San Diego Tandem Diabetes Care believes the storm has passed.
The company’s stock plummeted in 2016, beset by a competitor’s deal with a major insurer and lackluster sales. Some observers speculated Tandem would be squeezed out of the market. But the San Diego maker of touchscreen insulin pumps sees a turnaround, and analysts are cautiously optimistic.
“Really the focus right now is on execution. I think we’ve faced a lot of different challenges, and have been able to demonstrate over the last year, 18 months, our ability to navigate through,” said Susan Morrison, chief administrative officer of Tandem Diabetes Care.
She pointed to recent financials as an inflection point.
Sales in 2017 reached $107.6 million, a 28 percent year-over-year increase, according to results released in March. The company’s latest quarter marked its strongest sales yet. Pump shipments grew 80 percent compared with the preceding quarter.
Foreseeing further growth, Tandem estimates sales will reach $132 to $140 million this year. As another vote of confidence, CEO Kim Blickenstaff voluntarily reduced his 2018 salary to $1 — added compensation depends on the company hitting financial targets.
Although momentum builds, the device manufacturer still has a ways to go. It posted a $62.9 million operating loss in 2017, improved from a $78.05 million loss in 2016. By the second half of 2019 Tandem intends to reach cash flow break-even as it works toward profitability.
Meanwhile, demand grows for its t:slim X2 insulin pump, which can be updated with new software via a personal computer. That’s a selling point considering insurance companies usually only pay for one pump every four years.
“It really changes the way that the medical device community thinks about insulin pumps,” Morrison said. “By our allowing people to update their pumps, it allows people with diabetes to have access to new technology as it’s approved by the FDA, rather than having to wait for that four-year insurance cycle.”
Taking a Punch
Tandem made waves more than four years ago with a $120 million initial public offering. It beefed up its salesforce heading into 2016. Then came an unexpected gut punch. Insurance giant UnitedHealth Group named Minnesota-based Medtronic as its preferred pump provider for most health plans. There was speculation other insurers would follow suit, which hasn’t come to pass.
Medtronic, the market leader, also gained the upper hand months later with FDA approval for “closed loop” technology, in which automated insulin regulates glucose levels. Tandem sales fell dramatically.