Tandem Diabetes第二季銷售增5.8% 毛利率升至56.9% 淨虧損大幅收窄

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________________________ 
FORM 10-Q 
_____________________________________________________________________________________________ 

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2026
OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from              to                 
Commission File Number 001-36189 
_____________________________________________________________________________________________ 
Tandem Diabetes Care, Inc. 
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________ 

Delaware20-4327508
(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer
Identification No.)
12400 High Bluff Drive92130
San Diego, California
(Zip Code)
(Address of principal executive offices)

(858) 366-6900 
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading Symbol(s)Name of Exchange on Which Registered
Common Stock, par value $0.001 per shareTNDMNasdaq Global Market

_____________________________________________________________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerxAccelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒
As of August 3, 2026, there were 69,578,707 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS

Part IFinancial Information1

Item 1Financial Statements1

Condensed Consolidated Balance Sheets at June 30, 2026 (Unaudited) and December 31, 2025
1

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
2

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
3

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (Unaudited)
5

Notes to Unaudited Condensed Consolidated Financial Statements6

Item 2Management’s Discussion and Analysis of Financial Condition and Results of Operations25

Item 3Quantitative and Qualitative Disclosures About Market Risk36

Item 4Controls and Procedures36

Part IIOther Information37

Item 1Legal Proceedings37

Item 1ARisk Factors37

Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
76

Item 3Defaults Upon Senior Securities76

Item 4Mine Safety Disclosures76

Item 5Other Information76

Item 6Exhibits77

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

TANDEM DIABETES CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
June 30,December 31,
20262025
Assets(Unaudited)(Note 1)

Current assets:
Cash and cash equivalents$62,818 $90,634 
Short-term investments393,178 202,032 
Accounts receivable, net162,065 165,491 
Inventories135,106 128,769 
Prepaid and other current assets51,472 31,217 
Total current assets804,639 618,143 
Property and equipment, net84,501 83,580 
Operating lease right-of-use assets100,185 96,172 
Equity method investment132,271 60,351 
Other long-term assets32,606 22,866 
Total assets$1,154,202 $881,112 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$64,130 $47,067 
Accrued expenses25,539 21,012 
Employee-related liabilities53,261 70,409 

Operating lease liabilities20,265 19,472 
Deferred revenue8,430 9,527 

Other current liabilities81,380 75,237 
Total current liabilities253,005 242,724 

Convertible senior notes, net - long-term602,577 310,036 
Operating lease liabilities - long-term116,411 114,967 
Deferred revenue - long-term7,776 8,474 
Other long-term liabilities44,045 49,741 
Total liabilities1,023,814 725,942 
Commitments and contingencies (Note 14)
— — 
Stockholders’ equity:
Common stock, $0.001 par value; 200,000 shares authorized, 69,540 and 68,291 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
70 68 
Additional paid-in capital1,418,011 1,402,044 
Accumulated other comprehensive income
6,403 5,593 
Accumulated deficit(1,294,096)(1,252,535)
Total stockholders’ equity130,388 155,170 
Total liabilities and stockholders’ equity$1,154,202 $881,112 

See accompanying notes to unaudited condensed consolidated financial statements.
1

TANDEM DIABETES CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share data)

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Sales$254,560 $240,678 $501,781 $475,100 
Cost of sales109,780 114,823 220,213 230,838 
Gross profit144,780 125,855 281,568 244,262 
Operating expenses:
Selling, general and administrative111,642 109,596 219,829 223,449 
Research and development46,930 48,118 92,965 98,333 
Acquired in-process research and development expenses— — — 75,217 
Litigation and settlement expense
— 19,951 — 19,951 
Total operating expenses158,572 177,665 312,794 416,950 
Operating loss
(13,792)(51,810)(31,226)(172,688)
Other income (expense), net:
Interest income and other income, net
1,225 (632)4,851 3,561 
Interest expense(2,450)(1,905)(4,654)(3,767)
Loss from equity method investment(5,641)(3,375)(9,506)(6,917)

Total other income (expense), net(6,866)(5,912)(9,309)(7,123)
Loss before income taxes
(20,658)(57,722)(40,535)(179,811)
Income tax expense (benefit)510 (5,322)1,026 3,145 
Net loss
$(21,168)$(52,400)$(41,561)$(182,956)
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments
$(692)$(98)$(1,719)$325 
Unrealized gain (loss) on cash flow hedges716 (612)2,418 (612)
Foreign currency translation gains1,335 4,380 111 5,979 
Comprehensive loss
$(19,809)$(48,730)$(40,751)$(177,264)

Net loss per share - basic and diluted
$(0.31)$(0.78)$(0.60)$(2.74)

Weighted average shares used to compute basic and diluted net loss per share
69,011 67,050 68,706 66,729 

See accompanying notes to unaudited condensed consolidated financial statements.
2

TANDEM DIABETES CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands)

Three Months Ended June 30, 2026

Common StockAdditional 
Paid-in 
CapitalAccumulated 
Other 
Comprehensive 
Income (Loss)Accumulated 
DeficitTotal 
Stockholders’ 
Equity 
SharesAmount
Balance at March 31, 202668,504 $69 $1,400,218 $5,044 $(1,272,928)$132,403 

Exercise of stock options2 — 29 — — 29 
Vesting of restricted stock units, net of shares withheld for taxes493 — (3,769)— — (3,769)
Issuance of common stock for Employee Stock Purchase Plan541 1 5,893 — — 5,894 

Stock-based compensation expense— — 15,640 — — 15,640 

Unrealized loss on short-term investments
— — — (692)— (692)
Unrealized gain on cash flow hedges
— — — 716 — 716 
Foreign currency translation gains— — — 1,335 — 1,335 
Net loss— — — — (21,168)(21,168)
Balance at June 30, 2026
69,540 $70 $1,418,011 $6,403 $(1,294,096)$130,388 

Six Months Ended June 30, 2026

Common StockAdditional 
Paid-in 
CapitalAccumulated 
Other 
Comprehensive 
Income (Loss)
Accumulated 
DeficitTotal 
Stockholders’ 
Equity
SharesAmount
Balance at December 31, 202568,291 $68 $1,402,044 $5,593 $(1,252,535)$155,170 

Exercise of stock options43 — 739 — — 739 
Vesting of restricted stock units, net of shares withheld for taxes665 1 (6,176)— — (6,175)
Issuance of common stock under Employee Stock Purchase Plan541 1 5,893 — — 5,894 

Stock-based compensation expense— — 30,811 — — 30,811 
Purchase of capped call options related to convertible notes due 2029
— — (15,300)— — (15,300)

Unrealized loss on short-term investments— — — (1,719)— (1,719)
Unrealized gain on cash flow hedges— — — 2,418 — 2,418 
Foreign currency translation gains
— — — 111 — 111 
Net loss— — — — (41,561)(41,561)
Balance at June 30, 2026
69,540 $70 $1,418,011 $6,403 $(1,294,096)$130,388 

See accompanying notes to unaudited condensed consolidated financial statements.
3

Three Months Ended June 30, 2025

Common StockAdditional
Paid-in 
CapitalAccumulated
 Other
 Comprehensive
Income (Loss)
Accumulated 
DeficitTotal
Stockholders’
Equity
SharesAmount
Balance at March 31, 202566,568 $67 $1,333,531 $75 $(1,178,381)$155,292 

Exercise of stock options10 — 171 — — 171 
Vesting of restricted stock units, net of shares withheld for taxes502 1 (6,320)— — (6,319)
Issuance of common stock for Employee Stock Purchase Plan451 — 7,194 — — 7,194 

Stock-based compensation expense— — 25,675 — — 25,675 

Unrealized loss on short-term investments— — — (98)— (98)
Unrealized loss on cash flow hedges— — — (612)— (612)
Foreign currency translation gains
— — — 4,380 — 4,380 
Net loss— — — — (52,400)(52,400)
Balance at June 30, 2025
67,531 $68 $1,360,251 $3,745 $(1,230,781)$133,283 

See accompanying notes to unaudited condensed consolidated financial statements.

Six Months Ended June 30, 2025

Common StockAdditional
Paid-in 
CapitalAccumulated
 Other
 Comprehensive
Income (Loss)
Accumulated 
DeficitTotal
Stockholders’
Equity
SharesAmount
Balance at December 31, 202466,264 $66 $1,312,804 $(1,947)$(1,047,825)$263,098 

Exercise of stock options53 — 871 — — 871 
Vesting of restricted stock units, net of shares withheld for taxes763 1 (11,708)— — (11,707)
Issuance of common stock under Employee Stock Purchase Plan451 1 7,194 — — 7,195 

Stock-based compensation expense— — 51,090 — — 51,090 

Unrealized gain on short-term investments— — — 325 — 325 
Unrealized loss on cash flow hedges— — — (612)— (612)
Foreign currency translation gains
— — — 5,979 — 5,979 
Net loss— — — — (182,956)(182,956)
Balance at June 30, 2025
67,531 $68 $1,360,251 $3,745 $(1,230,781)$133,283 

See accompanying notes to unaudited condensed consolidated financial statements.
4

TANDEM DIABETES CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Six Months Ended June 30,
20262025
Operating Activities
Net loss$(41,561)$(182,956)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense8,974 8,678 
Amortization of debt issuance costs1,384 970 
Provision for expected credit losses5,358 3,577 

Operating lease and other impairment charges— 6,697 
Amortization of discount or (accretion of premium) on short-term investments(1,821)(1,780)

Loss from equity method investment9,506 6,917 
Stock-based compensation expense31,400 51,130 

Acquired in-process research and development expenses— 75,217 
Other1,005 424 
Changes in operating assets and liabilities:
Accounts receivable, net(3,082)(13,516)
Inventories(8,564)12,058 
Prepaid and other current assets(18,502)(2,348)
Other long-term assets(11,134)3,524 
Accounts payable
23,500 5,739 

Employee-related liabilities(17,072)(12,649)
Deferred revenue(3,782)(2,710)
Operating leases and other current liabilities4,095 8,403 
Other long-term liabilities(3,280)4,851 
Net cash used in operating activities(23,576)(27,774)
Investing Activities
Purchases of short-term investments(260,512)(26,496)
Proceeds from maturities and redemptions of short-term investments69,473 146,447 

Purchases of property and equipment(10,318)(9,171)
Acquisition of in-process research and development— (43,464)
Purchases of equity investments, strategic investments, and intangible assets
(81,427)— 
Net cash provided by (used in) investing activities(282,784)67,316 
Financing Activities
Proceeds from issuance of convertible senior notes due 2032, net of $8,843 debt issuance costs
291,157 — 

Principal payments on convertible senior notes due 2025— (40,760)
Payment for capped call transactions related to convertible senior notes due 2032
(15,300)— 

Cash used to settle withholding taxes on vested restricted stock, net of proceeds from issuance of common stock under Company stock plans458 (3,641)

Net cash provided by (used in) financing activities276,315 (44,401)
Effect of foreign exchange rate changes on cash2,229 (263)
Net decrease in cash and cash equivalents(27,816)(5,122)
Cash and cash equivalents at beginning of period90,634 69,234 
Cash and cash equivalents at end of period$62,818 $64,112 
Supplemental disclosures of cash flow information

Income taxes (refunded) paid
$(1,758)$4,892 
Supplemental schedule of non-cash investing and financing activities
Operating lease right-of-use assets obtained in exchange for operating lease obligations$10,224 $— 
Purchases of property and equipment included in accounts payable and accrued expenses$1,851 $1,073 
Intangible costs in other long-term liabilities
$13,300 $13,300 

See accompanying notes to unaudited condensed consolidated financial statements.
5

TANDEM DIABETES CARE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

The Company
Tandem Diabetes Care, Inc. is a global insulin delivery and diabetes technology company focused on the design, development, and commercialization of technology solutions that reduce the burden of diabetes management. Tandem Diabetes Care, Inc. is incorporated in the state of Delaware. Unless the context requires otherwise, the terms the “Company” or “Tandem” refer to Tandem Diabetes Care, Inc., together with its wholly-owned subsidiaries.
The Company’s strategy is to offer flexibility and choice in intelligent insulin delivery systems through an accessible portfolio of market-leading pumps, applications and insights. In support of this strategy, the Company’s pump platforms include t:slim X2 and Tandem Mobi (Mobi). Both pumps feature Control-IQ+ technology, which is the Company’s most advanced algorithm for managing insulin delivery, using information received from compatible continuous glucose monitoring (CGM) sensors. New software for the insulin pumps may be updated remotely by the individual users as new advancements become available. The insulin pumps are compatible with other complementary digital health offerings, such as the Company’s mobile application and cloud-based diabetes management applications. The Company’s insulin pumps are durable medical devices designed for multiple years of daily use. In addition, the Company sells disposable supplies used in conjunction with the pumps, which are replaced periodically. These supplies include cartridges for storing insulin, and infusion sets that contain a cannula and connect the pump to a user’s body to administer insulin.

Basis of Presentation and Principles of Consolidation
The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation.
Interim financial results are not necessarily indicative of results anticipated for the full year or any other period(s). These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report), from which the condensed consolidated balance sheet presented as of December 31, 2025 herein was derived. The condensed consolidated financial statements include the accounts of Tandem Diabetes Care, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The functional currency of each of the Company’s foreign subsidiaries is its respective local currency. The Company translates the financial statements of its foreign subsidiaries into U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates for each period for revenue, costs and expenses. Translation-related adjustments are included in other comprehensive income (loss) in the condensed consolidated statements of operations, and in accumulated other comprehensive income (loss) in the stockholders’ equity section of the Company’s condensed consolidated balance sheets. Foreign exchange gains or losses resulting from balances denominated in a currency other than the functional currency are recognized in interest income and other income, net in the Company’s condensed consolidated statements of operations.

2. Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2026, as compared to those disclosed in the Annual Report.
6

Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes as of the date of the condensed consolidated financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

Accounts Receivable
The Company grants credit to various customers in the ordinary course of business and is paid directly by customers who use its products, distributors and third-party insurance payors. The Company maintains an allowance for its current estimate of expected credit losses. Provisions for expected credit losses are estimated based on historical experience, assessment of specific customer-related risks, review of outstanding invoices, forecasts about the future, and various other assumptions and estimates that are believed to be reasonable under the circumstances, including the impact of broader macroeconomic conditions such as changes in credit risk, discretionary spending, and interest rates. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible.

Operating Lease Right-of-Use Assets and Liabilities
Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized when the Company takes possession of the leased property (the Commencement Date) based on the present value of lease payments over the lease term. For lease agreements that contain lease and non-lease components, the Company accounts for both of those components as a single lease component. Rent expense on noncancelable leases containing known future scheduled rent increases is recorded on a straight-line basis over the term of the respective leases beginning on the Commencement Date. The difference between rent expense and rent paid is accounted for as a component of operating lease right-of-use assets on the Company’s condensed consolidated balance sheets. Landlord improvement allowances and other similar lease incentives are recorded as a reduction of the right-of-use lease assets, and are amortized on a straight-line basis as a reduction to operating lease costs.

Intangible Assets Subject to Amortization
Finite-lived intangible assets are recorded at cost, net of accumulated amortization and, if applicable, impairment charges. Amortization of finite-lived intangible assets is recognized over their estimated useful lives using a straight-line or accelerated attribution method, depending on the economic benefit associated with the asset.
In the second quarter 2025, the Company and various Roche entities (collectively, Roche) entered into a Settlement, Mutual Release and Cross-License Agreement (the Settlement Agreement). The Settlement Agreement resolved all actual or potential patent disputes as of the agreement date, including the actions pending before courts of the Unified Patent Court in France and Germany.
Under the terms of the Settlement Agreement, the Company agreed to pay Roche $36.0 million over a four-year period, with an initial cash payment of $8.0 million and four equal annual installments thereafter. Based on a relative fair value approach, $13.3 million was capitalized as an intangible asset for the value of the license, which is being amortized over seven years, reflecting the estimated useful life of the acquired patents. The remaining consideration was expensed as settlement and litigation expense with related legal fees during the second quarter 2025. The Company paid its second annual payment of $7.0 million during the second quarter 2026.
7

Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment, operating lease right-of-use assets, and acquired intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined using unobservable (Level 3) inputs (see Note 5 “Fair Value Measurements”), including discounted cash flow models, future estimated sublease income, and third-party independent appraisals, as considered necessary. There is uncertainty in the projected undiscounted future cash flows used in the Company’s impairment review analysis, which requires the use of estimates and assumptions. If actual performance does not meet or exceed projected performance, or if the assumptions used in the model change in the future, the Company may be required to recognize additional impairment charges in future periods. The Company recognized the impairment of operating lease right-of-use assets in the first quarter of 2025 (see Note 6, “Leases”). There were no other impairments of long-lived assets, including acquired intangible assets, during the three and six months ended June 30, 2026 and 2025.

Equity Method Investment
The Company uses the equity method to account for investments in companies if it owns more than 20% of the investee company’s outstanding equity or the investment provides the Company with the ability to exercise significant influence but not control over the operating and financial policies of the investee. The Company assesses whether it has significant influence by considering various factors, including the nature and magnitude of the investment, voting rights held, and participation in the governance of the investee, if any. The Company may also consider additional relevant factors, such as the presence of other business relationships.
The Company held an equity method investment in CeQur SA (CeQur), a privately held company, of $132.3 million and $60.4 million as of June 30, 2026 and December 31, 2025, respectively. On May 22, 2026, the Company made an additional investment in CeQur of CHF 64.0 million ($81.4 million USD), remaining at an ownership level of less than 50%. The Company continues to account for the investment under the equity method. The additional investment was recorded as an increase to the carrying value of the existing equity method investment. In connection with the additional investment, the Company obtained, for an immaterial amount, the option to acquire the remainder of CeQur’s shares no earlier than 2028 at its sole discretion. In the event the option is exercised, the price to be paid will be calculated using a predetermined market-based formula. The Company recorded this call option in other long-term assets on the condensed consolidated balance sheets. The call option does not meet the criteria for derivative accounting.
Equity method investments are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. No impairment charges were recognized for the equity method investment during the three and six months ended June 30, 2026.
The Company’s condensed consolidated net loss included its proportionate share of the net loss of its equity method investee, which was $5.6 million and $9.5 million for the three and six months ended June 30, 2026, respectively, and $3.4 million and $6.9 million for the three and six months ended June 30, 2025, respectively.

Revenue Recognition
Revenue is generated primarily from sales of insulin pumps, single-use insulin cartridges and infusion sets to individual customers with third-party insurance coverage and through a network of distributors that resell the products to insulin-dependent diabetes customers. The Company recognizes revenue when it transfers control of the promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, net of estimated rebates, prompt payment discounts, and a provision for product returns.
8

Revenue Recognition for Arrangements with Multiple Performance Obligations
The Company considers the individual deliverables in its product offerings to be separate performance obligations. 
The transaction price is the net consideration to which the Company expects to be entitled, determined from either the stated value in contractual arrangements or the estimated cash to be collected in non-contracted arrangements. The transaction price also includes an estimate of variable consideration at the time of sale. Variable consideration includes, but is not limited to: rebates, prompt payment discounts, and a provision for product returns. These amounts are recorded as a reduction of accounts receivable when no payment is required from the Company and as a liability when a payment is required.
 The Company recognizes consideration based on when the performance obligation is satisfied, considering whether or not this occurs at a point in time or over time. Generally, insulin pumps, cartridges, infusion sets, and accessories are deemed performance obligations that are satisfied at a point in time when the customer obtains control of the promised good, which is typically upon shipment or delivery as title transfers. Certain complementary products, such as the Company’s data management and software update platforms, are considered distinct performance obligations that are satisfied over time, as access and support for these products is provided throughout the typical four-year warranty period of the insulin pumps. Accordingly, revenue related to these complementary products is deferred and recognized over the period of the performance obligation according to the agreement. 
The Company allocates the transaction price to each individual performance obligation based on the standalone selling price. For the pay-as-you-go reimbursement model, the Company allocates a portion of the transaction price associated with the customer’s initial supply order to the pump based on its relative standalone selling price. When standalone selling prices are not directly observable, the Company estimates such amounts using an expected cost plus a margin approach and allocates any residual consideration to the remaining performance obligations, as appropriate.

Variable Consideration
The amount of variable consideration that is included in the transaction price is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The Company is subject to certain rebates on pricing programs with managed care organizations, including pharmacy benefit managers and governmental or third-party commercial payors. The terms of these programs may vary depending on the customer and contractual arrangements. The Company estimates provisions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known market events or trends, and channel inventory data. Sales rebates are recorded as a reduction of revenue and are included within other current or long-term liabilities on the consolidated balance sheets, depending on the anticipated settlement period of the rebate. Actual rebate payments may differ from estimated amounts recorded in the accompanying consolidated financial statements.

Derivative Instruments and Hedging Activities
The Company records the fair value of derivative instruments as either current assets or current liabilities on the condensed consolidated balance sheets. Changes in the fair value of derivative instruments are recorded each period in current earnings or other comprehensive income (loss), depending on whether a derivative instrument is designated as part of a hedging transaction. For a derivative to qualify as a hedge at inception and throughout the hedged period, the Company formally documents the nature and relationships between the hedging instrument and hedged item.
For derivatives formally designated as hedges, the Company assesses both at inception and quarterly thereafter, whether the hedging derivatives are highly effective in offsetting changes in either the fair value or cash flows of the hedged item.
Gains or losses on cash flow hedges are reclassified from other comprehensive in