Diabetes technology company Tandem Diabetes Care (NASDAQ: TNDM) reported Q3 2026 results topping the market’s revenue expectations, with revenue up 13.8% year on year to $283.7 million. The company expects the full year’s revenue to be around $1.08 billion, close to analysts’ consensus estimates. Its GAAP loss of $0.10 per share was 60.2% above analysts’ consensus estimates.

For more on Tandem Diabetes, read our full research report, available free.

“Tandem’s third-quarter performance demonstrates that our strategy is delivering results,” said John Sheridan, president and chief executive officer. “We are expanding access to Tandem’s life-changing technology, strengthening our business model, advancing our pipeline and driving greater operating efficiency, creating a stronger foundation for sustainable, profitable growth.”

Revenue growth

Examining a company’s long-term performance can provide clues about its quality. Even a weak business can perform well for one or two quarters, but a high-quality one grows for years. Tandem Diabetes’s 10.2% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Tandem Diabetes’s annualized revenue growth of 11.4% over the last two years is above its five-year trend, suggesting some bright spots.

The company’s pump shipments offer more detail on its revenue dynamics, reaching 33,000 in the latest quarter. Over the last two years, Tandem Diabetes’s pump shipments averaged 39.6% year-on-year growth. Shipments outpaced revenue growth, indicating that average selling prices decreased.

This quarter, Tandem Diabetes reported year-on-year revenue growth of 13.8%, and its $283.7 million of revenue exceeded Wall Street’s consensus estimates by 7.6%.

Looking ahead, sell-side analysts expect revenue to grow 9.3% over the next 12 months, according to S&P, a slight deceleration versus the last two years. Still, this projection is healthy and suggests the market sees success for its products and services.

Adjusted operating margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses, from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt and taxes.

Although Tandem Diabetes broke even this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average adjusted operating margin of negative 10.3% over the last five years. Unprofitable healthcare companies require extra attention because downturns can expose their financial vulnerabilities. That raises doubts about whether the business can endure a full cycle.

On the positive side, Tandem Diabetes’s adjusted operating margin rose by 1.5 percentage points over the last five years, as its revenue growth gave it operating leverage. This performance was mostly driven by recent improvements, as the company’s margin has increased by 11.5 percentage points on a two-year basis.

This quarter, Tandem Diabetes generated a negative 0.8% adjusted operating margin.

Earnings per share

Long-term changes in earnings per share, or EPS, matter for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Tandem Diabetes’s EPS declined by 33.1% annually over the last five years while its revenue grew by 10.2%. However, its adjusted operating margin improved during this time, indicating that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

A closer look at Tandem Diabetes’s earnings helps explain its performance. A five-year view shows Tandem Diabetes has diluted its shareholders, growing its share count by 7.5%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Tandem Diabetes reported EPS of negative $0.10, up from negative $0.31 in the same quarter last year. The result comfortably beat analysts’ consensus estimates, a positive outcome for shareholders. Wall Street’s outlook for the next 12 months is positive. Analysts forecast Tandem Diabetes’s full-year EPS will improve from negative $0.71 to roughly break even, according to S&P.

Key takeaways from Tandem Diabetes’s Q3 results

Tandem Diabetes delivered a strong quarter, with revenue well ahead of Wall Street’s consensus estimates and EPS also topping analysts’ consensus expectations. Those beats were key positives in the results. Shares surged 8.3% to $19.45 immediately after the release.

Tandem Diabetes may have had a good quarter, but the latest results matter less than longer-term business quality and valuation when deciding whether to invest in the stock. For more on these factors, read our full research report here (it’s free).