing the contractual work was to help them. We educated them on the product, how it works in the DME. As a result of that, when you look at our contracts, they're very much like DME contracts, even though they're in the pharmacy, where there's a relatively large upfront for the pump, and then the supplies are just paid on a quarterly basis for the four years. We're not going to quantify exactly, but I will say that it's higher than. It's not all the way as far as our competitor may experience in terms of the ASPs, but it's certainly a positive from what we've got today. We do expect it to help from a top line for sure. Got it. Yeah, no, I think that's really helpful. Maybe just from a bottom-line standpoint as well, how should investors be thinking about the potential impact on your P&L or path to profitability over the next two to three years as your pharmacy mix increases? Yeah, I think that's a very important part of it. I think we've talked about our gross margin and our operating margin improvement plans. I think it's tied in large part to our pipeline. Mobi, as we've talked about, is a lot less expensive to build than the t:slim pump. As Mobi volume increases, we're going to see favorable effects on gross margin. If you look at the plan, right now, I think we ended 2024 at 51%. Our stated goal is 65%. Mobi gets us about halfway there. Substantial benefit from that. We also have the seven-day infusion set, which is going to have a favorable impact. I think we are counting on a meaningful bump from the pharmacy channel as well. I think that we have a path to 65%, and pharmacy is certainly part of that. As we get higher in the gross margin, certainly it drops to the bottom line. We also have a number of initiatives that are focused on efficiency improvement and some of the more labor-intensive operations that we have, that customer service, for instance, or order entry or insurance verification. There are quite a few people that are involved in those teams. Right now, we are focused on business process reengineering, automation, and things like that to really reduce the labor content, improve the experience, but also reduce the labor content, which we think will also help us get to the number of 25% for the operating margin. Understood. Super helpful. Congrats on the recent type 2 approval on papers. You mentioned that obviously comes with significant TAM expansion. I realize you already had a small portion of your patients that were already coming from the type 2 side. To what extent do you think the type 2 approval itself represents an immediate commercial catalyst, and what work still needs to be done to really unlock that opportunity? I think that you're right. Immediately, we are working to enable the Salesforce, as we talked about, with marketing materials, advertising, training materials to get that going. Our plan, as I stated, is to, early in the second quarter, we're going to be rolling this out into a number of territories just to evaluate the effectiveness of the program. As we feel more comfortable with that, we're going to roll it out to more. I would say that we will see a benefit from type 2 this year. I don't think it's going to be a step function. I think it's going to be a gradual increase over time. There's still some things we have to do, I think, to improve access. For instance, obviously, we're moving into pharmacy channel, which is going to be a benefit. The majority of our sales today go through DME. I think when you look at the commercial plans, all of the commercial plans cover type 2. I know it's relatively easy to get onto type 2 through the commercial plans. The government plans aren't as efficient, if you like. There's more hurdles that people have to go through to get the type 2 system working for you. We're definitely working with CMS. We have been working with a group called DTAC to just basically justify eliminating some of these hurdles that come through the government plans. We anticipate that that's going to be a benefit for us. It's going to take a little time for that to clear. We're also working on improvements to the product to reduce the complexity of some of the systems that are in the product that are needed for type 1. Simplification is something that's very important to us, and we're working on that for type 2. The data is going to be presented next Wednesday at ATTD. I think it's going to be, I mean, I think people will be impressed with the results. Very positive. The other thing that we've done, though, is we've developed inside of the study, there are several subgroups that have followed a process to simplify the sort of the carb counting and things like that. We also have subgroups where people went through the standard process of counting carbs, entering data. Then we evaluated the results of all of those. I think that's going to be pretty enlightening for people to see that there's things you can do to use the system that are very simple that I think will be appealing to the type 2 community that will just benefit the uptake of the product. Got it. Yeah, I know we and others will be keeping an eye out for that next week. Looking forward to that. You've also continued to indicate that tubeless Mobi remains on the horizon. I'm curious if the first half of 2026 is the right time frame to be expecting that coming to market and how much of an impact you expect that to have on your commercial operations. We are very excited about tubeless Mobi. In fact, in the call a month ago, we basically indicated that we've reprioritized our pipeline. And Mobi is now the next tubeless Mobi is the next feature that'll be brought to market. It'll be ahead of t:slim X3. We think it's going to have a meaningful impact. We think that that restores the competitive position that we had prior to some of our competitors coming to market with AID systems. I think that we will see an impact on the slope of our growth curve because of it. You might imagine that we understand the importance to the business. The team is very committed, and we're driving to get this to market as quickly as we can. We haven't made any public statements about when that's going to happen. Got it. Yeah, understood. Outside of the U.S., I think one thing that was also encouraging is you talked about the CE mark for Mobi on an OUS basis. Maybe can you just comment on the timing of that and how meaningful you expect that to be and any kind of commercial strategy that you have around that? Yeah, I mean, I think we think it's going to be a big deal. I mean, Mobi's been a great catalyst in the U.S. We think it's going to be just as impactful OUS. We believe that the timing will be this year. There's certainly unpredictability in dealing with regulatory bodies, but we're getting ready for it this year. I think that it's the same kind of a process that we followed in the States where we'll roll it out in more of a controlled manner first to be sure that all of the systems that we have to support it in the OUS countries are working properly. Once we get that level of confidence, we'll basically just step on the gas and make it available to everybody. It's a brief period of time just to confirm things are working the way they should be. We're going to be moving aggressively to get it into the market. Can I ask just a quick question on tubeless Mobi? Just curious what your thought process is. I assume for a while you've been discussing how tubeless is not necessarily better than tube. Yeah. You're going to come out with tubeless Mobi. How do you massage the message over the next year? It's a matter of choice. I think it's choice. I think that there are people who would not come to pump therapy unless they had a tubeless option. That's why we believe in a portfolio of having a tubed, a tubeless option that's 100% tubeless, which is Sigi. Then we have the wearability, sort of redefining wearability where you can use tubed or tubeless. I think it's a portfolio because people want to wear, control, interact with these devices differently. It's just a matter of providing choice. I think that, again, there are people out there that wouldn't wear it without it. It does give people an amazing amount of flexibility and versatility when you have the ability to use either. With all the Salesforce reorganizations, is that kind of going into the message now when you talk to the doctors, like, "Hey, we're going to be coming out with the tubeless. We've got Sigi on the way. We know it's a tube company. It's a great product, etc. We're going to have other options for you coming out." Or is that not even something you're discussing? We're in a situation until the product is approved, we really can't market it or speak about it. People are very much aware of what's going on with Mobi. A lot of the physicians do pay attention to investor communication, and they're aware of it. It's not something we're marketing heavily. The Salesforce, of course, is aware of it and very excited. It's just a huge upside potential for us as we do get to the market. It's not that far away. I mean, again, we're working aggressively to get it into the market. Understood. Maybe just in terms of Sigi beyond that, I know a competitor has kind of planted their flag around 2027 for their patch pump. How should investors be thinking about the timeline of you and your patch versus that bogey and just your competitive positioning within that market? Yeah, we're not going to talk about timing for Sigi. I think that's one of the things that we, again, just because of competition, we've refrained from discussing dates. I think that we have done a lot of market testing, though. And when you look at Sigi compared with the existing products in the market and products that are potentially on the market, we think it's a real winner. It scored very, very high, which is the reason we acquired the business. The product is being we actually have taken resources from San Diego and have put them on the program. We have a lot of people in San Diego that just finished developing the Mobi pump, and they will now move over to the Sigi pump. We are excited about it. We think it's, again, it's a durable patch. It has a prefilled insulin cartridge. It's very ergonomic. We think that it's going to do really well in the marketplace. No timing at this point, but we have been working on it for years. Got it. Maybe just on the bottom line, how should investors be thinking about the degree of operating leverage from here or just the level of confidence on that 3% adjusted EBITDA margin guidance? We have very high confidence we're going to achieve it. I think that one of the things that's interesting is that we have invested a significant amount in the Salesforce this year. The growth of our existing US Salesforce as well as going OUS, going direct OUS, require a lot of investment. We've been able to look for efficiencies in the business to enable us to make that investment and still see growth in the EBITDA. I mean, we're committed to profitability. As I said, we have a number of things that are happening over time that are going to drive gross margin improvement as well as leverage the SMG&A. I think that we feel confident we can get there. Understood. John, in the last 30 seconds or so, obviously, the stock's coming off a period of pronounced volatility. What's the one thing or any messaging you have on what you think is underappreciated about the story for investors today? I think we're very excited about 2025 and beyond. We have made structural changes to our business, to the business model. I think in doing so, we have positioned ourselves to get back to the growth curves that we've seen in the past and also achieve profitability. I think that there's four or five major things that have gone on here in 2024 and 2025 that really do get us back to growth. I think there might be some concern that they're going to be disruptive in the meantime. We're doing the best we can to manage that. We are very confident about getting back on the saddle. Understood. John, Katie, we really appreciate you both joining today. Thanks so much. Thanks, everyone, for coming to us. Thanks for having us. It's good talking to you.