Tandem Diabetes Care Inc (TNDM) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Tandem Diabetes Care fourth-quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, today's conference call may be recorded.

It is now my pleasure to turn the floor over to Susan Morrison, Chief Administrative Officer. Ma'am, the floor is yours.

Thank you. Good afternoon, everyone. And thank you for joining Tandem's fourth-quarter and full-year 2013 earnings 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 our press release issued earlier today, and under the Risk Factors portion and elsewhere in our Annual Report on Form 10-K for the year ended 2013. We assume no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or other factors.

Kim Blickenstaff, Tandem's President and CEO, will be leading today's call. And at this time, I will turn it over to Kim.

Thank you, Susan. Good afternoon, everyone. I'm joined today by John Cajigas, our Chief Financial Officer, who will go through our results and our guidance at the end of my opening comments.

So, 2013 was a milestone year for us in that it was our first full year commercialization of the t:slim Insulin Pump. Also during the year, we received approval for and launched the companion t:connect Data Management Application system that is a companion product to the t:slim Insulin Pump. We designed our products with a consumer-focused approach, with the support of the diabetes community, and are very happy with what we were able to achieve in 2013.

If you recall, we began the year with only 11 sales territories, each consisting of a sales rep and a Certified Diabetes Educator. We then expanded to 36 territories in the first half of 2013, maintaining a one-to-one sales rep to a Diabetes Educator ratio, and we are beginning to see an increase in the recognition and acceptance of both Tandem and the t:slim product within the diabetes marketplace. This level of expansion was challenging for us internally and operationally, but resulted in a dramatic increase in revenues on a sequential quarterly basis.

As you can see in our press release, total revenues for 2013 were $29 million, compared to $2.5 million in 2012. We saw increased pump shipments in each of the four quarters of 2013. In the fourth quarter, we shipped approximately 2400 t:slim Pumps and generated $10.2 million in revenues, up 32% over the third quarter. We're very pleased to see this growth, and we believe the expansion of our field organization in the first half of 2013 contributed to the momentum late in the year, along with the heavy seasonal nature of our business.

Just as a reminder, John is going to talk more about seasonality when he gives guidance. But seasonality in our marketplace, with the fourth quarter being the strongest of the year, relates to the seasonality of when annual deductibles and coinsurance requirements associated with most medical insurance plans have been met. So, conversely, in the first quarter, it's typically the lightest, as spending account deductibles are reset and there isn't the financial pressure to complete purchases.

We also continue to be pleased with the percentage of our install base that is new to insulin pumping, and it is increasing. As of December 31, approximately 45% of our install base reported that they had converted from multiple daily injections to the t:slim Pump. This supports one of our strategic goals of expanding the insulin pump market, because as you all know, only about 27% of people with Type I diabetes use an insulin pump. Our market research indicates that the design of conventional pumps user interfaces are a major barrier to adoption. So those of us at Tandem joined the companies to help make a difference for people with diabetes, so we are all very pleased to see t:slim allowing more people with diabetes to enjoy the health and quality of life benefits so many studies have shown come with using an insulin pump.

In February, we presented a comparative analysis of pump usability differences in training duration at the Advanced Technologies and Treatments for Diabetes, or ATTD Meeting, in Vienna. The data was from a multicenter study which assesses differences of usability and training times for seven of the most commonly performed tasks on an insulin pump. So, on average, the t:slim Pump took 27% less time to train than the Medtronic MiniMed Paradigm Revel Insulin Pump, with which it was compared. And the t:slim participants also experienced 65% fewer task failures in that arm of the study.

Following the study, a survey of the study participants showed that compared to the Revel pump, the t:slim Pump used terminology that was easier to understand. It had a screen with better contrast, was easier to read, was easier to program, and was more enjoyable to use. We believe these results can be attributed to the t:slim Pump's easy-to-use touchscreen design, and contributes to why people are choosing the t:slim pump for their insulin therapy. This supports the anecdotal feedback from Diabetes Educators in the past year that when training on the t:slim Pump, they are able to spend more time teaching their patients about diabetes management, and spend less time on how to use the device itself.

In addition to the tremendous sales growth Tandem experienced in 2013, we also achieved positive gross margins in our first full year of commercialization. This was an important validation of our overall business model and manufacturing strategy so early in our commercialization of the t:slim Pump. And it is a firm foundation from which we can strengthen our business operations.

As we previously announced several weeks ago, we initiated a voluntary recall in January of selected lots of cartridges used in the t:slim Pump that may be at risk of leaking. The cause of the recall was identified during the Company's internal product testing, and related to a certain piece of equipment used to test cartridges after they were manufactured. The problem was not a cartridge design flaw or an issue with the actual manufacturing of the cartridges; the issue was identified, corrected, and quality controls were put in place to prevent this issue from recurring again.

The majority of the financial impacts will hit in the fourth quarter. And John is going to provide more detail when he talks about our operating results for 2013.

Also, during our scale-up in 2013 that led to the Company's significant increase in revenues, we also completed our initial public offering, which brought $125 million in, in net proceeds to the Company. A key use of proceeds from the IPO is the expansion of our resources dedicated to selling and supporting t:slim. And I'm very pleased to report that our expansion from 36 territories to 60 territories is progressing well, and all field sales rep positions have now been filled, and nearly all the clinical -- field clinical positions are now filled, as well.

The vast majority of our new sales reps and sales management have diabetes experience, many in selling insulin pumps. And we still continue to forecast it will take about 9 to 12 months for a rep to become fully productive from the date of their hire here at the Company. I am pleased that we have accomplished so much from our recruitment efforts -- such an important effort this year, so early in the year.

So, at this point, I will turn it over to John to talk about our 2013 results and our guidance for 2014.

Thanks, Kim. Before providing a more detailed perspective on our 2013 financial results and our guidance for 2014, I just wanted to echo that, overall, I'm very happy with the progress of Tandem's first year -- full-year calendar year of commercialization has gone very well. From our financial performance, such as achieving sequential quarterly sales growth and positive gross margins at the level we were able to obtain in 2013, to the achievements behind the scenes, such as hiring quality people, as well as our establishment and continued improvement of our commercial systems, internal controls, and business processes. These behind-the-scenes achievements are important to our business and our ability to achieve the results we achieved in 2013 that I'm about to detail.

So, first looking at our P&L, with respect to sales and product shipments, sales were $29.0 million for the full year of 2013, compared to $2.5 million for 2012. As a reminder, 2012 sales represented a five-month performance, as we commercially launched t:slim in late August 2012. Also, there was approximately $1.9 million of sales of t:slim that were related to product that was shipped in Q4 of 2012, but wasn't recognized until Q1 of 2013 for GAAP accounting purposes. This related to our t:slim 30-day return policy and a lack of sufficient history to reasonably estimate product returns in 2012. In Q1 2013, we generally began recognizing t:slim revenues at the date of shipment, and recording an estimate of product returns based on our actual return experience.

Sales for Q4 of 2013 were $10.2 million compared to $2.3 million for Q4 of 2012. Even after consideration of the $1.9 million of sales deferred from the fourth quarter of 2012 into the first quarter of 2013, our Q4 2013 sales more than doubled year-over-year and grew 32% sequentially compared to Q3. Our quarterly t:slim shipments increased sequentially throughout 2013 from 852 in Q1, 1363 in Q2, 1851 in Q3, and 2406 in Q4. Much of the growth was attributed to the expansion of our sales force from 11 territories that we operated in 2012 to the 36 we were operating with at the end of 2013, as well as the increase in the recognition and acceptance of Tandem and t:slim in the market that Kim had mentioned earlier.

Also, we benefited in Q4 from the typical seasonality experienced in the insulin pump industry. During Q4, we shipped approximately 2400 t:slims to our customers, more than 2 1/2 times the number of t:slims shipped in Q4, 2012, and an increase of nearly 30% over Q3 of 2013. Our cumulative t:slim shipments from product launch through December 2013 totaled approximately 7500.

As Kim mentioned, at the end of 2013, we estimated that 45% of our installed base was new to insulin pump therapy, choosing first to switch primarily from multiple daily injection therapy to insulin pump therapy, and in doing so, choosing t:slim as their insulin pump of choice. We look at this high percentage favorably, as we believe it is contributing to the expansion of the insulin pump market, where we estimate only 27% of Type I insulin users are using implant pumps today. Sales of t:slims accounted for 90% of our 2013 sales and 91% of our 2012 sales, while pump-related supplies accounted for the remainder. Sales to distributors accounted for 69% and 73% of our total sales for the years ended December 31, 2013 and 2012, respectively.

Moving on to gross margins and cost of sales. As Kim mentioned, the key validation of our overall business and manufacturing strategy is seeing sustained positive gross margins in 2013. Our over-gross margins for 2013 was 21%, compared to a negative gross margin of negative 54% in 2012. The improvement in the gross margin year-over-year was primarily a result of manufacturing efficiencies associated with the increased production output, and improvements in our manufacturing processes throughout the year.

Our gross margin performance on a quarterly basis within 2013 did fluctuate, as we dealt with production scale up and early commercialization issues that resulted in some higher-than-planned production yield losses, rework costs, and scrapped inventory. Also due to the relatively low production volumes compared to our manufacturing capacity, the majority of our per-unit costs are currently manufacturing overhead expenses. Fluctuations in the production outputs at levels lower than their full capacity contributed to the fluctuations in our quarterly gross margins in 2013.

Despite higher sales, our Q4 2013 gross margin was 12%; sequentially down from Q3's gross margin of 33%, primarily because of the impact of the costs of the voluntary recall recorded in Q4, which reduced our Q4 margin by 13 percentage points, as well as other manufacturing inefficiencies created -- that created rework activities, scrap and inventory greater than planned.

With respect to the voluntary product recall, we expect to incur total direct costs of approximately $1.6 million. The $1.6 million of total cost of the recall consists of approximately $600,000 associated with the return and replacement of affected cartridges in the field, including logistical expenses and approximately $1 million for the write-off of cartridges on-hand within our in-house inventory. We recorded approximately a $1.3 million charge of these direct product costs as a charge-to-costs-of-sales in Q4 2013, and will record the remainder of this cost in Q1 of 2014. None of the direct costs hit the sales line in the P&L, and we do not expect any further direct financial costs associated with the recall beyond these costs.

Looking at the rest of our P&L, we concluded 2013 with a full-year operating loss of $49.4 million and $16.5 million for Q4 of 2013. This is compared to $33 million and $8.4 million in the respective periods of 2012. Our operating margin was negative 170% for 2013 as a whole, and 161% negative for Q4 of 2013, which were improvements over the same periods of 2012. Sales and growth in our gross margins and our operating margins were primary contributors to the overall improvement of our business, even as we increased our operating expenses to support the growing commercial operations.

Included in the operating expenses were significant increases in our non-cash stock-based compensation expense, resulting from stock options granted to our employees. During 2013, we recorded stock-based compensation of $4.5 million for the full year 2013, as well as $2.7 million of that during Q4 of 2013. This compares to $246,000 for the full year of 2012, and $49,000 for Q4 of 2012.

Moving on, for 2014 guidance, we expect full-year 2014 sales in the range of $48 million to $54 million, with sales being heavily back-end loaded. No revenues from potential new products are assumed in this guidance. We expect our quarterly sales performance will significantly be impacted by seasonal fluctuations resulting from the influence of flexible spending accounts, healthcare savings accounts, as well as annual deductibles, coinsurance requirements associated with medical plans that our current and potential customers use today.

Because of the seasonal nature of our business, we anticipate sequential sales between Q4 of 2013 and Q1 of 2014 will decline from our very successful Q4, and then will sequentially increase from there. We do believe that the expansion to 60 territories will increasingly have a positive contribution to our sales growth in the second half of 2014, especially in the fourth quarter. Additionally, similar to what we experienced during our 2013 expansion from 11 territories to 36, we expect there to be an initial disruptive impact to our overall sales productivity, as we add 24 more territories and realign existing sales territories.

The realignment disruption is expected to negatively impact our average sales productivity for the initial period of approximately three to six months across our entire sales force as new folks come onboard, territories get realigned, and account responsibilities transition during this period. Overall, we expect our sales reps to reach their steady-state of sales performance within 9 to 12 months from their date of hire in normal circumstances.

We are providing operating margin guidance for 2014 of negative 130% to negative 140%, which includes non-cash, stock-based compensation expense that we currently estimate could range from $17 million to $18 million for 2014. Long-term, our goal is to achieve gross margins in the mid-60s and operating margins in the mid-20s. With respect to cash on-hand, our IPO in 2013 provided us net proceeds of approximately $125 million. As of December 31, we have $129 million in unrestricted cash and short-term investments. We expect this current cash to be sufficient for our operating needs during at least the next 18 months.

We do have projections in areas where we could reach actual breakeven on the cash we have today. Key assumptions in those predictions involve rep productivity, our ability to timely secure regulatory approvals and successfully commercialize potential new products, and our ability to leverage within our sales and manufacturing organizations, as we bring on these new products that are currently under development.

So, in conclusion, I'm very happy with our achievements in 2013, as we have expanded from 11 to 36 territories, and improved other aspects of our operations to support the growth in our sales, as we expect that to continue in the coming years and our goals that we hope to achieve in 2014.

And with that, I'll turn it back over to Kim.

Thanks, John. I just want to give a brief update on our products in development before we have a Q&A session here. Our integrated products with the Dexcom G4 sensor is progressing well and is a top priority for us. Development work is essentially complete, and the balance of the effort on the product is regulatory in nature. We had discussions with the FDA in the fourth quarter of 2013 to confirm the regulatory path, and gain clarity on questions in advance of filing. We expect to submit our PMA for the t:slim G4 in the second quarter of this year.

Also progressing well is t:flex, our large-volume cartridge which holds 480 units of insulin, compared to the t:slim's 300 units. It's designed for the Type II diabetic market -- Type II pumpers. We held discussions with the FDA last year, and we will be submitting a 510(k) for this product. And we anticipate that we will be filing the t:flex 510(k) by mid-2014.

Both the t:slim G4 and the t:flex products are being developed with the same user-centric design approach and human factors research employed in the development of the t:slim. This is something we are very committed to as a company for all of our current and future products. I'm very pleased with the progress of our products in development, which will help Tandem expand and further penetrate the insulin-dependent diabetes market by addressing currently unmet needs.

We saw significant momentum with the t:slim Pump in 2013, as we discussed, and we are very pleased with our customers' response to the t:slim's easy-to-use features and modern design. we look to continue this momentum in 2014 with our expanded sales team in the field, and our consumer-focused approach product offerings and customer care.

So with that, I'm going to turn it over to the operator for the Q&A portion of the call.

Thank you, Sir. (Operator Instructions) Bob Hopkins, Bank of America Merrill Lynch.

Can you hear me okay? Terrific. Good afternoon. So just a couple of questions. First, on the guidance for this year, it was slightly below what we were expecting you guys to come out with. And so, given that this is your first quarter, I just wanted to kind of get a sense, Kim, as to your sort of philosophy around guidance. Some companies we cover guide to what they think they are going to do; some companies try to build in conservatism. And I'm just kind of wondering, as we start this process, sort of how you approached guidance for 2014? And then I have some specific questions on some of the assumptions you are using for that guidance.

Okay. Well, I think in general, we are trying to take a conservative approach to it. As you know, this expansion of the field sales force really disrupts the regions and the territories that were already in place. So it's a little bit hard to guess at all these moving pieces. So we're taking a range of what we think are pretty conservative estimates on what we think people can do in terms of productivity. And we're trying to guide in the range that we think we can achieve in the middle through the upper end of that range.

And has the -- have you changed your assumptions or your plans around sales force expansion relative to our last conversations? Is there anything new or updated that you should be talking about with us? And I was wondering if you could be specific around what sort of productivity you are assuming? And then maybe if you're willing to give things like how many pumps do you expect to sell or how many sales reps at the end of the year? Whatever metrics you are willing to provide would be great. But most importantly, I want to know has anything changed since we last spoke, in terms of the sales force buildout and sales force structure for 2014?

Sure. Bob, this is John. Not much has changed. Our assumptions are fairly similar to what we talked about in the past. I think one key assumption change is that because we have had such a successful fourth quarter, that we are moving to a model of having 60 territories; where, previously, we were looking at a range of 50 to 60, and now we're moving to the top end of that range.

Okay. And then just, again, in terms of -- what did you end the year in terms of sales reps? And how many do you expect to end at 2014? And then I was just wondering if -- can you give specific guidance on the number of pumps that you plan on selling in 2014?

We ended 2013 with 36 reps. We currently are almost to the point where we have 60 territories filled. So I expect that by midyear, the 60 territories will start to move towards that productivity that we are talking about. And we will finish 2014 with the 60 reps. We will finish this year out by seeing how this organization does. As far as pumps involved in the -- that we plan to sell this year, I don't think we're providing that kind of detail.

Okay. And then just lastly for me, just curious, Kim, as to the competitive environment and what you're seeing out there, both from the perspective of the ability to get more direct sales? And also, it's a very dynamic time in the marketplace, and so I was just wondering if you could comment on the competitive landscape and what you learned this quarter?

Well, as I mentioned, we continue to do extremely well with our number one segment, which is multiple daily injectors, which is really not impacted all that much by the competitive landscapes, especially with 530 P. I think the 530 G came out and there was a lot of consternation, and I would say a lot of noise about it. And I think that's settled down to the point where I don't believe we saw it impact our results in the fourth quarter.

Other than that, there's really -- other than the new Insulet, the smaller pod, we're really not primarily competitive. I mean, there's the tubeless system, and when people make a choice to go on to a tubeless system from an MDI, they went on that feature alone, and we're really not competitive in that regard. So, I'm not seeing too much from the competitive standpoint that's really impacting things. It's going to be more, going forward, our organizational reallocation of territories. Because every territory is going to get impacted in 2014 at the beginning of the year.

Okay. Great. Thanks so much.

Thom Gunderson, Piper Jaffray.

So ,a quick one. Pricing was stable in Q4, John?

Yes.

And you -- and it's that same price level that you are assuming for the guidance that you're giving for 2014?

I think from an industry standpoint, we are still seeing direct pricing being somewhere in the $4000 to $5000 range for pumps.

Thanks. And then on reimbursement, we all get that you go to a central agency for regulatory approval, but for reimbursement, it's all over the place. And last we talked, you were moving slowly but surely through those payers. Can you give us an update on what's going on with reimbursement, where you are today?

So one metric I look at is just how much of our business is running through distributor. And, for the year, it was 69%. I'll tell you that in Q4, it was 66%, so it is moving sort of towards that goal that we would like to see, which is eventually seeing anywhere from 25% to 30% be distributed and the rest of it being direct. It is a typical contract in process, as you just move through those processes. I think, hopefully, this year, we can announce some of the larger ones as we move through those and get those contracted.

Got it. And then, lastly, I just want to make sure I heard this right -- you've built all but -- essentially built the 60 territories; so now it's just a matter of getting everybody onboard and trained, and get them up to productivity. Part one -- I'm checking my notes. And part two is, none of the 48 million to 54 million includes anything from t:sensor or t:flex, is that right?

That is correct. So, the 60 territories is -- I think we just have put out the final offers, the last of them. And they should be all accepted and ready to go, and onboard here during the second quarter here. And, yes, the guidance does not assume any revenues from t:flex or t:sensor.

That's it for me, guys. Thank you.

Sure.

Rick Wise, Stifel.

Can you hear me clearly? Great. Hi, Kim. Hi, everybody. A couple of fourth-quarter questions to start with. I don't think you gave -- or if you did, I missed it. Can you break down the fourth-quarter revenues -- pump revenue -- split between direct and distributor, and supply revenue? I don't think I heard that.

In the fourth quarter?

Yes.

I don't think we provided it. It's sort of moving along the lines that the year's percentages are. I think the year, for distributor, was 69%. I did say that the 66% was the distributor percentage for the fourth quarter.

Okay. And maybe a little more color. I mean, you -- I would say the extremely strong fourth-quarter -- 2400 pumps -- a little more color on some of that strength. Was this opening new accounts? Was it -- you talked about the folks switching from multiple daily injections, but any color on where some of that strength came from? Any more detail you can give us?

I think it's -- across the board, I think the primary impact is that we have gone to 11 territories to 36 during 2013. And during the fourth quarter is when we saw the greatest impact of that additional sales force group being -- sort of contributing to our sales. And that's sort of the process that we have in play here for 2014, is to get as many of these territories up and running in the first half of the year. So that by the time we get to the second half of the year, and then the fourth quarter in particular, they can contribute as significantly as the original group did when they get added on in 2013.

All right. John, can you help us a little more -- if I could push you a little bit -- on the first-quarter outlook? You've been abundantly clear about the seasonality and the step-down, sequentially, from the fourth-quarter. It sounds like you're talking about steady sequential increases thereafter fourth end loaded -- fourth-quarter back-end loaded. But I think it's important we sort of start off right -- the first quarter is two-thirds done. Can you -- can we get a little more help, perhaps, possibly framing a reasonable range and from some perspective to think about first-quarter revenues?

I think if you look at just the general industry and what the typical drop-off is between the fourth quarter and first quarter, I think we will see something very similar to that. I think the other impact to consider is that we will see some disruption because of the new territories coming onboard. We also have our national sales meeting that we've just completed, where people are out of the field for a week. So, that is going to have some impact in the process of Q1. But if you start -- if your starting point is the typical drop-off within the industry, that's sort of what we will expect to see.

And then what do you see as a typical drop-off? Just so we make sure we are all on the same page?

I can't provide that detail.

I'll take it one step further. Are you comfortable with the current consensus of $9.3 million? It sounds like you might think that's high?

I can't comment on that one.

Okay. Maybe I'll ask one last question. Can you talk a little more about the -- you were looking for commercial insurance carrier coverage. Any updates there on -- how is access today for patients not covered by commercial carriers? And any updates on UNH or CIGNA? Thank you so much.

Sure. I think the typical process is still moving along that we are working to try to get these contracts in place. And the negotiation process is working. From an access standpoint, we feel very comfortable that our customers and potential customers can actually reach our product either directly through us or through one of our distributors that we work with. As far as some of the payers, like UHC, we are continuing to negotiate with those payers out there, so I can't really comment on the status of those negotiations.

Thanks so much.

Kristen Stewart, Deutsche Bank.

Thanks for taking the question. I just wanted to talk a little bit just around the margins. So, in the first quarter, if I'm understanding you correctly, we're going to see just a little bit of the leftover charges associated with some of the recalls. And I know you mentioned getting eventually up into the 60s, but can you maybe just help us understand kind of how you're thinking about, as the P&L breaks through, I know you gave operating margin kind of loss percentages, but to what level, I guess, of gross margin expansion one can see next year?

Sure. So, just to clarify, there will probably be around 300,000 of the product recall costs, direct product recall costs, that will hit in Q1. So that will have a very small impact on Q1. As far as expectations for gross margins, it really is just trying to drive to that operating margin target that I mentioned of 130% to 140%. And obviously, gross margin is going to be a big impact to that.

And as far as scaling the organization and the volumes, increasing our output and reducing any scrap or rework costs are the key factors in us hitting sort of the operating margin targets, as well as the gross margin targets. And we do expect to make some meaningful improvements in that number throughout 2014.

Okay. And are willing to put out any sort of time period by which you think you can kind of get to that 60%? Are we talking over the next three years? Is it sooner or later than that?

Not at this time. Because a lot of that is dependent on a lot of things such as the scalability of our existing operations, launching new products, the uptick of t:slim as well as potentially getting the other products into the market. So, a lot of that is moving parts that, at this point in time, we are just not comfortable putting a stake in the ground on.

Okay. And I know it's always difficult to try to predict the timing of FDA products, but in terms of just submitting in t:sensor, would you assume a regular sort of review process, perhaps, taking approximately a year for that? I know J&J has had some delays with their combined product with Dexcom.

I would agree with you. I think we intend to file the t:sensor EMA, which is typically a one-year to 15-month process, is what we have seen.

Okay. And on the t:flex, that's typically shorter and more along the lines of a six-month-ish process? Is that fair to say?

Correct. It's a 510(k) -- the first response is required by 90 days. Typically, we see these in a six-month cycle.

Okay. And then I guess just going back to Rick's questions about progression and the ramp. Is there any additional contacts that -- you're not willing to give specifics for 1Q, but I guess is there any reason to believe that it's -- any percentages on first half or second half or anything like that? Or is it simply just betting on kind of a big fourth quarter?

Yes. It will typically follow the industry. I think the impact of having the additional sales force, once we are past sort of the initial disruption, is going to force most of the revenues to be in the second half of the year.

Okay. Thanks very much.

Thank you, ma'am. And presenters, this does conclude our time for questions. I'd like to turn the program back over to Mr. Blickenstaff for any additional or closing remarks.

Sure. Okay. Thank you, everybody, for joining us again this afternoon. The momentum that we experienced in 2013 is very encouraging to us, as is the number of people who are choosing to use t:slim to manage their therapy. The t:slim Pump was designed with the support of the diabetes community to be easy to teach, easy to learn, and easy to use. And I view the t:slim Pump as a platform from which Tandem can expand its business to support different segments of the diabetes community.

So we look forward to keeping you updated as the Company continues to progress. And we thank you for being on our call today.

Thank you, presenters. And thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation and have a wonderful day. Attendees, you may log off at this time.