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Diabetes affects about 500 million adults worldwide. This chronic disease causes severe suffering and greatly increases the cost of care.

It's no wonder that many companies continue to develop innovative products to help people with diabetes manage their condition.Tandem Diabetes Carefirms(NASDAQ: TNDM)It is one of them, which is a therapeutic device company specializing in the sale of insulin pumps.

Although Tandem Diabetes Care's stock market performance has been poor over the past year, there is still hope for the company. Let's take a look at why Tandem remains a great investment choice for patient investors.

Tandem's recent financial performance

Tandem Diabetes Care's recent financial performance has been less than stellar. in 2023, the company's non-GAAP sales were $772.8 million, a year-over-year decline of nearly 41 TP3T. in 2023, Tandem's pump sales were lower than in 2022; pump shipments declined by nearly 191 TP3T year-over-year to 104,000 pumps, and in 2023, Tandem's sales were lower than in 2022. Pump shipments fell nearly 191 TP3T year-over-year to 104,000 units. At year-end, Tandem's installed base was 452,000 units, an increase of 7% from the previous fiscal year.

One of the reasons why Tandem's performance is not as good as it could be is because of the state of the economy, including inflation. Cash-strapped patients are reluctant to spend money on a new insulin pump, especially if they already have one. Multiple daily insulin injections are more cost-effective than an insulin pump, so patients are less likely to switch to an insulin pump during a recession.

Tandem's net profit decline was no better than its net loss. Last year, the company reported a net loss of $3.43 per share, up from $1.47 in the previous fiscal year. It's not good for any company when revenues and earnings are going the wrong way.

New products may bring changes

However, this is not the case with Tandem Diabetes Care. Many companies, including well-known ones, do not perform well during economic crises. Tandem's fortunes will change once the economy improves, pump volume rebounds, and revenues begin to come in on the upside, as Tandem's 2024 sales guidance suggests year-over-year sales growth of approximately $10%, which is much better than its 2023 performance.

Last year, Tandem licensed a new insulin pump called the Mobi, which Koon called "the world's smallest durable insulin automated delivery system. "Tandem's Mobi is smaller than its current kingpin, the t:slim X2 insulin pump, and the latter's size has been a selling point for some patients.

Mobi is designed with complete discretion in mind. It can be controlled by an app on a compatible smartphone. It also works withDexCom The G6 continuous glucose monitoring system is paired with the G6 to automate the insulin delivery process.

Mobi could be a major growth driver for Tandem Diabetes Care. According to one Wall Street analyst, adoption of the new device has been faster and more widespread than expected. That said, t:slim X2 is still important to Tandem.

The company's growing installed base means increased revenue from parts and pump replacements - the replacement cycle for the t:slim X2 is about five years. Tandem Diabetes Care plans to reach an installed base of one million customers for its products. The company is also working to improve gross margins, with a long-term goal of reaching 65%, compared to the current gross margin of about 50%.

Mobi is about 15% to 20% cheaper to manufacture than the t:slim X2, and that's where it excels. tandem continues to innovate. It's developing Sigi, a koonless, patch-based, discrete insulin pump, so Tandem's platform looks exciting.

Intriguing long-term development

Although Tandem Diabetes Care has encountered some headwinds lately, it's still a highly innovative company that should be able to make inroads into the huge residual diabetes market. With the growth of Mobi, it wouldn't be surprising to see it reach its goal of 1 million installations in five years, and Tandem Diabetes isn't stopping there. The company is developing several other products to help people with diabetes.

In total, although the company's share price has lagged the market over the past year, its prospects remain exciting. Long-term investors should strongly consider adding shares of Tandem Diabetes Care to their investment portfolio.

Should you invest $1,000 in Tandem Diabetes Care now?

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Prosper Junior Bakiny does not hold any of the above stocks. the Motley Fool recommends DexCom. the Motley Fool has a disclosure policy.

1 Only Suppressed Stocks May Make You Richer was originally published by The Motley Fool.