Image source: Insulet Corporation.

What: Shares in Insulet Corporation (NASDAQ:PODD) have skyrocketed 19.5% in morning trading today after the company reported second-quarter financial results that outpaced industry watchers' top- and bottom-line estimates.

So what: The maker of tubeless insulin pumps reported second-quarter revenue of $87.3 million, up 44% year over year, and a 7% year-over-year surge in gross margin. Insulet's CEO, Patrick Sullivan, reported growth across several of the company's programs, and a positive effect from operations investment:

Our continued positive momentum generated better-than-expected revenue growth and margin improvement in the second quarter, with growth in all of our business lines. We are advancing our Digital Insulet strategy and artificial pancreas program, while also successfully growing the body of clinical evidence in support of our Omnipod technology. Our investments in our manufacturing and supply chain operations are beginning to pay off and based on these improvements, we expect higher-than-planned gross margin for the year.

Revenue growth was led by increasing demand for OmniPod insulin pumps in the United States. In the quarter, OmniPod's U.S. sales increased 24%, to $56.3 million. The company is also executing on its international expansion plans for OmniPod. Second-quarter sales overseas surged 117%, to $16.6 million. 

Thanks to sales growth and manufacturing and operational improvements that kept costs in check, Insulet's operating loss improved to $1.3 million from $14.1 million in the second quarter of 2015. Overall, the company's net loss of $4.4 million, or $0.08 per share, marks a significant improvement over the $17.3 million, or $0.30 per share loss last year. 

Now what: Globally, 415 million people have diabetes, and according to the International Diabetes Federation, the number of diabetics will jump to 642 million by 2040. Because of the increasing prevalence of diabetes and the life-threatening consequences associated with this disease, there's a significant unmet need for treatment options such as Insulet's pumps.

So far, Insulet hasn't been able to leverage sales growth into profit, but that could happen soon given the improvement in the past year. Since the market potential is big and this company has proven it can execute on winning business, shares may be well worth looking at and adding to portfolios.

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