Image source: Dexcom, Inc.

What: After a Food and Drug Administration advisory committee voted to support removing the need to confirm blood glucose measures determined by Dexcom, Inc.'s (NASDAQ:DXCM) continuous glucose monitors (CGM) with a finger stick, the company's stock rallied 15.9% last month, according to S&P Global Market Intelligence

So what: Dexcom's CGMs provide diabetics with real-time insight into blood glucose trends. However, up until now, charting of blood glucose had to be confirmed by results from a blood glucose monitor prior to patients taking action to restore their levels to their desired range.

The committee's recommendation to remove that requirement for Dexcom's monitor could clear the way toward approval of the device by Medicare, opening up a significant patient population that up until now has struggled to afford the device. 

Despite reimbursement headwinds among some payers, demand for Dexcom's monitors and the consumables required to use them has been steadily accelerating. In Q2, revenue grew to $137.3 million, up 47% from the the same quarter in 2015.

Due to investments in manufacturing, research, and sales and marketing, expenses increased in the past year, resulting in a GAAP net loss of $20.2 million, or $0.24 per share for the second quarter of 2016, compared to $3.7 million, or $0.05 per share for the same quarter in 2015. The net loss of $20.2 million for the second quarter of 2016 included $31.5 million in non-cash expenses, comprised primarily of share-based compensation, depreciation, and amortization.

Now what: Dexcom's monitors are used primarily by type 1 diabetics and there are an estimated 500,000 people under age 14 living with type 1 diabetes. Since Dexcom's penetration of that patient pool is in the tens of thousands of patients, there could be a long runway still for future growth.

During its second-quarter earnings conference call, management boosted the low end of its full-year sales guidance to $550 million from prior estimates of at least $540 million. The company has $115.6 million in cash, cash equivalents, and short-term marketable securities and no meaningful debt, so there's plenty of financial flexibility available to roll out product updates and execute on next-generation improvements that could eventually open up CGM technology to the type 2 diabetes market.

Overall, since the type 1 patient population is growing 3% annually and international expansion, plans are still in the early stages, I think this company is one of the most intriguing growth stocks targeting diabetes and that suggests its shares might be worth picking up in long-haul portfolios.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.