Diabetes technology company Tandem Diabetes Care (NASDAQ: TNDM) announced better-than-expected revenue in Q1 CY2025, with sales up 22.3% year on year to $234.4 million. The company expects the full year’s revenue to be around $1 billion, close to analysts’ estimates. Its non-GAAP loss of $0.67 per share was 9.5% below analysts’ consensus estimates.

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StockStory’s Take

Tandem Diabetes began 2025 with growth in both U.S. and international markets, as management emphasized progress in new pump starts and increased conversions from multiple daily injections. CEO John Sheridan attributed quarterly performance to strong demand for the Tandem Mobi and t-slim X2 pumps, as well as successful deployment of an expanded sales force and improved customer retention. Sheridan also highlighted the FDA clearance of the Control-IQ+ algorithm for type 2 diabetes, which has the potential to significantly expand the company’s addressable market.

Looking forward, management reaffirmed its full-year revenue guidance, citing increased coverage through pharmacy channels, product launches, and the ongoing scaling of its sales force as key factors. CFO Leigh Vosseller explained that while pharmacy channel access is still in early stages, it is expected to contribute more in the long term, and the company’s investments in direct sales infrastructure outside the U.S. are progressing as planned. Management acknowledged headwinds in operating margin and free cash flow but remains focused on achieving profitability through cost control and margin improvement initiatives.

Key Insights from Management’s Remarks

Management outlined several business drivers and operational updates influencing Q1 performance and setting the stage for the year. These include product demand, commercial channel expansion, and new technology launches.

• U.S. Pump and Supply Demand: The company saw double-digit growth in new insulin pump starts, driven by the Tandem Mobi and t-slim X2, with a notable increase in conversions from multiple daily injections. Renewal rates remained high, supporting recurring supply sales.
• Sales Force Expansion: A realignment and expansion of the U.S. field sales and clinical team was completed, with new hires expected to reach full productivity by the end of the year. Management anticipates incremental benefits as the expanded team matures over coming quarters.
• Pharmacy Channel Progress: Management increased U.S. pharmacy channel coverage from 20% to 30% of insured lives and reported encouraging early results from reduced out-of-pocket costs for patients. This channel is expected to become a larger contributor in the future.
• International Market Momentum: Record international sales in Q1 were fueled by demand for the t-slim X2 platform and early renewal activity. Transition plans for direct sales operations in selected countries are underway, targeting further growth and margin expansion starting in 2026.
• Advancements in Technology Portfolio: The FDA clearance and launch of Control-IQ+ for type 2 diabetes, as well as ongoing work to integrate new continuous glucose monitor (CGM) sensors, position the company to address a broader segment of the diabetes population. Management is piloting commercial efforts and gathering data to refine its approach.

Drivers of Future Performance

Management’s outlook for 2025 is shaped by new product launches, expanded pharmacy channel access, and the scaling of its sales force, alongside a focus on cost efficiency and profitability improvements.

• Type 2 Diabetes Expansion: The launch of Control-IQ+ for type 2 diabetes widens the addressable market, but management expects a gradual ramp as reimbursement processes and training evolve.
• Pharmacy Channel Scaling: While pharmacy channel sales are currently a modest contributor, management believes this channel will play a larger role as coverage expands and operational capabilities are built out.
• Margin Improvement Initiatives: Efforts to reduce manufacturing costs, increase average selling prices, and optimize customer support functions are expected to support gross margin and EBITDA improvement, though investments in sales force and international infrastructure may create near-term pressure.

Top Analyst Questions

• Matt Miksic (Barclays): Asked about the impact and timing of sales force realignment. Management replied that modest disruption was expected, but the expansion is complete, and productivity gains are anticipated by year-end.
• Mat Blackman (Stifel): Inquired about the role of pricing in U.S. performance. CFO Leigh Vosseller confirmed price increases contributed and expects similar pricing trends to continue for the remainder of the year.
• Matthew O'Brien (Piper Sandler): Questioned the timing implications of the AMS write-off for the Sigi patch pump. Management explained that development was brought in-house to San Diego, which should accelerate time to market.
• David Roman (Goldman Sachs): Sought details on gross margin drivers and sustainability. Management highlighted manufacturing cost reductions and the growing contribution from Mobi, with expectations for further improvement as the product line scales.
• Chris Pasquale (Nephron Research): Asked why guidance was reaffirmed despite outperformance. CFO Leigh Vosseller cited a dynamic economic environment and prudent planning, with minimal tariff impact factored into guidance.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the pace of pharmacy channel adoption and its impact on pricing and patient access, (2) the effectiveness of the expanded sales force as territories reach full productivity later in the year, and (3) the commercial uptake of Control-IQ+ in the type 2 diabetes market. Progress on direct sales transitions outside the U.S. and continued margin improvement will also be key signposts for execution.

Tandem Diabetes currently trades at a forward EV-to-EBITDA ratio of 39.6×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.

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