Good day and welcome to the Tandem Diabetes Care third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your touchstone telephone. Please note this call may be recorded. I would like to turn the call over to Susan Morrison, Executive Vice President and Chief Administrative Officer. Please go ahead.

Hello and welcome to Tandem's 2026 Third Quarter Earnings Call. Today's discussion will include forward-looking statements, including statements about our CEO transition and its timing, our leadership, strategy, product pipeline, development timelines, financial performance, including profitability, and operating plans, and speak only as of today's date. These statements reflect our current expectations about future events and are subject to risk and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements, which are described in our press release issued earlier today and under the risk factors portion of our most recent annual report on Form 10-K and quarterly report on Form 10-Q, as well as the Form 8-K we issued today. Today's discussion will also include references to both GAAP and non-GAAP financial measures. Please refer to our earnings release issued today and available on the Investor Center portion of our website for a reconciliation of non-GAAP measures to their most directly comparable GAAP financial measure and other information regarding our use of non-GAAP financial measures. In addition, we also issued a press release this afternoon on the planned evolution of Tandem CEO leadership. To speak to this announcement, the Chair of Tandem's Board of Directors, Becky Robertson, will join us in opening today's call. We'll then move to our third quarter earning results and company update from John Sheridan, President and CEO, and Leigh Vosseller, Executive Vice President and Chief Financial Officer. After their prepared remarks, we'll open the call for questions with John and Leigh. Thank you in advance for limiting yourself to one question before rejoining the queue. I'll now turn the call over to Becky.

Thanks, Susan, and good afternoon, everyone. Today's succession announcement marks an important milestone for Tandem Diabetes Care. As part of a planned leadership transition, we celebrate John Sheridan's accomplished tenure as he prepares to retire at the end of 2026. And we are thrilled to welcome Jeanette Bankas as Tandem's next president and CEO. On behalf of the board, I want to thank John for more than a decade of service to Tandem, including eight years as CEO. Under John's leadership, Tandem has grown into a global innovator in diabetes care. He launched Control IQ, our first hybrid closed-loop technology, advanced our digital health strategy, and expanded our portfolio with the introduction of Mobi. In addition, he established the foundation for Tandem to operate at scale internationally and set in motion business model changes that broaden customer access. Just as important, he cultivated a mission-driven culture that will continue to define this company. With this foundation in place, Jeanette is the right leader to guide Tandem through its next phase of growth. Jeanette stood out during the board succession planning and search process bringing more than 30 years of global operating experience and an impressive record of translating strategy into consistent execution and growth. Her experience scaling medical technology businesses is well suited for Tandem at this stage as we capitalize on a new business model and expand internationally. Jeanette's customer-centric approach, broad perspective, and commitment to innovation align closely with Tandem's culture, Mission and Priorities as we advance our technology roadmap, expand customer access, and pursue sustainable growth and profitability. She is also well-positioned to shape Tandem's long-term strategy and strengthen our competitive position. Throughout the transition, our leadership team remains focused on Tandem's strategic priorities, and the board is confident in the organization's ability to deliver. John, thank you again for your leadership and your commitment to Tandem. Jeanette, we are excited to welcome you to the company on November 16th. With that, I'll turn the call over to John.

Thank you, Becky, and welcome everyone to our call today. It's been an honor to work alongside such an incredible group of employees and the board since 2013 and to have the privilege of leading this company for the past eight years. Together, we furthered Tandem's mission to improve the lives of people with diabetes. I am proud of all that we've accomplished, especially that half a million people worldwide now benefit from Tandem's technology. Tandem's fundamentals are strong, and I am confident in its future under Jeanette's leadership. She brings the experience, perspective, and commitment needed to build upon our momentum, and I look forward to supporting her through a smooth transition. Our team remains focused on executing our strategy and delivering value for customers and shareholders. and with that, let's review our earnings results and the progress we're making across the business. Looking back on the third quarter and our year-to-date performance, I am proud of what Tandem has accomplished in 2026. We're executing on our strategic priorities to expand access to Tandem's life-changing technology while strengthening our business model, advancing our pipeline and driving efficiency in our operations. These efforts are delivering tangible results. We outperformed across the P&L with increased contribution from our U.S. pharmacy transition and international shift to direct operations. Q3 also marked a quarter of record sales in pump shipments, with both growing double digits worldwide. This was supported by enhanced pricing and a return to year-over-year growth in U.S. new pump starts and strong early demand for Tandem Mobi in the 12 countries where it's now available internationally. Beyond top-line growth, we're delivering significant margin expansion. This reflects focused execution on our efficiency initiatives and a balance between cost discipline and investment and growth. These recent accomplishments provide a solid foundation that position Tandem for long-term success. Today, we'll provide more color on these results and review progress against our strategic priorities. Starting with reshaping our business model, We are undergoing major shifts in our approach to the global markets. In the US, after just two full quarters under PAYGO reimbursement model, pharmacy sales have reached 15% of US sales. We have steadily expanded access across the year and already achieved the high end of our full year target with approximately 50% formulary coverage. Early results in pharmacy demonstrate that the model is positioning us to achieve our goals are reaching more people through simplified access with lower upfront costs while driving greater economic benefit for our business. Outside the United States, we launched direct commercial operations in the UK, Switzerland, and Austria earlier in the year and remain on track to do the same in France this week. As one of our larger European markets, France represents an important next step for our international strategy. With this addition, We will be serving more than 30% of our international installed base directly. We plan to continue expanding our direct operations across 2027, which expands our footprint to approximately half of our installed base by the end of next year. Our early experience with direct international operations in 2026 confirms the strategic benefits of this approach as we develop closer relationships with customers and healthcare providers while achieving greater economic value. Turning to our pipeline advancements, we believe tandem Mobi tubeless is in the late stages of FDA review. Mobi tubeless is designed to be the world's first and only tubeless AID system, offering up to seven days of wear. This new infusion side option converts an existing Mobi pump into a tubeless system. Users can switch between tubed and tubeless wear with the same rechargeable pump just by changing their supplies. Combining Control IQ's best-in-class A1C outcomes with tubeless ware positions Tandem to compete in the fastest-growing segment of the pump market with more ware options than any other system. Following clearance, we plan to begin a scaled commercial launch, expanding manufacturing capacity and updating pharmacy contracts. We're also excited to introduce healthcare providers to Mobi tubeless and pending clearance are preparing to begin limited customer use and then expand to full commercial availability in the first half of 2027. To speed time to market, our initial submission focused on abdominal wear and we'll be working with the FDA to add more wear locations and insulin types. We also continue to innovate across our portfolio. Infusion set technology remains a key focus as we seek to improve comfort, extend wear time, reduce occlusions, and simplify the user experience. In Q3, we initiated a global launch of AutoSoft Plus, a new infusion set from our third-party supplier that is designed to improve ease of use with reliable one-hand insertion. AutoSoft Plus is now available in select countries, and we plan to expand to additional geographies in early 2027 pending any in-country regulatory requirements. This timing is important as we continue to manage supplier shortages of other infusion sets. We saw improved supply availability in Q3, and although improving, some level of impact remained into early 2027. We also plan to launch SteadySet following Mobi Tubeless, our proprietary technology that is FDA cleared for wear up to seven days, further expanding our customers' choice in infusion sets. We also took meaningful steps in Q3 to progress our automated insulin delivery efforts. The pursuit of an algorithm worthy of the term artificial pancreas has been foundational to our vision, and as we shared in the last call, Tandem is closer than ever to this achievement. Building on our long-standing research partnership with the University of Virginia, Tandem is developing UVA's next-generation 80-net algorithm into a fully closed-loop system. The system is designed to help people with type 1 and type 2 diabetes reach clinical time and range targets without meal announcements or other inputs. while still allowing users to enter additional information for a more personalized experience. We continue to advance the work necessary to begin a pivotal study before the end of 2026 in support of an FDA submission. With that, I'll turn the call over to Leigh for more details on our third quarter financial performance.

Thanks, John. As John outlined, our third quarter performance reflects significant progress across the business. We achieved many new Q3 records across sales, pump shipments, and gross margins. Overall, the quarter provided further evidence that our strategy and business model initiatives are translating into meaningful results. I'll focus my remarks today on the key drivers behind our performance and what they indicate about the company's financial trajectory. Starting with sales, worldwide revenue grew 14% year-over-year to $284 million. Pump shipments increased 12% to approximately 33,000 pumps. In the US, pump shipments increased 11% year-over-year to nearly 23,000. The trajectory of new customer starts continued to improve and return to growth during the quarter. MDI conversions represented approximately 70% of new customers and renewals grew at a double-digit rate. Together, these results reinforce our confidence that our product innovation, business model changes, and commercial investments are expanding the insulin pump market. U.S. sales increased 9% year-over-year to $191 million driven by increased pump demand, pharmacy pricing and pharmacy adoption. The PAYGO model remains a significant opportunity for our business and we increased each of our key pharmacy metrics this quarter. Pharmacy grew meaningfully to 15% of U.S. sales in the third quarter. We also reached our year-end access goal early, with approximately 50% of U.S. covered lives on formulary, and we expect Moby Tubeless to be an important catalyst for further expansion. While the $0 pump in our pay-goal model creates an initial revenue headwind, higher recurring supply revenue offset that impact this quarter, with net supply ASPs again exceeding $350 per month ahead of our baseline expectations. Pharmacy adoption increased to approximately 12% of pump shipments and 7% of our ordering installed base. Adoption is scaling, although the pace of transition is more gradual than we initially anticipated. The pace largely reflects the time required to establish new prescription workflows and change behaviors across our teams, healthcare providers, and customers. Our number of healthcare providers prescribing through pharmacy has increased each month since launch and we believe new pharmacy exclusive products, including Mobi Tubeless and Autosoft Plus, will help accelerate adoption. In the fourth quarter, we anticipate shipping approximately 15% to 20% of pumps and 8% to 10% of our install-based supplies through pharmacy, representing nearly 15% of U.S. sales. With the pace of pump adoption through pharmacy outpacing supply conversions, we anticipate continued sales headwinds extending into 2027. Importantly, the underlying indicators continue to strengthen, including formulary access, provider participation, and recurring supply economics. We look forward to demonstrating what this model can do at greater scale across our sizable and growing install base of nearly 330,000 customers. Turning to our international performance, we shipped nearly 11,000 pumps and achieved our highest sales quarter ever at $93 million, up 26% year-over-year or 27% in constant currency. This performance was driven primarily by new product launches and strong execution in our direct market, along with the anticipated benefit of supply orders deferred from the second quarter. The benefits of our transition to direct operations are also beginning to show, with a 30% sequential increase in direct market shipments at meaningfully improved pricing. Direct channel sales represented approximately 18% of international revenue in the quarter and 14% year-to-date, keeping us on track for our full year expectation of 15%. The quarter also included a $3 million headwind from our direct market transitions, bringing the year-to-date impact to approximately $7 million of the 15 million we expect for the full year. Turning to margins, the actions we have taken to improve our margin profile are delivering results. Gross margin was 57%, improving nearly three percentage points year over year. This performance largely reflects pricing improvement from our global business model changes. Our supply margins hit a record high, improving by more than 10 percentage points in the last two years. We also continue to see the benefit of lower product costs with the increased adoption of Mobi in the market. Operating expenses for the quarter were $163 million, up only 4% year-over-year, as we maintained disciplined expense management while continuing to invest in our strategic growth priorities. SG&A increased, reflecting commercial investments worldwide, while R&D was flat. These increases were largely offset by a $5 million decline in stock-based compensation expense. With revenue growing significantly faster than expenses, we generated meaningful operating leverage, improving operating margin by 8 percentage points and adjusted EBITDA margin by 5 percentage points. Adjusted EBITDA reached 6% of sales, marking our fifth consecutive quarter of positive adjusted EBITDA. We ended the quarter with a strong balance sheet at $443 million in cash and investments. Free cash flow reflected continued investment to rebuild InfusionSET inventory to our desired stocking levels and further invested in capital equipment to support upcoming product launches. Turning to our 2026 expectations, we are encouraged by strong progress as we undergo our global business model transformation. Our performance year-to-date reinforces our confidence in the 2026 guidance. Worldwide sales are expected to be in the range of $1.65 billion to $1.85 billion. This includes U.S. sales in the range of $730 to $745 million and international sales in the range of $335 to $340 million. We expect gross margins in the range of 56 to 57% and adjusted EBITDA margin of 5 to 6% of annual sales. In closing, I am proud of our execution this year and the strong third quarter results we delivered. This performance reinforces our confidence in the financial trajectory of the business and our 2026 outlook. With that, I'll turn the call back to John.

Thanks, Leigh. In closing, our third quarter performance reflects solid execution against the priorities we set for the year and reinforces my confidence in Tandem's strategic direction. We are carrying meaningful momentum into the final months of 2026 with a clear focus on expanding customer access, advancing innovation, and driving sustainable, profitable growth. Before I close, I want to thank the entire Tandem team. Your focus, resilience, and commitment to our customers have made this progress possible, and I am deeply grateful for everything that you do on behalf of Tandem and the diabetes community we serve. I'll now turn the call over to the operator for questions.

Thank you. We will now begin our Q&A session with John and Leigh. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, press star 11 again. Our first question comes from Matthew Blackman with TD Cowen. Your line is open.

Good afternoon, everybody. Can you hear me okay?

We can.

Yeah, great. Well, John, congratulations and best of luck on future endeavors. I'm just curious why now you feel like it's the right time to step aside. I've seen a lot has been accomplished over the last couple of years, but also on the cusp of a lot of very exciting things ahead. So just your thinking of why now and what sort of the business looks like now that you're moving on. Just any thoughts there would be really helpful. Thank you.

Sure. Well, you know, I'm not a spring chicken any longer. You know, I'm 70 years old. I know I look like 60, but I'm 70 and I've got to make a decision at some point. and so I've been working with the board for quite a while now. And I think the things that I really cared about accomplishing this before I stepped down were Moby Tubeless, the pharmacy channel, the OUS expansion and certainly the fully closed-loop systems. And I think as we enter 2026, I feel very confident that these things are moving in the right direction, we're going to execute and a great deal of confidence. The second thing you've got to do is you have to find somebody to replace me. We've done a lot of searching on this, and we found an outstanding candidate with Jeanette Bankas. She's got great experience as a leader of multiple medical technology companies for many years. More importantly, she's got the cultural awareness that's really important to our business, and she's very mission-driven. She's capable. She's got a track record of executing on strategy. So, you know, I think that she's going to do a great job and I look forward to supporting her for the next couple of months. And so it's really a matter of just there were some things I wanted to get done. I really feel confident that these things are going to get done. And we've got a great leader in Jeanette. And, you know, I'm rooting for the company as we go on into 27 and beyond.

All right. Thank you. I'll get back to you.

Thank you. Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.

Afternoon. Thanks for taking my question, and John, let me echo Matt's congratulations on your retirement. Best wishes. Would love to hear about the pharmacy channel. I may have missed it with the number of earnings calls we have tonight, but 15% in Q3, that would mean you need to get, I think, 29%. in Q4 to get to 15% average for the year. So I don't think that's going to happen. What are we thinking as far as pharmacy revenue goes here full year now for 26? And then how do we think about that metric as we head into the totality of 27? Thanks so much.

Yep. Great question, Matt. There's a lot to unpack there. So first, I'm just going to start at the very highest level and talk about the three major levers, I would say, that indicate our progress in pharmacy. and I'll start with access. And so we have reached about 50% coverage on formulary and that's well ahead of our expectations. And that is really the most important in these early stages because that builds the opportunity for us. The second lever would be pricing, and I would say that we are nicely outperforming the baseline expectation we set of 350 per month. It's actually averaging closer to 400 right now. We're asking that we keep our expectations tempered there at this time because it's only two quarters of data. We're continuously adding new contracts, and it's still really small volumes. We want to see how that plays out in the longer term, but performing very well in that regard. and then the third measure of progress is the pace of adoption and that's where I would say that it's been developing a little bit more gradually than we had originally anticipated. It is stepping up each quarter as we look ahead and in the fourth quarter we expect it to step up again. Not going to reach those original assumptions that we put out there at the beginning of the year but after two quarters of data we feel like we have a more informed view of how to think about this looking ahead and so we're still very confident in our ability to achieve what we set up in the two to three year time frame that we said which is by end of 28 will have this model turned over and be almost all pharmacy as opposed to DME. So things are on the right track there. But you do ask a very important question, where do we go from here? And so as we look into the year, the assumptions now look more like about Opego pumps for the year will be more like 10% to 12%. When you think about pharmacies or percent of sales, it will probably average something more in the low teens, like also 10% to 12%. and that's just reflective of the fact that we have seen this more gradual pacing and we're considering the fact that the pharmacy pump adoption has been slightly pacing faster than the conversion of the supply base. And so with that, that takes us into 2027 where we think about these headwinds we've talked about may shift into next year. And so with this new information about the pacing that we have in hand and that we've shared today, I expect that people will need to re-look at their models for next year and recalibrate for this new information.

Thank you. Our next question comes from Kieran Ryan with Deutsche Bank. Your line is open.

Hi there. Thanks for taking the question and congrats to John. I just wanted to ask about tubeless MOBI and some of the commentary and timing you did there. When you talk about commercial availability in the first half of 27, Can you talk about how much of your current pharmacy formulary coverage would you expect to be live for tubeless MOBI at that point and whether plans cover it under kind of existing MOBI arrangements or if that'll be something that goes plan by plan? And I guess just kind of on a similar note, just wondering how a current MOBI user who accesses through DME might be able to access tubeless MOBI. Thank you.

Sure. So I'll take that question, actually. So the 50% coverage that we have today is the starting point for Mobi Tubeless. We're actually in additional conversations, and we expect to continue to increase the coverage by the time we get to full commercial availability. And in fact, Mobi Tubeless, we see, and Mobi Tubeless and Autosoft Plus as pharmacy-only products. are really a key driver into getting more throughput into the pharmacy channel and they can be an accelerator for us on that pace of adoption. But Mobi Tubeless itself also is an important conversation point with the PBMs and the payers because they view this as a very important to them for what they want to see in the pharmacy channel and much more directly competitive with the other tubeless option there. So the coverage is starting off where we are today already and we expect to keep building on that across the year.

And Karen, if you have a Mobi pump today, all you really have to do is buy the tubeless supplies. It's an infusion plate and a cartridge that's designed to work with the infusion plate. And so it's a very easy transition to move from a tubed Mobi to a tubeless Mobi. And we expect people in the existing installed base will want to do that aggressively once it's on the market.

Thank you. Our next question comes from Lawrence Beagleson with Wells Fargo. Your line is open.

Yeah, hey, it's Larry. Thanks for taking the question. Excuse me. So I guess I'm Moby tubeless, John. And by the way, congratulations. I really did think you were going to make it till you're 80, but I guess not. Thanks, Larry. Hey, do you expect clearance in Q4. Just, you know, what gives you the confidence you're in the late stages of review here? Why only abdominal wear? You know, and what's the pathway to get other sites like the arm? And how do you think that limits commercial adoption just to have abdominal wear? Thank you.

Yeah, I think that, you know, as you start to work with FDA on these filings, you know, you have questions. And as you get towards the end, the questions changed. and they really have to do with more about preparing for launch. And so we're definitely in that phase with them right now. And I think that we expect it to be approved in the fourth quarter. And then relative to how we submitted this, we submitted it to get it through the review process quickly. But in the process, we work with the FDA and we let them know that we plan to make these changes and that they have mechanisms to allow us to agree ahead of time Thank you. Thank you.

Our next question comes from Steve Lichtman with William Blair. Your line is open.

Thank you. Hi, guys. John, best of luck. It's good working with you. Just wondering on the fully closed loop, any more details you could provide on what the pivotal trial will look like? And once you do begin it, if it is by the end of this year, you know, potential timing on approval? of that enhanced algorithm.

Yeah, so we have high confidence we're going to begin it in the fourth quarter. I'll just start off by saying that. It's going to be a large study. It'll be type 1 and type 2 and adolescents. You know, so it's going to be, you know, in excess of 300, maybe even 400 people. I think that the study is going to, each person will have to go through three months. And, you know, we're in the process right now of contracting and getting patients ready for starting study. It typically will take us three to four quarters to get through it. So by the end of 27, we expect to have enough data to submit to the FDA. And that review process probably can take a quarter or two. So I would say that in 2028, we'd expect to have the product on the market. We're very excited about it. We think we've got the best product that's coming to market. We have a great relationship with UVA. They've developed a really nice product. And we're really excited about it. And I think that, as I said, we think this is going to be a game changer for the business.

Thank you, John.

Thank you. Our next question comes from Jacob Malenik with Opco. Your line is open.

Hi, everyone, and thanks for taking the questions, and congrats to John. Moving to the international growth acceleration there, you noted that moving direct brings at least the 30 percent pricing uplift alongside the renewal opportunity. So in the markets you've already transitioned, can you separate the contribution from patient demand, pricing, and maybe any catch-up shipments following the infusion set constraints? And then how much of the quarter's growth is representative of the, I guess, underlying trajectory for next year?

Sure. Great questions there. From an international perspective, I think you said it well, the things that were drivers. In the third quarter in particular, we did have a small deferral of sales from the second quarter related to supply shipments that benefited the quarter. But I would say the biggest drivers were the new products as Moby's being scaled up in its launch and also Autosoft Plus launching where distributors were actually ordering some of their first stocking orders for that product. And so when we look at the strengths, the direct markets are still a small percent of the business through the end of the third quarter. By the time we get to the end of the year, we should be servicing about 30% of our base in those direct markets. And so although small contribution at this time, the progress there is pretty exciting. and so on. And so we're just at the very beginning phases there. So overall, without putting any hard numbers to it, there was contribution both from that volume increase in the direct and the distribution markets, but noticeably in the direct markets, as well as the pricing benefit we get from that uplift from being direct. And then the new products just starting to generate more momentum. I think the international markets, at least for tandem, have been underappreciated by many, and I think you're going to start to see some really exciting stuff happen there as we continue on this journey.

I would just add that Moby is doing really, really well in the international market on early data. Very excited about how that's going to even further advance the growth. Thank you.

Thank you. Our next question comes from Joanne Wunsch with Citibank. Your line is open.

Hey, good afternoon. This is Anthony on for Joanne. Thanks for taking our questions. I think the answer is no, but this dynamic we're going through with a bit slower adoption of supplies for the pharmacy channel. Will that impact at all, you think, the uptake of Mobi? And then if I could tack on a quick follow-up, what actions do you need to take just to drive more awareness that supplies are not available in the pharmacy? Thank you.

I'm sure lots of good things are about pharmacy and the adoption. And so, first of all, maybe I'll talk about a few of the things that we think will impact or benefit pharmacy adoption in the near term. And some of it's just the early learnings as we've gone through the implementation, how the processes work, educating physicians. We're now at the size of amount of coverage where we can start more broadly marketing to the pharmacy channel. So those are all the areas where we can start to drive that momentum. The coverage is at a really good level and we expect to continue to see increased coverage by the time Mobi is fully available commercially. And so Mobi to list is helping drive that conversation on coverage. but also with availability only in the pharmacy it will help drive that volume through pharmacy. So we see that as as not a limitation for people, but as a momentum builder. And it will keep pushing up to the level of coverage where we won't have this gap for people who don't have access immediately. And so, as John mentioned earlier, people can buy their pump today and they can switch to tubeless supplies at any future date. And so we think this will bring a lot of good momentum to Moby itself as a platform. And we do think that this is actually will be a big help to our pharmacy, meeting our pharmacy goals.

Thank you. Our next question comes from Ravi Misra with Truist Securities. Your line is open.

Hi. Good afternoon, John. Congratulations. It's Ravi here for Rich. So I just wanted to push a little bit on the FCL and big picture question around how you see this, you know, resonating with payers. Obviously, you know, you're still fighting for coverage in that channel. but longer term, can you just help me understand everyone has one of these algorithms coming out in a couple of years or so. Is it just kind of something you need to kind of be in the conversations with payers or is it something that obviously you can't argue on the merits just yet? Help us understand a little bit how that strategy is there. Thank you.

Sure. I think fully closed loop is going to enable patients to get the same results or even better results that we're seeing today on hybrid closed-loop systems without the work that goes along with it. So, you know, people who want to just set it and forget it can do that. And that's a substantial reduction in the burden of diabetes for those people. And I think as you look at the adoption of AID systems, you know, early on you had the early adopters who might be willing to interact with the system. Maybe it's a little bit more technically required to interact with the system, but as As we move through the growth curve, the people we're interacting with right now, including people with type 2 in particular, want to have a very simple experience. And so I think simplifying the experience of wearing a device for 24-7 is really, really important. And I think it's one of the main drivers to get to increased adoption rates of 65% plus, knowing that we're currently around 40. Again, I think the experience that people are going to have is going to be a real positive, and it's going to absolutely drive adoption for both type 1 and type 2 people living with diabetes.

Thank you. As a reminder, to ask a question, please press star 1-1. Our next question comes from John Block with Stiefel. Your line is open.

Great. Thanks, guys.

Good afternoon.

Leigh, I might be doing something wrong, but it seems like based on your prior comments, roughly 10,000 pumps might now be going through pharmacy. I think you said 10% to 12% of the 94,000, 95,000 versus the 18,000 initially planned, the 20% of the 94,000, 95,000. So if you've got an extra 8,000 pumps going through DME and the upfront ASP, Do you land at $32 million that now you're getting upfront on the pump side? I know you're foregoing something on the supplies, but it's late in the year, so you're not foregoing a lot of months on the supply. So why is the overall guide unchanged? Why aren't we seeing that appear now that you've got more upfront dollars on the pump side of things?

Thanks. Good question. When we look at the variables for this year, so there's always a number of factors that get embedded in guidance, right? You have to think about the market, the competition, the growth rates, all the usual parts and pieces. But with pharmacy, it's even more convoluted with all the variables that go into that. And so when we looked at it, the way we were thinking about it is we're focused very much on the pharmacy adoption piece. And so if we drive more volume through pharmacy, let's say first, that's a bigger headwind on sales. If it becomes DME instead of pharmacy, that's a revenue upside opportunity, if you want to call it that. And so for right now, we wanted to err on the side of considering outperformance on pharmacy could actually have a negative impact on sales. And so we want to monitor how these trends play out through the end of the quarter. And it's more important for us to make sure we get the revenue number right. and the levers to get there are the parts that we're gonna keep addressing as we get more trends and information through the pharmacy. So at this point, we're focusing on the fact that in the fourth quarter, we're anticipating 15 to 20% of shipments through pharmacy and it will continue to have that type of headwind. That's what factored into the guide.

Thank you.

Thank you. Our next question comes from Mike Crackey with Blue Ink Partners. Your line is open.

Hi, everyone. Thanks for taking our questions. John, congrats on the retirement. Great working with you and hope to see you on the golf course sometime. Maybe just on the preliminary outlook or how you think about the building blocks for 2027. I mean, it looks like SACSET, if I'm looking at this right, consensus is showing about 12% top line growth next year. Does that sound reasonable, or given the recalibration on the pharmacy ramp, is it fair to think maybe that's closer to high single digits to start, just since you won't have that ASP uplift later in the year?

Yeah, really great question. And I think you probably appreciate my normal answer at this time is to say I'm too early to give numbers. But with the changes that we've conveyed today on pharmacy and that pace of adoption, I do think it's important we get people started in the right place. and thinking about, as I mentioned just on the last question, erring on the side of if the pace of the pump adoption is faster than the uptake on the supply adoption, which is that sustained health one that we all know is coming and really looking forward to. We want to make sure we're not disappointing on the revenue side. And so I think you're in the ballpark there and the mid to high single digit increase year over year is probably a really fair starting point as we continue to gather more data and trends here in the fourth quarter and into the beginning of the first quarter before We get through our year-end earnings call. So I think that's the appropriate way to think about it. But I think another thing I would just like to highlight, it's not just about the percentage growth on revenue. As we've already shown this year, we can be performing very well as a business in terms of new start growth, market share capture, all of those other factors being very competitive especially as we look forward to being competing in the fastest growing segment of the pump market next year and so a lot of good things happening in the business but the transition for pharmacy just has that structural effect on revenue and it's probably a lot of words around a good place to start.

Yeah, understood on that side. And maybe just one follow-up, but I thought it was really encouraging to hear you talk about the returns in U.S. new customer starts growth this quarter. So can you just maybe clarify the magnitude that you saw in 3Q and what you've seen so far in 4Q to help bolster your confidence on the overall number?

So maybe I'll start with the look back. You know, new starts have been pressured, and I think middle of last Thank you for joining us today. We're going to talk a little bit about what we've seen in the last year. 2025 was when we saw the greatest pressure on new starts, and we've steadily seen that improve. And last quarter, we were just on the cusp of breaking even. This quarter, we did return to growth. And underlying that, the key driver there would be the MDI conversions. And that's where we're seeing the greatest effect coming from Moby in particular. And again, we think Moby Tubeless is going to be a catalyst for the business in so many ways, whether it's just new MDI have grown to about 70% of pump shipments and in fact this quarter MDI grew nearly 10%. So it's a really good trend for us and we look forward to continuing to push on that as we go into next year.

Understood. Thanks very much.

Thank you. Our next question comes from Jason Bedford with Raymond James and Associates. Your line is open.

Hi, this is Elaine. I'm for Jason. Thanks for taking the question. I have one on type 2 now that the seed peptide deadline has passed. Do you have any visibility into when that could be up for consideration again? And how does your type 2 strategy change if this requirement stays? Can just tubeless MOBI and pharma get you to the same amount of uptake? Thanks.

I think that tubeless MOBI, pharma, Freestyle Libre are all absolutely tailwinds that are going to help us really take advantage of the type 2 market. But C-peptide is a real problem. That being said, we feel very positive. I mean, we feel very positive that this is going to be taken care of. We're awaiting decisions from CMS. You know, I don't think it's an if, it's a when. And I think certainly we thought this was going to happen in the August timeframe. My guess is the election's probably gotten away. And we hope to hear about this in the near future. But I think it's a very important step forward for people with type 2, and we're looking forward to seeing that happen. Thank you.

Thank you. Our next question comes from Matt Taylor with Jefferies. Your line is open.

Hey, thanks for taking the question. And, John, congrats. If you can, just take me with you, please. It was great working with you.

I know where to find you, man.

That's right, that's right. Maybe I'll just ask a big picture of market growth question. You know, we've had strong market growth here for a number of years. There's a lot of innovation coming from you and across the space. I was wondering if you think this is enough to accelerate market growth or just kind of sustain the kind of growth that we're seeing over the next couple of years. Maybe just get your thoughts on that.

Yeah, you know, it's always difficult to sort of triangulate out to how it's growing in the midst of the year. But I would just say, looking back in 25, I think all of the pump companies did quite well. And I think at the end of 25, penetration might have been high 30s, maybe 40%. We think it can get to 65. And so there's still a huge opportunity for us out there. And I think you're right. I think that innovation drives adoption. Ease of use drives adoption. And everybody is heading in that direction. So it's not only our competitors, but our partners are as well. What this does is it really provides great technology to help people living with diabetes, and we're participating in that. I do feel that the technology is great, and it's going to continue to provide new growth opportunities in this market.

Thanks so much.

Thank you. Our next question. Jeff Johnson, R.W. Baird

You know, I'm pretty sure you guys are going through a bolus optional kind of where you can or cannot bolus at mealtime. It's kind of up to the user. Just talk to me maybe about your thoughts on the importance of leaving a bolus optional option out there, especially in type 1 versus going to more of a fully forced closed loop as maybe some of your peers are doing either in type 1 or type 2. Thanks.

I would say that we have not said that yet. What we have said, though, is that we'll allow people to make adjustments to the system to optimize the performance of the system. I think we believe it's going to be fully closed loop with the ability to make adjustments to the system in the event that you want to optimize the performance. So we haven't said bull is optional at this point in time. and I think that as time comes on and goes on, we'll be more specific about some of the specific features that we plan to bring to market.

Do you generally feel it's important at mealtime for a Type 1 to be able to announce if they want and if they don't, maybe they just accept a little bit lower time and range? I guess just as you go through that decision tree and think about the pivotal and then how you ultimately commercialize the system, what are your just general thoughts there?

I think we want the system to provide the best performance. We want to see people get the highest time and range, highest A1C reduction. And so we're definitely evaluating, and we have evaluated a number of features like that. But as I said, we really haven't been specific about what's going to be included in that final feature set that'll be starting here in the fourth quarter in our clinical study.

Thank you.

Yeah.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to John Sheridan for closing remarks.

Okay. Well, as this is my final earnings call as CEO, I just wanted to say again what an honor it's been to lead Tandem and to work alongside such an exceptional team. I am proud of everything that we've accomplished together, and I'm really confident in the company's future. So thanks for your support over the years, and thanks for joining the call today.

Thank you for your participation. You may now disconnect. Good day.