What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-08-03 · 114 added, 99 removed, 591 unchanged (26% of the section changed)

3 unchanged sentences

(In thousands, except par value)

June 30, December 31,

September 30, December 31,

Assets (Unaudited) (Note 1)

27 unchanged sentences

Common stock, $ 0.001 par value;

200,000 shares authorized, 65,062 and 64,513 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively.

200,000 shares authorized, 65,191 and 64,513 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively.

Additional paid-in capital 1,237,939 1,170,888

7 unchanged sentences

(In thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

27 unchanged sentences

(In thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Common Stock Additional

5 unchanged sentences

Shares Amount

Balance at March 31, 2023 64,609 $ 65 $ 1,191,843 $ ( 93 ) $ ( 853,062 ) $ 338,753

Balance at June 30, 2023 65,062 $ 65 $ 1,219,199 $ ( 1,193 ) $ ( 888,837 ) $ 329,234

Exercise of stock options 8 — 106 — — 106

Vesting of restricted stock units, net of shares withheld for taxes 121 — ( 1,945 ) — — ( 1,945 )

Issuance of common stock for Employee Stock Purchase Plan 249 — 6,804 — — 6,804

Stock-based compensation expense — — 20,579 — — 20,579

Unrealized loss on short-term investments — — — ( 298 ) — ( 298 )

Unrealized gain on short-term investments

— — — 349 — 349

Foreign currency translation losses — — — ( 1,362 ) — ( 1,362 )

Net loss — — — — ( 32,961 ) ( 32,961 )

Balance at June 30, 2023

Balance at September 30, 2023

65,191 $ 65 $ 1,237,939 $ ( 2,206 ) $ ( 921,798 ) $ 314,000

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Common Stock Additional

1 unchanged sentence

Comprehensive

Loss Accumulated

Income (Loss)

Deficit Total

9 unchanged sentences

Net loss — — — — ( 192,609 ) ( 192,609 )

Balance at June 30, 2023

Balance at September 30, 2023

65,191 $ 65 $ 1,237,939 $ ( 2,206 ) $ ( 921,798 ) $ 314,000

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Common Stock Additional

1 unchanged sentence

Comprehensive

Income (Loss)

Deficit Total

1 unchanged sentence

Shares Amount

Balance at March 31, 2022 63,941 $ 64 $ 1,089,689 $ ( 3,061 ) $ ( 649,310 ) $ 437,382

Balance at June 30, 2022 64,210 $ 64 $ 1,118,168 $ ( 4,282 ) $ ( 664,366 ) $ 449,584

Exercise of stock options 26 — 583 — — 583

Vesting of restricted stock units, net of shares withheld for taxes 29 — ( 952 ) — — ( 952 )

Issuance of common stock for Employee Stock Purchase Plan 129 — 7,915 — — 7,915

Exercise of common stock warrants 4 — 68 — — 68

Stock-based compensation expense — — 22,359 — — 22,359

2 unchanged sentences

Net loss — — — — ( 48,970 ) ( 48,970 )

Balance at June 30, 2022

Balance at September 30, 2022

64,265 $ 64 $ 1,140,158 $ ( 5,064 ) $ ( 713,336 ) $ 421,822

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Common Stock Additional

1 unchanged sentence

Comprehensive

Income (Loss)

Deficit Total

10 unchanged sentences

Net loss — — — — ( 78,741 ) ( 78,741 )

Balance at June 30, 2022

Balance at September 30, 2022

64,265 $ 64 $ 1,140,158 $ ( 5,064 ) $ ( 713,336 ) $ 421,822

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

25 unchanged sentences

Purchases of property and equipment ( 21,605 ) ( 28,470 )

Acquisition, including in-process research and development, net of cash acquired ( 69,496 ) —

Acquisitions, including in-process research and development, net of cash acquired

( 69,496 ) ( 25,697 )

Purchases of intangible assets and strategic investments ( 2,515 ) ( 8,855 )

Net cash provided by (used in) investing activities ( 20,631 ) 11,554

Net cash used in investing activities

( 69,156 ) ( 2,609 )

Financing Activities

11 unchanged sentences

Operating lease right-of-use assets obtained in exchange for operating lease obligations $ — $ 110,980

Purchase of property and equipment included in accounts payable $ 3,027 $ 1,255

Intangible costs in accounts payable and other long-term liabilities $ — $ 515

Purchases of property and equipment included in accounts payable

$ 3,224 $ 4,319

Intangible costs in accounts payable

See accompanying notes to unaudited condensed consolidated financial statements.

9 unchanged sentences

The Company’s manufacturing, sales and support activities principally focus on the t:slim X2 Insulin Delivery System (t:slim X2), the Company’s flagship pump platform which has an advanced algorithm for managing insulin delivery, and is designed to display continuous glucose monitoring (CGM) sensor information directly on the pump home screen.

The Company’s insulin pump products are compatible with other complementary digital health offerings, such as the t:connect mobile app, cloud-based diabetes management applications and the Tandem Device Updater, a Mac- and PC-compatible tool that offers and supports remote updates of the Company’s insulin pump software from a personal computer.

The Company’s insulin pump products are compatible with other complementary digital health offerings, such as the mobile application, cloud-based diabetes management applications and the Tandem Device Updater, a Mac- and PC-compatible tool that offers and supports remote updates of the Company’s insulin pump software from a personal computer.

The Company’s insulin pump products are generally considered durable medical equipment and have an expected lifespan of at least four years .

17 unchanged sentences

Reclassifications

The change in fair value of common stock warrants for the three and six months ended June 30, 2022, which was previously reported separately, is now reported as a component of interest income and other, net on the condensed consolidated statements of operations.

The change in fair value of common stock warrants for the three and nine months ended September 30, 2022, which was previously reported separately, is now reported as a component of interest income and other, net on the condensed consolidated statements of operations.

In addition, certain prior year balances on the condensed consolidated statement of cash flows have been reclassified to conform to the current year presentation.

Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2023, as compared to those disclosed in the Company’s 2022 Annual Report.

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2023, as compared to those disclosed in the Company’s 2022 Annual Report.

Use of Estimates

12 unchanged sentences

The Company measures the fair value of its convertible senior notes for disclosure purposes.

The Company estimated the fair value of its convertible senior notes to be $ 265.9 million and $ 260.5 million at June 30, 2023 and December 31, 2022, respectively, based on Level 2 quoted market prices as of those dates.

The Company estimated the fair value of its convertible senior notes to be $ 273.9 million and $ 260.5 million at September 30, 2023 and December 31, 2022, respectively, based on Level 2 quoted market prices as of those dates.

Operating Lease Right-of-Use Assets and Liabilities

8 unchanged sentences

Amortization of finite-lived intangible assets is recognized over their estimated useful lives on a straight-line basis.

The Company did not recognize any intangible asset impairment losses during the six months ended June 30, 2023 and 2022.

The Company did not recognize any intangible asset impairment losses during the nine months ended September 30, 2023 and 2022.

Strategic Investments

1 unchanged sentence

The investments are carried at cost minus impairment, if any, adjusted for changes in observable prices.

The investments were included as a component of other long-term assets on the condensed consolidated balance sheets.

The investments were included as a component of other long-term assets on the condensed consolidated balance sheets at September 30, 2023.

The Company monitors these investments to evaluate whether a decline in value has occurred based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

14 unchanged sentences

Tandem Choice expires on December 31, 2024.

The program was determined to create a material right for which a portion of each t:slim X2 pump transaction price was allocated and deferred.

In the third quarter of 2023, the Company announced a reduction in the price of the Tandem Choice program whereby purchasers of the X2 pump can obtain the Tandem Mobi.

The change in the program resulted in an increase to the amount of the transaction price allocated to the material right as the Company expects more customers to exercise the right as compared to the prior existing program price.

The amount of revenue deferred in the third quarter of 2023 related to the Choice program was $ 8.2 million.

For purposes of evaluating Tandem Choice in accordance with ASC 606, the Company has determined that the ability for a customer to upgrade to a new technology represents a material right because the pricing inherent in such option provides the customer with a discount that is incremental to the range of discounts that would otherwise be granted for the related goods and services to comparable customers.

The standalone selling price for the Choice Right was estimated based on the adjusted market assessment approach and contemplated the likelihood that the respective option will be exercised.

At June 30, 2023 and December 31, 2022, $ 10.5 million and $ 6.8 million, respectively, were allocated to the material right provided to customers and recorded in current deferred revenue on the condensed consolidated balance sheets.

At September 30, 2023 and December 31, 2022, $ 18.4 million and $ 6.8 million, respectively, were allocated to the material right provided to customers and recorded in current deferred revenue on the condensed consolidated balance sheets.

Warranty Reserve

9 unchanged sentences

Warranty expense is recorded as a component of cost of sales in the condensed consolidated statements of operations.

The following table provides a reconciliation of the changes in product warranty liabilities for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The following table provides a reconciliation of the changes in product warranty liabilities for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

4 unchanged sentences

Balance at end of the period $ 37,757 $ 34,610 $ 37,757 $ 34,610

As of June 30, 2023 and December 31, 2022, total product warranty reserves were included in the following condensed consolidated balance sheet accounts (in thousands):

June 30, 2023 December 31, 2022

As of September 30, 2023 and December 31, 2022, total product warranty reserves were included in the following condensed consolidated balance sheet accounts (in thousands):

September 30, 2023 December 31, 2022

Other current liabilities $ 18,370 $ 17,280

9 unchanged sentences

Any expense change resulting from an adjustment in the estimated shares to be released is recorded in the period of adjustment.

N et Income (Loss) Per Share

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income or loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents.

2 unchanged sentences

and shares issuable upon conversion of the convertible senior notes calculated using the if-converted method.

For the three and six months ended June 30, 2023, there was no difference in the weighted average number of shares used to calculate basic and diluted net loss per share due to the Company’s net loss position for each of the periods presented.

For the three and six months ended June 30, 2022, the net loss used in the calculation of diluted net loss per share was increased by $ 57,000 and $ 91,000 , respectively, to remove the gain recognized from the change in fair value of certain common stock warrants based on the dilutive effect of assumed exercise, and the denominator was increased by 958 shares and 965 shares, respectively, calculated under the treasury stock method.

For the three and nine months ended September 30, 2023, there was no difference in the weighted average number of shares used to calculate basic and diluted net loss per share due to the Company’s net loss position for each of the periods presented.

For the three and nine months ended September 30, 2022, the net loss used in the calculation of diluted net loss per share was increased by $ 12,000 and $ 103,000 , respectively, to remove the gain recognized from the change in fair value of certain common stock warrants based on the dilutive effect of assumed exercise, and the denominator was increased by 937 shares and 959 shares, respectively, calculated under the treasury stock method.

Potentially dilutive securities outstanding and not included in the calculation of diluted net loss per share (because inclusion would be anti-dilutive) are as follows (in thousands, in common stock equivalent shares):

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

9 unchanged sentences

Government-sponsored enterprises, and financial institutions and corporations with strong credit ratings.

The following represents a summary of the estimated fair value of short-term investments at June 30, 2023 and December 31, 2022 (in thousands):

At June 30, 2023 Amortized

The following represents a summary of the estimated fair value of short-term investments at September 30, 2023 and December 31, 2022 (in thousands):

At September 30, 2023 Amortized

Cost Gross Unrealized

18 unchanged sentences

Total $ 447,241 $ 30 $ ( 2,887 ) $ 444,384

The contractual maturities of available-for-sale debt securities as of June 30, 2023, were as follows (in thousands):

The contractual maturities of available-for-sale debt securities as of September 30, 2023, were as follows (in thousands):

Years to Maturity

At June 30, 2023 Within One Year One to Two Years Estimated Fair Value

At September 30, 2023 Within One Year One to Two Years Estimated Fair Value

Government-sponsored enterprises $ 110,863 $ 52,194 $ 163,057

5 unchanged sentences

The Company reviews the portfolio of available-for-sale debt securities quarterly to determine if any investment is impaired due to changes in credit risk or other potential valuation concerns.

Unrealized losses on available-for-sale debt securities at June 30, 2023 were primarily due to the recent increases in market interest rates.

Unrealized losses on available-for-sale debt securities at September 30, 2023 were primarily due to an increase in market interest rates after certain debt securities were purchased.

The Company does not intend to sell the available-for-sale debt securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell these debt securities before recovery of their amortized cost bases, which may be at maturity.

Based on the credit quality of the available-for-sale debt securities in an unrealized loss position, and the Company’s estimates of future cash flows to be collected from those securities, the Company believes the unrealized losses are not credit losses.

Accordingly, the Company did not record an allowance for credit losses related to its available-for-sale debt securities at June 30, 2023.

Accordingly, the Company did not record an allowance for credit losses related to its available-for-sale debt securities at September 30, 2023.

Composition of Certain Financial Statement Items

Accounts Receivable

Accounts receivable, net consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

June 30, December 31,

Accounts receivable, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

September 30, December 31,

Accounts receivable $ 105,673 $ 119,044

2 unchanged sentences

Allowance for Credit Losses

The following table provides a reconciliation of the changes in the allowance for estimated accounts receivable credit losses for the three and six months ended June 30, 2023 and 2022 (in thousands):

The following table provides a reconciliation of the changes in the allowance for estimated accounts receivable credit losses for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Balance at end of the period $ 5,355 $ 4,273 $ 5,355 $ 4,273

Inventories consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

June 30, December 31,

Inventories consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):

September 30, December 31,

Raw materials $ 40,232 $ 39,207

10 unchanged sentences

Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities, which require the reporting entity to develop its own valuation techniques that require input assumptions.

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in thousands):

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in thousands):

Fair Value Measurements at

June 30, 2023

September 30, 2023

Total Level 1 Level 2 Level 3

54 unchanged sentences

The Company’s lease costs recorded in the condensed consolidated statements of operations were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Total lease cost $ 3,550 $ 5,133 $ 23,768 $ 13,393

Maturities of operating lease liabilities at June 30, 2023 were as follows (in thousands):

Maturities of operating lease liabilities at September 30, 2023 were as follows (in thousands):

Years Ending December 31,

7 unchanged sentences

The weighted-average remaining lease term and weighted-average discount rate for operating leases were as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Weighted-average remaining lease term (in years) 10.4 10.8

Weighted-average discount rate used to determine operating lease liabilities 5.4 % 5.3 %

Cash paid for amounts included in the measurement of lease liabilities, representing operating cash flows from operating leases, was $ 4.4 million and $ 5.9 million for the six months ended June 30, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of lease liabilities, representing operating cash flows from operating leases, was $ 9.2 million and $ 9.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Lease For Which Accounting Has Not Yet Commenced

As of June 30, 2023, the Phase II Commencement Date for the Headquarters Lease had not yet occurred.

Accordingly, the condensed consolidated balance sheet at June 30, 2023 does not include operating lease right-of-use assets and operating lease liabilities, and the condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 do not include any lease costs, related to Phase II of the Headquarters Lease.

As of September 30, 2023, the Phase II Commencement Date for the Headquarters Lease had not yet occurred.

Accordingly, the condensed consolidated balance sheet at September 30, 2023 does not include operating lease right-of-use assets and operating lease liabilities, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 do not include any lease costs, related to Phase II of the Headquarters Lease.

In addition, the above disclosures of the Company’s lease costs, maturities of operating lease liabilities, weighted-average remaining lease term, and weighted-average discount rate do not include any amounts related to Phase II of the Headquarters Lease.

21 unchanged sentences

The net carrying amount of the Notes on the condensed consolidated balance sheets consisted of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Principal amount $ 287,500 $ 287,500

2 unchanged sentences

The Notes will have a dilutive effect to the extent the average market price per share of common stock for a given reporting period exceeds the conversion price of $ 112.57 .

As of June 30, 2023 and December 31, 2022, the if-converted value of the Notes did not exceed the principal amount.

As of June 30, 2023, the unamortized debt issuance costs of $ 3.4 million associated with the Notes will be amortized to interest expense, at an effective interest rate of 2.2 % over the remaining period of approximately 1.8 years.

The following table details interest expense related to the Notes recognized for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

As of September 30, 2023 and December 31, 2022, the if-converted value of the Notes did not exceed the principal amount.

As of September 30, 2023, the unamortized debt issuance costs of $ 2.9 million associated with the Notes will be amortized to interest expense, at an effective interest rate of 2.2 % over the remaining period of approximately 1.6 years.

In October 2023, the Company was notified that additional interest beyond the 1.50 % per annum has been accruing on the Notes since May 2021, pursuant to the terms of the indenture.

This additional interest continues to accrue at a rate of 0.50 % per annum on the outstanding principal amount of the Notes, and as of September 30, 2023 amounts to approximately $ 3.1 million in the aggregate.

The overdue unpaid interest itself accrues interest at a rate of 2.50 % per annum.

The Company has deposited the full amount for these payments with the trustee for the Notes and are coordinating with the trustee for the payments to be completed as soon as reasonably practicable in the fourth quarter of 2023.

The following table details interest expense related to the Notes recognized for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Contractual interest expense (1)

$ 4,138 $ 1,078 $ 6,368 $ 3,234

Amortization of debt issuance costs 702 498 1,711 1,395

Total interest expense $ 4,840 $ 1,576 $ 8,079 $ 4,629

(1) Contractual interest expense for the three and nine months ended September 30, 2023 includes $ 3.1 million of additional interest as discussed above.

Capped Call Transactions

7 unchanged sentences

Line of Credit

On May 18, 2022, the Company entered into a three-year Revolving Line of Credit Agreement that provides the Company with a maximum principal borrowing amount of $ 100.0 million (Line of Credit), reduced by any letters of credit issued and outstanding under a $ 15.0 million letter of credit sub-limit.

On May 18, 2022, the Company entered into a three-year Revolving Line of Credit Agreement that provided the Company with a maximum principal borrowing amount of $ 100.0 million (Line of Credit), reduced by any letters of credit issued and outstanding under a $ 15.0 million letter of credit sub-limit.

On August 2, 2023, the Revolving Line of Credit Agreement was amended to reduce the maximum principal borrowing amount to $ 50.0 million for the remainder of the term, limited to a percentage of eligible accounts receivable during the third quarter of 2023.

The Line of Credit allows the Company to request advances thereunder, and to use the proceeds of such advances for general corporate purposes, including working capital and capital expenditures.

1 unchanged sentence

The Springing Maturity Date is any date during the 91 days before the May 1, 2025 maturity date of the Company’s Convertible Senior Notes, that the Company does not satisfy a predefined liquidity threshold.

The Line of Credit is secured by a first priority security interest in substantially all of the assets of the Company and its subsidiaries.

During the term of the Line of Credit, the Company is required to maintain compliance with two financial maintenance covenants:

a minimum consolidated interest coverage ratio and a maximum consolidated net leverage ratio.

The Company was in compliance with the minimum consolidated interest coverage ratio covenant as of June 30, 2023.

On August 2, 2023, the Revolving Line of Credit Agreement was amended to lower the maximum principal borrowing amount to $ 50.0 million for the remainder of the term and provide that the maximum consolidated net leverage ratio will not be tested, and the borrowing base will be limited to a percentage of eligible accounts receivable for the second and third quarters of 2023.

The Line of Credit is secured by a first priority security interest in substantially all of the assets of the Company and its subsidiaries.

The Company was in compliance with the minimum consolidated interest coverage ratio covenant as of September 30, 2023.

The maximum consolidated net leverage ratio will not be tested as of September 30, 2023, in accordance with the August 2, 2023 amendment to the Revolving Line of Credit Agreement.

Without the amendment, the Company would have been non-compliant with the maximum consolidated net leverage ratio covenant for the trailing twelve month measurement period ended September 30, 2023.

The Company is currently not entitled to borrow any amounts under the Line of Credit as a result of its inadvertent failure to timely pay additional interest under the Notes.

Advances drawn under the Line of Credit bear interest at an annual rate of (1) the SOFR Rate (as defined in the Line of Credit);

3 unchanged sentences

The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time before the maturity date, without premium or penalty.

As of June 30, 2023, the Company had no outstanding borrowings under the Line of Credit, and a $ 4.9 million outstanding standby letter of credit.

As of September 30, 2023, the Company had no outstanding borrowings under the Line of Credit, and a $ 4.9 million outstanding standby letter of credit.

Stockholders’ Equity

Shares Reserved for Future Issuance

The following shares of the Company's common stock were reserved for future issuance at June 30, 2023 (in thousands):

The following shares of the Company's common stock were reserved for future issuance at September 30, 2023 (in thousands):

Shares reserved for issuance upon conversion of Convertible Senior Notes 2,554

5 unchanged sentences

Common Stock Warrants

Warrants outstanding to purchase shares of the Company's common stock as of June 30, 2023 were as follows:

Warrants outstanding to purchase shares of the Company's common stock as of September 30, 2023 were as follows:

Issue Date Exercise Price Per Share Warrants Outstanding Expiration Date of Warrants Outstanding

14 unchanged sentences

RSUs granted in March 2022 and thereafter vest over a three-year period based on continued service to the Company as to 33 % of the underlying shares on the first anniversary of the award, with the balance of the RSUs vesting quarterly over the following two years .

In addition, the Company granted 110,074 performance-based RSUs during the three and six months ended June 30, 2023, and 53,662 performance-based RSUs during the three and six months ended June 30, 2022.

In addition, the Company granted 110,074 performance-based RSUs during the nine months ended September 30, 2023, and 53,662 performance-based RSUs during the nine months ended September 30, 2022.

The performance-based RSUs have a grant value equal to the closing price of the Company’s common stock on the award date, and vest upon the Company’s actual performance relative to predefined performance metrics and subject to the awardee’s continuing service through the respective December 31, 2024 and 2025 measurement dates.

The total number of RSUs granted, which includes performance-based RSUs, and the respective weighted average grant date fair value were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

5 unchanged sentences

Stock options granted during the second quarter of 2022 and thereafter vest over a three-year period as to 33 % of the underlying shares on the first anniversary of the grant date, with the balance of the options vesting monthly over the following two years .

There were no common stock options granted during the three and six months ended June 30, 2023.

The total number of common stock options granted during the three and six months ended June 30, 2022, along with the assumptions used in the Black-Scholes option-pricing model were as follows:

Stock Options

Three and Six Months Ended

June 30, 2022

There have been no common stock options granted since the second quarter of 2022.

Common stock options granted during the nine months ended September 30, 2022, along with the assumptions used in the Black-Scholes option pricing model were as follows:

Nine Months Ended

September 30, 2022

Stock options granted 83,008

8 unchanged sentences

The assumptions used in the Black-Scholes option pricing model for the ESPP were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Nine Months Ended September 30,

Weighted average grant date fair value (per share) $ 12.52 $ 26.57

4 unchanged sentences

The following table summarizes the allocation of stock-based compensation expense included in the condensed consolidated statements of operations for all stock-based compensation arrangements (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Total stock-based compensation expense $ 20,741 $ 22,236 $ 65,334 $ 60,477

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $ 1.4 million at June 30, 2023, and $ 1.1 million at December 31, 2022.

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $ 1.3 million at September 30, 2023, and $ 1.1 million at December 31, 2022.

Employee Benefits

4 unchanged sentences

Under the terms of the plan, employees may make voluntary contributions as a percent of compensation, and, starting in 2022, the Company matches a discretionary percentage of employee contributions.

For the three and six months ended June 30, 2023, the Company recognized income tax expense of $ 1.1 million and $ 1.4 million, respectively, on a pre-tax loss of $ 34.6 million and $ 158.2 million, respectively.

The Company calculated the provision for income taxes for the three and six months ended June 30, 2023 using a discrete effective tax rate method as the annual effective tax rate method would not provide a reliable estimate.

Income tax expense for the three and six months ended June 30, 2023 was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

For the three and six months ended June 30, 2022, the Company recognized income tax expense of $ 2.1 million and $ 0.4 million, respectively, on a pre-tax loss of $ 13.0 million and $ 29.4 million, respectively.

The Company calculated the provision for income taxes for the three and six months ended June 30, 2022, using the discrete effective tax rate method as the annual effective tax rate method would not provide a reliable estimate.

Income tax expense for the three months ended June 30, 2022 was primarily attributable to the change from the annual effective tax rate method used in the first quarter of 2022 to the discrete effective tax rate method, and state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

The Company continues to maintain a full valuation allowance against its net deferred tax assets as of June 30, 2023, based on the current assessment that it is not more likely than not these future benefits will be realized before expiration.

For the three and nine months ended September 30, 2023, the Company recognized income tax expense of $ 2.2 million and $ 3.7 million, respectively, on a pre-tax loss of $ 30.7 million and $ 188.9 million, respectively.

For the three and nine months ended September 30, 2022, the Company recognized income tax expense of $ 1.6 million and $ 2.0 million, respectively, on a pre-tax loss of $ 47.3 million and $ 76.7 million, respectively.

Income tax expense for the three and nine months ended September 30, 2023 and 2022, was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

For the three and nine months ended September 30, 2023, the Company calculated the provision for income taxes by applying an estimate of the annual effective tax rate for the full year to ordinary income (loss) adjusted by the tax impact of discrete items.

For the three and nine months ended September 30, 2022, the Company calculated the provision for income taxes using a discrete effective tax rate method as the annual effective tax rate method would not provide a reliable estimate.

The Company continues to maintain a full valuation allowance against its net deferred tax assets as of September 30, 2023, based on the current assessment that it is not more likely than not these future benefits will be realized before expiration.

Business Segment and Geographic Information

8 unchanged sentences

Revenues by Geographic Region and Customer Sales Channel

During the three and six months ended June 30, 2023 and 2022, no individual country outside the United States generated revenue that represented more than 10% of total revenue.

During the three and nine months ended September 30, 2023 and 2022, no individual country outside the United States generated revenue that represented more than 10% of total revenue.

The table below sets forth revenues for the Company’s two primary geographical markets, based on the geographic location to which its products are shipped (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Total Sales $ 185,622 $ 204,547 $ 550,922 $ 580,716

Sales to distributors accounted for 64 % and 65 % of the Company’s United States sales for the three months ended June 30, 2023 and 2022, respectively, and 65 % of the Company’s United States sales for each of the six-month periods ended June 30, 2023 and 2022.

Sales to distributors accounted for 94 % and 96 % of the Company’s sales outside the United States for the three and six-month periods ended June 30, 2023 and 2022, respectively.

Sales to distributors accounted for 64 % and 66 % of the Company’s United States sales for the three months ended September 30, 2023 and 2022, respectively, and 64 % and 65 % of the Company’s United States sales for the nine-month periods ended September 30, 2023 and 2022, respectively.

Sales to distributors accounted for 95 % and 96 % of the Company’s sales outside the United States for the three and nine-month periods ended September 30, 2023 and 2022, respectively.

AMF Medical Acquisition

6 unchanged sentences

The contingent consideration will be recognized as each contingency is resolved and the respective consideration is paid or becomes payable.

As of June 30, 2023, the contingencies related to the earnout milestones were not yet resolved and, therefore, the related amounts were not included in the fair value of the asset acquired and were not recognized as a liability on the condensed consolidated balance sheet at June 30, 2023.

As of September 30, 2023, the contingencies related to the earnout milestones were not yet resolved and, therefore, the related amounts were not included in the fair value of the asset acquired and were not recognized as a liability on the condensed consolidated balance sheet at September 30, 2023.

The Company funded the initial closing payment using existing cash balances.

2 unchanged sentences

The Company recorded a $ 78.8 million charge representing the value of acquired in-process research and development assets with no alternative future use, and acquisition related expenses, on its condensed consolidated statements of operations in acquired in-process research and development expenses.

The Company’s results of operations for the three and six months ended June 30, 2023 included the operating results of AMF Medical since the date of acquisition.

The Company’s results of operations for the three and nine months ended September 30, 2023 included the operating results of AMF Medical since the date of acquisition.

Capillary Biomedical Acquisition

1 unchanged sentence

(Capillary Biomedical), an infusion set developer, for total cash consideration of $ 24.7 million, and the assumption of $ 4.7 million of long-term debt.

The debt becomes due and payable upon the first sale or license of the commercialized product, and is included as a component of other long-term liabilities on the condensed consolidated balance sheets at June 30, 2023 and December 31, 2022.

Capillary Biomedical’s extended-wear infusion set technology is currently in development and is not yet commercially available.

2 unchanged sentences

The Company recorded a $ 31.0 million charge representing the value of acquired in-process research and development assets with no alternative future use, and acquisition related expenses, on its condensed consolidated statements of operations in acquired in-process research and development expenses.

The Company’s results of operations for the three and six months ended June 30, 2023 included the operating results of Capillary Biomedical.

The Company’s results of operations for the three and nine months ended September 30, 2023 included the operating results of Capillary Biomedical.

Commitments and Contingencies

13 unchanged sentences

On March 7, 2023, the plaintiffs filed a notice of appeal of the Court’s order granting the Company’s motion for summary adjudication.

On August 15, 2023, the parties reached a settlement and on August 21, 2023, the Court issued an order dismissing the appeal.

On September 8, 2023, a purported stockholder of the Company filed a putative securities class action complaint (captioned Lowe v.

Tandem Diabetes Care, Inc., et al, Case No.

23-cv-1657) in the United States District Court for the Southern District of California against the Company and certain of the Company’s current executive officers.

The complaint generally alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by failing to properly account for and disclose the full impact that COVID-19, inflation, and the sales of competitors’ products were having on the Company’s sales and revenue.

The complaint seeks unspecified monetary damages and other relief.

Although the Company intends to vigorously defend against this claim, there is no guarantee that the Company will prevail.

1 unchanged sentence

From time to time, the Company is involved in various other legal proceedings, regulatory matters, and other disputes or claims arising from or related to claims incident to the normal course of the Company’s business activities, including actions with respect to intellectual property, data privacy, employment, regulatory, product liability and contractual matters.

Although the results of such legal proceedings and claims cannot be predicted with certainty, as of June 30, 2023 the Company believes it is not currently a party to any legal proceedings, regulatory matters, or other disputes or claims for which a material loss was considered probable or for which the amount (or range) of loss was reasonably estimable.

Although the results of such legal proceedings and claims cannot be predicted with certainty, as of September 30, 2023 the Company believes it is not currently a party to any legal proceedings, regulatory matters, or other disputes or claims for which a material loss was considered probable or for which the amount (or range) of loss was reasonably estimable.

However, regardless of the merit of the claims raised or the outcome, legal proceedings may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements