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DATE

Thursday, May 7, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — John F. Sheridan
  • Executive Vice President and Chief Financial Officer — Leigh A. Vosseller

TAKEAWAYS

  • Worldwide Sales -- $247 million, setting a new first-quarter company record driven mainly by U.S. performance.
  • Worldwide Pump Shipments -- Over 29,000 units, a new first-quarter high, with more than 19,000 from the U.S.
  • U.S. Pump Shipments Growth -- Approximately 10% year-over-year increase, with U.S. renewals representing over 50% of shipments and two-thirds of new customers from MDI therapy.
  • Pharmacy Channel Sales -- Represented 6% of total U.S. sales for the quarter; fewer than 5% of customers ordered pumps or supplies through pharmacy benefit.
  • Formulary Coverage -- Approximately 40% coverage achieved for PayGo pharmacy model, with ongoing expansion planned throughout the year.
  • International Sales -- $86 million, a 3% year-over-year increase, with direct channel sales rising to 11% of segment revenue due to new direct operations in select European markets.
  • Gross Margin -- 55%, improving nearly 5 percentage points year over year, delivering the highest gross margin for any first quarter in company history.
  • Operating Margin -- Improved by 40 percentage points to negative 7% of sales, primarily due to lower stock-based compensation as a proportion of sales.
  • Adjusted EBITDA Margin -- Approximately 1% of sales, an improvement of 32 percentage points year over year attributable to IPR&D expense timing and 3 additional points of operating leverage.
  • Free Cash Flow -- $5 million generated during the quarter, supported by cost discipline and margin improvement.
  • Convertible Debt Financing -- $276 million in net proceeds, 0% interest, completed in February; quarter-end cash and investments of $570 million.
  • Guidance Reaffirmed -- Fiscal 2026 sales expected at $1.065 billion to $1.085 billion, U.S. at $730 million to $745 million, international at $335 million to $340 million; second-quarter worldwide sales expected around $255 million.
  • Gross Margin Guidance -- 56%-57% for the year; adjusted EBITDA margin guidance at 5%-6%; second-quarter gross margin expected to remain consistent with Q1.
  • Tandem Mobi Android Launch -- Full U.S. availability announced in March, expanding access to users of Android smartphones.
  • FDA Clearance for Control-IQ+ in Pregnancy -- Received in April, making t:slim X2 and Mobi the first AID systems cleared for use during pregnancy in the U.S.; CE Mark in Europe pending.
  • International Expansion -- Direct commercial operations launched in the UK, Switzerland, and Austria during the quarter, with further direct expansion planned for late 2026 and 2027.
  • Upcoming Product Launches -- Q2 launches to include: Control-IQ+ pregnancy management symposium, FreeStyle Libre 3 Plus integration in select European countries, Mobi international rollout, and Dexcom G7 15-day sensor compatibility.
  • Mobi Tubeless 510(k) Submission -- Planned for Q2, with phased commercial rollout anticipated following regulatory clearance.
  • Pipeline Advancement -- Preparation for pivotal trial of first fully closed-loop system remains on track for launch within the year.

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RISKS

  • Infusion set supply shortages continued to create “significant” impact for some customers and providers, with management stating, "this probably will not be resolved for a quarter or two."
  • New starts declined both sequentially and year over year due to standard seasonal patterns, as confirmed by "slight decline in the first quarter."
  • International segment guidance incorporates a $3 million to $4 million headwind from the ongoing transition to direct operations, expected to impact Q2.

SUMMARY

Tandem Diabetes Care (TNDM +2.44%) reported record first-quarter sales and pump shipments, driven by U.S. renewal momentum, ongoing MDI conversions, and continued improvement in margin metrics. Management confirmed successful early execution of the PayGo pharmacy channel transition, reaching 40% formulary coverage and maintaining previous pricing and volume assumptions for the new model. Regulatory milestones included full U.S. launch of Mobi for Android, FDA clearance for pregnancy use of Control-IQ+, and the initial deployment of new direct markets in Europe. Large infusion set supply constraints and direct-market transition timing produced modest headwinds, which are reflected in both segment outlooks and near-term revenue guidance.

  • The first-quarter U.S. pharmacy channel contribution was consistent with internal expectations, with early economics modeled at $3.50 per patient per month for supplies sales.
  • Management anticipates gross margins to scale toward 60% by year-end, emphasizing direct-channel pricing benefits, expanding pharmacy utilization, and increased Mobi contributions as key drivers.
  • International pump ASPs benefited from a one-time Switzerland accounting gain and favorable currency, with normalized segment ASP expected to settle within the $2,800 to $2,900 range for 2026.
  • Pipeline visibility advanced, with Mobi Tubeless 510(k) submission on schedule and pivotal closed-loop system trial preparations confirmed for start within the current year.
  • Cash position was bolstered by a February convertible debt offering, supporting strategic flexibility through ongoing business model transformation and product launches.

INDUSTRY GLOSSARY

  • MDI: Multiple Daily Injection, referring to patients previously managing diabetes with several insulin injections per day prior to pump therapy.
  • PayGo: Pay-as-you-go pharmacy reimbursement model for insulin pumps and supplies, enabling lower up-front costs for patients and modified economics for Tandem Diabetes Care.
  • AID system: Automated Insulin Delivery system, integrating pump technology with glucose monitoring and automated dosing algorithms.
  • PBM: Pharmacy Benefit Manager, entities that manage prescription drug benefits and negotiate formulary coverage and rebate structures.
  • DME: Durable Medical Equipment, the traditional medical device distribution and reimbursement pathway for insulin pump systems.
  • Control-IQ+: A specific version of Tandem Diabetes Care's automated insulin delivery algorithm, recently cleared for use in pregnant women with Type 1 diabetes.
  • Infusion Set: Disposable component connecting an insulin pump to the patient’s body to deliver insulin subcutaneously.
  • ASP: Average Selling Price, the mean realized sales price per device unit in a given segment or geography.
  • 510(k): The FDA’s regulatory pathway for product clearance, based on demonstrating substantial equivalence to a legally marketed device.

Full Conference Call Transcript

John F. Sheridan, Tandem's President and CEO, will be leading today's call, and he will be joined by Leigh A. Vosseller, Executive Vice President and Chief Financial Officer. Following their prepared remarks, the operator will open up the call for questions. Thanks in advance for limiting yourself to one question before getting back into the queue. With that, I will hand the call over to John.

John F. Sheridan: Thanks, Susan, and welcome, everyone. In 2026, we delivered strong financial and operational performance, setting the stage for another successful year. This momentum reflects the dedication of our team and our commitment to our strategic objectives. Building on these results, we actively advanced several key initiatives that position Tandem for both immediate impact and long-term growth. By modernizing our commercial operations, reshaping our business model, and introducing new technologies, we are not only achieving notable short-term gains, but also laying the foundation for sustained growth, profitability, and innovation. I will walk you through updates on each of these initiatives, beginning with the modernization of our commercial organization. Globally, we have assembled a talented and impressive team.

The group is deeply committed to bringing the benefits of our technology to people living with diabetes, and we are working to further support them by strengthening our systems, infrastructure, and processes. For example, in the United States, we continue upgrading our sales and customer management infrastructure as part of our multiyear system investment to optimize sales efficiency, enhance effectiveness, and drive deeper customer insights. Internationally, a Q1 highlight was our launch of direct commercial operations in the UK, Switzerland, and Austria. By doing so, we are better positioned to serve our customers, strengthen HCP relationships, and drive continued growth.

The transition has been progressing smoothly, and we plan to continue expanding our direct operations later in 2026 and again in 2027. This approach deepens our engagement with the diabetes community while providing Tandem greater ASP and improved margins. The second key initiative I will discuss today is reshaping our U.S. business model through our transition to a multichannel strategy. On our last call, we discussed how adopting pay-as-you-go, or PayGo, in the pharmacy channel provides us the opportunity to bring significant advantages to customers, health care providers, and payers while delivering favorable economics to Tandem.

Throughout March, we began executing contracts adapted for PayGo, covering both t:slim and Mobi pump supplies, and continued to expand access with an increase to approximately 40% formulary coverage today. It is an important leading indicator for how quickly we can transition our business. Operationalizing PayGo in the pharmacy channel is an end-to-end change in the way health care providers prescribe our technology, the way we service customers, and the way we process and fill orders. We knew this transition would take time. It is still early in the process, and we are working to improve our efficiency and customer satisfaction by enhancing the pharmacy experience.

Our early introduction of PayGo through the pharmacy reinforces our conviction in the meaningful opportunity this transition presents for our business and for our customers. Finally, I will provide an update on our new technology across our portfolio. In March, we were excited to announce that Tandem Mobi, the world's smallest durable automated insulin delivery system, is fully available for use with Android smartphones in the U.S. By expanding to Android, we are bringing the benefits of Tandem Mobi to even more people living with diabetes, underscoring our commitment to delivering choice in diabetes technology. In the second quarter, we are on track to deliver on a number of exciting new offerings.

In April, we received FDA clearance for use of Control-IQ+ in pregnant women with Type 1. This is significant, as it makes the t:slim X2 and Mobi the first and only commercially available AID systems cleared for use during pregnancy in the U.S. We are also awaiting CE Mark for this indication in Europe. Pregnancy requires a much tighter glycemic range, and clinical data demonstrated that Control-IQ+ is designed to effectively support the unique therapy needs of pregnant women in addition to women considering pregnancy. We will be hosting a product theater highlighting pregnancy management with Control-IQ+ at the upcoming American Diabetes Association meeting in June.

We are also preparing for the international launch of Abbott's FreeStyle Libre 3 Plus integration with the t:slim starting in select European countries in Q2 and scaling to additional countries throughout the year. This integration with Abbott's latest generation sensor will allow even more CGM users to access the life-changing benefits of our Control-IQ technology. Additionally, in Q2, we will begin the commercial rollout of Tandem Mobi outside the United States. This brings together the best-in-class outcomes users have come to expect with Control-IQ+ and the benefits of Mobi's form factor.

Rounding out our Q2 launches, we will be upgrading both t:slim and Mobi for compatibility with Dexcom's G7 15-day sensor, ensuring we continue to provide our customers with the latest generation technologies. It is also exciting because this software update will enable Tandem pumps to provide CGM data directly to our Sugarmate app, with future plans to add insulin data. This provides visibility to sensor information across our device platforms for users and their loved ones. These launches are designed to be global and deployable to all markets where the relevant system combinations are available, which represents an important accomplishment by our team. While progressing these new offerings to commercial availability, we also made great strides with our pipeline products.

We are particularly excited about Mobi Tubeless, our novel infusion set option for the existing Mobi pump that transforms it into a tubeless AID system, allowing for interchangeability between tubed and tubeless wear with one platform. This will be Tandem's first tubeless pump offering and the world's first with extended wear technology. We plan to file our 510(k) submission for Mobi Tubeless in the second quarter. Finally, we continue to make good progress preparing our pivotal study for Tandem's first fully closed-loop system and remain on track to start it this year. As you can see, we continue to make meaningful progress across the business while demonstrating strong financial results, which Leigh will now discuss.

Leigh A. Vosseller: Thanks, John. As a reminder, unless otherwise noted, the financial metrics discussed today will be on a non-GAAP basis. In this quarter's performance, we continued the momentum from last year by achieving new first-quarter records for pump shipments and sales, as well as robust margin improvement and solid cash generation. We are reaffirming our annual 2026 guidance as we continue to execute on our bold business model transformation in both the U.S. and international markets. We set new first-quarter records with more than 29 thousand pump shipments worldwide and $247 million in sales. Our U.S. performance drove this achievement, where we shipped more than 19 thousand pumps, representing approximately 10% year-over-year growth.

Renewals continue to account for more than 50% of our shipments, and new starts were predominantly MDI patients, representing roughly two-thirds of new customers. As John discussed, a key milestone in the quarter was our March launch of PayGo in the pharmacy channel. Throughout the month, we successfully increased our formulary access outside of the traditional cycles for PBMs and payers. Adoption was within our range of assumptions in these first few weeks. Fewer than 5% of customers ordered a pump through their pharmacy benefit. Similarly, less than 5% of our installed base purchased their supplies through this channel. Our transition and pricing assumptions for the full year of 2026 remain unchanged.

U.S. sales were $161 million, growing 7% year over year, also representing our highest first-quarter U.S. sales. This reflects the headwind of approximately $1 million from the adoption of PayGo, as well as slight pressure in infusion set sales due to a key supplier's shortages. Overall, pharmacy sales represented 6% of sales in the U.S., which was significant based on our volume. Looking ahead to the second quarter, we are confident in our ability to deliver pump shipment growth with a seasonal curve similar to 2025, and expect U.S. sales of approximately $175 million. This factors in an increasing PayGo headwind, the magnitude of which will depend on our pace of execution.

Turning to our international performance, we shipped more than 10 thousand pumps and are executing well on our go-direct strategy. International sales totaled $86 million, representing 3% growth year over year. Direct channel sales increased to approximately 11% of total international sales from less than 5% historically. This is the highest international sales quarter in our history, due in part to favorable currency dynamics. Also, as a reminder, 2025 included a $5 million benefit from timing of distributor orders, creating a tougher point of comparison.

Our international business had a few puts and takes during the quarter compared to our original assumptions, including a delay in timing of expected headwinds from going direct, a one-time benefit in Switzerland related to the buyout of existing customer rental contracts from our former distributor, and the same infusion set shortage I referenced in the U.S. In the second quarter, we expect international sales will be approximately $80 million. This steps down from the first quarter due in part to the delayed impact of $3 million to $4 million headwinds associated with our go-direct transition. This also incorporates expected order phasing tied to Mobi availability as we scale launch, with some distributor demand shifting into the third quarter.

Turning to margins, gross margin for the quarter exceeded expectations at 55%, an improvement of nearly five percentage points year over year and the highest first-quarter gross margin in the company's history. Notably, we started the year higher than our full-year 2025 average, reflecting continued execution on our key drivers, including pricing discipline and product cost improvements. Both operating and adjusted EBITDA margin reflect a meaningful improvement year over year, due largely to $75 million IPR&D costs in the prior year. Beyond that charge, we demonstrated leverage as operating expenses of $154 million remained essentially flat year over year. This included a slight reduction in R&D spending that offset increased commercial investments in support of global growth initiatives.

As a result, adjusted EBITDA was approximately 1% of sales, an improvement of 32 percentage points based on the IPR&D charge alone and an additional three points of operating leverage. Operating margin improved even more substantially by 40 points to negative 7% of sales. This was due largely to a reduction of stock-based compensation expense from 11% of sales in 2025 to 6% this quarter. With our focus on cost discipline and achieving our profitability goals, we generated $5 million in free cash flow this quarter. We also completed a convertible debt financing in February, yielding net proceeds of $276 million with 0% interest, to further strengthen our balance sheet and provide flexibility as we execute against our strategic priorities.

As a result, we ended the quarter with $570 million in total cash and investments. Overall, we remain confident in our ability to deliver on our goals for 2026 and are reaffirming our 2026 financial guidance. Worldwide sales are expected to be in the range of $1.065 billion to $1.085 billion. This includes U.S. sales in the range of $730 million to $745 million and international sales in the range of $335 million to $340 million. For the second quarter, worldwide sales are expected to be approximately $255 million. We expect gross margins of 56% to 57% and adjusted EBITDA of 5% to 6% for the year. Second-quarter margins are expected to remain consistent with the first quarter.

Further details on our guidance and assumptions for the year can be found in the earnings call slide deck posted in the Investor Center portion of our website. With that, I will turn the call back to you, John.

John F. Sheridan: Thanks, Leigh. Before I wrap up our prepared remarks, I would like to extend my thanks to the full Tandem team. Your unwavering dedication, commitment to innovation, and teamwork have been the driving force behind our achievements. I also appreciate your resolve as we continue to navigate issues from our infusion set supplier. While they may only impact a small percentage of our customers, the impact on them and the health care providers is significant. I appreciate the extra care and service that you are providing during this time. Thank you, everyone, for all you do. In conclusion, we are encouraged by the start to the year and are confident in the strategic direction that we have set.

Our operational and commercial goals are firmly in focus, and we are committed to providing best-in-class technology to our customers in a more efficient and cost-effective way while advancing our global business model and driving meaningful long-term value for our shareholders. Thank you again for joining us today. We are excited about our opportunities ahead and look forward to sharing our progress in the upcoming quarters.

Operator: We will now open the call for questions. Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. In fairness to all, we ask that you please limit yourself to one question. If you have additional questions, please reenter the queue, and we will answer as many questions as time allows. One moment for our first question. Our first question is going to come from the line of Matthew Stephan Miksic with Barclays. Your line is open. Please go ahead.

Matthew Stephan Miksic: Great. Thanks so much, and congrats on a really solid quarter here. Appreciate all the color, and it is exciting to see you kind of turn the corner here into PayGo. So I had one question on just the, you know, as you I am sure you noticed, one of the other companies in the space talked a little bit about the market, some tone or I do not know, seasonal, I do not know what it was exactly, but maybe sounded like some temporary slowness.

So great to get your perspective on that, what you have seen, and then also any way that you would characterize the major drivers of the growth in the quarter, whether it is uptake in Type 2, whether it is uptake through pharmacy, whether it is new sensor and the integration. I hate the “all of the above” answer, but anything you can do to give us a sense of what were the major drivers for the quarter?

John F. Sheridan: Matt, I will just start off and talk a little bit about the market and whether it is growing or not. I think you know it is still large and very underpenetrated. It is great to have Type 2 as part of the market for us now. We are excited about the fact that we are bringing a great deal of new technology and business model changes that we believe will really help us grow new starts from MDI. If you look back in 2025, there are a number of pump companies in the market. I think they all did pretty well, and I would say it definitely appears to us that the market is growing.

We are very excited about this year in particular because we have so much technology and business model modifications that are really going to position us for growth this year and beyond. I will let Leigh answer some of the questions about seasonality.

Leigh A. Vosseller: Sure. I will just say that we did not see anything unusual or different from what we typically see in the DME space starting off the year. Our pump shipments came in line with where we expected, which was about a 30% sequential decline in the U.S. from the fourth quarter. So nothing really to note there. And then, unfortunately or fortunately, the answer to your question about the major drivers is it really is a little bit of all of the above.

We have a lot of things, as John suggested, working in our favor this year with our new product launches and our business model transformations, and as we start to gain traction, everything is coming together to drive us toward a very successful and strong growth year altogether.

Matthew Stephan Miksic: Thanks, guys.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Christopher Thomas Pasquale with Nephron Research. Your line is open. Please go ahead.

Christopher Thomas Pasquale: Thanks. I was hoping you could dig in a little bit on the international business. International pump revenue was up despite pump shipments in that segment being down. You talked about a couple of one-time items. So were those two things related? And could you maybe detail some of the one-timers that you had this quarter, just so we can think about the go-forward run rate?

Leigh A. Vosseller: Sure. You are right. There were a lot of moving parts internationally, and the answer varies depending on if you are comparing to last year or comparing to expectations. I will touch on a few of those. Year over year, a significant part of the growth was coming from currency fluctuation, so there was favorability in the environment that helped that growth year over year. Also, last year, first quarter and second quarter, there was a shift in timing of sales. It was more favorable by about $5 million in the first quarter versus second quarter. So as we go into Q2, it will be an easier comparison for us.

Then within the quarter, compared to when we set our guidance expectations, there were also a few moving parts. One was that we had estimated a headwind of approximately $5 million for going direct in certain international markets, and we are seeing a bit of a timing difference there. We realized about $1 million of that, and we expect $3 million to $4 million to push into the second quarter. Also, we did have some favorability in our Swiss market, a one-time accounting benefit that we had, which was largely offset by some of the infusion set noise that we saw as we managed through some of these shortages in the quarter.

Overall, we are very excited about the international operations. We still see strong demand in the market for our products, and in the markets where we have gone direct, we are already hearing a very positive reception as we are closer now to the physicians and the patients.

Christopher Thomas Pasquale: Okay. Thank you.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Matthew O'Brien with Piper Sandler. Your line is open. Please go ahead.

Matthew O'Brien: Good afternoon. Thanks for taking my question. On Mobi Tubeless, I know filing here in Q2, still nothing expected for revenue this year in 2026. And then if you do get the approval late this year, is it fair to think you do not want to disrupt the typically stronger DME part of the year, so more so a bigger launch next year and 2027, so no real disruption from launching Mobi Tubeless or as people are expecting Mobi Tubeless? I just do not want an air pocket in any of the quarters as people are waiting for that system. Thank you.

John F. Sheridan: Thanks, Matt. When it comes to our submission, we are on track to submit it this quarter. We also plan on getting clearance in the second half. There is some uncertainty with the FDA, but they have been doing a really nice job lately in getting things done quickly. As you know, when it comes to guidance, we typically do not include new products until they are actually in the market.

If we get the clearance in the second half, we have a phased commercialization process where we observe the product in small groups of people first, increase the size of the group using it, and then get to the point where we feel we have uncovered or found nothing that we would want to fix before it gets into full commercial launch. This is a practice we have used from the very beginning. While we do an excellent job of testing these products, you really cannot find everything until you use it over time with larger groups of people. We will go through that process.

If we can get it to the market before the fourth quarter starts, I think we would want to do that, but we will have to wait and see when the actual clearance occurs.

Operator: Thank you. And one moment for our next question. Our next question is going to come from the line of Michael Holden Kratky with Leerink Partners. Your line is open. Please go ahead.

Michael Holden Kratky: Hi, everyone. Thanks for taking our questions, and congrats on a great quarter. It looked like U.S. sales through the pharmacy maybe ticked down slightly from 7% in the fourth quarter to 6% in the first quarter. Can you talk about how that lined up with your expectations, what factors contributed to that, and what you have seen so far this quarter to support your confidence in the 15% for the year?

Leigh A. Vosseller: Great question. Most importantly, you really cannot compare our pharmacy experience this year in 2026 to what we saw in 2025. It is a whole different world with the change in the business model. For example, last year our pharmacy contracts included reimbursement for the pump that was a premium to even what we get in DME, so it is a very different environment. Coming into this year, in the first quarter we had two major workstreams. One is building up the coverage, and we were pleased to report we are already at approximately 40% formulary coverage, and we expect that to increase across the year. The other piece was the operational piece—implementing an end-to-end change in our workflows.

It changed how physicians prescribe, how we engage with patients, and how we process and fulfill orders. That execution really all started late in the first quarter, in the last few weeks, so we are at the very early stages. So far, we are excited about the opportunity it presents. Nothing has changed our conviction in our ability to grow and scale that across the year, and we look forward to future quarters where we can report the headwinds that are coming from the volumes we are bringing through.

Michael Holden Kratky: Understood. Thanks, Leigh.

Operator: Thank you. One moment for our next question. Our next question will come from the line of David Harrison Roman with Goldman Sachs. Your line is open. Please go ahead.

David Harrison Roman: Great. This is Phil on for David. Thanks for taking our questions. I think maybe touch on pricing. I saw on the slides that it was reiterated, and I think I heard in your comments as well, Leigh. We heard from a competitor yesterday that so far it sounds like everybody is acting rationally or fairly, I think, maybe was the term they used. Can you talk about how negotiations around pricing have gone so far, and what is baked into that $3.50 number for the year? What level of conservatism is in there? Thanks.

Leigh A. Vosseller: Sure. Happy to talk about that. I would agree—we are all behaving rationally when it comes to pricing. We are excited to be in this market and take advantage of the pricing opportunity that was already set in the pharmacy channel for insulin pump products. When we thought about how to set expectations for the year, I would call them modeling assumptions for now because it is new for us and it is an early experience. We said to expect about $3.50 per month per patient as they order supplies. What is factored into that is an array of contracts with varying rebate structures.

At this point, we do not have enough experience to say what that mix will look like on a sustainable basis. That is the baseline we have set for now. It is still the right way to think about it, and as we start delivering on more volumes and gain more traction and experience, we will be able to update those assumptions in the future.

David Harrison Roman: That is great. Thanks.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Richard Samuel Newitter with Truist Securities. Your line is open. Please go ahead.

Richard Samuel Newitter: Hi. It is Ravi on for Rich. Thank you for taking the questions. Just two for me, and I will ask them both upfront. First, on the infusion set shortage, would you mind quantifying that and/or maybe suggesting what the impact might be in Q2? It looks like you are guiding a little bit below consensus here for Q2 but reiterating the full-year guide, so curious if there is any impact from that. Second, on the salesforce expansion—seems to be a theme now running across your peers and I guess Tandem now itself—can you talk about what the opportunity is that the salesforce is going after and what patient population they can unlock? Thank you.

John F. Sheridan: I will talk a little bit about the situation with infusion sets, and Leigh can talk about guidance. First, I will say it is unfortunate. Our supplier has had some capacity challenges that actually began in the fourth quarter and continued to pressure us in the first quarter, both in the U.S. and internationally. We have been working very closely with them. We practically have daily calls with the operational team as well as the executive team. It is a top priority for us. When you look at the impact, it is only a small number of SKUs that are really subject to the capacity shortages.

The unfortunate part is that for those people who are impacted, and the HCPs who support them, it is really significant. We are doing everything we can to be creative. We are looking for options in terms of lengths, colors—you name it—to see if we can provide intermediate solutions until this is taken care of. We are also managing inventory to provide as broad a coverage as possible. Unfortunately, this probably will not be resolved for a quarter or two. We expect to see some progress in the second half of the year, but that is what we are dealing with right now, and we are taking it very seriously.

Leigh A. Vosseller: From the perspective of the impact, all we are sharing is that it was a modest impact in the quarter, both U.S. and internationally, and we have factored that same level of impact as we set expectations for the second quarter. As John said, we are managing it very closely and working through it, and we see a line of sight to the end of this in the long term.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Jeffrey D. Johnson with Baird. Your line is open. Please go ahead.

Jeffrey D. Johnson: Hey, guys. Good afternoon. Leigh, I will follow up on the comment you made on the infusion set impact. I know you are not quantifying it, but let me go after it this way. Supplies missed our model by about $11 million this quarter. It could be that we are just bad modelers—I have been told that before—but if we missed or if you missed our model by $11 million, does a lot of that get attributed to the shortfall, and is that also, it sounds like, assumed as a similar shortfall in Q2, even though you are trying to move patients over to other infusion sets?

I am trying to understand: does the year-over-year impact stay the same in Q2 as it was in Q1, and am I anywhere near ballpark based on my model points? Thank you.

Leigh A. Vosseller: Great. Thanks for the question, Jeff. I would say that is a bit on the high side for the impact. We would put it as more modest than that. There are a couple of ways to think about the size. First, there is a backorder situation, but also, to John’s point, we are helping to solve the problem for patients by offering an alternative. So just because we had some backorder situations does not mean that we have not recovered sales in other ways to satisfy patient needs. It is not near that big. It will be a bit disruptive again in the second quarter, but it is something we can work through.

We will continue to talk more about the modeling assumptions in supply sales—maybe it is a little better price or other pieces that are not working there.

Operator: Thank you. And one moment for our next question. Our next question is going to come from the line of Matthew Charles Taylor with Jefferies. Your line is open. Please go ahead.

Matthew Charles Taylor: Hi, good afternoon. Thanks for taking our question. This is Matt on for Matt Taylor. I wanted to ask on product expansion. First, on your clearance for Type 1 pregnant women—can you help us frame the size of that opportunity and how incremental that could be? And then a third one on adding Android capability—is there any analog we can look at for thinking how that adds incremental growth in your coming quarters?

John F. Sheridan: Sure. First of all, we are very excited to have received pregnancy clearance just a few days ago, based on data from the CIRCUIT trial that was published in JAMA recently. We are the first and only AID system approved for pregnancy in the U.S. for both Mobi and t:slim using Control-IQ. We also expect CE Mark this quarter. In the clinical data, the Control-IQ group experienced a 12.5% improvement in time in range within a tighter range of 63 to 140 mg/dL, about three more hours a day for the length of the pregnancy—really substantial improvement. When it comes to size, it is obviously pregnant women, but also women considering pregnancy.

It is not a really large group; I do not think I can put a number on it at this point. It is a meaningful and important group, and we are very happy to have this. We are now kicking off training and events for HCPs, and we plan to have a symposium at ADA. Relative to Android, on our mobile apps for t:slim, roughly 60% of users use iOS, so Android represents a big opportunity for us. Many customers have been waiting for Android to become available. It is meaningful, and it is another great opportunity to drive MDI growth in 2026 and beyond.

Operator: Thank you. And as a reminder, please limit yourself to one before reentering the queue. Our next question will come from the line of Joanne Karen Wuensch with Citi. Your line is open. Please go ahead.

Joanne Karen Wuensch: Thank you so much. Sticking with the one-question rule. With Mobi Tubeless being sent to the FDA in the second quarter and on track for second-half approval, and assuming there is nothing in your guidance for it, how do we think about kicking off 2027 launching that product, and how are you preparing for it? Thank you.

John F. Sheridan: For launching the product, as I mentioned, we have a phased commercial process to release it. We are hoping to get it on the market this year, but we will have to see about timing. Today, there really is a tubed market and a tubeless market. The tubed market is growing low single digits, whereas the tubeless market is growing in the 20% range. That is a significant opportunity. Looking at the competition today, we are in the pharmacy now, we will have a tubeless device, and we feel like we have a better algorithm. There is a big opportunity for us to drive MDI conversions to our device, and at the same time, there is potential for competitive conversions.

It is a big opportunity for us, and we are really excited about it.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Suraj Kalia with Oppenheimer. Your line is open. Please go ahead.

Suraj Kalia: Sorry about that. John, can you hear me alright?

John F. Sheridan: We can. Yes.

Suraj Kalia: Perfect. John, I am going to cheat and sneak in a two-parter if I could. To Joanne’s question, how would you define the low-hanging fruit for seven-day Mobi Tubeless? Would there be a price differential? Leigh, if I could quickly—U.S. sales were up 5%, pump units up roughly 12%, and then obviously there is a 6% PBM contribution. Can you help us thread the needle here? Thank you.

John F. Sheridan: I think the financial benefit, Suraj, is the fact that the infusion plate lasts seven days, whereas an infusion set lasts three today. There is a margin benefit from having that extended time. It is also a substantial customer experience improvement in that they do not have to change the product as frequently. All of this adds up, and we are doing everything we can to get gross margin up. This certainly helps, but the real benefit here is customer experience, and that is our focus.

Leigh A. Vosseller: To your question on the first quarter in the U.S., when you look at pump shipments, on a rounded basis the actual growth rate was 10%, so the spread between the growth rate on shipments and the sales growth is not as substantial as it might seem on the surface. It really is just pricing that is the differential.

Operator: One moment for our next question. Our next question will come from the line of Lawrence H. Biegelsen with Wells Fargo. Your line is open. Please go ahead.

Lawrence H. Biegelsen: Alright. Thanks for taking the question. Leigh, I will ask the new-start question. By my math, it looks like new starts were down slightly year over year in Q1 and down modestly sequentially. Is that right, and do you still expect new starts in the U.S. to grow in 2026? Thanks for taking the question.

Leigh A. Vosseller: Thanks, Larry. Your math is accurate when we look at it year over year, and even down sequentially, mostly due to the regular seasonal impact that we see. This was how we had structured the year in our modeling assumptions—that we would continue to see that slight decline in the first quarter but would return to growth as we look ahead. We are very confident in the ability to return to growth because we have seen improvement over the last few quarters from our low in the middle of last year.

It is really the traction we are seeing on our new product launches, and we look forward to pharmacy making a real difference now that we have removed that cost barrier. More people can move to pump therapy without having to worry about an upfront cost. As we continue to build on that initiative and drive these launches, we expect to see a return to growth this year.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Michael Polark with Wolfe Research. Your line is open. Please go ahead.

Michael Polark: Hey. Good afternoon. I am interested in learning about the process to convert someone in the base to pick up supplies at pharmacy. I get the incentive for a new user with no upfront cost, but for that compliant, happy user through DME, how do you get them to the pharmacy? What does the outreach from you to them look like? What is the outreach from you to a physician look like? And can you remind me on the financial incentive, how different is patient out-of-pocket for supplies-only in DME versus pharmacy? Thank you.

Leigh A. Vosseller: Glad you asked. There might be an assumption it would be easy to move people over, but there is work involved. First and foremost, when a customer comes in to place their order—usually quarterly—we check their benefits to see if we have coverage for them on formulary. We then share the out-of-pocket benefits. That is the true motivator—it is typically lower, or with copay assistance can be lower. Once they are ready to move forward, it requires a new prescription, which requires reaching out to the physician to write it. Getting their attention and time can be challenging in some cases, as they may want to focus on customers who have not yet moved to pump therapy.

It is a process we are working on, and it is a key driver as we look ahead to maximize the pharmacy opportunity. It is not only bringing more patients to Tandem, but also converting the existing base. If you think about moving hundreds of thousands of people and getting that price benefit, that makes a significant difference on our revenue growth and margins. It is one of the activities we are very focused on.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Analyst with UBS. Your line is open. Please go ahead.

Analyst: Hey, guys. Thanks so much for the question. Really nice to see the cash flow generation in the quarter, especially in Q1, which has typically been a heavy cash burn quarter for you. Would love to hear about what changed this quarter and how sustainable this level of cash generation is going forward. Thanks so much.

Leigh A. Vosseller: Thanks. A lot of this comes from the cost discipline we have. While we are focused on growing revenue, we are equally focused on driving improved margins. This year, we demonstrated a 1% positive EBITDA in the first quarter, and I believe that is the first time we have done that since 2022. Q1 is a tougher quarter because of the seasonal dynamics in our business, so it is really meaningful that we were able to show positive EBITDA and cash flow generation.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Elaine Cui with Raymond James and Associates. Your line is open. Please go ahead.

Elaine Cui: Hi. This is Elaine on for Jason. Thanks for taking my question. I had a question on the gross margin and how you are thinking about the cadence for the year. You gave us guidance for Q2 and Q4, and we can get to an implied Q3. So my question would be, why would it stay relatively flat for the first three quarters, according to my math? And when we think about the year-over-year expansion, how much of it is driven by Mobi scaling versus the pharmacy transition? Thank you.

Leigh A. Vosseller: Great question. First, on Q1 to Q2 being relatively flat—a little bit of that is product mix. From Q1 to Q2, both U.S. and internationally, more of the step-up is coming from supplies. Globally, even though supplies are going to have a better gross margin eventually in the U.S. with our new reimbursement model in pharmacy, today supplies still have a lower gross margin than pumps. So it is reflective of the mix going into Q2. It should start to step up from there, scaling toward that 60% in the fourth quarter.

That will come from pricing benefit we expect both with our direct operations outside the U.S. continuing to build and with the pharmacy benefit as we convert more customers to pharmacy in the U.S. I would say this year, price will be a very prominent driver of gross margin. We are also continuing to see benefit from Mobi as it scales in volumes. For pumps, we started seeing that benefit in 2025. For supplies with Mobi, we are really going to start to see that difference this year, so that will be a contributor to the gross margin improvement across the year.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Jonathan Block with Stifel. Your line is open. Please go ahead.

Jonathan Block: Great, guys. Thanks. Maybe I will just follow up on an earlier international question. When I look at that international pump ASP, the actual ASP seemed to step up really nicely from recent quarters. Any color on how much is FX, how much is the direct transition? Does this even trend higher from the current Q1 result just as the percent of business that is direct continues to increase? Maybe most importantly, any way to think about an exit 2026 pump ASP as we head into the following year?

Leigh A. Vosseller: I will start by saying the assumption we have made in guidance for the year is that pump ASPs outside the U.S., with the changes from going direct, should land somewhere in the $2,800 to $2,900 range. We did see extra benefit in the first quarter because of a one-time accounting benefit in the Switzerland market. We were able to recognize a higher level of revenue there because of the acquisition of certain customer rental contracts that were already in existence from our distributor. This one-time benefit really drove the incremental pump ASP in the first quarter. Otherwise, it should settle into that $2,800 to $2,900 range for the rest of the year.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Anthony Charles Petrone with Mizuho Financial Group. Your line is open. Please go ahead.

Anthony Charles Petrone: Thanks. Good afternoon, everyone. On the U.S. side, a competitor had a recall announcement. The FDA came out in April and reported more adverse events on one of the primary competitors. What is the chatter out there? Is that creating any opportunities for share capture, certainly as you look to Mobi or otherwise? A little bit on the competitive dynamics in the quarter. And then on spend as you get ready for the Mobi Tubeless launch, thinking about the DTC end of things, is there a big DTC campaign planned around Mobi Tubeless? Thanks.

John F. Sheridan: Regarding recalls, it is unfortunate, but that is something that happens in this marketplace. The intent of a recall is to ensure the diabetes community is aware of safety issues that might impact the use of their products. It is something that happens to everybody. When it happens to us, we do our very best to ensure that patients are safe and understand the risks. I do not think that is going to give us a benefit. You do not like to see it happen, but you recognize that as part of dealing in a market with life-saving technology. On competition in general, it is a large and expanding, underpenetrated market with new entrants. Q1 was consistent with our expectations.

It is highly competitive, but there is nothing specific to point to that changed. We are very confident in our ability to deliver new technology to the market. The team has done an amazing job in the last several quarters, and we continue to do it this quarter and in the second half of this year. Moving to the pharmacy benefit where the out of pocket is substantially lower is going to be a big benefit. We feel very good about where we are heading competitively, but specifically to the marketplace today, it is very competitive, and nothing has really changed.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Mathew Blackman with TD Cowen. Your line is open. Please go ahead.

Mathew Blackman: Good afternoon, everybody. Can you hear me okay?

John F. Sheridan: We can.

Mathew Blackman: Great. Thanks for taking my question. Leigh, I think I heard you say 40% formulary coverage to date. I am trying to figure out the proper context. That feels like a lot of progress—we are just one quarter and a half deep in the year—but I do not know how to frame it relative to where you need to be at the end of the year to hit your goals. Could you frame that relative to your expectations? Where do you hope to exit the year? Is the next, say, 60% a heavier lift? Any framework to think about where you are to date and where you need to be by year end to hit pharmacy mix goals, etc.?

Thank you.

Leigh A. Vosseller: Happy to put some context around that. Typically, new formulary additions happen on a January 1 or July 1 cycle. We are very excited that we have been able to add this coverage across the quarter, a bit off-cycle. It shows the receptivity to us moving to this PayGo model and the acceptance of our products within the channel. The team is not stopping. I see announcements every week with another formulary addition, some bigger and some smaller, but still progress. To achieve our goals for pharmacy this year, we are right on pace with where we need to be.

I am not going to share a specific target, but we are very well positioned to drive pharmacy access in order to hit the targets we have set.

Operator: Alright. Thanks so much. One moment for our next question. Our next question will come from the line of William John Plovanic with Canaccord Genuity. Your line is open. Please go ahead.

William John Plovanic: Hi. It is Zachary on for Bill. Thank you for taking the question. As for the Type 2 ramp, can you give more context as to how that is going? You have talked in the past about difficulties with the C-peptide testing requirements. Can you give us an update on what is happening there?

John F. Sheridan: Sure. First of all, we are really excited about Type 2. It is a big opportunity and even less penetrated than the Type 1 market in the U.S. and internationally. Our focus is on market development at this point. I am not going to talk specifically about numbers today. We want to see sustained trends before we report numbers. It is early for us. That said, there are many positive sources of growth happening right now in Type 2 and in the near future. We expect tailwinds from FreeStyle Libre 3, from Mobi Android, Mobi Tubeless, and pharmacy.

We also anticipate positive news from Medicare access—we think they are going to get rid of the C-peptide requirement, but we will have to wait and see. As a company, we are focused on creating awareness clinically and on the product benefits. It is a big, underpenetrated market. We have a lot of positive things going on, and we do anticipate seeing growth in Type 2 MDI starts this year.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Travis Lee Steed with Bank of America. Your line is open. Please go ahead.

Travis Lee Steed: Hey, thanks for the question. Maybe focus on March 2026 where you are moving PayGo into the pharmacy. Help us understand how that went. How is the trend? Are you seeing increasing ability to ramp into April and May? And the 40% coverage that you have, how much of that is tier one at this stage?

John F. Sheridan: I will answer the first part. Our early experience really does reinforce our conviction that this is a great opportunity for our business and for our customers. We are moving forward aggressively; it is our top priority. As Leigh mentioned, operationalizing pharmacy has a lot going on. It is a change to the physicians’ processes, the way we service our customers, and how we process and fulfill orders. Right now, we are working to improve the experience. There is behavioral change, a learning curve, and efficiency opportunities. These are things we are very focused on right now. We have a strong team and we are making good progress.

It starts off slow and will gradually increase as we get through the year. This will be a meaningful part of our business by the end of this year and as we move into 2027.

Leigh A. Vosseller: On tiering, we have a variety of contracts on different tiers. The real difference is the amount of rebate we pay at various tiers and the influence that has on out-of-pocket and the amount of copay assistance we might have to use. We are not sharing any breakdown of contracts in particular, but we are on tier one in some, tier two in some, and tier three in some. It varies across the board.

Travis Lee Steed: Okay. Thanks a lot.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Shagun Singh Chadha with RBC Capital Markets. Your line is open. Please go ahead.

Shagun Singh Chadha: Great. Thank you so much. I just had a quick one on Mobi Tubeless, and I apologize if it has been asked already. Can you talk about how you think about the mix between the products that you will be selling with Mobi Tubeless coming on board? How should we think about pricing? How do you expect to compete with the current patch form factor—more from MDI conversions or competitive share gains? And anything you can share on the go-to-market strategy that you have not already discussed? Thank you.

John F. Sheridan: The first thing that is important is we already have about 325 thousand customers in the U.S. A significant portion of those use the pump today already, and this is an infusion set option for them to choose. We think there will be pretty good conversion among those people. Many will try both ways and see what they like. For new starts, now that we will have a tubeless product in the market, we expect to benefit, as tubeless is very important to many people as a form factor. We expect a lot of progress there.

Leigh A. Vosseller: To your question on pricing, with it being the Mobi pump, it is the same pump hardware regardless of which infusion set they choose. When it comes to pricing, we have not discussed our approach yet, except that for supplies you can think about being similarly priced to other lease supplies. It is a supply pricing issue. It is the same pump—same price for the pump.

Operator: Thank you. This will conclude today’s question and answer session. Ladies and gentlemen, this will also conclude today’s conference call. Thank you for participating, and you may now disconnect. Everyone have a great day.