1 Falling Stocks That Can Make You Richer

Worldwide, approximately 500 million adults have diabetes. These chronic health conditions pose significant challenges to patients and have a significant impact on healthcare costs.

It’s no surprise that many companies continue to develop innovative products to help people with diabetes manage their disease. one of them Diabetes management for two (TNDM 1.48%)We are a medical device company that sells insulin pumps.

Tandem Diabetes Care hasn’t performed well on the stock market over the past year, but there is hope for the company. Let’s find out why Tandem can still be a great investment for patient investors.

Tandem’s most recent financial results

Tandem Diabetes Care’s recent financial results have been subpar. In 2023, the company’s non-GAAP (generally accepted accounting principles) revenue was $772.8 million, down nearly 4% from the previous year. Tandem didn’t sell as many pumps in 2023 as it did in 2022. Pump shipments fell nearly 19% year over year to 104,000 units. Tandem ended the year with an installed base of 452,000 units, up 7% from the previous fiscal year.

One factor in Tandem’s unimpressive results was economic conditions, including inflation. Cash-poor patients are less likely to spend money on a new insulin pump. This is especially true if you already have an insulin pump. Multiple daily injections are more cost-effective than pumps, so patients are less likely to switch to the latter when the economy is bad.

Tandem’s declining top line is not performing any better than its bottom line. Last year, the company’s net loss per share was $3.43, much worse than the $1.47 reported the previous year. If both revenue and earnings are moving in the wrong direction, that’s not good for any company.

New products can make a difference

But there is more to Tandem Diabetes Care. Many companies, including leading companies, are not performing well amid the economic crisis. If the economy improves, pump deliveries recover, and profits start moving in the right direction again, Tandem’s fortunes could change. Tandem’s 2024 sales guidance implies that sales will increase approximately 10% year-over-year. This is significantly better than the performance presented for 2023.

Last year, Tandem received licensing for its new insulin pump, Mobi, which executives call “the world’s smallest and most durable automated insulin delivery system.” Tandem’s Mobi is much smaller than its current most popular product, the t:slim X2 insulin pump. The size of this pump was also a selling point for some patients.

Mobi was designed with complete discretion in mind. It can be controlled via an app on a compatible smartphone. You can also pair it with dexcomG6, a continuous blood sugar monitoring system that automates the insulin delivery process.

Mobi could be a significant growth driver for Tandem Diabetes Care. Adoption of these new devices is happening faster and more broadly than expected, according to one Wall Street analyst. That said, the t:slim X2 will still be important to Tandem.

The company’s growing installed base means increased revenue from accessory and pump renewals. The t:slim X2 update cycle is approximately 5 years. Tandem Diabetes Care plans to have an installed base of 1 million customers across its products. The company is also seeking to improve its gross margin, with a long-term target of 65%. It is currently at 50%.

The Mobi is about 15-20% cheaper to manufacture than the t:slim X2. Tandem must also continue to innovate. We are developing Sigi, a tubeless, patch site, individual insulin pump option. So Tandem’s platform looks interesting.

Interesting long-term play

Although Tandem Diabetes Care has experienced some headwinds recently, it remains a highly innovative company with a lot of room to make progress in the vast diabetes market. As Mobi gains traction, don’t be surprised if it hits its installed base goal of 1 million units within five years. And Tandem Diabetes isn’t stopping there. The company is developing several other products to help people with diabetes.

Simply put, the stock still has an interesting outlook, even though it has lagged the market over the past year. Long-term investors should strongly consider adding shares of Tandem Diabetes Care to their portfolio.