I am Joanne Wuensch, the Citi MedTech Analyst, and thrilled to have today here at the podium with me, Susan and Leigh from Tandem. Welcome, and I hope you're enjoying, well, a not-so-warm Miami weather day, should you be able to get outside. I'd like to just sort of start off big picture, which is how you're thinking about the franchise and how you're thinking more specifically about the insulin pump market, obviously, because as I'm listening to every company deliver earnings and talk about the market, apparently everyone's taking share, which is cool. Just, I'll stop there and let you jump on in.
Sure. I'll start, Susan. Maybe you want to chime in a little bit. I would agree with you, Joanne. Everyone reported and everyone was reporting growth. So it's a healthy, strong market. I think we were particularly pleased that we were a contributor to that with Mobi launched this year. It's really helping drive our business in the market, and so it's helping make us a leader and, like I said, a contributor to that growth. So I think we're just super excited that the way the market's playing out and that we feel like we can be a big piece of it.
So I'm going to push you a little bit on that. What is it that's driving the growth? I mean, is it the reimbursement? Is it products? Is it AID systems? How should I think about that?
We see it as technology drives adoption. And so as you bring new features and new capabilities to people living with diabetes, it answers the question of when should I adopt this technology? And so by having multiple platforms for us integrated with multiple CGMs, these are all drivers of growth and part of our portfolio strategy.
All right, well, let's talk about one of your new products, which is pseudo-new right now, Mobi. And I'm going to give you a big softball, and then feel free to jump into it in any way. What has surprised you the most about Mobi adoption, and what has surprised you the least?
I think one thing that we've been thrilled is to see that Mobi is offering choices in wearability. And I think that the different ways and the creative ways that people are wearing it has been very exciting because we always thought discretion was important, but I think that this really emphasizes how it can be really the driver for someone who otherwise would have probably stayed using multiple daily injections. One of the things that's been surprising is one of the features, actually. The pump has a bolus button on it. And so with the healthcare providers, that's been a feature that's been a standout because even if someone doesn't have their operating device, they're still able to deliver that mealtime insulin. So that's been a great feature and that we're seeing adoption by a younger community.
So, people, our younger demographic adopting Mobi compared to t:slim, which has been great to see come to fruition.
One of the things that struck me as I've spoken with physicians is that some of them are younger patients who may never have gone on a pump. Some of them are Control-IQ patients that maybe the warranty is coming up, and so they're transitioning onto Mobi. Is there a way to divide up, or maybe it doesn't matter, Mobi adoption versus Control-IQ adoption?
I would say to us, it doesn't matter, and first of all, I'll specify, Control-IQ is available on Mobi and X2.
Thank you.
And so what we're seeing and what's very interesting is that Mobi, in some cases, has been drawing people to Tandem that have not considered Tandem before. Doctors, especially, have never prescribed Tandem. And then what we've seen are the patterns of them starting to prescribe X2 as well. And so that's why when we say it doesn't really matter what the mix itself is, it's what's bringing people to the table, and then we can offer them our portfolio where they have the choice to pick what they choose. Now, down the road, maybe it matters a little more because Mobi has the benefit of better gross margins, but at this point, we just want to drive adoption of Tandem.
Okay. And on your third quarter call, you highlighted that you had signed your first pharmacy contract for Mobi. And I feel like we've been talking about that for quite some time, so congratulations. What does this mean, though?
Yeah, you know, so I'll say we had a little internal celebration when we got that first contract under our belt. We've been talking about it, like you said, for so long, and we made the commitment that this year we would sign our first agreement. So it was very symbolic in that way. I will say there are other conversations that we're still having and negotiations going on, so it's not the end, but we wanted to share that we achieved that first goal. And so for us, it's a meaningful step because today we're very rooted in DME with the t:slim product, and our strategy is ultimately to take Sigi directly into the pharmacy channel. So Mobi is a bridge, a pilot, if you will, of what pharmacy can look like for Tandem and for durable pumps in particular. And so for us, it's a meaningful step.
As we start in 2025, that's when we'll have first access to the volumes. We'll be able to see the opportunities, and there are a couple of things that we think it can help do. Number one, we believe that there can be some margin improvement from just looking at the analogs in the market of where pricing sits in the pharmacy channel. But most importantly, it helps us solve the problem of the affordability question for patients. We find that to be one of the biggest pushbacks as to why people don't adopt pump therapy, is they just can't handle the cost of it. And particularly when they look at durable pumps and they see that initial upfront cost, it can be a little daunting.
In the pharmacy channel, it gives us the opportunity to look at copay assistance programs to help reduce or mitigate what that cost looks like, what that barrier is for patients.
I don't know if you can get specific about this. What are the economics that are different? I mean, instead of paying the upfront cost on an X2, you're going to be paying a percentage, a $20 copay. I mean, and how do you think about that?
Yes. So first of all, it will vary significantly person by person because even if you have a single particular insurance product, it might still vary by the employer or there are so many nuances to it. But what it can mean is that we can help reduce whatever that out-of-pocket is, we can help fund it. So we can get it down to a meaningful level for a customer so that they're willing to make that purchase. And so it doesn't even really matter how it's structured across the whole contract. It's about our ability to provide that assistance.
And who is helping the patient decide where to get it? I mean, am I a patient that walks in that says, "Oh, no, I can't pay that upfront cost"? And the physician goes, "Hey, by the way, I've got another option for you," or is it a conversation of, "You can have X2, or you can have Mobi"? I mean, I'm trying to get myself into the head of the physician and also the patient and how they make these decisions.
Yes. So what we have seen is that physicians, although pharmacy prescribing might be easier for them, they don't typically prescribe based on an insurance channel. What they do is they identify the technology that will be best for the patient. And many times they're just recommending pump therapy and the patient will do their own research. But once they've decided that Tandem is a product of choice, then they'll call into us. We'll help them navigate the insurance process. And so we'll let them know, "Here's what the out-of-pocket looks like. Here's what we can do for you," whether it's if you want X2, we still have financing programs to spread that upfront cost over four years if you would like. If Mobi is your product of choice, we can check and see if you have pharmacy benefits and we can talk about what that out-of-pocket looks like.
We help them navigate that insurance process.
Is there an entire team that helps them, I would assume?
It's the same team we have today to help them navigate the insurance process for X2.
Okay. So you didn't even staff up or anything?
Precisely.
Okay. Are you in a position to share how much of the percentage of the revenue will be coming from the pharmacy versus the DME channel as we get into 2025?
Stay tuned on that. We're just diving in. We're going to be looking at what access looks like, what it might represent. As we said earlier, keep in mind, it's really just for Mobi. It won't be the whole business. It's one contract so far. It's a meaningful amount of covered lives, but not yet across the entire spectrum.
Okay. The next generation product is tubeless Mobi, which I believe we're still calling Tobi.
That started as an internal name because it's a different cartridge for the Mobi pump, but you're right, internally we do refer to it as Tobi.
Oh, okay. Excellent. Is that going into the pharmacy? Or because you talked about Mobi being the bridge to Sigi, but not the bridge to Tobi.
Sure. So an important point about Tobi, as we call it, it's still the Mobi pump. So anyone who has a Mobi pump today, when the tubeless option becomes available, they can choose on any given order if they want to order cartridges with tubes or tubeless cartridges. So it's really just a change in the consumables, which means as part of the Mobi system, it has an opportunity to be in the pharmacy channel.
How do I think about the timing of Tobi?
We pulled back on providing timelines, but it's something that we're focused on internally and are moving forward in the development process. There is a regulatory filing that will be required. It's part of a 510(k). But to Leigh's point, it's still based on the Mobi pump that's already been cleared.
Will we get a press release that says this has been filed or will I wake up one morning and it's been approved?
We typically provide a little bit of forewarning on earnings calls. That's our vehicle. We don't typically press release when we do regulatory filing.
Okay. So one day on an earnings call, I'll hear about that.
We'll give more updates. Exactly.
We'll get more updates. Okay. Is it fair to assume in an environment where you're not giving updates that the old schedule, which isn't that old, maybe a year ago, is still somewhat in place or has the quietness meant a dramatic change?
No, the quietness really is more of a shift in philosophy. As we're looking towards the nearest products, we really want to focus attention on what are we launching in the immediate term? What do we have line of sight to timing to? And then as we get closer to some of these other products, we'll include those in our updates. But it's more really for competitive reasons. We realize that it's a highly competitive market out there and we've got a lot of exciting technology. And so we want to be controlling when we're providing more detailed information about each of these launches.
How do you think about the competitive market? Because it's changed so much in the decade plus I've been covering it.
Sure. So I mean, it's a highly competitive environment. That's what we've seen over the last couple of years. But Tandem is well positioned to compete, especially with the new technologies that we're offering today. And I think what underscores it all is that it's such a large and under-penetrated market. To the comments earlier, I think that we're showing multiple players are able to grow because in the U.S. and even more so outside the United States, the opportunity is so great.
All right. Is there one that you could particularly track that you want to talk about, or is there just generally you're like, "We're fine. We're good. There's a lot of demand for our stuff?
We're focused on our offerings. Absolutely. We're focused on Mobi. We're focused on the type 2 indication. We're focused on integration with FreeStyle Libre 3, Mobi Android. And so we're looking at our offerings and how those grow the market, recognizing the competitors are going to have their own focuses. But I think that we've got a lot of opportunity to drive growth through our own offerings.
So let's talk about some of those offerings. This was the year, if I can say, the year of Mobi and the year of Mobi with G7 and X2 with G7. Next year, the year of Libre?
I think that's a fair assumption. Yes, we're offering FreeStyle Libre 3, both on t:slim inside the United States and out, followed by Mobi. And so it is a really exciting time to be able to offer that technology combination.
I have my own ideas, of course, but what does Libre integration really mean? I mean, what does that open up for you? What's the opportunity?
We've heard reports that the Libre sensor has about 3,000-400,000 Type 1 users in the U.S. It unlocks a whole part of the market that hasn't been available to us before from a pump perspective. We see that as an opportunity to partner with Abbott to directly reach those customers and attract them to pump therapy. It's not that they haven't been interested necessarily in AID systems. It's just that the integration has not been available before now. We think we have a really great offering that we can encourage them to move over to pump therapy.
So of those 300,000-400,000 Type 1 users, are they on an AID system or these are sort of like they're ready to go maybe with a pump?
Yeah, I would say a majority are not using an AID system today, and so through our market research, there is a clear indication that there are people that are ready and willing to move to pump therapy, so 2025 is really going to be about that market development effort, and we'll continue to then penetrate into that population.
Okay. Where to go with this? So how do you think about offering all these different products, all these different CGM options? I'm trying to think. This sort of goes back to my previous question of the physician and of the patient. That's a lot of decision-making to be had. And is there a way to help the physician guide the patient in your direction, or how do you think about that?
I think it's about offering choice. And so that is the conversation with the physician, with the nurse educator, to understand what's important to the patient and then use that as a roadmap. And by having a portfolio, we've got multiple solutions based on how someone wants to wear their device, how they want to operate their device, what their preferred CGM is. And so it's really a decision tree that the physician's able to help guide people to based on where their personal preferences lie.
Do patients come in and ask for specific things?
At times. It's interesting. There's both a push and a pull dynamic depending on the individual patient. But typically, a patient will come in and say, "I heard about a specific technology." And then it really comes in the influence from the educator or the physician to say, "Let's talk about that. And are you interested in pump therapy? And let's talk about wearability. Let's talk about what gives you the best clinical outcomes." And so I think by having our portfolio and also with us just increasing the education, both on the outcomes for Control-IQ and the different wearability options with Mobi, we've become a very important and critical part of that conversation.
Have you updated or changed some of your patient or physician education processes? I'm trying to think about as the market develops and as your portfolio develops, what do you need to do on the back end to help support all of this?
Yes, there's an educational effort on what the difference is between these products so that people are able to be better informed as they make their purchasing decision. Also, there's emphasis on Control-IQ. We set a very high bar with that product and that offering, and the outcomes continue to be strong in every population. So because of that, it gives clinicians a greater degree of confidence when they're prescribing the product that their patients will also see those improved outcomes.
When we get to Sigi, does Control-IQ travel over to that?
It does. Yep. Sigi will be part of a 510(k) process, also pursuing through interoperability. So the actual devices are approved separate from the algorithm. We are continuing to advance our algorithm. And so the latest algorithm available at that time will also be available on Sigi.
When Sigi was acquired, it was a little bit like, they're going outside. Would you say that that acquisition has met your expectations so far?
Yes, it's an exciting jump start. We knew it was a segment of the market that we weren't in, and we see there's opportunity, especially to have a durable patch, a pump that's not disposable where you're not throwing away multiple coin cell batteries and electronic boards every three days where you're able to use a prefilled cartridge. So those are some of the features that really drew us to Sigi. And when we recognized that differentiation opportunity in the market, we said, "Hey, this helps start those efforts." We always knew we wanted to go there, but it helped us get there a little quicker.
And so how many days will you be able to wear this?
So we've committed to at least three, but extended wear is an objective that we're looking across our whole portfolio.
Okay. I want to spend a little bit of time, or actually, quite frankly, a lot of time. OUS, because that's been a quarter. There'll be one quarter you've delivered, and I'm like, "Okay, that's fine." And another quarter, I'm like, that didn't work out so well." So help me understand what makes it a consistent grower outside the United States and where do you see the opportunity?
Sure. So in our markets outside the U.S., we're in approximately 25 countries. And I'll just start by market size. So there are over three million people living with type 1 diabetes, and it's even far less penetrated than what we see here in the U.S. So penetration rates are below 20%. And what we've also seen is a lag in the technologies and innovations being brought to those markets compared to the U.S. So we feel like we can add to that growth. We can really drive penetration in those markets as we continue to introduce new technologies there. And so we've been making a lot of investments on that part of the business. Last year, we put into place a new distribution center outside in Europe to help us with the logistics piece of things.
We're also focused on building out additional leadership to help drive the penetration in those markets. And I would say we've been very successful this year. We've had three quarters in a row of very strong growth in the markets outside the U.S. and outperformance against expectations.
And so the last three quarters, what have you learned that you're like, "Okay, we're going to take this forward with us"?
Yeah, so I mean, it's about continuing to learn about how to sell into those markets. It's how we partner with our distributors there and drive that clinical message to make sure the real value proposition of our products is resonating in those markets, and so it's that partnership that's helping to move the needle.
As far advanced as some of the diabetic therapeutics in the United States, it's still very nascent outside the United States. By outside the United States, I mean Europe. There's a very large world out there. How do you think about getting a leg up in Europe, and then how do you think about going into other regions?
Yeah, I would say that I think we do have a leg up in Europe. I think we're driving great growth there. Like the U.S., it's a healthy growing market, and we are participating in that. And I would say a leader in many cases. And so it's something in the very near term, we're going to be continuing to focus on driving the penetration because we see so much opportunity where we already sit today that we don't even need to look beyond in the very near term. And so we'll continue to think about the clinical opportunities to educate the markets. We also have had some nice tender wins in recent months that will help drive business in 2025. And then I'll add that next year is the first time that we have a meaningful renewal opportunity outside the U.S.
so we've been there long enough to where we're starting that cycle and we'll be a more meaningful contributor to the business.
Okay. How do you think about the renewal opportunity both in the United States and outside the United States? It's one of the things I think is fairly unique to Tandem.
Yes. I mean, it really has to do with the insurance cycles that we follow through the DME channel. And so we've been very successful in the U.S. Our first opportunity was in 2016, and there were a lot of learnings, learnings about how the insurance process works, how to encourage patients to move forward with that renewal purchase. And what I can say is in the last two or three years, we have consistently been reaching a 70% renewal rate within about 18 months of when warranties expire. And that's pretty significant considering the last couple of years have been more competitive in the market. And so as people came up for renewal, it was a chance for them to look around. But what we found is people were sticking with us. Those were some of our highest capture rates that we'd ever seen in our history.
And so we built this nice predictable revenue base. And as we came into 2024, the number of new warranty opportunities in the U.S. grew from 50,000 last year to 70,000 this year. And then looking ahead to 2025, it grows to 80,000. So it's, again, another nice growth opportunity for us that I would say is a fundamental baseline to the 2025 business opportunity.
If somebody isn't renewing within 18 months of warranty, what are they doing?
Yeah, you know, so a number of things can occur, but what we see the majority of the time is they just continue to use their pump. The pumps are very reliable. They're happy using it out of warranty. And so what we do to encourage people is when we have new innovations. So if we have a software update, for example, like when G7 was launched, you have to be in warranty to get that free software update. And so that's one way we encourage people to move forward with their next pump purchase.
When you think about sort of the competitive opportunity for people to sort of look outside and then come back, is there a statistic you have of how many people don't go elsewhere but just go through their renewal here?
Beyond the reaching 70% in 18 months, I should add 70% isn't the ceiling. We do achieve beyond that. That's just the consistent timeframe to signal that we've been meeting our renewal goals. But we still have people. I would say the majority of people are just using it out of warranty, not a metric that we've shared what % leave versus stay. But we have a very sticky customer base.
Yeah. Okay. When I think about Type 2, there's a lot of Type 2 discussion, not just at the pump level, but also at the CGM level. And we were speaking with some people yesterday about does the CGM lead the pump? Does the pump lead the CGM? Just sort of step back in how you're thinking about Type 2.
Typically, we see CGM lead the pump, and as people get used to technology and depending on technology as part of their therapy management, you're empowered with data, and then the question is, what are you going to do about it, and that's where automated insulin delivery comes in and is really a solution when people can help identify that there's a problem while they're using the CGM.
So I mean, one of the things, not necessarily recently, but over time has been a Type 2 patient generally comes to need insulin later in their life cycle, and they may or may not want to wear an on-body product. What has changed or what may change that perception?
It's been fascinating because five years ago, our market research would have shown that from the 4% or 5% penetration in Type 2 pump wearers today, that number would go to maybe 10% or 15%. As far as the number of people who responded saying, "I'm interested in pump therapy" or "I'm considering pump therapy," when we do those survey work more recently, that number is more like 20%, 25% plus. And so it's just showing that there's a different openness to wearing some of these products. And I'm going to use Mobi as a great example. It offers greater discretion. It's very lightweight. And so when you see those in combination with the clinical outcomes that you're able to achieve, it increases someone's willingness to want to adopt the therapy.
Where's reimbursement for Type 2 patients now?
Today, I would say broadly from a commercial and government perspective, there is coverage for Type 2 patients. The real difference is in the Medicare side. Some of them are different barriers or hurdles that you have to get over in order to get qualified or to determine that a pump is medically necessary. That's something that we've been very focused on. Actually, it's an industry initiative to work to get CMS to change some of those guidelines. A submission has been made for them to review a new national coverage determination, which we know that they have accepted and it's on the docket. What we don't know is where it sits in the lineup of things for them to review. Absent that change, there is still coverage. It just takes a little more effort from the Medicare side.
From the commercial side, it's much more equivalent to what you have to do to get a Type 1 approved.
Can you remind me what percentage of the patients are of Medicare eligibility?
For us, what we tend to see is that Medicare represents 10%-15% of our population.
That would be for type 2 as well as type 1?
Yes, I think that's fair.
Okay, and I think on the last earnings call, I know that you have filed Type 2 label.
We said we would by the end of the year and just haven't provided an update just because we typically provide those on earnings calls.
Okay. And how long do you think it would take for?
It's always difficult to predict regulatory timelines.
I know. And I almost even didn't want to ask it. Like, what do you think?
The thing is, as Control-IQ was recently reviewed, we lowered the age indication. And so by doing that, we also were able to look at different features in that. And this is the same algorithm that was used in the Type 2 study. So FDA's familiarity with us, we think, is beneficial. Again, there's changes in administration also, so we always want to be cautious if that can impact any timelines for review. But we're optimistic about the review timeline and are hopeful, obviously, that it can be expeditious.
Okay, so 2025 could be the year not just of Libre, but it could be the year of Type 2.
We have a number of exciting opportunities for 2025. You just named those two, but then also we have the pharmacy access, which we think can drive more volume for Tandem, as well as Mobi with Android.
Am I underestimating the Mobi with Android opportunity? I can tell you it almost never comes up in conversation.
Sure. If you just think about the number of people, just Android versus iPhone users in the United States today, I mean, for our patient population, it is more heavily weighted towards iPhone. That's where kind of the dominant population is. But also, if you look outside the United States, that's going to be more weighted toward Android. And so we do think it's an important offering and that there's people today who don't have access or choosing to continue to use multiple daily injection until that integration is available.
Okay. Is it a U.S. versus OUS thing, or is it an age thing?
It's both. It's both. You typically see demographic changes in if people are iPhone versus Android users. That's just a demographic difference. And so that's the thing with our products, though. We have a wide spectrum of ages that use our products. And so we want to make sure that we're providing solutions for everyone.
Let's talk a little bit about the numbers and specifically, I'll use the phrase march towards profitability. How do we get there?
Sure, well, we have a number of opportunities. It's great because for every question you have, I can name at least two or three opportunities for us, so from a margin perspective, I usually lump it into three broad categories, so the first element of it would be new products, and Mobi is the most significant one and I think meaningful because it's on the market today, so it's more tangible, I would say, maybe in some folks' eyes than others, but Mobi, as we get to scale, so to be fair, this year, it's a bit of a headwind on the business because we're still building at small volumes. We haven't absorbed all of the overhead, but as we go into 2025, the Mobi pump will begin to become accretive to gross margins.
And as the volume scales up across the year, you'll begin to see the movement in gross margins that relate to that. In 2026, you'll start to see more movement that would come from the supply piece of it. And as a refresher, the Mobi pump compared to t:slim has about a 10%-15% lower manufacturing cost. The cartridge for Mobi has about a 20% lower manufacturing cost than t:slim. So this is meaningful. And Mobi can get us more than halfway to our 65% gross margin target overall. It's a multi-year step up in it, but it will be one of the biggest drivers. And then you just layer on as you look at every new product that we plan to introduce, all of them are being designed with cost efficiencies in mind compared to existing products on the market.
So as other new products come out, they will be gross margin opportunities as well. So that's the first category. The second category I would put is pricing generally, pricing strategies. We have been demonstrating nice price appreciation this year just from the DME channel alone. And so the DME channel where we plan to keep X2 is still driving margin improvement. As we look to pharmacy, we see an opportunity there, again, looking at analogs in the market, that there is an opportunity for us to see price enhancement over time as well. So those two pieces are gross margin drivers. And then when you go all the way to the bottom line, the third category that I would say is about how we service our customers today. So this is not about folks in the field and driving new business.
This is really about how we support the 480,000 customers we have worldwide, and more specifically, I'm speaking to the U.S. where we have over 300,000 customers. We have a large number of employees that are there to take phone calls, take orders, navigate people through the process, and what we can do with our Tandem Source platform is use that as the infrastructure or the basis for building out more digital engagement and digital interaction, so basically just automate, streamline, pull people out of the process, and in fact, we believe it not only can maintain the high levels of customer service we have, it might improve the levels of customer service because people won't have wait times on the phone, and many people would much prefer to self-serve or order online than they would then have to call a human being.
Okay. So lots of different ways. Most of those sound gross margin targeted, although there's a little SG&A in there too.
The last category is all SG&A. The first two are more gross margin, but dropping down to the bottom line because to support those initiatives for gross margin does not take any additional operating expense investment to get them done.
Okay. And do you have to have a certain level of top line to get bottom line leverage, or how do I think about that?
So what we had communicated in the past when we set our 65% gross margin target, 25% operating margin target was that when we got to about a million customers in the installed base when you could think about achievement of those. Since that time, as we continue to run our models and we monitor the progress of Mobi, we think about the pharmacy opportunity. In fact, we didn't really have much pharmacy opportunity built into those original expectations. We believe that we can actually get there with a lower install base number. We haven't set out a new target yet, but we believe we can get there faster than we had originally anticipated.
Okay. And that's because of pharmacy?
I would say pharmacy and also, again, monitoring the progress of Mobi as it's rolling out.
Okay, and when you think about Sigi, is that margin accretive also?
You can think of every new product to be becoming accretive to what's already in the market when it rolls out.
Are there products after Sigi?
We do have other things in the pipeline, but we've not discussed them yet. One area, though, is fully closed loop. And so I'm not saying if that's before or after or where that falls within the timelines, but it's an area of focus for us at the company.
What do you mean by fully closed loop? Define, please.
Allowing a patient to get the optimal outcomes with as little interaction as possible. None if they so choose.
So they wouldn't necessarily have to carb count. They wouldn't have to tell you whether they're eating or it's mealtime.
There's nothing. Yeah. At mealtime, there's no action required.
Just put it on and go.
Put it on and go.
Keep it on.
If you so choose.
If you so choose. Okie dokie. If we think about the next couple of years, where do you see the insulin pump market, just generally speaking? And I'm asking on a couple of different levels. I'm asking on a technology level. I'm asking on a competitive level and just in terms maybe of new patients too.
Yeah. I'll start with the pump penetration measure. How about that? So today, we estimate that it's about 40%. And in the coming years, it can get to 60%, 65% pump penetration. And that is driven by, as we said earlier, innovation in the market, new technologies. And if you look at our pipeline, I would say we have the richest pipeline to help drive that. We talked about FreeStyle Libre as being an example of another way to reach MDI patients that are not using pump therapy today. I was talking about the Type 1 market. We look at Type 2 indication as a way to drive further penetration and bring more people to market. And so our portfolio is directly focused on driving new patients, new patient growth, and particularly to Tandem, to continue to check the box of needs that have not yet been met.
Okay. When you had your third quarter earnings call, you didn't give 2025 guidance, but you gave a parameter or an outline of how to think about it. My impression is that threw some people off. Maybe you had a different impression of that. But what were you trying to accomplish? And I'll just put it on the table. How should we think about 2025?
Yeah, absolutely. It's a great question. So I would almost describe it as more of a calibration, if you will. So as we're getting near the end of the year, everyone's always clamoring to get guidance and estimates for the future. And it's just too soon for us to give what that could look like. We particularly need to see how Mobi trends out through the end of this year, with the fourth quarter in the U.S. being the biggest one of the year. But what we wanted to do is level set people and say, "We want you to understand our philosophy and remember how to think about how we establish expectations." And so when we came into 2024, for example, we focused on the predictable and recurring revenue streams. And then we looked at all of the new product introductions as upside opportunities to the business.
So we're sitting here today and we're talking about we are super excited about what's coming in 2025. And not even to mention, we're excited about how Mobi's trending and tracking and gaining that momentum that will drive more growth into 2025. But what we don't want to do is for people to get over enthusiastic in what they're setting as their own expectations. So when we come into the year, we expect to look at the building blocks and think about it as supply sales being a predictable revenue stream, renewal opportunities. It's growing again, provides another level of growth, but also a pretty predictable revenue stream. We'll have more trends from Mobi that we can start to look at from a sustainable perspective and figure out or think about how to factor that into 2025.
And then what we want to do is, I'm going to say, save those other opportunities as upsides, what Type 2 can do for us, what pharmacy can do for us, what FreeStyle Libre 3 can do for us as a business. And as we get more specific on the launch timelines, the way we plan to scale those launches, we can talk more about how you can think about those as part of the guidance. And then the last piece is we also always think about the competitive dynamics in the market. So what could go wrong? So when we set expectations, we tend to lean more weight to the risk side of things than we do on the opportunities and let those then play out over the year.
So based on what you just finished saying, when I think about 2025, when you do give guidance in February, Libre will be in there, type 2 will be in there, or as those get approved, those will be layered on?
As we give more firm timing on when you can expect them to come to market, we will talk more about how to think about those in expectations and when to include them and how much to include.
Okay. Excellent. What have I not asked you? What do you think investors really should be hearing?
I think personally, I think that we had a really great third quarter, and I think this year we're checking a lot of boxes in ways that we said we would do, and we're really demonstrating progress, and so a number of things we said. We got the pharmacy contract. We said we would return to growth this year, particularly with new patient starts, which we did in a big way in the third quarter. In fact, new patient starts grew more than 20% year over year, and even from Q2 to Q3, when you look at that tough seasonal period, we grew, although modest, we grew through it, and new patients was a growth driver in that. Mobi has been a contributor to the business, and it's really just in the middle innings, if you will, in terms of the launch.
I think people looked at the G7 availability and said, "Okay, Mobi's launched. It's done what it's going to do," and what people don't understand is we're still out there building awareness. We're still out educating physicians. Patients are still trying it out, coming back and expressing their experiences, which is what's going to convince or drive physicians to prescribe it even more, and so I think the biggest miss is when people look at us, we're not getting credit for the things that we've demonstrated and we continue to demonstrate all through the year.
Amazing. Thank you so much for joining us today, and I hope you enjoy the day.
Thanks again for having us.
Thank you.
Okay.