Tandem Diabetes Care Inc 10-Q for FY2023 Q3

Tandem Diabetes Care Inc (TNDM)

10-Q 2023-11-01 For: 2023-09-30

Added on April 12, 2026

About this 10-Q

Tandem Diabetes Care Inc filed this 10-Q on November 1, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $185.62M; down 9.3% from $204.55M a year earlier
Net loss: $32.96M; compared with a net loss of $48.97M a year earlier
Diluted EPS: -$0.51; compared with -$0.76 a year earlier

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Delaware		20-4327508
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
12400 High Bluff Drive		92130
San Diego,	California	(Zip Code)
(Address of principal executive offices)


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.001 per share	TNDM	Nasdaq Global Market


Part I	Financial Information	1
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4	Controls and Procedures	38

Part II	Other Information	40
Item 1	Legal Proceedings	40
Item 1A	Risk Factors	40
Item 5	Other Information	46
Item 6	Exhibits	47


	September 30,		December 31,
	2023		2022
Assets	(Unaudited)		(Note 1)
Current assets:
Cash and cash equivalents	$	79,611	$	172,517
Short-term investments	418,547		444,384
Accounts receivable, net	100,318		114,717
Inventories	143,492		111,117
Prepaid and other current assets	16,176		7,241
Total current assets	758,144		849,976
Property and equipment, net	75,760		68,552
Operating lease right-of-use assets	89,434		110,626
Other long-term assets	16,571		23,631
Total assets	$	939,909	$	1,052,785
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	46,142	$	55,730
Accrued expenses	14,073		9,595
Employee-related liabilities	43,735		38,682
Operating lease liabilities	17,618		13,121
Deferred revenue	31,610		18,837

Other current liabilities	33,932		29,325
Total current liabilities	187,110		165,290

Convertible senior notes, net - long-term	284,580		283,232
Operating lease liabilities - long-term	116,012		123,524
Deferred revenue - long-term	14,089		16,874
Other long-term liabilities	24,118		23,918
Total liabilities	625,909		612,838
Commitments and contingencies (Note 13)	—		—
Stockholders’ equity:
Common stock, $0.001 par value; 200,000 shares authorized, 65,191 and 64,513 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively.	65		65
Additional paid-in capital	1,237,939		1,170,888
Accumulated other comprehensive loss	(2,206)		(1,817)
Accumulated deficit	(921,798)		(729,189)
Total stockholders’ equity	314,000		439,947
Total liabilities and stockholders’ equity	$	939,909	$	1,052,785


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Sales	$	185,622	$	204,547	$	550,922	$	580,716
Cost of sales	95,869		100,122		276,527		283,252
Gross profit	89,753		104,425		274,395		297,464
Operating expenses:
Selling, general and administrative	79,328		84,104		266,752		237,989
Research and development	41,970		36,798		127,063		103,529
Acquired in-process research and development expenses	—		31,016		78,750		31,016
Total operating expenses	121,298		151,918		472,565		372,534
Operating loss	(31,545)		(47,493)		(198,170)		(75,070)
Other income (expense), net:
Interest income and other, net	5,656		1,720		17,305		2,961
Interest expense	(4,840)		(1,576)		(8,079)		(4,629)


Total other income (expense), net	816		144		9,226		(1,668)
Loss before income taxes	(30,729)		(47,349)		(188,944)		(76,738)
Income tax expense	2,232		1,621		3,665		2,003
Net loss	$	(32,961)	$	(48,970)	$	(192,609)	$	(78,741)
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments	$	349	$	(258)	$	1,800	$	(3,899)
Foreign currency translation losses	(1,362)		(524)		(2,189)		(549)
Comprehensive loss	$	(33,974)	$	(49,752)	$	(192,998)	$	(83,189)

Net loss per share - basic	$	(0.51)	$	(0.76)	$	(2.97)	$	(1.23)
Net loss per share - diluted	$	(0.51)	$	(0.76)	$	(2.97)	$	(1.23)
Weighted average shares used to compute basic net loss per share	65,117		64,236		64,834		64,066
Weighted average shares used to compute diluted net loss per share	65,117		64,237		64,834		64,067


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at June 30, 2023	65,062	$	65	$	1,219,199	$	(1,193)	$	(888,837)	$	329,234
Exercise of stock options	8	—		106		—		—		106
Vesting of restricted stock units, net of shares withheld for taxes	121	—		(1,945)		—		—		(1,945)



Stock-based compensation expense	—	—		20,579		—		—		20,579
Unrealized gain on short-term investments	—	—		—		349		—		349
Foreign currency translation losses	—	—		—		(1,362)		—		(1,362)
Net loss	—	—		—		—		(32,961)		(32,961)
Balance at September 30, 2023	65,191	$	65	$	1,237,939	$	(2,206)	$	(921,798)	$	314,000


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at June 30, 2022	64,210	$	64	$	1,118,168	$	(4,282)	$	(664,366)	$	449,584

Exercise of stock options	26	—		583		—		—		583
Vesting of restricted stock units, net of shares withheld for taxes	29	—		(952)		—		—		(952)



Stock-based compensation expense	—	—		22,359		—		—		22,359
Unrealized loss on short-term investments	—	—		—		(258)		—		(258)
Foreign currency translation losses	—	—		—		(524)		—		(524)
Net loss	—	—		—		—		(48,970)		(48,970)
Balance at September 30, 2022	64,265	$	64	$	1,140,158	$	(5,064)	$	(713,336)	$	421,822


	September 30, 2023		December 31, 2022

Other current liabilities	$	18,370	$	17,280
Other long-term liabilities	19,387		19,257
Total warranty reserve	$	37,757	$	36,537


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Options to purchase common stock	135	1,080	135	1,250
Unvested restricted stock units	2,930	1,526	2,011	977
Warrants to purchase common stock	194	195	194	195
Awards granted under the ESPP	173	99	80	73
Convertible senior notes (if-converted)	2,554	2,554	2,554	2,554
	5,986	5,454	4,974	5,049


At September 30, 2023	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available-for-sale securities:
U.S. Government-sponsored enterprises	$	163,806	$	2	$	(751)	$	163,057
U.S. Treasury securities	131,939		2		(196)		131,745
Commercial paper	109,853		—		(102)		109,751
Corporate debt securities	14,006		3		(15)		13,994

Total	$	419,604	$	7	$	(1,064)	$	418,547


At December 31, 2022	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available-for-sale securities:
U.S. Government-sponsored enterprises	$	100,602	$	21	$	(615)	$	100,008
U.S. Treasury securities	213,105		3		(1,947)		211,161
Commercial paper	112,812		6		(208)		112,610
Corporate debt securities	18,218		—		(104)		18,114
Supranational bonds	2,504		—		(13)		2,491
Total	$	447,241	$	30	$	(2,887)	$	444,384


	Years to Maturity
At September 30, 2023	Within One Year		One to Two Years		Estimated Fair Value
U.S. Government-sponsored enterprises	$	110,863	$	52,194	$	163,057
U.S. Treasury securities	98,898		32,847		131,745
Commercial paper	109,751		—		109,751
Corporate debt securities	7,074		6,920		13,994

Total	$	326,586	$	91,961	$	418,547


Level 1:						Observable inputs such as unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2:						Inputs, other than quoted prices in active markets, that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3:						Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities, which require the reporting entity to develop its own valuation techniques that require input assumptions.


	Nine Months Ended September 30,
	2023		2022
Operating Activities
Net loss	$	(192,609)	$	(78,741)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	11,684		10,689
Amortization of debt issuance costs	1,711		1,395
Provision for expected credit losses	4,066		2,955
Provision for inventory obsolescence	332		775
Operating lease impairment charge	14,099		—
Amortization of premium on short-term investments	3,177		3,381

Stock-based compensation expense	65,335		60,477
Acquired in-process research and development expenses	78,750		31,016
Other	(1,769)		(647)
Changes in operating assets and liabilities:
Accounts receivable, net	9,872		(4,796)
Inventories	(32,714)		(37,062)
Prepaid and other current assets	(7,296)		1,364
Other long-term assets	(1,216)		(960)
Accounts payable and accrued expenses	(4,574)		28,038
Employee-related liabilities	5,571		(3,585)
Deferred revenue	10,042		4,998
Operating leases and other current liabilities	10,745		24,305
Other long-term liabilities	200		1,042
Net cash provided by (used in) operating activities	(24,594)		44,644
Investing Activities
Purchases of short-term investments	(391,025)		(362,494)
Proceeds from maturities and redemptions of short-term investments	415,485		422,907

Purchases of property and equipment	(21,605)		(28,470)
Acquisitions, including in-process research and development, net of cash acquired	(69,496)		(25,697)
Purchases of intangible assets and strategic investments	(2,515)		(8,855)
Net cash used in investing activities	(69,156)		(2,609)
Financing Activities


Proceeds from issuance of common stock under Company stock plans, net	1,567		11,369
Proceeds from exercise of common stock warrants	—		83


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance at beginning of the period	$	4,842	$	4,600	$	4,327	$	4,249
Provision for expected credit losses	1,308		965		4,066		2,955
Write-offs and adjustments, net of recoveries	(795)		(1,292)		(3,038)		(2,931)
Balance at end of the period	$	5,355	$	4,273	$	5,355	$	4,273


	September 30,		December 31,
	2023		2022

Raw materials	$	40,232	$	39,207
Work-in-process	41,622		18,571
Finished goods	61,638		53,339
Total inventories	$	143,492	$	111,117


Years Ending December 31,
2023 (remaining)	$	4,641
2024	17,198
2025	17,023
2026	17,068
2027	17,333
Thereafter	103,844
Total undiscounted lease payments	177,107
Less: amount representing interest	(43,477)
Present value of operating lease liabilities	133,630
Less: current portion of operating lease liabilities	(17,618)
Operating lease liabilities - long-term	$	116,012


	Fair Value Measurements at September 30, 2023
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents(1)	$	63,810	$	63,810	$	—	$	—
U.S. Government-sponsored enterprises	163,057		—		163,057		—
U.S. Treasury securities	131,745		131,745		—		—
Commercial paper	109,751		—		109,751		—
Corporate debt securities	13,994		—		13,994		—

Total assets	$	482,357	$	195,555	$	286,802	$	—


	Fair Value Measurements at December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents(1)	$	150,742	$	150,742	$	—	$	—
U.S. Government-sponsored enterprises	100,008		—		100,008		—
U.S. Treasury securities	211,161		211,161		—		—
Commercial paper	112,610		—		112,610		—
Corporate debt securities	18,114		—		18,114		—
Supranational bonds	2,491		—		2,491		—
Total assets	$	595,126	$	361,903	$	233,223	$	—


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term (in years)	10.4		10.8
Weighted-average discount rate used to determine operating lease liabilities	5.4	%	5.3	%


	September 30, 2023		December 31, 2022
Principal amount	$	287,500	$	287,500
Unamortized debt issuance costs	(2,920)		(4,268)
Net carrying amount	$	284,580	$	283,232


Shares reserved for issuance upon conversion of Convertible Senior Notes			2,554
Shares underlying outstanding warrants			194
Shares underlying outstanding stock options			4,085
Shares underlying unvested restricted stock units			3,049
Shares authorized for issuance pursuant to awards granted under the ESPP			704
Shares authorized for future equity award grants			1,031
Total			11,617



	Nine Months Ended September 30, 2022

Stock options granted	83,008
Weighted average grant date fair value (per share)	$	42.16
Risk-free interest rate	2.7		%
Dividend yield	0.00		%
Expected volatility	72.0		%
Expected term (in years)	5.8


	United States Pump Unit Shipments for Each of the Three Months Ended in Respective Years
	March 31	June 30	September 30	December 31	Total






2018	4,444	5,447	7,379	12,935	30,205
2019	9,669	12,799	13,814	17,453	53,735
2020	13,158	14,735	18,380	24,552	70,825
2021	16,644	20,665	20,296	25,712	83,317
2022	18,658	20,818	20,394	23,684	83,554
2023	17,003	18,964	16,842	N/A	52,809


	Outside the United States Pump Unit Shipments for Each of the Three Months Ended in Respective Years
	March 31	June 30	September 30	December 31	Total
2018	N/A	N/A	1,055	3,233	4,288
2019	5,063	8,459	4,025	2,149	19,696
2020	4,220	3,952	3,641	8,133	19,946
2021	8,708	13,152	11,262	11,873	44,995
2022	9,437	11,296	12,113	11,939	44,785
2023	6,052	10,530	7,989	N/A	24,571


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except percentages)	2023			2022			2023			2022
Sales:
United States	$	130,222		$	146,035		$	403,964		$	422,985
Outside the United States	55,400			58,512			146,958			157,731
Total sales	185,622			204,547			550,922			580,716
Cost of sales	95,869			100,122			276,527			283,252
Gross profit	89,753			104,425			274,395			297,464
Gross margin	48		%	51		%	50		%	51		%
Operating expenses:
Selling, general and administrative	79,328			84,104			266,752			237,989
Research and development	41,970			36,798			127,063			103,529
Acquired in-process research and development	—			31,016			78,750			31,016
Total operating expenses	121,298			151,918			472,565			372,534
Operating loss	(31,545)			(47,493)			(198,170)			(75,070)
Other income (expense), net:
Interest income and other, net	5,656			1,720			17,305			2,961
Interest expense	(4,840)			(1,576)			(8,079)			(4,629)


Total other income (expense), net	816			144			9,226			(1,668)
Loss before income taxes	(30,729)			(47,349)			(188,944)			(76,738)
Income tax expense	2,232			1,621			3,665			2,003
Net loss	$	(32,961)		$	(48,970)		$	(192,609)		$	(78,741)


	Tandem Diabetes Care, Inc.

Dated: November 1, 2023	By:	/s/ John F. Sheridan
		John F. Sheridan President and Chief Executive Officer (on behalf of the registrant and as the registrant’s Principal Executive Officer)

Dated: November 1, 2023	By:	/s/ Leigh A. Vosseller
		Leigh A. Vosseller Executive Vice President, Chief Financial Officer and Treasurer (on behalf of the registrant and as the registrant’s Principal Financial and Accounting Officer)


Date: November 1, 2023						/s/ John F. Sheridan
						John F. Sheridan President, Chief Executive Officer and Director