Tandem Diabetes Care, Inc.
Q2 2016 Earnings Call Transcript

Published: 29 Jul 2016

[Operator:]

Good day, ladies and gentlemen and welcome to Tandem Diabetes Care Second Quarter 2016 Earnings Conference Call. At this time, all participant lines are in a listen-only mode to reduce background noise but later we will conducting a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to introduce your first speaker for today Susan Morrison, Chief Administrative Officer. You have the floor ma'am.

[Susan Morrison:]

Thank you. Good afternoon, everyone and thank you for joining Tandem's second quarter 2016 earnings conference call. Today's discussion may 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 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 the press release announcing our Q2 earnings which was 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. In addition, today’s discussion will include references to a number of GAAP and non-GAAP financial measures. Non-GAAP financial measures are provided to give investors information that we believe is indicative of our core operating performance and reflects our ongoing business operations. We believe non-GAAP financial measures facilitate better comparison to operating results across reporting period. For additional information about our use of non-GAAP financial measures please see the information under the heading use of non-GAAP financial measures in our press release. Kim Blickenstaff, Tandem’s President and CEO will be leading today’s call. And at this time, I'll turn it over to Kim.

[Kim Blickenstaff:]

Thanks Susan, good afternoon everyone. Joining me on today’s call is our Chief Financial Officer, John Cajigas. I'm extremely proud of the progress we've made so far in 2016 across each of the companies key initiatives. We continue to grow and further penetrate the insulin pump market with our family of products and just as importantly we also continue to provide our customers superior care and support. At the same time, we are looking to the future advancing our product development efforts and managing the business toward profitability. Some quarterly highlights and recent developments are our achievement of 46% year over year sales growth, our 5 point year-over-year gross margin improvement, our 45 percentage point improvement in year-over-year operating margin, FDA clearance for the Tandem Device Updater, FDA clearance for a lower age indication for t

[John Cajigas:]

Thanks Kim, good afternoon everyone, overall I'm very pleased we continued to deliver high sales growth, demonstrated success in selling three differentiated pump offerings and made meaningful progress towards profitability. Today, I will be reviewing the rolling 12 month and Q2 results, discussing our updated 2016 guidance and providing an overview of our technology upgrade program. Looking at our sales and product shipments, first I'll discuss our rolling 12 month metrics which we continue to view as best indicators of our progress followed by some particulars for future. Our sales for the rolling 12 months ended June 30 were $87.9 million, an increase of 48% or $59.4 million for the previous 12 month. This growth was mainly driven by the increasing productivity and recent expansion of our salesforce as well as the contribution of t

[Operator:]

[Operator instructions] Our first question for the day comes from the line of Jeff Johnson from Robert Baird. Your line is open.

[Jeff Johnson:]

Thanks, guys. Can you hear me okay?

[Kim Blickenstaff:]

Yes. We can.

[Jeff Johnson:]

Hey, Good afternoon, guys. So just a couple of questions here. I just want to check, so I guess, John, a question for you. When you're going to non-GAAP guidance and you will report non-GAAP results, will the scenario be something like we would have sold X amount of pumps if we could have booked them all in the third quarter, but we have to defer it, so the GAAP number is this and the non-GAAP is the other. Is that kind of how we’re going to get presentation in third and fourth quarter?

[John Cajigas:]

Yes. Very similar to what you’re saying. So what we will do is present the GAAP numbers according to the rules and then we will present certain non-GAAP numbers, very similar to how we do it today. If we shift it, then we would show you what the revenue would have been, had we recognized that so much how we’ve historically done it and that will be a reconciliation actually in the Q that reconciles the final GAAP number of sales to the final GAAP number of -- non-GAAP number of sales as well. And then you’ll see what’s got differed, what got recognized, maybe what got rated during the period and we’ll do that for multiple factors and multiple lines within the P&L. So just a couple of other things. Other things that we typically talk about on the call that aren’t sort of financial amounts, such as shipments and all that will be unchanged.

[Jeff Johnson:]

Okay. And then in the non-GAAP number and the non-GAAP guidance, there is no presumption in there of upgrade revenue, anything like that. That is just pure kind of sales of new pumps and things like that, is that correct?

[John Cajigas:]

Well, the upgrade fees that we will be charging will be recognized on the sales line.

[Jeff Johnson:]

Are those upgrade fees, I'm sorry, are those upgrade fees included in your new non-GAAP guidance?

[John Cajigas:]

No, they are not.

[Jeff Johnson:]

Okay, so there could be upside from that if you get, which I’d presume you will get a decent amount of upgrade demand going to something like X2?

[John Cajigas:]

Correct. Just realize what we're trying to do is, for us, it's really trying to get a lot of customers to a pathway in which they can access sort of what we believe we’ll offer in the future. So we're really trying to make this sort of a breakeven proposal on which we’re trying to make most of the pathways, sort of covering our cost and even some of them, we are actually incurring the costs like the no cost portion that we’ll incur here before the end of the year.

[Jeff Johnson:]

Understood. And then, Kim, I think you did a good job of laying out all the differences between all the pumps and what have you. I just want to make sure I’m understanding the difference on t

[Kim Blickenstaff:]

Well, it’s a radio that has, it can go to two devices. So the original Bluetooth could not. So now, we will be able to have in the future an app that goes to a mobile phone. So that's why that new radio is going in there.

[Jeff Johnson:]

Yeah. Understood. And then last question for me, just, John, it sounded when you gave the cash flow update and kind of the cash update, you’re now almost assuming you’re going to take that 35 million from CRG. In the past, I think that was a little questionable. Obviously, you guys have a lot going on here with moving manufacturing and a lot of new exciting products. I guess it's somewhat understandable, but is it fair to just presume you're probably going to have to exercise that 35 million at this point at the very least?

[John Cajigas:]

I think we're still continuing to manage on the cash we have today, our burn is decreasing and typically our burn decreases throughout the year once we move past the first quarter. But it is an assumption that’s reasonable that we might take the money, but I have not committed to taking the money yet.

[Jeff Johnson:]

Understood. Thanks, guys.

[John Cajigas:]

And just to be clear, we have, until December 31, to take it and as soon as we take it, we’ll be paying interest on it. So at this point, I don't need to take it, so I won't take it.

[Operator:]

Thank you. Our next question comes from the line of Rick Wise from Stifel. Your line is open.

[Rick Wise:]

Good afternoon, everybody. A couple of questions. Maybe start with territory expansion, maybe Kim, just a little more color there, as you say, now, you are at 72 territories. Is your expectation still that that’s where we are going to stay and just looking ahead, I mean, should we expect sequential improvement in, maybe John in those, the pumps per rep per month. Obviously, fourth quarter should see a big one, but is it reasonable to still expect steady sequential improvement?

[Kim Blickenstaff:]

I’ll just answer that first question. We do not have plans to expand beyond where we are. We believe that the territory improvement is always a function in time and territory and gaining experience, but the real wild card here is going to be having multiple products to sell and we are sort of guessing it, what we think productivity can go to because there has really not been a historical basis to set expectations. So John, do you have any comments beyond that?

[John Cajigas:]

Yes. I would just add, we do expect the productivity to continue to increase. And as you mentioned, we have the seasonal impact, but even outside of the seasonal impact, we see territories are improving. I think having three products in the bags of the rep is very helpful. We’ve talked about that in the past. And now that we have a technology upgrade program, which has hindered us in the past as compared to some of our competitors, I think that is going to be an exciting thing for our reps to be able to offer our customers.

[Rick Wise:]

Right. Talk a little more if you would about, you mentioned passing the possibility that as customers look ahead to the t

[John Cajigas:]

Sure. I think as we experienced with the G4, there were people sort of waiting for that product. And while you point out that there is a no cost upgrade path for these people who buy pumps, starting July 1 until we have the X2 available, maybe they don't want to worry about having to flip it out or change it and just want to wait until it's available and then just buy it then and they can live with their existing pump for a month or two, while we wait for the X2 to sort of launch in Q4. So it really comes down to just somebody from a convenience standpoint says, I could live for another three months until Q4 to be able to wait to see the X2 and not have to use a pump, get used to it, turn it back in, get a new pump and reset everything.

[Kim Blickenstaff:]

I would add, one of the difficulty in giving guidance on this part of what is going to happen is that we really, really don't know how patients are going to behave in each one of these buckets, trying to get up to the X2 upgrades. So it will be an interesting time to see how our patient’s customers really react to the options that we’re laying out.

[John Cajigas:]

And, perhaps, fair point. We really are trying to provide the greatest amount of flexibility that we're able to do, while controlling the cost of this and having a no cost path for people who buy pumps starting July 1 until X2 is available is purposeful in allowing people to do what you’re saying, Rick is that, there really shouldn't be any difference, but if there is a difference, we want to give them the ability to wait.

[Rick Wise:]

Yes. Turning to the United comments, Kim, I think it's great that you were able to sit down. I understand your reluctance to communicate too much for all sorts of reasons, but two things, I guess. One, any -- and it's a tough question to answer. I appreciate, but should we feel less concerned, more concerned, are you less and more concerned that others will follow United's lead and another broader question, given this just steady flow, compelling flow of technology, differentiated technology, and let’s add in the pediatric indications that you have got. I mean that has to be at a minimum, some significant protection installation from this kind of thing and I mean, couldn't United look at you on the under 18, the pediatric indication alone. Again, are there options like that, sort of the kitchen sink question?

[Kim Blickenstaff:]

Lot of questions in that question. Let me just say, it was a good conversation. I think we walked away understanding sort of the thinking behind their decision to go with exclusively Medtronic and so we’re going to work and try to bring them back evidence and information that possibly could help our case here. I think our whole strategy of having the X2 platform is that all of our future products are going to be class 3 products and so, we will be the only on in the industry actually to add these feature upgrades during that warranty period. So we know Dexcom is moving ahead on improvements. They went from the G4, which we had to the G5 that they’re marketing today. We can get there through the Tandem device updater. We can do that for G6, both of those are going to drive the AP program, a key part of the entire system is that CGM. So I’m hopeful that we can be responsive to UHC in terms of convincing them that we have a technology migration penalty that no one else can offer and I know that was part of the decision that we sort of heard through the communities. So we're just going to keep working at it and we hope that we can make progress, both from evidence we can give them and progress on our pipeline.

[Susan Morrison:]

And to your secondary questions, Rick, so people who are 18 and under, they are able to actually purchase Tandem pumps today, so the pediatric indication does help to expand that offering for those folks, but really this preferred in network arrangements that’s in place is for people over 18, so there still is that flexibility.

[Kim Blickenstaff:]

And we don't have any guess as to what percentage of that population that is.

[Susan Morrison:]

We don’t. The numbers unfortunately aren’t very reliable. So it is hard to predict and then as far as other payers, we believe in customer choice and that most payers also recognize this value.

[Kim Blickenstaff:]

I mean, you could probably bet this, it has been shopped around, but we’ve been very active, proactive here and so far we are not hearing that, there is a widespread wave that it’s going to happen.

[Rick Wise:]

Thank you so much.

[Operator:]

Thank you. Our next question comes from the line of Kristen Stewart from Deutsche Bank. Your line is open.

[Kristen Stewart:]

So I was just kind of wondering the X2, I guess, do you guys have approval for it or I guess a high degree of approval I would assume at this point?

[Kim Blickenstaff:]

It’s essentially at t

[Kristen Stewart:]

Okay. So just a matter of getting all your docs in a row and so just launching it in the fourth quarter when you’re ready from a manufacturing standpoint?

[Kim Blickenstaff:]

Yes. And I’d just like to point out that the G4 was our first class III product. So we really got experience, not only on the PMA side, but the class III manufacturing side. So the learning curve for us is not quite as steep and we have all those systems in place. So, as I said, all of our products going forward are class III and that's kind of company we need to be and we've really done a good job in getting there.

[Kristen Stewart:]

Okay. So it will be a beginning of the fourth quarter, no real risk at that and so you will definitely be able to hit the seasonality of it.

[Kim Blickenstaff:]

Yes. That's what we believe.

[John Cajigas:]

We expect it'll be some time in the fourth quarter. There is nothing that is out of our control that we don't believe that we will be able to do that.

[Kristen Stewart:]

Okay, perfect. And then I know you guys said that the X2 profitability is better, is there any way to quantify that at all?

[John Cajigas:]

No, I mean the main differential that I discussed was that there are some components in the X2 that are the lower cost and highest quality than the previous component that were in the G4s or the t

[Kristen Stewart:]

Okay. And how have been the cost tracking from the disposables as well, any improvements there, I would assume, just from volumes, but?

[John Cajigas:]

It’s fine, steady improvement. I think that has continued over the last 12 months, I don't think there is anything unusual there that I think is worth talking about.

[Kristen Stewart:]

Okay. And lastly, I guess, as you’re getting back all these devices through the upgrade program, you’d mentioned approvals to refurbish. Are those ones that you can, I guess, refurbish and put back as X2s or will you be scrapping these and taking up losses and charges?

[John Cajigas:]

We refurb them and use them for the original use that they were brought in for. So that we will continue to have some people that don't upgrade, that will stay on t

[Kim Blickenstaff:]

You want one Kristen?

[Kristen Stewart:]

I will take one and I will have it on my desk. And so it will be a nice memento.

[Kim Blickenstaff:]

The benefit of utilizing refurbished pumps is that it generally -- they are at a much lower cost than the -- utilizing a new pump when we use replacements. So it does help our warranty costs. And up until this point, the newer products, if we had to replace a pump, it was with a brand-new pump, which is more closely than our refurbished pump.

[Kristen Stewart:]

Okay, perfect. Alright, thanks. I will get back with any other questions.

[Operator:]

Our next question comes from the line of Bob Hopkins from Bank of America Merrill Lynch. Your line is open.

[Bob Hopkins:]

Good afternoon. Thanks for taking the question. So I just wanted to circle back on two things. First on United and the question around other payers, I was just curious, Kim, how confident are you that you have a real sense for that the other payers will pass on what I agree is definitely being chopped around by Medtronic. So I just want to gauge your level of confidence that today on that really important subject frankly?

[Kim Blickenstaff:]

Level of confidence, I can't guarantee anything, but from our other top payers, we are not hearing that there is a pending decision or really a lot of interest in going to an exclusive arrangement. I think these payers see things in different ways, depending upon their situations and so I'm not certain that the rest have the same motivations that UHC expressed to us, but that’s what I can tell you. I mean, obviously, it's a very high priority for our reimbursement folks and also for me and for Brian Hansen, our Chief commercial Officer. So we really want to be out there and proactive.

[Bob Hopkins:]

And why do you think United has different priorities than the other payers. What makes them different from some of the other guys in terms of their willingness to move forward with something like this?

[Kim Blickenstaff:]

I really don't feel like going to that from the discussions that I had, I feel those fall in the class of confidential sharing that they had with us.

[Bob Hopkins:]

Okay. And then on the guidance, I mean, obviously there is a ton of moving parts here, but just to try to simplify things, if you look at the previous guidance you gave for 2016 and as you try to figure things out into kind of excluding the new thinks for a second, the new pump, the exchange program, if we just looked at sort of the UNH decision and then the strength of the base business, are you not lowering guidance on kind of the net of UNH plus the strengths in the base business. I just want to try to break this down as much as I can.

[John Cajigas:]

Sure. Our previous guidance was 1.08 to 1.15 and historically we've seen about 8% of our business be UNH that would have been sort of unavailable to us under the new rules. So if you were to take and apply that percentage to those numbers and also apply sort of the seasonal distribution of our sales and which about 60% to 65% of our sales are in the back half of the year, you would infer or imply that our guidance to be 102 to 109 and our guidance is 105 to 110, recognizing that aspect as well as some positives that we see in the business.

[Bob Hopkins:]

Okay. So I think I got it on that. That's helpful. And then the effect of this change program in the new pump are different issues with GAAP, non-GAAP.

[John Cajigas:]

Correct.

[Bob Hopkins:]

Okay. Rather than be at here, I will take the rest offline. Thanks very much for the time.

[Operator:]

Thank you. Our next question comes from the line of Tao Levy from Wedbush. Your line is open.

[Tao Levy:]

Great, thanks. Good afternoon. All right. So a few questions here, so how do you expect the disposables breakdown to trend for the rest of the year? One of the answers you gave was there is nothing notable about that, but was the lowest percentage that you guys have talked about in the past in terms of pump revenues versus total revenues?

[John Cajigas:]

Well, our installed base continues to grow and the utilization among that is going to grow, so I gave this, our cartridge volumes have grown, our infusion set volumes has grown as well. As a percentage of revenues, I still maintain that I think pumps are going to be the lion's share of our revenues throughout our future. It's just because of the dynamics of the price points, as well as the activities that we have, the offerings that we have as well as what we see, what we can do with the update and so forth. And with the four-year cycle coming up and having renewals that also adds to the process. So I think you'll continue to see that, I think renewals will start in the fourth quarter, so that may generate more pump revenues than we have seen in the past as far as the percentage of sales. So I think it will bounce around pretty consistent to sort of what we’ve seen in the past.

[Tao Levy:]

Okay. That’s great. And are there any other features with the t

[Kim Blickenstaff:]

Well, I’d come back to the fact that we did a study that we published last year and it's actually in the Journal of Diabetes Science and Technology and there is about 1300 responders and these are pumpers and nearly 91%, one operability for their pump, they have a very, very high level of comfort with doing software updates because they have experience with smartphones and so they expect their pumps to behave like smartphones. So that feature of having that upgrade ability, whether it’s for the software layer that operates the touchscreen or updates the touchscreen and provides new features and new screens and new different displays and so forth that could be that kind of a change, but I think most importantly, it's going to be the ability to follow the migration of the improvement of Dexcom CGM and then that is a driver to our AP program that will make the X2 very, very unique, because within a four-year cycle, we can add these features as fast as we can get them through the FDA. So I just think that's revolutionary. I think that's the way cellphones killed the Motorola Razr, we now all unexpected and so patients expected of their pump and I think there will be a revolutionary feature and advantage that we can bring to patients who really want this.

[Tao Levy:]

But nothing necessarily on sort of like the disposables and accessories that would make it go more proprietary?

[Kim Blickenstaff:]

No.

[Tao Levy:]

And then just, how should we think about, as you go through upgrade program, entering into the fourth quarter, you are going to have potentially some replacements, what happens to those pumps if you’re kind of towards any warranty and you decide you want to pay the 799 instead of the several thousand that Tandem would have collected I guess with insurance company, how is that going to work?

[Kim Blickenstaff:]

So if you're talking about somebody who potentially is coming up for warranty and has a choice of getting a brand new pump reimbursed or going to the upgrade program, one facet that should be made clear is that the warranty, just because we upgraded, we're not changing the warranty period. So very consistent to some of how our competitors have done it. So that is unchanged. So if you have a pump that you’ve had for two years, you upgrade and you have a four-year warranty, then you have two years remaining on your warranty. So that's a consideration that they have to make, whether it's a wait in the side, whether they should wait for their normal renewal cycle and get a new pump or to go ahead and upgrade through this program.

[Tao Levy:]

But you could have some patients who want to pay the 799 instead of the 20% copay of getting a brand-new pump with four years?

[Kim Blickenstaff:]

Yes. They will be dealing with the warranty issues, they could do that, and the question is 799 is the same to them as they are out of pocket costs, they had bought a new pump.

[Tao Levy:]

Okay. And then just lastly on the timing standpoint, when do you expect to get the approvals for the G5 integration with the X2, is that mid-2017?

[Kim Blickenstaff:]

Yes, mid-next year's what we’re forecasting.

[Tao Levy:]

Okay, perfect. Thank you so much.

[Operator:]

Thank you. Our next question comes from the line of Ben Andrew from William Blair. Your line is open.

[Alexa Desai:]

Hi guys, this is actually Alexa in Fort Ben. We touched on a lot of the pertinent topics, so just a few quick questions from me, on the lower indication, how much of the market does that open up for pumps for you guys and then if, correct me if I’m wrong, this is only for t

[Kim Blickenstaff:]

It is for t

[John Cajigas:]

Yeah. That’s right. Do we have good estimate, Susan that we’ve given.

[Susan Morrison:]

We don't unfortunately, just because of the demographics that are available are very hard to decipher between type I and type II and then age stratification there. And so unfortunately we don't. The one thing I would mention though is that today it’s at the discretion of a provider or of a health care provider if they want to prescribe the t

[Alexa Desai:]

Okay, that's helpful. And then I know you said the X2 is not going to be too different from the current platform. So is there any training differences associated with the X2 platform that for customers are at once you get that sales?

[John Cajigas:]

No. It would be just like the current pump from a user perspective.

[Alexa Desai:]

Okay. And then just I apologize if I missed this earlier, but the present distributor versus the present direct, is that similar to last quarter?

[John Cajigas:]

I think it has, I think this quarter, it was 75% last quarter was 77%.

[Alexa Desai:]

Okay. All right. And then that metric, so that metric is down, do you anticipate it moving down any further going forward or kind of stay in still at 75?

[John Cajigas:]

It fluctuates, it really depends on which, who is buying, where our pump buyers within quotas they have different insurance companies. I do think that because United is in play now that the distributor percentage would probably be reduced because we were servicing those customers through a distributor.

[Alexa Desai:]

Okay, all right, that's helpful. Thanks guys.

[Operator:]

Thank you. Our next question comes from the line of Tom Backus from Piper Jaffray. Your line is open.

[Tom Backus:]

Hey, guys. Good afternoon and thanks for taking my question. Most of mine have been asked, so I just have one quick one. And Kim, you had mentioned clinical data in your conversation with United Health, I was just hoping is that data being made publicly available and just hoping if you can give us a little detail on that?

[Kim Blickenstaff:]

Now, it's not publicly available, it was internal surveys that we have done on our own customer base that sort of give us indications of will this thing better control and whether the use of the advanced features, because they’re so simple to use has an impact on all that. So we have come to a conclusion of what we are seeing on that, but we really haven't listed.

[Tom Backus:]

Okay, it was retrospective and it was against. I guess injections, right multiple injections?

[Kim Blickenstaff:]

It was against a bunch of different cut, you can imagine, we have looked at the entire variety of treatment options pretty and then post.

[Tom Backus:]

Okay, that's all I had. Thank you very much.

[Operator:]

Thank you. Our next question comes from the line of Ben Haynor with Feltl & Company.

[Ben Haynor:]

Good afternoon, everyone. Kind of early on the warranty side of things, but you did sell a couple of hundred pumps in Q3 2012, I'm not sure exactly what month that launched in but have you started to see any upgrades from that yet or is it too early?

[Kim Blickenstaff:]

It's too early and most of our sales are pump shipments in 2012, we’re in in the fourth quarter and probably heavily back-end loaded as of December.

[Ben Haynor:]

Okay, that makes sense. And then on the t

[Kim Blickenstaff:]

In terms of reaction to it, I think everybody that has seen it thinks it’s just very, very slick, it is serving interesting hybrid offering between a patch pump and then a durable pump like we are offering with a t

[Ben Haynor:]

Okay, that's helpful. Thank you very much. That's all I have.

[Operator:]

Thank you. Our next question comes from the line of Kristen Stewart from Deutsche Bank. Your line is open.

[Kristen Stewart:]

I think you mentioned this earlier, but I can't remember, what is the pricing of t

[Kim Blickenstaff:]

That's correct.

[Kristen Stewart:]

Okay. And then I know there has been a lot of talk on United, but I was just wondering if you’ve had any positive tasks with any of the other payers and just going back to Kaiser, I know that was one you that had signed up a while back, just checking into see how that has been going?

[Kim Blickenstaff:]

As I said, we have people in the field that are people that are working with payers and I am, they have regular visits and so forth, but we are going to have elevate this to my level and Brian's level and really focus on our top 10 or 20 providers to give them more exposure to senior management here at Tandem and have a good ongoing relationship with them. These payers are having growing patient populations and we are a part of that and think a lot of them see the benefits of easer to train, intuitive interface, all that kinds of things and are impressed by the fact that we have half of patient population, formed MDI uses and pumps are going to give you better clinical items. So those are the messages that we continue to want to try to get to the remainder of the payers that are out there and open it up to very senior level.

[Kristen Stewart:]

Okay, but no payers in the last I’d say six months that are worth noting to coming on board?

[Kim Blickenstaff:]

No.

[Kristen Stewart:]

That you brought on board?

[John Cajigas:]

No. Those are steady and we would have seen this last quarter a little bit of 20 bit of increase in utilization on our current contracts. But again, that fluctuates depending on who is buying our pumps and what insurance plans they have.

[Kristen Stewart:]

Okay. All right. Cool. Thank you.

[Operator:]

Thank you. [Operator Instructions] And it looks like we have no other questioners in the queue at this time. So I would like to turn the call back over to management for closing remarks.

[Kim Blickenstaff:]

Okay, we thank everybody for joining us today and hearing along and sometimes difficult to understand story, so appreciate the patience. As for industry events, we are going to be at the American Association Diabetes Educators Conference, which is August 12 to August 15th here in San Diego. So we have a number of activities planned for that week and we're looking forward to educating healthcare providers about the new t

[Operator:]

Ladies and gentlemen, thank you again for your participation in today's conference call. This now concludes the program and you may all disconnected at this time. Everyone, have a great day.