Detailed narrative
Strategic Priorities and Operational Momentum
Tandem is executing against three strategic priorities: reshaping its business model, modernizing its commercial organization, and delivering new technology. This focus led to worldwide pump shipments growing over 10% year-over-year and sequentially in Q2. The company is seeing improved new pump start trends in the U.S., particularly from MDI transitions, and accelerated international adoption in direct launch countries. Significant margin improvement was also a highlight, with gross margin reaching the second highest in company history.
Pay-as-You-Go (PAYGO) Pharmacy Transition
The company launched its PAYGO reimbursement model in the pharmacy channel in March, aiming for better economics and broader access. Q2 was the first full quarter of implementation, focusing on updating processes for prescribing, customer support, and order processing. Tandem has achieved approximately 45% formulary coverage, nearing the high end of its annual goal. U.S. sales through the pharmacy channel reached 10% in Q2, reinforcing confidence in the strategy despite an initial $8 million revenue headwind from pumps.
Commercial Modernization and International Expansion
Tandem has been modernizing its commercial organization for the past year, deploying a new CRM system to enhance salesforce efficiency and global channel strategy. This supports the U.S. pharmacy transition and direct commercial launches internationally. Direct launches began in the UK, Switzerland, and Austria earlier this year, with France planned for Q4. This strategy aims to better serve customers and healthcare providers while strengthening the financial profile.
New Technology and CGM Compatibility
The company expanded its global portfolio with Control IQ+, now having the broadest indication of any AID system in the U.S., including pregnancy. It also received CE mark for pregnancy and Type 2 in Q2. Tandem Mobi is being introduced internationally in over 10 countries by year-end. CGM compatibility has broadened, with T-Slim now compatible with Abbott's Freestyle Libre 3+ in seven ex-U.S. countries, and Dexcom's G7 15-day sensor compatible with Mobi and T-Slim in the U.S., with international markets to follow.
Mobi Tubeless and Infusion Set Innovation
Tandem reached a key R&D milestone with the 510K submission for Mobi Tubeless in Q2, designed to transform the existing MobiPump into a tubeless AID system with extended wear technology. A scaled launch is planned for H2 2026, pending FDA clearance. The company is also launching AutoSoft Plus, a new infusion set, in Canada and later the U.S. to help manage supplier shortages. SteadySet, a proprietary 7-day wear infusion set, is in manufacturing scale-up for a H1 2027 launch.
AIDANET Algorithm and Future Innovation
Tandem is advancing the University of Virginia's AIDANET algorithm, aiming for a fully closed-loop system for Type 1 and Type 2 users without meal announcements or other user inputs. The system is designed to incorporate user context for personalized responses. The company received FDA IDE approval in Q2 and plans to begin a pivotal study later this year, marking a significant step towards its artificial pancreas vision.
Financial Performance and Outlook
Q2 saw record worldwide sales of $255 million, up 6% YoY, and 33,000 pump shipments. U.S. sales were $179 million, up 5% YoY, with 22,000 pumps shipped. International sales totaled $75 million, up 7% YoY, with 11,000 pumps shipped. Gross margin was 57%, and adjusted EBITDA margin reached 3%. The company reaffirmed its full-year sales and margin guidance, expecting Q4 to achieve the highest margins due to increasing pharmacy supply orders and direct European presence.