What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-01 · 138 added, 126 removed, 603 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except par value)

June 30, December 31,

September 30, December 31,

Assets (Unaudited)

28 unchanged sentences

Common stock, $ 0.001 par value;

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

200,000 shares authorized, 65,646 and 65,552 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively.

Additional paid-in capital 1,282,354 1,263,997

Accumulated other comprehensive income (loss)

( 1,253 ) 1,369

Accumulated other comprehensive income

Accumulated deficit ( 1,048,580 ) ( 951,800 )

5 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,

2024 2023 2024 2023

19 unchanged sentences

Other comprehensive income (loss):

Unrealized gain (loss) on short-term investments

Unrealized gain on short-term investments

$ 3,948 $ 349 $ 2,189 $ 1,800

11 unchanged sentences

(In thousands)

Three Months Ended June 30, 2024

Three Months Ended September 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

Balance at June 30, 2024 65,435 $ 65 $ 1,260,392 $ ( 1,253 ) $ ( 1,025,329 ) $ 233,875

Exercise of stock options 24 — 409 — — 409

Vesting of restricted stock units, net of shares withheld for taxes 187 1 ( 4,928 ) — — ( 4,927 )

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

Stock-based compensation expense — — 26,481 — — 26,481

Unrealized loss on short-term investments

Unrealized gain on short-term investments

— — — 3,948 — 3,948

2 unchanged sentences

Net loss — — — — ( 23,251 ) ( 23,251 )

Balance at June 30, 2024

Balance at September 30, 2024

65,646 $ 66 $ 1,282,354 $ 3,870 $ ( 1,048,580 ) $ 237,710

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Common Stock Additional

15 unchanged sentences

— — 184 — — 184

Unrealized loss on short-term investments

Unrealized gain on short-term investments

— — — 2,189 — 2,189

Foreign currency translation losses — — — ( 863 ) — ( 863 )

Foreign currency translation gains

— — — 312 — 312

Net loss — — — — ( 96,780 ) ( 96,780 )

Balance at June 30, 2024

Balance at September 30, 2024

65,646 $ 66 $ 1,282,354 $ 3,870 $ ( 1,048,580 ) $ 237,710

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Common Stock Additional

4 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

2 unchanged sentences

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

See accompanying notes to unaudited condensed consolidated financial statements.

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Common Stock Additional

13 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

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

5 unchanged sentences

Operating lease termination and other impairment charges

Accretion of discount or premium on short-term investments

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

( 595 ) 3,177

Stock-based compensation expense 73,217 65,335

8 unchanged sentences

Accounts payable and accrued expenses

( 952 ) ( 4,574 )

Employee-related liabilities 15,300 5,571

43 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 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 .

In addition to insulin pumps, the Company sells single-use products that are used together with the pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body.

The Company recently expanded its insulin pump portfolio, which now includes both the t:slim X2 and the Tandem Mobi.

Both pumps feature Control-IQ technology, which is the Company’s advanced algorithm for managing insulin delivery, using information received from integrated continuous glucose monitoring (CGM) sensors.

New software for the insulin pumps 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 systems products are generally considered durable medical equipment and have an expected lifespan of at least four years .

In addition to insulin pumps, the Company sells single-use components that are used together with the pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body.

Basis of Presentation and Principles of Consolidation

5 unchanged sentences

Interim financial results are not necessarily indicative of results anticipated for the full year or any other period(s).

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (Annual Report), from which the balance sheet information herein was derived.

The condensed consolidated financial statements include the accounts of Tandem Diabetes Care, Inc.

7 unchanged sentences

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, 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 nine months ended September 30, 2024, as compared to those disclosed in the 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 and six months ended June 30, 2024 and 2023.

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

Strategic Investments

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

The investments were 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.

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.

In November 2024, the Company signed an investment agreement with one of its private company investees.

Per the agreement, the Company will invest an additional $ 46.4 million.

The investment is expected to close in the fourth quarter of 2024, and represent a cumulative investment of more than 20 % of the private company’s outstanding equity.

The investment will be recorded using the equity method and will be included in long-term assets on the Company’s consolidated balance sheet.

The Company did no t record any impairment charges related to its strategic investments in the three months ended September 30, 2024.

During the nine months ended September 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 no t record any impairment charges related to its strategic investments in the three and nine months ended September 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.

1 unchanged sentence

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.

As of September 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

18 unchanged sentences

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.

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.

The Company will recognize the deferred sales when the obligations under the Tandem Choice program are satisfied.

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.

Any remaining deferrals will be recognized at program expiration on December 31, 2024, provided all obligations under the Tandem Choice program are satisfied.

For the nine months ended September 30, 2024, the net effect of Tandem Choice deferrals and fulfillments was negligible.

At September 30, 2024 and December 31, 2023, current deferred revenue balance was $ 30.1 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 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

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

September 30, 2024 December 31, 2023

Other current liabilities

$ 3,012 $ 505

Other long-term liabilities

12 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, 2024 and 2023 (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, 2024 and 2023 (in thousands):

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

2024 2023 2024 2023

5 unchanged sentences

Balance at end of the period $ 40,746 $ 37,757 $ 40,746 $ 37,757

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

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

September 30, 2024 December 31, 2023

Other current liabilities $ 19,832 $ 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 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.

For the three and nine months ended September 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,

September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

14,744 5,986 11,223 4,974

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07 to improve the information that a public entity discloses about reportable segments and to address investor requests for more information about reportable segment expenses.

The pronouncement requires a public entity to report a measure of segment profit or loss that the chief operating decision maker (CODM) uses to assess segment performance and make decisions about allocating resources.

ASU 2023-07 also requires other specified segment items and amounts, such as depreciation, amortization, and depletion expense, to be disclosed under certain circumstances.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, adopted retrospectively.

The Company is currently evaluating the effect of adoption of ASU 2023-07 on the Company’s consolidated financial statements or disclosures.

Short-Term Investments

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

The following represents a summary of the estimated fair value of short-term investments at September 30, 2024 and December 31, 2023 (in thousands):

At September 30, 2024 Amortized

Cost Gross Unrealized

6 unchanged sentences

Corporate debt securities 116,314 653 ( 1 ) 116,966

Foreign government bonds

3,013 55 — 3,068

Total $ 421,328 $ 2,956 $ ( 18 ) $ 424,266

9 unchanged sentences

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

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

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

Years to Maturity

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

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

Estimated Fair Value

3 unchanged sentences

Corporate debt securities 62,532 54,434 — 116,966

Foreign government bonds

— — 3,068 3,068

Total $ 218,027 $ 118,843 $ 87,396 $ 424,266

1 unchanged sentence

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, 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 June 30, 2024 and December 31, 2023.

Unrealized losses on available-for-sale debt securities at September 30, 2024 were primarily due to an increase in market interest rates after certain debt securities were purchased, and the balance was not material to the Company’s quarterly results.

Composition of Certain Financial Statement Items

Accounts Receivable

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

June 30, December 31,

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

September 30, December 31,

Accounts receivable $ 113,249 $ 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 and six months ended June 30, 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 nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Balance at end of the period $ 6,061 $ 5,355 $ 6,061 $ 5,355

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

June 30, December 31,

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

September 30, December 31,

Raw materials $ 35,933 $ 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 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):

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, 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

June 30, 2024

September 30, 2024

Total Level 1 Level 2 Level 3

5 unchanged sentences

Corporate debt securities 116,966 — 116,966 —

Foreign government bonds

3,068 — 3,068 —

Total assets $ 463,096 $ 151,439 $ 311,657 $ —

8 unchanged sentences

Corporate debt securities 39,375 — 39,375 —

Supranational bonds — — — —

Total assets $ 457,077 $ 163,037 $ 294,040 $ —

4 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 June 30, 2024 and 2023, respectively.

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

Fair Value of Financial Instruments

4 unchanged sentences

Fair Value Measurements at

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Convertible Senior Notes due 2025

9 unchanged sentences

The Company includes the renewal option period in the lease term for those leases reasonably expected to be extended at the time of lease commencement.

Operating Lease Impairment Charge

In 2023, the Company consolidated facilities by moving the administrative functions and other operations from the leased space on Vista Sorrento Parkway in San Diego, California (Vista Sorrento Lease) to the Company’s new headquarters, located on High Bluff Drive in San Diego, California.

In connection with permanently ceasing use of the Vista Sorrento Lease, the Company recorded a $ 14.1 million impairment charge as the carrying amount of the assets related to the Vista Sorrento Lease exceeded its fair value based on the Company’s estimate of future discounted cash flows related to the leased facility.

The $ 14.1 million charge was comprised of an $ 11.2 million impairment of operating lease right-of-use assets and a $ 2.9 million write-off of fixed assets, and was recorded as a component of selling, general and administrative expenses in the condensed consolidated statements of operations.

Supplemental Lease Disclosure Information

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,

2024 2023 2024 2023

2 unchanged sentences

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

— 11,224 — 11,224

Total lease cost $ 3,625 $ 3,550 $ 10,749 $ 23,768

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

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

Years Ending December 31,

6 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Weighted-average remaining lease term (in years) 9.4 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 $ 4.4 million for the six months ended June 30, 2024 and 2023, respectively.

Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were $ 13.3 million and $ 9.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Convertible Senior Notes Due 2029

2 unchanged sentences

The Company used approximately $ 246.1 million of the net proceeds to repurchase approximately $ 246.7 million in aggregate principal amount of its Convertible Senior Notes Due 2025 (the 2025 Notes) concurrently with the pricing of the 2029 Notes in privately negotiated transactions.

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 six months ended June 30, 2024.

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 nine months ended September 30, 2024.

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

6 unchanged sentences

The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2029 Notes.

The Company may not redeem the 2029 Notes prior to March 22, 2027.

The Company may not redeem the 2029 Notes before March 22, 2027.

The Company has the option to redeem for cash all or any portion of the 2029 Notes on or after March 22, 2027 if the last reported sale price of the Company’s common stock has been at least 130 % of the 2029 Notes Conversion Price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period, at a redemption price equal to 100 % of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest.

No sinking fund is provided for the 2029 Notes.

Holders of the 2029 Notes may convert all or a portion of their 2029 Notes at their option prior to December 15, 2028, in multiples of $1,000 principal amounts, only under the following circumstances:

Holders of the 2029 Notes may convert all or a portion of their 2029 Notes at their option before December 15, 2028, in multiples of $1,000 principal amounts, only under the following circumstances:

• during any calendar quarter commencing after the quarter ending on June 30, 2024 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the 2029 Notes Conversion Price on each applicable trading day;

4 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.

As of September 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.

2 unchanged sentences

No sinking fund is provided for the 2025 Notes.

Holders of the 2025 Notes may convert all or a portion of their 2025 Notes at their option before November 1, 2024, in multiples of $1,000 principal amounts, only under the following circumstances:

• 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;

• 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;

• on the occurrence of specified corporate events.

Holders of the 2025 Notes had the right to convert all or a portion of their 2025 Notes at their option before November 1, 2024, in multiples of $1,000 principal amounts, under certain circumstances outlined in the offering agreement.

On or after November 1, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.

3 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Principal amount:

8 unchanged sentences

current portion

$ ( 40,540 ) $ —

Long-term senior convertible notes

1 unchanged sentence

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

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.

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

As of September 30, 2024, the if-converted value of the 2029 Notes exceeded the principal amount by $ 71.8 million.

In October 2023, the Company was notified that additional interest beyond the 1.50 % per annum had been accruing on the 2025 Notes since May 2021, under the terms of the indenture.

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

The additional accrued interest was fully paid in November 2023.

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

June 30, 2024 June 30, 2023

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

2024 2023 2024 2023

Effective interest rate:

Convertible Senior Notes Due 2025

2.1 % 2.2 % 2.1 % 2.2 %

Convertible Senior Notes Due 2029

2.1 % * 2.1 % *

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

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,

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

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

2024 2023 2024 2023

3 unchanged sentences

Total interest expense $ 1,841 $ 4,840 $ 5,227 $ 8,079

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

2029 Capped Call Transactions

13 unchanged sentences

Shares Reserved for Future Issuance

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

The following shares of the Company's common stock were reserved for future issuance at September 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 June 30, 2024 were as follows:

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

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

8 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,

2024 2023 2024 2023

3 unchanged sentences

Total stock-based compensation expense $ 26,281 $ 20,741 $ 73,217 $ 65,335

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.

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $ 1.8 million at September 30, 2024, and $ 2.0 million at December 31, 2023.

Restricted Stock Units

1 unchanged sentence

The total number of RSUs granted 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,

2024 2023 2024 2023

6 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,

2024 2023 2024 2023

Nine Months Ended September 30,

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

9 unchanged sentences

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 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.

For the three and nine months ended September 30, 2024, the Company recognized income tax expense of $ 0.6 million and $ 4.9 million, respectively, on a pre-tax loss of $ 22.6 million and $ 91.9 million, respectively.

The Company calculated the provision for income taxes for the three and nine months ended September 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 nine months ended September 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 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.

Income tax expense for the three and nine months ended September 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 nine months ended September 30, 2023 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.

The Company continues to maintain a full valuation allowance against its net deferred tax assets as of September 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

8 unchanged sentences

Revenues by Geographic Region and Customer Sales Channel

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.

During the three and nine months ended September 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

2 unchanged sentences

Total Sales $ 243,971 $ 185,622 $ 657,555 $ 550,922

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.

Sales to distributors accounted for 61 % and 62 % of the Company’s United States sales for the three and nine months ended September 30, 2024, respectively, and 64 % and 64 % of the Company’s United States sales for the three and nine months ended September 30, 2023, respectively.

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

Revenues by Product

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,

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

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

2024 2023 2024 2023

10 unchanged sentences

On January 19, 2023, the Company completed the acquisition of AMF Medical under the terms of the Purchase Agreement.

The total aggregate consideration for the Transaction includes a previous strategic investment of Swiss Francs (CHF) 8.0 million made in the third quarter of 2022, a cash payment of CHF 62.4 million paid at the closing of the Transaction, and additional contingent earnout payments of up to CHF 129.6 million.

The total aggregate consideration for the Transaction included a previous strategic investment of Swiss Francs (CHF) 8.0 million made in the third quarter of 2022, a cash payment of CHF 62.4 million paid at the closing of the Transaction, and additional contingent earnout payments of up to CHF 129.6 million.

The contingent earnout payments become payable upon the achievement of certain milestones, and are comprised of a payment of up to CHF 38.4 million upon the successful completion of key development milestones over the two years following the closing date of the Transaction, and a payment of up to CHF 91.2 million upon obtaining regulatory clearance from the FDA of an automated controller enabled (ACE) pump.

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

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.

As of September 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 September 30, 2024.

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

10 unchanged sentences

On February 1, 2024, the plaintiffs filed their amended complaint.

In the amended complaint, the plaintiffs allege violations of the Securities Exchange Act of 1934, as amended, based on alleged materially false and misleading statements relating to our sales trends and financial forecasts.

The plaintiffs seek to represent a class of persons who purchased or otherwise acquired Tandem common stock during the period between August 3, 2022, and November 2, 2022, inclusive.

The plaintiffs also seek unspecified monetary damages, pre- and post-judgment interest, costs and fees, including attorneys’ fees and expert fees, and other relief.

In the amended complaint, the plaintiffs alleged violations of the Securities Exchange Act of 1934, as amended, based on alleged materially false and misleading statements relating to our sales trends and financial forecasts.

The plaintiffs sought to represent a class of persons who purchased or otherwise acquired Tandem common stock during the period between August 3, 2022, and November 2, 2022, inclusive.

The plaintiffs also sought unspecified monetary damages, pre- and post-judgment interest, costs and fees, including attorneys’ fees and expert fees, and other relief.

The defendants filed their motion to dismiss the amended complaint on March 11, 2024.

9 unchanged sentences

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

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.

These shareholder derivative lawsuits piggybacked on the Lowe case, and alleged 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.

2 unchanged sentences

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.

Accordingly, the Company is unable to determine the ultimate outcome of these lawsuits or determine the amount or range of potential losses associated with these lawsuits.

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, 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 September 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

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.

As of September 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