What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 194 added, 111 removed, 535 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except par value)

March 31, December 31,

June 30, December 31,

Assets (Unaudited)

15 unchanged sentences

Employee-related liabilities 42,871 43,430

Current portion of convertible senior notes, net

Operating lease liabilities 17,790 17,060

10 unchanged sentences

Common stock, $ 0.001 par value;

200,000 shares authorized, 64,563 and 65,552 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.

200,000 shares authorized, 65,435 and 65,552 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively.

Additional paid-in capital 1,260,392 1,263,997

8 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

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

2024 2023 2024 2023

Sales $ 221,910 $ 195,917 $ 413,584 $ 365,300

20 unchanged sentences

$ ( 463 ) $ ( 298 ) $ ( 1,759 ) $ 1,451

Foreign currency translation losses

Foreign currency translation gains (losses)

145 ( 802 ) ( 863 ) ( 827 )

9 unchanged sentences

(In thousands)

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Common Stock Additional

5 unchanged sentences

Shares Amount

Balance at March 31, 2024 64,563 $ 65 $ 1,238,449 $ ( 935 ) $ ( 994,515 ) $ 243,064

Exercise of stock options 55 — 1,149 — — 1,149

Vesting of restricted stock units, net of shares withheld for taxes 415 — ( 10,438 ) — — ( 10,438 )

Issuance of common stock for Employee Stock Purchase Plan 402 — 6,286 — — 6,286

Stock-based compensation expense — — 24,946 — — 24,946

Unrealized loss on short-term investments

— — — ( 463 ) — ( 463 )

Foreign currency translation gains

— — — 145 — 145

Net loss — — — — ( 30,814 ) ( 30,814 )

Balance at June 30, 2024

65,435 $ 65 $ 1,260,392 $ ( 1,253 ) $ ( 1,025,329 ) $ 233,875

Six Months Ended June 30, 2024

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss)

Deficit Total

Stockholders’

Shares Amount

Balance at December 31, 2023 65,552 $ 66 $ 1,263,997 $ 1,369 $ ( 951,800 ) $ 313,632

Stock repurchase and retirement of shares ( 1,107 ) ( 1 ) ( 29,999 ) — — ( 30,000 )

( 1,107 ) ( 1 ) ( 29,999 ) — — ( 30,000 )

Exercise of stock options 70 — 1,397 — — 1,397

Vesting of restricted stock units, net of shares withheld for taxes 518 — ( 12,197 ) — — ( 12,197 )

Issuance of common stock under Employee Stock Purchase Plan 402 — 6,286 — — 6,286

Stock-based compensation expense — — 46,537 — — 46,537

7 unchanged sentences

Net loss — — — — ( 73,529 ) ( 73,529 )

Balance at June 30, 2024

65,435 $ 65 $ 1,260,392 $ ( 1,253 ) $ ( 1,025,329 ) $ 233,875

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended June 30, 2023

Common Stock Additional

Capital Accumulated

Comprehensive

Deficit Total

Stockholders’

Shares Amount

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

Exercise of stock options 18 — 305 — — 305

Vesting of restricted stock units, net of shares withheld for taxes 186 — ( 3,163 ) — — ( 3,163 )

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

Stock-based compensation expense — — 23,410 — — 23,410

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

Foreign currency translation losses — — — ( 802 ) — ( 802 )

Net loss — — — — ( 35,775 ) ( 35,775 )

Balance at June 30, 2023

65,062 $ 65 $ 1,219,199 $ ( 1,193 ) $ ( 888,837 ) $ 329,234

Three Months Ended March 31, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

Six Months Ended June 30, 2023

Common Stock Additional

7 unchanged sentences

Vesting of restricted stock units, net of shares withheld for taxes 237 — ( 4,561 ) — — ( 4,561 )

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

Exercise of common stock warrants — — — — — —

Stock-based compensation expense — — 44,906 — — 44,906

Unrealized gain on short-term investments — — — 1,451 — 1,451

— — — 1,749 — 1,749

Foreign currency translation losses — — — ( 827 ) — ( 827 )

Net loss — — — — ( 159,648 ) ( 159,648 )

Balance at March 31, 2023

Balance at June 30, 2023

65,062 $ 65 $ 1,219,199 $ ( 1,193 ) $ ( 888,837 ) $ 329,234

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

$ ( 73,529 ) $ ( 159,648 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense 8,151 7,661

1 unchanged sentence

Provision for expected credit losses 3,723 2,758

Accretion (amortization) of discount or premium on short-term investments

Operating lease termination and other impairment charges

Accretion of discount or premium on short-term investments

Stock-based compensation expense 46,936 44,594

1 unchanged sentence

Acquired in-process research and development expenses — 78,750

Other 335 ( 280 )

Changes in operating assets and liabilities:

4 unchanged sentences

Accounts payable and accrued expenses

( 3,369 ) ( 919 )

Employee-related liabilities ( 462 ) ( 2,711 )

22 unchanged sentences

Net cash provided by (used in) financing activities

13,586 ( 541 )

Effect of foreign exchange rate changes on cash 112 107

9 unchanged sentences

$ 1,505 $ 3,027

Intangible costs in accounts payable

See accompanying notes to unaudited condensed consolidated financial statements.

8 unchanged sentences

The Company manufactures, sells, and supports insulin pump products that are designed to address the evolving needs and preferences of differentiated segments of the insulin-dependent diabetes market.

The Company’s manufacturing, sales and support activities have been principally focused on the t:slim X2 Insulin Delivery System (t:slim X2), which has been the Company’s flagship pump platform and 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.

In February 2024, the Company expanded its pump portfolio with the U.S.

launch of Tandem Mobi.

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 recently expanded its portfolio, which now includes both the t:slim X2 Insulin Delivery System (t:slim X2) and the Tandem Mobi insulin pumps.

Both pumps have an advanced algorithm for managing insulin delivery, using information received from integrated continuous glucose monitoring (CGM) sensors.

The software on the insulin pump products may be updated remotely by the individual users as new advancements become available and are compatible with other complementary digital health offerings, such as the mobile application and cloud-based diabetes management applications.

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

Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2024, as compared to those disclosed in the Company’s 2023 Annual Report.

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2024, as compared to those disclosed in the Company’s 2023 Annual Report.

Use of Estimates

17 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 three months ended March 31, 2024 and 2023.

The Company did not recognize any intangible asset impairment losses during the three and six months ended June 30, 2024 and 2023.

Strategic Investments

The Company held equity investments totaling $ 10.1 million in two separate private companies at each of March 31, 2024 and December 31, 2023, each of which represented less than 5 % of the outstanding equity of the respective company as of the date of investment.

The Company held equity investments totaling $ 30.4 million and $ 10.1 million in private companies at June 30, 2024 and December 31, 2023, respectively.

The investments were included as a component of other long-term assets on the condensed consolidated balance sheets at June 30, 2024 and December 31, 2023.

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

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

The investments were included as a component of other long-term assets on the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023.

The Company also held a $ 22.3 million investment in subordinated convertible notes of one of its private investee companies.

The subordinated notes are convertible into equity of the private company upon certain qualifying events, including at their final maturity in 2024.

The subordinated convertible notes are non-interest bearing, and are only repayable before conversion into equity upon a change in control of the private company.

At March 31, 2024, the $ 22.3 million subordinated convertible notes investment was included as a component of other long-term assets on the condensed consolidated balance sheet.

During the three and six months ended June 30, 2024, the Company recorded an impairment charge of $ 2.0 million related to one of its investments in a private company.

The Company did not record any impairment charges related to its strategic investments in the three and six months ended June 30, 2023.

Approximately $ 22.2 million of the total strategic investments balance was previously held in the form of subordinated convertible notes of one private investee company.

The subordinated notes were converted into equity of the private company at final maturity, which occurred in June 2024.

As a result of the note conversion, the Company received shares of the private investee company.

As of June 30, 2024, and December 31, 2023, each of the Company’s equity investments in private companies represented less than 15 % of the outstanding equity of the respective private company.

Revenue Recognition

6 unchanged sentences

Generally, insulin pumps, cartridges, infusion sets, and accessories are deemed performance obligations that are satisfied at a point in time when the customer obtains control of the promised good, which typically is upon shipment for our distributor arrangements and upon receipt for sales directly to individual customers.

Complementary products, such as t:connect, Tandem Source and the Tandem Device Updater, are considered distinct performance obligations that are satisfied over time, as access and support for these products is provided throughout the typical four-year warranty period of the insulin pumps.

Complementary products, such as the Company’s data management and software update platforms, are considered distinct performance obligations that are satisfied over time, as access and support for these products is provided throughout the typical four-year warranty period of the insulin pumps.

Accordingly, revenue related to the complementary products is deferred and recognized over a four-year period.

1 unchanged sentence

Revenue Recognition for Tandem Choice Program

In September 2022, the Company launched a new technology access program referred to as Tandem Choice, that provides eligible, in-warranty t:slim X2 customers in the United States with the flexibility to obtain the newest hardware platform, Tandem Mobi, when it becomes commercially available.

Participating customers have the right to purchase the alternative Tandem pump for a fee, referred to as Choice Right.

Participating customers have the right to purchase the alternative Tandem pump for a fee, referred to as a choice right.

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.

1 unchanged sentence

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.

From July 1, 2023 to December 31, 2023, the Company reduced the fee for the Tandem Choice program.

The change in the program resulted in an increase to the amount of the transaction price allocated to the material right during the limited-time offer period as the Company expected more customers to exercise the right with the lower program fee.

The Company began selling Tandem Mobi insulin pumps in the first quarter of 2024 and eligibility for the Tandem Choice program ended in February 2024.

1 unchanged sentence

Eligible customers who purchased a t:slim X2 insulin pump during the program period will have until December 31, 2024 to exercise the option to switch to the Tandem Mobi for a stated fee.

At March 31, 2024 and December 31, 2023, $ 31.5 million and $ 30.6 million, respectively, were allocated to the material right provided to customers who purchased a pump during the Tandem Choice program period.

The Company recorded the amounts in current deferred revenue on the condensed consolidated balance sheets.

The Company will recognize the deferred amount of sales at the earlier of when the obligations under the Tandem Choice program are satisfied or when the program expires.

If a customer elects to participate in the program, the Company will recognize upgrade fees received, and the associated cost of goods sold at the time of fulfilling the obligation.

For the six months ended June 30, 2024, the Company deferred $ 1.1 million of pump sales that qualified for Tandem Choice, and recognized incremental sales of $ 0.2 million from individual Tandem Choice fulfillments.

At June 30, 2024 and December 31, 2023, current deferred revenue balance was $ 31.0 million and $ 30.6 million, respectively, related to the Tandem Choice program.

Sales Rebates

3 unchanged sentences

Accordingly, actual rebates paid may differ from estimated amounts recorded in the accompanying condensed consolidated financial statements.

As of March 31, 2024 and December 31, 2023, total estimated sales rebates were included in the following condensed consolidated balance sheet accounts (in thousands):

March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, total estimated sales rebates were included in the following condensed consolidated balance sheet accounts (in thousands):

June 30, 2024 December 31, 2023

Other current liabilities

13 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 months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following table provides a reconciliation of the changes in product warranty liabilities for the three and six months ended June 30, 2024 and 2023 (in thousands):

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

2024 2023 2024 2023

Balance at beginning of the period $ 37,638 $ 37,152 $ 37,173 $ 36,537

1 unchanged sentence

Settlements made during the period ( 9,062 ) ( 7,385 ) ( 18,099 ) ( 15,068 )

Decreases in warranty estimates

Increases (decreases) in warranty estimates

( 801 ) 235 ( 1,708 ) 160

Balance at end of the period $ 37,356 $ 38,917 $ 37,356 $ 38,917

As of March 31, 2024 and December 31, 2023, total product warranty reserves were included in the following condensed consolidated balance sheet accounts (in thousands):

March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, total product warranty reserves were included in the following condensed consolidated balance sheet accounts (in thousands):

June 30, 2024 December 31, 2023

Other current liabilities $ 18,155 $ 18,135

13 unchanged sentences

Dilutive common share equivalents are comprised of stock options and unvested RSUs outstanding under the Company’s stock incentive plans, potential awards to be granted pursuant to the ESPP, and common stock warrants, each calculated using the treasury stock method, and shares issuable upon conversion of the convertible senior notes calculated using the if-converted method.

For the three months ended March 31, 2024 and 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, 2024 and 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.

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,

2024 2023 2024 2023

Options to purchase common stock 804 138 129 138

3 unchanged sentences

Convertible senior notes (if-converted) 9,513 2,554 6,877 2,554

13,892 4,950 10,094 4,579

Short-Term Investments

The Company invests in marketable securities primarily consisting of debt instruments of the U.S.

Government, U.S.

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 March 31, 2024 and December 31, 2023 (in thousands):

At March 31, 2024 Amortized

The Company invests in marketable securities primarily consisting of debt instruments of the United States Government, United States 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, 2024 and December 31, 2023 (in thousands):

At June 30, 2024 Amortized

Cost Gross Unrealized

2 unchanged sentences

Available-for-sale securities:

Government-sponsored enterprises $ 181,208 $ 113 $ ( 621 ) $ 180,700

Treasury securities 111,311 42 ( 117 ) 111,236

United States Government-sponsored enterprises $ 176,311 $ 37 $ ( 754 ) $ 175,594

United States Treasury securities 90,505 14 ( 189 ) 90,330

Commercial paper 45,520 1 ( 52 ) 45,469

6 unchanged sentences

Available-for-sale securities:

Government-sponsored enterprises $ 181,851 $ 518 $ ( 215 ) $ 182,154

Treasury securities 114,714 318 ( 28 ) 115,004

United States Government-sponsored enterprises $ 181,851 $ 518 $ ( 215 ) $ 182,154

United States Treasury securities 114,714 318 ( 28 ) 115,004

Commercial paper 72,505 33 ( 27 ) 72,511

1 unchanged sentence

Total $ 408,295 $ 1,025 $ ( 276 ) $ 409,044

The contractual maturities of available-for-sale debt securities as of March 31, 2024, were as follows (in thousands):

The contractual maturities of available-for-sale debt securities as of June 30, 2024, were as follows (in thousands):

Years to Maturity

At March 31, 2024 Within One Year One to Two Years Two to Three Years

At June 30, 2024 Within One Year One to Two Years Two to Three Years

Estimated Fair Value

Government-sponsored enterprises $ 75,500 $ 39,171 $ 66,029 $ 180,700

Treasury securities 55,160 55,088 988 111,236

United States Government-sponsored enterprises $ 66,707 $ 30,914 $ 77,973 $ 175,594

United States Treasury securities 54,404 34,941 985 90,330

Commercial paper 45,469 — — 45,469

3 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 March 31, 2024 were primarily due to an increase in market interest rates after certain debt securities were purchased.

Unrealized losses on available-for-sale debt securities at June 30, 2024 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 March 31, 2024 and December 31, 2023.

Accordingly, the Company did not record an allowance for credit losses related to its available-for-sale debt securities at June 30, 2024 and December 31, 2023.

Composition of Certain Financial Statement Items

Accounts Receivable

Accounts receivable, net consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):

March 31, December 31,

Accounts receivable, net consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):

June 30, December 31,

Accounts receivable $ 103,342 $ 110,453

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 months ended March 31, 2024 and 2023 (in thousands):

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, 2024 and 2023 (in thousands):

Three Months Ended

June 30, Six Months Ended June 30,

2024 2023 2024 2023

Balance at beginning of the period $ 4,923 $ 4,467 $ 4,898 $ 4,327

2 unchanged sentences

Balance at end of the period $ 5,225 $ 4,842 $ 5,225 $ 4,842

Inventories consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):

March 31, December 31,

Inventories consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):

June 30, December 31,

Raw materials $ 45,457 $ 42,783

3 unchanged sentences

Fair Value Measurements

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, 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

March 31, 2024

June 30, 2024

Total Level 1 Level 2 Level 3

1 unchanged sentence

$ 34,513 $ 34,513 $ — $ —

Government-sponsored enterprises 180,700 — 180,700 —

Treasury securities 111,236 111,236 — —

United States Government-sponsored enterprises 175,594 — 175,594 —

United States Treasury securities 90,330 90,330 — —

Commercial paper 45,469 — 45,469 —

6 unchanged sentences

$ 48,033 $ 48,033 $ — $ —

Government-sponsored enterprises 182,154 — 182,154 —

Treasury securities 115,004 115,004 — —

United States Government-sponsored enterprises 182,154 — 182,154 —

United States Treasury securities 115,004 115,004 — —

Commercial paper 72,511 — 72,511 —

7 unchanged sentences

The Company validates these prices through independent valuation testing and review of portfolio valuations provided by the Company’s investment managers.

There were no transfers into or out of Level 3 assets during the three months ended March 31, 2024 and 2023, respectively.

There were no transfers into or out of Level 3 assets during the three months ended June 30, 2024 and 2023, respectively.

Fair Value of Financial Instruments

4 unchanged sentences

Fair Value Measurements at

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Convertible Senior Notes due 2025

4 unchanged sentences

* Not applicable as no notes were outstanding at this date.

In March 2024, the Company repurchased $ 246.7 million of principal of the Company’s Convertible Senior Notes due 2025 (see Note 7, “Debt”).

In March 2024, the Company issued $ 316.3 million aggregate principal amount of the Company’s Convertible Senior Notes Due 2029, and repurchased $ 246.7 million of principal of the Company’s Convertible Senior Notes due 2025 (see Note 7, “Debt”).

The Company's leases consist of operating leases for general office space, research and development, manufacturing and warehouse facilities, and equipment.

4 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Operating lease cost $ 3,564 $ 4,299 $ 7,081 $ 8,774

Short-term lease cost 21 124 43 220

Loss on lease termination and right-of-use asset impairment charges

— 11,224 — 11,224

Total lease cost $ 3,585 $ 15,647 $ 7,124 $ 20,218

Maturities of operating lease liabilities at March 31, 2024 were as follows (in thousands):

Maturities of operating lease liabilities at June 30, 2024 were as follows (in thousands):

Years Ending December 31,

2024 $ 12,943

Thereafter 90,004

5 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Weighted-average remaining lease term (in years) 9.9 10.2

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

Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were $ 4.7 million and $ 1.8 million for the three months ended March 31, 2024 and 2023, respectively.

Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were $ 4.7 million and $ 4.4 million for the six months ended June 30, 2024 and 2023, respectively.

Convertible Senior Notes Due 2029

3 unchanged sentences

Concurrently, the Company also paid $ 1.3 million of accrued interest due at time of the note repurchase.

As a result of the repurchase, the Company recognized a $ 1.3 million loss on extinguishment of debt in the condensed consolidated statement of operations for the three months ended March 31, 2024.

As a result of the repurchase, the Company recognized a $ 1.3 million loss on extinguishment of debt in the condensed consolidated statement of operations for the six months ended June 30, 2024.

The loss on extinguishment of debt included the unamortized debt issuance costs related to the portion of the 2025 Notes repurchased.

1 unchanged sentence

In addition, the Company used $ 15.8 million of the net proceeds to pay the cost of the capped call transactions (2029 Capped Call Transactions) discussed below.

The Company intends to use the remainder of the net proceeds for general corporate purposes, which may include additional repurchases of the 2025 Notes from time to time, or the repayment at maturity, of the 2025 Notes.

The 2029 Notes are the Company’s senior unsecured obligations.

13 unchanged sentences

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the 2029 Notes.

During the three months ended June 30, 2024, the conversion feature of the 2029 Notes was triggered and therefore the 2029 Notes are currently convertible, in whole or in part, at the option of the holders from July 1, 2024 through September 30, 2024.

Whether the 2029 Notes will be convertible following the stated period will depend on the continued satisfaction of this condition or another conversion condition.

The Company has not received any conversion notices through the issuance date of its condensed consolidated financial statements.

The Company may elect to settle conversions of the 2029 Notes in shares of common stock.

Since the Company has the ability and intent to settle conversions in shares of common stock, it continued to classify the 2029 Notes as long-term debt on its condensed consolidated balance sheet as of June 30, 2024.

Convertible Senior Notes Due 2025

5 unchanged sentences

The 2025 Notes mature on May 1, 2025 unless repurchased, redeemed, or converted in accordance with their terms before the maturity date.

As of June 30, 2024 the outstanding balance of the 2025 Notes was classified in current liabilities on the Company’s condensed consolidated balance sheets.

The 2025 Notes are convertible into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion rate of 8.8836 shares of common stock per $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of $ 112.57 (2025 Notes Conversion Price) per share of the Company’s common stock.

4 unchanged sentences

• if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 2025 Notes on each such trading day;

• during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2025 Notes for each day of that five consecutive trading day period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate of the 2025 Notes on such trading day;

less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate of the 2025 Notes on such trading day;

• if the Company calls any or all of the 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date;

5 unchanged sentences

The net carrying amount of the Company’s convertible senior notes on the condensed consolidated balance sheets consisted of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Principal amount:

5 unchanged sentences

Unamortized debt issuance costs ( 9,078 ) ( 2,465 )

Net carrying amount $ 347,497 $ 285,035

Total debt, net

$ 347,932 $ 285,035

current portion

$ ( 40,540 ) $ —

Long-term senior convertible notes

$ 307,392 $ 285,035

* Not applicable as no notes were outstanding at this date.

The 2025 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 .

The 2029 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 $ 34.56 per share.

As of March 31, 2024 and December 31, 2023, the if-converted value of the 2025 Notes did not exceed the principal amount.

As of March 31, 2024, the if-converted value of the 2029 Notes exceeded the principal amount by $ 7.8 million.

As of June 30, 2024 and December 31, 2023, the if-converted value of the 2025 Notes did not exceed the principal amount.

As of June 30, 2024, the if-converted value of the 2029 Notes exceeded the principal amount by $ 52.4 million.

The following table summarizes the effective interest rates for each of our convertible senior notes for the periods shown:

March 31, 2024 March 31, 2023

June 30, 2024 June 30, 2023

Effective interest rate:

2 unchanged sentences

* Not applicable as no notes were outstanding at this date.

The following table details interest expense related to the Notes recognized for the three March 31, 2024, and 2023 (in thousands):

Three Months Ended March 31,

The following table details interest expense related to the Notes recognized for the three and six months ended June 30, 2024, and 2023 (in thousands):

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

2024 2023 2024 2023

Contractual interest expense

17 unchanged sentences

Shares Reserved for Future Issuance

The following shares of the Company's common stock were reserved for future issuance at March 31, 2024 (in thousands):

The following shares of the Company's common stock were reserved for future issuance at June 30, 2024 (in thousands):

Shares reserved for issuance upon conversion of Convertible Senior Notes 9,513

5 unchanged sentences

Common Stock Warrants

Warrants outstanding to purchase shares of the Company's common stock as of March 31, 2024 were as follows:

Warrants outstanding to purchase shares of the Company's common stock as of June 30, 2024 were as follows:

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

5 unchanged sentences

The 2023 Plan replaced the Company’s Amended and Restated 2013 Stock Incentive Plan (2013 Plan), and no further equity awards will be granted under the 2013 Plan.

In May 2024, the Company’s stockholders approved the 2023 Long-Term Incentive Plan, as amended, to increase the number of shares authorized for issuance under the plan by 3,000,000 shares.

Stock-Based Compensation

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 March 31,

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

2024 2023 2024 2023

Cost of sales $ 1,760 $ 1,749 $ 3,830 $ 3,343

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Total stock-based compensation expense $ 24,897 $ 23,401 $ 46,936 $ 44,594

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $ 1.5 million at March 31, 2024, and $ 2.0 million at December 31, 2023.

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $ 1.6 million at June 30, 2024, and $ 2.0 million at December 31, 2023.

Restricted Stock Units

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The total number of RSUs granted and the respective weighted average grant date fair value were as follows:

Three Months Ended March 31,

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

2024 2023 2024 2023

RSUs granted 1,694,239 1,635,679 2,052,298 1,789,825

Weighted average grant date fair value (per share) $ 48.30 $ 27.61 $ 44.30 $ 28.92

Employee Stock Purchase Plan

In May 2024, the Company's stockholders approved the 2013 Employee Stock Purchase Plan, as amended, to increase the number of shares authorized for issuance under the plan by 3,000,000 shares.

The Company records stock-based compensation expense associated with the ESPP using the Black-Scholes option pricing model.

Valuations are performed on the grant date at the beginning of the purchase period, which generally occurs in May and November of each year.

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,

2024 2023 2024 2023

Weighted average grant date fair value (per share) $ 21.45 $ 12.52 $ 21.45 $ 12.52

Risk-free interest rate 5.1 % 4.7 % 5.1 % 4.7 %

Dividend yield 0.0 % 0.0 % 0.0 % 0.0 %

Expected volatility 70.2 % 60.9 % 70.2 % 60.9 %

Expected term (in years) 1.3 1.3 1.3 1.3

Employee Benefits

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Under the terms of the plan, employees may make voluntary contributions as a percent of compensation and the Company may elect to match a discretionary percentage of employee contributions .

For the three months ended March 31, 2024, the Company recognized income tax expense of $ 3.2 million on a pre-tax loss of $ 39.5 million.

For the three months ended March 31, 2023, the Company recognized income tax expense of $ 0.3 million on a pre-tax loss of $ 123.6 million.

Income tax expense for the three months ended March 31, 2024 and 2023, was primarily attributable to federal, state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

For the three months ended March 31, 2024, 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 months ended March 31, 2023, 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 March 31, 2024, 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 six months ended June 30, 2024, the Company recognized income tax expense of $ 1.1 million and $ 4.3 million, respectively, on a pre-tax loss of $ 29.7 million and $ 69.3 million, respectively.

The Company calculated the provision for income taxes for the three and six months ended June 30, 2024 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.

Income tax expense for the three and six months ended June 30, 2024 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, 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.

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.

The Company calculated the provision for 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.

The Company continues to maintain a full valuation allowance against its net deferred tax assets as of June 30, 2024, 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

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Revenues by Geographic Region and Customer Sales Channel

During the three months ended March 31, 2024 and 2023, no individual country outside the United States generated revenue that represented more than 10% of total revenue.

During the three and six months ended June 30, 2024 and 2023, 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 March 31,

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

2024 2023 2024 2023

United States $ 156,711 $ 142,501 $ 286,472 $ 273,743

1 unchanged sentence

Total Sales $ 221,910 $ 195,917 $ 413,584 $ 365,300

Sales to distributors accounted for 61 % and 65 % of the Company’s United States sales for the three months ended March 31, 2024 and 2023, respectively.

Sales to distributors accounted for the vast majority of the Company’s sales outside the United States for the three-month periods ended March 31, 2024 and 2023.

Sales to distributors accounted for 63 % and 62 % of the Company’s United States sales for the three and six months ended June 30, 2024, respectively, and 64 % and 65 % of the Company’s United States sales for the three and six months ended June 30, 2023, respectively.

Sales to distributors accounted for the vast majority of the Company’s sales outside the United States for the three and six-month periods ended June 30, 2024 and 2023.

Revenues by Product

During the three months ended March 31, 2024 and 2023, sales by product were as follows (in thousands):

Three Months Ended March 31,

During the three and six months ended June 30, 2024 and 2023, sales by product were as follows (in thousands):

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

2024 2023 2024 2023

Supplies and other

$ 107,875 $ 101,677 $ 195,162 $ 186,379

Deferral for Tandem Choice program

Supplies and other

113,881 96,549 219,414 183,253

Net revenue recognized (deferred) for Tandem Choice program

154 ( 2,309 ) ( 992 ) ( 4,332 )

Total Sales $ 221,910 $ 195,917 413,584 365,300

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 March 31, 2024, 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 consolidated balance sheet at March 31, 2024.

As of June 30, 2024, 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 consolidated balance sheet at June 30, 2024.

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

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On April 29, 2024, the court granted defendants’ motion to dismiss with leave to file a second amended complaint within 30 days.

The plaintiffs did not file a second amended complaint within 30 days.

On June 4, 2024, the Court entered final judgment dismissing the action in its entirety with prejudice.

On July 5, 2024, the plaintiffs’ deadline to appeal the final judgment expired.

Two shareholder derivative cases were filed in the United States District Court for the Southern District of California on March 29, 2024 (captioned Bushansky v.

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24-cv-726) against the individual members of Tandem’s Board of Directors and the Company.

These lawsuits piggyback on the Lowe case, and allege that Tandem’s Board breached its fiduciary duties by failing to properly oversee and monitor the risks affecting the Company’s business, which resulted in reduced guidance, an associated stock drop, and the Lowe case.

These shareholder derivative lawsuits piggyback on the Lowe case, and allege that Tandem’s Board breached its fiduciary duties by failing to properly oversee and monitor the risks affecting the Company’s business, which resulted in reduced guidance, an associated stock drop, and the Lowe case.

On May 16, 2024, the parties in the derivative actions filed a joint motion regarding consolidation and appointment of counsel.

On June 13, 2024, the joint motion was granted and the derivative actions were consolidated.

On July 12, 2024, the parties filed a joint request for voluntary dismissal of the consolidated derivative actions without prejudice.

On the same day, July 12, 2024, the court granted the parties’ joint request and dismissed the consolidated derivative actions without prejudice.

Although the Company intends to vigorously defend against these claims, 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 March 31, 2024 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 June 30, 2024 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.

Letters of Credit

In connection with one of the Company’s operating leases (see Note 6, “Leases”), the Company has a $ 4.9 million unsecured irrevocable standby letter of credit arrangement with a bank, under which the landlord of the building is the beneficiary.

As of June 30, 2024, in connection with one of the Company’s operating leases (see Note 6, “Leases”), the Company had a $ 4.9 million unsecured irrevocable standby letter of credit arrangement with a bank, under which the landlord of the building is the beneficiary.

The Company is required to maintain the standby letter of credit throughout the term of the lease, which expires in April 2035.

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