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What changed in TANDEM DIABETES CARE INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TANDEM DIABETES CARE INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+481 added−557 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-21)

Top changes in TANDEM DIABETES CARE INC's 2024 10-K

481 paragraphs added · 557 removed · 367 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

80 edited+15 added−19 removed79 unchanged
Biggest changeWe have established a comprehensive training program to develop employees throughout the organization. Emerging Leaders and Leading in Tandem are examples of internal programs intended for high performing individual contributors, and newly hired and promoted supervisors and managers, respectively.
Biggest changeEmerging Leaders and Leading in Tandem are examples of internal programs intended for high performing individual contributors, and newly hired and promoted supervisors and managers, respectively. More than 95% of employees participating in these programs remained employed at Tandem as of December 31, 2024 and approximately 20% had been promoted or had a significant change in scope of responsibility.
Regulation of Medical Devices in the European Economic Area On 26 May 2021, Regulation (EU) 2017/745 on Medical Devices, or the Medical Device Regulation, entered into application, repealing and replacing both Directive 93/42/EEC concerning medical devices, or MDD, and Directive 90/385/EEC concerning active implantable medical devices, or AIMD.
Regulation of Medical Devices in the European Economic Area On May 26, 2021, Regulation (EU) 2017/745 on Medical Devices, or the Medical Device Regulation, entered into application, repealing and replacing both Directive 93/42/EEC concerning medical devices, or MDD, and Directive 90/385/EEC concerning active implantable medical devices, or AIMD.
Accordingly, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from 25 May 2017, and which remained valid on 26 May 2021 and have not since been withdrawn will, with certain exceptions, remain valid until 31 December 2027 for Class III and Class IIb implantable medical devices and until 31 December 2028 for other Class IIb, Class IIa and Class I devices with a measuring function or which are sterile.
Accordingly, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from 25 May 2017, and which remained valid on May 26, 2021 and have not since been withdrawn will, with certain exceptions, remain valid until December 31, 2027 for Class III and Class IIb implantable medical devices and until December 31, 2028 for other Class IIb, Class IIa and Class I devices with a measuring function or which are sterile.
Class I medical devices, for which the conformity assessment procedure in accordance with the MDD or the AIMD did not require the involvement of a Notified Body but will require the involvement of a Notified Body in accordance with the Medical Device Regulation and for which an EU Declaration of Conformity was issued in accordance with the MDD or the AIMD before 26 May 2021, can continue to be placed on the EEA market until 31 December 2028.
Class I medical devices, for which the conformity assessment procedure in accordance with the MDD or the AIMD did not require the involvement of a Notified Body but will require the involvement of a Notified Body in accordance with the Medical Device Regulation and for which an EU Declaration of Conformity was issued in accordance with the MDD or the AIMD before May 26, 2021, can continue to be placed on the EEA market until December 31,2028.
Manufacturers of medical devices may only benefit from the above extended transitional provisions deadlines if the following conditions are fulfilled: (i) the devices continue to comply with the requirements of the MDD or AIMD, (ii) there are no significant changes in the design and intended purpose, (iii) the devices do not present an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health, (iv) the manufacturer implements a quality management system by 26 May 2024 which complies with the requirements of the Medical Devices Regulation, (v) by 26 May 2024 an application is lodged with a Notified Body for conduct of the conformity assessment of the devices covered by the CE Certificate of Conformity, or the devices intended to substitute for such devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by 26 September 2024, and (vi) from 26 May 2021, compliance with the Medical Device Regulation relating to post-market surveillance, market surveillance, vigilance, registration of economic operators and of devices is ensured in place of the corresponding requirements in the MDD or AIMD.
Manufacturers of medical devices may only benefit from the above extended transitional provisions deadlines if the following conditions are fulfilled: (i) the devices continue to comply with the requirements of the MDD or AIMD, (ii) there are no significant changes in the design and intended purpose, (iii) the devices do not present an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health, (iv) the manufacturer implements a quality management system by May 26, 2024 which complies with the requirements of the Medical Devices Regulation, (v) by May 26, 2024 an application is lodged with a Notified Body for conduct of the conformity assessment of the devices covered by the CE Certificate of Conformity, or the devices intended to substitute for such devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by September 26, 2024, and (vi) from May 26, 2021, compliance with the Medical Device Regulation relating to post-market surveillance, market surveillance, vigilance, registration of economic operators and of devices is ensured in place of the corresponding requirements in the MDD or AIMD.
In addition, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from 25 May 2017, which were valid on 26 May 2021 and have not been withdraw since but which expired before 20 March 2023, will only continue to be valid in accordance with the extended transitional deadlines above if either (i) the manufacturer signed a written agreement with a Notified Body for the conformity assessment of the device covered by the expired CE Certificate of Conformity, or the device intended to substitute that device, in accordance with the Medical Device Regulation before the date of expiry of the CE Certificate of Conformity, or (ii) a competent authority of an EEA country has granted a derogation from the application conformity assessment procedure in accordance with Article 59(1) or Article 97(1) of the Medical Device Regulation.
In addition, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from May 25, 2017, which were valid on May 26, 2021 and have not been withdraw since but which expired before March 20, 2023, will only continue to be valid in accordance with the extended transitional deadlines above if either (i) the manufacturer signed a written agreement with a Notified Body for the conformity assessment of the device covered by the expired CE Certificate of Conformity, or the device intended to substitute that device, in accordance with the Medical Device Regulation before the date of expiry of the CE Certificate of Conformity, or (ii) a competent authority of an EEA country has granted a derogation from the application conformity assessment procedure in accordance with Article 59(1) or Article 97(1) of the Medical Device Regulation.
Class III custom-made implantable medical devices may be placed on the market until 26 May 2026 without a CE Certificate of Conformity issued by Notified Body, provided that (i) by 26 May 2024, an application is lodged with a Notified Body for the conformity assessment of the devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by 26 September 2024.
Class III custom-made implantable medical devices may be placed on the market until May 26, 2026 without a CE Certificate of Conformity issued by Notified Body, provided that (i) by May 26,2024, an application is lodged with a Notified Body for the conformity assessment of the devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by September 26, 2024.
We have comprehensive safety training programs that teach our employees how to do their jobs safely and in compliance with laws and regulations. We operate in modern, efficient, and safe facilities, and have had minimal accident and injury rates company wide. Despite this success, however, our goal remains the same: zero accidents. Additional Information Our website address is www.tandemdiabetes.com .
We have comprehensive safety training programs that teach our employees how to do their jobs safely and in compliance with laws and regulations. We operate in modern, efficient, and safe facilities, and have had minimal accident and injury rates company-wide. Despite this success, our goal remains the same: zero accidents. Additional Information Our website address is www.tandemdiabetes.com .
Despite measures taken to protect our intellectual property, unauthorized parties might copy aspects of our products or obtain and use information that we regard as proprietary. 10 Competition The medical device industry is intensely competitive, subject to rapid change and highly sensitive to the introduction of new products, treatment techniques or technologies, or other market activities of industry participants.
Despite measures taken to protect our intellectual property, unauthorized parties might copy aspects of our products or obtain and use information that we regard as proprietary. Competition The medical device industry is intensely competitive, subject to rapid change and highly sensitive to the introduction of new products, treatment techniques or technologies, or other market activities of industry participants.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use and that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and 14 safety of the device (e.g., product labeling and instructions for use) are supported by suitable evidence.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use and that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device (e.g., product labeling and instructions for use) are supported by suitable evidence.
In addition, voluntary EU and national industry Codes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals. Outside of the European Union, regulatory approval would need to be sought on a country-by-country basis for us to market our products.
In addition, voluntary EU and national industry Codes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals. 14 Outside of the European Union, regulatory approval would need to be sought on a country-by-country basis for us to market our products.
Our relationships with healthcare providers and other third parties are subject to scrutiny under these laws. Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Health Administration programs. Federal Anti-Kickback Statute.
Our relationships with healthcare providers and other third parties are subject to scrutiny under these laws. Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Health Administration programs. 11 Federal Anti-Kickback Statute.
This assessment must be based on clinical data, which can be obtained from (1) clinical studies conducted on the devices being assessed, (2) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific literature. The conduct of clinical studies in the EEA is governed by detailed regulatory obligations.
This assessment must be based on clinical data, which can be obtained from (1) clinical investigations conducted on the devices being assessed, (2) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical investigations and scientific literature. The conduct of clinical studies in the EEA is governed by detailed regulatory obligations.
Members of our quality department also inspect certain of our devices at various steps during the manufacturing cycle to facilitate compliance with our devices’ stringent specifications. 9 We purchase our raw materials and select components used in the manufacturing of our products from external suppliers.
Members of our quality department also inspect certain of our devices at various steps during the manufacturing cycle to facilitate compliance with our devices’ stringent specifications. We purchase our raw materials and select components used in the manufacturing of our products from external suppliers.
The term “employees” in this Annual Report means our regular full-time employees. Our headquarters are in San Diego, California, where our primary research and development and administrative headquarters are located, and where we also operate a manufacturing facility and a warehousing facility.
The term “employees” in this Annual Report means our regular full-time employees. Our headquarters are in San Diego, California, where our primary research and development and administrative functions are located, and where we also operate a manufacturing facility and a warehousing facility.
The information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only.
The information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only. 16
Apart from low risk medical devices (Class I with no measuring function and which are not sterile), in relation to which the manufacturer may issue an EU Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
Apart from low risk medical devices (Class I with no measuring function and which are not sterile), in relation to which the manufacturer may issue an EU Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires review by a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
The structure of our compensation program balances incentive earnings for both short-term and long-term performance. • We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location. • We engage internationally recognized outside compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs and to provide benchmarking. • We align our executives’ long-term equity compensation with our stockholders’ interests. • Annual increases and incentive compensation are based on our performance as well as each individual’s contribution to the results achieved and are documented through our talent management process as part of our annual review process.
The structure of our compensation program balances incentive earnings for both short-term and long-term performance. • We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location. • We engage internationally recognized outside compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs and to provide benchmarking. • We align our executives’ long-term equity compensation with our stockholders’ interests. • Annual increases and incentive compensation are based on Company performance as well as each individual’s contribution to the Company’s achieved results and are documented through our talent management procedures as part of our annual review process.
These laws also require, among other things, publication of privacy notices detailing certain data collection and sharing practices and extension of certain rights to individuals, such as the right to know what data is collected about them, to obtain a copy of that data, to correct or amend that data, and to request restricted use of that data. 13 Healthcare Fraud .
These laws also require, among other things, publication of privacy notices detailing certain data collection and sharing practices and extension of certain rights to individuals, such as the right to know what data is collected about them, to obtain a copy of that data, to correct or amend that data, and to request restricted use of that data. 12 Healthcare Fraud .
Patents are generally effective for 20 years from the date the earliest application was filed in the patent family, and in some cases may be extended. Our issued patents as of December 31, 2023 are set to expire over a range of years, from 2024 to 2042, subject to any extensions.
Patents are generally effective for 20 years from the date the earliest application was filed in the patent family, and in some cases may be extended. Our issued patents as of December 31, 2024 are set to expire over a range of years, from 2025 to 2042, subject to any extensions.
Other Regulatory Requirements. Even after a device receives clearance or approval and is placed in commercial distribution, numerous regulatory requirements apply.
Even after a device receives clearance or approval and is placed in commercial distribution, numerous regulatory requirements apply.
In addition, we have Health Canada approval to sell the t:slim X2 in Canada. Outside the United States, interactions between medical device companies, government officials and health care professionals are also governed by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct.
In addition, we have Health Canada approval to sell the t:slim X2 in Canada. Moreover, outside the United States, interactions between medical device companies, government officials and health care professionals are also governed by strict laws, such as national anti-bribery laws of EEA countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct.
To demonstrate compliance with the GSPRs provided in the Medical Device Regulation and obtain the right to affix the CE mark, medical devices manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
To demonstrate compliance with the GSPRs provided in the Medical Device Regulation and obtain the right to affix the CE mark, medical devices manufacturers must conduct a conformity assessment procedure, which varies according to the type of medical device and its classification.
We purchase many of our components and sub-assemblies from manufacturers with whom we are at least dual sourced. We work closely with all suppliers to ensure continuity of supply while maintaining high quality and reliability. We have received certification from BSI Group, a Notified Body to the International Standards Organization (ISO), of our quality system.
We purchase many of our components and sub-assemblies from manufacturers with whom we are at least dual sourced and across various geographies. We work closely with all suppliers to ensure continuity of supply while maintaining high quality and reliability. We have received certification from BSI Group, a Notified Body to the International Standards Organization (ISO), of our quality system.
Human Capital We are committed to creating and maintaining a safe, diverse, and inclusive community for all employees while we serve our customers and fulfill our mission to improve the lives of people with diabetes. As of December 31, 2023, we had approximately 2,400 regular full-time employees, who primarily work in the United States, Canada, or Europe.
Human Capital We are committed to creating and maintaining a safe, diverse, and inclusive community for all employees while we serve our customers and fulfill our mission to improve the lives of people with diabetes. As of December 31, 2024, we had approximately 2,650 regular full-time employees, who primarily work in the United States, Canada, or Europe.
Compliance with these requirements is a prerequisite to be able to affix the CE mark to devices, without which they cannot be marketed or sold in the European Economic Area (comprised of the 27 EU Member States, Iceland, Liechtenstein and Norway).
Compliance with these requirements is a prerequisite to affixing the CE mark to devices, without which they cannot be marketed or sold in the European Economic Area (comprised of the 27 EU Member States, Iceland, Liechtenstein and Norway).
We also have various registered U.S. trademarks, registered European Community trademarks, and other trademark registrations and pending trademark applications in other countries and regions of the world. In addition, we have entered into exclusive and non-exclusive licenses in the ordinary course of business relating to a wide array of technologies or other intellectual property rights or assets.
We also have various registered United States trademarks, registered European Community trademarks, and other trademark registrations and pending trademark applications in other countries and regions of the world. In addition, we have entered into exclusive and non-exclusive licenses in the ordinary course of business relating to a wide array of technologies or other intellectual property rights or assets.
Our Strategy & Future Technologies Diabetes management can vary greatly from person-to-person, creating multiple market segments based on clinical needs and personal preferences. Our goal is to address the individual needs of people with insulin-dependent diabetes and their care team flexibility and choice in intelligent insulin delivery systems, through an accessible portfolio of market-leading pumps, applications, and insights.
Diabetes management can vary greatly from person to person, creating multiple market segments based on clinical needs and personal preferences. Our goal is to address the individual needs of people with insulin-dependent diabetes and their care team, by offering flexibility and choice in intelligent insulin delivery systems through an accessible portfolio of market-leading pumps, applications, and insights.
Preventing and managing fluctuations in blood glucose levels between hypoglycemia, or low blood glucose levels, and hyperglycemia, or high blood glucose levels, is often time consuming and stressful to people with diabetes and their loved ones. 5 There are two primary therapies used by people with insulin-dependent diabetes, Multiple Daily Injection (MDI) and insulin pumps.
Preventing and managing fluctuations in blood glucose levels between hypoglycemia, or low blood glucose levels, and hyperglycemia, or high blood glucose levels, is often time consuming and stressful. 5 There are two primary therapies used by people with insulin-dependent diabetes, Multiple Daily Injection (MDI) and insulin pumps.
It also provides us with data that we can analyze to reveal patterns, trends, outcomes and associations that can be used to improve our products and in the analysis of clinical outcomes data.
Tandem Source also provides us with data that we can analyze to reveal patterns, trends, outcomes and associations that can be used to improve our products and in the analysis of clinical outcomes data.
By comparison, there are also disposable pumps which combine the pump mechanism, battery and electronics with the cartridge and infusion set into a body-worn patch. These pumps are entirely disposed of by the user every 3 days. More than 1.3 million people worldwide are estimated to use an insulin pump to manage their diabetes.
By comparison, there are also disposable pumps which combine the pump mechanism, battery and electronics with the cartridge and infusion set into a body-worn patch. These pumps are entirely disposed of by the user every 3 days. Approximately 2.2 million people worldwide are estimated to use an insulin pump to manage their diabetes.
Third parties may also independently develop similar or competing technology that avoids our patents. The steps we have taken may not prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. We also face risks associated with intellectual property infringement.
Third parties may also independently develop similar or competing technology that avoids our patents. The steps we have taken may not prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.
Furthermore, we offer comprehensive, locally relevant and innovative benefits to all eligible employees, including health insurance, paid time off, paid and unpaid leaves, a retirement plan, health savings accounts, flexible spending accounts, life and disability coverage, voluntary accident, critical illness, legal and identity theft coverage, employee discount program, and an employee loaner pump program.
Furthermore, we offer comprehensive, locally relevant and innovative benefits to all eligible employees, including health insurance, paid time off, paid and unpaid leaves, defined-contribution retirement plans, health savings accounts, flexible spending accounts, life and disability coverage, voluntary accident, critical illness, legal and identity theft coverage, employee discount programs, and an employee loaner pump program.
In 2021, we began conducting employee engagement surveys through Gallup, a leading global consulting firm on employee engagement. More than 90% of our employees have participated each year, and the results demonstrated that our overall engagement levels exceed Gallup’s averages worldwide and in the United States.
In 2021, we began conducting employee engagement surveys through Gallup, a leading global consulting firm on employee engagement. More than 90% of our employees have participated each year, and the results demonstrated that our overall engagement levels exceed Gallup’s averages worldwide and in the United States. In addition, we exceeded overall engagement in the professional, scientific and technical sector.
If we are not able to satisfy those special controls, we would be required to seek approval for those products under the traditional PMA submission application, which must be supported by valid scientific evidence that typically includes extensive technical, pre-clinical, clinical, manufacturing and labeling data to demonstrate to the FDA’s satisfaction the safety and efficacy of the device.
If we are not able to satisfy those special controls, we would be required to seek approval for those products under the traditional PMA submission application, which must be supported by valid scientific evidence that typically includes extensive technical, pre-clinical, clinical, manufacturing and labeling data to demonstrate to the FDA’s satisfaction the safety and efficacy of the device. 10 Clinical trials are typically required to support a PMA application and are sometimes required for a 510(k) clearance.
We are also researching the use of different insulins with our Control-IQ technology. 8 Markets and Distribution Methods Our technology solutions are now available in the following 25 countries: Australia Denmark Israel Norway Spain Bahamas Finland Italy Portugal Sweden Belgium France Luxembourg Saudi Arabia Switzerland Canada Germany Netherlands Slovakia United Kingdom Czech Republic Ireland New Zealand South Africa United States In the United States and Canada, we employ direct sales, customer support, and clinical teams.
Markets and Distribution Methods Our technology solutions are now available in the following 25 countries: Australia Denmark Israel Norway Spain Bahamas Finland Italy Portugal Sweden Belgium France Luxembourg Saudi Arabia Switzerland Canada Germany Netherlands Slovakia United Kingdom Czech Republic Ireland New Zealand South Africa United States In the United States and Canada, we employ direct sales, customer support, and clinical teams.
These laws include the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions in which we operate. Such laws generally prohibit U.S.- 15 based companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business to foreign officials, or in the case of the U.K. Bribery Act, to any person.
These laws include the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions in which we operate. Such laws generally prohibit United States-based companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business to foreign officials, or in the case of the U.K. Bribery Act, to any person. In Great Britain (i.e.
Diabetes can be difficult for patients to manage. Unlike most therapies, insulin requirements can vary greatly and can be affected by many factors, such as type or quantity of food eaten, illness, stress and exercise.
Unlike most therapies, insulin requirements can vary greatly and can be affected by many factors, such as type or quantity of food eaten, illness, stress and exercise.
Item 1. Business References within this Annual Report to “Tandem,” “we,” “our,” “us,” “management,” or the “Company” refer to Tandem Diabetes Care, Inc., together with its wholly-owned subsidiaries in the United States, Canada, the Netherlands, and Switzerland.
Item 1. Business References within this Annual Report to “Tandem,” “we,” “our,” “us,” “management,” or the “Company” refer to Tandem Diabetes Care, Inc., together with its wholly-owned subsidiaries.
Agreements with our employees also forbid them from bringing the proprietary rights of third parties to us. We also generally require confidentiality or material transfer agreements from third parties that receive our confidential data or materials. We cannot guarantee that employees and third parties will abide by the confidentiality or assignment terms of these agreements.
We also generally require confidentiality or material transfer agreements from third parties that receive our confidential data or materials. We cannot guarantee that employees and third parties will abide by the confidentiality or assignment terms of these agreements.
In the four-year period ended December 31, 2023, we shipped approximately 450,000 insulin pumps, which is representative of our in-warranty global installed customer base assuming the typical four-year reimbursement cycle. Approximately 310,000 pumps were shipped to customers in the United States and 140,000 were shipped to customers outside the United States.
In the four-year period ended December 31, 2024, we shipped more than 480,000 insulin pumps, which is representative of our in-warranty global installed customer base assuming the typical four-year reimbursement cycle. Approximately 320,000 pumps were shipped to customers in the United States and approximately 160,000 were shipped to customers outside the United States.
To foster a stronger sense of ownership and align the interests of partners with stockholders, stock options and/or restricted stock units are provided to a substantial proportion of our employees under our broad-based stock incentive programs. Also, our employees are able to participate in our employee stock purchase program.
To foster a stronger sense of ownership and align the interests of partners with stockholders, equity awards are provided to a substantial proportion of our employees under our broad-based stock incentive programs. Also, our full-time U.S. employees are able to participate in our employee stock purchase program.
In February 2024, we expanded our pump portfolio with the U.S. launch of Tandem Mobi. Both pumps feature our Control-IQ advanced hybrid closed loop technology, with an automated insulin delivery (AID) feature designed to help increase a user's time in targeted glycemic range.
The t:slim X2 Insulin Delivery System has been our flagship technology solution. In February 2024, we expanded our pump portfolio with the United States launch of Tandem Mobi. Both pumps feature our Control-IQ advanced hybrid closed loop technology, with an automated insulin delivery (AID) feature designed to help increase a user's time in targeted glycemic range.
Outside diabetes educators are reimbursed for their services at fair market value. Although we believe that these arrangements do not violate the Anti-Kickback Statute, regulatory authorities may determine otherwise, especially as enforcement of this law historically has been a high priority for the federal government.
Although we believe that these arrangements do not violate the Anti-Kickback Statute, regulatory authorities may determine otherwise, especially as enforcement of this law historically has been a high priority for the federal government.
Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as applicable U.S. state privacy laws HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), imposes certain requirements on covered entities, which include certain healthcare providers, health plans and healthcare clearinghouses, and their business associates and covered subcontractors that receive or obtain protected health information in connection with providing a service on behalf of a covered entity relating to the privacy, security and transmission of individually identifiable health information.
Our use of t:connect and Tandem Source data is subject to internal policies and procedures that are designed to comply with the federal United States Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as applicable United States state privacy laws HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), imposes certain requirements on covered entities, which include certain healthcare providers, health plans and healthcare clearinghouses, and their business associates and covered subcontractors that receive or obtain protected health information in connection with providing a service on behalf of a covered entity relating to the privacy, security and transmission of individually identifiable health information.
In addition, we are focused on cultivating and supporting our internal culture through diversity of thought, support and advocacy within the diabetes community and continuing to build and maintain a diverse and inclusive workforce. 16 Organizational Development Attracting, developing and retaining employees is critical to our longer-term success.
Moreover, we are focused on cultivating and supporting our internal culture through diversity of thought, support and advocacy within the diabetes community and continuing to build and maintain a diverse and inclusive workforce. 15 Organizational Development Attracting, developing and retaining employees is critical to our longer-term success. We have established a comprehensive training program to develop employees throughout the organization.
Competitive Total Rewards Our compensation program is designed to align employee compensation with our performance and to provide the proper incentives to attract, retain, and motivate employees to achieve superior results.
In 2024, more than 300 employees participated in our leadership development programs. Competitive Total Rewards Our compensation program is designed to align employee compensation with our performance and to provide the proper incentives to attract, retain, and motivate employees to achieve superior results.
These may include the requirement of prior authorization by the Competent Authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee. This process can be expensive and time-consuming. After a device is placed on the market, it remains subject to significant regulatory requirements.
These may include the requirement of prior authorization by the Competent Authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee. This process can be expensive and time-consuming.
Outside suppliers are the source for components and some sub-assemblies in the production of our insulin pumps and cartridges. In addition, we purchase all of our currently marketed infusion sets from a third-party supplier, Unomedical A/S, a subsidiary of the ConvaTec Group. Unomedical is responsible for all manufacturing, testing, sterilization and packaging of the infusion sets under our brands.
In addition, we purchase all of our currently marketed infusion sets from a third-party supplier, Unomedical A/S, a subsidiary of the ConvaTec Group. Unomedical is responsible for all manufacturing, testing, sterilization and packaging of the infusion sets under our brands.
These trials generally require submission of an application for an Investigational Device Exemption (IDE), to the FDA. The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.
The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.
The advertising and promotion of medical devices in the EU is subject to the national laws of the individual EEA country that implemented the MDD, the AIMD and that apply the Medical Device Regulation, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EEA countries governing the advertising and promotion of medical devices EEA countries’ national legislation may also restrict or impose limitations on our ability to advertise our products directly to the general public.
The advertising and promotion of medical devices in the EEA is subject to the national laws of the individual EEA country that implemented the MDD, the AIMD and that apply the Medical Device Regulation, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EEA countries govern the advertisement and promotion of medical devices.
We compete in markets worldwide with companies that manufacture insulin delivery devices, primarily Insulet, Medtronic and Ypsomed. There are also a number of other companies developing and marketing their own insulin delivery systems and/or related software applications for launch both in the U.S. market and outside the U.S., including insulin pumps and Bluetooth-enabled insulin pens to support MDI therapy.
There are also a number of other companies developing and marketing their own insulin delivery systems and/or related software applications for launch both in the United States market and outside the United States, including insulin pumps and Bluetooth-enabled insulin pens to support MDI therapy.
Overview Tandem Diabetes Care, a global insulin delivery and diabetes technology company, manufactures and sells advanced automated insulin delivery systems that reduce the burden of diabetes management, while creating new possibilities for patients, their loved ones, and healthcare providers.
Overview Tandem Diabetes Care, a global insulin delivery and diabetes technology company, manufactures and sells advanced automated insulin delivery systems that reduce the burden of diabetes management, while creating new possibilities for patients, their loved ones and healthcare providers. Our pump portfolio features the Tandem Mobi and t:slim X2, both of which feature Control-IQ advanced hybrid closed-loop technology.
If we are not contracted with a prospective customer’s third-party payor and in-network status cannot be otherwise obtained, then to the extent possible we use distribution channels so our customers’ orders can be serviced.
We enter into contracts with national and regional third-party payors to establish reimbursement for our insulin pump products, single-use insulin cartridges and other related supplies. If we are not contracted with a prospective customer’s third-party payor and in-network status cannot be otherwise obtained, then to the extent possible we use distribution channels so our customers’ orders can be serviced.
Our extensive experience in CGM integration, and efforts to continue expanding the available CGM sensors integrated with our pump portfolio, represents our commitment to provide customizable solutions to help reduce burden and create new possibilities for people living with diabetes. 7 Tandem Device Updater This tool allows our pump users to update their pump software quickly and easily from a personal computer.
Our extensive experience in CGM integration, and efforts to continue expanding the available CGM sensors integrated with our pump portfolio, represents our commitment to provide customizable solutions to help reduce burden and create new possibilities for people living with diabetes.
The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid. 12 We provide the initial training to customers necessary for appropriate use of our products either through our own diabetes educators or by contracting with outside diabetes educators who have completed a Tandem pump-training course.
The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid.
It is PC- and Mac- compatible and designed to work with our pumps in a manner similar to software updates on a smartphone. We have used this technology to offer our in-warranty t:slim X2 customers worldwide software updates at no cost.
Tandem Device Updater This tool allows our pump users to update their pump software quickly and easily from a personal computer. It is PC- and Mac- compatible and designed to work with our pumps in a manner similar to software updates on a smartphone. We have used this technology to offer our in-warranty customers worldwide software updates at no cost.
Insulin pump therapy can provide benefit to a person with insulin-dependent diabetes when used independently or in conjunction with continuous glucose monitoring (CGM), which is a technology that provides users with real-time access to their glucose levels as well as trend information.
We estimate that approximately 900,000 people in the United States use an insulin pump, of whom approximately 85% live with type 1 diabetes. Insulin pump therapy can provide benefit when used independently or in conjunction with continuous glucose monitoring (CGM), which is a technology that provides users with real-time access to their glucose levels as well as trend information.
The FDA’s approval of an IDE allows clinical testing to go forward, but it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria. 11 We are currently sponsoring or supporting several clinical trials that are intended to support future enhancements to our AID products.
The FDA’s approval of an IDE allows clinical testing to go forward, but it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria. Other Regulatory Requirements.
We also partner with independent distributors for order fulfillment. Outside the United States and Canada, we contract with distributors who have substantial responsibility for sales, customer support, clinical efforts and order fulfillment. Revenue Concentrations and Significant Customers. A small number of independent distributors in the United States and Canada are responsible for order fulfillment.
We also partner with independent distributors for order fulfillment. Outside the United States and Canada, we contract with distributors who have substantial responsibility for sales, customer support, clinical efforts and order fulfillment. In addition, we anticipate initiating direct sales, training and customer support activities in select European countries beginning in 2026. Revenue Concentrations and Significant Customers.
We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position. We seek to protect our proprietary information and other intellectual property by generally requiring our employees, consultants, contractors, suppliers, outside scientific collaborators and other advisors to execute non-disclosure and assignment of invention agreements at the start of their employment or engagement.
We seek to protect our proprietary information and other intellectual property by generally requiring our employees, consultants, contractors, suppliers, outside scientific collaborators and other advisors to execute non-disclosure and assignment of invention agreements at the start of their employment or engagement. Agreements with our employees also forbid them from bringing the proprietary rights of third parties to us.
Tandem Source Our web-based data management platform provides users, their caregivers and their healthcare providers with a fast, easy and visual way to display diabetes therapy management data from our pumps, integrated CGMs and supported blood glucose meters.
Tandem Source Our web-based data management platform provides users, their caregivers and their healthcare providers with a fast, easy and visual way to display diabetes therapy management data from our pumps and integrated CGMs. In 2023, Tandem Source was launched in the United States and in 2024 we began scaling its launch outside the United States.
Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future. Outside of the United States and Canada, our distribution partners are responsible for all reimbursement, tender application and fulfillment activities.
Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future.
Tandem Source is designed to bring together the features of Tandem’s legacy t:connect, t:connect HCP, and t:connect Portal offerings with new comprehensive data reporting in one central, scalable platform. It offers automatic data transfers from pumps using the t:connect mobile app to keep online data current and remove the need for manual pump uploads.
Tandem Source is designed to bring together the features of Tandem’s legacy t:connect, t:connect HCP, and t:connect Portal offerings with new comprehensive data reporting in one central, scalable platform.
Clinical trials are typically required to support a PMA application and are sometimes required for a 510(k) clearance. We anticipate that most of our future AID offerings will require supporting clinical data, either from clinical trials or potentially from evidence that we are able to collect through real-world use of our products.
We anticipate that most of our future AID offerings will require supporting clinical data, either from clinical trials or potentially from evidence that we are able to collect through real-world use of our products. These trials generally require submission of an application for an Investigational Device Exemption (IDE), to the FDA.
The information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only. 17
Additional information about our Environmental, Social and Governance practices as well as our Sustainable Business Report can be found on our website within the “Investor Center” section. The information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only.
Throughout this Annual Report, we refer to these individuals as people with insulin-dependent diabetes. In the geographies we serve, we estimate about 5 million people live with type 1 diabetes of whom, 1.9 million reside in the United States. We estimate approximately 2 million people in the United States live with type 2 diabetes and require intensive insulin therapy.
In the geographies we serve, we estimate more than 5 million people live with type 1 diabetes of whom, approximately 2 million reside in the United States. We estimate nearly 2.5 million people in the United States live with type 2 diabetes and require intensive insulin therapy. Diabetes can be difficult for patients to manage.
We believe that bringing together different perspectives and experiences is fundamental to innovation and continuing to raise the bar in the field of diabetes technology. 2021 was our first full year of having a DE&I Council, which we have continued to expand since that time.
We believe that bringing together different perspectives and experiences is fundamental to innovation and continuing to raise the bar in the field of diabetes technology.
Typically, customers are eligible for insurance reimbursement for the purchase of a new insulin pump once every four years. However, some plans may be limited to once every five years or have additional restrictions or requirements. Insurance reimbursement processes outside the United States vary by geography.
However, some plans may be limited to once every five years or have additional restrictions or requirements. Insurance reimbursement processes outside the United States vary by geography. We are accredited by the Community Health Accreditation Program and are an approved Medicare provider.
We believe these distributors carry minimal inventory at any given time. Outside the United States and Canada, there may be variability in inventory levels among our distributors, particularly when they first begin product sales or surrounding the launch of new products.
Outside the United States and Canada, there may be variability in inventory levels among our distributors, particularly when they first begin product sales or in the quarters surrounding the launch of new products. For the year ended December 31, 2024, two independent distributors each accounted for more than 10% of our worldwide sales.
For the year ended December 31, 2023, two independent distributors each accounted for more than 10% of our worldwide sales. Third-Party Reimbursement In the United States, customer orders are typically fulfilled by billing third-party payors on behalf of our customers, or by using our network of distributors who then bill third-party payors on our customers’ behalf.
Third-Party Reimbursement In the United States, customer orders are typically fulfilled by billing third-party payors on behalf of our customers, or by using our network of distributors who then bill third-party payors on our customers’ behalf. Typically, customers are eligible for insurance reimbursement for the purchase of a new insulin pump once every four years.
Environment, Social and Governance Our Board of Directors and management team believe that environmental stewardship, social responsibility, and solid corporate governance are important to our business strategy and long-term value creation for our shareholders, employees, customers, and communities. The Nominating and Corporate Governance Committee of our Board oversees ESG matters across our business operations in accordance with its charter.
The UK Government has established transitional provisions to recognize the acceptance of CE marked medical devices on the Great Britain market. Environment, Social and Governance Our Board of Directors and management team believe that environmental stewardship, social responsibility, and solid corporate governance are important to our business strategy and long-term value creation for our shareholders, employees, customers, and communities.
We rely on a combination of copyright, patent, trademark, trade secret and other intellectual property laws, non-disclosure agreements and other measures to protect our proprietary rights. As of December 31, 2023, our patent portfolio includes numerous issued patents and pending patent applications in the U.S. and other countries, which in the aggregate, we believe to be important to our business.
We rely on a combination of copyright, patent, trademark, trade secret and other intellectual property laws, non-disclosure agreements and other measures to protect our proprietary rights.
This Certificate and the related conformity assessment process entitles the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EU Declaration of Conformity.
This Certificate and completion of the related conformity assessment process entitles the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EU Declaration of Conformity. 13 As a general rule, demonstration of conformity of medical devices and their manufacturers with the GSPRs must include the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.
The Center for Disease Control and Prevention estimates Type 2 accounts for 90-95% of diagnosed diabetes in adults in the United States. We consider our addressable market to be people diagnosed with diabetes who are living with either type 1 diabetes, or with type 2 diabetes who require intensive insulin therapy.
The Center for Disease Control and Prevention estimates Type 2 accounts for 90-95% of diagnosed diabetes in adults in the United States.
Manufacturing and Quality Assurance Our t:slim X2 pumps, and Tandem Mobi pumps and cartridges, are currently assembled, tested, and packaged at our facilities in San Diego, California. Our t:slim X2 cartridges are manufactured by an experienced third-party contract manufacturer and packaged at our facilities in San Diego.
Our t:slim X2 cartridges are manufactured by an experienced third-party contract manufacturer and packaged at our facilities in San Diego. Outside suppliers are the source for components and some sub-assemblies in the production of our insulin pumps and cartridges.
In addition, we exceeded overall engagement in the professional, scientific and technical sector, as well as the life sciences sector. The results also reflected that we are a mission-driven company with employees’ response on our strength of purpose far exceeding Gallup’s measurement for world class.
The results also reflected that we are a mission-driven company with employees’ response on our strength of purpose far exceeding Gallup’s measurement for world class. We focus on cultivating and encouraging an inclusive and equitable culture where diversity of thought is represented and can thrive throughout our organization.
Our management team is responsible for developing and driving strategic ESG initiatives and programs across our business and providing regular updates on progress to the Nominating and Corporate Governance Committee. Additional information about our Environmental, Social and Governance practices can be found on our website within the “Investor Center” section.
The Audit Committee of our Board oversees ESG matters across our business operations in accordance with its charter. Our management team is responsible for developing and driving strategic ESG initiatives and programs across our business and providing regular updates on progress to the Audit Committee.
Through our product development efforts, we are seeking to expand our addressable market to include people living with type 2 diabetes who require intensive insulin therapy. Diabetes management can vary greatly from person to person, creating multiple market segments based on clinical needs and personal preferences.
Our headquarters are in San Diego, California. We consider our primary addressable market to be people who live with type 1 diabetes. We are seeking to expand our addressable market to include people living with type 2 diabetes who require intensive insulin therapy.
Sugarmate Sugarmate is a mobile app that is designed to help people visualize diabetes therapy data in innovative ways. It allows users to log glucose data and health and nutrition information, and can provide notifications and alerts to users, their family, and their caregivers.
It offers automatic data transfers from pumps using the t:connect mobile app to keep online data current and remove the need for manual pump uploads. 7 Sugarmate Sugarmate is a mobile app that is designed to help people visualize diabetes therapy data in innovative ways.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSome of these provisions: • authorize the issuance of preferred stock with powers, preferences and rights that may be senior to our common stock, which can be created and issued by the board of directors without prior stockholder approval; • provide for a staggered board of directors whereby the board is currently divided into three classes, although our board and stockholders have approved the phased declassification of the board of directors such that the board structure will be completely declassified by our 2024 annual meeting of stockholders; • provide for the removal of a director only with cause and then by the affirmative vote of the holders of a majority of the outstanding shares; • prohibit stockholders from calling special stockholder meetings; • prohibit stockholders from acting by written consent without holding a meeting of stockholders; • require the vote of at least two-thirds of the outstanding shares to approve amendments to the certificate of incorporation or bylaws; and • require advance written notice of stockholder proposals and director nominations. 50 We are also subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock.
Biggest changeSome of these provisions: • authorize the issuance of preferred stock with powers, preferences and rights that may be senior to our common stock, which can be created and issued by the board of directors without prior stockholder approval; • provide for the removal of a director only with cause and then by the affirmative vote of the holders of a majority of the outstanding shares; • prohibit stockholders from calling special stockholder meetings; • prohibit stockholders from acting by written consent without holding a meeting of stockholders; • require the vote of at least two-thirds of the outstanding shares to approve certain amendments to the certificate of incorporation and bylaws; and • require advance written notice of stockholder proposals and director nominations.
As a result, the responses we receive may not be reflective of the broader market and may not provide us accurate insight into the desires of people with insulin-dependent diabetes. In addition, understanding the meaning and significance of such market research responses necessarily requires that analysis be conducted and conclusions be drawn.
As a result, the responses we receive may not be reflective of the broader market and may not provide us with accurate insight into the desires of people with insulin-dependent diabetes. In addition, understanding the meaning and significance of such market research responses necessarily requires that analysis be conducted and conclusions be drawn.
From time to time, we may receive communications from third parties alleging our infringement of their intellectual property rights or offering a license to their intellectual property relating to products that we are currently developing could require us to do one or more of the following: • stop selling current products, developing new products or using technology that allegedly infringes third-party intellectual property; • try to obtain a license to intellectual property from the third parties, which may not be available on reasonable terms or at all; • try to re-design our products around third-party intellectual property; • incur significant royalty payments and legal expenses; or • pay substantial damages to the party whose intellectual property rights we are allegedly infringing.
From time to time, we may receive communications from third parties alleging our infringement of their intellectual property rights or offering a license to their intellectual property relating to products that we are currently developing could require us to do one or more of the following: • stop selling current products, developing new products or using technology that allegedly infringes on third-party intellectual property; • try to obtain a license to intellectual property from the third parties, which may not be available on reasonable terms or at all; • try to re-design our products around third-party intellectual property; • incur significant royalty payments and legal expenses; or • pay substantial damages to the party whose intellectual property rights we are allegedly infringing.
The trading price of our common stock has been and will continue to be volatile in response to a variety of factors, including the following: • actual or anticipated fluctuations in our financial and operating results from period to period; • market acceptance of our current products and products under development, and the recognition of our brand; • introduction of proposed products, technologies or treatment techniques by us or our competitors; 49 • announcements of significant contracts, acquisitions, divestitures or partnerships by us, our competitors or our collaboration partners; • regulatory clearance, certification, or approval of our products or the products of our competitors or collaboration partners, or the failure to obtain such clearances, certifications, or approvals on the projected timeline or at all; • the announcement of a product recall, suspension or other safety notice associated with our products or the products of our competitors, or other similar regulatory enforcement actions; • financial and operating results relative to the expectations of securities analysts and other market participants and the issuance of securities analysts’ reports or recommendations; • threatened or actual litigation, regulatory proceedings, or government investigations; and • general political or economic conditions.
The trading price of our common stock has been and will continue to be volatile in response to a variety of factors, including the following: • actual or anticipated fluctuations in our financial and operating results from period to period; • market acceptance of our current products and products under development, and the recognition of our brand; • introduction of proposed products, technologies or treatment techniques by us or our competitors; • announcements of significant contracts, acquisitions, divestitures or partnerships by us, our competitors or our collaboration partners; • regulatory clearance, certification, or approval of our products or the products of our competitors or collaboration partners, or the failure to obtain such clearances, certifications, or approvals on the projected timeline or at all; • the announcement of a product recall, suspension or other safety notice associated with our products or the products of our competitors, or other similar regulatory enforcement actions; • financial and operating results relative to the expectations of securities analysts and other market participants and the issuance of securities analysts’ reports or recommendations; • threatened or actual litigation, regulatory proceedings, or government investigations; and • general political or economic conditions.
Potential and completed acquisitions and investments involve numerous risks, including: • problems assimilating, maintaining or operating the acquired products or technologies; • issues maintaining uniform standards, procedures, controls and policies; • unanticipated costs, liabilities, impairment charges or write-offs associated with acquisitions or investments; • diversion of management’s attention from our existing business; • risks associated with entering new markets in which we have limited or no experience; and • increased legal and accounting costs relating to the acquisitions or to comply with regulatory requirements or other compliance matters.
Potential and completed acquisitions and investments involve numerous risks, including: • problems assimilating, maintaining or operating the acquired products or technologies; • issues maintaining uniform standards, procedures, controls and policies; • unanticipated costs, liabilities, impairment charges or write-offs associated with acquisitions or investments; 48 • diversion of management’s attention from our existing business; • risks associated with entering new markets in which we have limited or no experience; and • increased legal and accounting costs relating to the acquisitions or to comply with regulatory requirements or other compliance matters.
From time to time, we have financed our liquidity needs under various credit arrangements and we may borrow additional funds in the future. For example, in May 2020, we completed the offering of $287.5 million principal amount of 1.50% Convertible Senior Notes due 2025 (the Notes), which are governed by the terms of an indenture.
From time to time, we have financed our liquidity needs under various credit arrangements and we may borrow additional funds in the future. For example, in May 2020, we completed the offering of $287.5 million aggregate principal amount of 1.50% Convertible Senior Notes due 2025 (the 2025 Notes), which are governed by the terms of an indenture (the 2025 indenture).
These delays could have a negative impact on our product commercialization efforts and the future demand for our products. In addition to the foregoing impacts, disruptions from outbreaks or epidemics, could result in delays in or the suspension of our manufacturing operations, research and product development activities, regulatory work streams, clinical development programs and other important commercial functions.
These delays could have a negative impact on our product commercialization efforts and the future demand for our products. 33 In addition to the foregoing impacts, disruptions from outbreaks or epidemics, could result in delays in or the suspension of our manufacturing operations, research and product development activities, regulatory work streams, clinical development programs and other important commercial functions.
Accordingly, our future capital requirements will depend on many factors, including: • revenue generated by sales of our products, as well as the gross profits and gross margin we realize from such sales; 34 • the costs associated with maintaining and expanding an appropriate sales, marketing, clinical and customer service infrastructure; • expenses associated with developing and commercializing our proposed products or technologies, including capital expenditures we make to maintain or enhance our manufacturing operations and distribution capabilities; • the cost of obtaining and maintaining regulatory clearance, certification, or approval for our products and our manufacturing facilities, and of ongoing compliance with other legal and regulatory requirements; • expenses we incur in connection with current or future litigation or governmental investigations; • expenses we may incur or other financial commitments we may make in connection with current and potential new acquisitions, investments, business or commercial collaborations, development agreements or licensing arrangements; and • general and administrative expenses.
Accordingly, our future capital requirements will depend on many factors, including: • revenue generated by sales of our products, as well as the gross profits and gross margin we realize from such sales; • the costs associated with maintaining and expanding an appropriate sales, marketing, clinical and customer service infrastructure; 31 • expenses associated with developing and commercializing our proposed products or technologies, including capital expenditures we make to maintain or enhance our manufacturing operations and distribution capabilities; • the cost of obtaining and maintaining regulatory clearance, certification, or approval for our products and our manufacturing facilities, and of ongoing compliance with other legal and regulatory requirements; • expenses we incur in connection with current or future litigation or governmental investigations; • expenses we may incur or other financial commitments we may make in connection with current and potential new acquisitions, investments, business or commercial collaborations, development agreements or licensing arrangements; and • general and administrative expenses.
Our failure to comply with our contractual obligations may result in a loss of revenue, loss of existing and future business opportunities, and payment of financial damages to the other parties involved. We publish privacy policies, marketing materials and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy.
Our failure to comply with our contractual obligations may result in a loss of revenue, loss of existing and future business opportunities, and payment of financial damages to the other parties involved. We publish privacy policies, marketing materials and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security.
In addition, our current or future level of indebtedness could affect our business, operations and strategy in several important ways, including the following: 52 • we may be required to dedicate a portion of our current liquidity or cash flow from operations to interest payments, limiting the availability of cash for other purposes; • covenants contained in future agreements governing indebtedness may limit our ability to borrow additional funds, refinance indebtedness or make certain investments; • debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and our industry; • a high level of indebtedness may increase our vulnerability to adverse economic and competitive conditions; and • a high level of indebtedness may limit our ability to obtain additional financing in the future or negatively impact the terms on which additional financing may be obtained.
In addition, our current or future level of indebtedness could affect our business, operations and strategy in several important ways, including the following: • we may be required to dedicate a portion of our current liquidity or cash flow from operations to interest payments, limiting the availability of cash for other purposes; • covenants contained in future agreements governing indebtedness may limit our ability to borrow additional funds, refinance indebtedness or make certain investments; • debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and our industry; 29 • a high level of indebtedness may increase our vulnerability to adverse economic and competitive conditions; and • a high level of indebtedness may limit our ability to obtain additional financing in the future or negatively impact the terms on which additional financing may be obtained.
Further, we may not achieve anticipated improvements in manufacturing efficiency as we undertake actions to expand our manufacturing capacity. We are also subject to other general market and economic conditions that may increase our expenses, including unpredictable variability in commodity prices, wage increases and inflation.
Further, we may not achieve the anticipated improvements in manufacturing efficiency as we undertake actions to expand our manufacturing capacity. We are also subject to other general market and economic conditions that may increase our expenses, including unpredictable variability in commodity prices, wage increases and inflation.
For example, our third-party contract manufacturers are located in regions subject to natural disasters, including earthquakes, hurricanes, floods, fires and other catastrophic events. We strive to partner with organizations that mitigate their business risks associated with climate change.
For example, our third-party contract manufacturers are located in regions subject to natural disasters, including earthquakes, hurricanes, floods, wild fires and other catastrophic events. We strive to partner with organizations that mitigate their business risks associated with climate change.
The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions before the maturity of the Notes.
The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions before the applicable maturity of the Notes.
Holders of the Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any.
Holders of the Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental change (as defined in the applicable indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any.
Our failure to appropriately respond to these findings and take corrective action, or to comply with applicable regulations for any other reason, could jeopardize our ability to sell our products and result in enforcement actions such as fines, civil or criminal penalties, injunctions, warning letters, product recalls, operating restrictions, interruption of production, delays in the introduction of products into the market, refusal of the FDA or other regulatory authorities or Notified Bodies to grant future clearances, certification, or approvals, and the suspension or withdrawal of existing clearances, certifications, or approvals by the FDA, other regulatory authorities or Notified Bodies.
Our failure to appropriately respond to these findings and take corrective action, or to comply with applicable regulations for any other reason, could jeopardize our ability to sell our products and result in enforcement actions such as fines, civil or criminal penalties, injunctions, warning letters, product recalls, operating restrictions, interruption of production, delays in the introduction of products into the market, refusal of the FDA or other comparable foreign regulatory authorities or Notified Bodies to grant future clearances, certification, or approvals, and the suspension or withdrawal of existing clearances, certifications, or approvals by the FDA, other comparable foreign regulatory authorities or Notified Bodies.
If we or the third parties on whom we rely fail, or are perceived to have failed to address or comply with applicable data privacy obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing of personal data; orders to destroy or not use personal data; and imprisonment of company officials.
If we or the third parties with whom we work fail, or are perceived to have failed to address or comply with applicable data privacy obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing of personal data; orders to destroy or not use personal data; and imprisonment of company officials.
Any additional operating losses will have an adverse effect on our stockholders’ equity, and we cannot assure you that we will be able to sustain profitability.
Any additional operating losses will have an adverse effect on our stockholders’ equity, and we cannot assure you that we will be able to achieve and sustain profitability.
Sales of these products may be negatively impacted by many factors, including: 18 • market acceptance of the insulin pumps and related products manufactured and sold by our key competitors, including Insulet, Medtronic, and Ypsomed; • the potential that breakthroughs for the monitoring, treatment or prevention of diabetes may render our insulin pumps obsolete or less desirable; • adverse regulatory or legal actions relating to our products, or similar products or technologies of our competitors; • failure of our Tandem Device Updater to accurately and timely provide customers with remote access to new product features and functionality as anticipated, or our failure to obtain regulatory clearance, certification, or approval for any such updates; • changes in reimbursement rates or policies relating to insulin pumps or similar products or technologies by third-party payors; • competitive pricing and attrition rates of consumers who cease using our products; • our inability to enter into contracts with third-party payors on a timely basis and on acceptable terms; • problems arising from the expansion of our manufacturing capabilities and commercial operations, or destruction, loss, or temporary shutdown of our manufacturing facilities; • concerns regarding the perceived safety, reliability or cybersecurity of any of our products, or any component thereof, particularly in connection with the launch of additional mobile app features and functionality and other software products; and • claims that any of our products, or any component thereof, infringes on patent rights or other intellectual property rights of third parties.
Sales of these products may be negatively impacted by many factors, including: 17 • market acceptance of the insulin pumps and related products manufactured and sold by our key competitors, including Insulet, Medtronic, Ypsomed and Beta Bionics; • the potential that breakthroughs for the monitoring, treatment or prevention of diabetes may render our insulin pumps obsolete or less desirable or reduce the size of our potential market; • adverse regulatory or legal actions relating to our products, or similar products or technologies of our competitors; • failure of our Tandem Device Updater to accurately and timely provide customers with remote access to new product features and functionality as anticipated, or our failure to obtain regulatory clearance, certification, or approval for any such updates; • changes in reimbursement rates or policies relating to insulin pumps or similar products or technologies by third-party payors; • competitive pricing and attrition rates of consumers who cease using our products; • our inability to enter into contracts with third-party payors on a timely basis and on acceptable terms; • problems arising from the expansion of our manufacturing capabilities and commercial operations, or destruction, loss, or temporary shutdown of our manufacturing facilities; • concerns regarding the perceived safety, reliability or cybersecurity of any of our products, or any component thereof, particularly in connection with the launch of additional mobile app features and functionality and other software products; and • claims that any of our products, or any component thereof, infringes on patent rights or other intellectual property rights of third parties.
Our primary competitors are major medical device companies, primarily Insulet, Medtronic, and Ypsomed. There are also a number of other companies developing and marketing their own insulin delivery systems and/or related software applications, including insulin pumps and Bluetooth-enabled insulin pens to support MDI therapy.
Our primary competitors are major medical device companies, primarily Insulet, Medtronic, Ypsomed and Beta Bionics. There are also a number of other companies developing and marketing their own insulin delivery systems and/or related software applications, including insulin pumps and Bluetooth-enabled insulin pens to support MDI therapy.
Moreover, we have designed our hardware products to resemble modern consumer electronic devices to address certain embarrassment and functionality concerns consumers have raised with respect to traditional pumps. Similarly, our newer mobile software applications are being designed to incorporate features and functions that are common to other consumer-oriented applications.
Moreover, we have designed our hardware products to resemble modern consumer electronic devices to address certain wearability and functionality concerns consumers have raised with respect to traditional pumps. Similarly, our newer mobile software applications are being designed to incorporate features and functions that are common to other consumer-oriented applications.
If any of our dosing devices is found to infringe Roche’s patents and Roche’s patents are also found to be valid, we could be required to redesign our technology or obtain a license from Roche to continue importing, marketing and selling our dosing devices in certain countries in Europe.
If any of our products are found to infringe Roche’s patents and Roche’s patents are also found to be valid, we could be required to redesign our technology or obtain a license from Roche to continue importing, marketing and selling our dosing devices in certain countries in Europe.
To implement our business strategy and achieve consistent profitability, we need to, among other things, increase sales of our products and the gross profit associated with those sales, maintain an appropriate customer service, training and support infrastructure, fund ongoing research and development (R&D) activities, create additional efficiencies in our manufacturing processes while adding to our capacity, and obtain regulatory clearance, certification or approval to commercialize our products currently under development both in the United States and the more than 25 countries outside the United States in which our insulin pumps are available.
To implement our business strategy and achieve consistent profitability, we need to, among other things, increase sales of our products and the gross profit associated with those sales, maintain an appropriate customer service, training and support infrastructure, fund ongoing research and development (R&D) activities, create additional efficiencies in our manufacturing processes while adding to our capacity, and obtain regulatory clearance, certification or approval to commercialize our products currently under development both in the United States and the 24 countries outside the United States in which our insulin pumps are available.
We operate in a very competitive industry and if we fail to compete successfully against our existing or potential competitors, or if the competitive environment harms our business partners, our financial condition and operating results may be negatively affected.
We operate in a very competitive industry and if we fail to compete successfully against our existing or future competitors, or if the competitive environment harms our business partners, our financial condition and operating results may be negatively affected.
Many of the jurisdictions in which our products are sold have experienced and could continue to experience unfavorable general economic conditions, such as a recession or economic slowdown, including as a result of political instability and military hostilities in certain geographies, concerns over the potential downgrade of U.S. sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other geographies, and domestic and global inflationary trends, any of which could negatively affect the affordability of, and consumer demand for, our products.
Many of the jurisdictions in which our products are sold have experienced and could continue to experience unfavorable general economic conditions, such as a recession or economic slowdown, including as a result of political instability and military hostilities in certain geographies, concerns over the potential downgrade of United States sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other geographies, and domestic and global inflationary trends, any of which could negatively affect the affordability of, and consumer demand for, our products.
In the UK, medical devices are governed by the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) (UK MDR 2002) which, for the time being, retains a regulatory framework similar to the framework set out by the MDD.
In Great Britain, medical devices are governed by the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) (UK MDR 2002) which, for the time being, retains a regulatory framework similar to the framework set out by the MDD.
Member State national legislation; • reduced protection for our intellectual property rights in certain countries outside the U.S. than exists in the U.S.; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation and workforce instability, and political instability in foreign economies and markets; • compliance with tax, employment, immigration and labor laws, such as the Foreign Corrupt Practices Act and comparable foreign legislation; • difficulties associated with foreign legal systems, including increased costs associated with enforcing contractual obligations in foreign jurisdictions; • political instability and actual or anticipated military or political conflicts; • difficulties in managing international relationships, including any relationships that we establish with foreign partners, distributors, or sales or marketing agents; • foreign taxes, including withholding of payroll taxes; • different reimbursement systems; and • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country.
Member State national legislation; • reduced protection for our intellectual property rights in certain countries outside the United States compared to the protection that exists in the United States; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation and workforce instability, and political instability in foreign economies and markets; • compliance with tax, employment, immigration and labor laws, such as the Foreign Corrupt Practices Act and comparable foreign legislation; • difficulties associated with foreign legal systems, including increased costs associated with enforcing contractual obligations in foreign jurisdictions; • political instability and actual or anticipated military or political conflicts; • difficulties in managing international relationships, including any relationships that we establish with foreign partners, distributors, or sales or marketing agents; • foreign taxes, including withholding and payroll taxes; • different reimbursement systems; and • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country.
In addition, sales of any of our current or future insulin pump products with CGM integration are subject to the continuation of our applicable agreements with Dexcom, Abbott, or other third parties which, under some circumstances, may be subject to termination, with or without cause, on relatively short notice.
In addition, sales of any of our current or future insulin pump products with continuous glucose monitoring (CGM) integration are subject to the continuation of our applicable agreements with Dexcom, Abbott, or other third parties which, under some circumstances, may be subject to termination, with or without cause, on relatively short notice.
Federal government agencies continue to issue proposed and final rules implementing additional process, controls and guidelines for compliance under these laws with which we will be required to comply. We cannot predict the impact of any changes in these laws and whether they might be retroactive. Further, the U.S.
Federal government agencies continue to issue proposed and final rules implementing additional process, controls and guidelines for compliance under these laws with which we will be required to comply. We cannot predict the impact of any changes in these laws and whether they might be retroactive.
In addition, the perception that some or all of the Notes may be converted into shares of our common stock in the future could have a negative impact on the trading price of our common stock. Certain provisions in the indenture governing the Notes may delay or prevent an otherwise beneficial takeover attempt.
In addition, the perception that some or all of the Notes may be converted into shares of our common stock in the future could have a negative impact on the trading price of our common stock. 30 Certain provisions in the indentures governing the Notes may delay or prevent an otherwise beneficial takeover attempt.
We sell our products in approximately 25 countries outside the United States and may seek to begin commercial sales of our products in additional geographies in the future. As we continue to expand our operations outside of the United States and launch new products, we are increasingly subject to additional regulatory and legal requirements in the international markets.
We sell our products in certain countries outside the United States and may seek to begin commercial sales of our products in additional geographies in the future. As we continue to expand our operations outside of the United States and launch new products, we are increasingly subject to additional regulatory and legal requirements in the international markets.
To date, we have funded our operations primarily through cash collected from product sales, private and public offerings of our equity securities, and debt financing.
To date, we have funded our operations primarily through cash collected from product sales, private and public offerings of our equity securities, and debt financings.
Our sales in the approximately 25 countries in which our products are offered outside the United States, which accounted for approximately 26% of our total sales during 2023, are accompanied by certain financial and other risks related to international business markets, including: • local product preferences and differing regulatory requirements for product clearances, certifications, or approvals; • differing U.S. and foreign medical device import and export rules; • more restrictive privacy and security laws relating to personal information of end-users and employees, including GDPR and other E.U.
Our sales in the approximately 24 countries in which our products are offered outside the United States, which accounted for approximately 28% of our total sales during 2024, are accompanied by certain financial and other risks related to international business markets, including: • local product preferences and differing regulatory requirements for product clearances, certifications, or approvals; • differing U.S. and foreign medical device import and export rules; • more restrictive privacy and security laws relating to personal information of end-users and employees, including GDPR and other E.U.
The laws that may affect our ability to operate include: 46 • the federal and state Anti-Kickback Statutes, which prohibit, among other things, persons from knowingly and willfully soliciting, receiving, offering, paying or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and state Medicaid programs; • federal and state false claims laws which prohibit, among other things, persons from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to Medicare, state Medicaid programs, or other third-party payors; • federal and state physician self-referral laws, such as the Stark Law, which prohibit a physician from referring Medicare or Medicaid patients to an entity providing “designated health services,” including a company that furnishes durable medical equipment, with which the physician or their immediate family member has a financial relationship unless that financial relationship meets an exception under the applicable law; • federal and state laws, such as the Civil Monetary Penalties Law, that prohibit an individual or entity from offering or transferring remuneration to any person eligible for benefits under a federal or state health care program which such individual or entity knows or should know are likely to influence such eligible individual’s choice of provider, practitioner or supplier of any item or service for which payment may be made under federal health care programs such as Medicare and state Medicaid programs; • federal criminal laws enacted as part of HIPAA that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • federal and state disclosure laws, such as the Physician Payments Sunshine Act, which require certain manufacturers, including medical device manufacturers, to submit annual data pertaining to payments or other transfers of value to covered recipients, including physicians and certain other healthcare providers, and teaching hospitals; • federal and state laws governing the use, disclosure and security of personal information, including protected health information, such as HIPAA and the Health Information Technology for Economic and Clinical Health; and • foreign and U.S. state law equivalents of each of the above federal laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
The laws that may affect our ability to operate include: • the federal and state Anti-Kickback Statutes, which prohibit, among other things, persons from knowingly and willfully soliciting, receiving, offering, paying or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and state Medicaid programs; • federal and state false claims laws which prohibit, among other things, persons from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to Medicare, state Medicaid programs, or other third-party payors; • federal and state physician self-referral laws, such as the Stark Law, which prohibit a physician from referring Medicare or Medicaid patients to an entity providing “designated health services,” including a company that furnishes durable medical equipment, with which the physician or their immediate family member has a financial relationship unless that financial relationship meets an exception under the applicable law; • federal and state laws, such as the Civil Monetary Penalties Law, that prohibit an individual or entity from offering or transferring remuneration to any person eligible for benefits under a federal or state health care program which such individual or entity knows or should know are likely to influence such eligible individual’s choice of provider, practitioner or supplier of any item or service for which payment may be made under federal health care programs such as Medicare and state Medicaid programs; • federal criminal laws enacted as part of HIPAA that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • federal and state disclosure laws, such as the Physician Payments Sunshine Act, which require certain manufacturers, including medical device manufacturers, to submit annual data pertaining to payments or other 43 transfers of value to covered recipients, including physicians and certain other healthcare providers, and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members; • federal and state laws governing the use, disclosure and security of personal information, including protected health information, such as HIPAA and the HITECH; and • foreign and United States state law equivalents of each of the above federal laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
Our operating results, and the variability of these operating results, will be affected by numerous factors, including: • our ability to commercialize and sell our current and future products and our ability to increase sales and gross profit from our products, including insulin pumps and the related insulin cartridges and infusion sets; • the number and mix of our products sold in each quarter; • acceptance of our products by people with insulin-dependent diabetes, their caregivers, healthcare providers and third-party payors; • the pricing of our products and competing products, including the use of discounts, rebates or other financial incentives by us or our competitors; • the effect of third-party coverage and reimbursement policies; • our ability to maintain our existing infrastructure; • the amount of, and the timing of the payment for, insurance deductibles required to be paid by our customers and potential customers under their existing insurance plans; • interruption in the manufacturing or distribution of our products; 35 • our ability to simultaneously manufacture multiple products that meet quality, reliability and regulatory requirements; • seasonality and other factors affecting the timing of purchases of our products; • timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; • results of clinical research and trials on our existing and future products; • the ability of our suppliers to timely provide us with an adequate supply of components that meet our requirements for product quality and reliability; • regulatory clearances, certifications, or approvals, or adverse regulatory or legal actions, affecting our products or those of our competitors; and • the timing of revenue and expense recognition associated with our product sales pursuant to applicable accounting standards.
Our operating results, and the variability of these operating results, will be affected by numerous factors, including: • our ability to commercialize and sell our current and future products and our ability to increase sales and gross profit from our products, including insulin pumps and the related insulin cartridges and infusion sets; • the number and mix of our products sold in each quarter; • acceptance of our products by people with insulin-dependent diabetes, their caregivers, healthcare providers and third-party payors; • the pricing of our products and competing products, including the use of discounts, rebates or other financial incentives by us or our competitors; • the effect of third-party coverage and reimbursement policies; • our ability to maintain our existing infrastructure; • the amount of, and the timing of the payment for, insurance deductibles required to be paid by our customers and potential customers under their existing insurance plans; • interruption in the manufacturing or distribution of our products, including as a result of our anticipated initiation of direct sales in select European countries beginning in 2026; • our ability to simultaneously manufacture multiple products that meet quality, reliability and regulatory requirements; • seasonality and other factors affecting the timing of purchases of our products; 32 • timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; • results of clinical research and trials on our existing and future products; • the ability of our suppliers to timely provide us with an adequate supply of components that meet our requirements for product quality and reliability; • regulatory clearances, certifications, or approvals, or adverse regulatory or legal actions, affecting our products or those of our competitors; and • the timing of revenue and expense recognition associated with our product sales pursuant to applicable accounting standards.
Department of Justice (DOJ) in conjunction with other federal agencies, has increased its scrutiny of interactions between healthcare companies and healthcare providers. Adjusting to new regulatory guidelines and responding to investigations can be time and resource-consuming and can divert management’s attention from our core business.
Further, the United States Department of Justice (DOJ) in conjunction with other federal agencies, has increased its scrutiny of interactions between healthcare companies and healthcare providers. Adjusting to new regulatory guidelines and responding to investigations can be time and resource-consuming and can divert management’s attention from our core business.
Further, our view is that diabetes management can vary greatly from person to person, creating multiple market segments based on clinical needs and personal preferences. However, each of these assumptions may prove to be inaccurate and limited sources exist to compare treatment alternatives and obtain reliable market data.
Further, diabetes management can vary greatly from person to person, creating multiple market segments based on clinical needs and personal preferences. However, each of these assumptions may prove to be inaccurate and limited sources exist to compare treatment alternatives and obtain reliable market data.
Climate-related events, including the increasing frequency of extreme weather events and their impact on the U.S., Mexico, Canada, and other major regions’ critical infrastructure along with potential related regulations, have the potential to disrupt our business, our third-party suppliers, and/or the business of our customers.
Climate-related events, including the increasing frequency of extreme weather events and their impact on the United States, Mexico, Canada, and other major regions’ critical infrastructure along with potential related regulations, have the potential to disrupt our business, our third-party suppliers, and/or the business of our customers.
The actual incidence of diabetes, and the actual demand for our products or competing products, could differ materially from our projections if our assumptions are incorrect. In addition, our strategy of focusing exclusively on the insulin-dependent diabetes market may limit our ability to increase sales or achieve profitability.
The actual incidence of diabetes, and the actual demand for our products or competing products, could differ materially from our projections. In addition, our strategy of focusing exclusively on the insulin-dependent diabetes market may limit our ability to increase sales or achieve profitability.
Moreover, despite our efforts, our employees and personnel or third parties on whom we rely, may fail to comply with such obligations, which could negatively impact our business operations.
Moreover, despite our efforts, our employees and personnel or third parties with whom we work, may fail to comply with such obligations, which could negatively impact our business operations.
The option counterparties are financial institutions, and we will be subject to the risk that any or all of them may default under the Capped Call Transactions.
We are subject to counterparty risk with respect to the Capped Call Transactions. The option counterparties are financial institutions, and we will be subject to the risk that any or all of them may default under the Capped Call Transactions.
Many of our employees were previously employed at other medical device companies, including those that are our competitors or could become our competitors. We may be subject to claims that we, or our employees, have used or disclosed trade secrets or other proprietary information.
We may be subject to damages resulting from claims that we, or our employees, have wrongfully used or disclosed trade secrets or other proprietary information of our competitors. Many of our employees were previously employed at other medical device companies, including those that are our competitors or could become our competitors.
Our failure to comply with U.S. federal and state fraud and abuse laws, including anti-kickback laws and other U.S. federal and state anti-referral laws, or comparable foreign legislation, could have a material, adverse impact on our business. The U.S. has numerous federal and state laws pertaining to healthcare fraud and abuse.
Our failure to comply with United States federal and state fraud and abuse laws, including anti-kickback laws and other United States federal and state anti-referral laws, or comparable foreign legislation, could have a material, adverse impact on our business. The United States has numerous federal and state laws pertaining to healthcare fraud and abuse.
If our information technology systems or those third parties upon which we rely, our data, or our software are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; harm to our reputation; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
If our information technology systems or those of third parties with whom we work, our data, or our software are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; harm to our reputation; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
We have developed retention programs, including our Tandem Choice Program, aimed at our customers, their caregivers and healthcare providers, which include discounts, training specific to our products, ongoing support by our sales and clinical employees, and technical support and customer service.
We have developed retention programs aimed at our customers, their caregivers and healthcare providers, which include discounts, training specific to our products, ongoing support by our sales and clinical employees, and technical support and customer service.
Medicare program. Medicare periodically reviews its reimbursement practices for diabetes-related products, and there is uncertainty as to the future Medicare reimbursement rate for our products.
Medicare periodically reviews its reimbursement practices for diabetes-related products, and there is uncertainty as to the future Medicare coverage structure and reimbursement rate for our products.
For example, we believe that the benefits of insulin pump therapy as compared to other common insulin treatment alternatives will continue to drive growth in the market for insulin pump therapy. In addition, we believe the incidence of diabetes in the United States and worldwide is increasing.
For example, we believe that the benefits of insulin pump therapy as compared to other common insulin treatment alternatives will continue to drive growth in the market for insulin pump therapy. In addition, World Health Organization data indicates that the incidence of diabetes in the United States and worldwide is increasing.
While we may enter into additional contracts both in the United States and the more than 25 countries outside the United States in which our insulin pumps are available through third-party payors, and add coverage for future products under our current agreements, we cannot guarantee that we will succeed in doing so or that the reimbursement contracts that we are able to negotiate will enable us to sell our products on a profitable basis.
While we may enter into additional contracts both in the United States and the countries outside the United States in which our insulin pumps are available through third-party payors, and add coverage for future products under our current agreements, we cannot guarantee that we will succeed in doing so or that the reimbursement contracts that we are able to negotiate will enable us to sell our products on a profitable basis or in certain channels, including the pharmacy channel.
Such results could slow the adoption of our products and significantly reduce our sales, which could prevent us from achieving our forecasted sales targets or achieving or sustaining profitability. 29 If the results of clinical studies or other experience, such as our monitoring or investigation of customer complaints, indicate that our products may cause or create an unacceptable risk of unexpected or serious complications or other unforeseen negative effects, we could be required to inform our customers of these risks or complications or, in more serious circumstances, we could be subject to mandatory product recalls, suspension or withdrawal of clearance, certification, or approval from regulatory authorities or Notified Bodies, product recalls or seizure, operating restrictions, interruption of production, fines, civil penalties and criminal prosecution which could result in significant legal liability, harm to our reputation, and a decline in our product sales.
If the results of clinical studies or other experience, such as our monitoring or investigation of customer complaints, indicate that our products may cause or create an unacceptable risk of unexpected or serious complications or other unforeseen negative effects, we could be required to inform our customers of these risks or complications or, in more serious circumstances, we could be subject to mandatory product recalls, suspension or withdrawal of clearance, certification, or approval from regulatory authorities or Notified Bodies, product recalls or seizure, operating restrictions, interruption of production, fines, civil penalties and criminal prosecution which could result in significant legal liability, harm to our reputation, and a decline in our product sales.
For example, as per the California Consumer Privacy Act of 2018 (CCPA), as amended by the California Privacy Rights Act of 2020 (CPRA) (collectively, “CCPA”), noncompliance may carry fines of up to 7,500 U.S. Dollars per violation; the CCPA also allows private litigants affected by certain data breaches to recover significant statutory damages.
For example, under the California Consumer Privacy Act of 2018 (CCPA), as amended by the California Privacy Rights Act of 2020 (CPRA) (collectively, CCPA), noncompliance may carry fines of up to $7,500 per intentional violation; the CCPA also allows private litigants affected by certain data breaches to recover significant statutory damages.
We are actively pursuing alternative suppliers of several existing components and qualifying new alternatives to existing select components, but there is no assurance that we will be able to identify alternative sources that meet our requirements and at comparable prices, or at all.
We consistently evaluate alternative suppliers of several existing components and qualifying new alternatives to existing select components, but there is no assurance that we will be able to identify alternative sources that meet our requirements and at comparable prices, or at all.
A default under the indenture, or the fundamental change itself, could also lead to a default under agreements governing our existing or future indebtedness.
A default under an indenture, or the fundamental change itself, could also lead to a default under agreements governing our existing or future indebtedness, including the other indenture.
The FDA and other U.S. governmental agencies and foreign regulatory authorities regulate numerous elements of our business, including: • product design and development; • pre-clinical and clinical testing and trials; • product safety; • establishment registration and product listing; • labeling, packaging and storage; • marketing, manufacturing, sales and distribution; • import and export; • pre-market clearance, certification, or approval; • servicing and post-market surveillance; 44 • advertising and promotion; and • recalls and field safety corrective actions.
The FDA and other United States governmental agencies and comparable foreign regulatory authorities and Notified Bodies regulate numerous elements of our business, including: • product design and development; • pre-clinical and clinical testing and trials; • product safety; • establishment registration and product listing; • labeling, packaging and storage; • marketing, manufacturing, sales and distribution; • import and export; • pre-market clearance, certification, or approval; • servicing and post-market surveillance; • advertising and promotion; and • recalls and field safety corrective actions.
We are subject to numerous risks related to our manufacturing capabilities, including: • quality or reliability defects in product components that we source from third-party suppliers; • our inability to secure product components in a timely manner due to shipping delays at ports of entry or exit, the impact of natural disasters, global conflicts, health pandemics or other issues, in sufficient quantities and on commercially reasonable terms; • difficulty identifying and qualifying alternative suppliers for components in a timely manner; • implementing and maintaining acceptable quality systems while experiencing rapid growth; • our failure to increase production of products to meet demand; • our inability to modify production lines and expand manufacturing facilities to enable us to efficiently produce future products or implement changes in current products in response to consumer demand or regulatory requirements; • our inability to manufacture multiple products simultaneously while utilizing common manufacturing equipment; • government-mandated or voluntary closures of, or operational limitations impacting, our manufacturing facilities; and • potential damage to or destruction of our manufacturing equipment or manufacturing facilities.
We are subject to numerous risks related to our manufacturing capabilities, including: • quality or reliability defects in product components that we source from third-party suppliers; • our inability to secure product components in a timely manner due to shipping delays at ports of entry or exit, the impact of natural disasters, global conflicts, health pandemics or other issues, in sufficient quantities and on commercially reasonable terms; • difficulty identifying and qualifying alternative suppliers for components in a timely manner; • implementing and maintaining acceptable quality systems while experiencing rapid growth; • our failure to increase production of products to meet demand; • our inability to modify production lines and expand manufacturing facilities to enable us to efficiently produce future products or implement changes in current products in response to consumer demand or regulatory requirements; • our inability to manufacture multiple products simultaneously while utilizing common manufacturing equipment; • government-mandated or voluntary closures of, or operational limitations impacting, our manufacturing facilities; and • potential damage to or destruction of our manufacturing equipment or manufacturing facilities. 24 As demand for our products increases, and as the number of our commercial products expands, we will have to invest additional resources to purchase components, hire and train employees, and enhance our manufacturing processes and quality systems.
If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences. 38 Obligations related to data privacy are quickly changing, becoming increasingly stringent, and creating uncertainty.
Regulators in the United States are increasingly scrutinizing these statements, and if these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences. 35 Obligations related to data privacy are quickly changing, becoming increasingly stringent, and creating uncertainty.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. In addition, our insulin pumps and other products rely on software and hardware, some of which is developed by third-party service providers, that could contain vulnerabilities.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. 36 In addition, our insulin pumps and other products rely on software and hardware, some of which is developed by third parties with whom we work, that could contain vulnerabilities.
Our sales and marketing efforts are dependent on independent distributors who are free to market products that compete with our products. If we are unable to maintain or expand our network of independent distributors, our sales may be negatively affected.
Our sales and marketing efforts in the United States are largely dependent on independent distributors who are free to market products that compete with our products. If we are unable to maintain or expand our network of independent distributors, our sales may be negatively affected.
If we are unable to expand internationally, manage the complexity of our global operations successfully or if we incur unanticipated expenses, we may not achieve the expected benefits of this expansion and our financial condition and results of operations could be materially and adversely impacted. 32 Failure to obtain any required regulatory authorization, clearance or certification in foreign jurisdictions will prevent us from marketing our products in international markets.
If we are unable to expand internationally, effectively transition to direct sales in certain European countries, manage the complexity of our global operations successfully or if we incur unanticipated expenses, we may not achieve the expected benefits of this expansion and our financial condition and results of operations could be materially and adversely impacted. 28 Failure to obtain any required regulatory authorization, clearance or certification in foreign jurisdictions will prevent us from marketing our products in international markets.
Although it is difficult to predict and adequately prepare to meet the challenges to our business posed by climate change, if new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory obligations as well as adverse impacts on raw material sourcing, manufacturing operations and the distribution of our products.
Although it is difficult to predict and adequately prepare to meet the challenges to our business posed by climate change, if new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory obligations as well as adverse impacts on raw material sourcing, manufacturing operations and the distribution of our products. 46 Other Risks The price of our common stock may continue to fluctuate significantly.
The Notes are our senior unsecured obligations. The Notes contain certain debt service requirements. Pursuant to the Notes, interest is payable in cash semi-annually at a rate of 1.50% per year. Our failure to comply with certain obligations under the Notes, or inability to make required debt service payments, could result in an event of default.
The Notes are our senior unsecured obligations, and interest on the Notes is payable in cash semi-annually at a rate of 1.50% per year. Our failure to comply with certain obligations under the Notes, or inability to make required debt service payments, could result in an event of default under the relevant indenture.
Further, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA 2022”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.
Further, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the IRA 2022) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in the Affordable Care Act marketplaces through plan year 2025.
A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our platform/products/services. Furthermore, many of the third parties upon whom we rely are subject to similar risks.
A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to provide our products and services. Furthermore, many of the third parties with whom we work are subject to similar risks.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If the third parties upon whom we rely experience a security incident or other interruption, we could experience adverse consequences.
Our ability to monitor information security practices of these third parties is limited, and these third parties may not have adequate information security measures in place. If the third parties with whom we work experience a security incident or other interruption, we could experience adverse consequences.
The process of obtaining regulatory clearances, certification, or approvals to market a medical device can be costly and time-consuming, which may be exacerbated if the FDA or other regulatory authorities or Notified Bodies in the EU changes their clearance, certification, and approval policies, and we may not be able to obtain these clearances, certification for our proposed products or approvals on a timely basis or at all, including as a result of: • our inability to demonstrate that our products are safe and effective for their intended users; • the data from our pre-clinical studies or clinical trials may be insufficient to support clearance, certification, or approval; or • the failure of the manufacturing process or facilities we use to meet applicable requirements.
The process of obtaining regulatory clearances, certification, or approvals to market a medical device can be costly and time-consuming, which may be exacerbated if the FDA or other comparable regulatory authorities or Notified Bodies in the EU changes their clearance, certification, and approval policies, and we may not be able to obtain these clearances, certification for our proposed products or approvals on a timely basis or at all, including as a result of: • our inability to demonstrate that our products are safe and effective for their intended users; • the data from our pre-clinical studies or clinical trials may be insufficient to support clearance, certification, or approval; or • the failure of the manufacturing process or facilities we use to meet applicable requirements. 41 Any delay in, or failure to receive or maintain, clearance, certification, or approval for our products under development could prevent us from generating revenue from these products or achieving profitability.
A number of countries in which we conduct business, including through our subsidiaries, such as the Netherlands and Switzerland, have enacted with effect from January 1, 2024, or are in the process of enacting, core elements of the Pillar Two rules.
A number of countries in which we conduct business, including through our subsidiaries, such as the Netherlands and Switzerland, have enacted, or are in the process of enacting, core elements of the Pillar Two rules.
If we (or a third party upon whom we rely) experience a security incident (such as the phishing attack we experienced in 2020) or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims) and mass arbitration demands; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we or a third party with whom we work experience a security incident such as the phishing attack we experienced in 2020, or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (e.g., investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information including personal data, litigation including class claims and mass arbitration demands; indemnification obligations; negative publicity; reputational harm; loss of investor, partner or customer confidence in the effectiveness of our cybersecurity measures; monetary fund diversions; diversion of management attention; interruptions in our operations including availability of data; financial loss; and other similar harms.
Our primary competitors may enjoy several competitive advantages over us, including: • greater financial and human resources for sales and marketing, product development, customer service and clinical resources; • greater ability to respond to competitive pressures, regulatory uncertainty, or challenges within the financial markets; • established relationships with healthcare providers, third-party payors and regulatory agencies; • established reputation and name recognition among healthcare providers and other key opinion leaders in the medical industry generally and the diabetes industry in particular; 20 • larger and more established distribution networks; • greater ability to cross-sell products or provide incentives to healthcare providers to use their products; and • more experience in conducting R&D, manufacturing, clinical trials, and obtaining regulatory approval or clearance.
Our primary competitors enjoy several competitive advantages over us, including: • greater financial and human resources for sales and marketing, product development, customer service and clinical resources; • greater ability to respond to competitive pressures, regulatory uncertainty, or challenges within the financial markets; • established relationships with healthcare providers, third-party payors and regulatory agencies; • established reputation and name recognition among healthcare providers and other key opinion leaders in the medical industry generally and the diabetes industry in particular; • larger and more established distribution networks; • greater ability to cross-sell products or provide incentives to healthcare providers to use their products; and • more experience in conducting R&D, manufacturing, clinical trials, and obtaining regulatory approval or clearance. 20 In addition, the competitive environment in which we operate has resulted and may continue to result in competitive pressures on our manufacturers, suppliers, distributors, collaboration partners and other business constituents.
Risks Related to Our Business and Our Industry We have incurred significant operating losses since inception and cannot assure you that we will achieve sustained profitability. Since our inception in January 2006, we have incurred a significant net loss. As of December 31, 2023, we had an accumulated deficit of $951.8 million.
Risks Related to Our Business and Our Industry We have incurred significant operating losses since inception and cannot assure you that we will achieve sustained profitability. Since our inception in January 2006, we have incurred a significant net loss. As of December 31, 2024, we had an accumulated deficit of $1.0 billion.
Because we currently rely on sales of our t:slim X2 insulin pump, and expect to rely on sales of our Tandem Mobi insulin pump, and related products to generate a significant majority of our revenue, any factors that negatively impact sales of these products (or negatively impact the products or components integrated with these products) could adversely affect our business, financial condition and operating results.
Because we currently rely on sales of our insulin pumps, and related products to generate a significant majority of our revenue, any factors that negatively impact sales of these products (or negatively impact the products or components integrated with these products) could adversely affect our business, financial condition and operating results.
Any of the previously identified or similar threats and risks could cause a security incident or other interruption that could result in the unauthorized, unlawful or accidental disclosure, access, acquisition, modification, destruction, loss, alteration, or encryption of our sensitive information or our information technology systems or those of the third parties upon whom we rely.
Any of the previously identified or similar threats and risks could in the future, as they have in the past, cause a security incident or other interruption that could result in the unauthorized, unlawful or accidental disclosure, access, acquisition, modification, destruction, loss, alteration, or encryption of our sensitive information or our information technology systems or those of the third parties with whom we work.
This Regulation, which entered into force in January 2022 and will apply as of January 2025, is intended to boost cooperation among EU Member States in assessing health technologies and providing the basis for cooperation at EU level for joint clinical assessments in these areas.
This Regulation, which entered into force in January 2022 and has applied as of January 2025, is intended to boost cooperation among EU Member States in assessing health technologies, including new medical devices, and providing the basis for cooperation at EU level for joint clinical assessments in these areas.
The remaining federal NOL carryforwards of $89.6 million will begin to expire in 2033, and state tax loss carryforwards continue to expire.
The remaining federal NOL carryforwards of $83.2 million will begin to expire in 2033, and state tax loss carryforwards continue to expire.
Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties with whom we work.
The potential effect, if any, of any of these transactions and activities on the market price of our common stock or the Notes will depend in part on market conditions and cannot be ascertained at this time, but any of these activities could adversely affect the value of our common stock and the value of the Notes and, under certain circumstances, the ability of the Note holders to convert the Notes. 54 We are subject to counterparty risk with respect to the Capped Call Transactions.
The potential effect, if any, of any of these transactions and activities on the market price of our common stock or the Notes will depend in part on market conditions and cannot be ascertained at this time, but any of these activities could adversely affect the value of our common stock and the value of the Notes and, under certain circumstances, the ability of the Note holders to convert the Notes.
The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, any such purchases or exchanges may result in us acquiring and retiring a substantial amount of such indebtedness, which could impact the trading liquidity of such indebtedness. An event of default occurred under the indenture governing the Notes.
The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, any such purchases or exchanges may result in us acquiring and retiring a substantial amount of such indebtedness, which could impact the trading liquidity of such indebtedness.
We believe a majority of our sales will continue to be to independent distributors for the foreseeable future, and it is possible that the percentage of our sales to independent distributors could increase, particularly in light of our reliance on independent distributors outside of the United States.
We believe a majority of our sales within the United States will continue to be to independent distributors for the foreseeable future, and it is possible that the percentage of our sales to independent distributors could increase.
As of December 31, 2023, we had accumulated federal and state NOL carryforwards of approximately $168.0 million, and $262.4 million, respectively. Of the total federal NOL carryforwards, approximately $78.4 million were generated after January 1, 2018, and therefore do not expire under current law but can only be utilized to offset 80% of future taxable income.
As of December 31, 2024, we had accumulated federal and state NOL carryforwards of approximately $96.5 million, and $248.0 million, respectively. Of the total federal NOL carryforwards, approximately $13.2 million were generated after January 1, 2018, and therefore do not expire under current law but can only be utilized to offset 80% of future taxable income.
We are monitoring developments and evaluating the potential impacts of these new rules, including on our effective tax rates, and considering our eligibility to qualify for these safe harbor rules.
We are monitoring developments and evaluating the potential impacts of these new rules, including on our effective tax rates and associated compliance costs, and considering our eligibility to qualify for any relevant transition or safe harbor rules.
For those medical devices sold in the EU and for which we have obtained a CE Certificate of Conformity by a Notified Body, we must notify our Notified Body if significant changes are made to the products or if there are substantial changes to our quality assurance systems affecting those products.
For those medical devices sold in the EU and for which we have obtained a CE Certificate of Conformity by a Notified Body, we must notify the Notified Body that carried out the conformity assessment of the medical devices we market or sell in the EEA of any planned significant changes to the products or if there are substantial changes to our quality assurance systems affecting those products.
Although we have achieved a positive overall gross margin during the years ended December 31, 2023 and 2022, we had net losses from operations of $222.6 million and $94.6 million, respectively, and we may continue to incur losses in the future.
Although we have achieved a positive overall gross margin during the years ended December 31, 2024, 2023 and 2022, we had net losses from operations in those years, and we may continue to incur net losses from operations in the future.
For example, in November 2023, at the Unified Patent Court (the “UPC”), we filed a revocation action and an action for a declaration of non-infringement of EP Patent No. 2 196 231 B1 (the “’231 patent”) against Roche Diabetes Care GmbH.
For example, November 2023, at the Unified Patent Court (UPC), Paris Central Division (UPC Paris), we filed a revocation action and an action for a declaration of non-infringement of EP Patent No. 2 196 231 B1 (the ’231 patent) against Roche Diabetes Care GmbH.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Risk Management and Strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and patient and customer data (“Information Systems and Data”).
Biggest changeCybersecurity Risk Management and Strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and patient and customer data (Information Systems and Data). 50 Our information security function is led by our Vice President, Cybersecurity (our Information Security Team), and is supported by our Chief Technology Officer, our Chief Legal, Privacy and Compliance Officer and legal department, our Chief Information Officer, and our cybersecurity incident management team.
The Privacy and Security Subcommittee is responsible for overseeing our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity management processes are implemented and maintained by our Information Security Team, in consultation with members of our cybersecurity incident management team.
The Privacy and Security Subcommittee is responsible for overseeing our cybersecurity risk management processes, including oversight of mitigation of risks from cybersecurity threats. Our cybersecurity management processes are implemented and maintained by our Information Security Team, in consultation with members of our cybersecurity incident management team.
The Privacy and Security Subcommittee provides regular reports to the Nominating and Corporate Governance Committee of significant matters related to the Privacy and Security Subcommittee’s responsibilities, and the Nominating and Corporate Governance Committee together with the VP, Cybersecurity in turn provide regular reports to our Board of Directors on such significant matters. 56
The Privacy and Security Subcommittee provides regular reports to the Nominating and Corporate Governance Committee of significant matters related to the Privacy and Security Subcommittee’s responsibilities, and the Nominating and Corporate Governance Committee together with the VP, Cybersecurity in turn provide regular reports to our Board of Directors on such significant matters.
Additionally, our senior management evaluates material risks from cybersecurity threats against our overall business objectives and reports to the Cybersecurity and Data Privacy Oversight Subcommittee (the “Privacy and Security Subcommittee”) of the Nominating and Corporate Governance Committee, as well as our Board of Directors, the latter of which evaluates our overall enterprise risk.
Additionally, our senior management evaluates material risks from cybersecurity threats against our overall business objectives and reports to the Cybersecurity and Data Privacy Oversight Subcommittee (the Privacy and Security Subcommittee) of the Nominating and Corporate Governance Committee, as well as our Board of Directors, the latter of which evaluates our overall enterprise risk.
Our cybersecurity incident management team is led by our Vice President, Cybersecurity and includes our Chief Human Resources Officer, Vice President, Privacy, senior personnel from our legal, finance, and relevant business departments (the “Incident Management Team”).
Our cybersecurity incident management team is led by our Vice President, Cybersecurity and includes our Chief Human Resources Officer, Vice President, Privacy, senior personnel from our legal, finance, and relevant business departments (the Incident Management Team).
We have a vendor management program to manage cybersecurity risks associated with our use of these providers. The program includes requiring certain vendors to complete security questionnaires, conducting risk assessments for certain vendors, reviewing security assessments, conducting security assessment calls with certain vendor security personnel, and imposing information contractual obligations on the vendor.
The program includes requiring certain vendors to complete security questionnaires, conducting risk assessments for certain vendors, reviewing security assessments, conducting security assessment calls with certain vendor security personnel, and imposing information contractual obligations on the vendor.
As the leader of our Information Security Team, our Vice President, Cybersecurity, is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, communicating key priorities to relevant personnel, requesting and allocating budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Notably, he spent four years at a medical device company focused on insulin delivery, where he successfully established the product security program and played a pivotal role in obtaining clearance for its flagship product line. 51 As the leader of our Information Security Team, our Vice President, Cybersecurity, is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, communicating key priorities to relevant personnel, requesting and allocating budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including professional services firms, including legal counsel; cybersecurity consultants; cybersecurity software providers; managed cybersecurity service providers; penetration testing firms; and forensic investigators. 55 We use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, contract research organizations, contract manufacturing organizations, distributors and supply chain resources.
We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including professional services firms, including legal counsel; cybersecurity consultants; cybersecurity software providers; managed cybersecurity service providers; penetration testing firms; and forensic investigators.
Removed
Our information security function is led by our Vice President, Cybersecurity (our “Information Security Team”), and is supported by our Chief Technology Officer, our Chief Legal, Privacy and Compliance Officer and legal department, our Vice President, Head of Information Technology, and our cybersecurity incident management team.
Added
We use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, contract research organizations, contract manufacturing organizations, distributors and supply chain resources. We have a vendor management program to manage cybersecurity risks associated with our use of these providers.
Removed
Notably, he spent the last four years at a medical device company focused on insulin delivery, where he successfully established the product security program and played a pivotal role in obtaining clearance for its flagship product line.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Headquarters Lease also includes a first right of offer with respect to an additional 16,154 rentable square feet of general office space should the space become available. • Vista Sorrento Parkway Lease : 73,929 square feet of general office space located on Vista Sorrento Parkway in San Diego, California, which is scheduled to expire in January 2028.
Biggest changeThe lease expires in April 2035; however, we have two options to extend the lease for additional five-year periods as well as a right of first offer with respect to an additional 16,154 square feet of general office space should the space become available.
We believe that the facilities that we presently occupy will be sufficient to support our current operations and that suitable additional facilities would be available to us should our operations require it.
We lease additional office space in San Diego, California, Irvine, California, Saint-Sulpice, Switzerland and Markham, Ontario, Canada. We believe that the facilities that we presently occupy will be sufficient to support our current operations and that suitable additional facilities would be available to us should our operations require it.
Removed
Item 2. Properties. Substantially all of our operations are currently conducted at leased facilities, including our manufacturing processes, research and development activities, customer and technical support, and management and administrative functions.
Added
Item 2. Properties. Our corporate headquarters and principal offices are located at a 181,949 square foot facility we lease in San Diego, California.
Removed
As of December 31, 2023, we leased facilities with an aggregate total of approximately 358,000 square feet, as follows: United States • Headquarters Lease : 181,949 square feet of general administrative, laboratory and research and development office space located on High Bluff Drive in San Diego, California.
Removed
Phase I of the lease, consisting of 143,850 rentable square feet, began in March of 2022. Phase II of the lease, consisting of 38,099 rentable square feet, is expected to begin in the first quarter of 2025. The lease term covering both Phase I and Phase II is currently expected to expire in April 2035.
Removed
We have two options to extend the term of the lease, with each option providing for an additional period of five years.
Removed
We have two options to extend the term of the Vista Sorrento Parkway lease, with each option providing for an additional period of five years, which are not expected to be exercised.
Removed
During the second quarter of 2023, the Company consolidated facilities by moving the administrative functions and other operations from the Vista Sorrento Lease facility to the new Headquarters Lease location, and this leased facility is currently unoccupied. • Barnes Canyon Lease : 48,880 square feet of general office, manufacturing and warehouse space located on Barnes Canyon Road in San Diego, California, which is scheduled to expire in November 2028. • Marindustry Place Lease : 40,490 square feet of general office and warehouse space located on Marindustry Place in San Diego, California, which is scheduled to expire in April 2026.
Removed
We have a one-time option to extend the term of the Marindustry Place lease for a period of no less than three years and no more than five years. • High Bluff Lease : 31,372 square feet of general office space located on High Bluff Drive, in San Diego, California, which is scheduled to expire in March 2024.
Removed
This leased facility is currently unoccupied. • Wrigley Lease: 7,753 square feet of general administrative and research and development office space located on Wrigley Avenue in Irvine, California, which is scheduled to expire in October 2024. In January 2024, the Company extended the term of this lease through October 2025.
Removed
Outside the United States • Switzerland Lease : 11,287 square feet of general administrative and research and development office space located in Saint-Sulpice, Switzerland, which expired in December 2023.
Removed
The Company executed a new lease agreement with a lease term that begins in January 2024 and expires in December 2028. • Canada Lease : 667 square feet of general office space located in Markham, Ontario, Canada. This is a month-to-month lease that can be canceled by delivering written notice of no less than one month to the landlord.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee also “Patent litigation in the medical device industry is common, and we may be subject to litigation that could cause us to incur substantial costs and divert the attention of management from our business” in Part I, Item 1A of this Annual Report. 57
Biggest changeSee also “Patent litigation in the medical device industry is common, and we may be subject to litigation that could cause us to incur substantial costs and divert the attention of management from our business” in Part I, Item 1A of this Annual Report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes a $100 investment, on December 31, 2018, in (i) our common stock, (ii) the securities comprising the Nasdaq Composite Index, (iii) the securities comprising the Nasdaq Health Care Index, and (iv) the securities in the Russell 3000 Index. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Tandem Diabetes Care, Inc. $ 100.00 $ 156.99 $ 251.99 $ 396.42 $ 118.38 $ 77.90 NASDAQ Composite $ 100.00 $ 135.23 $ 194.24 $ 235.78 $ 157.74 $ 226.24 NASDAQ Health Care $ 100.00 $ 125.83 $ 163.63 $ 157.82 $ 125.58 $ 133.80 Russell 3000 $ 100.00 $ 128.54 $ 152.73 $ 189.39 $ 150.61 $ 186.68 59 Dividend Policy We have never declared or paid any cash dividends on our common stock.
Biggest changeThe graph assumes a $100 investment, on December 31, 2019, in (i) our common stock, (ii) the securities comprising the Nasdaq Composite Index, (iii) the securities comprising the Nasdaq Health Care Index, and (iv) the securities in the Russell 3000 Index. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Tandem Diabetes Care, Inc. $ 100.00 $ 160.51 $ 252.51 $ 75.41 $ 49.62 $ 60.43 NASDAQ Composite $ 100.00 $ 143.64 $ 174.36 $ 116.65 $ 167.30 $ 215.22 NASDAQ Health Care $ 100.00 $ 130.04 $ 125.43 $ 99.81 $ 106.34 $ 105.42 Russell 3000 $ 100.00 $ 118.82 $ 147.35 $ 117.17 $ 145.24 $ 177.38 53 Dividend Policy We have never declared or paid any cash dividends on our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has been trading on the Nasdaq Global Market since November 14, 2013 under the symbol “TNDM.” Holders of Record As of February 16, 2024, there were approximately 45 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has been trading on the Nasdaq Global Market since November 14, 2013 under the symbol “TNDM.” Holders of Record As of February 16, 2025, there were approximately 41 holders of record of our common stock.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors. Unregistered Sales of Equity Securities None. Repurchases of Equity Securities We did not repurchase any of our equity securities during the year ended December 31, 2023.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors. Unregistered Sales of Equity Securities None. Repurchases of Equity Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Year Ended December 31, (in thousands, except percentages) 2023 2022 2021 Sales: United States $ 554,878 $ 588,765 $ 524,907 Outside the United States 192,840 212,452 177,892 Total sales 747,718 801,217 702,799 Cost of sales 380,028 388,231 326,584 Gross profit 367,690 412,986 376,215 Gross margin 49 % 52 % 54 % Operating expenses: Selling, general and administrative 352,503 335,681 261,508 Research and development 169,667 139,114 92,054 Acquired in-process research and development 78,750 31,039 — Total operating expenses 600,920 505,834 353,562 Operating income (loss) (233,230) (92,848) 22,653 Other income (expense), net: Interest income and other, net 22,858 6,057 674 Interest expense (9,882) (6,208) (6,040) Change in fair value of common stock warrants — 147 (1,386) Total other income (expense), net 12,976 (4) (6,752) Income (loss) before income taxes (220,254) (92,852) 15,901 Income tax expense 2,357 1,742 335 Net income (loss) $ (222,611) $ (94,594) $ 15,566 65 Comparison of Years Ended December 31, 2023 and 2022 Sales For the year ended December 31, 2023, sales were $747.7 million, which included $192.8 million of sales outside the United States.
Biggest changeResults of Operations Year Ended December 31, (in thousands, except percentages) 2024 2023 Sales: United States $ 672,685 $ 554,878 Outside the United States 267,518 192,840 Total sales 940,203 747,718 Cost of sales 450,629 380,028 Gross profit 489,574 367,690 Gross margin 52 % 49 % Operating expenses: Selling, general and administrative 389,824 352,503 Research and development 198,877 169,667 Acquired in-process research and development — 78,750 Total operating expenses 588,701 600,920 Operating loss (99,127) (233,230) Other income (expense), net: Interest income and other, net 17,993 22,858 Interest expense (7,415) (9,882) Loss from equity method investment (2,053) — Loss on extinguishment of debt (1,268) — Change in fair value of common stock warrants — — Total other income (expense), net 7,257 12,976 Income (loss) before income taxes (91,870) (220,254) Income tax expense 4,155 2,357 Net loss $ (96,025) $ (222,611) 58 Pump Reimbursement Cycle Insulin pumps in the markets we serve worldwide are generally subject to a four-year reimbursement cycle, imposed by the third-party insurance carrier, government plan or healthcare system that serves as the primary payor.
These delays, or failure to receive regulatory approval could adversely impact our revenue and results of operations. • Any adverse event involving any products that we distribute could result in future corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action.
These delays, or failure to receive regulatory approval could adversely impact our revenue and results of operations. • Any adverse event involving products that we distribute could result in future corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action.
Other income, net for 2023 primarily consisted of $21.2 million of interest income earned on our cash equivalents and short-term investments, and $1.5 million in foreign currency transaction gains, partially offset by $9.9 million of interest expense which included $3.3 million of additional interest as discussed above and the amortization of debt issuance costs related to our Convertible Senior Notes.
Other income, net for 2023 consisted primarily of $21.2 million of interest income earned on our cash equivalents and short-term investments, and $1.5 million in foreign currency transaction gains, partially offset by $9.9 million of interest expense which included $3.3 million of additional interest as discussed above and the amortization of debt issuance costs related to our Convertible Senior Notes.
In particular, our cash inflows and outflows are principally impacted by the following: • our ability to generate sales, the timing of those sales, the mix of products sold and the collection of receivables from period to period; • contractual debt obligations, including periodic interest payments; • the timing of any additional financings, and the net proceeds raised from such financings; • the timing and amount of proceeds from the issuance of equity awards pursuant to employee stock plans; • fluctuations in gross margins and operating margins; and • fluctuations in working capital, including changes in accounts receivable, inventories, accounts payable, employee-related liabilities, and operating lease liabilities.
In particular, our cash inflows and outflows are principally impacted by the following: • our ability to generate sales, the timing of those sales, the mix of products sold and the collection of receivables from period to period; • contractual debt obligations, including periodic interest payments; • the timing of any additional financings, and the net proceeds raised from such financings; • the timing and amount of proceeds from the issuance of equity awards pursuant to employee stock plans; • fluctuations in gross and operating margins; and • fluctuations in working capital, including changes in accounts receivable, inventories, accounts payable, employee-related liabilities, and operating lease liabilities.
The ordering patterns of, and levels of inventory carried by, our distributors outside the United States for pumps and supplies have historically been highly variable from period to period due to a number of factors, including summer vacations, the timing of product launches into new geographies and variability due to supply chain logistics, particularly during the global pandemic.
The ordering patterns of, and levels of inventory carried by, our distributors outside the United States for pumps and supplies have historically been highly variable from period to period due to a number of factors, including summer vacations, the timing of product launches, expansion into new geographies and variability due to supply chain logistics, particularly during the global pandemic.
The requirements and timelines to receive regulatory clearance can vary substantially from country to country and delays may impact our ability to expand 62 our worldwide customer base and bring products to market in a competitive timeframe.
The requirements and timelines to receive regulatory clearance can vary substantially from country to country and delays may impact our ability to expand our worldwide customer base and bring products to market in a competitive timeframe.
For additional information, see “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Annual Report. A discussion of changes in our results of operations during the year ended December 31, 2022 compared with the year ended December 31, 2021 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
For additional information, see “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Annual Report. A discussion of changes in our results of operations during the year ended December 31, 2023 compared with the year ended December 31, 2022 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
For a description of our contractual obligations related to leases at December 31, 2023, see Note 6 “Leases” to the consolidated financial statements in Part II, Item 8 of this Annual Report. Purchase Order Commitments We have agreements with suppliers and other parties to purchase inventory, other goods and services and long-lived assets.
For a description of our contractual obligations related to leases at December 31, 2024, see Note 6 “Leases” to the consolidated financial statements in Part II, Item 8 of this Annual Report. Purchase Order Commitments We have agreements with suppliers and other parties to purchase inventory, other goods and services and long-lived assets.
From inception in 2012 through June 2018, we derived nearly all of our sales from the shipment of insulin pumps and associated supplies to customers in the United States. Starting in the third quarter of 2018, we began selling in select geographies outside the United States and our technology solutions are now available in approximately 25 countries worldwide.
From inception in 2012 through 2018, we derived nearly all of our sales from the shipment of insulin pumps and associated supplies to customers in the United States. Starting in the third quarter of 2018, we began selling in select geographies outside the United States and our technology solutions are now available in 25 countries worldwide.
Our goal is to address the individual needs of people with insulin-dependent diabetes and their care team flexibility and choice in intelligent insulin delivery systems, through an accessible portfolio of market-leading pumps, applications, and insights.
Our goal is to address the individual needs of people with insulin-dependent diabetes and their care team, by offering flexibility and choice in intelligent insulin delivery systems, through an accessible portfolio of market-leading pumps, applications, and insights.
For a description of our contractual obligations related to purchase order commitments at December 31, 2023, see Note 13 “Commitments and Contingencies” to the consolidated financial statements in Part II, Item 8 of this Annual Report.
For a description of our contractual obligations related to purchase order commitments at December 31, 2024, see Note 13 “Commitments and Contingencies” to the consolidated financial statements in Part II, Item 8 of this Annual Report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 22, 2023, which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024, which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov .
Acquisition-related Contingent Consideration In connection with our acquisition of AMF Medical SA completed in January of 2023 (see Note 12, “Acquisitions” to the consolidated financial statements in Part II, Item 8 of this Annual Report), the total consideration includes cash paid at the closing of the transaction and additional contingent earnout payments.
Acquisition-related Contingent Consideration In connection with our acquisition of AMF Medical SA completed in January of 2023, the total consideration included cash paid at the closing of the transaction and additional contingent earnout payments (see Note 12, “Acquisitions” to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information).
The promissory note accrues interest at the rate of 5% per year, and becomes due and payable upon the first sale or license of the commercialized product. At December 31, 2023, $4.7 million was included as a component of other long-term liabilities on the consolidated balance sheet.
The promissory note accrues interest at the rate of 5% per year, and becomes due and payable upon the first sale or license of the commercialized product. At December 31, 2024, $4.8 million was included as a component of other long-term liabilities on the consolidated balance sheet.
Any action by regulatory bodies against us, and any regulatory challenges we encounter could have a negative impact on our product sales and harm our reputation. Product - Launches and Reimbursement • We expect our business to be impacted by the introduction of new diabetes devices and treatments by us or our competitors.
Any action by regulatory bodies against us, and any regulatory challenges we encounter could have a negative impact on our product sales and harm our reputation. Markets, Seasonality, Competition, and Product Launches • We expect our business to be impacted by the introduction of new diabetes devices and treatments by us or our competitors.
Through our product development efforts, we are seeking to expand our addressable market to include people living with type 2 diabetes who require intensive insulin therapy. Diabetes management can vary greatly from person-to-person, creating multiple market segments based on clinical needs and personal preferences.
We are seeking to expand our addressable market to include people living with type 2 diabetes who require intensive insulin therapy. Diabetes management can vary greatly from person-to-person, creating multiple market segments based on clinical needs and personal preferences.
While warranties generally expire four years from the original pump shipment date, those customers that renew typically take up to one year from date of warranty expiration to purchase a subsequent pump.
While warranties generally expire four years from the original pump shipment date, those customers that renew take on average up to one year from date of warranty expiration to purchase a subsequent pump.
This also influences the timing in which renewal eligibility begins for existing customers, which may not initially be consistent with trends in the U.S. market. We recently began completing a full four-year reimbursement cycle in an increasing number of our markets outside of the United States.
This also influences the timing in which renewal eligibility begins for existing customers, which may not initially be consistent with trends in the United States market. We recently began completing full four-year reimbursement cycles in an increasing number of our markets outside of the United States.
Critical Accounting Policies Involving Management Estimates and Assumptions Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
The increase in R&D expenses was primarily the result of a $23.0 million increase in salaries and related benefits due to our acquisitions, as well as an increase in personnel to support our product development efforts.
The increase in R&D expenses was primarily the result of a $20.3 million increase in salaries and related benefits due to our acquisitions, as well as an increase in personnel to support our product development efforts.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about our financial condition and results of operations that are not readily apparent from other sources. Actual results may differ materially from these estimates.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about our financial condition and results of operations that are not readily apparent from other sources.
Income tax expense for the years ended December 31, 2023 and 2022 was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions. Liquidity and Capital Resources At December 31, 2023, we had $467.9 million in cash and cash equivalents and short-term investments.
Income tax expense for the years ended December 31, 2024 and 2023 was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions. Liquidity and Capital Resources At December 31, 2024, we had $438.3 million in cash and cash equivalents and short-term investments.
Therefore, the lowest percentage of sales is typically reported in the first quarter of each calendar year and the highest percentage is typically reported in the fourth quarter. See also “Trends and Uncertainties Impacting Financial Results—Seasonality” above.
Therefore, the lowest percentage of sales is typically reported in the first quarter of each calendar year and the highest percentage is typically reported in the fourth quarter. See also “Trends and Uncertainties Impacting Financial Results—”Markets, Seasonality, Competition, and Product Launches” above.
Both our primary short-term and long-term capital needs are expected to include expenditures related to: • support of our commercialization efforts related to our current and future products; • expansion of our customer support resources for our growing installed customer base; • research and product development efforts, including clinical trial costs; • acquisitions, including contingent earnout payments that become payable upon the achievement of certain milestones; • leasing or licensing of equipment, technology, intellectual property and other assets; • additional facilities leases and related tenant improvements; • investments for the development, improvement and acquisition of manufacturing, testing and packaging equipment to support business growth and increase capacity; • payments under licensing, development and commercialization agreements; and 69 • integration costs related to acquisitions of businesses, products and technologies.
Both our primary short-term and long-term capital needs are expected to include expenditures related to: • support of our commercialization efforts related to our current and future products; • expansion of our commercial resources for our growing installed customer base; • research and product development efforts, including clinical trial costs; • acquisitions, including strategic investments, equity method investments and future contingent payments associated with acquisitions; • leasing or licensing of equipment, technology, intellectual property and other assets; • additional facilities leases and related tenant improvements; 62 • investments for the development, improvement and acquisition of manufacturing, testing and packaging equipment to support business growth and increase capacity; • payments under licensing, development and commercialization agreements; and • integration costs related to acquisitions of businesses, products and technologies.
Indebtedness Convertible Senior Notes In May 2020, we entered into a purchase agreement with certain counterparties for the sale of an aggregate of $287.5 million principal amount of 1.50% Convertible Senior Notes due 2025 in a private offering to qualified institutional buyers (the Notes).
In May 2020, we entered into a purchase agreement with certain counterparties for the sale of an aggregate of $287.5 million principal amount of 1.50% Convertible Senior Notes due 2025.
We have approximately 110 sales territories in the United States, which are generally maintained by sales representatives and field clinical specialists, and supported by managed care liaisons, additional sales management and other customer support personnel.
Our sales territories in the United States are generally maintained by sales representatives and field clinical specialists, and supported by managed care liaisons, additional sales management and other customer support personnel.
Income Tax Expense We recognized income tax expense of $2.4 million on a pre-tax loss of $220.3 million for the year ended December 31, 2023, compared to income tax expense of $1.7 million on a pre-tax loss of $92.9 million for the year ended December 31, 2022.
Income Tax Expense We recognized income tax expense of $4.2 million on a pre-tax loss of $91.9 million for the year ended December 31, 2024, compared to income tax expense of $2.4 million on a pre-tax loss of $220.3 million for the year ended December 31, 2023.
Cost of Sales and Gross Profit Our cost of sales for the year ended December 31, 2023 was $380.0 million, resulting in gross profit of $367.7 million, compared to cost of sales of $388.2 million and gross profit of $413.0 million for the year ended December 31, 2022. The gross margin for 2023 was 49%, compared to 52% in 2022.
Cost of Sales and Gross Profit Our cost of sales for the year ended December 31, 2024 was $450.6 million, resulting in gross profit of $489.6 million, compared to cost of sales of $380.0 million and gross profit of $367.7 million for the year ended December 31, 2023. The gross margin for 2024 was 52%, compared to 49% in 2023.
Other Income and Expense Other income and expense primarily consists of interest earned on our cash equivalents and short-term investments, foreign currency transaction gains and losses, and interest expense which includes the amortization of debt issuance costs related to our 1.50% Convertible Senior Notes due May 2025 (Notes).
Other Income and Expense Other income and expense primarily consists of interest earned on our cash equivalents and short-term investments, income or loss from equity method investments, foreign currency transaction gains and losses and interest expense which includes the amortization of debt issuance costs related to our convertible senior notes.
Net cash used in investing activities was $85.7 million for the year ended December 31, 2023, which primarily consisted of $69.5 million cash paid for the acquisition of AMF Medical, including transaction costs (see Note 12, “Acquisitions”), $26.8 million in purchases of property and equipment of which $8.7 million was associated with improvements to the now completed new Headquarters lease facility (see Note 6, “Leases”), and $24.8 million cash paid for purchases of intangible assets and strategic investments, offset by $35.4 million provided by short-term investments activity as proceeds from maturities and redemptions exceeded purchases.
Net cash used in investing activities was $85.7 million for the year ended December 31, 2023, which primarily consisted of $69.5 million cash paid for the acquisition of AMF Medical, including transaction costs (see Note 12, “Acquisitions”), $26.8 million in purchases of property and equipment, and $24.8 million cash paid for purchases of intangible assets and strategic investments, offset by $35.4 million provided by short-term investments activity.
Pump sales, which have the highest gross margin, were 46% of total worldwide sales, excluding the impact of Tandem Choice in 2023, compared to 53% in 2022. Operating Expenses Our operating expenses for the year ended December 31, 2023 were $600.9 million, compared to $505.8 million for the year ended December 31, 2022.
Pump sales, which have the highest gross margin, were 49% of total worldwide sales, excluding the impact of Tandem Choice in 2024, compared to 46% in 2023. Operating Expenses Our operating expenses for the year ended December 31, 2024 were $588.7 million, compared to $600.9 million for the year ended December 31, 2023. Selling, General and Administrative Expenses.
Overview We are a medical device company focused on the design, development and commercialization of technology solutions for people living with diabetes. We consider our primary addressable market to be people who live with type 1 diabetes.
Overview We are a global insulin delivery and diabetes technology company focused on the design, development and commercialization of technology solutions that reduce the burden of diabetes management. We consider our primary addressable market to be people who live with type 1 diabetes.
Sales of pump-related supplies increased primarily due to a 7% year-over-year increase in our ending estimated installed base of customers in the United States. Sales to distributors accounted for 64% and 65% of our total sales in the United States for the years ended December 31, 2023 and 2022, respectively.
Sales to distributors accounted for 61% and 64% of our total sales in the United States for the years ended December 31, 2024 and 2023, respectively. Sales of pump-related supplies increased primarily due to a year-over-year increase in our installed base of customers in the United States, as well as an increase in average selling prices.
Net cash provided by financing activities was $4.1 million for the year ended December 31, 2023, which primarily consisted of proceeds from the issuance of common stock under our stock plans, net of payments for related tax withholdings.
Net cash provided by financing activities was $4.1 million for the year ended December 31, 2023, which primarily consisted of proceeds from the issuance of common stock under our stock plans, net of payments for related tax withholdings. Our liquidity position and capital requirements are subject to fluctuation based on a number of factors.
The following table shows a summary of our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 Net cash provided by (used in): Operating activities $ (31,810) $ 50,464 $ 111,359 Investing activities (85,740) 33,168 (186,876) Financing activities 4,113 16,877 51,932 Effect of foreign exchange rate changes on cash (212) 827 153 Net increase (decrease) in cash and cash equivalents $ (113,649) $ 101,336 $ (23,432) Operating activities .
The following table shows a summary of our cash flows for the twelve months ended December 31, 2024, 2023, and 2022 (in thousands): Year Ended December 31, 2024 2023 2022 Net cash provided by (used in): Operating activities $ 24,225 $ (31,810) $ 50,464 Investing activities (23,482) (85,740) 33,168 Financing activities 8,367 4,113 16,877 Effect of foreign exchange rate changes on cash 1,256 (212) 827 Net increase (decrease) in cash and cash equivalents $ 10,366 $ (113,649) $ 101,336 61 Operating activities .
Trends and Uncertainties Impacting Financial Results Our financial condition and operating results have historically fluctuated on a quarterly or annual basis. We expect these periodic fluctuations will continue to be impacted by a number of trends and uncertainties, including the following: Regulatory Approvals and Actions • Sales of new products are subject to local government regulations.
We expect these periodic fluctuations will continue to be impacted by a number of trends and uncertainties, including the following: Regulatory Approvals and Actions • Sales of new products are subject to local government regulations.
The t:slim X2 was the first pump on which remote software updates were made commercially available in the United States and is now also available in the countries we serve worldwide. Our Tandem Device Updater (TDU) has allowed our t:slim X2 customers to update their pump software from a personal computer.
The t:slim X2 was the first pump in the industry on which remote software updates were made commercially available in the United States and is now also available in the countries we serve worldwide. This feature allows our t:slim X2 and Tandem Mobi customers to update their pump software independently.
For the year ended December 31, 2023, we deferred $25.1 million of pump sales as the result of our Tandem Choice program which launched in the United States in the third quarter of 2022.
For the year ended December 31, 2024, we recognized $30.2 million in net revenue from pump sales as the result of the conclusion of our Tandem Choice program which launched in the United States in the third quarter of 2022 and ended in 2024.
Net cash used in operating activities was $31.8 million for the year ended December 31, 2023, compared to cash provided by operating activities of $50.5 million and $111.4 million, respectively, for the years ended December 31, 2022 and 2021.
Net cash provided by operating activities was $24.2 million for the year ended December 31, 2024, compared to net cash used in operating activities of $31.8 million for the year ended December 31, 2023.
Macroeconomic Factors • Global economic and market uncertainty, such as recessionary concerns, inflation, changes in discretionary spending and increased interest rates have impacted our customers’ purchasing decisions and the buying patterns of our distributors. • High inflation and the effects of other macroeconomic factors and concerns have continued to disrupt our relationships with suppliers, third-party manufacturers, healthcare providers, distributors and our existing or potential customers.
Our revenue and results of operations may be impacted by the failure to secure or retain adequate coverage, changes in reimbursement structures or availability of affordable options for our customers. 56 Macroeconomic Factors • Global economic and market uncertainty, such as recessionary concerns, changes in discretionary spending and increased interest rates have impacted our customers’ purchasing decisions and the buying patterns of our distributors. • High inflation, fluctuations in foreign currency valuations, uncertainty regarding tariffs and the effects of other macroeconomic factors and concerns has disrupted and may continue to disrupt our relationships with suppliers, third-party manufacturers, healthcare providers, distributors and our existing or potential customers.
Experience has shown that initial data for any given pump version or pump platform may be insufficient; therefore, our process relies on long-term historical averages until sufficient data are available. As actual experience becomes available, we use the data to update the historical averages.
Experience has shown that initial data for any new pump version or pump platform may be insufficient. Therefore, our process relies on long-term historical replacement data from existing platforms until sufficient data is available. As actual experience accumulates, we adjust the warranty reserve estimate accordingly.
We also experienced a $2.8 million increase in other non-employee discretionary spending, primarily attributable to outside consulting, outside services, and travel, in addition to the impact of facilities consolidation charges described above. Research and Development Expenses . R&D expenses increased 22% to $169.7 million for the year ended December 31, 2023, from $139.1 million for the same period in 2022.
Excluding certain non-recurring facilities consolidations costs of $14.1 million from 2023, we experienced a $17.9 million increase in other non-employee discretionary spending, primarily attributable to outside consulting, outside services, and supplies. 60 Research and Development Expenses . R&D expenses increased 17% to $198.9 million for the year ended December 31, 2024, from $169.7 million for the same period in 2023.
Other significant SG&A expenses typically include those incurred for commercialization activities associated with new product launches, travel, trade shows, outside legal fees, independent auditor fees, outside consultant fees, insurance premiums, facilities costs and information technology costs.
Other significant SG&A expenses typically include those incurred for commercialization activities associated with new product launches, travel, trade shows, outside legal fees, independent auditor fees, outside consultant fees, insurance premiums, facilities costs and information technology costs. 57 Research and Development Our research and development (R&D) activities primarily consist of engineering and research programs associated with our hardware, software and digital health products under development, as well as activities associated with our core technologies and processes.
Net cash used by investing activities was $186.9 million for the year ended December 31, 2021, which primarily consisted of $163.4 million used by short-term investments activity as purchases exceeded maturities and redemptions, $14.2 million in purchases of property and equipment, and $9.3 million cash paid for purchases of intangible assets and strategic investments. Financing activities .
Net cash used in investing activities was $23.5 million for the year ended December 31, 2024, which primarily consisted of $46.4 million cash paid for investments in equity method investees, $19.2 million in purchases of property and equipment, offset by $42.2 million provided by short-term investments activity as proceeds from maturities and redemptions exceeded purchases.
We may make further adjustments to the warranty reserve when deemed appropriate, giving additional consideration to the length of time each pump version has been in the field and revised future expectations of performance based on new features and capabilities that may become available through Tandem Device Updater.
We may make further adjustments to the warranty reserve when appropriate, considering revised expectations of product performance based on enhanced hardware, or new features and capabilities that may become available through Tandem Device Updater.
Regulatory approval and/or upcoming launches of other new Tandem or competitor products could also adversely impact timing of purchasing decisions. • In periods following new product launches, particularly with new hardware platforms, our cost of sales may increase on a per unit basis until the new products achieve manufacturing scale and operating expenses may be elevated by increased sales and marketing spend to support the product launches. • Our revenue and results of operations may be impacted by the failure to secure or retain adequate coverage or reimbursement for our current and future products from third-party payors, as well as changes in reimbursement structures.
Other factors that may impact sales across the year include the timing of winter, summer and other seasonal holidays, particularly in our markets outside the United States. • Regulatory approval and/or upcoming launches of other new Tandem or competing products could also adversely impact timing of purchasing decisions. • In periods following new product launches, particularly with new hardware platforms, our cost of sales may increase on a per unit basis until the new products achieve manufacturing scale and operating expenses may be elevated by increased sales and marketing spend to support the product launches.
In addition, for the year ended December 31, 2023, we recorded a reduction to sales of $8.5 million for a new rebate structure implemented in a market outside of the United States.
Our pump shipments outside the United States increased by 30% to nearly 40,000 pumps for the year ended December 31, 2024 compared to the year ended December 31, 2023. Pump sales outside the United States in 2023 included a reduction of $8.5 million for the establishment of the new rebate structure implemented in a single market.
The proceeds from the issuance of the Notes were $244.6 million, net of debt issuance costs and cash used to pay the cost of the Capped Call Transactions (see Note 7, “Debt”). The Notes are senior unsecured obligations. Interest is payable in cash semi-annually in arrears on May 1 and November 1 at a rate of 1.50% per year.
The proceeds from the issuance of the Notes were $244.6 million, net of debt issuance costs and cash used to pay the cost of the Capped Call Transactions (see Note 7, “Debt”).
For the year ended December 31, 2022, sales were $801.2 million, which included $212.5 million of sales outside the United States, and we deferred $3.5 million of pump sales as a result of our Tandem Choice program.
For the year ended December 31, 2023, sales were $747.7 million, which included $192.8 million of sales outside the United States, and deferral of $25.1 million of pump sales as a result of Tandem Choice.
Cash payments due by calendar year for our Convertible Senior Notes at December 31, 2023, are as follows (in thousands): Total 2024 2025 Principal amount of convertible senior notes (1) $ 287,500 $ — $ 287,500 Contractual interest 6,469 4,313 2,156 Total $ 293,969 $ 4,313 $ 289,656 (1) The Convertible Senior Notes may be settled in cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.
Cash payments due by calendar year for our Convertible Senior Notes at December 31, 2024, are as follows (in thousands): Total 2025 2026 2027 2028 2029 Principal amount (1) : Convertible Senior Notes Due 2025 $ 40,760 $ 40,760 $ — $ — $ — $ — Convertible Senior Notes Due 2029 316,250 — — — — 316,250 Total principal amount 357,010 40,760 — — — 316,250 Contractual interest 20,270 5,050 4,744 4,744 4,744 988 Total $ 377,280 $ 45,810 $ 4,744 $ 4,744 $ 4,744 $ 317,238 (1) The convertible senior notes may be settled in cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.
The success of our products is variable and we believe it correlates to market acceptance, anticipated product launches and commercial availability.
The success of our products is variable and we believe it correlates to market acceptance, anticipated product launches and commercial availability. • Seasonality in the United States is associated with annual insurance deductibles and coinsurance requirements of the medical insurance plans used by our customers and the customers of our distributors.
In September 2022, we began offering the Tandem Choice program to eligible t:slim X2 customers to provide a pathway to ownership of our newest hardware platform, Tandem Mobi, for a fee when available. Tandem Choice expires on December 31, 2024. The accounting treatment for Tandem Choice is complex (see Note 2, “Summary of Significant Accounting Policies”).
From September 2022 through February 2024, we offered the Tandem Choice program to eligible t:slim X2 customers to provide a pathway to ownership of our newest hardware platform, Tandem Mobi, for a fee once available.
The reduction in net cash provided by operating activities for 2023 compared to 2022 was primarily a result of the $128.0 million increase in net loss, offset by increase of $58.8 million net non-cash adjustments. Net non-cash adjustments were primarily related to acquired in-process research and development expenses, operating lease termination and impairment charges and stock-based compensation expense.
Net non-cash adjustments in 2023 were primarily related to acquired in-process research and development expenses, operating lease termination and impairment charges and stock-based compensation expense. In addition, there was a net decrease of $3.7 million in changes of working capital balances.
Initially, the program requires the deferral of some portion of sales for shipments of eligible pumps, which began in the third quarter of 2022. No election is made by the customer at the time of the initial sale, nor does the right offered to the customer impact the economics associated with how or when the initial pump sale is reimbursed.
No election was made by the customer at the time of the initial sale, nor did the right offered to the customer impact the economics associated with how or when the initial pump sale was reimbursed.
Tandem Mobi offers the same update capability with wireless, remote updates. This offering is a competitive advantage that allows us to bring our customers clinical and lifestyle enhancements, such as new developments in our AID technology, CGM integrations and mobile app features.
We believe this offering is a competitive advantage that allows us to bring our customers clinical and lifestyle enhancements within their warranty cycle without having to purchase a new pump. These enhancements include new developments in our AID technology, CGM integrations and mobile app features.
We also incur R&D expenses for supplies, development prototypes, outside design and testing services, depreciation, allocated facilities and information services, clinical trial costs, payments under our licensing, development and commercialization agreements and other indirect costs. 64 Acquired In-process Research and Development (IPR&D) Expenses Acquired IPR&D reflects costs of external research and development projects acquired directly in a transaction other than a business combination, that do not have an alternative future use.
Acquired In-process Research and Development (IPR&D) Acquired IPR&D reflects costs of external research and development projects acquired directly in a transaction other than a business combination, that do not have an alternative future use.
The decrease in our gross profit for the year ended December 31, 2023 was primarily the result of the $53.5 million decrease in total sales, driven by lower pump shipments and an increase in sales deferral related to the Tandem Choice Program. Amounts deferred were $25.1 million and $3.5 million for the years ended December 31, 2023 and 2022, respectively.
The increase in our gross profit for the year ended December 31, 2024 was primarily the result of the $192.5 million increase in total sales, driven by higher pump shipments, the impact of the conclusion of the Tandem Choice program and the greater impact of the sales rebate structure outside the United States in 2023 compared to 2024.
At this time, we are not able to estimate the financial impact for the remainder of the Tandem Choice period. Cost of Sales Cost of sales includes raw materials, labor costs, manufacturing overhead expenses, product training costs, royalties, freight, reserves for expected warranty costs, costs of supporting our digital health platforms, scrap and charges for excess and obsolete inventories.
The remaining deferral balance was recognized as revenue when the program ended on December 31, 2024. Cost of Sales Cost of sales includes raw materials, labor costs, manufacturing overhead expenses, product training costs, royalties, freight, reserves for expected warranty costs, costs of supporting our digital health platforms, scrap and charges for excess and obsolete inventories.
With programs dedicated to customer retention efforts, we expect such renewal purchases to represent an increasing portion of our pump shipments over time. In the four-year period ended December 31, 2023, we shipped more than 450,000 insulin pumps worldwide, which is representative of our global in-warranty installed customer base.
With programs dedicated to customer retention efforts, we expect such renewal purchases to represent an increasing portion of our pump shipments over time. At December 31, 2024, we had over 480,000 users in our in-warranty installed base, approximately one-third of whom live outside the United States.
Sales by product outside the United States were as follows (dollars in thousands): Year Ended December 31, 2023 2022 % Change Pumps shipped 30,000 44,000 (32)% Sales: Pump $ 84,748 $ 102,846 (18)% Pump rebate (8,452) — —% Supplies and other 116,544 109,606 6% Total Sales Outside the United States $ 192,840 $ 212,452 (9)% 66 Pump sales outside the United States were $76.3 million for the year ended December 31, 2023, compared to $102.8 million in the prior year.
Sales by product outside the United States were as follows (dollars in thousands): Year Ended December 31, 2024 2023 % Change Sales: Pump, net of rebates 105,544 76,296 38% Supplies and other 161,974 116,544 39% Total Sales Outside the United States $ 267,518 $ 192,840 39% Pump sales, net of rebates, outside the United States were $105.5 million for the year ended December 31, 2024, compared to $76.3 million in the prior year.
Sales by product in the United States were as follows (dollars in thousands): Year Ended December 31, 2023 2022 % Change Pumps shipped 74,000 84,000 (12)% Sales: Pump $ 289,546 $ 329,061 (12)% Supplies and other 290,439 263,253 10% Deferral for Tandem Choice program (25,107) (3,549) 607% Total Sales in the United States $ 554,878 $ 588,765 (6)% Pump sales in the United States were $289.5 million for the year ended December 31, 2023 compared to $329.1 million for the year ended December 31, 2022, as pump shipments decreased 12% compared to the year ended December 31, 2022.
Sales by product in the United States were as follows (dollars in thousands): Year Ended December 31, 2024 2023 % Change Sales: Pump $ 328,625 $ 289,546 13% Supplies and other 313,811 290,439 8% Net revenue recognized (deferred) for Tandem Choice program 30,249 (25,107) 220% Total Sales in the United States $ 672,685 $ 554,878 21% 59 Pump sales in the United States were $328.6 million for the year ended December 31, 2024 compared to $289.5 million for the year ended December 31, 2023.
While our significant accounting policies are more fully described in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report, we believe that the following accounting policies are the most critical to the judgments and estimates used in the preparation of our consolidated financial statements. 70 Revenue Recognition Our revenue is generated primarily from sales of our insulin pumps, single-use insulin cartridges and infusion sets to individual customers with third-party insurance coverage and through a network of distributors that resell the products to insulin-dependent diabetes customers.
Actual results may differ materially from these estimates. 63 While our significant accounting policies are more fully described in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report, we believe that the following accounting policies are the most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
With both the t:slim X2 and Tandem Mobi in our product portfolio, we are offering people living with diabetes a choice between the t:slim X2 and Tandem Mobi insulin pumps based on their individual needs and preferences in insulin delivery. The majority of our customers use their insulin pump with continuous glucose monitoring (CGM) integration.
Through our portfolio approach, we offer people living with diabetes a choice in their therapy management system based on their individual needs and preferences. In support of this strategy, we recently expanded our portfolio which now includes both the t:slim X2 and the Tandem Mobi insulin pumps.
We also experienced a $7.5 million increase in other non-employee discretionary spending, including equipment and supplies costs, clinical trial expenses, and information technology costs attributable to R&D. Acquired In-Process Research and Development Expenses.
We also experienced an $8.5 million increase in other non-employee discretionary spending, including outside services and consulting, clinical trial expenses, and equipment costs attributable to R&D. Acquired In-Process Research and Development Expenses. Acquired IPR&D expenses of $78.8 million for the year ended December 31, 2023, pertained to our 2023 acquisition of AMF Medical (see Note 12, “Acquisitions”).
In February 2024, we expanded our pump portfolio with commercial U.S. availability of the Tandem Mobi insulin pump, which is the world’s smallest durable automated insulin delivery (AID) system.
The Tandem Mobi insulin pump is the world’s smallest durable automated insulin delivery (AID) system.
Multiple studies have demonstrated that use of Control-IQ technology provides people across all demographics with improved clinical outcomes that are both immediate and sustained. It was the first system cleared by the FDA to deliver automatic correction boluses in addition to adjusting insulin to help prevent high and low blood sugar.
Multiple studies, including three publications in the New England Journal of Medicine, have demonstrated that use of Control-IQ technology provides people across all demographics with improved clinical outcomes that are both immediate and sustained.
Manufacturing overhead expenses include expenses relating to quality assurance, manufacturing engineering, material procurement, inventory control, facilities, equipment, information technology and operations supervision and management. When taking into consideration the differences in reimbursement levels and cost structure, pumps have, and are expected to continue to have, a higher gross profit and gross margin percentage than our pump-related supplies.
When taking into consideration the differences in reimbursement levels and cost structure, pumps have, and are expected to continue to have, a higher gross profit and gross margin percentage than our pump-related supplies on a per unit basis. Therefore, the percentage of pump sales relative to total sales could have a significant impact on our overall gross margin percentage.
In addition to insulin pumps, we sell single-use products that are used together with our pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body. 61 In the United States, we also offer a data management web application that provides users, their caregivers and their healthcare providers with a fast, easy and visual way to display diabetes therapy management data from our pumps, integrated CGMs and supported blood glucose meters.
In addition to insulin pumps, we sell single-use products that are used together with our pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body. Because of the DME classification, our pumps and supplies are typically reimbursed through a medical benefit.
In 2023, we also incurred employee severance costs of $2.7 million. Selling, General and Administrative Expenses. SG&A expenses increased 5% to $352.5 million for the year ended December 31, 2023, from $335.7 million for the same period in 2022. Employee-related expenses for our SG&A functions comprise the majority of SG&A expenses.
SG&A expenses increased 11% to $389.8 million for the year ended December 31, 2024, from $352.5 million for the same period in 2023. Employee-related expenses for our SG&A functions comprised the majority of our SG&A expenses, which increased $33.6 million due to continued support services for our growing installed customer base.
Acquired IPR&D expenses of $31.0 million for the year ended December 31, 2022 represented the value of assets acquired, and acquisition-related expenses in connection with our acquisition of Capillary Biomedical. 67 Other Income (Expense), Net Total other income, net for the year ended December 31, 2023 was $13.0 million, compared to expense of $4,000 in 2022.
Other Income (Expense), Net Total other income, net for the year ended December 31, 2024 was $7.3 million, compared to $13.0 million in 2023.
Seasonality • Seasonality in the United States is associated with annual insurance deductibles and coinsurance requirements of the medical insurance plans used by our customers and the customers of our distributors. In the United States, we typically experience a higher volume of pump shipments in the third and fourth quarters due to the nature of the reimbursement environment.
In the United States, we typically experience a higher volume of pump shipments in the second half of the year due to the nature of the reimbursement environment.
For example, we began operations of a European distribution center beginning in the third quarter of 2022, which led to downward adjustments of inventory levels at our distributors starting in late 2022 and continuing through the first half of 2023.
For example, we began operations of a European distribution center which led to a reduction of inventory levels at our distributors, significantly impacting sales patterns in the second half of 2022 and first half of 2023. Reimbursement • Our insulin pump products are generally considered durable medical equipment (DME) and have an expected lifespan of at least four years.
In addition, a net decrease of $17.7 million in changes of working capital balances. Changes of working capital balances primarily consisted of increases in inventories, prepaid and other current assets, and deferred revenue.
Changes of working capital balances primarily consisted of decreases in deferred revenue, current liabilities and inventories, offset by increases to accounts receivable. Investing activities .
Other expense, net for 2022 consisted primarily of $6.2 million of interest expense related to our Convertible Senior Notes, offset by $6.1 million of interest income earned on our cash equivalents and short-term investments. Interest income increased in 2023 primarily due to the higher interest rate environment as compared to 2022.
Other income, net for 2024 primarily consisted of $22.1 million of interest income earned on our cash equivalents and short-term investments, offset by $7.4 million of interest expense, $2.1 million in losses attributable to equity method investments, $2.0 million loss on impairment of strategic investment, $2.0 million in foreign currency transaction losses, and $1.3 million loss on extinguishment of debt.
Net cash provided by financing activities was $16.9 million and $51.9 million, respectively, for the years ended December 31, 2022 and 2021, which primarily consisted of proceeds from the issuance of common stock under our stock plans, net of payments for related tax withholdings.
Net cash provided by financing activities was $8.4 million for the year ended December 31, 2024, which primarily consisted of net proceeds of $306.9 million from the issuance of the 2029 Notes which was partially offset by $246.1 million used in the repurchase of 2025 Notes, $30.0 million used in the repurchase and retirement of common stock and $15.8 million used to purchase Capped Call Options related to the 2029 Notes.
The additional earnout payments of up to CHF 129.6 million, in aggregate, become payable upon the achievement of certain milestones and are comprised of a payment of up to CHF 38.4 million upon the successful completion of key development milestones over the two years following the acquisition, and a payment of up to CHF 91.2 million upon obtaining regulatory clearance of an automated controller enabled (ACE) pump by the United States Food and Drug Administration. 72 Off-Balance Sheet Arrangements As of December 31, 2023, we are party to a standby letter of credit arrangement in support of certain operating lease obligations (See Note 13 “Commitments and Contingencies” to the consolidated financial statements in Part II, Item 8 of this Annual Report).
Standby Letter of Credit As of December 31, 2024, we were party to a standby letter of credit arrangement in support of certain operating lease obligations (See Note 13 “Commitments and Contingencies” to the consolidated financial statements in Part II, Item 8 of this Annual Report). 64
The Notes mature on May 1, 2025 unless repurchased, redeemed, or converted in accordance with their terms before the maturity date.
Interest is payable in cash semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2024, at a rate of 1.50% per year. The 2029 Notes mature on March 15, 2029 unless repurchased, redeemed, or converted in accordance with their terms prior to the maturity date.
Sales in the United States for the years ended December 31, 2023 and 2022 were reduced by a deferral of $25.1 million and $3.5 million, respectively, as the result of our Tandem Choice program which launched in September of 2022.
We also recognized $30.2 million in net revenue from pump sales due to the conclusion of Tandem Choice during the year ended December 31, 2024. Sales in the United States for the year ended December 31, 2023 were reduced by $25.1 million in sales deferrals related to Tandem Choice.
If a customer elects to participate in Tandem Choice at a future date beginning with the launch of our next generation hardware platform, Tandem Mobi, we will recognize the existing deferral, incremental fees received and the associated costs of providing the new hardware, Tandem Mobi, at the time of fulfillment. Any remaining deferrals will be recognized at program expiration.
When a customer elected to participate in Tandem Choice, we recognized the existing sales deferral, incremental fees received and the associated costs of goods sold for the new insulin pump, Tandem Mobi, at the time of fulfillment. Qualifying customers were able to elect participation in Tandem Choice starting near the end of the second quarter of 2024.
The reduction in net cash provided by operating activities for 2022 compared to 2021 was primarily a result of the $110.2 million increase in net loss, as well as net working capital changes. Working capital changes during 2022, primarily consisted of increases in inventories, accounts receivable, accounts payable, and operating leases and other current liabilities. 68 Investing activities .
The increase in net cash provided by operating activities for 2024 compared to 2023 was primarily a result of the $128.8 million decrease in net loss, offset by a decrease of $76.5 million net non-cash adjustments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAccordingly, we are not subject to interest rate risk related to the Convertible Senior Notes (see Note 7, “Debt”). Foreign Currency Exchange Rate Risk Our operations are primarily located in the United States.
Biggest changeIn May 2020, we issued $287.5 million principal amount of Convertible Senior Notes, which bear interest at a fixed rate of 1.50% per year, of which $40.8 million principal amount remained outstanding as of December 31, 2024. Accordingly, we are not subject to interest rate risk related to the Convertible Senior Notes (see Note 7, “Debt”).
In certain circumstances, we may seek to manage such foreign currency exchange risk by using derivative instruments such as foreign currency exchange forward contracts to hedge our risk. However, we may choose not to hedge some exposures for a variety of reasons, including prohibitive economic costs. 73
In certain circumstances, we may seek to manage such foreign currency exchange risk by using derivative instruments such as foreign currency exchange forward contracts to hedge our risk. However, we may choose not to hedge some exposures for a variety of reasons, including prohibitive economic costs. 65
Unrealized losses on available-for-sale debt securities at December 31, 2023 were primarily due to an increase in market interest rates after certain debt securities were purchased.
Unrealized losses on available-for-sale debt securities at December 31, 2024 were primarily due to an increase in market interest rates after certain debt securities were purchased.
In addition, we have a sales and marketing office in Canada, a distribution center in the Netherlands and, beginning in 2023, a research and development facility in Switzerland associated with the acquisition of AMF Medical. Our sales to customers in the United States are made in U.S. dollars.
Foreign Currency Exchange Rate Risk Our operations are primarily located in the United States. In addition, we have a sales and marketing office in Canada, a distribution center in the Netherlands and, beginning in 2023, a research and development facility in Switzerland associated with the acquisition of AMF Medical.
Sales from our distribution center in the Netherlands are made to independent distributors under agreements denominated in Euros, and our sales in Canada are denominated in Canadian dollars. Approximately 20% of our revenue was denominated in foreign currencies for the year ended December 31, 2023. In addition, we purchase certain inventory from a third-party contract manufacturer located in Mexico.
Our sales to customers in the United States are made in U.S. dollars. Sales from our distribution center in the Netherlands are made to independent distributors under agreements denominated in Euros, and our sales in Canada are denominated in Canadian dollars. Approximately 28% of our revenue was denominated in foreign currencies for the year ended December 31, 2024.
A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to actual rates at December 31, 2023, would have affected the estimated fair value of our investments portfolio by approximately $3.6 million. In May 2020, we issued $287.5 million principal amount of Convertible Senior Notes, which bear interest at a fixed rate of 1.50% per year.
A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to actual rates at December 31, 2024, would have affected the estimated fair value of our investments portfolio by approximately $3.4 million.
Added
In March 2024, we issued $316.3 million principal amount of Convertible Senior Notes, due in 2029, which bear interest at a fixed rate of 1.50% per year.
Added
In addition, we purchase certain inventory from a third-party contract manufacturer located in Mexico.

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