What happened

Shares of Tandem Diabetes Care (NASDAQ:TNDM) were 10.9% higher as of 2:42 p.m. EDT on Thursday. Investors continued to drive up the insulin-pump maker's stock following Tandem's second-quarter update on Monday after the market closed. Tandem's share price has risen more than 27% since the company announced its Q2 results.

So what

There are three key reasons why investors are so excited about Tandem right now. First, business is booming. The company reported that pump shipments increased 59% year over year in the second quarter. This translated to sales in Q2 of $34.1 million, up 60% over the prior-year period.

Doctor holding marker up to the word "diabetes" written on glass

Image source: Getty Images.

Second, Tandem is steadily improving its operating margin. In Q2 of 2017, the company's operating margin stood at negative 89%. Tandem said that its operating margin in the most recent quarter was negative 41%.

Third, the company expects to keep the momentum going in the second half of the year. Tandem revised its full-year 2018 guidance and now expects sales for the year to be between $140 million and $148 million. Its previous guidance called for full-year sales of $132 million to $140 million.

Now what

The big thing for investors to watch now with Tandem Diabetes Care is the upcoming launch of its t:slim X2 insulin pump with basal-IQ technology, which the U.S. Food and Drug Administration (FDA) approved in June. The insulin pump, which integrates with Dexcom's G6 continuous glucose monitoring (CGM) system, will become the first automated insulin-delivery system approved for use in children as young as six years old.

Tandem will face competition from the current market leader, Medtronic. However, if its new pump delivers as hoped, the company could be on track to achieve breakeven on a cash flow basis in 2019.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of Medtronic. The Motley Fool has a disclosure policy.