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Tandem Diabetes Care Reports Second Quarter 2018 Financial Results

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Tandem Diabetes Care®, Inc. (NASDAQ:TNDM), a medical device company and
manufacturer of the only touchscreen insulin pump available in the
United States, today reported its financial results for the quarter
ended June 30, 2018.

Second Quarter 2018 Results

In comparing the second quarter of 2018 to the same period of 2017:

  • Pump shipments increased 59 percent to 5,447 pumps from 3,427 pumps
  • Sales increased 60 percent to $34.1 million from $21.3 million
  • Operating margin improved to negative 41 percent from negative 89
    percent

"We are increasing our sales guidance for the year following our
continued record growth in the second quarter," said Kim Blickenstaff,
President and Chief Executive Officer. "We look to further this momentum
through our upcoming launch of the t:slim X2 Insulin Pump with Basal-IQ
Technology and by progressing our product pipeline as we work to improve
the lives of people with diabetes."

Gross profit for the second quarter of 2018 increased 89 percent to
$15.1 million, compared to $8.0 million for the same period of 2017.
Gross margin was 44 percent for the quarter ended June 30, 2018 compared
to 38 percent in the same period of 2017.

For the second quarter of 2018, operating expenses totaled $29.1
million, compared to $27.0 million for the same period of 2017.
Operating loss for the second quarter of 2018 was $14.0 million,
compared to $19.0 million for the same period of 2017. Operating margin
for the second quarter was negative 41 percent compared to negative 89
percent in the same period of last year. Both operating loss and
operating margin included non-cash charges for stock-based compensation
of $2.7 million and depreciation and amortization of $1.4 million for
the second quarter of 2018, compared to stock-based compensation of $5.1
million and depreciation and amortization of $1.6 million, for the
comparable period of 2017.

Net loss for the second quarter of 2018 was $59.4 million, which
included a $42.5 million non-cash charge for the change in fair value of
the Series A and Series B warrants issued in the Company's October 2017
financing. This compares to a net loss of $21.8 million for the second
quarter of 2017.

Cash Balance and Liquidity

As of June 30, 2018, the Company had $96.5 million in cash, cash
equivalents, short-term investments and restricted cash. This included
$29.2 million in net proceeds from the exercise of Series A and Series B
warrants, of which $22.7 million were exercised in the second quarter of
2018.

2018 Annual Guidance

For the year ending December 31, 2018, the Company is updating its
financial guidance as follows:

  • Sales are estimated to be in the range of $140 million to $148
    million, which represents an annual sales growth of 30 percent to 38
    percent compared to 2017.
    • Annual sales for 2017 benefited from $5.0 million in previously
      deferred sales that were recognized during the period1.
  • Operating margin is estimated to be in the range of negative 45
    percent to negative 40 percent, which includes:
    • Approximately $20.0 million in non-cash, stock-based compensation
      expense
    • Approximately $7.0 million to $8.0 million of depreciation and
      amortization

1 Beginning in the third quarter of 2016 through the third
quarter of 2017, the Company offered a Technology Upgrade Program under
a variable pricing structure, as a pathway for certain existing
customers to obtain the t:slim X2TM Insulin Pump. This
program resulted in a number of accounting complexities that makes
comparisons of our current and historical financial results more
difficult. In particular, during the term of the program, accounting
guidelines required us to defer up to 100 percent of sales at the time
of pump shipment and recognize them in a subsequent period, either when
the upgrade was fulfilled or at the expiration of the program.

Conference Call

The Company will hold a conference call and simultaneous webcast today
at 4:30pm Eastern Time (1:30pm Pacific Time). The link to the webcast
will be available by accessing the Investor Center of the Tandem
Diabetes Care website at http://investor.tandemdiabetes.com,
and will be archived for 30 days. To listen to the conference call via
phone, please dial 855-427-4396 (U.S./Canada) or 484-756-4261
(International) and use the participant code "7975966".

About Tandem Diabetes Care, Inc.

Tandem Diabetes Care, Inc. (www.tandemdiabetes.com)
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 with Basal-IQ™ technology. The t:slim X2 Pump is
capable of remote feature updates using a personal computer, and is the
only automated insulin delivery device approved for children as young as
6 years old. Tandem is based in San Diego, California.

Tandem Diabetes Care is a registered trademark, and t:slim X2 and
Basal-IQ are trademarks of Tandem Diabetes Care, Inc.

Follow Tandem Diabetes Care on Twitter @tandemdiabetes; use #tslimX2,
#tconnect, and $TNDM.
Follow Tandem Diabetes Care on Facebook at www.facebook.com/TandemDiabetes.
Follow
Tandem Diabetes Care on LinkedIn at https://www.linkedin.com/company/tandemdiabetes.

Forward Looking Statement

This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that
concern matters that involve risks and uncertainties that could cause
actual results to differ materially from those anticipated or projected
in the forward-looking statements. These forward-looking statements
include statements regarding, among other things, the Company's
projected financial results and the Company's ability to achieve its
near and longer-term goals. The Company's actual results may differ
materially from those indicated in these forward-looking statements due
to numerous risks and uncertainties. For instance, the Company's ability
to achieve projected financial results will be impacted by the Company's
ability to obtain regulatory approval for new products and products
under development and the timing of any such approvals; market
acceptance of the Company's existing products and products under
development by physicians and people with diabetes; the potential that
newer products that compete with the Company's products, or other
technological breakthroughs for the monitoring, treatment or prevention
of diabetes, may render the Company's products obsolete or less
desirable; and the potential that the process of purchasing the
Company's products, including insurance verification approval for
individual customers, may delay or prevent the sale of the products.
Other risks and uncertainties include the Company's inability to
manufacture products in commercial quantities at an acceptable cost and
in accordance with quality requirements; the Company's inability to
contract with additional third-party payors for reimbursement of the
Company's products; uncertainty associated with the development and
approval of new products generally; possible future actions of the FDA
or any other regulatory body or governmental authority; and other risks
identified in the Company's most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, and other documents that the Company
files with the Securities and Exchange Commission. Investors are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release. Tandem
undertakes no obligation to update or review any forward-looking
statement in this press release because of new information, future
events or other factors.

 
TANDEM DIABETES CARE, INC.
GAAP CONDENSED BALANCE SHEETS
(in thousands)
  June 30,     December 31,
2018 2017
(Unaudited)
Assets
Current assets:
Cash and cash equivalents and short-term investments $ 86,505 $ 14,179
Accounts receivable, net 13,914 20,793
Inventory, net 24,912 26,993
Other current assets   3,012   2,191
Total current assets 128,343 64,156
 
Restricted cash - long-term 10,000 10,000
Property and equipment, net 18,212 19,631
Other long term assets   1,439   1,559
Total assets $ 157,994 $ 95,346
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable, accrued expense and employee-related liabilities $ 21,565 $ 22,470
Deferred revenue 2,964 2,526
Common stock warrants 12,291 5,432
Other current liabilities   5,687   5,657
Total current liabilities 42,507 36,085
 
Notes payable-long-term 77,100 76,541
Other long-term liabilities   12,382   11,868
Total liabilities 131,989 124,494
 
Total stockholders' equity (deficit)   26,005   (29,148 )
Total liabilities and stockholders' equity (deficit) $ 157,994 $ 95,346
 
 
TANDEM DIABETES CARE, INC.
GAAP CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
       

Three Months Ended
June 30,

Six Months Ended
June 30,

2018 2017 2018 2017
Sales $ 34,126 $ 21,327 $ 61,402 $ 40,303
Cost of sales   19,039   13,325   34,912     25,549
Gross profit 15,087 8,002 26,490 14,754
 
Operating expenses:
Selling, general and administrative 22,628 22,104 43,541 44,952
Research and development   6,456   4,866   12,431     9,996
Total operating expenses   29,084   26,970   55,972     54,948
Operating loss (13,997 ) (18,968 ) (29,482 ) (40,194 )
 
Total other expense, net   (45,362 )   (2,832 )   (62,571 )     (5,399 )
Net loss $ (59,359 ) $ (21,800 ) $ (92,053 )   $ (45,593 )
 
Net loss per share, basic and diluted $ (1.17 ) $ (4.36 ) $ (2.32 )   $ (11.12 )
 
Weighted average shares used to compute basic and diluted net loss
per share
  50,948   5,004   39,594     4,101

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