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Tandem (TNDM) Posts Earnings in Q4, Revenues Top Estimates

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Tandem Diabetes Care, Inc. TNDM reported earnings per share of 2 cents in fourth-quarter 2018 compared with net loss of $1.23 posted in the year-ago period. The Zacks Consensus Estimate was pegged at a loss of 22 cents.

For the full year, the company registered loss of $2.55 per share, much narrower than the year-ago loss of $12.87 per share. The Zacks Consensus Estimate was pegged at a loss of $3.22 per share.

Revenues in Detail

Revenues in the quarter totaled $76.2 million, sailing past the Zacks Consensus Estimate by 34.9%. The top line also surged 89.1% from the year-ago quarter.

The roll-out of t:slim X2 with Basal-IQ technology, increased supply capacity and renewal sales, strengthening the company’s core business, along with its international launch, considerably drove top-line growth.

In the fourth quarter, Tandem Diabetes’ pump shipments soared 133% year over year to 16,168 pumps.Of these, 3,200 pumps were shipped to international markets. Accordingly, Tandem Diabetes recorded international sales of $7.1 million in the quarter.

Interestingly, the company had begun shipping pumps to select geographies for commencing international operations in August 2018.

For the full year, the company registered sales of $183.9 million, a 70.9% surge from the year-ago period. The reported figure also exceeded the Zacks Consensus Estimate by 11.9%.

Margins

Gross profit in the reported quarter came in at $41.5 million, significantly up 137.8% from the prior-year period. Gross margin came in at 54.5%, expanding 1116 basis points (bps) on benefits from a number of factors. These include increased production volumes, creating leverage of fixed overhead costs, manufacturing efficiencies gained in the new facility, a high percentage of pump sales and improved percentage of infusion set sales following the t:lock connector launch.

Total operating expenses came in at $40.9 million compared with $27.1 million in the prior-year quarter. Operating profit in the quarter under review was $0.56 million compared with operating loss of $9.5 million posted a year ago.

Guidance

Tandem has provided its guidance for full-year 2019. The company expects total sales in the range of $255-$270 million, reflecting annual sales growth of around 39-47% from 2018. The Zacks Consensus Estimate for revenues is pegged at $224.9 million, below management’s guided range.

Our Take

Tandem Diabetes posted better-than-expected top-line results in the fourth quarter. Strength in domestic sales, along with the t:slim X2 Insulin Pump’s recent launch in select international markets, bodes well for the company. The company’s sales guidance for 2019 also looks promising.  Also, favorable demographics in the diabetes market are expected to boost demand for Tandem Diabetes’ products.

However, heavy dependence on sales of insulin pumps and recurring operating losses are threats to the company.

Zacks Rank & Other Key Picks

Tandem Diabetes currently carries a Zacks Rank #2 (Buy).

Other top-ranked MedTech stocks that posted solid quarterly results are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corporation CNMD. 

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock carries a Zacks Rank #2 (Buy), currently. 

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2, at present.

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