Tandem Diabetes Care Conference: Record 58% Margin, “Toby” Tubeless Mobi and Pharmacy Shift Ahead

Key Points

• Tandem reported a record fourth-quarter gross margin of 58%, driven primarily by pricing, rising Mobi volume and early movement of t:slim supplies into the pharmacy channel.
• The company is shifting U.S. sales to a pharmacy “pay-as-you-go” model that will cause a near-term $70–$80 million revenue headwind in 2026 but offers materially higher long‑term reimbursement (about 2x over four years and > 4x monthly vs DME), with ~20% of pumps forecast to ship through pharmacy in 2026 and pharmacy sales expected to reach ~70% in 2–3 years.
• Tandem is expanding direct international sales (live in Switzerland, Austria and the U.K. with an expected ASP uplift of at least 30%) and plans to submit its tubeless Mobi cartridge nicknamed “Toby” to the FDA in Q2 for a planned commercial rollout in the second half of the year, compatible with existing Mobi pumps.

Tandem Diabetes Care NASDAQ: TNDM executives discussed recent operating performance and a broad set of strategic initiatives during a webcast event, emphasizing fourth-quarter execution improvements, an international sales model transition, upcoming product milestones, and a major shift in U.S. reimbursement through the pharmacy channel.

Fourth-quarter momentum and margin expansion

Management said the fourth quarter reflected multiple initiatives “coming together” after a disruptive commercial transformation earlier in 2025. The company had expanded its sales force, introduced new tools and systems, and changed its go-to-market approach. Executives said disruption lasted longer than expected, but by the fourth quarter productivity improved and was supported by product and channel developments.

They cited several factors contributing to the quarter’s strength, including the launch of FreeStyle Libre 3 integration with the t:slim platform, the late-quarter launch of Mobi with Android compatibility, training the sales force to sell into the type 2 market, and a decision to shift t:slim X2 supplies into the pharmacy channel.

On profitability, the company highlighted fourth-quarter gross margin of 58%, which management described as the highest reported to date. Executives said price was the primary driver, with additional benefit from growing Mobi volume and early scale advantages, as well as the initial movement of t:slim supplies into pharmacy. They noted that even with less than 5% of the install base ordering supplies through pharmacy, pharmacy sales doubled from the third quarter to the fourth quarter and contributed to margin improvement.

International direct sales: early markets and expected uplift

Outside the U.S., the company described a transition toward a direct sales model in select markets, which required hiring sales teams, adding local leadership, building new systems, and navigating distributor transitions. Management said it went live with direct sales in Switzerland, Austria, and the U.K. in the first quarter and characterized early results as positive.

Executives said going direct provides business benefits including the removal of the “middleman” and direct reimbursement collection. They stated that in a given market, the average selling price (ASP) uplift is at least 30%. For 2026, they said direct sales are still expected to represent about 15% of sales.

On near-term financial impacts, management discussed headwinds tied to the transition, referencing approximately $7 million of headwind in 2025. They broke that into about $3 million from distributors reducing replenishment and about $4 million in the fourth quarter related mostly to buying back inventory. Regarding a $15 million headwind discussed for 2026, they said roughly $5 million would fall into the first quarter due to incomplete inventory activity, with the remainder expected later in the year, potentially spilling into early 2027. They added that additional market transitions could change the picture later, but said no further markets were being named at the event.

Product roadmap: expanding addressable markets and “Toby” tubeless for Mobi

Management outlined a portfolio approach to growth, describing near-term “scaling efforts” tied to recently launched capabilities and additional features expected throughout the year. They referenced plans to bring FreeStyle Libre 3 integration and the Mobi platform outside the U.S., and said the company expects to launch Dexcom 15-day technology in the U.S. They also emphasized that Mobi’s Android capability had only “very early access” in the fourth quarter and would expand in the first quarter.

Executives also discussed a new tubeless feature for Mobi that they said is internally nicknamed “Toby.” They described it as a new cartridge used with the same Mobi pump available today, enabling patch-pump-style wear. Key points included:

• Submission to the FDA is planned in the second quarter.
• The company described it as Tandem’s first patch pump offering that can be worn for up to 7 days.
• It would allow users to change the infusion site separately from changing insulin, which management said could reduce burden, particularly for higher-insulin-volume users.

Management said it is not able to promote the unapproved product and that physicians are currently unaware of it. They characterized the expected commercial launch as a second-half-of-the-year event, adding that the broader build is “really building towards 2027.” They also said a patient who buys a Mobi pump today would be able to use the tubeless form once the new supply becomes available, since it is the same pump.

On product mix, executives said new patient adoption remains a “healthy mix” between t:slim X2 and Mobi, noting t:slim’s 300-unit capacity as a driver for certain users, including people living with type 2 diabetes. They said portfolio decisions will continue to be evaluated based on demand.

Pharmacy channel and pay-as-you-go: higher supply reimbursement, near-term headwinds

A central theme of the discussion was the company’s move to a “pay-as-you-go” model in the U.S. through the pharmacy channel. Management framed pharmacy as a “win” for multiple stakeholders—patients, physicians, payers, and manufacturers—citing lower out-of-pocket costs for patients (with the ability to use co-pay assistance), more streamlined ordering for physicians, improved visibility and population-health management for payers, and higher reimbursement for manufacturers.

Executives said the company initially used Mobi as an entry point to educate the market about durable pumps in pharmacy, then expanded by moving t:slim supplies into pharmacy once it had more data and confidence it would not damage its established DME business.

On economics, management said that across a four-year patient life, reimbursement in pharmacy is expected to be about two times what it sees in DME, because reimbursement shifts from upfront pump payment to supplies over time. They also said that when comparing a month of supplies in pharmacy versus DME, pharmacy supplies reimbursement is more than four times DME.

The company described a sizable near-term revenue headwind from the transition, stating that 2026 includes an estimated $70 million to $80 million headwind. For modeling and performance metrics, management emphasized focusing on pump shipments rather than reported revenue during the early transition phase. They said:

• Pump shipments are expected to grow 10% to 11% year-over-year.
• In 2026, about 20% of pumps shipped are assumed to go through pharmacy.
• Less than 5% of U.S. sales went through pharmacy in 2025; management expects about 15% in 2026, with pharmacy sales reaching 70% or more in 2–3 years.
• For the install base, an average of about 10% is expected to order supplies in pharmacy during 2026, with the rate starting lower and exiting the year higher.

Management said the headwinds are most pronounced in the first year because the company no longer receives the historical ~$4,000 upfront pump reimbursement on day one for pay-as-you-go patients, and it can take many months—potentially more than a year—for the recurring supply stream to “break even” for a single new patient. However, they said shifting existing installed-base patients’ supplies into pharmacy can accelerate breakeven: executives stated that for every new pay-as-you-go pump shipped, moving two existing patients’ supply orders into pharmacy can allow breakeven in “five or six months” on both revenue and gross profit.

Executives also addressed retention concerns, arguing that customers can already switch to pharmacy-available offerings during a warranty period and that the company has seen patients who trial alternatives often return. They said the company will track pharmacy versus DME sales through kitting differences and monitor usage through its Tandem Source data-upload platform. They added that pharmacy contracting introduces formulary tiers and rebate dynamics, with annual reevaluation by payers and PBMs; contracts were described as going live in March, marking the official start of the pay-as-you-go rollout.

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.

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