UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~June 30, 2020~~March 31, 2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 001-36189

Tandem Diabetes Care, Inc.

(Exact name of registrant as specified in its charter)



Delaware		20-4327508
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
11075 Roselle Street		92121
San Diego,	California	(Zip Code)
(Address of principal executive offices)

(~~858~~) (858) 366-6900

(Registrant’s telephone number, including area ~~code~~code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	~~Symbol~~Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.001 per share	TNDM	~~NASDAQ~~Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 22, 2020,~~April 30, 2021, there were ~~60,906,146~~62,637,925 shares of the registrant’s Common Stock outstanding.

~~Table of contents~~

~~TABLE OF CONTENTS~~

Table of contents

TABLE OF CONTENTS


Part I	Financial Information	1
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets at ~~June 30, 2020~~March 31, 2021 (Unaudited) and December 31, ~~2019~~ 2020	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	54
	Notes to Unaudited Condensed Consolidated Financial Statements	65
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	3734
Item 4	Controls and Procedures	3836

Part II	Other Information	3937
Item 1	Legal Proceedings	3937
Item 1A	Risk Factors	4138
Item 6	Exhibits	7774

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TANDEM DIABETES CARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


	June 30,			December 31,				March 31,		December 31,
	2020			2019				2021		2020
	(Unaudited)			(Note 1)				(Unaudited)		(Note 1)
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	222,479		$	51,175		Cash and cash equivalents	$	120,791	$	94,613
Short-term investments	203,806			125,283			Short-term investments	392,646		390,323
Accounts receivable, net	45,031			46,585			Accounts receivable, net	73,673		82,195
Inventories	62,263			49,073			Inventories	66,816		63,721
Prepaid and other current assets	6,100			4,025			Prepaid and other current assets	7,770		6,383
Total current assets	539,679			276,141			Total current assets	661,696		637,235
Property and equipment, net	44,385			32,923			Property and equipment, net	50,445		50,022
Operating lease right-of-use assets	21,553			15,561			Operating lease right-of-use assets	33,273		19,773
Other long-term assets	10,622			1,485			Other long-term assets	8,859		9,385
Total assets	$	616,239		$	326,110		Total assets	$	754,273	$	716,415
Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Current liabilities:							Current liabilities:
Accounts payable	$	16,371		$	17,745		Accounts payable	$	28,184	$	17,805
Accrued expenses	4,563			8,014			Accrued expenses	5,058		4,783
Employee-related liabilities	25,731			28,320			Employee-related liabilities	32,711		34,159
Deferred revenue	4,642			3,869			Deferred revenue	6,670		6,082
Common stock warrants	39,625			23,509			Common stock warrants	2,517		14,261
Operating lease liabilities	9,306			6,320			Operating lease liabilities	9,446		9,421
Other current liabilities	14,069			11,619			Other current liabilities	18,824		17,341
Total current liabilities	114,307			99,396			Total current liabilities	103,410		103,852
Convertible senior notes, net - long-term	195,344			—			Convertible senior notes, net - long-term	280,168		202,984
Operating lease liabilities - long-term	17,632			14,063			Operating lease liabilities - long-term	29,011		15,914
Other long-term liabilities	21,252			17,672			Other long-term liabilities	28,270		27,360
Total liabilities	348,535			131,131			Total liabilities	440,859		350,110
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)							Commitments and contingencies (Note 11)	0		0
Stockholders’ equity:							Stockholders’ equity:
Common stock, $0.001 par value; 200,000 shares authorized, 60,787 and 59,396 shares issued and outstanding at June 30, 2020 (unaudited) and December 31, 2019, respectively.	61			59
Common stock, $0.001 par value; 200,000 shares authorized, 62,571 and 62,335 shares issued and outstanding at March 31, 2021 (unaudited) and December 31, 2020, respectively.							Common stock, $0.001 par value; 200,000 shares authorized, 62,571 and 62,335 shares issued and outstanding at March 31, 2021 (unaudited) and December 31, 2020, respectively.	63		62
Additional paid-in capital	934,402			819,626			Additional paid-in capital	968,450		1,025,233
Accumulated other comprehensive income	43			122			Accumulated other comprehensive income	106		220
Accumulated deficit	(666,802		)	(624,828		)	Accumulated deficit	(655,205)		(659,210)
Total stockholders’ equity	267,704			194,979			Total stockholders’ equity	313,414		366,305
Total liabilities and stockholders’ equity	$	616,239		$	326,110		Total liabilities and stockholders’ equity	$	754,273	$	716,415

See accompanying notes to unaudited condensed consolidated financial statements.

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TANDEM DIABETES CARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019			2020			2019				2021		2020
Sales	$	109,236		$	93,255		$	207,162		$	159,250		Sales	$	141,037	$	97,926
Cost of sales	54,846			43,351			102,511			75,993			Cost of sales	67,750		47,665
Gross profit	54,390			49,904			104,651			83,257			Gross profit	73,287		50,261
Operating expenses:													Operating expenses:
Selling, general and administrative	50,440			40,565			100,157			75,524			Selling, general and administrative	58,563		49,717
Research and development	15,987			11,204			30,104			20,594			Research and development	17,961		14,117
Total operating expenses	66,427			51,769			130,261			96,118			Total operating expenses	76,524		63,834
Operating loss	(12,037		)	(1,865		)	(25,610		)	(12,861		)	Operating loss	(3,237)		(13,573)
Other income (expense), net:													Other income (expense), net:
Interest and other income	412			786			1,138			1,543
Interest and other expense	(3,221		)	(9		)	(3,221		)	(16		)
Interest income and other, net													Interest income and other, net	272		726
Interest expense													Interest expense	(1,506)		0

Change in fair value of common stock warrants	(14,336		)	(424		)	(16,258		)	(13,170		)	Change in fair value of common stock warrants	(690)		(1,922)
Total other income (expense), net	(17,145		)	353			(18,341		)	(11,643		)
Total other expense, net													Total other expense, net	(1,924)		(1,196)
Loss before income taxes	(29,182		)	(1,512		)	(43,951		)	(24,504		)	Loss before income taxes	(5,161)		(14,769)
Income tax benefit	(2,075		)	—			(1,977		)	—
Income tax expense (benefit)													Income tax expense (benefit)	(117)		98
Net loss	$	(27,107	)	$	(1,512	)	$	(41,974	)	$	(24,504	)	Net loss	$	(5,044)	$	(14,867)
Other comprehensive loss:													Other comprehensive loss:
Unrealized gain on short-term investments	$	105		$	101		$	147		$	151
Foreign currency translation gain (loss)	183			20			(226		)	24
Unrealized gain (loss) on short-term investments													Unrealized gain (loss) on short-term investments	$	(38)	$	42
Foreign currency translation loss													Foreign currency translation loss	(76)		(409)
Comprehensive loss	$	(26,819	)	$	(1,391	)	$	(42,053	)	$	(24,329	)	Comprehensive loss	$	(5,158)	$	(15,234)

Net loss per share, basic and diluted	$	(0.45	)	$	(0.03	)	$	(0.70	)	$	(0.42	)	Net loss per share, basic and diluted	$	(0.08)	$	(0.25)

Weighted average shares used to compute basic and diluted net loss per share	60,424			58,219			60,082			57,996			Weighted average shares used to compute basic and diluted net loss per share	62,448		59,740



Shares reserved for issuance upon conversion of Convertible Senior Notes		2,554
Shares underlying outstanding warrants		~~640~~254
Shares underlying outstanding stock options		~~6,802~~5,772
Shares underlying unvested restricted stock units		~~132~~136
~~Shares authorized for future equity award grants~~		~~2,256~~
Shares authorized for issuance pursuant to awards granted under the ESPP	~~1,462~~1,389
Shares authorized for future equity award grants		~~11,292~~1,957
		12,062

Common Stock Warrants

~~As of June 30, 2020, there were Series A warrants~~Warrants outstanding to purchase ~~415,200~~ shares of the ~~Company’s~~Company's common stock as of March 31, 2021 were as follows:


Issue Date	Exercise Price Per Share		Warrants Outstanding	Expiration Date
October 2017	$	3.50	29,700	October 2022
March 2017	$	23.50	193,788	March 2027
August 2011 - August 2012	$	73.73	30,861	August 2021 - August 2022
			254,349

Each warrant allows the holder to purchase 1 share of the Company's common stock at anthe exercise price ~~of $3.50~~ per share ~~which were issued in connection with a financing in October 2017, and which expire in October 2022. Also outstanding as of June 30, 2020, were warrants to purchase 193,788 shares~~ of the Company’s common stock at an exercise price of $23.50 per share, which were issued in March 2017, and which expire in March 2027, and warrants to purchase 31,166 shares of the Company’s common stock at an exercise price of $73.73 per share, which were issued between August 2011 and August 2012, and which expire between August 2021 and August 2022.respective warrant. The Company issued ~~32,574~~125,000 and ~~34,894~~2,320 shares of its common stock, respectively, upon the exercise of warrants during the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021 and ~~74,985 and 93,270 shares of its common stock upon the exercise of warrants during the three and six months ended June 30, 2019.~~March 31, 2020.

Stock Plans

The Company issued ~~454,045~~110,424 and ~~1,126,487~~672,442 shares ~~respectively,~~ of its common stock, respectively, upon the exercise of stock options during the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020. ~~The Company issued 364,818 and 773,782 shares, respectively, of its common stock upon the exercise of stock options during the three and six months ended June 30, 2019.~~

The ESPP enables eligible employees to purchase shares of the Company’s common stock using their after-tax payroll deductions, subject to certain conditions. Generally, offerings under the ESPP consist of a two-year offering period with ~~four~~4 six-month purchase periods which begin in May and November of each year. ~~During the six months ended June 30, 2020 and 2019, 229,320 and 168,165~~There were 0 shares of ~~the Company’s~~ common stock ~~respectively, were~~ purchased under the ESPP ~~for proceeds of $4.9 million~~during the three months ended March 31, 2021 and ~~$3.0 million, respectively.~~2020.

Stock-Based Compensation

~~The~~During the three months ended March 31, 2021 and 2020, the Company granted options to purchase ~~850,956~~115,400 and 229,911 shares of common stock under the 2013 Plan, during the six months ended June 30, 2020. During the six months ended June 30, 2019, the Company granted options to purchase 2,679,535 shares of common stock under the 2013 Plan, of which 1,644,715 were originally awarded between February 2019 and June 2019, subject to and conditioned upon the approval by its stockholders of an increase in the number of shares of common stock reserved for issuance under the 2013 Plan. Stock-based compensation expense was not recognized for these contingent stock option grants prior to the approval by the Company’s stockholders of the increase in the number of shares of common stock reserved for issuance under the 2013 Plan, which occurred in June 2019.respectively. These options have an exercise price equal to the closing price of the Company’s common stock on the applicable award date, and generally vest as to 25% of the underlying shares on the first anniversary of the award, with the balance of the options vesting monthly over the following three years.

The Company also granted ~~131,848~~3,208 restricted stock units (RSUs) during the three months ended ~~June 30, 2020.~~March 31, 2021. These RSUs have a grant ~~price~~value equal to the closing price of the Company’s common stock on the award date, and vest ~~based only on service as to 25%~~in annual installments over a period of ~~the underlying shares on the first anniversary of the award, with the balance of the RSUs vesting quarterly over the following~~ three years.

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The assumptions used in the Black-Scholes option-pricing model ~~are~~were as follows:

Stock Options
Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Weighted average grant date fair value (per share) $52.50 $41.38 $50.04 $39.11
Risk-free interest rate 0.4 % 1.9 % 0.6 % 2.5 %
Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 %
Expected volatility 75.0 % 71.8 % 74.3 % 71.8 %
Expected term (in years) 6.0
6.0
6.0
6.0

ESPP
Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Weighted average grant date fair value (per share) $36.18 $33.49 $36.18 $33.49
Risk-free interest rate 0.2 % 2.3 % 0.2 % 2.3 %
Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 %
Expected volatility 65.7 % 75.9 % 65.7 % 75.9 %
Expected term (in years) 1.3
1.3
1.3
1.3


	Stock Options
	Three Months Ended March 31,
	2021			2020
Weighted average grant date fair value (per share)	$	60.98		$	43.40
Risk-free interest rate	0.9		%	1.1		%
Expected dividend yield	0.0		%	0.0		%
Expected volatility	75.6		%	72.5		%
Expected term (in years)	6.1			6.1

The Company records stock-based compensation expense associated with the ESPP using the Black-Scholes option-pricing model. Valuations are performed on the grant date at the beginning of the purchase period, which generally occurs in May and November of each year.

The following table summarizes the allocation of stock-based compensation expense included in the condensed consolidated statement of operations for all stock-based compensation arrangements (in thousands):

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Cost of sales $ 2,162
$ 1,379
$ 4,326
$ 2,427
Selling, general & administrative 11,707
8,950
23,210
15,950
Research and development 2,552
2,084
4,750
3,779
Total $ 16,421
$ 12,413
$ 32,286
$ 22,156


	Three Months Ended March 31,
	2021		2020
Cost of sales	$	1,476	$	2,164
Selling, general & administrative	9,409		11,501
Research and development	2,062		2,200
Total stock-based compensation expense	$	12,947	$	15,865

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was ~~$1.3~~$0.7 million and ~~$1.3~~$0.6 million ~~as of June 30, 2020~~at March 31, 2021 and December 31, ~~2019,~~2020, respectively.

9. Income Taxes

~~For~~The Company recognized an income tax benefit of $0.1 million on a pre-tax loss of $5.2 million for the three ~~and six~~ months ended ~~June 30, 2020, the Company’s~~March 31, 2021, compared to income tax expense isof $0.1 million on a pre-tax loss of $14.8 million for the three months ended March 31, 2020. The income tax benefit for the three months ended March 31, 2021 was primarily attributable to the pre-tax loss position and excess tax benefits from stock compensation recorded discretely during the quarter. Income tax expense for the three months ended March 31, 2020 was primarily attributable to state and foreign income tax expense as a result of current taxable income in those ~~jurisdictions, as well as benefit associated with release of valuation allowance related to~~jurisdictions.

For the ~~acquisition of Sugarmate.~~

~~The~~three months ended March 31, 2021, the Company ~~used~~calculated the ~~year-to-date effective tax rate method to determine its interim~~provision (benefit) for income ~~tax expense for federal and state jurisdictions where a reliable~~taxes by applying an estimate of the annual effective tax rate ~~could~~for the full year to ordinary income (loss) adjusted by the tax impact of discrete items. For the three months ended March 31, 2020, the Company calculated the provision for income taxes using a discrete effective tax rate method as the annual effective tax rate method would not ~~be made.~~provide a reliable estimate.

The Company ~~maintains~~continues to maintain a full valuation allowance against its net deferred tax assets as of ~~June 30, 2020~~March 31, 2021, based on the current assessment that it is not more likely than not these future benefits will be realized before expiration.

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10. Business Segment and Geographic Information

~~On March 27, 2020,~~

Segment Reporting

Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance. The Company is organized based on its current product portfolio, which consists primarily of insulin pumps, disposable cartridges and infusion sets for the storage and delivery of insulin. The Company views its operations and manages its business as 1 segment and a single reporting unit because key operating decisions and resource allocations are made by the CODM using consolidated financial data.

Disaggregation of Revenue

The Company primarily sells its products through national and regional distributors in the United States ~~enacted the Coronavirus Aid, Relief~~on a non-exclusive basis, and ~~Economic Security Act (CARES Act). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen~~through distribution partners outside the United States, ~~economy~~including in select European countries, Canada, Australia, New Zealand, and ~~fund~~South Africa. In the United States and Canada, the Company utilizes a ~~nationwide effort~~direct sales force. The Company disaggregates its revenue by geography and by major sales channel as management believes these categories best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors.

Revenues by Geographic Region and Customer Sales Channel

During the three months ended March 31, 2021 and 2020, no individual country outside the United States generated revenue that represented more than 10% of total revenue. The table below sets forth revenues for the Company’s two primary geographical markets, based on the geographic location to ~~curtail the effect~~which its products are shipped.


	Three Months Ended March 31,
	2021		2020
United States	$	103,339	$	79,546
International	37,698		18,380
Total Sales	$	141,037	$	97,926

Sales to distributors accounted for 68% and 69% of the ~~COVID-19 global pandemic. While~~Company’s total domestic sales for the ~~CARES Act provides sweeping tax changes in response~~three months ended March 31, 2021 and 2020, respectively. Sales to ~~the COVID-19 global pandemic, some~~distributors accounted for 96% and 93% of the ~~more significant provisions which are expected to impact~~Company’s total international sales for the ~~Company’s financial statements include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years,~~three months ended March 31, 2021 and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. Due to the recent enactment of the CARES Act, the Company is unable to quantify the impact, if any, that the CARES Act will have on its financial position, results of operations or cash flows but it is not anticipated to be significant.2020, respectively.

~~10.~~11. Commitments and Contingencies

Legal and Regulatory Matters

In April 2020, the Company was named as a defendant in 4 federal class action lawsuits relating to a data breach it experienced in January 2020, each of which was subsequently dismissed.

In addition, in May 2020 the Company was named as a defendant in 3 California state court class action lawsuits arising from the same data breach. Collectively, these lawsuits seek statutory, compensatory, actual, and punitive damages; equitable relief, including restitution; pre- and post-judgment interest; injunctive relief; and attorney fees, costs, and expenses from the Company. On July 24, 2020, these 3 pending lawsuits were consolidated into a single case in the Superior Court of the State of California in the County of San Bernardino entitled Joseph Deluna et al v. Tandem Diabetes Care, Inc. The consolidated case alleges violations of the Confidentiality of Medical Information Act (CMIA), California Consumer Privacy Act (CCPA), California’s Unfair Competition Law (UCL), and breach of contract. The Company filed a demurrer seeking dismissal of all claims, which was heard by the Court on October 27, 2020, and which resulted in the following outcome: (i) the demurrer of the CMIA claim was denied; (ii) the demurrer of the CCPA claim was sustained; and (iii) the demurrer of the UCL and contract claims were sustained with leave to amend the pending complaint. A second demurrer was heard by the Court on March 29, 2021 with the following outcome: (i) the demurrer of the CMIA claim was denied; and (ii) the demurrer of the UCL and contract claims were narrowed in scope to dismiss three plaintiffs for either failing to allege cognizable damages or injuries-in-fact, resulting in two remaining plaintiffs.

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In September 2020, the Company was named as a defendant in a lawsuit entitled Buck Walsh, individually and on behalf of others similarly situated v. Tandem Diabetes Care, Inc., which was filed in the Superior Court of the State of California in the County of San Diego. The alleged violations include business and professions code and labor code violations for failure to compensate wages, unpaid meal and rest periods, and failure to reimburse for necessary business-related expenses. The proposed class of plaintiffs includes hourly paid or non-exempt employees of the Company who were employed from April 6, 2016 through the date of adjudication.

Although the Company intends to vigorously defend against these claims, there is no guarantee that the Company will prevail. The Company presently is unable to determine the ultimate outcome of these lawsuits or determine the amount (or range) of possible losses associated with the lawsuits.

From time to time, the Company ~~may be subject to~~is involved in various other legal proceedings, or regulatory matters, and other disputes or claims arising infrom or related to the ~~ordinary~~normal course of our business activities, including actions with respect to intellectual property, data privacy, employment, regulatory, product liability and contractual matters. In connection with these proceedings or matters, the Company regularly assesses the probability and amount (or range) of possible losses based on the developments in these proceedings or matters. A liability is recorded in the consolidated financial statements if it is determined that it is probable that a loss has been incurred, and that the amount (or range) of the loss can be reasonably estimated. Because of the uncertainties related to any pending proceedings or matters, the Company is currently unable to predict their ultimate outcome and, with respect to any ~~legal~~ proceeding or ~~regulatory~~ matter where no liability has been accrued, to make a reasonable estimate of the possible loss (or range of loss) that could result from an adverse outcome.

As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, there were 0 legal proceedings, regulatory matters, or other disputes or claims for which a material loss was considered probable or for which the amount (or range) of loss was ~~deemed to be~~ reasonably estimable. However, regardless of the merits of the claims raised or the outcome, legal proceedings, regulatory matters, and other disputes and claims ~~can~~may have an adverse impact on the Company because of ~~legal~~as a result of defense and settlement costs, diversion of management time and resources, and other factors.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis together with our financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2020~~March 31, 2021 (Quarterly Report).

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Quarterly Report, other than statements of historical fact, are forward-looking statements. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. In particular, forward-looking statements contained in this Quarterly Report may relate to, among other things, our future or assumed financial condition, results of operations, liquidity, trends impacting our financial results, business forecasts and plans, research and product development plans, manufacturing plans, strategic plans and objectives, capital needs and financing plans, ~~and objectives,~~ product launches, geographic expansion, distribution plans, production capacity, clinical trials, regulatory approvals, competitive position and the impact of changes in the competitive ~~environment.~~environment, the impact of the COVID-19 global pandemic, integration of acquisitions and partner technologies, and the application of accounting guidance. We caution you that the foregoing list may not include all of the forward-looking statements made in this Quarterly Report.

Our forward-looking statements are based on our management’s current assumptions and expectations about future events and trends, which affect or may affect our business, strategy, operations or financial performance. Although we believe that these forward-looking statements are based upon reasonable assumptions, they are subject to numerous known and unknown risks and uncertainties and are made in light of information currently available to us. Our actual financial condition and results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below in the section entitled “Risk Factors” in Part II, Item 1A, and elsewhere in this Quarterly Report, as well as the other public filings we make with the Securities and Exchange Commission. In particular, as discussed in greater detail below, our financial condition, operating results, liquidity and business prospects could be materially adversely affected by the impacts and disruptions caused by the novel coronavirus pandemic (COVID-19 global pandemic). You should read this Quarterly Report with the understanding that our actual future financial condition and results may be materially different from and worse than what we expect.

Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Forward-looking statements speak only as of the date they were made and, except to the extent required by law or the rules of the ~~NASDAQ~~Nasdaq Global Market, we undertake no obligation to update or review any forward-looking statement because of new information, future events or other factors.

We qualify all of our forward-looking statements by these cautionary statements.

Overview

We are a medical device company with ~~an innovative~~a positively different approach to the design, development and commercialization of products for people with insulin-dependent diabetes. Diabetes management can vary greatly from person-to-person, creating multiple market segments based on clinical needs and personal preferences. We aim to improve and simplify the lives of all people living with insulin-dependent diabetes and those of their healthcare providers, by delivering innovative hardware and software solutions, as well as best-in-class customer support. Our goal is to lead in insulin therapy management by building a robust ecosystem and portfolio of data-driven products and services around our flagship insulin pumps. We believe our competitive advantage is rooted in our consumer-focused approach, and the incorporation of modern and innovative technology into our product offerings. Our manufacturing, sales and support activities principally focus on our flagship pump platform, the t:slim X2 Insulin Delivery System (t:slim X2)~~, which is capable of remote feature updates~~ and ~~is designed to display continuous glucose monitoring (CGM) sensor information directly on the pump home screen, as well as~~ our complementary product offerings, such as our cloud-based t:connect data management application (t:connect) and the Tandem Device Updater. We aim to improve and simplify the lives of people with diabetes and those of their healthcare providers, by delivering innovative hardware and software solutions, as well as best-in-class customer support.

~~Table of contents~~

offerings.

Since our initial commercial launch, we have been able to rapidly innovate and bring more products to market than our competitors. We have commercially launched seven insulin ~~pumps~~pump configurations in the United States since 2012 and three ~~of which we also launched~~insulin pump configurations outside the United States since 2018. ~~Four of~~Today, our insulin pumps have featured integration with CGM technology, of which two have also featured an automated insulin delivery (AID) algorithm. The United States Food and Drug Administration (FDA) has defined requirements for the interoperability of devices as a complete AID system, which we believe will help support continued rapid innovation by streamlining the regulatory pathway for integrated products in the United States. This interoperability designation is comprised of three categories: alternate controller enabled (ACE) infusion pumps, integrated continuous glucose monitor (iCGM) devices, and interoperable automated glycemic controller (iAGC) technology. In June 2018, the t:slim X2 was the first insulin pump designated as compatible with iCGM devices; in February 2019 the t:slim X2 was the first insulin pump to receive ACE pump designation, and in December 2019 our Control-IQ technology for the t:slim X2 was cleared as the first iAGC for users age 14 and older. In June 2020, we received an expanded indication for our Control-IQ technology for users age six and older.

In the four-year period ended June 30, 2020, we shipped approximately 169,000 insulin pumps, which is representative of our estimated global installed customer base, assuming the typical four-year reimbursement cycle. Approximately 137,000 of these pumps were shipped to customers in the United States and approximately 32,000 were shipped to international markets.

~~Today, our~~software-updatable t:slim X2 hardware platform represents 100% of our new pump ~~shipments and now nearly all~~shipments.

Table of ~~our in-warranty customers benefit from having the X2 platform. The~~contents

Our simple-to-use t:slim X2 is based on our proprietary technology platform and is the smallest durable insulin pump ~~available, and~~available. We have commercially offered our pump technology integrated with three generations of Dexcom’s continuous glucose monitoring (CGM) sensors. The t:slim X2 is the only ~~commercial insulin~~ pump ~~that allows users to update their pumps’~~on which remote software updates have been commercially available in the United States. This experience, which offers and supports different software updates quickly and easily from a personal computer ~~using~~through the use of our revolutionary tool referred to as Tandem Device Updater ~~tool. This~~(TDU), provides us with a unique ~~offering positions us to bring future innovations, including~~competitive advantage. Two of our ~~next generation AID algorithms,~~updates provided our users access to our in-warranty t:slim X2 customers faster than the industry has been able to in the past and independent of the typical four-year insurance pump reimbursement cycle. We have offered in-warranty t:slim customers in the United States four different software updates for no-cost since the Tandem Device Updater was approved in July 2016, including our two AIDautomated insulin delivery (AID), algorithms, Basal-IQ technology and Control-IQ technology. Basal-IQ technology launched in August 2018 and is a predictive low glucose suspend feature that is designed to temporarily suspend insulin delivery to help reduce the frequency and duration of hypoglycemic events. Control-IQ technology launched in January 2020 and is an advanced hybrid-closed loop feature, designed to help increase a ~~user’s~~user's time in their targeted glycemic range. It is the first and only system cleared by the U.S. Food and Drug Administration (FDA) to deliver automatic correction boluses in addition to adjusting insulin to help prevent high and low blood sugar. Outside the United States we began selling ~~efforts with~~ t:slim X2 with Dexcom G5 ~~CGM~~ integration in the third quarter of 2018, offering no-cost software updates for Basal-IQ technology in the third quarter of 2019 and ~~initiated~~for Control-IQ technology beginning in the third quarter of 2020. We intend to continue our scaled launch of Control-IQ technology ~~updates in select geographies in July 2020, which we plan to continue~~outside the United States throughout the ~~second half~~remainder of ~~2020,~~2021, subject to ~~required~~securing necessary regulatory ~~and reimbursement~~clearances or approvals. We continue to offer both AID algorithms on the market to support the varying needs of people living with diabetes.

Our insulin pump products are generally considered durable medical equipment and have an expected lifespan of at least four years. In addition to insulin pumps, we sell disposable products that are used together with our pumps and are replaced every few days, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s ~~body.~~body, as well as a variety of accessories designed for enhanced usability. We also offer t:connect, a web-based data management application that provides users, their caregivers and their healthcare providers with a fast, easy and visual way to display diabetes therapy management data from our pumps, integrated CGMs and supported blood glucose meters.

~~We continue~~In the four-year period ended March 31, 2021, we shipped approximately 239,000 insulin pumps, which is representative of our estimated global installed customer base, assuming the typical four-year reimbursement cycle. Approximately 186,000 of these pumps were shipped to ~~deliver complementary offerings~~customers in the United States and approximately 53,000 were shipped to international markets.

For the three months ended March 31, 2021 and 2020, our consolidated sales were $141.0 million and $97.9 million, respectively. For the three months ended March 31, 2021 and 2020, our net loss was $5.0 million and $14.9 million, respectively. Worldwide pump sales accounted for 58% and 63% of our total sales for the three months ended March 31, 2021 and 2020, respectively, while pump-related supplies and accessories accounted for the remainder in each year. Our accumulated deficit as of March 31, 2021 and December 31, 2020 was $655.2 million and $659.2 million, respectively. These amounts included $305.8 million and $292.1 million of accumulated non-cash stock-based compensation charges and non-cash charges from the change in fair value of common stock warrants as of March 31, 2021 and December 31, 2020, respectively.

In support of our digital health strategy, ~~beyond~~we continue to offer and improve t:connect and ~~the Tandem Device Updater.~~TDU, and also develop and launch other complementary offerings. In the first quarter of 2020, we began a limited launch in the United States of our first-generation t:connect mobile application, followed by general availability in July 2020. This mobile app ~~was designed to~~ wirelessly ~~upload~~uploads pump data to our t:connect diabetes management application, ~~receive~~receives notification of pump alerts and alarms, and ~~provide~~provides a discrete, secondary display of glucose and insulin data. The availability of this mobile app is intended to reduce patient burden and increase healthcare provider office efficiency by reducing the manual and more time-consuming steps historically required for data extraction. In addition, in the second quarter of 2020, we acquired Sugarmate, the developer of a popular app designed to help people visualize diabetes therapy data in innovative ~~ways.~~ways that also connects with many other popular, consumer-friendly devices. We intend to support the Sugarmate app in addition to our t:connect mobile app to provide a wide variety of features intended to benefit a broad community of people with diabetes.

~~For the six months ended June 30, 2020 and~~ ~~2019, our consolidated sales were $207.2 million and $159.3 million, respectively. For the six months ended June 30, 2020 and~~ ~~2019, our net loss was $42.0 million and $24.5 million, respectively. Worldwide pump sales accounted for 60% and 71% of our total sales, respectively, for the six months ended June 30, 2020 and~~ ~~2019~~, while pump-related supplies and accessories accounted for the remainder in each year. Our accumulated deficit as of June 30, 2020 and December 31, 2019 was $666.8 million and $624.8 million, respectively. These amounts included $265.2 million and $216.6 million of accumulated non-cash stock-based compensation charges and non-cash charges from the change in fair value of common stock warrants as of June 30, 2020 and December 31, ~~2019, respectively.~~


	Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019				2021		2020
Operating Activities							Operating Activities
Net loss	$	(41,974	)	$	(24,504	)	Net loss	$	(5,044)	$	(14,867)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided (used) by operating activities:							Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and amortization expense	4,035			2,946			Depreciation and amortization expense	3,485		1,830
Amortization of debt discount and debt issuance costs	2,457			—
Amortization of debt issuance costs							Amortization of debt issuance costs	428		0
Provision for expected credit losses	1,529			797			Provision for expected credit losses	143		862
Provision (recovery) for inventory obsolescence	(81		)	1,018			Provision (recovery) for inventory obsolescence	64		(363)
Change in fair value of common stock warrants	16,258			13,170			Change in fair value of common stock warrants	690		1,922
Amortization of discount on short-term investments	(1,127		)	(166		)
Benefit for deferred income taxes	(2,126		)	—
Amortization of premium (discount) on short-term investments							Amortization of premium (discount) on short-term investments	209		(66)

Stock-based compensation expense	32,286			22,156			Stock-based compensation expense	12,947		15,865

Other	36			26			Other	(73)		19
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable, net	(50		)	(13,988		)	Accounts receivable, net	8,389		(8,292)
Inventories	(13,181		)	(8,454		)	Inventories	(3,084)		(11,095)
Prepaid and other current assets	(2,101		)	(2,533		)	Prepaid and other current assets	(1,412)		(2,231)
Other long-term assets	6			(415		)	Other long-term assets	(17)		(383)
Accounts payable	(324		)	2,206			Accounts payable	10,537		4,294
Accrued expenses	(3,455		)	1,851			Accrued expenses	278		(2,124)
Employee-related liabilities	(3,094		)	(140		)	Employee-related liabilities	(1,448)		(6,253)
Deferred revenue	2,668			2,539			Deferred revenue	1,871		1,524
Other current liabilities	2,428			(1,050		)	Other current liabilities	1,094		431
Other long-term liabilities	678			3,985			Other long-term liabilities	(372)		(1,704)
Net cash used in operating activities	(5,132		)	(556		)
Net cash provided (used) by operating activities							Net cash provided (used) by operating activities	28,685		(20,631)
Investing Activities							Investing Activities
Purchases of short-term investments	(166,984		)	(74,164		)	Purchases of short-term investments	(154,300)		(9,727)
Proceeds from maturities of short-term investments	54,709			67,050			Proceeds from maturities of short-term investments	140,200		30,859
Proceeds from sales of short-term investments	35,027			1,400			Proceeds from sales of short-term investments	11,530		18,550
Purchases of property and equipment	(16,552		)	(8,169		)	Purchases of property and equipment	(3,524)		(6,766)
Acquisition of intangible assets	(4,805		)	—
Net cash used in investing activities	(98,605		)	(13,883		)

Net cash (used in) provided by investing activities							Net cash (used in) provided by investing activities	(6,094)		32,916
Financing Activities							Financing Activities
Proceeds from issuance of convertible senior notes, net of $8,809 debt issuance costs	278,691			—
Purchase of capped call options related to convertible senior notes	(34,069		)	—

Proceeds from issuance of common stock under Company stock plans	28,645			10,429			Proceeds from issuance of common stock under Company stock plans	3,135		11,474
Proceeds from exercise of common stock warrants	2,036			326			Proceeds from exercise of common stock warrants	438		7
Net cash provided by financing activities	275,303			10,755			Net cash provided by financing activities	3,573		11,481
Effect of foreign exchange rate changes on cash	(262		)	15			Effect of foreign exchange rate changes on cash	14		(456)
Net increase (decrease) in cash and cash equivalents	171,304			(3,669		)
Net increase in cash and cash equivalents							Net increase in cash and cash equivalents	26,178		23,310
Cash and cash equivalents at beginning of period	51,175			41,826			Cash and cash equivalents at beginning of period	94,613		51,175
Cash and cash equivalents at end of period	$	222,479		$	38,157		Cash and cash equivalents at end of period	$	120,791	$	74,485
Supplemental disclosures of cash flow information							Supplemental disclosures of cash flow information

Income taxes paid	$	131		$	55		Income taxes paid	$	197	$	91
Supplemental schedule of non-cash investing and financing activities							Supplemental schedule of non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease obligations	$	8,805		$	11,445		Right-of-use assets obtained in exchange for operating lease obligations	$	15,087	$	8,805

Property and equipment included in accounts payable	$	977		$	239		Property and equipment included in accounts payable	$	924	$	1,880
Intangible costs in accounts payable and other long-term liabilities	$	2,348		$	—		Intangible costs in accounts payable and other long-term liabilities	$	2,244	$	0



	June 30, 2020		December 31, 2019
Deferred revenue	$	4,180	$	3,465
Other long-term liabilities	7,528		5,656
Total	$	11,708	$	9,121


	March 31, 2021		December 31, 2020
Deferred revenue	$	6,313	$	5,508
Other long-term liabilities	11,709		10,426
Total	$	18,022	$	15,934


					Three Months Ended March 31,
Balance at December 31, 2019	$	16,724
					2021		2020
Balance at beginning of period				Balance at beginning of period	$	22,075	$	16,724
Provision for warranties issued during the period	9,658			Provision for warranties issued during the period	5,896		4,814
Settlements made during the period	(6,721		)	Settlements made during the period	(4,256)		(3,390)
Decreases in warranty estimates	(1,838		)	Decreases in warranty estimates	(546)		(1,387)
Balance at June 30, 2020	$	17,823
Balance at end of period				Balance at end of period	$	23,169	$	16,761



	June 30, 2020		December 31, 2019
Other current liabilities	$	6,605	$	4,707
Other long-term liabilities	11,218		12,017
Total warranty reserve	$	17,823	$	16,724


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2020	62,335	$	62	$	1,025,233	$	220	$	(659,210)	$	366,305
Effect of change in accounting for convertible debt(1)	—	—		(85,803)		—		9,049		(76,754)
Exercise of stock options	111	1		3,135		—		—		3,136

Exercise of common stock warrants	125	—		437		—		—		437
Fair value of common stock warrants at time of exercise	—	—		12,434		—		—		12,434


Stock-based compensation expense	—	—		13,014		—		—		13,014
Unrealized loss on short-term investments	—	—		—		(38)		—		(38)
Foreign currency translation adjustments	—	—		—		(76)		—		(76)
Net loss	—	—		—		—		(5,044)		(5,044)
Balance at March 31, 2021	62,571	$	63	$	968,450	$	106	$	(655,205)	$	313,414



	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Warrants to purchase common stock	640	611	640	611
Options to purchase common stock	6,195	6,790	5,992	6,216
Unvested restricted stock units	132	N/A	132	N/A
Awards granted under the ESPP	8	23	4	12
Convertible senior notes (if-converted)	—	N/A	—	N/A
	6,975	7,424	6,768	6,839


At March 31, 2021	Maturity (in years)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available-for-sale securities:
Commercial paper	Less than 1	$	126,705	$	8	$	(2)	$	126,711
U.S. Government-sponsored enterprise	Less than 2	56,028		24		(6)		56,046
U.S. Treasury securities	Less than 1	140,183		14		0		140,197
Corporate debt securities	Less than 2	66,684		7		(13)		66,678
Supranational bonds	Less than 2	3,015		0		(1)		3,014
Total		$	392,615	$	53	$	(22)	$	392,646



At June 30, 2020	Maturity (in years)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
Available-for-sale securities:
Commercial paper	Less than 1	$	67,013	$	8	$	(6	)	$	67,015
U.S. Government-sponsored enterprise	Less than 2	22,733		44		(5		)	22,772
U.S. Treasury securities	Less than 1	32,036		48		—			32,084
Corporate debt securities	Less than 1	81,788		164		(17		)	81,935
Total		$	203,570	$	264	$	(28	)	$	203,806



At December 31, 2019	Maturity (in years)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
Available-for-sale securities:
Commercial paper	Less than 1	$	24,147	$	10	$	—		$	24,157
U.S. Government-sponsored enterprise	Less than 2	33,073		26		—			33,099
U.S. Treasury securities	Less than 2	17,963		17		(1		)	17,979
Corporate debt securities	Less than 2	50,011		42		(5		)	50,048
Total		$	125,194	$	95	$	(6	)	$	125,283


At December 31, 2020	Maturity (in years)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Available-for-sale securities:
Commercial paper	Less than 1	$	108,892	$	5	$	(1)	$	108,896
U.S. Government-sponsored enterprise	Less than 2	52,330		21		(1)		52,350
U.S. Treasury securities	Less than 2	143,244		12		(2)		143,254
Corporate debt securities	Less than 2	85,788		48		(13)		85,823
Total		$	390,254	$	86	$	(17)	$	390,323


	March 31, 2021		December 31, 2020
Accounts receivable	$	77,232	$	86,052
Less: allowance for credit losses	(3,559)		(3,857)
Accounts receivable, net	$	73,673	$	82,195


	March 31, 2021		December 31, 2020
Raw materials	$	27,001	$	30,880
Work-in-process	15,327		15,664
Finished goods	24,488		17,177
Total inventories	$	66,816	$	63,721



	June 30, 2020		December 31, 2019
Raw materials	$	34,216	$	20,699
Work-in-process	12,329		16,532
Finished goods	15,718		11,842
Total Inventories	$	62,263	$	49,073


~~Level 1:~~	~~Observable inputs such as unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.~~


~~Level 2:~~	~~Inputs, other than quoted prices in active markets, that are observable either directly or indirectly for substantially the full term of the asset or liability.~~


~~Level 3:~~	Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities, which require the reporting entity to develop its own valuation techniques that require input assumptions.


			Fair Value Measurements at March 31, 2021
			(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents(1)	$	110,616	$	110,616	$	0	$	0
Commercial paper	126,711		0		126,711		0
U.S. Government-sponsored enterprise	56,046		0		56,046		0
U.S. Treasury securities	140,197		140,197		0		0
Corporate debt securities	66,678		0		66,678		0
Supranational bonds	3,014		0		3,014		0
Total assets	$	503,262	$	250,813	$	252,449	$	0

Liabilities
Common stock warrants	$	2,517	$	0	$	0	$	2,517

Total liabilities	$	2,517	$	0	$	0	$	2,517


			Fair Value Measurements at June 30, 2020									Fair Value Measurements at December 31, 2020
			(Level 1)		(Level 2)		(Level 3)					(Level 1)		(Level 2)		(Level 3)
Assets									Assets
Cash equivalents⁽¹⁾	$	221,360	$	221,360	$	—	$	—	Cash equivalents(1)	$	87,300	$	87,300	$	0	$	0
Commercial paper	67,015		—		67,015		—		Commercial paper	108,896		0		108,896		0
U.S. Government-sponsored enterprise	22,772		—		22,772		—		U.S. Government-sponsored enterprise	52,350		0		52,350		0
U.S. Treasury securities	32,084		32,084		—		—		U.S. Treasury securities	143,254		143,254		0		0
Corporate debt securities	81,935		—		81,935		—		Corporate debt securities	85,823		0		85,823		0
Total assets	$	425,166	$	253,444	$	171,722	$	—	Total assets	$	477,623	$	230,554	$	247,069	$	0

Liabilities									Liabilities
Common stock warrants	$	39,625	$	—	$	—	$	39,625	Common stock warrants	$	14,261	$	0	$	0	$	14,261
Total liabilities	$	39,625	$	—	$	—	$	39,625	Total liabilities	$	14,261	$	0	$	0	$	14,261



			Fair Value Measurements at December 31, 2019
			(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents⁽¹⁾	$	58,938	$	58,938	$	—	$	—
Commercial paper	24,157		—		24,157		—
U.S. Government-sponsored enterprise	33,099		—		33,099		—
U.S. Treasury securities	17,979		17,979		—		—
Corporate debt securities	50,048		—		50,048		—
Total assets	$	184,221	$	76,917	$	107,304	$	—

Liabilities
Common stock warrants	$	23,509	$	—	$	—	$	23,509
Total liabilities	$	23,509	$	—	$	—	$	23,509


~~(1)~~	~~Generally, cash equivalents include money market funds and investments with a maturity of three months or less from the date of purchase.~~


	Series A Warrants
	March 31, 2021		December 31, 2020
Risk-free interest rate	0.1	%	0.1	%
Expected dividend yield	0.0	%	0.0	%
Expected volatility	54.0	%	55.3	%
Expected term (in years)	1.5		1.8



Years Ending December 31,
2020 (remaining)	$	4,627
2021	9,421
2022	7,313
2023	3,388
2024	1,881
Thereafter	3,975
Total undiscounted lease payments	30,605
Less: amount representing interest	(3,667		)
Present value of operating lease liabilities	26,938
Less: current portion of operating lease liabilities	(9,306		)
Operating lease liabilities - long-term	$	17,632


Years Ending December 31,
2021 (remaining)	$	7,096
2022	9,129
2023	6,856
2024	5,691
2025	5,801
Thereafter	10,654
Total undiscounted lease payments	45,227
Less: amount representing interest	(6,770)
Present value of operating lease liabilities	38,457
Less: current portion of operating lease liabilities	(9,446)
Operating lease liabilities - long term	$	29,011



	June 30, 2020		December 31, 2019
Weighted-average remaining lease term (in years)	4.0		3.6
Weighted-average discount rate used to determine operating lease liabilities	6.3	%	6.6	%



	As of June 30, 2020
Liability:
Principal	$	287,500
Unamortized debt discount and debt issuance costs	(92,156		)
Net carrying amount	$	195,344
Carrying amount of the equity component	$	85,803


	Three Months Ended March 31, 2021
Contractual interest expense	$	1,078
Amortization of debt issuance costs	428
Total interest expense	$	1,506



	Three Months Ended June 30, 2020
Contractual interest expense	$	719
Amortization of debt issuance costs	159
Amortization of debt discount	2,298
Total	$	3,176



	ESPP
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Weighted average grant date fair value (per share)	$36.18		$33.49		$36.18		$33.49
Risk-free interest rate	0.2	%	2.3	%	0.2	%	2.3	%
Expected dividend yield	0.0	%	0.0	%	0.0	%	0.0	%
Expected volatility	65.7	%	75.9	%	65.7	%	75.9	%
Expected term (in years)	1.3		1.3		1.3		1.3


•	~~AID Enhancements –~~ We intend to further enhance our automated insulin delivery system and are considering alternative strategies to deliver new features and benefits to our customers on a regular basis. In addition to algorithm enhancements intended to improve clinical outcomes, we are also developing new features for greater personalization and refinements to the overall system usability.


	Pump Units Shipped for Each of the Three Months Ended in Respective Years - U.S.						Pump Units Shipped for Each of the Three Months Ended in Respective Years - U.S.
	March 31	June 30	September 30	December 31	Total		March 31	June 30	September 30	December 31	Total
2012	—	9	204	844	1,057	2012	0	9	204	844	1,057
2013	852	1,363	1,851	2,406	6,472	2013	852	1,363	1,851	2,406	6,472
2014	1,723	2,235	2,935	3,929	10,822	2014	1,723	2,235	2,935	3,929	10,822
2015	2,487	3,331	3,431	6,234	15,483	2015	2,487	3,331	3,431	6,234	15,483
2016	4,042	4,582	3,896	4,418	16,938	2016	4,042	4,582	3,896	4,418	16,938
2017	2,816	3,427	3,868	6,950	17,061	2017	2,816	3,427	3,868	6,950	17,061
2018	4,444	5,447	7,379	12,935	30,205	2018	4,444	5,447	7,379	12,935	30,205
2019	9,669	12,799	13,814	17,453	53,735	2019	9,669	12,799	13,814	17,453	53,735
2020	13,158	14,735	N/A	N/A	27,893	2020	13,158	14,735	18,380	24,552	70,825
2021						2021	16,644	N/A	N/A	N/A	16,644


	Three Months Ended March 31,
(in thousands, except percentages)	2021			2020
Sales:
Domestic	$	103,339		$	79,546
International	37,698			18,380
Total sales	141,037			97,926
Cost of sales	67,750			47,665
Gross profit	73,287			50,261
Gross margin	52		%	51		%
Operating expenses:
Selling, general and administrative	58,563			49,717
Research and development	17,961			14,117
Total operating expenses	76,524			63,834
Operating loss	(3,237)			(13,573)
Other income (expense), net:
Interest income and other, net	272			726
Interest expense	(1,506)			—

Change in fair value of common stock warrants	(690)			(1,922)
Total other expense, net	(1,924)			(1,196)
Loss before income taxes	(5,161)			(14,769)
Income tax expense (benefit)	(117)			98
Net loss	$	(5,044)		$	(14,867)


	Six Months Ended June 30,							Three Months Ended March 31,
(in thousands)	2020			2019			(in thousands)	2021		2020
Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	$	(5,132	)	$	(556	)	Operating activities	$	28,685	$	(20,631)
Investing activities	(98,605		)	(13,883		)	Investing activities	(6,094)		32,916
Financing activities	275,303			10,755			Financing activities	3,573		11,481
Effect of foreign exchange rate changes on cash	(262		)	15			Effect of foreign exchange rate changes on cash	14		(456)
Total	$	171,304		$	(3,669	)
Net increase in cash and cash equivalents							Net increase in cash and cash equivalents	$	26,178	$	23,310


•	~~On April 1, 2020,~~ ~~C.H., individually, and on behalf of all others similarly situated v. Tandem Diabetes Care, Inc.~~ was filed against us in the Southern District of the United States District Court. The complaint alleged negligence and violations of the California Confidentiality of Medical Information Act (CMIA). Plaintiff filed a Notice of Voluntary Dismissal on May 22, 2020.


•	~~On April 8, 2020,~~ ~~Joseph Deluna, on behalf of himself and all others similarly situated v. Tandem Diabetes Care, Inc.~~ was filed against us in the Central District of the United States District Court. The complaint alleged negligence and violations of the CMIA and the Federal Trade Commission Act (FTCA). Plaintiff filed a Notice of Voluntary Dismissal on May 22, 2020.