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Tandem Diabetes (TNDM) Q1 Earnings Lag Estimates, Sales View Up

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Tandem Diabetes Care, Inc.’s TNDM reported GAAP loss per share of 23 cents for the first quarter of 2022 was wider than the loss of 8 cents per share in the year-ago period. This figure also compared unfavorably with the Zacks Consensus Estimate of break-even earnings.

Revenues

Revenues in the quarter came in at $175.9 million, up 24.7% year over year and beating the Zacks Consensus Estimate by 4.4%. The strength in the top line was driven by growth in the company’s installed base and robust pump shipments, both in and outside the United States.

Quarter in Detail

Tandem Diabetes registered sales of $44.6 million outside the United States in the quarter under review, recording a 18.4% rise from first-quarter 2021. Total sales in the United States came in at $131.3 million, up 27% year over year.

Pump shipments outside the United States surged 8.4% to 9,437 pumps. Meanwhile, U.S. pump shipments jumped 12.1% year over year to 18,658 units.

Tandem Diabetes Care, Inc. Price, Consensus and EPS Surprise

Tandem Diabetes Care, Inc. Price, Consensus and EPS Surprise
Tandem Diabetes Care, Inc. Price, Consensus and EPS Surprise

Tandem Diabetes Care, Inc. price-consensus-eps-surprise-chart | Tandem Diabetes Care, Inc. Quote

The surge in pump shipments outside the United States resulted from a remarkable growth in the number of customers compared to the year-ago period. Meanwhile, pump shipments within the United States benefitted from increasing new and renewal customers.

Margins

Gross profit in the first quarter was $91.1 million, marking 24.3% year-over-year growth. Gross margin was 51.8%, indicating a contraction of 18 basis points (bps).

Selling, general and administrative expenses rose 25.1% to $73.3 million in the quarter under review. Research and development expenses also increased 84.6% to $33.2 million.

The company registered an operating loss of $15.3 million in the first quarter.

Financial Position

Tandem Diabetes exited the first quarter of 2022 with cash and cash equivalents, and short-term investments of $635.4 million compared with $623.8 million recorded at the end of 2021.

2022 Guidance

Tandem Diabetes has updated its financial guidance for 2022.

For the year, sales are projected in the range of $850-$865 million (up from the prior projection of $845-$860 million), indicating annual sales growth of 21% to 23%. The Zacks Consensus Estimate for 2022 revenues is pegged at $851.24 million.

Full-year sales guidance for the United States is in the range of $635-$645 million (up from the prior estimated $630-$640 million).

The company has maintained its full-year sales guidance for outside the United States at the band of $215-$220 million.

Our Take

Tandem Diabetes exited the first quarter with better-than-expected revenues. The company delivered record sales growth in and outside the United States. Robust pump shipments in the quarter resulted from an increase in the company’s installed base. The company witnessed strong customer retention in the first quarter, primarily driven by the impressive positive response from the Control-IQ technology. Continued adoption of the company’s t:slim X2 insulin pumps looks encouraging. The raised sales guidance for 2022 also instills investors’ confidence.

However, the company’s earnings missed the Zacks Consensus Estimate. Contraction of gross margin is discouraging. The company incurred an operating loss in the quarter, raising apprehension.

Zacks Rank and Key Picks

Tandem Diabetes currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Alkermes plc ALKS, Medpace Holdings, Inc. MEDP and UnitedHealth Group Incorporated UNH.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.

Medpace reported first-quarter 2022 adjusted EPS of $1.69, which surpassed the Zacks Consensus Estimate by 34.1%. Revenues of $330.9 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Medpace has a historical growth rate of 27.3%. MEDP’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.


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