Tandem Diabetes Care, Inc. (TNDM) Earnings Call Transcript & Summary

Well, listen, thanks, everybody, for joining us. We're very pleased to have with again Tandem Diabetes. John Sheridan, President and CEO; Leigh Vosseller, Executive Vice President and CFO. My name is Matt Miksic, I cover medical supplies and devices at Credit Suisse. And as I mentioned, we're pleased to be able to host you again this year. Thanks for coming.

Absolutely. Good to see you.

And so I thought it might be helpful to start with -- as some people may know. And I think if we look at the chart on the stock to see is that strangely, you had a very strong Q3. And -- but the stock has responded due to some comments that you made on the call. And so I'd say -- I'm imagining you're getting a fair amount of questions about this, but maybe start first with the results that you delivered, if you could -- how you came out of the quarter guiding? And then sort of -- some of the announcements that you made on sales and service capacity, particularly in the U.S. changes that you are making now?

Sure. We had a fantastic quarter, and I think it would have been fantastic at any point in time, but it was particularly strong. I think when you consider some of the headwinds we faced with COVID this period in time. And so we actually mentioned this in our second quarter call that in the June time frame, we were seeing an unusual seasonality that was just people taking time off. I mean it was well-deserved time off. People hadn't really had a chance to do that in a long time. But that's pretty much what we were seeing happening. And then things are opening up. The Delta variant came out, and then we saw almost a rapid return to the typical COVID kind of an environment. And then on top of that, one of the other things that really affected I think the performance in the quarter was really the -- it was the staffing situation that some of the endo-offices were actually experiencing. I mean they were experiencing the same retention issues that everybody has right now. And as a result of that, they didn't have staff. They had to spread out the time between some of the endo visits. So I would say we had a very, very strong performance in a difficult environment. And the good news, though, is that the -- as we've gone into the fourth quarter, we have seen a notable step-up in demand as we've entered the October time frame. And we've seen -- as people's deductibles begin to reset, which is typically what drives the growth that we see here in the fourth quarter. So a strong quarter, I think across the board. I mean, we saw strong revenue growth. We saw increase in margin year-over-year. We saw operating margin increase year-over-year. So I think we're very pleased with how things went.

Great. Yes. And I think -- I mean this is a hypothesis, but is it possible to add I think folks have gotten so accustomed to the idea that collective surgeries are having these problems in hospitals and having those problems. But diabetes is great. Diabetes is benefited from telehealth and diabetes is -- it doesn't require an overnight stay, and diabetes has been kind of flowing through with technology in any case with really strong growth through the dynamic. And so the idea that somehow you're being affected staffing levels at endo-offices and some of the things that I'd ask you to comment on in terms of productivity, the return to in-person sales and support from some higher percentage of telehealth. All those things just maybe just as a little bit of a surprise.

I think it was just -- there was unusual perturbations in the endo offices that we hadn't seen before. And I think we responded very well to it, but it was happening pretty quickly. And I think the issues with regards to the sales force. I mean, we have grown so quickly that our sales force productivity has just it's probably industry-leading highs right now. And this time of year, we typically evaluate the sales force. We look at the productivity of various regions. We decide whether or not to separate or split territories and those are sort of things. And so this is a normal process that we go through. And as a result, when we look at the current demand and we look at the growth we have next year, we've decided to add 15 territories. And so we're going to go from 95 to 110. That's a larger number than we have in the past. And I think that we see -- again, we've been experiencing great growth. And I do want to say that it's not that the sales organization wasn't able to capture all of the demand. It was more of a quality of life issue for the salespeople themselves, as we kind of move from -- at home to in office, there was a lot of work that they had administrative -- just administrative work that they had taken on at home that was just more difficult to do when they're out when things opened up and they're back into physicians' offices. So we respond to that. We're hiring people now. I think we're definitely trying to just improve the quality of life of these people and just get things back on to a normal track.

Okay. So do you think there were some -- I don't know, sort of a misinterpretation of your comments hereby not to get into the mind of investors and analysts too much, but do you think that given the sort of reaction that you got that some books just maybe took these 2 comments that you made to think that, okay, now you're facing capacity issues, now you're going to have trouble meeting demand, whereas as you just mentioned, that from your perspective, wasn't so much the case. Do you think that there was some misunderstanding?

Yes, I think so. I think the fact that the sort of -- we actually saw -- I mean, we expect -- we guided to, we would see flat to slightly up in U.S. demand, and it was slightly down, it was very slightly down. And I think that's the thing that I think people probably responded to the most. And again, as we look at what actually happened during the quarter, there is just these unusual situations that occurred in endo practices that I think was really what was driving that. And as I said, we see -- we've seen a step up in the demand here in the fourth quarter. So we expect to finish strong for the year.

Got it. Okay. And the kind of ads that you're making, just to put it in perspective, if you look at your sales growth, sales force expansion, territory expansion over the past year, you were 95 in the third quarter, and you're going to 110, maybe just for perspective, where were you in the first quarter of this last year?

It was -- I think we were at 95 also. I think we -- I think in -- this time last year, I think we had 90, we went to 90 to 95. So it was a smaller increase, but we did the same thing roughly at the same time frame.

Okay. So a lot of helpful color on that subject. I mean, anything else about sort of productivity or the swing from -- it sounds like there was a confluence of issues. But if one of them was an increasing activity levels in person versus telemedicine, anything on those trends that you highlight or feel like you should -- thought...

Well, I mean I think that we -- offices did open up, but there still is a significant amount of telehealth. I mean we're still seeing a lot of virtual visits, a lot of virtual training. And we anticipate that, that's going to stick around. I mean we -- obviously, when we went from just when we initially entered into the COVID situation 1.5 years ago, it was almost 100% virtual in a really short period of time. And I would say it's kind of moderated to a certain extent. And today, I would say, it's more like 50-50. And I think it's going to stay around. I think it's something that's highly -- it increases the efficiency and productivity of our sales teams by enabling us to do remote training. People that the trainers themselves don't have to be in cars, driving back and forth. And so it's a positive to us. And I think it's also a convenience to the patients as well. So I think that we anticipate that this is going to stick around. And obviously, we were successful in that environment, and we continue to look forward to having.

So one of the questions that has come up -- as had this pretty great ramp of success as you enhance the algorithm expanded capabilities to Control-IQ. Is a question of competition, what happens when there's launches and so on? And I thought that one of you the metrics you shared on the call was sort of conversion or renewal rates. Could you talk a little bit about those trends and also just maybe answer the question of how much or if at all, if you're seeing any sort of shift in the competitive landscape?

Why don't I start off with that competitive landscape, Leigh, and then you could hit a renewals question. I think that we feel very confident that Control-IQ as it is today is going to be very competitive against the new devices coming to market here in the near future. And one reason we feel that way is that we're currently in or U.S. countries where Medtronic device is available. I mean, it's available in Germany and in the U.K. And in both cases, we're doing quite well. I mean we look at the -- that device as -- it's absolutely an improvement to the algorithm, but it's the same system, the same form factor, the same sensor. And I think that there's a credibility issue that they have right now with the endo community. And I think that we have done extremely well. We have the confidence and the endos love it and they see the results in their patient populations. And so I think we're going to compete quite well against Medtronic. When you look at the patch device with Insulet, it's going to have an algorithm on it. But I still -- there's a big decision that comes down to tube versus tubeless. And we think there's a lot of flexibility that we provide by having a tubed pump. You have just a variety of infusion sets with different cannula angles, different types of adhesives. So you have the flexibility to pick and choose what is best for you. You also have the flexibility to remove it, if you like, take a holiday and you don't lose your insulin. And you can move it around on your body, which we've done quite a bit of market research. And that flexibility is a really important thing for people, just because there's -- your life changes in an hour, you may want to be in a different close, you might move to a beach or is something like that. And the ability to be able to move the pump or change it or take it off is really, really huge. So that's an important factor. And I think the next piece is that we have a pipeline of products that are coming out next year that are going to be very exciting. And I think also, they are going to be competitive with the patch device. We have t:sport coming out and t:sport is roughly the same form factor. It's also -- and I think having it at the same size as the POD device, we think that people will now -- in addition to the tubeless argument, there's now the size, which I think is also an important variable. And I think that flexibility that comes with that is going to change the competitive environment to a certain extent. So we feel confident we're going to compete against both. I think that the reality is what's going to happen and Insulet as I said this, they plan to roll out. They're going to have a limited launch, and they're going to go slowly at first. And I think that -- what happens is when they actually get to the point where they're moving at the pace they intend to at a more accelerated pace, we're going to have t:sport in the market right around that same timing. So I think t:sport is going to compete effectively against that device.

Right. Yes, it's an interesting topic, I guess, because one way to look at it is there's 3 pumps. The other way to look at it is there's 2 tube pumps and 1 tubeless pump -- Is that kind of -- I think that defines some of the boundaries of sort of play a little bit more than one might initially think.

Yes. I mean I think the way we look at it is when T sports on the market, there will be 4 pumps and 2 of them will be ours.

That's right. That's a good way to look at it. So that pipeline, we were going to talk about renewals.

Yes. I'll let, Leigh, you want to?

Sure. So just to add to that part about the source of where our new pumps have come from, I'll start with the vast majority have been people new to Tandem. And so to the point about the competitive dynamics, and we've still been very healthily running at that 50-50 level of people from MDI and competitive conversions, even in the third quarter with all of the dynamics going on in the world. As you look to next year, I still expect the preponderance to come from people new to Tandem, but renewals are growing to rapidly become a significant or more significant portion of our business opportunity. And if you think about it, you look back to how many people bought pumps from us 4 years ago. And in 2017, that was about 17,000 pumps. If you think about 2018, which will be the beginning of new opportunities for us next year, it doubled to about 34,000. So that's where renewals will start to grow and become a bigger piece of the business over time. One thing I always caution people to remember is, well, it's a 4-year warranty cycle. So at the end of 4 years, people's warranties do expire. It generally takes about a year, I would say, on average for us to bring people through the cycle. And it's not really about us and our ability to bring them and bear to that convincing people to buy that next pump. So where the first step-up in renewals most meaningful is going to be in the fourth quarter of this year. There will be a bit of a lag, but it's a good leading indicator of the opportunity that's coming for us in the coming quarters.

Got it. Okay. That's helpful, Lee. Back to the pipeline first. So you talked about T sport, but maybe the sort of mobile bolus is something that you're sort of waiting on. You've had some dialogue back and forth with the FDA as we talked about on the call. I guess talk maybe a little bit about oftentimes, folks try to describe where they think they are in the process and how confident they are in now -- by line to walk when you're talking about the FDA. But what can you tell us for what sources of confidence do you have on that filing and the timing?

Well, as we said, we received quite well, first of all, we filed about a year ago in the late spring time frame. We got questions and then we responded to the questions. We did a very thorough job. And the questions weren't really questions about concerns that the FDA may have its more a matter of that was about how the user interacts with the app. And so it was more about how incorporating training onto the app that had in-app training capabilities. That was just something we had to add that we didn't anticipate in the original submission. So we did a very thorough job. We made the change as we responded to that those questions. And we really haven't heard much other than they acknowledge that they've received it. And I think this is kind of the situation that most people find themselves in today. It's just the resources that I have at the FDA have been reassigned to COVID, and we -- we're just not getting any interaction at this point in time. I think when we do have the interaction, it's not going to take long because I think we did a very good job, and we were pretty far along in the process when we receive the questions. So I don't think it's going to be a long wait once we do have that interaction start back up again. We just needed to happen at this point in time. And I did say on the call that here we are, we're at almost mid-November. I think that it's the likelihood that it's going to happen before the end of the year is probably low at this point in time. So I would say it's more likely in early 2022 approval, and we're going to be in a position to move quickly to get this back on the market -- to get it on the market. And I think that we have the Tandem device updater, which is probably -- that's probably where the most use will come -- immediately is that as we said on the call, there's about 200,000 people out there who are using Control-IQ. And this will be a free pump update that you can use the device updater to have as long as you're in warranty.

Yes. That's helpful. I was at a cardiovascular conference last week, where FDA presented just on this topic, It was talking about the massive ramp and requests and approvals that they've been facing and struggling get indicate where the bandwidth has been, and we haven't like they're coming out of that just yet. So.

Yes. I mean I think what's happened probably is that I don't think they anticipated the demand from COVID on the FDA to be as -- to last as long as it has. And clearly, I think there's just a lot still going on there. We're hoping that next year as the pediatric indication comes out for the COVID's vaccine, sorry, that will be the last big thing that they've got to work on.

Excellent. Okay. We look forward to that. So another thing you talked about on the call was sort of the type 2 feasibility and preparation for a clinical study. So maybe if you could talk a little bit about what the sort of metrics and goalposts are for that clinical program? What do you think that you need to demonstrate to get approval for the type 2?

Yes. So we have -- I think it's between 5% and 10% of our current population that use -- that we have today has type 2. And we presented data already on several thousand people at some -- at the recent conferences just to show that Control-IQ is very effective in improving the therapeutic outcomes for people with type 2. And we had initially hoped that, that would be adequate to suffice for the FDA. But in conversations, they wanted to see a more controlled clinical study. So what we're doing right now is there's a feasibility study that we're going to start here this month. And the feasibility study will just basically allow us to look at -- there's type 2 is segment if there's people who have high insulin usage and different requirements. So we just need to be sure that we incorporate data -- clinical data that -- those different segments of the type 2 community into our clinical study. So we'll be looking at that from a feasibility point of view here shortly. And once we have that data, it will inform us so that we can actually make a recommendation on what the design for a pivotal study will look like early next year. And that being the case, we would anticipate that we would run the study and submit the data to the FDA and hopefully probably late '22, early '23 have approval, and it will allow us to get Control-IQ into the type 2 community. It's being used right now, as we've said, but we can't market. And so as soon as we get the approval, we'll be able to market. And I think roughly that time frame is when we're going to see T sport. So T sport with Control-IQ approved for the type 2 community in my mind, is going to be a strong product to help us drive demand there.

Yes. That kind of dovetails into my next question, which is sort of looking at mobile bolus is obviously important. And regardless of what happens with these other indications. But if you look at T sport, you look at type 2, you look at pediatric, I guess which one of these do you think exactly kind of the answer, but it's going to be the most significant sort of, call it, sustaining or enhancing growth over the next, say, 2, 3 years?

Yes. I mean I think that when you look at mobile bolus, it's another software update that we're providing to our in-warranty customer base. And so I think that over time, we've proven that we -- as we innovate, we'll make the innovations available to our user community, which is a big deal. And so as you and Leigh were just talking about renewals, I think when we continue to do this, I think it builds confidence in the people who have been using our product, and it really does drive the I think that the success in having them come back to Tandem when their warranty is over. So that's -- I don't think it's -- I don't think mobile bolus is going to drive sort of an uptick in the revenue. But I do think it's going to help us on the renewal side, just because we're continuing to demonstrate that ability. Clearly, I think that when you bring T sport to market, we think T sport is going to be another game changer. And like we've seen with Control-IQ and with Basal-IQ, we have seen an inflection point in our revenue stream. So we expect T sport to do that. We continue to do a great deal of market research on T sport. And what we are continuing to see is that the community that's most interested in is it's MDIs, people who have been using pens and needles and pediatrics. And so over the last couple of years, we've seen a significant growth in the MDI conversion rate to pump therapy, we think that T sport will continue to drive that and again, continue to enable us to grow rapidly in time, as well as our improvements that we plan to make to the control acute algorithms over time. And as we announced the other day, we're going to have an R&D day in about a month and share with you some of the longer-term pipeline initiatives that we have and we're very excited about.

And anything maybe just an unimportant question, but is there anything on the sort of coverage front to consider as you roll like a new sort of platform like T sport into the market?

Leigh, why don't you take that?

Yes. So T sport was designed particularly to fit within the coding structure that we use today. So it helps us with speed to market and that was intentional. We do have opportunities as we continue to engage with payers to think about if there are alternative models or even focus as much on potential for value-based or outcomes type arrangements. So with all of the clinical data that we've amassed, it's opening doors at payers organizations to speak with people that we been able to engage with before. It brings us to the table with medical directors and folks who are interested more in the clinical side of the story. And so all that coming together gives us the opportunity to discuss with these types of clinical benefits that you see, what kind of savings will you see in your system? And are there ways we can work together in order to enhance reimbursement for us overall, and they can see the value of those cost savings.

So what types of incremental savings you would you highlight just initially for T sport versus t:slim?

Yes. So it's really Control-IQ that brings those benefits. T sport is with it being a different, it looks different to payers. So there's a potential opportunity for us to think about other ways to consider reimbursement that might be different from t:slim. Today, we'll go straightforward with what we've been doing. But what we want to do is help them understand the form factor and the similarities and differences in what it might bring -- why it might bring more people to the table, who would be interested in pump therapy that maybe weren't before. But really, it's the clinical benefits, which will cover both pumps and that's where we expect that we can get enhanced reimbursement as you look at reductions in hypoglycemic events, which in turn means reductions in hospitalizations and ER visits.

Got it. And I don't know whether this is something that you think about as a growth driver, but you've talked a fair amount I think you may have just mentioned it, John, you were working with Abbott for a year now and you've long relationship with Dexcom. But Tandem t:slim or T sport plus Libre, what does that do, if anything, to the trajectory of market adoption and demand and willingness to kick on pumps as a therapy?

Well, I think that CGM has been very helpful to us. I think as people start to use CGM, they get comfortable with the device on their body, they see the benefits of working with a larger company that this improves the overall management of their diabetes and they're more likely to consider pump therapy at that point in time. So both the G7 and the Libre technology are big improvements from what's on the market today. So I think that, that is going to be of interest and drive demand for us. And then as you've mentioned with Abbott, they're in a lot of markets today that we're not. They have a great presence OUS. They're strong in the type 2 community. So there's a number of benefits, I think, that come along from working with both. But Abbott's new for us, and I think it just opens up is a great deal of opportunity.

Sure. Yes. I mean not to overthink it but they do capture a fair amount of the CGM market.

Yes, absolutely.

Different strata, different type of patient, perhaps.

Yes, it's all about providing choice. I mean people prefer that for reasons and others prefer the DexCom system, and we think providing both is as a win-win scenario.

Sure. Yes. No. I mean we're seeing a patient if they're going to CGM to close loop to have to change their sensor. I mean, you might say that's not a huge thing, but it is a thing. And so we're moving that barrier -- can't be anything but positive, I guess.

Absolutely. Yes, I totally agree with you on that.

And then you mentioned something else that I thought was interesting was -- we talked a little bit about this before, the experience -- experiential data that you have, 30 million patient days of data, I'm sure you understand better than I do, the value of that asset in terms of domain data to drive all kinds of opportunities in AI, machine learning and enhancing the platform or enhancing user outcomes are experienced. What are you doing with that data? What are your plans to sort of enhance the platform with that asset?

Well, I mean, initially, I think it's just with Control-IQ, we're able to now see how people interact with it, the sort of the benefits that provides areas that are opportunities and we can mine that data and actually look at specific improvements to Control-IQ that we think can even improve the therapeutic outcomes more so than it have already occurred. So that's a huge opportunity is to continue to use the data to drive the pipeline and algorithm advancements that we're making to support the pump. But then there's also the physician. I mean we have -- we can look at data now over longer periods of time, and we can share the information with the physicians. We can say, you've got this group of people who are in control and probably don't need any attention here. Here are people now that could use attention. And here's recommendations on some things that you could do to better increase their -- improve their therapeutic outcomes. And so decision support is something that's absolutely next-generation thought for us, things that we're thinking about now that as we are today, we're improving the lives of the people living with diabetes by providing great technology, we can improve the efficiency of the office practices. The same thing, reduce the burden that diabetes causes on these offices by providing decision support tools. And they're all integrated into our digital health initiative. I mean we have Tandem Source coming to market here next year, it's really designed to support the physician and the practice. By novel, we're going to provide novel ways of looking at data. Ultimately, we could have algorithms that exist in Tandem Source that would recommend various changes to therapy for the patient population of these physicians and again, improve their efficiencies. So I mean these are things that -- now that we have this data, we can use it over time just to drive overall improvement in therapeutic outcomes.

Sure. Well, that seems to be the call of the day. Just to take that kind of data and provide tools and assistance and support to clinicians.

So the other -- one, the other thing that we have is now we have close relationships with the payers that we work with. And with this data, we can connect it with data that they have as well. And we can show that we now Control-IQ is reducing adverse events and it's reducing hospitalizations. And we're going to present data here shortly that shows that. And I think that by sharing our data with the health -- the payer organizations, they see it as well. And I think that once they see that we're substantially reducing the cost of diabetes for the institution, that's a big deal as well. And I think that it's a point that Leigh and I have made in the past that, we think that we're saving a great deal of money in the healthcare system. And as a result of that, there's an opportunity for us to get additional reimbursement for the products with these algorithms from the payer organizations in time.

It makes a lot of sense. So let's see, we've got a about 10 minutes left. I wanted to touch on sort of margin expectations in some of the puts and takes and environmental factors that go into your thinking for how you imagine those things might evolve throughout 2020. Leigh, would you mind talking a little bit about that?

Not at all. So I'll start with from a gross margin perspective, this year, we've guided to about 54%. But our long-term goal is to be at 60% or better. We've set that target through the end of 2024 at this point. And there are a number of ways that we can get to that gross margin expectation. And that's what's important because it's not all relying on one factor, much like our sales, we have many different ways we can drive the opportunity. But first, it starts with we've had lengthy conversations here about reimbursement. So it's continuing to partner with payers in any way, shape or form to enhance that reimbursement that we're receiving today. It's moving to more direct contracts. It's also been within those direct contracts looking at ways to optimize it, maybe some sort of value-based or outcome-type opportunities there. So reimbursement is one piece of that. When you get to the cost side of it, T sport is another big element. That product itself was designed with cost savings compared to the t:slim. And in fact, any new product that we're designing and developing, we're also focused on cost efficiency. So T sport, the most near-term product right now at R&D Day, we'll talk more about future opportunities there. And then last of all, everything else goes into the bucket of scale and your general Lean Six Sigma-type initiatives that you apply to your manufacturing operations. And so just as we continue to utilize our overhead as we grow the volumes, that will provide natural benefit. One of the major initiatives this past year, as we've been doubling our cartridge manufacturing capacity, we're doing that with the assistance of a third-party manufacturer. So we're already have been seeing the benefit of that, and that will continue to generate more return next year in particular. And so as you think about that for the step from here to 60% in the future, it will be -- you think you can think of it as linear at this point. Some of these opportunities will come depending on certain timings of activities. Payers are hard to -- it's hard to estimate when exactly those will come to the table can be all at 1 time, it can be here and there. But anyway, that's -- I would think about it linearly for now as we look forward. Then as you push down to the operating margin line, we've made significant improvement in our operating margins in the last few years in particular. A lot of that has come with the leverage that we've generated from our international operations. As you think about that business, the pump reimbursed is lower than the U.S., but the surprise has been higher reimbursement. So when you think about that in the future as the installed base size grows tremendously with the international operations, that continues to minimize the disruption or the pressure on the gross margin. And since we don't have to build that entire operating infrastructure to support it, it's bringing great benefit to the operating margin line. We'll continue to invest in R&D, but we're also seeking leverage opportunities in our SG&A-type functions as we think about the future outcome.

Okay. So -- and on the -- you mentioned the sort of payer enhanced reimbursement or improving reimbursement, what's that process look like? I mean I think we're all -- I asked the question because we're all familiar that sometimes it can be challenging to sort of bring those folks to the table. It's been a great part of the diabetes technology growth story that they are at the table, increasingly, even for type 2 in places where we would have never thought that they would come. But what are the opportunities and maybe some sense of what you have to deliver and what's the reasonable timing of then responding with something more in terms of economic?

Sure. I think 1 important element to start with is just there's been remarkable stability in pricing for the DME channel in particular when it comes to insulin pumps. And so it's continuing to build on that, continuing to show that what we're offering is enhancing or above and beyond what they've been reimbursing for in the past. And it started with the clinical trials data and information. So as we would go to payers, we would start to share that type of information. But honestly, there's a reluctant sometimes to believe that something designed in a trial is going to have the same real-world benefit. And so now that we have almost 2 years with Control-IQ data, we're able to take that and package it up and take it to the payers. And I think John mentioned earlier, as we're thinking about our digital platforms. With the payers being one of what we consider as one of our customers, we're building tools particularly where we can show pre and post outcomes data for subscribers within a particular payer population. So there are ways that we can take this information where before when we would go to the payers, we were talking to people that I would call it more in the contracting function. So it's more about the paperwork side of it as we package this data up and take it to payers, medical directors are coming to the meeting. So we're able to get to a different level of the organization that clinical viewpoint. And that's what we need in order to get someone to think of us differently as just a standard insulin pump that was the more -- as much of a convenience feature in the past, now is delivering true therapy. And so we can measure some of those benefits with them together, it takes the combination of data we have and data they have in order to do that. And so we've already started to see some level of success. Just in some payer groups, it's resulted in just an incremental reimbursement, which is great as a starting point. In other cases, we want to take a further level and work more towards those value-based type contracts.

Okay. So maybe shifting gears here in just the last couple of minutes, a lot of the markets that we cover kind of involve the medical device innovator and sort of the patient and the clinician and the sort of disease where it target and then there's that kind of like channel of innovation that goes back and forth. And I think the diabetes technology and the market of caring for helping people manage their disease and diabetes is different anyways, but one way is this kind of community aspect and interoperability mandate that all companies in the space have to get on board with. And so if you could talk a little bit about -- you are obviously, tremendous amount of partnering with CGM companies. And how you feel about things like smart hens -- how other areas of integration or sort of cooperation, I don't know if it in to strategic investment or if it's just stronger partnerships that you see to sort of drive the whole field forward?

Yes. I completely agree with you. I think that the -- when you look at diabetes, in particular, there's been a tremendous amount of innovation, and there's a tremendous amount coming. And as that happens, I think we really do provide much better products for people living with diabetes. And so -- I mean it's -- competition is a great thing for the diabetes community. And when you look at CGM and pumps and different types of devices, they're all moving, I think, the bar in a meaningful, just to provide better therapy. And I think that you're right about partnerships. Partnerships really helped us get to where we are today. Clearly, with the CGM companies with TypeZero and now with Dexcom, when it comes to the algorithm, those all helped us a great deal. And I think we continue to look at opportunities that are existing. We clearly have invested in Secure, which is a low-profile injector that's very, it's very discrete and it's something that I think is going to be very popular with the type 2 community because of the discretion that comes along with it and the simplicity of using it. So it's a very segmented market and we're going to be looking at opportunities that really address the segments. And clearly, when you look at Secure, it's a segment we're not part of. And so there's a great deal to learn from having that partnership. I would say that there's also continued opportunity to partner with academic institutions on technology development. I mean, as Wes will discuss when we come to our Investor Day -- our R&D Day in a few weeks. We're going to be talking about the next-generation pump technology that we're looking at. And I think that partnerships are obviously a way to help us accelerate that. And I think that's something that we will be -- at least it will be apparent as we go forward that we are looking at new generations of technology, smaller, more discrete devices that potentially would use concentrated insulins. And I think that -- we think that's where things are going. And that's what we'll talk about, I think, when we're gather in a few weeks.

Well, there's a lot of questions on that front. I'm sure which we'll have time to cover on December 6. Look forward to that and very much appreciate you taking the time just now with us today.

Yes, absolutely. It was great talking to you, Matt. Thanks very much.

Take care.