What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-02-26 compared with 2024-02-21 · 374 added, 262 removed, 796 unchanged (44% of the section changed)

14 unchanged sentences

A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to actual rates at December 31, 2024, would have affected the estimated fair value of our investments portfolio by approximately $3.4 million.

In May 2020, we issued $287.5 million principal amount of Convertible Senior Notes, which bear interest at a fixed rate of 1.50% per year.

In March 2024, we issued $316.3 million principal amount of Convertible Senior Notes, due in 2029, which bear interest at a fixed rate of 1.50% per year.

In May 2020, we issued $287.5 million principal amount of Convertible Senior Notes, which bear interest at a fixed rate of 1.50% per year, of which $40.8 million principal amount remained outstanding as of December 31, 2024.

Accordingly, we are not subject to interest rate risk related to the Convertible Senior Notes (see Note 7, “Debt”).

17 unchanged sentences

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2023 , 2022 and 2021

Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2024 , 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2024 , 2023 and 2022

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Tandem Diabetes Care, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

21 unchanged sentences

Auditing management’s expected replacement rates on pumps was complex as it required a significant level of effort due to the amount of data utilized in determining the expected replacement rates.

Management’s estimate considers historical claims experience and the assumption of historical data predictive of future activity and events, in particular, the number of historical periods used and the weighing of historical data.

Management’s estimate considers historical claims experience and the assumption of historical data predictive of future activity and events.

It is possible that the future replacement rates may not be reflective of historical product replacement rates and changes in this assumption could have a material impact on the Company’s estimated reserve.

22 unchanged sentences

Operating lease right-of-use assets 85,306 87,791

Equity method investments

Other long-term assets 5,166 40,336

5 unchanged sentences

Employee-related liabilities 64,128 43,430

Current portion of convertible senior notes, net

Operating lease liabilities 18,208 17,060

10 unchanged sentences

Common stock, $ 0.001 par value;

200,000 shares authorized, 65,552 and 64,513 shares issued and outstanding at December 31, 2023 and 2022, respectively.

200,000 shares authorized, 66,264 and 65,552 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively.

Additional paid-in capital 1,312,804 1,263,997

6 unchanged sentences

TANDEM DIABETES CARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share data)

9 unchanged sentences

Total operating expenses 588,701 600,920 505,834

Operating income (loss)

Operating loss

( 99,127 ) ( 233,230 ) ( 92,848 )

2 unchanged sentences

Interest expense ( 7,415 ) ( 9,882 ) ( 6,208 )

Loss from equity method investments

( 2,053 ) — —

Loss on extinguishment of debt ( 1,268 ) — —

Change in fair value of common stock warrants — — 147

Total other income (expense), net 7,257 12,976 ( 4 )

Income (loss) before income taxes

Loss before income taxes

( 91,870 ) ( 220,254 ) ( 92,852 )

Income tax expense 4,155 2,357 1,742

Net income (loss)

$ ( 96,025 ) $ ( 222,611 ) $ ( 94,594 )

1 unchanged sentence

Unrealized gain (loss) on short-term investments

Foreign currency translation gains (losses)

$ ( 311 ) $ 3,606 $ ( 2,233 )

Comprehensive income (loss)

$ ( 219,425 ) $ ( 95,795 ) $ 14,730

Net income (loss) per share - basic

Foreign currency translation gains (losses)

( 3,005 ) ( 420 ) 1,032

Net income (loss) per share - diluted

Comprehensive loss

$ ( 99,341 ) $ ( 219,425 ) $ ( 95,795 )

Weighted average shares used to compute basic net income (loss) per share

Net loss per share - basic and diluted

$ ( 1.47 ) $ ( 3.43 ) $ ( 1.47 )

Weighted average shares used to compute diluted net income (loss) per share

Weighted average shares used to compute basic and diluted net loss per share

65,451 64,969 64,146

10 unchanged sentences

Balance at December 31, 2021 63,833 $ 64 $ 1,068,259 $ ( 616 ) $ ( 634,595 ) $ 433,112

Effect of change in accounting for convertible senior notes (1) — — ( 85,803 ) — 9,049 ( 76,754 )

Exercise of stock options 280 1 9,130 — — 9,131

2 unchanged sentences

Exercise of common stock warrants 6 — 83 — — 83

Fair value of common stock warrants at time of exercise — — 15,500 — — 15,500

Stock-based compensation expense — — 85,077 — — 85,077

Unrealized loss on short-term investments — — — ( 2,233 ) — ( 2,233 )

Foreign currency translation losses — — — ( 143 ) — ( 143 )

Net income — — — — 15,566 15,566

Foreign currency translation gains — — — 1,032 — 1,032

Net loss — — — — ( 94,594 ) ( 94,594 )

Balance at December 31, 2022 64,513 $ 65 $ 1,170,888 $ ( 1,817 ) $ ( 729,189 ) $ 439,947

2 unchanged sentences

Issuance of common stock under Employee Stock Purchase Plan 499 1 10,678 — — 10,679

Exercise of common stock warrants 6 — 83 — — 83

Stock-based compensation expense — — 88,926 — — 88,926

Unrealized loss on short-term investments — — — ( 2,233 ) — ( 2,233 )

Foreign currency translation gains — — — 1,032 — 1,032

Unrealized gain on short-term investments

— — — 3,606 — 3,606

Foreign currency translation losses

— — — ( 420 ) — ( 420 )

Net loss — — — — ( 222,611 ) ( 222,611 )

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

Stock repurchases and retirement of shares

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

Exercise of stock options 112 — 2,233 — — 2,233

2 unchanged sentences

Stock-based compensation expense 101,167 — — 101,167

Unrealized gain on short-term investments

Purchase of capped call options related to convertible notes due 2029

— — ( 15,813 ) — — ( 15,813 )

Unwind of capped call options related to convertible notes due 2025

— — 184 — — 184

Unrealized loss on short-term investments

— — — ( 311 ) — ( 311 )

Foreign currency translation losses

2 unchanged sentences

Balance at December 31, 2024

(1) The Company adopted ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, effective January 1, 2021 (see Note 7, “Debt”).

66,264 $ 66 $ 1,312,804 $ ( 1,947 ) $ ( 1,047,825 ) $ 263,098

The accompanying notes are an integral part of the consolidated financial statements.

5 unchanged sentences

Operating Activities

Net income (loss)

$ ( 96,025 ) $ ( 222,611 ) $ ( 94,594 )

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 16,607 15,715 14,330

1 unchanged sentence

Provision for expected credit losses 9,979 5,540 4,782

Operating lease termination and impairment charges

Operating lease termination and other impairment charges

2,000 14,099 7,567

Amortization of premium on short-term investments 3,587 4,187 365

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

( 2,321 ) 3,587 4,187

Losses from equity method investee

Stock-based compensation expense 101,383 88,076 84,918

Loss on extinguishment of debt

Acquired in-process research and development expenses — 78,750 31,039

5 unchanged sentences

Other long-term assets 893 ( 3,187 ) ( 1,207 )

Accounts payable

Accounts payable and accrued expenses

( 2,392 ) ( 4,864 ) 24,493

6 unchanged sentences

Net cash provided by (used in) operating activities

24,225 ( 31,810 ) 50,464

Investing Activities

4 unchanged sentences

— ( 69,496 ) ( 25,720 )

Purchases of intangible assets and strategic investments ( 24,799 ) ( 8,855 ) ( 9,331 )

Net cash used in investing activities

Purchases of equity investments, strategic investments, and intangible assets

( 46,404 ) ( 24,799 ) ( 8,855 )

Net cash provided by (used in) investing activities

( 23,482 ) ( 85,740 ) 33,168

Financing Activities

Proceeds from issuance of common stock under Company stock plans, net 4,184 17,469 51,340

Proceeds from exercise of common stock warrants — 83 592

Proceeds from issuance of convertible senior notes due 2029, net of $ 9,400 debt issuance costs

Repurchase of $ 246,740 principal amount of convertible senior notes due 2025

( 246,123 ) — —

Payment for capped call transactions related to convertible senior notes due 2029

( 15,813 ) — —

Repurchase and retirement of common stock

( 30,000 ) — —

Proceeds from issuance of common stock under Company stock plans, net of cash used to settle withholding taxes on vested restricted stock

( 6,730 ) 4,184 17,469

Other financing activities 183 ( 71 ) ( 592 )

Net cash provided by financing activities

8,367 4,113 16,877

Effect of foreign exchange rate changes on cash 1,256 ( 212 ) 827

Net increase (decrease) in cash and cash equivalents

10,366 ( 113,649 ) 101,336

Cash and cash equivalents at beginning of period 58,868 172,517 71,181

7 unchanged sentences

$ 511 $ 2,946 $ 4,237

Intangible costs in accounts payable

$ — $ 515 $ 1,029

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

Organization and Basis of Presentation

Tandem Diabetes Care, Inc.

is a medical device company focused on the design, development and commercialization of technology solutions for people living with diabetes.

Tandem Diabetes Care, a global insulin delivery and diabetes technology company, manufactures and sells advanced automated insulin delivery systems that reduce the burden of diabetes management, while creating new possibilities for patients, their loved ones and healthcare providers.

Tandem Diabetes Care, Inc.

2 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’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

1 unchanged sentence

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

and its wholly-owned subsidiaries in the United States, Canada, Netherlands, and Switzerland.

and its wholly-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

4 unchanged sentences

Foreign exchange gains or losses resulting from balances denominated in a currency other than the functional currency are recognized in interest income and other, net in the Company’s consolidated statements of operations.

Reclassifications

Certain prior year balances on the consolidated statements of cash flows have been reclassified to conform to the current year presentation.

Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the year ended December 31, 2023, except for adding the accounting policy for sales rebates, which is included herein.

There have been no material changes to the Company’s significant accounting policies during the year ended December 31, 2024, except for adding the accounting policy for equity method investments, which is included herein.

Use of Estimates

2 unchanged sentences

Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and employee-related liabilities are reasonable estimates of their fair values because of the short-term nature of these assets and liabilities.

Short-term investments are carried at fair value.

The Company’s convertible senior notes are carried at amortized cost on the consolidated balance sheets (see Note 7, “Debt”).

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

The Company estimated the fair value of its convertible senior notes to be $ 271.7 million and $ 260.5 million at December 31, 2023 and 2022, respectively, based on Level 2 quoted market prices as of those dates.

Cash Equivalents

29 unchanged sentences

2024 2023 2022 2024 2023

Distributor A

11.2 % 12.2 % 11.6 % 11.1 % 10.0 %

Distributor B

* * * * 10.5 %

Distributor C

* * * 11.8 % 10.6 %

Distributor D

Distributor E

11.5 % 10.8 % 14.4 % 11.2 % 11.5 %

14 unchanged sentences

Operating lease right-of-use assets and liabilities are recognized when the Company takes possession of the leased property (Commencement Date) based on the present value of lease payments over the lease term.

For lease agreements entered into or reassessed after the adoption of ASC 842 Leases , the Company combines lease and non-lease components.

For lease agreements that contain lease and non-lease components, the Company accounts for both of those components as a single lease component.

Rent expense on noncancelable leases containing known future scheduled rent increases is recorded on a straight-line basis over the term of the respective leases beginning on the Commencement Date.

4 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 years ended December 31, 2023, 2022 and 2021.

Impairment of Long-Lived Assets

7 unchanged sentences

Strategic Investments

The Company held equity investments totaling $ 10.1 million and $ 16.4 million in two separate private companies at December 31, 2023 and 2022, respectively, each of which represented less than 5 % of the outstanding equity of the respective company as of the date of investment.

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 consolidated balance sheets at December 31, 2023 and 2022.

In November 2023, the Company made an additional investment of approximately $ 22.3 million 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 December 31, 2023, the $ 22.3 million subordinated convertible notes investment was included as a component of other long-term assets on the consolidated balance sheet.

The Company measures strategic investments at cost minus impairment, if any, adjusted for changes in observable prices.

Strategic investments are reviewed, on an individual basis, for impairment whenever significant events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.

The Company held strategic equity investments totaling zero and $ 10.1 million in private investee companies at December 31, 2024 and December 31, 2023, respectively.

In November 2024, the Company invested an additional $ 46.4 million cash in one of its private company investees, resulting in a change to equity method accounting, described below.

During the year ended December 31, 2024, the Company also recorded an impairment charge of $ 2.0 million related to one of its strategic investments in a private investee company.

The Company did no t record any impairment charges related to its strategic investments during the years ended December 31, 2023 and 2022.

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

From November 2023 to June 2024, the company held a strategic investment balance of $ 22.2 million in the form of subordinated convertible notes of one private investee company.

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

Equity Method Investments

The Company held equity method investments of $ 74.5 million at December 31, 2024.

We use the equity method to account for investments in companies if our investment provides us with the ability to exercise significant influence but not control over the operating and financial policies of the investee.

The Company assesses significant influence by considering various factors, including the nature and magnitude of the investment, voting rights held and participation in the governance of the investee, if any.

The Company may also consider additional relevant factors, such as the presence of other business relationships.

In November 2024, the Company invested an additional $ 46.4 million cash in one of its private investee companies that was previously accounted for as a strategic investment at cost.

As a result of the additional investment, the Company owned more than 20 % of the private investee company’s outstanding equity and held significant influence but not control over the private investee company’s activities.

As a result, the investment was accounted for using the equity method following the November 2024 transaction date.

Our consolidated net loss included our Company’s proportionate share of the net loss of our equity method investee, which was a loss of $ 2.1 for the year ended December 31, 2024.

For the years ended December 31, 2023 and 2022, the Company did not hold any equity method investments and therefore did not recognize a share of net income or loss from any equity method investments.

Revenue Recognition

2 unchanged sentences

Revenue Recognition for Arrangements with Multiple Performance Obligations

The Company considers the individual deliverables in its product offering to be separate performance obligations.

The Company considers the individual deliverables in its product offerings to be separate performance obligations.

The transaction price is determined based on the consideration expected to be received, based either on the stated value in contractual arrangements or the estimated cash to be collected in non-contracted arrangements.

1 unchanged sentence

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.

Tandem Choice expires on December 31, 2024.

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

During the third and fourth quarters of 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 as the Company expects more customers to exercise the right as compared to the prior existing program price.

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

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

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

The Company determined that the program created a material right for which a portion of each t:slim X2 pump sales transaction price was allocated and deferred.

The Company determined that the ability for a customer to upgrade to a new technology represents a material right because the pricing inherent in such option provided the customer with a discount that is incremental to the range of discounts that would otherwise be granted for the related goods and services to comparable customers.

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

At December 31, 2023 and 2022, $ 30.6 million and $ 6.8 million, respectively, were allocated to the material right provided to customers and recorded in current deferred revenue on the consolidated balance sheets.

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.

Consequently, the Company ceased allocating and deferring a portion of the transaction price for the material right for pumps sold after that date.

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

The Company recognized the deferred sales when the obligations under the Tandem Choice program were satisfied.

If a customer elected to participate in the program, the Company recognized upgrade fees received, and the associated cost of goods sold at the time of fulfillment.

Substantially all of the remaining deferrals were recognized at program expiration on December 31, 2024.

For the year ended December 31, 2024, the Company recognized net revenue of $ 30.2 million as a result of the Tandem Choice program.

Sales Rebates

1 unchanged sentence

The Company estimates provisions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data.

At December 31, 2023, estimated sales rebates of $ 8.5 million were recorded on the consolidated balance sheet, of which $ 8.0 million was included in other long-term liabilities as the estimated payment due date was beyond twelve months from the balance sheet date.

Estimated sales rebates included in other long-term liabilities have an estimated payment due date beyond twelve months from the balance sheet date.

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

The Company did not provide sales rebates before the fourth quarter of 2023.

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

December 31, 2024 December 31, 2023

Other current liabilities

$ 2,229 $ 505

Other long-term liabilities

Total sales rebate

$ 9,396 $ 8,547

Sales Returns

The Company offers a 90-day right of return to customers in the U.S.

and Canada from the date of shipment of its insulin pumps, provided a physician’s confirmation of the medical reason for the return is received.

The Company offers a 90-day right of return to customers in the United States and Canada from the date of shipment of its insulin pumps, provided a physician’s confirmation of the medical reason for the return is received.

Estimated allowances for sales returns are based on historical returned quantities as compared to pump shipments in those same periods of return, adjusted for known or expected changes in the marketplace when appropriate.

The amount recorded in deferred revenue on the Company’s consolidated balance sheets for allowances for sales returns was $0.4 million and $0.5 million at December 31, 2023 and 2022, respectively.

The amounts recorded in deferred revenue on the Company’s consolidated balance sheets for allowances for sales returns were not material for the periods presented.

Actual product returns have not differed materially from estimated amounts recorded in the accompanying consolidated financial statements.

1 unchanged sentence

The Company generally provides a four-year warranty on its insulin pumps to end-user customers and may replace any pumps that do not function as intended in accordance with the product specifications within the warranty period.

Additionally, the Company offers a six-month warranty on single-use insulin cartridges and infusion sets.

In addition, the Company offers a six-month warranty on single-use insulin cartridges and infusion sets.

Estimated warranty costs are recorded at the time of shipment, and the Company reevaluates the estimate of the warranty reserve obligation at each reporting period.

Warranty costs are estimated primarily based on the current expected product replacement cost and expected replacement rates using historical experience.

Insulin pumps returned to the Company may be refurbished and redeployed.

Experience has shown that initial data for any given pump version or pump platform may be insufficient;

therefore, the Company’s process relies on long-term historical averages until sufficient data are available.

As actual experience becomes available, the Company uses the data to update the historical averages.

The Company may make further adjustments to the warranty reserve when deemed appropriate, giving additional consideration to revised future expectations of performance based on enhanced hardware components, or new features and capabilities that may become available through Tandem Device Updater.

Warranty costs are primarily estimated based on the current expected product replacement cost and expected replacement rates using historical experience.

Returned insulin pumps may be refurbished and redeployed.

Experience has shown that initial data for any new pump version or pump platform may be insufficient.

Therefore, the Company relies on long-term historical replacement data from existing platforms until sufficient data is available.

As actual experience accumulates, the Company adjusts its warranty reserve estimate accordingly.

In addition, the availability of replacement data may differ by country due to local compliance and privacy regulations, which may require the Company to estimate its warranty liability using available information or data from similar markets.

The Company may make further adjustments to the warranty reserve when appropriate, considering revised expectations of product performance based on enhanced hardware, or new features and capabilities that may become available through Tandem Device Updater.

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

5 unchanged sentences

Settlements made during the period ( 36,632 ) ( 32,617 ) ( 25,447 )

Decreases in warranty estimates

Increases (decreases) in warranty estimates

1,929 ( 2,437 ) ( 1,116 )

Balance at end of the period $ 51,408 $ 37,173 $ 36,537

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

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

December 31, 2024 December 31, 2023

4 unchanged sentences

Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award, and the portion that is ultimately expected to vest is recognized as compensation expense over the requisite service period on a straight-line basis.

The Company estimates the fair value of stock options issued under the Company’s stock incentive plans, and the fair value of the employees’ purchase rights under the Company’s Employee Stock Purchase Plan (ESPP), using the Black-Scholes option pricing model on the date of grant.

The Company estimates the fair value of stock options issued under the Company’s stock incentive plans, and the fair value of employee purchase rights under the Company’s Employee Stock Purchase Plan (ESPP) using the Black-Scholes option pricing model on the date of grant.

The Black-Scholes option pricing model requires the use of assumptions about a number of variables, including stock price volatility, expected term, dividend yield and risk-free interest rate (see Note 8, “Stockholders’ Equity”).

20 unchanged sentences

The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist.

Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required.

Any adjustment to the net deferred tax asset valuation allowance would be recorded in the consolidated statement of operations for the period that the adjustment is determined to be required.

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities.

6 unchanged sentences

The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense.

Comprehensive Income (Loss)

All components of comprehensive income (loss), including net income (loss), are reported in the consolidated financial statements in the period in which they are recognized.

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on marketable securities and foreign currency translation adjustments.

Net Income (Loss) Per Share

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

Diluted net income (loss) per share reflects the potential dilution that would occur if securities exercisable for or convertible into common stock were exercised for or converted into common stock.

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 years ended December 31, 2023, 2022 and 2021, the numerator and denominator of the diluted net income (loss) per share computation were calculated as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Net income (loss) - basic and diluted $ ( 222,611 ) $ ( 94,594 ) $ 15,566

Weighted average shares outstanding - basic 64,969 64,146 63,000

Dilutive common share equivalents:

Options to purchase common stock — — 1,129

Unvested restricted stock units — — 62

Warrants to purchase common stock — — 157

Awards to be granted under the ESPP — — 1

Weighted average shares outstanding - diluted 64,969 64,146 64,349

Comprehensive Loss

All components of comprehensive loss, including net loss, are reported in the consolidated financial statements in the period in which they are recognized.

Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on marketable securities and foreign currency translation adjustments.

Net Loss Per Share

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

Diluted net loss per share reflects the potential dilution that would occur if securities exercisable for or convertible into common stock were exercised for or converted into common stock.

For the years ended December 31, 2024, 2023, and 2022, 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 in each period.

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):

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11,436 4,986 5,012

Recently Issued Accounting Pronouncements

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’s adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements or disclosures.

Accounting Pronouncements Issued and Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03 Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (ASU 2024-03), which requires entities to disclose information about purchases of inventory, employee compensation, and intangible asset amortization in each income statement line item that contains those expenses.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating ASU 2024-03 to determine the impact it may have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.

The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating ASU 2023-09 to determine the impact it may have on its consolidated financial statements.

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 December 31, 2023 and 2022 (in thousands):

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

At December 31, 2024 Amortized

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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 $ 133,139 $ 275 $ ( 134 ) $ 133,280

United States Treasury securities 103,645 197 ( 140 ) 103,702

Commercial paper 23,225 39 — 23,264

Corporate debt securities 105,635 248 ( 47 ) 105,836

Foreign government bonds

3,013 — — 3,013

Total $ 368,657 $ 759 $ ( 321 ) $ 369,095

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Available-for-sale securities:

Government-sponsored enterprises $ 100,602 $ 21 $ ( 615 ) $ 100,008

Treasury securities 213,105 3 ( 1,947 ) 211,161

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

Corporate debt securities 39,225 156 ( 6 ) 39,375

Supranational bonds 2,504 — ( 13 ) 2,491

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

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Estimated Fair Value

Government-sponsored enterprises $ 86,875 $ 56,647 $ 38,632 $ 182,154

Treasury securities 74,214 40,790 — 115,004

United States Government-sponsored enterprises $ 44,717 $ 39,193 $ 49,370 $ 133,280

United States Treasury securities 85,400 17,307 995 103,702

Commercial paper 23,264 — — 23,264

Corporate debt securities 60,514 45,322 — 105,836

Foreign government bonds

— — 3,013 3,013

Total $ 213,895 $ 101,822 $ 53,378 $ 369,095

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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 December 31, 2023 were primarily due to an increase in market interest rates after certain debt securities were purchased.

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

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

Accordingly, the Company did not record an allowance for credit losses related to its available-for-sale debt securities at December 31, 2023 and 2022.

Unrealized losses on available-for-sale debt securities at December 31, 2024 were primarily due to an increase in market interest rates after certain debt securities were purchased, 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 December 31, 2023 and 2022 (in thousands):

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

December 31, December 31,

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Balance at end of the period $ 7,251 $ 4,898 $ 4,327

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

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

December 31, December 31,

Raw materials $ 32,602 $ 42,783

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Amortization expense related to intangible assets subject to amortization amounted to $ 1.9 million, $ 1.9 million and $ 2.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The amortization expense is recorded in cost of sales and selling, general and administrative expense in the consolidated statement of operations.

The estimated aggregate future amortization expense is $ 1.9 million for 2024, and the remaining $ 0.9 million in 2025, all of which will be recorded in selling, general and administrative expense in the consolidated statement of operations .

The amortization expense is recorded in selling, general and administrative expense in the consolidated statement of operations.

The estimated aggregate future amortization expense is $ 0.9 million in 2025, all of which will be recorded in selling, general and administrative expense in the consolidated statement of operations.

Fair Value Measurements

Authoritative guidance on fair value measurements defines fair value, and provides a consistent framework for measuring fair value and for disclosures of each major asset and liability category measured at fair value on either a recurring or a nonrecurring basis.

Fair value is intended to reflect an assumed exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, the authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Observable inputs such as unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly for substantially the full term of the asset or liability.

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

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

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 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):

Fair Value Measurements at

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$ 56,234 $ 56,234 $ — $ —

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

Treasury securities 115,004 115,004 — —

United States Government-sponsored enterprises 133,280 — 133,280 —

United States Treasury securities 103,702 103,702 — —

Commercial paper 23,264 — 23,264 —

Corporate debt securities 105,836 — 105,836 —

Foreign government bonds

3,013 — 3,013 —

Total assets $ 425,329 $ 159,936 $ 265,393 $ —

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$ 48,033 $ 48,033 $ — $ —

Government-sponsored enterprises 100,008 — 100,008 —

Treasury securities 211,161 211,161 — —

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

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

Commercial paper 72,511 — 72,511 —

Corporate debt securities 39,375 — 39,375 —

Supranational bonds 2,491 — 2,491 —

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

(1) Generally, cash equivalents include money market funds and investments with a maturity of three months or less from the date of purchase.

The Company’s Level 1 financial instruments, which are in active markets, are valued using unadjusted quoted market prices for identical instruments.

The Company’s Level 2 financial instruments are valued using market prices on less active markets with observable valuation inputs such as interest rates and yield curves.

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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 December 31, 2024 and 2023, respectively.

Fair Value of Financial Instruments

Short-term investments are carried at fair value.

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 Convertible Senior Notes are carried at amortized cost on the consolidated balance sheets (see Note 7, “Debt”).

The Company estimated the fair value of its convertible senior notes based on Level 2 quoted market prices as follows (in thousands):

Fair Value Measurements at

December 31, 2024 December 31, 2023

Convertible Senior Notes due 2025

$ 39,130 $ 271,688

Convertible Senior Notes due 2029

Total fair value of outstanding convertible senior notes

$ 446,882 $ 271,688

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

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

These noncancellable operating leases have initial lease terms from two years to thirteen years .

Leases with an initial term of 12 months or less (Short-term Lease) are expensed as incurred, and are not recorded as right-of-use leased assets and lease liabilities on the Company’s consolidated balance sheets.

The Company is required to recognize operating lease right-of-use assets and liabilities, and begin recording lease expense when the Company takes possession of the leased property (Commencement Date).

The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Because the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease Commencement Date to determine the operating lease right-of-use assets and liabilities based on the present value of future lease payments over the lease term.

Certain leases include an option to renew, with renewal terms that can extend the lease term for additional periods.

The exercise of lease renewal options is at the Company’s sole discretion.

For renewal options that are reasonably certain at the lease Commencement Date of being exercised, the Company includes the renewal option period in the lease term.

Certain leases include an option to renew, with renewal terms that can extend the lease term for additional periods at the Company’s sole discretion.

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.

Headquarters Lease

In September 2021, the Company entered into a lease agreement for 181,949 square feet of general administrative, laboratory, and research and development office space (the Premises) located on High Bluff Drive in San Diego, California (Headquarters Lease).

Possession of the Premises will be tendered to the Company by the landlord in two phases, with Phase I consisting of 143,850 rentable square feet, and Phase II consisting of 38,099 rentable square feet.

The Headquarters Lease also includes a first right of offer with respect to an additional 16,154 rentable square feet of general office space at December 31, 2023, should the space become available.

The Phase I Commencement Date occurred in March 2022 when the Company was tendered possession of the Phase I portion of the Premises, and rent payments commenced in September 2022 (Phase I Rent Commencement Date).

The Phase II Commencement Date is expected to occur upon the earlier of (i) the date upon which the Company first commences business in the Phase II portion of the Premises, and (ii) May 1, 2025 (Phase II Rent Commencement Date).

Possession of the Premises was to be tendered to the Company in two phases, with Phase I consisting of 143,850 rentable square feet, and Phase II consisting of 38,099 rentable square feet.

The Headquarters Lease term expires in April 2035.

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The Headquarters Lease term was determined assuming the renewal options would not be exercised.

The initial base rent for the Headquarters Lease is approximately $ 906,000 per month beginning on the Phase I Rent Commencement Date, and the base rent increases by approximately $ 255,000 per month on the Phase II Rent Commencement Date.

The monthly base rent will increase by 3.0 % on each annual anniversary of the respective Rent Commencement Date.

In addition to the monthly base rent, the Company is required to pay its proportionate share of certain ongoing operating expenses throughout the duration of the lease.

No base rent, other than the proportionate share of operating expenses, will be due for the Phase I portion of the Premises for months two through nine following the Phase I Rent Commencement Date, and for the Phase II portion of the Premises for months two through five following the Phase II Rent Commencement Date.

The Company recognized operating lease right-of-use assets and corresponding operating lease liabilities of $ 107.5 million on the consolidated balance sheet on the Phase I Commencement Date in the first quarter of 2022.

In December 2023, the Company entered into an agreement to sublease the Phase II portion of the Premises under its Headquarters Lease from January 2025 through March 2029.

In December 2023, the Company entered into an agreement to sublease the Phase II portion of the leased premises under the Headquarters Lease, from January 2025 through March 2029.

Future minimum payments for base rent due under Phase II of the Headquarters Lease, net of sublease rent, are estimated to be $ 2.2 million in total for 2025 through 2028, and $ 23.2 million in total for 2029 through 2035.

Operating Lease Termination and Impairment Charges

In the second quarter of 2023, the Company began using Phase I of the Headquarters Lease for operations that previously occupied 77,458 square feet of leased space located on Roselle Street (Roselle leases) in San Diego, California.

The Roselle leases expired in May 2023.

Also in the second quarter of 2023, the Company relocated operations that occupied 73,929 square feet of leased space on Vista Sorrento Parkway in San Diego, California (Vista Sorrento Lease) to the new Headquarters Lease location.

During the second quarter of 2023, in connection with permanently ceasing use of the Vista Sorrento facility, 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.

Estimates used to determine the present value of future cash flows over the remaining lease term included projected sublease income and a discount rate.

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 consisting primarily of leasehold improvements, and was recorded as a component of selling, general and administrative expenses in the consolidated statement of operations.

During the fourth quarter of 2022, the Company recorded $ 12.4 million of lease termination and impairment charges primarily related to its customer and technical support office space in Boise, Idaho.

The $ 12.4 million charge consisted of a $ 6.7 million loss on disposal of fixed assets, including leasehold improvements, furniture and fixtures, $ 3.8 million net loss on lease termination, and $ 1.9 million impairment of operating lease right-of-use assets, and was recorded as a component of selling, general and administrative expenses in the consolidated statement of operations.

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 consolidated statement of operations.

Supplemental Lease Disclosure Information

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

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Total lease cost $ 14,363 $ 27,303 $ 24,273

Lease Liabilities

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

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

Lease Payments

Cash paid for amounts included in the measurement of lease liabilities, representing operating cash flows, were as follows (in thousands):

Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were as follows:

Year Ended December 31,

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As of December 31, 2024, the Phase II commencement date for the Headquarters Lease had not yet occurred.

Accordingly, the consolidated balance sheet at December 31, 2023 does not include operating lease right-of-use assets and operating lease liabilities, and the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 do not include any lease costs, related to Phase II of the Headquarters Lease.

Accordingly, the consolidated balance sheets at December 31, 2024 and December 31, 2023 did not include operating lease right-of-use assets and operating lease liabilities, and the consolidated statements of operations for the twelve months ended December 31, 2024, and 2023 did not include any lease costs related to Phase II of the Headquarters Lease.

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

Because the incremental borrowing rate will not be available until the Phase II Commencement Date, which is currently estimated to occur in the first quarter of 2025, we are not yet able to determine the Phase II operating lease right-of-use assets and liabilities.

Convertible Senior Notes

In May 2020, the Company completed an offering of $ 287.5 million aggregate principal amount of unsecured Convertible Senior Notes with a stated interest rate of 1.50 % and a maturity date of May 1, 2025 (Notes).

Convertible Senior Notes Due 2029

On March 8, 2024, the Company completed an offering of $ 316.3 million aggregate principal amount of 1.50 % Convertible Senior Notes due 2029 (the 2029 Notes).

The proceeds from the issuance of the 2029 Notes were $ 306.8 million, net of debt issuance costs.

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.

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 consolidated statement of operations for the year ended December 31, 2024.

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

The Company used $ 30.0 million of the net proceeds to repurchase shares of the Company’s common stock from certain purchasers of the 2029 Notes at a purchase price equal to the last reported sale price per share of the Company’s common stock on March 5, 2024, which was $ 27.105 per share.

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 2029 Notes are the Company’s senior unsecured obligations.

Interest is payable in cash semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2024, at a rate of 1.50 % per year.

The 2029 Notes mature on March 15, 2029 unless repurchased, redeemed, or converted in accordance with their terms prior to the maturity date.

The initial conversion rate for the 2029 Notes is 28.9361 shares of common stock per $1,000 principal amount of the 2029 Notes, which is equivalent to an initial conversion price of approximately $ 34.56 per share of the Company’s common stock (2029 Notes Conversion Price).

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 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 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;

• during the five business day period after any ten consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of the 2029 Notes for each trading day of the measurement 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 2029 Notes on such trading day;

• if the Company calls such 2029 Notes for redemption, at any time before the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2029 Notes called (or deemed called) for redemption;

• on the occurrence of specified corporate events.

On or after December 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2029 Notes, in integral multiples of $1,000 principal amount, at any time, regardless of the foregoing circumstances.

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.

Convertible Senior Notes Due 2025

In May 2020, the Company completed an offering of $ 287.5 million aggregate principal amount of 1.50 % Convertible Senior Notes due 2025 (the 2025 Notes).

The proceeds from the issuance of the Notes were $ 244.6 million, net of debt issuance costs and cash used to pay the cost of the capped call transactions (Capped Call Transactions) discussed below.

In March 2024, the Company repurchased for cash $ 246.7 million aggregate principal amount of the 2025 Notes, concurrently with the pricing of the 2029 Notes in privately negotiated transactions.

The 2025 Notes are the Company’s senior unsecured obligations.

Interest is payable in cash semi-annually in arrears beginning on November 1, 2020 at a rate of 1.50 % per year.

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

The 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 Notes, which is equivalent to an initial conversion price of $ 112.57 (Conversion Price) per share of the Company’s common stock.

As of December 31, 2024 the outstanding balance of the 2025 Notes was classified in current liabilities on the Company’s consolidated balance sheet.

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.

The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2025 Notes.

The Company has the option to redeem for cash all or any portion of the Notes on or after May 6, 2023 if the last reported sale price of the Company’s common stock has been at least 130 % of the 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 Notes to be redeemed, plus accrued and unpaid interest.

The Company has the option to redeem for cash all or any portion of the 2025 Notes on or after May 6, 2023 if the last reported sale price of the Company’s common stock has been at least 130 % of the 2025 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 2025 Notes to be redeemed, plus accrued and unpaid interest.

No sinking fund is provided for the 2025 Notes.

Holders of the Notes may convert all or a portion of their 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 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 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 Notes on such trading day;

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

• on the occurrence of specified corporate events.

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.

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.

From 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.

Holders of the 2025 Notes who convert in connection with a make-whole fundamental change or in connection with a redemption are entitled to an increase in the conversion rate.

Additionally, in the event of a fundamental change, holders of the 2025 Notes may require us to repurchase all or a portion of the 2025 Notes at a price equal to 100 % of the principal amount of the Notes, plus any accrued and unpaid interest.

In accounting for the issuance of the Notes in 2020, the Company separated the Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments, which do not have an associated convertible feature.

The carrying amount of the equity component representing the conversion option for the Notes was recorded as a debt discount, which was being amortized to interest expense.

On January 1, 2021, the Company early adopted ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting for convertible instruments.

The Company adopted the new standard using the modified retrospective method, and accordingly, recorded a net reduction to accumulated deficit of $ 9.0 million, a decrease to additional paid-in capital of $ 85.8 million, and an increase to convertible senior notes, net - long-term of $ 76.8 million to reflect the impact of the accounting change.

Beginning January 1, 2021, the Notes have been accounted for as a single liability measured at amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

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

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

December 31, 2024 December 31, 2023

Principal amount:

Convertible Senior Notes Due 2025

$ 40,760 $ 287,500

Convertible Senior Notes Due 2029

Total principal amount

357,010 287,500

Unamortized debt issuance costs ( 8,074 ) ( 2,465 )

Net carrying amount $ 285,035 $ 283,232

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

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

As of December 31, 2023, the unamortized debt issuance costs of $ 2.5 million associated with the Notes will be amortized to interest expense, at an effective interest rate of 2.2 % over the remaining period of approximately 1.3 years.

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

This additional interest continued to accrue at a rate of 0.50 % per annum on the outstanding principal amount of the Notes until November 2, 2023.

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

The Company paid all overdue amounts related to this matter in November 2023.

Total debt, net

$ 348,936 $ 285,035

current portion

Long-term senior convertible notes

$ 308,266 $ 285,035

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

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

As of December 31, 2024, the if-converted value of the 2029 Notes exceeded the principal amount by $ 13.4 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 to approximately $ 3.3 million.

The additional accrued interest was fully paid during the fourth quarter of 2023.

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

Year Ended December 31,

2024 2023 2022

Effective interest rate:

Convertible Senior Notes Due 2025

2.1 % 2.2 % 2.2 %

Convertible Senior Notes Due 2029

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

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

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Total interest expense $ 7,067 $ 9,368 $ 6,209

(1) Contractual interest expense for the year ended December 31, 2023 includes $ 3.3 million of additional interest as discussed above.

(1) Contractual interest expense for the year ended December 31, 2023 included $ 3.3 million of additional interest as discussed above.

2029 Capped Call Transactions

In connection with the issuance of the Notes, the Company entered into Capped Call Transactions in May 2020 with certain counterparties at a net cost of $ 34.1 million.

The Capped Call Transactions are intended to reduce potential dilution to holders of the Company’s common stock beyond the conversion price of $ 112.57 , up to a conversion price of $ 173.18 on any conversion of the Notes, or to offset any cash payments the Company is required to make in excess of the principal amount of such converted Notes, as the case may be, with such reduction or offset subject to a cap.

The cap price of the Capped Call Transactions is initially $ 173.18 per share of the Company’s common stock, representing a premium of 100 % above the last reported sale price of $ 86.59 per share of the Company’s common stock on May 12, 2020, and is subject to certain adjustments under the terms of the Capped Call Transactions.

Conditions that cause adjustments to the initial strike price of the Capped Call Transactions mirror conditions that result in corresponding adjustments for the Notes.

For accounting purposes, the Capped Call Transactions are separate transactions, and not part of the terms of the Notes, while they are integrated for federal tax purposes.

As these transactions met certain criteria under the applicable accounting guidance, the Capped Call Transactions were recorded in stockholders' equity and were not accounted for as derivatives.

The cost of the Capped Call Transactions was recorded as a reduction of the Company’s additional paid-in capital in the Company’s consolidated balance sheet and will not be remeasured.

Line of Credit

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

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

The Company terminated the Revolving Line of Credit Agreement in January 2024, with no borrowings made thereunder.

In connection with the issuance of the 2029 Notes, the Company entered into Capped Call Transactions in March 2024 with certain counterparties at a net cost of $ 15.8 million (2029 Capped Call Transactions).

The 2029 Capped Call Transactions are expected generally to reduce potential dilution to the Common Stock upon any conversion of the 2029 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $ 42.0128 per share, and is subject to certain adjustments under the terms of the 2029 Capped Call Transactions.

2025 Capped Call Transactions

In connection with the issuance of the 2025 Notes, the Company entered into Capped Call Transactions in May 2020 with certain counterparties at a net cost of $ 34.1 million (2025 Capped Call Transactions).

The 2025 Capped Call Transactions are expected generally to reduce potential dilution to the Common Stock upon any conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2025 Notes, as the case may be, with such reduction or offset subject to a cap.

The cap price of the 2025 Capped Call Transactions is initially $ 173.18 per share of the Company’s common stock, and is subject to certain adjustments under the terms of the 2025 Capped Call Transactions.

In connection with the repurchase of certain 2025 Notes, the Company entered into unwind agreements with the existing option counterparties on March 5, 2024 to terminate a portion of the existing 2025 Capped Call Transactions in a notional amount corresponding to the amount of 2025 Notes repurchased (the Unwind Transactions).

In connection with the Unwind Transactions, the Company received $ 0.2 million in cash as a termination payment in respect of the portion of the existing 2025 Capped Call Transactions that were unwound.

The amount received was based generally on the termination values of the unwound portions of the existing 2025 Capped Call Transactions.

For accounting purposes, each of the capped call transactions described above are separate transactions, and not part of the terms of the 2029 Notes or the 2025 Notes.

As these transactions met certain criteria under the applicable accounting guidance, each of the capped call transactions were recorded in stockholders’ equity and were not accounted for as derivatives.

The cost of the transactions was recorded as a reduction of the Company’s additional paid-in capital in the Company’s consolidated balance sheet and will not be remeasured.

Promissory Note Payable

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The promissory note accrues interest at the rate of 5.0 % per year, and becomes due and payable upon the first sale or license of the commercialized product.

At December 31, 2023 and 2022, the loan balance of $ 4.7 million was included as a component of other long-term liabilities on the consolidated balance sheets.

At December 31, 2024 and 2023, the loan balance of $ 4.8 million and $ 4.7 million, respectively, was included as a component of other long-term liabilities on the consolidated balance sheets.

Stockholders’ Equity

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In May 2023, the Company’s stockholders approved the 2023 Long-Term Incentive Plan (2023 Plan), under which 2,602,184 shares of common stock were initially reserved for issuance.

Under the 2023 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units to individuals who are then employees, officers, directors or consultants of the Company.

Under the 2023 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units to individuals who are employees, officers, directors or consultants of the Company at the time of grant.

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 Options

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Stock options have an exercise price equal to the closing price of the Company's common stock on the applicable award date.

Stock options granted before the second quarter of 2022 generally vest over a four-year period as to 25 % of the underlying shares on the first anniversary of the grant date, with the balance of the options vesting monthly over the following three years .

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

Stock options granted before 2022 generally vested over a four-year period as to 25 % of the underlying shares on the first anniversary of the grant date, with the balance of the options vesting monthly over the following three years .

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

The following table summarizes stock option activities under the Company’s stock incentive plans:

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Restricted stock units (RSUs) have a grant value equal to the closing price of the Company’s common stock on the award date.

RSUs granted before March 2022 generally vest over a four-year period based only on continuous service as to 25 % of the underlying shares on the first anniversary of the award, with the balance of the RSUs vesting quarterly over the following three years .

RSUs granted before March 2022 generally vest over a four-year period based on continuous service as to 25 % of the underlying shares on the first anniversary of the award, with the balance of the RSUs vesting quarterly over the following three years .

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

In addition, the Company granted 110,074 , 53,662 and 25,674 performance-based RSUs during the years ended December 31, 2023, 2022 and 2021, respectively.

The Company estimated the fair value of performance-based RSUs at the date of grant using the intrinsic value method and the probability that the specified performance metrics will be met.

These awards vest upon the Company’s actual performance relative to predefined performance metrics and subject to the awardee’s continuous service through the respective December 31, 2024 and 2025 measurement dates as defined in the award agreements.

In addition, the Company granted 151,660 , 110,074 and 53,662 performance-based RSUs during the years ended December 31, 2024, 2023 and 2022, respectively, of which 151,660 , 92,308 and 48,139 units remained outstanding at December 31, 2024.

The Company estimated the fair value of performance-based RSUs at the date of grant using the closing price of the Company’s common stock on the date of grant, and the probability that the specified performance metrics of the performance-based RSU would be met.

These awards vest upon the Company’s actual performance relative to predefined performance metrics and subject to the awardee’s continuous service through the respective measurement dates as defined in the award agreements.

For certain performance-based RSUs with market-based criteria, the Company used a Monte Carlo methodology to estimate the fair value at the date of grant.

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The Company estimates the fair value of stock options using the Black-Scholes option pricing model on the grant date.

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

Stock Options

Year Ended December 31,

2023 2022 2021

Weighted average grant date fair value (per share) N/A $ 42.16 $ 56.89

Risk-free interest rate N/A 2.7 % 1.0 %

Dividend yield N/A 0.0 % 0.0 %

Expected volatility N/A 72.0 % 75.1 %

Expected term (in years) N/A 5.8 6.1

No stock options were granted in 2024 or 2023.

For the year ended December 31, 2022, the Company’s assumptions used in the Black-Scholes model were as follows:

weighted average grant date fair value of $ 42.16 per share, risk-free interest rate of 2.7 %, dividend yield of 0.0 %, expected volatility of 72.0 %, and expected term of 5.8 years.

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

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Risk-free Interest Rate .

The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S.

Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

The risk-free interest rate assumption was based on the United States Treasury’s rates for United States Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

Expected Dividend Yield .

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Employee Benefits

Employee 401(k) Plan

The Company has a defined contribution 401(k) plan for employees in the United States who are at least 18 years of age.

Defined Contribution Plans

The Company has defined contribution plans for its employees.

The Company’s largest defined contribution plan is the 401(k) plan for employees in the United States who are at least 18 years of age.

Employees are eligible to participate in the plan beginning on the first day of the calendar month following their date of hire.

Unless they affirmatively elect otherwise, employees are automatically enrolled in the plan following 30 days from date of rehire or entry date.

Unless they affirmatively elect otherwise, employees are automatically enrolled in the plan following 30 days from date of hire or entry date.

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.

The total cost recognized by the Company for the 401(k) plan was $ 4.2 million and $ 4.2 million, respectively, for the years ended December 31, 2023 and 2022.

The Company did not provide a matching contribution prior to 2022.

The total cost recognized by the Company for the 401(k) plan was $ 4.6 million, $ 4.2 million and $ 4.2 million, respectively, for the years ended December 31, 2024, 2023 and 2022.

The Company’s contributions for its defined contribution plans for employees outside the United States were not material for each of the years ended December 31, 2024, 2023 and 2022 .

The income (loss) before provision for income taxes for the Company’s operations was as follows (in thousands):

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State income tax, net of federal benefit ( 1,444 ) ( 1,313 ) ( 926 )

Convertible debt leg-out

Warrants revaluation — — ( 31 )

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Acquired IPR&D expenses — 14,938 6,518

Cross-border tax impacts

( 1,422 ) ( 307 ) 31

Foreign rate differential

Other 1,159 1,374 894

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Lease liabilities 29,165 31,037

Warranty reserve

Other 8,610 11,992

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NOL generated after January 1, 2018, is subject to 80% limitation in accordance with the Tax Cuts and Jobs Act of 2017.

The remaining federal net operating loss carryforwards of $ 89.6 million will begin to expire in 2033, and state tax loss carryforwards continue to expire in 2024, unless previously utilized.

The remaining federal net operating loss carryforwards of $ 83.2 million will begin to expire in 2033, and state tax loss carryforwards continue to expire.

The remaining California NOL carryforwards of $ 182.4 million will begin expiring in 2029.

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As a result, the Company recognized deferred tax assets, net of contra reserve, of approximately $ 5.0 million in 2023.

The Company included these deferred tax assets in its components of deferred tax assets in the table above, to the extent that such deferred tax assets are available for future utilization, and the balances are fully offset by valuation allowance as of December 31, 2023.

The evaluation of uncertainty in a tax position is a two-step process.

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The Company’s tax years from 2006 (inception) are subject to examination by the United States and state authorities due to the carry forward of unutilized NOLs and research and development credits.

In 2021 the OECD announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%.

Subsequently multiple sets of administrative guidance have been issued.

Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024, including the European Union Member States, with the adoption of additional components in later years or announced their plans to enact legislation in future years.

We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions we operate in.

Undistributed earnings of the foreign subsidiaries are indefinitely reinvested.

Thus, the Company has not recognized any deferred taxes on foreign unremitted earnings.

Business Segment and Geographic Information

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The Company is organized based on its current product portfolio, which consists primarily of insulin pumps, single-use insulin cartridges and infusion sets for the storage and delivery of insulin.

The Company views its operations and manages its business as one segment and a single reporting unit because key operating decisions and resource allocations are made by the CODM using consolidated financial data.

The Company views its operations and manages its business as one reporting segment because key operating decisions and resource allocations are made by the CODM using consolidated financial data.

Accordingly, the Company is organized as a single operating segment and therefore a single reportable segment:

Insulin Pumps and Supplies.

The Company’s CODM is the Chief Executive Officer (CEO), who evaluates segment performance based on segment net income (loss) on a consolidated basis.

Segment net income (loss) was consistent with the net loss amounts reported in the Company’s consolidated statement of operations and comprehensive loss for the years ended December 31, 2024, 2023, and 2022.

There were no significant segment expenses that are regularly provided to the CODM other than those reported in the Company’s consolidated statement of operations and comprehensive loss for the years ended December 31, 2024, 2023, and 2022.

The Company’s CODM is provided segment assets information on a consolidated basis for the evaluation of company performance.

Total segment assets were consistent with total assets reported in the Company’s consolidated balance sheets for December 31, 2024 and 2023, respectively.

Disaggregation of Revenue

Segment revenues were consistent with revenue reported in the Company’s consolidated statement of operations and comprehensive loss for the years ended December 31, 2024, 2023, and 2022.

The Company primarily sells its products through national and regional distributors in the United States on a non-exclusive basis, and through distribution partners outside the United States.

In the United States and Canada, the Company also uses a direct sales force.

The Company disaggregates its revenue by geography and by major sales channel as management believes these categories best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors.

The Company disaggregates its revenue by geography, major sales channel and product as management believes these categories best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors.

Revenues by Geographic Region and Customer Sales Channel

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Total Sales $ 940,203 $ 747,718 $ 801,217

Revenues by Product

During the years ended December 31, 2024, 2023 and 2022, sales by product were as follows (in thousands):

Year Ended December 31,

2024 2023 2022

$ 434,169 $ 365,842 $ 431,907

Supplies and other

475,785 406,983 372,859

Net revenue recognized (deferred) for Tandem Choice program

30,249 ( 25,107 ) ( 3,549 )

Total Sales 940,203 747,718 801,217

Sales to distributors accounted for 61 %, 64 %, and 65 % of the Company’s total United States sales for the years ended December 31, 2024, 2023 and 2022, respectively.

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AMF Medical Acquisition

On December 10, 2022, the Company entered into a Share Purchase Agreement (Purchase Agreement) with AMF Medical SA, a corporation organized and existing under the laws of Switzerland (AMF Medical), and its shareholders to acquire all of the registered shares of AMF Medical (Transaction).

AMF Medical is the developer of the Sigi Patch Pump, which is designed to be an ergonomic, rechargeable patch pump that reduces the burden of managing diabetes through its use of pre-filled insulin cartridges.

The Sigi Patch Pump is under development and not commercially available.

On December 10, 2022, the Company entered into a Share Purchase Agreement (Purchase Agreement) to acquire all of the registered shares of AMF Medical (Original Transaction).

AMF Medical is the original developer of the Sigi Patch Pump, which continued to be under development and was not yet commercially available as of December 31, 2024.

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 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 United States Food and Drug Administration 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 December 31, 2023, the contingencies related to the earnout milestones were not yet resolved and, therefore, the related amounts were not included in the fair value of the asset acquired and were not recognized as a liability on the consolidated balance sheet at December 31, 2023.

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

As of December 31, 2022, the previous strategic investment was included as a component of other long-term assets on the consolidated balance sheet (see Note 2, “Summary of Significant Accounting Policies”).

The total aggregate consideration for the Original 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 were to become payable upon the achievement of certain milestones, and were comprised 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 up to CHF 91.2 million upon obtaining regulatory clearance from the FDA of an automated controller enabled (ACE) pump.

The contingent consideration was to be recognized as each contingency was resolved and the respective consideration was paid or became payable.

The transaction was accounted for as an asset acquisition as substantially all the value of the gross assets was concentrated in a single asset.

The Company recorded a $ 78.8 million charge in 2023 representing the value of acquired in-process research and development assets with no alternative future use, and acquisition related expenses, on its consolidated statements of operations in acquired in-process research and development expenses.

The Company’s results of operations for the year ended December 31, 2023 included the operating results of AMF Medical since the date of acquisition.

In January 2025, the Company entered into a revised agreement that removed contingent liabilities previously outlined in the Original Transaction.

The Company agreed to pay CHF 40 million in January 2025 and a final payment of CHF 28 million in October 2025.

All other payments outlined in the Original Transaction were removed based on the revised agreement.

The amounts due to be paid were recorded as a short-term accrued liability in the first quarter of 2025.

Capillary Biomedical Acquisition

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

The Company funded the purchase price using existing cash balances.

The transaction was accounted for as an asset acquisition as substantially all the value of the gross assets was concentrated in a single asset.

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Legal and Regulatory Matters

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

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

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

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

The complaint seeks unspecified monetary damages and other relief.

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

In November 2023, at the Unified Patent Court (UPC), Paris Central Division (UPC Paris), we filed a revocation action and an action for a declaration of non-infringement of EP Patent No.

2 196 231 B1 (the ’231 patent) against Roche Diabetes Care GmbH.

While Roche contends that Tandem’s t:slim X2 pump infringes the ‘231 patent, we contend that our t:slim X2 pump does not infringe the ‘231 patent.

Furthermore, we contend that the claims of the ‘231 patent are invalid over the prior art and should be revoked.

In February 2024, Roche filed an infringement action against Tandem and its distributor in Germany at the UPC, Hamburg Local Division (UPC Hamburg) contending that Tandem’s t:slim X2 pump, and the offering, marketing, using, importing, possessing, and supplying of such devices infringes certain claims of the ‘231 patent.

Roche seeks, among other things, damages and other monetary relief, costs and expenses of the legal proceedings, and an order to cease and desist the allegedly infringing activities.

At the UPC Hamburg, Tandem has asserted that the t:slim X2 pump does not infringe the claims of the ‘231 patent and Tandem’s distributor has asserted that the t:slim X2 pump does not infringe the claims of the ‘231 patent and that the claims of the ‘231 patent are invalid and should be revoked.

On November 6, 2024, the UPC Paris held a hearing on Tandem’s action to revoke the claims of the ‘231 patent.

On December 18, 2024, the UPC Paris upheld the patent.

The hearing in Hamburg on invalidity and non-infringement is scheduled for June 12, 2025.

In December 2023, F.

Hoffman-La Roche AG and Roche Diabetes Care GmbH (collectively, Roche), filed an infringement action at the UPC, Dusseldorf Division (UPC Dusseldorf) against Tandem Diabetes Care, Inc.

and Tandem Diabetes Care Europe B.V.

and Tandem’s distributors in Germany, France, the Netherlands and Denmark.

Roche alleges our t:slim X2 insulin pump, and the offering, marketing, using, importing, possessing, and supplying of such devices infringe EP Patent No.

1 970 677 B1 (the ‘677 patent).

While Roche contends that Tandem’s t:slim X2 pump infringes the ‘677 patent, we contend that our t:slim X2 pump does not infringe the ‘677 patent.

Furthermore, we contend that the claims of the ‘677 patent are invalid over the prior art and should be revoked.

Roche seeks, among other things, damages and other monetary relief, costs and expenses of the legal proceedings, and an order to cease and desist the allegedly infringing activities.

On April 9, 2025, the UPC Dusseldorf will hold a hearing on Roche’s action asserting infringement of the ‘677 patent, Tandem and its distributors’ counterclaims that the t:slim X2 pump does not infringe the ‘677 patent, and Tandem and its distributors’ actions to revoke the claims of the ‘677 patent.

The action seeks unspecified monetary damages and other relief.

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 this lawsuit or determine the amount or range of potential losses associated with the lawsuit.

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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 December 31, 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.

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December 31, 2024 December 31, 2023

Sales $ 196,796 $ 220,502

$ 282,648 $ 196,796

Gross profit (1)(2)

$ 157,455 $ 93,295

Operating expenses $ 158,036 $ 128,355

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$ ( 581 ) $ ( 35,060 )

Net income (loss)

$ 755 $ ( 30,002 )

Net loss per share, basic and diluted

Basic net income (loss) per share

$ 0.01 $ ( 0.46 )

Weighted average shares used to compute basic and diluted net loss per share

Weighted average shares used to compute basic net income (loss) per share

65,939 65,369

For the three months ended December 31, 2023 and 2022, 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.

Diluted net income (loss) per share

$ 0.01 $ ( 0.46 )

Weighted average shares used to compute diluted net income (loss) per share

66,157 65,369

(1) The Company recognized revenue of $ 30.2 million and deferred revenue of $ 25.1 million for the quarters ended December 31, 2024 and 2023, respectively, as a result of the Tandem Choice program (see Note 2, “Summary of Significant Accounting Policies”) .

(2) For the quarter ended December 31, 2024, the Company recognized charges to cost of sales of $ 0.6 million for Tandem Choice fulfillments in 2024, with no corresponding charge in 2023.

The numerator and denominator of the basic and diluted net income per share computations are calculated as follows for the three months ended December 31, 2024 (in thousands).

For the Quarter Ended

December 31, 2024

Net income - basic and diluted

Weighted average shares outstanding - basic 65,939

Dilutive common share equivalents:

Options to purchase common stock 112

Warrants to purchase common stock 59

Awards to be granted under the ESPP 47

Weighted average shares outstanding - diluted 66,157

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

1 unchanged sentence

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-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk