Tandem Diabetes Care, Inc.

Thank you for standing by and welcome to Tandem's second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, please press star 1-1 again. I would now like to hand the call over to Executive Vice President and Chief Administrative Officer Susan Morrison.

please go ahead thanks hello everyone and thank you for joining tandem's 2023 second quarter earnings call as a reminder today's discussion will include forward-looking statements these statements reflect management's expectations about future events product development timelines and financial performance and operating plans and speak only as of today's date there are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today and under the risk factors portion and elsewhere in our most recent annual report on Form 10-K, quarterly report on Form 10-Q. and in our other SEC filings. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or other factors. Today's discussion will also include references to a number of GAAP and non-GAAP financial measures. Non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core operating performance and reflects our ongoing business operations. We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting periods. Any non-GAAP information presented should not be considered as a substitution, independently or superior to results prepared in accordance with GAAP. Please refer to our earnings release, quarterly report on Form 10-Q, and the Investor Center portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. Today's call participants include John Sheridan, our President and CEO, and Lee Vossler, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we'll take questions. Thank you in advance for limiting yourself to one question before getting back into the queue. John, you're welcome to begin.

Thanks, Susan, and welcome everyone to today's call. Reflecting on TANF's performance in the first half of the year, and the second quarter in particular, I am proud of our execution across the business. We achieved our sales expectation while demonstrating operational improvement as we exceeded our profitability target and returned to positive adjusted EBITDA. We also made exceptional progress with our new product innovations by starting the rollout of Tandem Source, preparing for the launch of two new sensor integrations, and most recently, reaching the exciting milestone of FDA clearance for Tandem Mobis. With these four new products, we are expanding our reach into different customer segments of the market beyond where we operate today, providing additional choice to new and existing customers and how they manage their diabetes, and demonstrating our excellence in delivering digital solutions to optimize care. This sets us up for another exciting period in the company's history, reminiscent of when we first introduced Control IQ to the market. These new products are also important in fulfilling our vision of having a unique portfolio of devices that meet the diverse needs of people living with diabetes and reinforces our leadership in automated insulin delivery. We anticipate that this wave of innovation may create turbulence in the overall market in the near term. To ensure that we maintain the highest level of customer satisfaction during the busiest months of the year, as we previously discussed, we will be scaling these launches throughout the second half of the year and into 2024. Customer awareness and excitement is quickly building. and this may impact the timing of purchasing decisions, particularly as it relates to Tandem Mobi, as customers weigh access to new products against the reset of deductibles in January. With this backdrop, we have introduced new promotional pricing for our Tandem Choice program for the remainder of the year. The program now provides customers purchasing a new T-SLIM X2 access to Tandem Mobi once it becomes broadly available for $199, rather than $999 it was before clearance. This helps provide customers seamless access to current technologies and may reduce the pausing dynamic we've seen historically with new product launches between the time the FDA clears the product and its availability. Having said that, it's difficult to predict the impact that this will have on our sales the remainder of the year. For that reason, and in combination with an increasingly competitive environment worldwide, We feel it's prudent to reset our 2023 guidance with a low point for expectations and a starting baseline for 2024 while we focus on driving the business. By doing so, we are establishing a path for tandem to deliver sustainable growth driven by our market-leading innovation pipeline. As we prepare to expand our technology offerings this fall, we're building on our strong reputation and decade of experience offering high-quality diabetes solutions and services. This was evident in the second quarter as our T-SLIM X2 continues to stand out as the number one rated automated insulin delivery system in terms of overall customer satisfaction. This was repeatedly reinforced as I spoke directly with healthcare providers at the recent American Diabetes Association scientific sessions that took place here in San Diego. Providers spoke to the importance of their patients having options for wearability, the benefits of pump detachability, and how different infusion sets, materials, and cannula insertion angles impact their patient's comfort and user experience. These comments underscore the importance of recognizing that people need options in how they wear and how they use their AID systems and reinforce our strategy of enabling our customers to personalize multiple aspects of that system. Another highlight was the positive reaction to demonstrations of Tandem Source at our booth. Keep in mind, this is our global data management application that was designed specifically with clinicians in mind. It provides a central location and comprehensive reporting to view critical patient data so they can spot trends and put these insights into use with their patients. We began rolling it out in the United States in June and will continue to progress its launch in the coming months with plans to deploy it globally on a country-by-country basis thereafter. For HCPs, TandemSource becomes even more meaningful with TandemMobi. which offers smart phone control and will be continuously connected to the cloud via mobile app. For customers, it's a platform to see important therapy data, and we plan to build around this in the future by adding experience-enhancing features for our customers that streamline supply reordering and new feature trainings. The ADA conference also reinforced that there's currently a high level of activity in diabetes devices. And that related pressure is likely to continue as new offerings launch both in the U.S. and internationally. In the second quarter, we began hearing more from our distribution partners outside the United States about new pump entrants, only some of which we have experience selling against. Even with an anticipated increase in competition, our longer-term opportunity outside the United States is meaningful. Our T-SLIM X2 with control IQ has been shown to deliver immediate and sustained benefits in all populations. and we are still in the early stages of building market awareness internationally. In the near term, we're cautious that external pressures may increase in advance of our own new product launches, the first of which will be new CGM integrations. T-SLIM X2 integrations with Dexcom G7 and Freestyle Liberate 2 sensors are on track for a skilled launch beginning in the United States this fall. We anticipate that TSLMX2 will be the first FDA-cleared pump that will offer a user options in CGM sensor integrations. Choice of more than one CGM is not only a differentiator, it's the true realization of interoperability and empowers users to make the best sensor decision for their needs and preferences. We want our customers to have the benefits of the latest CGM technologies, and being first to market with these new CGMs is evidence of our commitment to enable access and lead in systems integration. It takes a lot of collaboration and coordination to launch and integrate CGM systems. I'd like to thank Dexcom for their continued partnership and Abbott for their new partnership as we bring the benefits of our AID systems to even more people living with diabetes. In the United States, we are planning for Dexcom G Center integration to be broadly available in the first part of Q4 and Freestyle Liberate 2 integration to be broadly available in the middle of Q4. These will be followed by international launches with Dexcom G7 and Freestyle Libre 3. The pump software updates for these integrations will be offered to all in-warranty customers for no charge and can be completed from a personal computer. Turning to our next new innovation, Tandem Mobi is the world's smallest durable automated insulin delivery system. Redefining durable pump miniaturization, Mobi is leading the way in creating a whole new category of devices for insulin therapy. I am particularly proud of this clearance as it's our first expansion to our family of pump hardware offerings and as an opportunity to bring the benefits of our technologies to a segment of people living with diabetes who otherwise would not likely choose to adopt pump therapy. Already, we're hearing from future customers who plan to choose Mobi for its discreet small size, multiple wear options, iOS control, and our number one rated AID algorithms. In the second quarter, nearly two-thirds of our sales leadership reported that they are experiencing some level of new customer pausing and making their purchasing decisions to await the availability of Moby, and reported that this dynamic was even greater with our own renewal customers. This enthusiasm has grown even more following FDA clearance, and thousands of people have signed up on our website and through our call center for more information on Moby's availability. We plan to kick off our scale launch of Mobi with a limited release in early Q4, followed by broad availability in early 2024. Launching a new pump platform and the associated physician and customer education that goes along with doing it right takes significant time from our talented sales and clinical team. The fourth quarter is a period in which their time is already in high demand due to the seasonality of our U.S. business as they work to help customers maximize their insurance benefits before the typical reset at the end of the year. This is why making Mobi available through a scaled launch is even more important during this period. Turning to our pipeline beyond these near-term offerings, we are continuing development work for our hardware portfolio, which includes the T-SLIM X3, an extended wearer infusion set, a tubeless cartridge and infusion site feature for MOBI, and CIGI, our durable patch pump. We are also very active clinically. Enrollment for a study of people with type 2 diabetes using Control IQ, which includes a randomized control arm, began in the second quarter. We are also preparing for a clinical study set, our extended wear infusion set, and the first in-human trial for CIGI to begin in the fourth quarter this year. As you can see, we are executing well and are confident that we have the most exciting product portfolio in insulin therapy management. It's part of our commitment to relentless innovation, revolutionary customer experience, and operational excellence, which are mission-driven building blocks of our company. I'd like to thank our employees for their hard work in delivering on each of these in the second quarter. The team's fortitude and passion is how we are navigating 2023 and positioning Tandem for success. With that, I'd like to turn the call over to Lee to provide more information on the quarter and our guidance and expectations for the year. Here you go, Lee.