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Tandem Diabetes (TNDM) Gains on Pump Sales, Margin Woe Stays
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Tandem Diabetes’ (TNDM - Free Report) expansion initiatives in global markets are a major positive. Moreover, the company boasts an impressive product pipeline. Yet, Heavy dependence on sales of insulin pumps and escalating operating expenses pose concerns for Tandem Diabetes. The stock carries a Zacks Rank #3 (Hold).
Tandem Diabetes exited the fourth quarter with better-than-expected bottom-line figures. Full-year 2022 sales exceeded $800 million, setting quarterly records throughout the year. The company noted that it has more than doubled its sales in three years. Pumps sales generated 54% of the company’s total revenues, banking on Tandem Diabetes’ continued focus to expand in the insulin pump market, capture competitive share and drive success in renewal efforts.
Geographically, one of the largest growth drivers was a more than 20% increase in the company’s U.S. installed base, which is now at 290,000 customers. Tandem Diabetes is now increasing its renewal numbers both in volume and rates.
Related to volume, the company saw a 60% increase in renewal shipments for 2022. In the fourth quarter alone, these shipments increased 75%. From a rate perspective, the company has already renewed over 50% of customers whose warranties expired in 2022. Overall, it has shipped 84,000 pumps in the United States in 2022.
Tandem Diabetes is off to a strong start in terms of its collaborative efforts with the Capillary Biomedical team, which joined Tandem at the end of July 2022. The company is in the planning process for the pivotal study for an extended wear infusion set and intends to use the data to support a regulatory filing with the FDA. Earlier, Tandem Diabetes collaborated with its CGM partners, Dexcom and Abbott, on the integration of their sensors. With international demand for t:slim X2 pump rapidly increasing, the company now intends to offer Tandem data management applications to its international customers like it does domestically with t:connect.
Meanwhile, to further develop in the insulin pump space, in January 2023, Tandem Diabetes acquired Switzerland-based privately-held AMF Medical SA, the developer of the Sigi Patch Pump. The company has also purchased Capillary Biomedical, the developer of an extended wear infusion set, in July 2022.
On the flip side, total GAAP revenue missed the Zacks Consensus Estimate. Although the company delivered year-over-year sales growth, U.S. and outside-U.S. pump shipments in the quarter faced the unfavorable impact of macroeconomic headwinds. Further, escalating costs and expenses put pressure on margins. The quarter’s gross margin was 52.4%, reflecting a contraction of 177 basis points.
Meanwhile, Tandem Diabetes operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets where the company operates limit its ability to switch to strategies like price increases.
Tandem Diabetes primarily competes with Medtronic’s market-leading MiniMed, a division of Medtronic. Notably, MiniMed boasts a major part of the conventional insulin pump market share in the United States.
Tandem Diabetes has been underperforming the industry for the past year. The stock has lost 65.7% compared with the industry’s 16.1% fall.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 1.7% against the industry’s 17.5% growth in the past year.
Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 12.4% compared with the industry’s 10.9% decline in the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 13.7% compared with the industry’s 17.5% decline in the past year.
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Tandem Diabetes (TNDM) Gains on Pump Sales, Margin Woe Stays
Tandem Diabetes’ (TNDM - Free Report) expansion initiatives in global markets are a major positive. Moreover, the company boasts an impressive product pipeline. Yet, Heavy dependence on sales of insulin pumps and escalating operating expenses pose concerns for Tandem Diabetes. The stock carries a Zacks Rank #3 (Hold).
Tandem Diabetes exited the fourth quarter with better-than-expected bottom-line figures. Full-year 2022 sales exceeded $800 million, setting quarterly records throughout the year. The company noted that it has more than doubled its sales in three years. Pumps sales generated 54% of the company’s total revenues, banking on Tandem Diabetes’ continued focus to expand in the insulin pump market, capture competitive share and drive success in renewal efforts.
Geographically, one of the largest growth drivers was a more than 20% increase in the company’s U.S. installed base, which is now at 290,000 customers. Tandem Diabetes is now increasing its renewal numbers both in volume and rates.
Related to volume, the company saw a 60% increase in renewal shipments for 2022. In the fourth quarter alone, these shipments increased 75%. From a rate perspective, the company has already renewed over 50% of customers whose warranties expired in 2022. Overall, it has shipped 84,000 pumps in the United States in 2022.
Tandem Diabetes Care, Inc. Price
Tandem Diabetes Care, Inc. price | Tandem Diabetes Care, Inc. Quote
Tandem Diabetes is off to a strong start in terms of its collaborative efforts with the Capillary Biomedical team, which joined Tandem at the end of July 2022. The company is in the planning process for the pivotal study for an extended wear infusion set and intends to use the data to support a regulatory filing with the FDA. Earlier, Tandem Diabetes collaborated with its CGM partners, Dexcom and Abbott, on the integration of their sensors. With international demand for t:slim X2 pump rapidly increasing, the company now intends to offer Tandem data management applications to its international customers like it does domestically with t:connect.
Meanwhile, to further develop in the insulin pump space, in January 2023, Tandem Diabetes acquired Switzerland-based privately-held AMF Medical SA, the developer of the Sigi Patch Pump. The company has also purchased Capillary Biomedical, the developer of an extended wear infusion set, in July 2022.
On the flip side, total GAAP revenue missed the Zacks Consensus Estimate. Although the company delivered year-over-year sales growth, U.S. and outside-U.S. pump shipments in the quarter faced the unfavorable impact of macroeconomic headwinds. Further, escalating costs and expenses put pressure on margins. The quarter’s gross margin was 52.4%, reflecting a contraction of 177 basis points.
Meanwhile, Tandem Diabetes operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets where the company operates limit its ability to switch to strategies like price increases.
Tandem Diabetes primarily competes with Medtronic’s market-leading MiniMed, a division of Medtronic. Notably, MiniMed boasts a major part of the conventional insulin pump market share in the United States.
Tandem Diabetes has been underperforming the industry for the past year. The stock has lost 65.7% compared with the industry’s 16.1% fall.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 1.7% against the industry’s 17.5% growth in the past year.
Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 12.4% compared with the industry’s 10.9% decline in the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 13.7% compared with the industry’s 17.5% decline in the past year.