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

Move on to the next presentation. And thank you, everybody, who has come physically into the room and that the snow didn't stop you from getting here. So thank you for that. And for everybody who is listening on the webcast. But this session is all about Tandem. And I'm absolutely thrilled to have Leigh and Susan here. So thank you so much for coming.

Thank for having us.

So what's funny is I had an entire set of questions that I had written before your earnings call. And then I wrote a second set of questions and some overlap, but I need to start with the fourth quarter and to start thinking about what you were the most surprised by when the numbers started coming together or maybe you just knew it all in advance, and it was perfect as planned. But as the numbers were coming together and you were preparing for that call, what really stood out for you?

Sure. I mean there are a number of things which makes us excited going into 2026 as well because this really underpins and gives us the momentum that we were looking for. And I'll start, were we surprised? I don't know if surprised is the word, but what we were happy to see is that everything was coming together. And so you may remember when we started in 2025, we talked a lot about a huge commercial transformation that we were undergoing. We were expanding our sales force. We were offering new tools to our teams. We are putting new systems into place, teaching them different ways to target and just approach the market. And that created some disruption. And we did expect disruption. It was disruptive for a bit longer than we expected. But in the fourth quarter, it really all started coming together. So we saw the sales force continue to grow in productivity across the year. And then we added to that with the launch of FreeStyle Libre 3 with t:slim. We also launched Mobi with Android late in the quarter. That was something we've been selling Mobi without access to Android operating system customers. And so that's a big add for us. We also trained the whole sales force to start selling type 2 because that was a slow rollout across the year. So a number of things coming together in a positive way. And then the decision that we made to shift t:slim supplies into the pharmacy channel really is, I think, the last big thing that precipitated the baseline for what we're looking at for 2026. And so it was just great to see we set a number of records sales, shipments, I mean, every margins, everything you could think about. And I think maybe I should add margins as being a very important element. We've been able to demonstrate revenue growth in the past, but one of the criticisms has been that you're not expanding your margins, and we did that in a really big way in the fourth quarter. So we couldn't have been more excited to share that news when we came out last week.

Okay. Was there a moment where you carried the one and you went, "Oh, wow".

A little bit.

Okay. That's good to know. I think most of my questions are on the U.S. pharmacy moment. So I'm going to actually pivot and start early on OUS. I know, right, shocking. We're just going to go all out. It is called unplugged. And if you think about the OUS pharmacy -- not pharmacy, OUS direct sales force, that's been the progress for quite some time. And can you walk through where you are in that transformation and how you're thinking about which geographies where you're just like checking the box and then which geographies you're like, yes, that one needs more help.

Yes. Yes. So what you're highlighting, it was a super busy year for us altogether because everything I just named was about the U.S. and its performance. But outside the U.S., we were preparing ourselves to go direct in a number of markets which means we had to hire direct sales forces. We had to put more leadership in the countries. We had to navigate the transition with our distributors, put all new systems into place. And we got all of that done last year. So we were ready and went live in Switzerland, Austria and the U.K. here in the first quarter. And that's just the beginning. So we're getting started there. We're engaging with customers. We're getting great responses. It's going very well so far. We're also preparing for the next wave. And so we have more markets to be named. We're not going to share that today, but in the fourth quarter and the first quarter of '27 that we're thinking about. And it's a great benefit for us as an organization. We get the benefit of eliminating the middleman so that we get all of the reimbursement directly. So in any given market, the ASP uplift is at least 30%, which is tremendous for the business. Now this year, it's still -- direct sales will still only be about 15% of our sales. But you can see this could be a great dynamic going forward as we continue to launch in more markets direct. So we're just super excited about that opportunity also to be close to the customer. So we actually get those engagement with the customers, with the physicians. We're setting our own reimbursement policies with the reimbursement agencies. And so all of that, we believe, will help us to grow the volumes too at a faster rate than we've been able to before. So it's good for the business overall. And I'm glad you asked about it first because it keeps getting missed, I think, with all of the hype around the pay-as-you-go model, which is super exciting, but it is a big part of our business that's growing, and we're excited about the opportunities there.

So I think in '26, there's a $15 million headwind from OUS. Now is that something that you get to the end of the year and you're like, okay, we got that done. Or is it $10 million in '27 and made up that number and so on and so forth?

Sure. So maybe just reflecting on 2025, we saw about a $7 million headwind from this transition. And it was in 2 pieces really across the year, what we were seeing is some of the distributors were just not replenishing their inventory levels as they were selling through to patients. And that equated to about $3 million. And then in the fourth quarter, we saw about $4 million, and that was mostly due to some inventory -- buying back some inventory. Not all of that was completed in the fourth quarter. So we're going to have a little that falls into the first quarter of '26, which is about $5 million of the $15 million you mentioned. The other $10 million, same thing, I expect it mostly to come around late in the year. It could trickle across the Q2 and Q3, and that should be the amount that is -- that we expect to see for the launches we expect in the fourth quarter and early '27.

So that will roll into maybe early '27 and then...

It should be done until we announce our next wave of markets. But I'll say right now, these are the ones that we're focused on. We don't have anything yet to share about future transitions.

Okay. That's very helpful. Currently, you're operating in 25 countries. There's got to be a certain number where you're like we really sell here, but not so much there. Is that the right way to think about it?

I just -- I guess I would just say there are different sizes. And so some markets are bigger than others. But every market that we're in, we have a big presence there, if you will. But in comparison to Germany or France, there are some much smaller markets. But we are in the markets where the reimbursement is good and there is an opportunity there. And so we wouldn't have spent the effort, the time the dollars to go there if there wasn't real opportunity for us as a business.

Okay. I want to talk a little bit about the U.S. market. And before we get to the pay-as-you-go business model, there's a lot of products that you have coming out. And I feel like in post earnings, I've spent more time on the pharmacy channel than like Pivot. So I need to think about. Talk us through how you're thinking about those products coming along over the next couple of quarters and how you think about sort of maybe -- and these are my words, rolling contribution as you look forward?

And I love the term rolling contribution because these are really scaling efforts. So as Leigh commented to, in the fourth quarter, we saw the launch of FreeStyle Libre 3 on t:slim. We'll be bringing that technology outside the United States. We'll be bringing the Mobi platform outside the United States. And then in the U.S., we'll be launching Dexcom 15-day technology, for example. So we have all of these different feature sets that we're expanding our addressable audience for. The other one I would highlight is Mobi Android capability, very early access in the fourth quarter that we'll be expanding here in the first quarter. And so all of these are going to build throughout the year. But the first half of the year is really starting with how do we expand these addressable markets also with type 2. And then from here, we'll look to layer on new technologies, not just broadening what's available in certain markets.

And you didn't mention Tobi.

Because that's the new one, right? And that's the -- well, and I think that's where -- that's not part of the scaling launch that we've already started. That will be new. And so for anyone not familiar with a tubeless feature for Mobi, which we affectionately call Tobi, it really is a new cartridge that's used on the same Mobi pump that's available today, and we'll be submitting in the second quarter to the FDA. And it really features some important aspects. The first one being extended wear technology. So this is Tandem's first patch pump that we'll be offering that can be worn for up to 7 days. You're also able to change the infusion site separate from when you change your insulin. So especially people who have higher volume insulin needs, the opportunity to not have to change your site at that every single time, that's a huge burden relief for people. And as we look to what drives adoption, to your point, it's technology as well as affordability, ease of use, greater clinical outcomes. And so a number of the items that we have with Tobi allow us to address those pieces.

And so you're looking for that launch in the second half of the year?

We are. We're preparing -- we're scaling up manufacturing. We're preparing for commercial launch in the back half of the year.

And if I'm a new patient sitting in front of my endocrinologist today, are they talking to me about Tobi? Are they aware of it? Or is it starting blank?

It's unfortunately, at this point, we're not able to talk about it because you can't promote an unapproved product.

So physicians are unaware.

So physicians are unaware. And that's where this is a novel idea. physicians aren't familiar with being able to all of a sudden change the wearability device so dramatically. And so we're excited for the opportunity to begin talking about this. And -- but at this point, we have to just wait a little bit longer until we get to that clearance.

So if you get approval, I'm making this up October, then becomes a physician education. And again, this isn't in your model or in your guidance for -- so it's really building towards 2027.

That's correct.

Do you think of patients -- I mean -- okay, so I'm not going into my endocrinologist, I'm going in November after the approval. do you think they will say, hang on, I don't have availability of it yet. How do you think -- I'm really trying to get to the idea of are you creating a backlog or a list of wait list for lack of a better term, for these patients? Or is this something that just is going to evolve over 2027 at some stage?

I think that's what's exciting about it is a patient who buys a Mobi pump today can use it in a tubeless form as soon as that new supply is available. So it's the same pump. So as soon as awareness builds, people are able to buy Mobi. And as soon as the tubeless feature becomes available, they can just wear it as a patch.

So in the United States, of the new patients that came along in the quarter, were they all Mobi? I mean -- or are they largely Mobi, still some t:slim holdouts? I mean I'm trying to think about with all of these products which are coming out, how to think about adoption?

Yes. It's still a healthy mix, which is what we anticipated when we launched Mobi. It's interesting. There are certain people, for example, with higher volume insulin needs. The 300 units associated with t:slim is a driver for their adoption to the t:slim product, particularly with people living with type 2. For Mobi, we're just launching the Android capability. So that's been half of the market that we really haven't been able to access. And so we look at this as a portfolio approach because there's not a one-size-fits-all solution for people who want -- how they want to wear and how they want to operate their device. So that's really the appeal for Tandem is we have Control-IQ, the best algorithm that's available, immediate and sustained outcomes. So then the question is, how do you want to wear and operate your device? And we've got a solution for that.

Okay. When you think about manufacturing and building towards manufacturing, do you continue that portfolio of products?

Yes.

You phase out at some stage?

So we will always be evaluating and it's really about market demand. If there's enough market demand to support maintaining the manufacturing, maintaining the R&D and the sustaining activities, we would keep it on the market. So it's something we'll continue to evaluate. If everyone is sort of drifting to one product, it would say that maybe we don't need the whole portfolio anymore. But right now, everything that we're seeing suggests the portfolio is the right approach.

Sigi stopped being a stand-alone product, and it sounds like now it's the Sigi technology side of something.

Exactly.

Okay. So for those not familiar with the wonders of Sigi, can you walk through all of that, please?

Sure. So Sigi is a technology that we acquired from AMF Medical about 2 years ago. And one of the big feature of it is that it's miniaturized. And so when we look at discretion for people adopting technology, miniaturization is a very important driver. So to your point, how do you make sure from a manufacturing standpoint that you're driving economies of scale? We identified by furthering the Mobi line from a manufacturing perspective, but also from a brand equity perspective. People are starting to become aware of and really loving the Mobi offering. And so what we found is by taking that Sigi technology and incorporating it within the Mobi product, we're able to get a lot of those feature benefits that originally were contained within Sigi and launch it within a patch pump building off of the Mobi brand today. And so that's where it's really been a shift where we don't -- we didn't see a world where we would have 3 different pump offerings. We see where it's a screen on pump, and that's the t:slim platform. And then there's a screen -- mobile control of it. And so that's where really we see the Mobi platform evolving to. And we see it first launching with the tubeless feature, obviously, on Mobi, and then we'll continue to optimize that form factor.

A lot to talk about. And then you have a variety of different CGMs. We talked about Libre 3. We talked about Dexcom 15-day. And then you threw out there on the call a dual ketone CGM integration.

Yes. That's an exciting technology. Abbott has been working on this, and they've been a great partner of ours. And so as there's advancements within CGM or ketone sensing, we want to say, how can we incorporate that within our insulin delivery technology, either using the information to draw awareness to the patient or eventually being able to incorporate something like that within an algorithm. So lots of opportunities, I think, that can build over time, but we're excited about this first step with the partnership.

Okay. So I'm keeping track of all stuff. I have my little spreadsheet, columns and rows and stuff like that. How do you envision -- and this is a question both for Tandem's offerings as well as everybody has new offerings that are coming out. How do you envision physicians making choices?

I think that first starts with the outcomes because for us with Control-IQ goes back to the immediate and sustained outcomes we deliver. But the next step is really then how much does the patient want to interact with their device. And that's where we're moving toward a fully closed-loop system that provides patients the optionality to either engage with their system or not. And then it goes to the wearability, operability and allowing people to make the choice that works best with them and with their insurance coverage. And so our portfolio approach is really designed around appealing to each of those factors.

So one of the really cool things having covered this space for a long time is I remember it was just type 1 patients, just insulin dependent and you got a pump and you were happy with it. And now it's all insulin-dependent patients and you have a variety of different choices. What I'm getting at is why doesn't every insulin-dependent diabetic, type 1 or 2 wear this technology and use it.

Yes. I think it really comes down to 3 reasons. One is, does it relieve the burden enough? And that could be a mental burden. Does the algorithm relieve it? Does it allow you to think about your diabetes less? Can you wear it in a way that you're comfortable operating it and also just from a discretion perspective. The other piece is, are you getting the outcomes? People have to say it has to be worth it. You have to make the outcomes good enough and more so than what I'm able to achieve independent of that. And then the other piece is just affordability, and we hear that again and again that that's been a large barrier for adoption.

Yes. Do you find that the physicians that you deal with, there's like Tandem physician and they're just going to prescribe Tandem all day long or I also cover contact lenses and frequently will be like, okay, I'm an ophthalmologist and I only prescribe these 2, even though I have a choice of 4. They sort of get comfortable with either the salesperson or the portfolio. Is that the right way to think about the evolution of decision treat for diabetes management also?

I think physicians want their patients to adopt the technology because it's going to give them better outcomes. And then the question is what's most important to this patient in order to stick with the technology? And then how do they optimize that? And that's where I think Tandem with our algorithms with our outcomes, we've been able to really drive there's multiple decision points and that you don't have to sacrifice a decision about wearability in order to get the best outcomes with our portfolio.

Okay. So your answer is you don't see a Tandem doctor.

You're going to have some loyal. This is the way or people who may be very much more comfortable with one technology or another. We've also found that even with the expansion of our sales force, for example, there were some places where we weren't calling on as frequently. And so they maybe didn't know about our full portfolio of offerings and how to make sure they're supporting their patients with it. So I think a piece of this is on Tandem and the effectiveness of our sales force, and we've been really pleased with the strides they've been making in being able to just reach out to new health care providers and making sure they're aware of what Tandem has to offer.

Okay. I have more questions on different topics, but I do want to spend some time now talking about the pharmacy channel. This is -- I feel like we've sat across from each other, many times to talk about what does it take to get a tube into the pharmacy. And so one of the questions I get like why is now the time that is possible to get the tube pump into the pharmacy?

Yes. I would say that the thinking has evolved over the years. And so there was only one player in the channel with a fully disposable product, which fit more of this, I don't call it the standard definition of what would be in pharmacy. And then I think what started to happen is as other durable pumps, we were talking about pharmacy, considering it, the players on the insurance side looked at it and said, we need more competition in this category. So they started to be more open to hearing about a durable pump, the possibility of reimbursing for that through the pharmacy channel. So they can manage a category all in one place. And this came about also when Mobi first launched, we were using Mobi as our first chance to step in and start that education. And I think this all came together around the same time. And so with us, -- you may remember 2 years ago, we were saying t:slim in the DME channel. It works well. We have a big franchise there. We don't want to mess that up. Pharmacy, we want to test out the ability to put a durable pump there. Let's do that with Mobi. It will be straddling the line between DME and pharmacy. And then with Sigi, we can be ready with all of our learnings to go directly into pharmacy. And so we came into 2025 with that thought in mind, launched Mobi into the channel. The nature of the contracts we had structured initially were all DME like, if you will. So reimbursement for the pump upfront and then reimbursement for the supplies along the way, all at a little bit of a premium level to what we see in DME already. And as we progressed across the year, we were seeing and basically proving out all our beliefs about the pharmacy channel. Yes, we could see lower out-of-pocket for the patient. You can influence that with co-pay assistance. Yes, it is easier for the physician. It's a more streamlined ordering process. It's more electronic, more automated. So it's efficiencies within their practice. And so if they are on the fence of which product to recommend and if that's going to make the decision, we want to be there with them. For the payers, they get a benefit, too. They get better visibility to data about their members or their subscribers. They actually can see what products they're using, what drugs they're actually prescribing or selling for those patients as well, and they can manage their population health in a better way than they could with what they have in DME. So they just don't have the visibility there. And then, of course, from the manufacturer side, all of us are able to enjoy the benefits of a higher reimbursement stream there. It's just the nature of that channel, how they reimburse, how they pay. And so you win in all 4 ways. And when we were seeing this, we decided why don't we start taking t:slim supplies in the channel? Because now we feel like we have enough information that we don't have to worry about damaging a business that's working just fine. We can't take advantage of those benefits as well. And through that, as we were evaluating how do we continue to get more coverage, that's why we decided that basically, it made sense that if you go full pay-as-you-go model, that will allow us to get to optimal access across the board. And so here we are, we made the decision. It was also important for us to know as a business that we could weather the transition period because obviously, in a real true pay-as-you-go model, you're getting no reimbursement for the pump where we've been enjoying $4,000 a pump, both revenue and cash all along. And so we're at a stable place in our business. We were positive free cash flow in the back half of the year, and we felt like it was the right time that we could actually move forward with this type of model. And so we kicked it off. And here we are ready to go in a big way, not just dabble in it or step in lightly, we're ready to go and accelerate as fast as we can.

Okay. So the first foray was with the t:slim consumables.

Yes.

And can you share or maybe you already have them, I missed it, the percentage more -- the higher ASP that you're getting in channel pharmacy versus channel DME?

Sure. When you look at it over the 4-year life of the patient, the reimbursement is expected to be 2x what we see in DME. And the difference is the way it's structured is since you're not getting reimbursement on the pump, there is more placed on the supplies over time. So when you compare DME to pharmacy supplies, it's more than 4x what we see in DME. And so it's a substantial benefit for the business. What it does is it helps build on a more predictable recurring consistent revenue stream so that you don't have to look at our business and the number of pumps we sell in any given quarter dictate how good our revenue will be or how good our margins will look. And so this way, it really flips the model where pumps have generated the highest gross margin and supplies are always a bit of a drag on the margin, it will turn that around. And now the supplies will have a healthy margin that will help us expand our gross margins more rapidly than we were able to without making this shift.

Okay. So over 4 years, 2x higher ASP per supplies. You don't get a pump revenue. Over 4 years, it's benefit. It's better for you to be getting this.

Absolutely.

And did you just say 4x?

4x when you look at a supply -- a month of supplies for a DME patient today versus a month of supplies in pharmacy. That's the 4x. When you look at it on a life where the pump was included before in DME, that's where you get the 2x overall.

Okay. This year, you're taking a $35 million headwind. Same question I asked was it $45 million?

It's $70 million to $80 million.

In the U.S. Yes. I'm sorry, I'm getting my companies mixed up.

It's large.

Large. Okay. So this year, it's $70 million to $80 million. Yes. Same question I asked for OUS. Next year?

So that's the beauty of this model. In 2026, we are assuming about 20% of the pumps we ship will go through pharmacy. And I should probably highlight, it does create -- it tempers the revenue growth this year. So the metric we want people to be focused on is total pumps that we're shipping. So I want to just start there for a second. Pump shipments are expected to grow 10% to 11% year-over-year. So you start with that as your baseline, and then we assume 20% of those will go through the pharmacy channel. So on day 1, we're losing $4,000. It's going to take time to make up that differential with the recurring supply stream. And if you just look at a single pay-as-you-go patient, it takes many months. It can be over a year before that single patient can break even or pay for itself. But when you look at it in perspective of we have over 300,000 people in our existing installed base with the opportunity to shift some of those to the pharmacy channel. And so for every patient who gets a free pump of PayGo pump, if we ship to patients from our existing installed base. So think about all the people who are ordering supplies already have already have a pump in hand, we break even in a matter of 5 or 6 months on both revenue and gross profit. So what happens, to your point, the long way to get to your answer -- to your question about 2027 is this year, it tempers the revenue growth. But what it does is it pays off -- it multiplies when you get into 2027. Every patient you get on the pay-as-you-go model as fast as you can will accelerate the growth in the future. So it's -- the headwinds we expect are most pronounced here in the early phase in this first year. But after this, we'll expect to see a really great revenue growth just from price alone. And as Susan said, one of the barriers is cost. It will bring more people and will allow more people to enjoy the benefits of pump therapy.

Now when you think about it, this rolling revenue stream phrase really is working because you actually are getting your hit in '27 to total revenue, but you're building your additional higher ASP consumables over the next 4 years to keep within that time frame. Is there a way to think about if it's $70 million to $80 million this year, what a headwind might be next year?

Well, the beauty of this is we're going to be focused on shifting our existing patients and the PayGo patients we shift to this year, they will start helping to pay for themselves and others as well. And so we don't -- we really expect that we'll start to be past the headwind phase, if you will. There will still be -- every time we give away a pump, it's a headwind, but we have enough other opportunities. It's a self-funding model in a way.

Okay. So 20% this year, is it 20% next year?

So what we've shared is -- so in fact, that's -- I'm going to go here for a second. Very important question is let's talk about some of the metrics we shared this year. The metric that we want to be focused on for the long term is what percent of our U.S. sales are going through pharmacy. And so we said less than 5% in 2025. In 2026, that will grow to about 15%. And as we transition through this model, in 2 to 3 years, pharmacy sales should be 70% or more. So that helps maybe think a little bit about the transition and the timing of it. The metrics we gave this year were to help people get grounded because understandably, someone could get lost very quickly. And if people don't understand how we get there, then we'll lose everyone's interest fast. And so importantly, this year, we shared that think of 20% of pumps are going through pharmacy out of the 10% to 11% growth, that also the supplies, so the customer base of our installed base on average this year, about 10% will be ordering supplies in pharmacy. And both of those metrics are averages for the year. So you think about it as starting off low and exiting at a higher rate than that. So it's going to be something -- it won't necessarily be linear, but we're going to be working to grow it month over month over month as we go across the next few years.

Okay. What drives your confidence that 10% to 11% pump shipment growth in the U.S. is sustainable?

Yes. So it's a very exciting year. I mean how long did we already spend talking about all the new product launches. So that's one big piece that we've always relied on in the business to grow shipments and sales. Now we're adding pharmacy, which is another layer, which means we don't have to -- we don't -- won't see these spikes in growth around product cycles or new product launches. We can grow it in other ways by removing that cost barrier. So those are the new products, the expanded market with type 2 as well as pharmacy will help grow that. But one thing I'll highlight is a lot of our revenue shipment growth -- revenue shipment, our shipment growth in recent years has been based on renewals. That's been a very large revenue stream for us. Renewals are still expected to grow low double digits in 2026. So when you take that as an underpinning, it does -- your new starts don't have to grow as much, but we will be returning to new start growth. And it's all of those factors coming together that will get us there. And it's more than just you have to believe it can happen. I think Q4 was a real demonstration that it can happen. We really started to execute with our sales force productivity and just the beginnings of these new products that we launched that we can make a change in how we grow.

Some of the patient that ships the pump, you're shipping it, who ships it to them?

So we have a partner that will deliver the pump. We still use our same network of distributors to fulfill all the pharmacy orders when it comes to the supplies. And so that's -- in our model, it's very helpful because what we've seen sometimes is people have to get new distribution network. So it's more overhead, if you will, just managing all of that. And then how do you keep all your partners happy when some are in the business that you're going away from. But we're using the same network of distributors. Most of the large distributors we've worked with in the past have all developed their own pharmacy capability, but they want to stay in the game. And so they're going to be our same partners yesterday in DME, tomorrow in pharmacy.

And if you're giving the patient a pump for free essentially, how do you make sure they use it? And can you take it back?

So all great questions. Great question. So it's been a hot topic of, oh my gosh, are you going to start losing customers because now they can freely move anywhere they want, anytime they want. And so we, of course, don't have the pharmacy experience yet, but we have a lot of experience in DME with retention. And so a few interesting data points. Number one, customers who buy a pump from Tandem in the 4-year warranty period, they can leave. They can't go to another durable pump because the insurance won't reimburse it, but they could have gone to an offering that was in pharmacy already. So there is nothing to stop them from going and trying out other products. And we did -- we have heard at a very small level of people that have trialed other products, but this is the important point. They almost always come back to us. And there's the value of people who get on our product using the algorithm, it's the best algorithm. And when they try anything else, it doesn't compare. So we have a very sticky base. Also people, we have 70% of our people at least within an 18-month time frame, buy a second pump from us. So we have good retention in terms of people who also when they're out of warranty could go anywhere else they want to go, but they still choose to come back to us. And we have many customers who just use their pump halfly out of warranty. And so our -- we expect our retention to be similar in pharmacy because of these different examples of what we experience today, and it's because of the power of our products and the algorithm in particular.

And is there -- how are you going to monitor that? I'm anticipating the earnings call where you were like, well, okay, it went down a little bit, but we have these new patients. Not saying that you're going to do that, but how are you monitoring it? So it's -- you're on track?

Yes, yes. So what we -- obviously, we will know how many kits that we're selling in pharmacy. So they're kitted differently. There's -- and so we know exactly what was a pharmacy sale versus what was a DME sale, even if our distributors are managing it. That's piece one. We also have Tandem Source, which is the platform where people upload their data. So we can see that people are actually consistently on the product. And we use Tandem Source for so many reasons, but one is to understand retention.

Is there a world where insurers will have a preferred pump or a preferred provider or whatever the phraseology may be? And how do you think about that?

Yes. I mean, so that's the nature of pharmacy is that there are different -- the formulary has preferred and nonpreferred status. There's different tiers within the formulary. All those exist. And so it just comes down to as we learn more about preference for our products and what tier and what formulary that we are on, what's the right mix of co-pay insurance to use and rebate structure. And so the way you get the best access, the most preferred is through your rebating system. And so we have a mixture of some preferred access, some nonpreferred, and we'll be seeing the utilization across those as we launch into this because the contracts actually go live in March. And so we haven't actually officially kicked off the pay-as-you-go. It will be in March. And so we'll start to see what works, what doesn't. And basically, every year, you get another shot at it because the payers and PBMs reevaluate their formularies pretty much annually.

Okay. What really stood out to me on the fourth quarter was your profitability? And walk us through what drove that. I think I already know the answer, but let's do it anyway. And then how you think about that, not just for '26, but building from that.

Sure, sure. So we did -- we had a tremendous fourth quarter. Our gross margin was 58%, and that's the highest we've ever shown the world. And so we were excited to get to report that. Again, one of the biggest sticking points for our business is you don't show margin expansion. And really, price was the primary driver. We do have Mobi growing in volume as a part of the business. That's what we've talked about for years, Mobi having a lower cost profile than t:slim. And it is getting there. So we're getting to the scale on the pump where we're already seeing that benefit. The cartridges, we're still building up the installed base. I mean it takes a lot to become a big enough percent of our installed base to make a meaningful difference. But in '26 and even in '27, we'll show more of that with the Mobi contribution. But pricing was one of the biggest drivers. if you recall, that's when we launched t:slim supplies in the pharmacy channel. So even with less than 5% of our base ordering supplies in the pharmacy, we doubled pharmacy sales from Q3 to Q4, and that was one of the big margin drivers.

Excellent. I have 8 whole minutes left, and I have a very long list. I'm sure you've been talking to a lot of investors as I have since last Thursday night. What do you think people need some clarity on? And what do you think people are like, "Yes, I get".

Yes. So I'll start with that, yes, we get it. really people are penciling the math out for 2027 and 2028 and basically saying like, I don't even care about '26 anymore. I can't wait for that to come. And so where we wondered if there would be a concern of, I don't like to see low revenue growth, I think people are accepting of the fact that it could be low. And if we go fast and hard, it could be lower, but it pays big rewards in the future. So I think people are really getting -- embracing that and can see that as a business. This is really good for us for revenue and margin in the long term. One point that I think we've talked a lot about retention with people, this understanding of will people move around and will you lose your customers. And I think another important point about patients is it's not easy to just switch pumps all the time. So first of all, you have to get a prescription and your physician at some point can say, what are you doing? Why do you need so many pumps? But then secondly, they have to get trained and they have -- it's part of their life. It's a life-saving device. And so people aren't just going to willingly go out and move from product to product. And so -- and we feel very confident with what we offer. I think the other thing that's been coming up a great deal is we talked about the -- for modeling purposes, again, we are giving a lot of extra data points this year. We gave price comparisons. And we said, for supply, start with $350 a month. It's a good place to start from a modeling perspective. And so that -- I think that raised a lot of questions from folks like, oh, are you doing some special pricing strategy? Are you trying to undercut? Are you playing a different game than everyone else? And the answer is a firm no. We see what pharmacy pays today. We want to take advantage of every dollar that we can get from it just like everyone else. We feel like on the merit of our products, we can sell competitively if we're all doing it at the same pricing. For us, we just don't have the data and the experience yet. And so back to what I said earlier, we have a mix of preferred access with nonpreferred. We know there's going to be some level of co-pay assistance. We just wanted to give people a starting point. Just as you're thinking about the business, don't get ahead of us, let us gather some trends and see that mix of utilization. And for now, just think about it as $350 a month. And after the course of a couple of months or a couple of quarters, we'll get a better idea of where that's shaking out. And then we can give more firm targets based on real experience and not just our estimations.

Excellent. So when we merge together this time next year, what do you think we're talking about?

Oh my gosh, the success we've had in pharmacy and all the customers we brought to the table...

And how much customers are loving the tubeless feature for Mobi as well as our full rollout of our portfolio features, the fact that FreeStyle Libre 3 will be launched internationally on the t:slim, which is so exciting, the fact that Mobi Android will be broadly available. So we'll have this full suite of products that people can really grab on to. And I can't wait at that point. I'm hopefully that we're talking about a pivotal study that's happening for fully closed loop.

There you go. Well, Leigh and Susan, thank you so much for coming. And it's great to see you.

You as well. Thank you for having us.

Thanks for having us.