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Tandem Diabetes (TNDM) Reports Loss in Q3, Revenues Beat

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Tandem Diabetes Care, Inc. (TNDM - Free Report) reported loss per share of 62 cents in third-quarter 2018 compared with net loss of $3.09 a year ago.

The company’s adjusted loss was 30 cents a share. The Zacks Consensus Estimate was pegged at a loss of 34 cents.

Revenues in Detail

Revenues in the quarter totaled $46.3 million, beating the Zacks Consensus Estimate by 12.9%. The top line improved 71.5% from the year-ago quarter.

Per management, launch of the t:slim X2 with Basal-IQ technology, increased supply capacity and renewal sales strengthening the company’s core business along with the international launch drove the upside in revenues.

Tandem Diabetes’ pump shipments rose 118% year-over-year to 8,434 pumps from 3,868.

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

 

Interestingly, the company had begun shipping pumps to select geographies for commencing international operations in August 2018. As a result, of the 8,434 pumps shipped, 1,055 pumps were shipped to locations outside the United States. Accordingly, Tandem Diabetes recorded international sales of $2.5 million in the third quarter.

Margins

Gross profit in the reported quarter grossed $21.8 million, up 83.2% from the prior-year quarter. Gross margin came in at 47.1%, up 300 basis points (bps) on benefits from increased production volumes to meet growing demand and a significant contribution from sales of high-margin pumps.

Total operating expenses came in at $37.5 million compared with $25 million in the prior-year quarter. Operating loss in the reported quarter was $15.7 million, compared with operating loss of $13.2 million             a year ago.

Guidance Revised

For 2018, the company raised its revenue guidance to a range of $160-$165 million from $150-$158 million, reflecting annual sales growth of around 49-53% from 2017. The Zacks Consensus Estimate for revenues is pegged at $155.7 million, below the guided range.

Our Take

Tandem Diabetes posted better-than-expected top-line results for the third quarter. Strength in domestic sales along with the recent launch of the t:slim X2 Insulin Pump in select international markets bodes well for the company. Encouragingly, this was Tandem Diabetes’ highest sales in a quarter. The company’s raising of sales guidance for 2018 buoys optimism. We are upbeat about the company’s receipt of Heath Canada Medical Device License for the t:slim X2 Insulin Pump.  Also, favorable demographics in the diabetes market are expected to boost demand for Tandem Diabetes’ products.

However, heavy dependence on sales of insulin pumps and recurring operating losses are threats to the company.

Zacks Rank & Key Picks

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

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical (ISRG - Free Report) , Stryker Corporation (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical reported third-quarter 2018 adjusted earnings per share of $2.83, which beat the Zacks Consensus Estimate of $2.65. Revenues totaled $920.9 million, also surpassing the consensus estimate of $918.6 million.

Stryker posted third-quarter 2018 adjusted earnings per share of $1.69, beating the Zacks Consensus Estimate of $1.68. Operating margin was 17.8%, up 30 bps.

Merit Medical reported third-quarter 2018 adjusted earnings per share of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.

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