Back to top

Image: Bigstock

Tandem Diabetes (TNDM) Q3 Earnings Miss, '20 Sales View Up

Read MoreHide Full Article

Tandem Diabetes Care, Inc. (TNDM - Free Report) reported adjusted loss per share of 9 cents for third-quarter 2020, narrower than the year-ago metric of a loss of 13 cents. However, the loss per share was wider than the Zacks Consensus Estimate of a loss of 8 cents.

Reported net loss came in at 15 cents per share, wider than the year-ago loss of 5 cents.

Revenues in the quarter came in at $123.6 million, beating the Zacks Consensus Estimate by 9.4%. The top line surged 30.6% year over year despite sales pressure due to COVID-19 and the summer holiday season in Europe. Robust adoption of the company’s t:slim X2 with Control-IQ technology significantly boosted the top line in the reported quarter.

Q3 in Detail

Tandem Diabetes registered international sales of $16.1 million in the quarter under review, recording a 2% uptick from third-quarter 2019. Domestic sales came in at $107.5 million, up 36% year on year.

International pump shipments were down 10% to 3,641 pumps. Domestic pump shipments jumped 33% year over year to 18,380 units.

The company believes that surge in domestic pump shipments resulted from the continued momentum of its Control-IQ technology.

Margins

Gross profit in the September-end quarter was $65.3 million, marking a 28.9% year-over-year growth. Gross margin was, however, 52.8%, down 70 basis points (bps).

Total operating expenses were $66.3 million, up 16.9% year over year. The company registered operating loss of $1 million in the third quarter, narrower than a loss of $6 million a year ago.

Tandem Diabetes Care, Inc. Price, Consensus and EPS Surprise

Tandem Diabetes Care, Inc. Price, Consensus and EPS Surprise

Tandem Diabetes Care, Inc. price-consensus-eps-surprise-chart | Tandem Diabetes Care, Inc. Quote

Financial Position

Tandem Diabetes exited the third quarter with cash and cash equivalents, and short-term investments of $464.5 million compared with $426.3 million recorded at the end of the second quarter of 2020.

2020 Guidance

Based on the strength in demand for t:slim X2 insulin pump across the globe, Tandem Diabetes has raised the financial guidance for the year 2020.

For the year, sales are estimated to be in the range of $465 million-$475 million, up from the previously provided guidance of $450 million-$465 million. This represents an annual sales growth of 28-31% compared to 2019, up from the previous projection of annual sales growth of 24-28%. The Zacks Consensus Estimate for 2020 revenues is pegged at $461 million.

The full-year sales outlook includes international sales of $70 million-$75 million, unchanged year over year.

Our Take

Tandem Diabetes delivered better-than-expected revenues in the third quarter. A robust top line despite pandemic-led business disruptions is impressive. Strong domestic and international pump sales along with robust domestic pump shipments buoy optimism. Continued strength in demand for t:slim X2 insulin pump across the globe and rising customer adoption of the company’s Control-IQ technology look encouraging.

Product launches, including the domestic launch of the company’s first-generation mobile app and the commencement of the international launch of the t:slim X2 with Control-IQ technology, buoy optimism. The company’s full-year sales forecast also looks upbeat amid the coronavirus crisis.

However, the company’s loss per share widening year over year is concerning. Fall in international pump shipments is also deterring. Contraction of the gross margin and the company incurring operating loss are disappointing as well.

Zacks Rank & Stocks to Consider

Currently, Tandem Diabetes carries a Zacks Rank #3 (Hold).

Some other better-ranked stocks in the broader medical space are West Pharmaceutical Services, Inc. (WST - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Align Technology, Inc. (ALGN - Free Report) .

West Pharmaceutical reported third-quarter 2020 adjusted EPS of $1.15, beating the Zacks Consensus Estimate by 13.9%. Net revenues of $548 million outpaced the consensus estimate by 7.2%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher, a Zacks Rank #2 company, reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion outpaced the consensus mark by 10%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, surpassing the Zacks Consensus Estimate by a stupendous 281.4%. Net revenues of $734.1 million exceeded the Zacks Consensus Estimate by 38%. It currently carries a Zacks Rank #2.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Published in