Perhaps not too surprisingly, medical device megagiant Medtronic ($MDT) has again bested tiny Tandem Diabetes Care ($TNDM) in the insulin pump market. Tandem disclosed that its customer UnitedHealthcare would adopt Medtronic as its in-network insulin pump provider.
Wall Street punished the small cap insulin pump player on the news--pushing its shares down by more than 20% in early trading. The change goes into effect as of July 1.
"This unexpected decision by UnitedHealthcare designates Medtronic as their preferred, in-network durable medical equipment provider of insulin pumps," Tandem said in a statement. "The company anticipates that this decision will prevent a majority of UnitedHealthcare members from purchasing an insulin pump on an in-network basis from Tandem Diabetes Care and several other durable medical equipment providers."
|Tandem's t:slim G4 pump|
About 1,200 of the 15,500 insulin pumps that Tandem sold last year were to people who would not now be eligible for in-network coverage under UnitedHealthcare. That's a significant portion of sales--roughly 8%.
Tandem markets its t:slim, t:slim G4 and t:flex insulin pumps. It sold 4,042 pumps during the first quarter and grew sales 63% to $20.1 million from the prior year's quarter. It had an operating loss of $19.2 million in the first quarter, only a bit below the $20.4 million in the first quarter of 2015.
"Having diabetes isn't a choice. How people manage it should be," summed up Tandem President and CEO Kim Blickenstaff in a statement on the UnitedHealthcare change. "Insulin pumps are not a one-size fits all solution. Selecting which pump is the best fit for a person to manage their therapy needs should be a decision made between a person and their healthcare provider."
Tandem first launched on the public markets in late 2013 with a $120 million IPO. It debuted with a $15 share price; now that hovers around $8.
- here is the announcement