Tandem Diabetes Care, Inc. (TNDM) Q1 2022 Earnings Report, Transcript and Summary

00:04 Thank you for standing by, and welcome to Tandem's First Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be aware that today’s call is being recorded. [Operator Instructions] 00:29 I would now like to turn the call over to Susan Morrison, EVP and Chief Administrative Officer.

00:44 Thanks, and good afternoon everyone. Welcome to Tandem's 2022 first quarter earnings call. 00:50 Today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, product development timelines and financial performance and operating plans and speak only as of today's date. There are risks and uncertainties that could cause our actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today and under the Risk Factors portion and elsewhere in our most recent annual report on Form 10-K, quarterly report on Form 10-Q and in our other SEC filings. We assume no obligation to publicly update any forward-looking statements whether as a result of new information, future events or other factors. 01:44 In addition, today's discussion will include references to adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is a key measure used by us to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital. Please refer to our press release issued earlier today for further information. 02:04 Our call today will be hosted by John Sheridan, our President and Chief Executive Officer and Leigh Vosseller, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we'll open up the call for questions. Thank you in advance for limiting yourself to one question and one follow-up before getting back into the queue. 02:24 I'll now turn the call over to John.

02:27 Thank you, Susan and welcome to everyone to today's call. Our first quarter performance demonstrated the strength which we are executing across all areas of our business. We achieved record breaking Q1 sales, both inside and outside the United States. We also received FDA clearance for the t:slim X2 users to initiate a bolus delivery from iOS and Android smartphones, which is our top requested app feature. And we also made operational progress throughout the business. 2:56 Our office employees deliver these accomplishments while continue to navigate the broader headwinds being faced across the world. A special thanks to everyone on the team for sharing your talents with Tandem and our customers. Each of these plays a role in our success and together, we continue to make a positively different impact on people's lives with diabetes. 03:17 We already reached a new milestone in '2022 as our installed base has surpassed more than 350,000 people worldwide. This represents an estimated 30% of people using insulin pumps in the geographies in which we serve, which is remarkable considering our commercial efforts outside the United States began to ramp less than four years ago. It's evident that we are making meaningful progress in our longstanding objective to bring the benefits of our technology to the diabetes community. We are also continuing to progress our goal to expand the insulin pump market, as about half of our new customers in the US in Q1 reported converting from multiple daily injections with the remainder from competitive offerings. At the same time, we are seeing strong customer retention. 04:04 A key driver of this continued growth is the overwhelmingly positive experience customers and healthcare providers report from our Control-IQ technology. This powerful diabetes management solution is now offered in all the geographies which we serve worldwide, and the feedback we hear and the data we see is consistent. Our t:slim X2 with Control-IQ technology provides immediate and sustained positive results. This was demonstrated at last week's Advanced Technologies and Treatment for Diabetes Conference in Barcelona, Spain where data was presented from our Control-IQ observational study, also referred to as the CLIO study, where users reported improved quality of life, reduced diabetes burden and higher satisfaction with diabetes therapy, irrespective of age, baseline hemoglobin A1c and the previous method of insulin delivery. 04:58 Our CLIO data is particularly insightful as the study is fully enrolled with more than 2,000 customers and it's now two-thirds complete. Its powerful information that will help inform our future algorithm advancements, as well as discussions with payers and further optimization of the user experience we provide. Additional presentations at the conference feature data demonstrating positive clinical outcomes from long-term use of Control-IQ technology, as well as the successful adoption of Control-IQ by people previously using MDI as it's effective across all ages, including children. 05:34 The ATTD conference as well as next month's ADA Scientific Sessions are important opportunities for us to showcase data that demonstrates the power of our technology. Experience matters and with more than 60 million real world customer days of use, our Control-IQ technology continues to set a high bar in advanced automated insulin dosing. It's an advantage that's not tied to one specific algorithm feature like our automated correction bolus or auto population CGM data, but rather the full customer experience with the ease of use of our technology, improved clinical outcomes it provides and through the positive interactions with our employees. 06:16 Another competitive advantage that we offer is the ability to bring new software features and benefits to our customers who are within the typical warranty cycle. In February, we received FDA clearance of the mobile app that enables our t:slim X2 pump users to bolus insulin from their smartphone. With this clearance, we added to the list of Tandem's first as this is the first ever FDA-cleared smartphone app capable of initiating insulin delivery on both iOS and Android operating systems. 06:47 Following the clearance, out team kicked off training for our internal employees, along with healthcare providers. Launch activities are underway this month as part of a paced rollout into the summer, and we are on track to offer our t:slim X2 US customers access to the mobile bolus delivery feature and this will be free of charge. 07:08 Mobile bolus clearance provides a great reason for our sales and clinical teams to reach out to healthcare providers. It also reinforces the importance of our strategic decision to expand our US sales and clinical teams in the first quarter to further drive awareness of our technology solutions among people living with diabetes and healthcare providers. People have been excited to learn about our mobile bolus technology as it's been a top requested feature. 07:34 Our interactions with healthcare providers have continued to be a mix of in-person and virtual. It varies widely by practice and geography, and overall the impact of the broader labor shortages in physicians' offices continues to weigh on many of our prescribers. This along with the fluctuating COVID case rates is a dynamic our US field team continues to navigate well, staying both flexible and adaptable. Our international distribution partners are also successfully managing these headwinds outside of the United States. 08:07 Turning to our product pipeline, we're making great progress across our family of products under development. Mobi, a novel miniaturized durable pump is a focus for our R&D team as it provides us an opportunity to serve a new market segment. As a reminder, the Mobi pump is designed to be fully controlled through a mobile app on the user's personal smartphone. And the t:connect mobile app that was cleared earlier this year for bolus insulin delivery is also the foundation of Mobi's mobile control functionality. The big development milestone for Mobi in Q1 was our undertaking of the largest human factor studies in Tandem's history, which was recently completed. 08:43 We are in the data analysis process now and early data from the study is encouraging. It's been exciting and inspirational to hear the feedback from people who participated in the study, both people living with diabetes, as well as our pump trainers. And how systems operate and how it will serve a current unmet need in the diabetes community. The data from our pivotal human factor study along with other final test reports and development work are now taking place, and we intend to submit our 510-K filing to the FDA in the third quarter. We'll be filing through an ace pump pathway in the US, which allows Mobi to be integrated with interoperable CGMs, as well as our algorithms like Control-IQ without additional regulatory review. 09:29 CGM work is another top priority for our development teams and continues to progress well with both of our CGM partners Dexcom and Abbott. We are in tight communications with both organizations as they each progress towards bringing their technology to market through the iCGM pathway. 09:47 The last area of product development I'd like to highlight today is the extensive clinical work that we're undertaking to bring the benefits of our Control-IQ technology to more people living with diabetes. For example, our first Type 2 feasibility study for Control IQ is anticipated to be fully enrolled this month. Also, the pediatric trial using Control-IQ continues to progress well. And as discussed in the past, we intend to use the data to pursue an age indication for children younger than six years old. 10:16 And lastly, we're working to expand insulin indications for Control-IQ through the addition of [indiscernible] and we'll be kicking off a study this quarter. In addition to these products under development, we're making progress on our global digital health initiatives, which remain strategically important to us. These efforts and our longer-term pipeline are all designed to deliver on our commitments to meet the varying needs and preferences of people living with diabetes. Relentless innovation and revolutionary customer experience remain at the heart of our company. 10:49 Looking across our business, we're also applying the lens of continued improvement to identify areas for process efficiency, lean optimization and reduced environmental impact. I look forward to keeping you updated on the company's accomplishments to reduce the burden of diabetes management, while working to deliver value to our shareholders. 11:09 I'll now turn the call over to Leigh to provide further color on the quarter, as well as on our guidance for the year. Leigh?

11:15 Thank you, John. Good afternoon everyone. 2022 is off to a strong start. US sales outperformed expectations and we are on track with international sales and operational execution against our profitability goals. 11:29 First quarter sales were $176 million worldwide demonstrating continued high growth at a rate of 25% year-over-year. Our Control-IQ technology continues to improve the quality of life for our customers around the world, driving more people to our products and creating strong retention within our customer base. In the first quarter of 2022, we shipped 20,000 pumps worldwide, contributing to nearly 50% growth of our installed base compared to one year ago. 11:56 Beginning with our results in the US, our first quarter sales grew 27% to $131 million, we shipped nearly 19,000 pumps in the quarter, bringing us to an installed base of more than 250,000 customers. We continue to see growth from both an increase in customers new to Tandem and an increase in renewal customers who are purchasing a pump from us once again. In fact, our renewals grew to nearly 20% of the total pumps we shipped this quarter compared to approximately 15% in the prior year. This higher rate of renewal growth is particularly encouraging as we look ahead to our increasing renewal opportunities and it is a trend we expect will continue throughout 2022. 12:38 Turning to our results. Outside the US, we generated $45 million in sales this quarter, growing 18% over the prior year. Half of those sales were generated from shipping more than 9,000 pumps with the other half from supply sales to the nearly 100,000 customers in our installed base. This is a remarkable 87% increase in the number of our customers outside the US compared with Q1 of last year. 13:00 As we discussed on our last call, this quarter reflected inventory rebalancing at some of our key distributors. It's important to note that the variability we have seen in shipment patterns is not necessarily reflective of underlying market demand. Analysis of the end customer data is exciting as it shows a steady uptick in demand within the individual countries, which is even more pronounced in the six months following each Control-IQ launch. 13:24 As we look to the remainder of the year ahead, we are increasing our 2022 worldwide sales expectations to a range of $850 million to $865 million, reflecting a growth rate of 21% to 23%. This is based primarily on our strong Q1 results in the US and so we have increased our US sales guidance to a range of $635 million to $645 million and are reaffirming our US expectations of $215 million to $220 million. Overall, we remain cautious regarding the broader COVID and economic trends and the lingering impact these have on the market, our health care providers and our customers. 14:03 I will now turn the gross margin, which was in line with the first quarter of last year at 52%, demonstrating that we're finding ways to offset some of the broader economic pressures. The three primary factors that contributed to our gross margin performance this quarter where: production cost improvements; improved average selling prices; and ongoing global supply chain challenges. First is a production cost. We continue to see improvement in the per-unit cost of each of our products year-over-year from manufacturing efficiencies, lean initiatives and leverage of overhead on increased sales volumes. 14:36 Second, improvement in our average selling prices came from the mix of customers ordering within this quarter, in particular, our sales through direct contracts in the US increased to 35% of total US sales this quarter versus only 32% in the prior year. Both the price and cost improvements more than offset the impact of the increasing percentage of supply sales from our large and growing installed base. Keeping in mind that supplies have lower margins than pumps. 15:02 Last, our non-manufacturing costs were slightly pressured this quarter due to greater freight costs from global supply challenges. We anticipate that this pressure will be more significant in the second quarter based on increases in both freight and the recent acquisition cost of certain materials. Because of this, we expect gross margin in the second quarter to be in line with the first quarter, despite a seasonal increase in pump shipments as is typical in our business. We have factored the impact of these pressures into our expectations for the full year and our 2022 guidance is unchanged at 54%, Most importantly, we remain confident in our ability to achieve our long-term gross margin objectives. 15:42 The change in our operating and adjusted EBITDA margins year-over-year reflects our commitment to increasing investment in R&D, which has been the trend for the last four quarters. Our operating margin was negative 9% of sales and adjusted EBITDA remains positive at 4% of sales. R&D grew to 19% of sales this quarter as we expanded our teams in support of our hardware, software and digital health initiatives. This reflects higher spending, but it's also greater on a percentage basis due in part to the seasonality of our business. For the full year, R&D expenses are expected to average 15% of sales, up more modestly from 30% of sales in the full year of 2021. This investment in R&D and balanced by expected efficiencies in SG&A with operating expenses overall remaining flat as a percent of sales from 2021 to 2022. 16:34 Our full year expectations for adjusted EBITDA remain unchanged in the range of 14% to 15% of sales. Factoring in the current level of investments we are making in the business. We remain on track to achieve our long-term operating margin outlook. Our balance sheet remains strong as we continue to navigate challenges of the COVID environment and drive operational execution. We ended the quarter with $635 million in cash and investments, generating free cash flow of $11 million in the quarter. 17:02 To summarize our 2022 outlook, worldwide sales are estimated to be in the range of $850 million to $865 million, including international sales of $215 million to $220 million. We estimate gross margin for the year to average 54% and adjusted EBITDA to be in the range of 14% to 15% of sales. Our noncash P&L charges for stock compensation, depreciation, and amortization are expected to be slightly higher than our original expectations for the year at approximately $95 million, of which $80 million is associated with non-cash stock compensation and $15 million in depreciation and amortization. 17:43 With that I will turn it over to the operator for questions.

17:48 [Operator Instructions] Our first question comes from the line of Steven Lichtman of Oppenheimer & Company. Your question please.

18:10 Thank you. Hi guys. I was wondering if you could talk a little bit about sort of the intra-quarter trends and whether you saw an appreciable pick up as the quarter went on with Omicron fading and perhaps that having an incrementally better impact on staffing, et cetera. So just anything you saw throughout the quarter would be helpful.

18:35 Sure. Thanks, Steve. I think what we were seeing in the quarter as much of what you've heard from other companies as well as is, the beginning of it was more pressured as there were more absences due to illnesses as the Omicron wave was kind of running out at that point, but it’s also typical for us to have an uptick across the quarter, particularly in the first quarter with it being the lowest seasonal quarter of the year. And so, our field continues to express as the same challenges exist where when they call in physician offices there’s still staff shortages and high absenteeism, which put price pressure, but we were happy that we still came through strong this quarter.

19:10 Steve. the only thing I'd add to that is that, we also continue to see shipping challenges to our OUS partners. The supply chain is still a bit turbulent. And so, it just really hasn't settled down, we hope it happens here in the next month or so, maybe in the next -- second half of this year, but it's definitely still been a little problematic for the distributors.

19:30 Got it, got it. And then I just wanted to follow-up on one of the opportunities that you guys talked about in that moving up to the -- the new CGM. And so in particular relative to G7 [indiscernible] progress there. Can you talk a little bit more about sort of what you guys need to do to get that up and running? I know, obviously FDA has set up from a regulatory perspective with the protocols, but how long should we be thinking about that process taking for you guys once [indiscernible] does get approved.

20:02 Yeah. And as you know, we've been working with Dexcom now for many years. We're in the fourth generation of the sensor integration and our team is in very close relationship. There is work -- I mean they have made a submission to the FDA for the CGM system. There is still work that we both need to do to establish the communications, cyber securities and things like that, that both teams are continuing to work on. And so, when they get approval, we're anticipating us probably going to be a quarter, maybe two quarters afterwards before we introduce the device. And since it is an ICGM and it will be on a days pump there is no -- there is not going to be any regulatory submissions. And we'll be in close communication with the Dexcom team to discuss the commercialization and timing and discuss more of that as we get through this year.

20:50 Got it. Thanks, John. Thanks, Leigh.

20:52 Good talking to you Steve.

20:54 Thanks, Steve.

20:55 Thank you. Our next question comes from Travis Steed of Bank of America. Please go ahead.

21:03 Hey, this is Dan [indiscernible] on for Travis. Thanks for taking the questions. Just two from me. We've heard from some other med-tech companies that OUS regions weren’t as heavily impacted from this COVID wave. It sounds like your messaging is a little bit different. So just love to get your thoughts on those markets? And how you think the full year can play out? And are you seeing any competitive differences in the US market compared to the OUS?

21:28 Yeah, I'll start with the first part of the question about the impact in the OUS markets. And you're correct, for us what we've seen in our distributors outside the US have also continue to manage through the same challenges that we've seen here in the US. And it's been like that for the last three or four quarters as well, which has contributed to some of that variability that we've seen in the revenue as their shipment timing and orders have varied as well. And so we're being thoughtful about that from a full-year perspective, as we continue to factor in caution around the ongoing lingering effect of COVID across the rest of the year.

22:03 And I would say in regards to the competitive environment, OUS it really hasn't changed at all. There has been no new products that have come to market. It's still a same and we are still doing great. We just had the ATV conference there, we were able to pull together our entire distribution group of distributors and we're now in every OUS country with Control-IQ. And so there's a great deal of excitement and we're really expecting to see good things as far as Control-IQ goes OUS. 22:35 And in United States there has been -- there has been a new product that has come to market, but I would say, even with that the competitive environment remains largely unchanged, it's been on the market now for a few months, but we have heard conversations about it, but there so few systems that are out there that is really very difficult for us to get a sense for how it's actually performing [indiscernible] keep monitoring and see how that goes in time.

23:01 Understood. Thank you. And then just a quick follow-up. On the Type 2 market you spoke during the R&D Day about that mark being more of a focus. So just trying to get a sense here of when you expect to start capturing some more Type 2 patient there? And really what it takes to start driving that market? And thanks for taking the questions.

23:18 Yeah. Well, we currently have about 20,000 people who are using Control-IQ off label and they're seeing fantastic results. We've -- we have a feasibility study right now for Type 2 underway, it's fully enrolled and we would anticipate that that will probably take the majority of this year to complete. And what that's done, we'll have -- that will give us the information that we will need to work with the FDA to design a pivotal study, which will be something that will most likely be run in the beginning part of 2023. So we're moving in a good direction. We've got a lot of excitement on the Type 2 front as well. It's probably more like a late ’23, '24 product.

23:58 Great. Thanks so much.

24:00 Yeah.

24:01 Thank you.

24:02 Our next question comes from Brooks O'Neil of Lake Street Capital. Your line is open.

24:08 Good afternoon and congratulations on continued terrific results. [Multiple Speakers] recognize that you've talked quite a bit about various factors that influence performance this quarter, but could you talk -- try to highlight for us the factors that you think contributed to 11% pump shipment growth in the quarter?

24:34 Sure. It's actually -- Brooks, a lot of people focus on the challenges that everyone is facing, but it was a really strong quarter for us in a good way to start the year. And we have seen strength coming from all the areas that have been made us so successful in the past few years and that our new customers continue to increase year-over-year and we're getting great traction with our renewals. And so it was great to see the step up in those year-over-year as well, which is very meaningful as we think about the number of new opportunities coming this year and how that will continue to scale in the coming years.

25:07 Great. And then I guess as a follow-up or a different question, could you just comment at all about whether the human factors testing on Mobi uncovered issues or things you really want to change about the product or would you say it was pretty affirming of the strong characteristics of the underlying product?

25:31 I would say it's a relatively complicated analysis Brooks, and we're still in the process. I mean, up until this point we have not found anything that we think is problematic, but we still have some data to dig through. I mean, we're optimistic, there is nothing that just stood out that was problematic. In fact people were thrilled to use it, it was great to see people who live with diabetes, as well as our trainers, the excitement that they had as they were just watching people interact with it. So they is still more analysis to be done, but I'm optimistic that we're going to get through this with no significant changes.

26:07 Great. Thanks a lot.

26:09 Thank you.

26:10 Thank you. Our next question comes from Alex Nowak of Craig-Hallum. Your line is open.

26:17 Great. Good afternoon, everyone. It was a good renewal number this quarter. But I would say -- still say it’s a big opportunity. Could you expand a bit more on the marketing efforts there you can undertake to help push for more upgrades in the installed base? Is it something from a patient marketing perspective that could be done? And I guess, how critical is having a different form factor out there like Mobi to encourage those upgrades?

26:40 Sure. So part of the success we've had in increasing that renewal rate in the past 12 months or so has just really come from, I would say, some of the operational efficiencies and embedding some of the learnings from the early years since our processes. We continue to expand that team. We have a high level of outreach and we're seeing great retention from our customers. I mean, so there are number of factors, we're excited about the opportunity to talk about mobile bolus with patients, because it's another good reason to reach out to customers. And then we'll continue with that trajectory as we move forward.

27:12 And Alex, I would just say that, we believe that it's not a one size fits all situation when it comes to managing diabetes and there is different segments out there. And so we think that certainly we're doing very well with the t:slim pump, but when Mobi comes to market, we think it's going to unlock another segment that we haven't been participating in. And so we think it's going to continue to drive growth in the penetration rate from MDI conversions to pumps and we think that's an important factor in our growth going forward.

27:41 And then as you're getting ready to submit Mobi here, what sort of payers conversations are you having now to position Mobi? I would assume it’s both a durable, but also a PBM capable pump. And does Mobi more give you anymore renewed levers to push for direct contracts with the payers?

27:58 There are a number of good reasons to talk with the payers, it's not just the technology, the form factor changes, but conversations we're having today really center around Control-IQ as much as anything else. And it's demonstrating the great outcomes that our customer base has seen, we're able to share with payers their own subscriber base and we can show them the pre and post outcomes. So they can really see what a difference we're making for their own population. And so we're at the beginning stages now with initiating conversations about Mobi that will be very prepared for launch. 28:31 And it likely won’t probably be in the DME channel, but it doesn't mean that we're not starting to explore further what it might -- what -- how pharmacy channel might benefit our business or how we might be able to fit into the pharmacy channel in the long-term. Each product evolution in our pipeline will give us another opportunity to find out what fits and what doesn't.

28:51 Excellent. I appreciate. That's it. Thank you.

28:54 Thank you, Alex.

28:57 Thank you. Our next question comes from Jayson Bedford of Raymond James. Your line is open.

29:04 Good afternoon. Just a couple here. You mentioned the inventory dynamic with international distributors, it did look like non-pump revenue internationally came a bit lower than we has expected. Is this where you saw the impact or did you also see the inventory dynamic play out in the pump side as well?

29:23 It was across the board, Jayson. So it's not so much product focused, but it's distributor focus and how they are managing through their inventories. And so, it came in basically right where we anticipated as we came out of the fourth quarter understanding what their inventory levels look like. And while we are anticipating that we will be continued variability going forward as we look ahead to Q2, at least we don't have anything at this point of a material nature that we could call out that would -- that we should -- feel like we should share with you.

29:54 Okay. Okay, that's helpful. And just on the renewal rate, do you expect this rate to trend higher throughout the year or is 20% a good number for the rest of the year?

30:06 Yeah, I think it's a good average for the year to think about, because obviously, our US business scale seasonally just for new customers, similar to renewal customers. We do have a heavier renewal opportunity coming to the table in the fourth quarter. It represents about 40% of that 13,000 new opportunities this year. So as you always expect a heavier back end finish for us, it would be the same with renewals and new customers alike.

30:42 Thank you. Our next question comes from Danielle Antalffy of SVB Securities. Your line is open.

30:51 Hey, good afternoon guys. This is Ryan on for Danielle. Thanks so much for taking the questions. So, you touched on the – you covered impacts in the quarter in your remarks. Can you please talk a little bit more of new patient volumes and patient starts for the quarter, given potential Omacorn impacts that might have limited access to physician offices? And any trends you might be seeing exiting the quarter? And then I had one follow-up.

31:14 Sure. So what we saw basically was that, it is what you're hearing across the board from folks, Omicron impacts physician offices and customers alike in so many different ways, but a lot of it is just higher levels of illness and the offices still have heavy staff shortages. And so that's where our field is trying to help supplement as much as possible as they work with their physician customers to make sure we can still get new patients onto the product as expected. And I think we've been very successful, again, not without challenge, but the team has worked very hard. And so, as we go into second quarter there is still a lot of conversation about how the pandemic is affecting the environment. What we've seen is, I would say, not to a typical from a typical -- not atypical from a second quarter, which is around significant holidays like Easter and spring break time, you see a little bit more softness but for the most part we expect to continue to have to work through these COVID challenges all year long. And I applaud our field sales force for what they've been doing to get it done.

32:19 Okay, great. Super helpful. Thanks for that. And then just shifting gears to primary care physicians. How are you seeing PCP doctor prescribing more patients on pumps and how has the process different with the PCP versus an endocrinologist? And I guess if you could frame how many target PCPs are there?

32:39 I don't have a sense for the number off top of my head. I can tell you that we primarily interact with vendors as you would think, but we do have -- we do keep track of insulin usage on that PCP offices and we actually do visit offices that do have significant amounts of insulin usage. And so, I think that the interaction is, there is probably more of a training burden that's required in that setting. But we are having such success. I just off the top of my head, don’t recall the numbers and how significant they are at this point in time. 33:12 We definitely as we move to Type 2 we definitely are interested and looking at that channel carefully and trying to figure out ways to access it without significantly growing the sales force. And we think training is a big important part of that.

33:34 Thank you. Our next question comes from Jeff Johnson of Baird. Please go ahead.

33:39 Hey guys, good afternoon. And I apologize. I'm jumping back and forth between a couple of calls. But Leigh, I just wanted to check one thing, just on the supplies revenues, back to Jason's question on the international side. But even in the US side, both numbers kind of came sort of our model. And I could see it, it’s either pricing has come down on some of the supplies, maybe dropouts were higher than normal in the quarter or my modeling was just off? And I have a feeling of just that latter one, but just help us understand kind of like the price, maybe seeing a little softer both US and international this quarter? Thanks.

34:10 Sure. And I’ll separate the two, they're slightly different conversations. From the US perspective, I guess, what I could say on both pricing has been pretty consistent. And really when you think about the US, much like we see seasonality from pump purchases, the same sort of seasonality exists for supply purchases as well. So what you have are people who deductibles are resetting, so many times at the end of the year they will stock up on supplies, and it will impact their Q1 quarters. So in our models, we didn't see anything unusual with the first quarter supply trends in the US in particular. 34:44 And I should make it clear too, we see very high retention with our customers on both those renewing, as well as people who continue to stay on the product out of warranty. So it's still been very strong and stable and probably even more so since Control-IQ came about in the last few years. And then from a OUS perspective, there is not so much of that seasonality aspect. It just goes back to these dynamics of the distributors trying to manage the inventory on their shelves with unpredictable order times. And so it's about when they're trying to figure out what they need to ship, when they can ship and the frankly, how they ship it to get it when they want it. So it's more about the variability than it is about seasonality.

35:27 Yeah. That helps. Thanks a lot.

35:30 Take care. Jeff.

35:31 Thank you. [Operator Instructions] Our next question comes from Josh Jennings of Cowen & Company. Your line is open.

35:48 Hi, this is Brian here for Josh. Thank you for taking my questions. I wanted to go back to just the international distributor inventory levels topic. Our levels back to normal now and how are you thinking about reorders this quarter after the first quarter destocking?

36:06 Yeah, what we've tried to do is when we know there's going to be something materially different from the trends that we've called it out each time. And as we go into the second quarter there is nothing to speak of necessarily from any particular distributor. So when we -- and just to recap, when we ended 2021 we were very aware that certain distributors had enough inventory on their shelves, were there weren't going to be first quarter orders to replenish. And so as we go into second quarter, we feel good about the fact that it's going to be something -- if there is a normal something more normal and each distributor will order at what would be a standard level.

36:45 Okay, thank you. And on Mobi, I think you previously referenced the filing is a summer time filing. So the third quarter language seems very consistent to me, but I just wanted to confirm that the timing of the submission hasn't changed. And I guess if I could ask a follow-on question just, will you be releasing data specific to Mobi either at the time of the filing or wallets under review.

37:08 Yeah, I mean I think that regarding timing, as you get closer to the end of the schedule you get -- you have better visibility on it. And I think that we knew it wasn't going to be June and so we just wanted to make that clear. So it's a minor situation. And relative to data, I would say that the data that we have presented really has been on the algorithm and that's -- and since it is a interoperable algorithm, it could be used on Mobi or on t:slim. So we are sort of filing Mobi to be an ace pump. And so as a result of that we can integrate the algorithm onto the pump with no regulatory filings. All we have to do is get the ace pump approval. 37:54 So at this point in time, nothing specific relative to data. Brian, I mean I think that we'll probably be sharing some of the human factors work that's being done, some of the benefits that our psychosocial the ease of use, sort of the response to the size and the mobile app, those sorts of things, but I don't think there'll be any clinical data at this point in time.

38:16 Understood. Thank you.

38:19 You are welcome.

38:21 And as there are no further questions in queue, this does conclude today's conference call. Thank you for participating. You may now disconnect.