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Tandem Diabetes (TNDM) Q2 Earnings Rise Y/Y, Sales View Up

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Tandem Diabetes Care, Inc.’s TNDM reported GAAP net earnings per share (EPS) for the quarter was 6 cents, a significant improvement from the year-ago net loss of 45 cents. The Zacks Consensus Estimate is pegged at a loss of 8 cents.

Revenues

Revenues in the quarter came in at $172.1 million, up 57.6% year over year and beating the Zacks Consensus Estimate by 19%. The strength in the top line was driven by new customer demand and increasing renewal purchases from the company’s installed base.

The company registered record-high sales in the second quarter by expanding and further penetrating in the U.S. insulin pump market. Rapid international uptake of Tandem Diabetes’ technologies in regions where business opportunities are still in early stages also contributed to top-line growth.

Quarter in Detail

Tandem Diabetes registered international sales of $44.6 million in the quarter under review, recording a 123% rise from second-quarter 2020. Domestic sales totaled $127.6 million, up 43% year over year.

International pump shipments surged 233% to 13,152 pumps. Domestic pump shipments jumped 40% year over year to 20,665 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 company believes that surge in pump shipments resulted from continued adoption of t:slim X2 technology by both new and existing customers and more healthcare providers prescribing the t:slim X2 than ever before.

Margins

Gross profit in the second quarter was $92.5 million, marking 69.9% year-over-year growth. Gross margin was 53.7%, indicating an expansion of 392 basis points (bps).

Selling, general and administrative expenses rose 31.9% to $66.5 million in the quarter under review. Research and development expenses also increased 28.2% to $20.5 million.

Overall operating income was $5.4 million against the year-ago loss of $12 million.

Financial Position

Tandem Diabetes exited second-quarter 2021 with cash and cash equivalents, and short-term investments of $545.3 million compared with $513.4 million at the end of first-quarter 2021.

2021 Sales Guidance Raised

For 2021, the sales projection has been raised to $670-$685 million, indicating annual sales growth of 34% to 37% (earlier projection for 2021 was in the range of $625-$640 million). The Zacks Consensus Estimate for 2021 revenues is pegged at $634.71 million.

Full-year international sales are expected in the range of $160-$165 million, which suggests annual sales growth of 92% to 98%. This also represents a significant improvement from the prior guidance of $125-$130 million.

Our Take

Tandem Diabetes delivered better-than-expected revenues for the second quarter of 2021. The topline registered year-over-year growth despite pandemic-led business disruptions. Solid performance in the quarter was driven by both new customer demand and increasing renewal purchases from the company’s installed base. Strong domestic and international pump sales along with robust domestic and international pump shipments are impressive. Continued adoption of the company’s t:slim X2 insulin pumps by both new and existing users look encouraging as well. International expansion of the Control-IQ technology, with its latest launch in Canada buoys optimism. Expansion of gross margin and a raised 2021 sales forecast bode well for the stock.

However, the unabated spread of coronavirus continues to pose challenges to the company’s operations. A rise in operating costs is discouraging as well.

Zacks Rank and Key Picks

Tandem Diabetes currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced their quarterly results are Encompass Health Corporation EHC, West Pharmaceutical Services, Inc. WST and Bruker Corporation BRKR.

Encompass Health, carrying a Zacks Rank #1 (Strong Buy), reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%.You can see the complete list of today’s Zacks #1 Rank stocks here.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy), reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

Bruker, sporting a Zacks Rank #2, reported second-quarter 2021 adjusted EPS of 44 cents, surpassing the Zacks Consensus Estimate by 10%. Revenues of $570.8 million surpassed the Zacks Consensus Estimate by 6.1%.


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