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John Sheridan

Thanks, Susan, and thank you everyone for joining us on today's call.
2024 was a pivotal year for tandem, marked by an impressive 18% increase in worldwide sales. I am proud that we set new sales records both in the US and internationally while delivering industry leading customer satisfaction and expanding our portfolio of technology solutions.
The highlight of the year was the introduction of our category defining pump platform Tande Mobi, which experienced continued growth throughout 2024 as awareness of our newest offering increased. Additionally, we implemented operational efficiencies that set the stage for sustained profitability in 2025 and beyond. These achievements were made possible thanks to the resilience, perseverance, and hard work of our employees.
Thank you, everyone, including our distributors, suppliers, clinical partners, for your continued dedication and efforts that contribute to furthering our mission.
Tandem now offers the most robust ecosystem and insulin therapy management in the world. With our flagship TSIM and TandemM Mobi, we provide the greatest choice in pump platforms. We offer customers a seamless cloud-based experience with our apps and operating system support and enable HCPs with our web-based data management platform tandemSource.
We also integrate with multiple leading CGM sensors, and next month we will launch our 3rd automated insulin delivery algorithm with Control-IQ plus.
ControlIQ has long been considered the best automated insulin delivery algorithm with more than 240 million patient days of data logged in our system and 70+ peer reviewed manuscripts and published abstracts. Over the past 5 years, it has provided immediate and sustained results across all patient populations.
Now we're raising our own bar with a launch of Control IQ plus.
Control IQ Plus offers superior glucose control and best in class outcomes by predicting, calculating, and adjusting insulin doses, including delivering automated collection correction bonuses.
Driven by customer feedback, we have added new clinical features, such as an extended bolus lasting up to 8 hours and the option to set a temporary basal rate.
Activating Control IQ is easy. We have introduced a simple set of wizards that allows users to set it in accordance to AACE guidelines, switch it on, and witness immediate results. This is particularly beneficial to people coming from MDI.
In the US, customers also are now able to choose between English and Spanish.
Control IQ Plus was originally approved for individuals with type 1 diabetes, age 2 and older.
As highlighted in yesterday's press release, we're excited that it is now FDA cleared for people living with type 2 diabetes, 18 years and up.
This more than doubles our addressable market in the United States, positioning us for significant long-term growth. This expanded label indication encompasses all insulin requiring people with type 2 diabetes and is based on a recently completed pivotal trial. This trial represents the first large-scale randomized control study of an automated insulin delivery system in more than 300 people with type 2 diabetes.
Full study results will be presented at the International Conference of Advanced. Technologies and treatments for diabetes in Amsterdam next month.
With tandem's robust expanded portfolio, we also began executing a multi-channel pair strategy with the addition of the pharmacy channel, which we expect will ensure our best of class products are matched with ease of access and improved affordability. We also began investing in important commercial initiatives to fortify our business fundamentals. And advanced our short and longer term sales and profitability goals. For instance, in the 4th quarter, we initiated recruitment efforts to support a strategic sales expansion and territory realignment, which took effect at the beginning of this year.
We identified opportunities to modernize the tools and systems used by our commercial teams, enhance their efficiency and effectiveness.
Additionally, leveraging leveraging the robust performance of our OU US business and recognizing the vast potential within the markets we serve, we have begun a multi-year transition to direct commercial operations in select European countries.
Overall, 2024 was a successful year for Tandem with a return to growth. Importantly, we also initiated fundamental changes to key business processes, broadened market access options, and expanded organizational capabilities to accelerate revenue growth and profitability in 2025 and beyond.
And taking a deeper look at the 4th quarter, there are many wins to celebrate. Outside the US, we delivered strong double-digit growth driven by demand for the T Slim pump platform.
In the US we saw strength from both TSEM and Mobion platforms and in key performance indicators, such as year over year growth in the customers coming from multiple daily injections and customers renewing from tandem once again.
Our wins in that quarter also came with some challenges. The 4th quarter in the US did not come together as anticipated. We experienced more mutant seasonality in the last few weeks of the year, where historically, we have seen acceleration throughout December.
Additionally, shipping delays by carriers who did not deliver to customers before the end of the year as planned, impacted the timing of revenue reporting.
Despite these factors, the underlying trends of our business remain strong and favorable.
I will now ask Mark to provide more additional detail on the commercial insights, Mark.

Thank you, John. When I joined Tandem just over a year ago, we put a commercial strategy in place to maximize our portfolio of innovations, galvanize the customer experience, and fortify our international efforts to become truly global. Our strategy remains fully intact, and we achieved meaningful progress delivering on it in 2024 and most importantly, set ourselves up well for the longer term.
Starting with maximizing our portfolio in 2024, we demonstrated our commitment to bringing new innovation to market with the launch of a new pump platform and multiple new CGM integrations.
We also scaled Tandem Source, which is now used by more than 90% of our US prescribers, and began offering it outside the United States. The expansion of our AIB portfolio with the US launch of Tandem Mobi was a particular highlight. Moby is an expansion to our portfolio, largely attracting customers who otherwise may not have selected Tandem.
At half the size of TSlim, the same weight as 2 AA batteries, and the size of an AirPod case, Moby is defining a new category in AID technology. Its tiny form factor coupled with mobile app operation and the flexibility to be worn as many as 20 different ways, including the ability to detach, provides patients with an entirely new value proposition in wearability backed by the best in class control IQ.
This new value proposition is attracting a younger population to AID therapy and earning Moby excellent feedback from both healthcare providers and Moby customers. This was reflected in DQ&A's recent survey where Moby was rated number one in size, comfort, and wear during physical activity.
I am proud of the start to Moby's launch, which we plan to continue building by amplifying awareness and trialing of this exciting technology, offering greater access and expected affordability through the pharmacy channel and by expanding its feature set.
We also continue to have high expectations for our flagship T Slim pump, which has a strong fan base with both new and renewing customers. Its 300 unit cartridge, broad CGM and phone compatibility, and all in one touch screen use provide high satisfaction and allow for tandem to meet different needs in the diabetes community.
We now have more than 320,000 in warranty customers in the United States, and the way we serve them is a differentiating factor for tandem. As a result, we delivered double-digit growth in renewal customers both sequentially and year over year, while delivering an industry-leading customer satisfaction score.
For the first time, Tandem won Sea Grove's People Choice Award, leading in 4 out of the 8 categories surveyed, including favorite pump. In DQ and A, Tandem had the highest net promoter score, outperforming all other competitors. This reflects our deep dedication and commitment to delivering a best in class customer experience.
Turning to our business outside the US where we now have more than 160,000 in warranty customers, our consistent outperformance this year was driven by high demand for our TS Slim X2 pump, and under new international leadership, we advanced how we work with our distributor partners and strengthened our commercial capabilities.
It's also a reflection of the large and under penetrated nature of the countries we serve and the future opportunity in these regions.
As we look to 2025 and beyond, we are well positioned to drive and scale our commercial strategy. The worldwide AID market has more competitors, larger sales forces, and more insulin pump offerings than ever before. 2024 highlighted this as an opportunity to invest in foundational capabilities that we are capitalizing on for the year ahead to increase our share of voice. Continue driving sales force and overall commercial effectiveness and improve how we service those markets.
In the US we have successfully executed a strategic realignment and expansion of our sales and clinical teams.
This optimization enhanced efficiency while increasing our share of voice in high priority growth accounts. Tandem's technology is incredibly exciting and innovative, and we recognize this is a promotionally sensitive market.
So now is the time to invest selectively and responsibly to amplify our market presence and enhance both the customer and employee experience.
We have enhanced our structure, targeting strategy, modernized our practices, and equipped our teams with new capabilities and tools to drive commercial excellence. These initiatives were piloted with our field team in 2024, are now being rolled out, and we expect to see increasing benefits starting in the latter half of this year.
Another exciting opportunity for Tandem is our scaling pharmacy channel initiatives. 2025 marks the 1st year that Tandem is able to offer multi-channel durable medical equipment and pharmacy benefit plan coverage.
Our team exceeded our market access goals for 2024 by signing multiple meaningful contracts with leading PBMs. And we now have approximately 20% of US lives covered under pharmacy agreements for a mix of commercial and government lives. We believe this is a win for tandem and most importantly, a win for patients who previously stayed on multiple daily injections due to cost barriers. Driving scalable growth in pharmacy is a top priority for our business this year as we work to drive broader access and sustainable growth.
Pharmacy is also strategically important as we increase our focus on supporting people living with type 2 diabetes, where cost is also a barrier. To help drive change so that cost does not prevent people from getting the therapy they want and need, we are active in a coalition as well as industry efforts to establish a sustainable Medicare pathway to broaden coverage for people living with type 2.
Addressing the needs of the type 2 insulin dependent population is a strategic imperative for tandem and one that provides long term growth opportunities.
With Control IQ plus Type 2 indication now FDA cleared, the size of our addressable market has doubled. As a reminder, more than 30,000 people with type 2 use tandem's technology today, and we've seen this success without any dedicated marketing or sales efforts.
Our recently completed randomized clinical trial will serve as a powerful foundation for promotion post-clearance, highlighting key differentiators that set us apart in this market.
We also recognize the needs of this population can be different than people living with type 1, and we are committed to serving them with tailored solutions. We will soon begin type 2 pilot launch activities that will scale based on our key performance indicators.
Turning to our business outside the United States, we are continuing to scale our presence in the countries we serve. Historically, our sales have been exclusively through distributors. In 2024, we began laying the groundwork to expand our international presence by onboarding new talent to our regional and in-country commercial teams while continuing partnerships with our in-region distributors.
To build upon this model and drive further growth, we are preparing to initiate direct sales training and customer support in select European countries starting in 2026.
Acknowledging that such transitions can cause some disruption, we are working closely with the distributors to minimize impact for all parties involved, particularly prescribers and tandem pump users.
This is a natural step in our maturation as a med tech company and one that is intended to strengthen our financial position by accelerating sales growth and driving margin expansion. It's also an opportunity to gain greater direct insights and deepen relationships within the European diabetes community, which is a priority for us as we build out our teams to support local efforts and establish global leadership.
As you can see, we have entered a transformational phase for our commercial organization and for tandem.
These steps are critical as we continue to maximize our portfolio, expand our addressable market, increase our competitiveness both near and long term, and improve the lives of people with diabetes worldwide.
I'd now like to turn the call over to Lee to share some more information on our Q4 results and expectations for 2025, Lee.

Leigh Vosseller

Thanks, Mark. As a reminder, unless otherwise noted, the financial metrics I'll be discussing today are on a non-gap basis. Reconciliations from GAAP to non-gap results can be found in today's earnings release as well as on the investor center portion of our websites.
Annual worldwide sales were the highest ever at $910 million, which was an increase of 18% year over year.
We also achieved the record 4th quarter sales of $252 million. It was the largest in our history and the 2nd quarter in a row of greater than 20% growth over the prior year.
This sales performance was driven largely by a strong double-digit increase in pump shipments.
Starting with color on the US market, in the 4th quarter, we shipped more than 24,000 pumps and generated sales of $184 million, representing 13% year over year growth.
On a full year basis, sales were $642 million. Pump shipments of nearly $81,000 for the year increased 10% due largely to the Mobi launch and strong retention of our customers through renewal purchases, while pump sales increased 13%.
This differential is due to improvements in average selling prices, benefiting from continued price increases and favorable mix within the DME channel across the year.
We are now consistently seeing nearly 40% of our US pump and supply business through direct contracts versus 36% a year ago.
When looking at our sources of business during the year, we continue to see positive trends into the 4th quarter. Renewals and new starts from MDI conversions are two key metrics that are foundational to meeting our long-term growth objectives, and we delivered on both fronts. Renewals continue to meet historically high retention rates on pace for consistent achievement of 70% capture within 18 months of warranty expiration.
Renewals were the greatest driver of pump growth, we were exiting 2024 encouraged by our trajectory with Moby driving more MDI users to pump therapy.
MDI conversions in 2024 grew double digits and made up greater than 60% of our new starts overall.
Q4 also marked the conclusion of our tandem Choice program, which, as previously discussed was an opportunity for eligible TLX2 customers to switch to Moby upon its availability earlier this year.
As a reminder, reported pump shipments and non-gap financials do not include any impact from the program.
There were essentially 3 stages of this program. On a GAAP basis, we deferred a portion of the sale for each eligible X2 customer over the course of approximately 18 months prior to selling Moby.
Upon launching Moby this year, we ceased deferring any portion of X2 sales and began recognizing sales and cost of goods sold with each individual election to switch to Moby.
Now that the program is complete, we captured all remaining X2 sales deferrals in the fourth quarter totalling $30 million.
For further details on the GAAP accounting for this program, please refer to the accounting policy discussion in our 10k.
Turning to our results outside the United States, we shipped approximately 40,000 pumps for the full year and grew sales to $268 million, which is a 39% increase year over year.
In the fourth quarter, we shipped approximately 10,000 pumps and grew sales 48% to $68 million.
Similar to the US, our OUS pump and supply sales benefited both from volume and price increases.
The majority of our pump sales continue to be driven by customers new to tandem with strong demand for TSM X2. Renewals will begin to offer more meaningful contribution in 2025.
Moving on to margin performance, our 2024 gross margin was 51%, consistent with 2023, while absorbing headwinds associated with the Moby launch.
As expected with scaling volumes, Moby pump manufacturing costs per unit continue to improve across the year and will begin to benefit gross margin as we enter 2025.
This positive contribution from Moby will build in the coming years and become more meaningful as we increase the mix of Moby pumps we are selling.
Additional leverage will come from Moby cartridge scaling in 2026 and beyond, as the size of the ordering install base is expected to grow.
Gross margins also benefited from favorable ASPs across all products.
For the full year of 2024, our adjusted EDA margin was consistent with 2023 at 1% of sales, which included increased spending year over year to support the Mobi launch and clinical trials for new products and indications.
The adjusted EBITDA margin also reflects initial investments to commence the expansion of our footprint in the US, as well as build infrastructure to support direct operations outside the US.
Even with these investments, 2024 marked a return to positive free cash flow, which is early evidence of our dedication to improved financial strength in the coming year.
We ended the year with $438 million in total cash and investments and are confident in our ability to support key operating and non-operating commitments in 2025, including debt repayment of convertible notes due and final AMF purchase obligations.
Turning to guidance, with tandem choice behind us, we are returning to GAAP guidance for 2025, which will be most directly comparable to the non-gap results we provided in 2024.
Worldwide sales are expected to be in the range of $997 million to just over $1 billion, or 10% to 11% growth year over year. This contemplates the impact of certain factors that are critical to meeting our long-term sales ambitions that may create some level of disruption in the near term.
In the US, our sales for 2025 are expected to be in the range of $725 million to $730 million or growth of 13 to 14%.
We anticipate another strong performance with renewals from increased warranty expirations, predictable and growing supply sales, and mid single digit growth in new pump starts.
This growth in new pump starts will be driven by continued traction with Moby and other new product innovations.
We will continue to vigorously pursue improved market access for our expanded type 2 label in the Medicare population, expecting only modest contribution in the meantime.
The Salesforce expansion and realignment that we just completed in the US have the potential to create disruption in the near term and was factored into our expectations.
Our move into the pharmacy channel is important for addressing affordability concerns, and we have a strong start with approximately 20% of covered lives under contract.
We have not included material benefit from pricing or volume at this time. We will continue to gather and assess data related to new product adoption and channel utilization to inform updates to our guidance in upcoming quarters.
As a reminder, both pump and supply shipments typically reflect seasonal patterns across the quarters, which is associated with insurance dynamics in the US. For example, first quarter pump shipments typically decline from the 4th quarter by 25% to 30%. Accordingly, sales for the first quarter are expected to be in the range of $144 million to $147 million, representing 10 to 12% growth year over year.
The remainder of 2025 is expected to follow historical seasonal patterns where both pump and supply sales scale up across the year.
Sales outside the US for 2025 are expected to grow 2 to 4% to a range of $272 million to 277 million.
This reflects the tremendous market expansion opportunity ahead, balanced with the potential for disruption as we prepare to go direct and select European countries. Our sales assumptions factor in $15 million to $20 million of potential headwinds later in the year as we navigate this transition ahead of our planned 2026 launch.
In the first quarter, we anticipate minimal disruption and therefore expect sales of 75 million to 77 million from strength in these markets.
We expect to demonstrate our greatest progress in recent years in both growth and adjusted even by the margins. While I have outlined today certain investments we are making for growth, we have meaningful efficiency initiatives underway through greater automation, process improvement, and increased use of technology to support our customers.
The savings expected to be generated will allow us to fund the commercial investments while expanding margins.
We expect gross margin to be approximately 54% for the full year, and 51% in the first quarter, including minimal anticipated impact of tariffs, driving towards our long-term target of 65% where Mobi will be the greatest contributor.
Adjusted EBITDA margins are expected to improve to approximately 3% of sales for the year or an improvement of 4% points from 2024, with the low in the first quarter at approximately 6% of sales.
I'll now hand the call back to John for closing remarks.

John Sheridan

Thankfully, alongside our operational and commercial strategies to propel business growth, we are unwavering in our dedication to innovation and focus on new technologies that will bring the greatest benefits to our people with diabetes.
In 2025, we will further expand our portfolio by launching new techno technology solutions.
First is our integration with FreeStyle Libre 3, plus with T Slim, followed by Mobi, and then next is the introduction of Android app for control for Mobi.
Additionally, I am thrilled to announce that we have already submittedOI for CE Mark and are on track to launch it outside the US by the end of the year.
The international launch of tandem sources currently underway will enable the scaling of Mobi's global expansion.
Another key regulatory filing to highlight is our initial FDA submission for our steady set and fusion set.
We are pursuing a 3 day indication as a first step in our regulatory strategy for longer wear times with additional filings to support our product targets. Our commitment to innovation and growth also extends beyond 2025. We are enhancing the features of both TSIM and Mobi platforms. For TSIM, it's continuing to keep our flagship platform modern and competitive. For Mobi, we are prioritizing the development of a tubeless infusion site. That offers even more wearability options, which will be the next significant pump enhancement available within our portfolio.
Beyond that, we plan to further expand our portfolio with a 3 pump platform, CII.
SIGI is an ergonomic and rechargeable patch pump. We are beginning to accelerate its development in San Diego, leveraging the expertise of our advanced pump development team, and we are excited to bring this differentiated technology to the market.
We remain steadfast in our commitment to offer the best performing fully closed loop algorithm with industry leading outcomes and minimal user burden. To further this goal, we recently signed a multi-year collaboration agreement with the University of Virginia Center for Diabetes Technology to advance research and development efforts on fully closed loop insulin delivery systems.
This exciting collaboration will build on ongoing research as we continue our successful partnership to deliver new innovations.
As you can see, 2025 is positioned to be full of tremendous opportunity for tandem. The strengths that have driven meaningful growth for us in the past are once again in place today. These include having a differentiated portfolio of technology solutions.
Our industry leading customer service and our best in class automated insulin delivery algorithm.
These drivers, coupled with our actions underway to fortify, strengthen and grow our business, include our expanded sales force with modernized tools and systems, increased pharmacy channel access, scaling growth into type 2, preparation for direct sales in Europe, and the most exciting pipeline of diabetes.
Each of these is an exciting opportunity independently. Together they position us for near and longer term profitable growth as we create new possibilities for people living with diabetes.
Thank you for supporting Tandem through this exciting transformation.
Operator, would you please open the call for questions.

Question and Answer Session

Operator

Thank you. (Operator Instructions)
Matthew Blackman with Steel.

Mathew Blackman

Oh, good afternoon everybody. Thanks for taking my question.
Lee, I was going to give you a multi-part question. Apologies that we're starting off like that, but I was hoping to get you to, if you could quantify, I think you called out 42 shipping delays.
You quantify that for us and whether that was on both the pumps and the supplies side and then also the December trends being softer, just any thoughts there on why and to the extent you want to give us some commentary beyond obviously the one you guidance on how things are looking in early 205 on that front and then on the guidance, I just want to confirm, I think I heard it, but is type 2 baked in there? Is libre baked in there? It didn't sound like it. A and just any clarification on what's in there and what would be potentially upside, I'll leave it at that.
Thank you.

John Sheridan

Thanks, Matt. Certainly a lot packed into that question. So I think I will start with a few comments on the 4th quarter.
And so to your point, asking about where the shortfall came from, the majority of it really came from the fact that we saw a muted seasonal curve in the in December. So if you think about the last few weeks, and as we normally look at seasonal trends, and not only grows across the quarters, but even across the weeks within the 4th quarter. December was still by far the largest shipment month we had for the year. It was really just those last few weeks that fell short, and it showed growth year over year. And so the comment about the shipping delays, it was a contributor. It was not the most meaningful, but it was important just to call out compounding, what we were seeing at the end of the year. And we did take those considerations or take those into consideration as we thought about how to set the guidance for 20. 5, none of it took away from our enthusiasm, or confidence in continuing to grow the market. We still saw great strength in NDI. We still saw great traction with our renewal opportunities, and those are the fundamental key performance indicators that we expect to drive the business going forward.

Operator

Steve Lichtman with Oppenheimer.

Steve Lichtman

Thank you evening guys. I guess for for my one question wanted to touch on pharmacy, a lot of progress, that you noted there. Can you talk about the next steps for that initiative, any 2025 goals on coverage you can share and you know how you see, now that you're at that 20% mark, how you see that playing out here in the in the coming quarters.

John Sheridan

Thanks.
Thanks for the question.
Steve, I'll take that one.
So yeah, I think you know we're really focused on.
Pharmacy, we recognize that out of out of pocket cost matters and you know we're really pleased with the strong progress we're we're making, in the pharmacy, you know this year is the 1st year that we can offer multi-channel DME and pharmacy benefit plan coverage and you know the good news is we now have patients receiving products through the pharmacy. It's a really important step. It's a win for tandem, certainly because, we believe that, allows us to offer better access, and experience, and we do think it'll help us with our win rate with both healthcare professionals and patients, but you know it's obviously a huge win for patients, right, because those that have, been on MDI and haven't been able to. Go on to cost barriers, it's been something we've been focused on. So yes, we've signed, multiple contracts with with leading PBMs, and it translates to roughly 20% of covered lives across various lines of business, both commercial and government. And you know we're activating our copay assistance capability, as well to serve that market. So, you know we have those plans to obviously pull through that with, our field teams and, for this year driving scale and efficiency in the pharmacy remains a top priority.

Operator

Brooks O'Neil with Lake Street Capital Markets.

Brooks O'Neil

Hey, good afternoon, guys. This is Erin on the line for Brooks. Thanks for taking my question. You, you've mentioned in the past that the Mobi pump compared to TSE in the long term will be, roughly 10 to 15% lower manufacturing costs and the cartridge being about roughly 20%. Can we expect to see some meaningful margin improvement from those conversions this year, recognizing the guide does call for margin improvement, but, just looking to digest that a little bit. Thanks guys.

John Sheridan

Sure, thanks for the question, Erin. So you do have it correct in terms of the ultimate at scale, lower manufacturing costs for Moby compared to TSlim. As we built up this year, we were facing headwinds with Moby having that higher per unit cost, mostly because of the overhead overhead that we were absorbing, but I can say as we exited 2024 and going into 2025, the. The pump itself will start to become accretive, and that's part of the contribution to the margin improvement in 2025. The cartridges, on the other hand, still have a way to go before they scale up enough to start showing that benefit, which will begin in 2026. And so this is a multi-year margin expander for us, but everything that we're seeing, we're absolutely on the right track to achieving those targets for the Mobium.

Operator

Matt Mixic with Barclays.

Matt Miksic

Thanks so much for taking the question and congrats on a really great finish despite the the the ebbs and flows that you mentioned in in December so I I wanted to ask a question about, you mentioned some of the additional, the new product innovations that kind of baked into your into your into your guidance for this year so maybe highlight what some of those are and then, also one of the questions we get often is. We're not putting a finer point on the arrival of SIGI. It's kind of the pathway of SIGI. It's it's going to use, I suppose, the current algorithms Control IQ plus now, but maybe what other, what are hoops and hurdles that it has to get through in order to get to market.
Does that involve a large clinical trial, maybe just some high level background on what the pathway is to bring Sigy eventually to the US. Thanks so much.

John Sheridan

Good thing, Matt. Well, first of all, we're really excited about the launch of Control IQ, and that's going to be happening here in a matter of weeks and it has enhancements to the algorithm, the sort of the usability of the product, personalization, and also it will enable children 2 years and older to start to use Control IQ as well as people who have type 2. So very excited about that. I, I'd say following Control IQ plus, we intend to implement Freestyle Libra 3. On TSlim, and that then will be followed on to Mobi. And then we also are working on the Android version for Mobi, which will be available this year as well.
So all, we feel very good about these. We think that they're going to be meaningful improvements to the sort of the appeal of the products and drive significant revenue growth opportunities in the market. In addition to that, we're also rolling out tandem source and mobile OUS, which we're excited about. And, I think that, that's been happening now and I think that we're going to be going country by country, as we get into the year. We did also, as I mentioned, file for CE mark for Moby. And so certainly there's uncertainty that comes along with the MDR certifications in Europe, they've gotten more complex over time. But, we would expect to hopefully have that on the market OUS before the end of the year. So those are a lot, that's a lot going on here for the 2025, and we think it's really meaningful progress and I think it's our commitment to innovation. The question about SII. Sigy is going to be an ace pump, so it's going to be interoperable. And so just like T Slim and and and Moby, once it's approved as an interoperable pump, we can use any of our approved algorithms on it, and we would intend to do that. And so, it's still a little ways away. So any enhancements that happen to control IQ or any additional improvements we make to algorithms. In the meantime, we will be available onigi as soon as it does come to market. I hope that answers your question.

Operator

David Roman with Goldman Sachs.

David Roman

Good afternoon. This is Phil on for David, thank you for taking the question. I thought I'd go to the OU US business is some solid out performance and 4Q versus your guidance, but if I do the math, even if adjusting for the direct to the distributor to direct transition that's contemplated, it's still represents some slowing, year over year trying to adjust out some of the 2023 1 time distributor and and France.
I guess the question is what's contemplated in the underlying there with renewal becoming a more meaningful part of the opportunity is there may be some expectation for slowing, ahead of the Mobi roll out and launch OUS? Thanks for taking the question.

John Sheridan

Sure, thanks, Phil. I'll acknowledge first there have been a lot of moving parts in our business outside the US over the past couple of years and in 2025 as well, but I'll say from the perspective of the market, it's still vastly under penetrated and we've been demonstrating great strength and traction. If you think about where our business has been coming from in the past few years, it's really almost all new customers to tandem. And so renewals only began to be a contribution in 2025. And so we do anticipate there will be disruption, this year as we execute on this transition to going direct in preparation for 2026. But outside of that we feel very strongly about our. Opportunity in those markets and we'll continue to push forward there. And so, as we start the year we're always thoughtful when we put our guidance into place about what the risks and opportunities are for the business and putting more weight to the risks and this is true for the whole worldwide business, and that's reflected in in how we built the guide for 2025 for OUS, but we do believe in the, there's a great opportunity for us to grow.

Operator

Chris Pascal with Nephron Research.

Chris Pasquale

Thanks, I wanted to ask about the US Salesforce expansion and clarify how far along you are in that process today and how we should think about the timing of any potential disruption associated with that. And then given the news about type 2, does this give you the coverage that you need to really capitalize on that opportunity and call on the primary care physicians who manage a lot of those patients, or you're going to need to do more to really get it at that opportunity?
Mark, what did you take that?

Yeah, Chris, thanks.
A lot for the question. There's a couple questions in there. So, yeah, I mean when we step back.
We we felt like it was the appropriate time to to selectively invest in the field force expansion, just based on the potential of the portfolio, also just looking at what competition is doing with their sales forces we know this market is a promotionally sensitive market and frankly we hadn't, realigned in in several years so. The realignment will do a couple things I think first off is it does create optimization and efficiencies that you get through a a a realignment process, and then the expansion, is clearly going to give us some boost, and increasing our share of voice and what's important here is, this is going to allow us to really call on the right, high growth HCPs, the ones where we believe have the greatest potential. And and growth opportunity as as we've, and missed some of those or haven't called on them in in in the prior years so and and the realignment and expansion allows us to to really go deeper, in each of those more high potential accounts. Now in terms of disruption, I mean this was very front and center and we did this expansion in quarter 4, so we start this year right now with, higher share of voice we are completed in the expansion about 95+% there and so it's live. And you know we were very intentional on how we went about this to ensure that we minimize disruption, in quarter 4 the field teams were focused on selling and so there was no impact to to Q4 and you know we've got a really good experienced team on board that you know knows how to manage. Realignments and expansions and and so you know that continues to serve us well now into the 2nd month of the year I I'll.
TRY to comment on the future sales force expansion.

John Sheridan

You know I think hey we continuously evaluate share voice needs. You know what competition is doing in line with our growth and and profitability goals for now in in type 2, we're really primarily focused on those high insulin prescribers, think of this more as end those and end of like PCPs, but what is very important is we designed this sales salesforce, restructure in alignment. It's designed with the type 2 expansion in mind as well as we expand in pharmacy. So down the road that we can easily scale up, over time if we want to put more share of voice into primary care, but for the time being we're we're focused on the immediate core market.

Operator

Larry Biegelsen, Wells Fargo

Larry Biegelsen

Good afternoon, thanks for taking the question. Hey John, I wanted to focus on the, type 2, launch and opportunity in the US.
So the mid single digit growth in new starts, how much is, contemplated from from type 2? How long is the pilot going to last, John and. Type 2, I think they're about 5% to 10% of new starts today for for you guys for pod, it's, 30% now. Is there any reason your percent of new starts from type 2 can't increase to 30% in the next few quarters?

John Sheridan

Thanks.
Yeah, let me go ahead and just kick it off, and I'm going to hand it over to Lee and Mark to add some insights from their perspective. First thing I want to do about type 2 is, I want to thank the FDA because this was a stressful time for them, as you might imagine, and I think they did a great job of getting this through their system. And, those guys are just as committed to helping people with diabetes as we are. So just a hats off to them. That being said, as you said, Larry, it's a large under penetrated market. It's about 5% penetrated in the US, essentially doubles our addressable market. And the great thing about Control IQ is it brings the same benefits. That people with type 1 have experience to the type 2 community. And I think that as we've seen it over the last, couple, about over the last year or so as we, as we've done marketing research, we're finding that people who have type 2 are more willing to consider pump therapy. And so in the past, we might have said that we can get from 5% maybe to 15%. I think that, with this, the new smaller, easier to use technology in the market, we think you can get over 25% in the next 3.5 years. So, I think that, with that, I think I'll let Mark talk a little bit more about our go to market strategy, and we'll go from there.
Yeah Mark, I think you're on mute.

Thank you. I just, will echo the gratitude and, the excitement we have about, being able to scale our impact in type 2 diabetes and so, we'll.
We'll soon.
In this quarter in March begin our type 2 pilot launch activities and we'll scale that based on how. Go and and they based on various performance KPIs as I mentioned earlier we're going to target you know high insulin prescribers a big focus is going to be around, activating and expanding the pharmacy channel recognizing how important that is for type 1 and type 2, and work to establishing a sustainable Medicare pathway to to broaden coverage. There is, naturally, a lot of market development work, in this particular category of type 2, so we recognize, with our other industry partners we have our work cut out for us that's going to take some time to develop the market, and, to ensure that we've got really good long term growth potential, but we're excited to. Roll out, the results we will be presenting, next month, in Amsterdam, ATTD, we're really excited about unveiling, those results and then of course all the follow on that. Communication, clinical training, and so forth, that comes along with it. So you know we have a big year ahead of us.
And the.
Last.
Thing.
I think we'll say is that we do recognize that the the population needs here in in type 2 are different from from type 1.
How we're approaching it we're committed to serving this population with with tailored solutions.

Operator

Shagoon Singh with RBC.

Shagun Singh

Great, thank you so much for taking the question. I wanted to touch on the 2025 guidance and I appreciate, you guys have this basic guidance philosophy, you've factored in some of the headwinds, but is it possible for you to share maybe a range of outcomes like given that you have type 2. You have the OUS renewal opportunity, Libre integration, the pharmacy channel where you're making progress, anything you can share on the range of outcomes or, to help us really put that into those opportunities into perspective for 25 would be helpful.
Thank you.

John Sheridan

Sure, happy to take the question. So from a guidance perspective, to your point, we looked very closely at what are the predictable recurring revenue streams to start, and obviously renewals have been something that we have a consistent track record with that will already just because of the new opportunities in 2025 create a step up in growth, consistency in our supply sales from our very large install base of over 480,000 people. And then when we thought about the new factors, if you want to call it that, or the new product and feature introductions that we have in 2025, we're super excited about all of these opportunities tied to, the new products, the pharmacy initiative, but some of these are really multi-year contributors, and we're just getting started. Mark just talked about the pilot for Type 2 pharmacy works the very beginning phase, really building out the infrastructure and just testing the waters there if not. Else here in the first quarter at least. And so from a guidance perspective we've factored in modest contribution from those in 2025. And so what's important, I think, is it really is the impact it could have on new starts for tandem and we factored in about a mid single digit growth in new starts year over year in the US, I should say in particular.

And Shain, this is not unusual. We've done this in the past where we, we're pressing hard to get these systems into the market and to benefit from them. But until we have evidence and understand exactly how they're going to affect us, we're going to take a more conservative position.

Operator

Matthew Taylor with Jeffrey.

Hi, good afternoon guys, this is also Matt on for Matt Taylor.
We wanted to ask a little bit about the integration with Libre users especially those not on the pump so maybe if you can help us understand how that launch has progressed thus far and.
Maybe the kind of momentum you're seeing about it and maybe how you think about this from a guidance perspective in terms of it being a driver of your of your new starts next year.

John Sheridan

Yeah, we have Libre 2 integrated today with with TSlim, and we're working on bringing Libre 3 to market here in the relatively new future. I think that the availability of the product is going to be, it'll be shipped on new pumps and also be made available to people who currently own pumps through a software upgrade. Right now though, if you look at the installed base in the US for Freeight Liberator 3, there's roughly 300 or 400,000 people who have, who use the system, use the sensor that have Type 1 who don't use pumps. And so I would say that there is a large market development opportunities an opportunity to collaborate with Abbott as as we bring this technology to market and we see the benefits. So, if you look at over time, we've said we can get, upwards of close to a million people using our technology, and these 400,000 people in the US represent a big part of that. And so we will be working closely with Abbott and our own sales team to make sure that we take advantage of that.

Operator

Mike Kratkey with Leering Partners.

Mike Kratky

Hi everyone, thanks for taking our questions.
Maybe just to go back to an earlier one on understanding the dynamics of the 4th quarter, I think you mentioned the unexpected timing of revenue reporting in the 4th quarter, but you know looks like the guidance for one queue is still down.
About over 20% of the midpoint in the US, so was there anything specific that fundamentally contribute to that December weakness that you saw, and I think you mentioned that there was no impact here for to sales from the sales force realignment, so just wanted to, clarify what's giving you the confidence that that's the case.

John Sheridan

Mark, would you like to talk about the commercial environment a bit in the 4th quarter going into 1st?

Yeah, of course, happy to wait and thanks for the question, Mike. So.
Yeah, I mean, as John and Lee both pointed to.
To some of the things that happened in Q4, I mean there was, a little bit of a muting on the seasonality. I think I step back and I reflect on the full year, and you know there's some macro factors that I think we continue to to observe that continue to be a challenge. I mentioned, out of pocket cost for patients and you know how important it is to to make these accessible and so you know that's really underscored the importance for us to to strengthen our position in pharmacy and. So I.
I think that played into to some parts of it. I think, overall.
From a competitive standpoint, I think, we recognize that first off this is like a super large, under penetrated growth market. There's there's going to be some entrance, here and there, and we continue to see kind of two large competitors, a new one that's been scaling, but, we feel good, we feel like we're holding our own and you know as. As Lee mentioned, despite December, I mean it was still, a really good, I think month. In fact, it was like the largest shipment month we had all year and with really sizable growth versus last year's December in 203. So the underlying fundamentals we feel good about it was a record quarter, healthy year over year and quarter over quarter growth, we really like what we're seeing on the MDI side, and of course, from a renewal perspective.

Operator

Danielle and Talfiy with UBS.

Danielle Antalffy

Good afternoon guys thanks so much for taking the question. Just to follow up on the type 2 opportunity, just curious, so I appreciate there's still a lot of market development to happen and you guys are going to pilot this and and all that, but just curious about, and by the way, congrats. On on getting that approval, how to think about, what's important to a type 2 patient based on, the small percentage of patients that you have on pump today and some of the market research you've already done, from a feature perspective time and range versus pharmacy versus footprint of the pump. Flexibility, etc. And also, how a patient utilizes that pump is it pretty in line with what you see from type ones like 24/7 365? Is there, or is there some, different adoption patterns we should be or utilization, excuse me, patterns we should be, considering.
Thank you so much.

John Sheridan

Mark, I'll just kick that off and hand it over to you, but I would just say that a couple of things are important to people with type 1. 1st of all, type 2, excuse me. First of all, I think it's the simplicity of the system. It really does have to be easy to use. Discretion is another very important factor. So therefore it needs to be small and convenient. And I think that the financial elements are something that, we need to deal with it, so I think that when you look at this, we've got Moby. It is small, it's convenient. We're moving into the pharmacy channel. It is addressing some of the out of pocket expenses that that the type 2 community will have to deal with. And I think that, we feel pretty well, positioned to take advantage of this marketplace, and I think we're going to kick off this pilot and learn a lot more. But I think it's one of those opportunities that we think it's giant for us and I'm we're excited to be in it.
Mark, you want to add anything to that?

Yeah, thanks John. I think you know.
The only.
Thing I would add.
Is that, we 22 points is that, from a portfolio perspective what we feel good about is that we can offer choice and that you know it is one similarity between type 1 and type 2 is that not one size fits all and that you know we through our market research recognize that there are unique segments in type one but also in type 2 and in some cases. Type 2, really favor, a larger reservoir with 300 units of insulin, and they like the on-screen, compatibility and use, of T swim. Others we know are going to really like Mobi because if it's small form factor and it's vers. Aware, so I think we feel good about being able to offer that choice and as we load up more CGM integration on Mobi we believe that's going to be, equally important, the other point I, I'd say is that. You know we have a lot of experience working with type 2, yeah, it's, I think we've shared before we've got about 30,000 people living with type 2 using our technology today and so we've got great experience training them, working with them we understand, some of the important nuances to deliver, compelling and effective training and, we're actually looking at how to scale that digitize it, modernize it, and make it, the best experience possible.

Operator

Jason Bedford with Raymond James.

Jayson Bedford

Good afternoon. Just maybe on the pharmacy, the 20% of lives is bigger than I thought. So I guess my question is how does this impact the P&L and your guidance in 25, meaning is it a driver of revenue growth? Does it impact margins, or is it just a little early right now?

John Sheridan

Thanks for the question, Jason. So I'll start by saying we were, we're very pleased with the progress we've already made acquiring these contracts coming into the year, and we're still in the very early stages. And so from a guidance perspective we have only factored in very modest contribution from a volume and an ASP perspective, but I think that's the point as we look forward this. Implement our channel strategy and will help us drive towards meeting our future profitability goals. And I think most importantly overcome the affordability question for many patients. So the 60% of people in type 1 not using pumps today, there's a cost sensitivity there, and this gives us that opportunity to really lower that out of pocket cost and and drive more people to pump therapy.

Operator

William Plovanic - Canaccord Genuity

William Plovanic

Great, thanks. Good evening. Thanks for taking my question. I want to go back to the pharmacy. You've been signing these contracts. I think one of the questions I get is how does this impact cash flow? Typically if with the pay we go product you'll get you know you have a capital piece do you get paid that capital piece up front or is that smoothed over the the length of the contract? And then you know so how is this going to impact your free cash flow and how are you thinking about longer term just the business in general? I mean, I see, it seems like as you're crossing that chasm into positive free cash flow, you're taking the opportunity to transition the international business realign the US sales force, kind of like turning 25 into a transition year. Is this just taking the incremental free cash available and investing in the business now for leverage in the future? Thanks for taking my questions.

John Sheridan

Yeah, a couple of really good questions. I can touch on the pharmacy very quickly. The pharmacy gives us the opportunity to think about our business model and our structure and how, reimbursement may work. At this point, the volume we've anticipated is very small, and there's no change to the business model that we have in place. So, bottom line, no cash flow in. Impact with the contracts that we, kicked off right now and then to your point on the long term of the business and this is more generally about cash flow, there are very important, things that we need to do to set up the business appropriately to drive that long term growth to meet our ambitions, for growing top line, and we are always looking for ways to make those. But fund them in other ways with cost saving initiatives. And so as we turn the corner to being free cash flow positive again this year, we look forward to the opportunity to be able to make these investments that will have multi-year benefit for the organization. We also have initiatives in place so that we can show a bit of leverage in 2025 even in this investment year.

Operator

Mike Polark with Wolf Researcher

Michael Polark

Good afternoon. Just one model question. I appreciate the 2025 guidance comment mid single digit growth expectation for new US pumpers.
We all stab at this number, but we had interested if you're willing to comment on 2024 US new pumpers. What was the growth rate either for the full year or in the fourth quarter?
Thank you for taking the questions.

John Sheridan

Sure, great question, Mike. And so what I can share about new pumpers, so we've often talked about our sources of growth being renewal and new pumpers, and within new pumpers we often break it down into NDI and competitive conversions. Our focus is purely on MDI conversions. 2024 was a year where we knew, we anticipated, and we saw that competitive conversions would start to decline purely because the op. CUNY was declining, and so our focus is driving the growth of the business through the NDI conversions. NDI did return to growth in the second quarter, each of the quarters Q2, Q3, and Q4, and it was double digit growth year over year. And so that's one of the key underpinnings as we thought about the 2025 guide, in building, in that build up.

Operator

Matthew O'Brien with Piper Sandler.

Matthew O'Brien

Afternoon, thanks for taking the question. It's a two parter as well. I just want to be clear about a couple of things that you've said on the call the Q4, end of year impact that you saw. I'm just wondering if that wasn't competitive specifically with another durable pump company in the market. With a good product there, the halo effect that's probably happening on the patch pump side of things, is that something you saw in Q4 that's lingering here somewhat in Q1 and could impact the full year? And then secondly, the guy Lee, if I look at the number of additional pump sales you need to make this year, I know there'll be a little bit more bump from the renewal cycle, but it's also at a time you've got a restructured sales force where that didn't go well for your one of your CGM partners recently. And it's just assuming a big ramp, in the back half of the year, especially that I think a lot of folks are going to be concerned about you being able to hit without getting a massive tailwind from type 2s and, a massive tailwind on the pharmacy side. So how do we get comfortable you can do all that again with a restructured sales force? Like.

John Sheridan

Sure, great question, Matt. I'll kick this off. Mark may want to chime into it. So first of all, from the Salesforce expansion perspective and the impact on 2025, we did anticipate there could be disruption, no matter how well you plan or execute. There can be a little bit of turbulence initially as people are going out and meeting their docs and getting acquainted with their new territories and realignments. Mark can speak to how diligent we were and how we are. Shooting on this, but we factored in in the beginning of the year that it could be a bit more disruptive. And so to that point, on the ramp across the year, it's partially seasonality, taking into consideration the impact we saw at the end of 2024, with a little bit muted seasonality really in just the last few weeks of the year, but also assuming that these with the territory realignments and the expansion, we'll start to see more productivity as they get to the back half of the year. And so to that Q4. Softness, I would say, there's a myriad of factors that contributed. It's hard to pinpoint a single one. It wasn't, it has been across the year of an increasingly competitive environment. Mark mentioned the macro factors we've seen across recent years more and more people becoming sensitive to cost, use of high deductible plans, and such. There are so many things, but I can't say that there's any one thing that turned on the dime in the last few weeks. It just was a little bit more muted than what we've seen in the past.

Yeah, I would just say that nothing changed competitively out throughout the year. I mean, it was basically, it was static, and I think that we held our own. Certainly there's a lot of competition, but I think we held our own.

Operator

Josh Jennings with TD Cowen

Joshua Jennings

Hi, good evening.
To ask on the the type 2 indication, I guess first just to ask you your views on the basal opportunity, is that in play with the current label, or do you need to show more data, for the Control IQ to be approved there and for you to take advantage of that opportunity and maybe just touch on type 2 coverage for tandem pumps, where it stands and when it will be full. Thanks a lot.

John Sheridan

Yeah, Josh, the approval we got was for type 2 diabetes in general, for insulin use with type 2 using our algorithm. And so it involves, it's all insulins and it's all manners in which insulin can be delivered either through basal basal bolus. So it's all there. And so, and, I think basillo is something that's not necessarily, an area we're focused on, but if we decide to, then we can do that with this algorithm. Lee, you want to comment on.

Leigh Vosseller

Sure, the type 2 coverage, and so I'll say first and foremost from a commercial perspective there, it's pretty much the same coverage as it would be for a type 1. So there aren't any real limitations from a type 2 perspective. From the Medicare perspective, there's still some onerous requirements and we are engaged in working. Actively with other industry players in order to get changes made with that national coverage determination which has been received by CMS and is on the docket for review. We just don't yet have any color today on when they will actually get to it, so we are working hard to pursue that, improved coverage overall.

Operator

Thank you. One moment for our next question.
And that will come from the line of Jeff Johnson with Baird. Your line is open.

Jeff Johnson

Hey, thank you. Good afternoon, guys. Congrats on the type 2 coverage. I wanted to focus on another question there, which I apologize. I know a lot of the questions have been on type 2. But I've really been trying to game this out and, John, I'd love to hear your thoughts or anyone else's thoughts. If I look over the last 2.5 years up until 6 months ago, both you and your biggest AID competitor, essentially were off label for type 2, and I think during that time as best I could break out numbers, you guys were winning about 25% share of the type 2 new starts that were coming in, the other company winning. Maybe 75% now when you're both going to be on label, do you think those shares shift? I think a rising tide's going to help everybody, but do you think that 2,575 split or maybe my math's off a little bit, but somewhere in there, does that share shift or does the share shift at all, now that you're both going to be competing on label and how is it different if you're both on label versus maybe 69 months ago when you were both off label?
Thank you.

John Sheridan

Yeah, the first thing I'll say is what I mentioned a moment ago, and that is that, certainly as new technology comes to market, it's smaller, it's more convenient to use, and the therapy benefits are substantial, we believe more and more people are coming to market. So, the opportunity is big and I think the penetration is bigger than we had thought it was in the past. I would say when it comes to type 2 and on the competition in the marketplace. It really comes back to, the pipeline, market access and the things that we're working on. And so I would anticipate that, we, we're very confident in our pipeline, and we think it's going to be more competitive as as more of these features and systems come to the market. So I think that, I think we're going to begin to take more share in type 2 and in type 1.

Operator

Thank you. One moment for our next question.
And that will come from the line of Travis Steed with Bank of America. Your line is open.

Travis Steed

Hey, thanks for taking the question. I did want to ask on the gross margin ramp over in the course of 2025, I think it's 51 and 1 and 54 for the full year just if there's any other additional color on that. And then the impetus for why doing the the Saor expansion now. I don't know if there was a specific reason why now is the time to do it if it was related to type 2 or if it's what you're seeing in the competitive environment. And if it's, if you're calling on more primary care doctors or if it's all kind of just focused on deeper with the endos.

John Sheridan

Yeah, thanks for the question, Travis. I'll start with the gross margin and turn it over to Mark from the commercial, expansion perspective. For gross margin, what you typically see in, I'll say the normal year is that gross margin improves across the quarters as pump sales ramp in the US, with pumps being the highest gross margin contributor. In 2025 in particular, we have I call the added benefit of Moby scaling up across the year. So as we sell more and more Moby pumps, that will Also, providing a greater contribution to the margin. So we're starting the year at 51%, and I think it's I'd like to point out that that's flat to what we just demonstrated in the fourth quarter when usually we take a bit of a step back in Q1 for gross margins. So we're at a new starting point for the year and confident in our ability to deliver on that. So Mark.

Yeah, thanks, Travis for the question. I think.
The timing was right for us to do this at the end of last year, and set up ourselves, for 2025.
I think, it's a combination of factors of timing. I mean, number one is that, we do think. The portfolio's got a lot of potential. We're really excited about what we can offer, with our technology, and the market is emotionally sensitive we know that that we've done our research, we understand it and you know there is an efficiency play here too we haven't realigned in in several years and. You.what that sort of means is that, the marketplace has grown and changed tremendously over the last few years and for us to recut territories and alignment creates greater efficiency for our sales teams, gives them better workload balance. They have better reach and frequency and can just really concentrate on those high potential accounts, but it's really important, and then.
We believe we needed some extra share voice, in order to compete, and continue, in this current market, within the US and alongside that there's also new tools and capabilities. It's not just about Salesforce expansion, as John mentioned, we've been piloting a number of different tools. To better understand and segment HCPs and help enrich our messaging, new selling tools, and so, again we feel good starting this year where we have stronger share of voice, we know exactly where to go, what to say, how to say it with a bunch of high impact tools that, really can support the field.

Operator

Thank you. I'm showing no further questions in the queue at this time.
Thank you all for part thank you all for participating. This concludes today's program. You may now disconnect.