Executives from Tandem Diabetes Care (NASDAQ:TNDM) outlined how a shift toward the pharmacy channel, an expanding product portfolio, and international buildout are expected to reshape the company’s revenue mix and margin profile over the next several years during an investor discussion hosted by Oppenheimer medical device analyst Suraj Kalia.
Pharmacy channel seen as near-term margin driver and longer-term volume catalyst
CFO Leigh Vosseller said Tandem has already begun to see financial benefits from early steps into the pharmacy channel. She noted that last year marked the company’s first move into pharmacy, initially with the Mobi platform using a reimbursement approach that resembled the durable medical equipment (DME) model. Midway through the year, she said management saw “great validation” of assumptions about pharmacy’s benefits for both patients and physicians, prompting Tandem to move faster than planned by adding t:slim supplies to the pharmacy channel.
Looking ahead, Vosseller described a more significant business model shift starting in 2026, in which supplies are expected to move into the pharmacy channel and patients would be able to obtain a pump at no cost if they choose Tandem. Under that model, she said the company expects roughly 10% of customers to be purchasing supplies via pharmacy on average across 2026, translating to pharmacy sales of about 15% for the year. Over the following two to three years, she said Tandem expects pharmacy sales to rise to about 70% of total sales.
Vosseller said the shift is expected to accelerate gross margin expansion. She stated the company expects to exit this year around 60% gross margin in Q4 and believes it can reach its long-standing 65% gross margin target “much earlier” than it would have without the pharmacy opportunity. She added that 65% is “not the end,” citing additional levers including international direct business and mix benefits as Mobi grows.
Pay-as-you-go model: PBM coverage, formulary access, and pricing still developing
Vosseller said pharmacy progress starts with pharmacy benefit manager (PBM) contracting, and Tandem now has contracts with the three major PBMs, providing access to about 80% of covered lives on PBM contracts. She added that the next step is formulary placement and that, under the company’s pay-as-you-go approach, about one-third of covered lives are currently on formulary.
On pricing, Vosseller reiterated that the company has discussed net pricing of about $350 per month, but characterized it as a modeling assumption while Tandem learns more about contract mix, rebate levels tied to preferred versus non-preferred placement and tiering, and the potential need for co-pay assistance. She said Tandem expects to remain competitive with market pricing and that management will update investors as more data comes in on how net pricing “settles in.”
Asked whether tubed versus tubeless devices could carry different pricing, Vosseller said form factor likely “doesn’t make a difference at all” in the near term, and that differentiation in reimbursement may ultimately be more tied to clinical capabilities such as algorithm advancements. CEO John Sheridan added that features like a fully closed-loop algorithm could create an opportunity to negotiate higher reimbursement, though he suggested pricing would be “relatively similar for both products” over the next couple of years.
Management: affordability and access could expand pump adoption
Vosseller argued the pharmacy channel could drive not only economics but also unit growth by lowering barriers for patients. She pointed to affordability as a key reason why only about 40% of people use insulin pumps today. She said the pharmacy channel allows Tandem to better influence out-of-pocket costs through co-pay assistance and, under the new model, by offering the pump itself at no cost. In contrast, she said patients in the DME channel often pay an average of $800 to $1,000 for a pump after meeting a deductible, and potentially more if the deductible has not been met.
Product roadmap: Mobi tubeless timing, Sigi positioning, and competitive factors
Sheridan said the pump market remains segmented, with users having different preferences for how they wear and interact with devices. He said Tandem intends to offer both tubed and tubeless options and highlighted that the tubeless segment is growing faster than the tubed segment, which he described as mid-single digit growth annually.
On the company’s upcoming tubeless offering, Sheridan said Tandem remains on track for a Q2 submission for Mobi tubeless and a second-half 2026 launch. He said the basis of competition has broadened from outcomes to include form factor and market access. Without pharmacy and a tubeless product, he said, Tandem faced a competitive disadvantage “even though we had the best algorithm.” He also said Mobi tubeless is expected to be an extended-wear device with a seven-day set, which he described as offering additional flexibility and convenience.
Regarding Sigi, Sheridan described it as a next-generation Mobi device that is expected to be smaller and more differentiated. He said the company views Mobi as having “life for several years,” and that launching Mobi tubeless first will allow Tandem to learn from market feedback and apply those learnings to Sigi as development continues.
International expansion and upcoming milestones, including ADA
Vosseller said the company’s largest expense increase in 2025 was in sales and marketing, driven by U.S. changes and initial investments for international markets, including hiring country leadership and building direct sales forces. She said additional investment is expected as the company prepares for further country launches, but described the approach as “self-funding,” aided by U.S. efficiencies as pharmacy grows and DME becomes a smaller part of the business.
Sheridan also discussed upcoming catalysts and conference plans, including product and integration updates anticipated at the American Diabetes Association (ADA) meeting in June. He cited additional sensor integrations, information about Android integration for Mobi, a filed pregnancy indication, and further discussion of Type 2 progress in the U.S. market.
He added that Tandem intends to launch Mobi into international markets in Q2 and to launch t:slim with FreeStyle Libre 3. He also said the company is working on 15-day Dexcom integration during Q2 and characterized Mobi tubeless and Mobi with FreeStyle Libre 3 as key upcoming developments.
About Tandem Diabetes Care (NASDAQ:TNDM)
Tandem Diabetes Care, Inc (NASDAQ: TNDM), headquartered in San Diego, California, is a medical device company focused on the design, development and commercialization of innovative insulin delivery systems for people with insulin-dependent diabetes. Founded in 2006, the company introduced its first product, the t:slim® Insulin Pump, in 2011 and has since built a portfolio of next-generation pumps featuring touchscreen interfaces, remote software updates and integrated continuous glucose monitoring (CGM) capabilities.
The company’s flagship offering, the t:slim X2® Insulin Pump, is engineered to work with leading CGM sensors and features automated insulin delivery algorithms that adjust basal insulin rates based on real-time glucose trends.
