UnitedHealth names Medtronic as preferred insulin pump vendor, dealing a blow to Tandem

Tandem Diabetes Care (NSDQ:TNDM) shares dropped over 20% after UnitedHealth Group (NYSE:UNH) announced it is making Medtronic (NYSE:MDT) its preferred provider of insulin pumps.

The shift will go into effect July 1 this year, and will remove Tandem Diabetes pumps as in-network options for UnitedHealth members, the San Diego, Calif.-based company said.

Last year, Tandem shipped 15,483 insulin pumps, with approximately 1,200 going to UnitedHealth members, according to analysts at Seeking Alpha.

Tandem Diabetes said the decision was “unexpected” and will prevent a majority of UnitedHealth members from purchasing insulin pumps on an in-network basis from Tandem Diabetes and “several other durable medical equipment providers.”

“Having diabetes isn’t a choice. How people manage it should be. Insulin pumps are not a 1-size fits all solution. Selecting which pump is the best fit for a person to manage their therapy needs should be a decision made between a person and their healthcare provider,” Tandem Diabetes CEO Kim Blickenstaff said in prepared remarks.

Tandem Diabetes said the decision would not apply to members under 18 years, as well as UnitedHealth Sierra Health and Life Commercial members and Medicare Advantage members.

UnitedHealth will continue to cover supplies for all insulin pump brands in warranty and still functioning.

Shares in Tandem Diabetes have dropped 23.2% to $7.96 as of 11:39 a.m. EDT.

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