What happened

After the small-cap insulin pump maker won Food and Drug Administration approval for a new automated insulin-delivery solution last June, Tandem Diabetes Care (NASDAQ:TNDM) saw its shares skyrocket 1,509% in 2018, according to S&P Global Market Intelligence.

So what

Increasingly, type 1 diabetics who require frequent insulin injections to manage their disease are embracing technology, including Tandem's insulin pumps, that are less burdensome and help them control their disease better.

A woman draws a rocket on an ascending price chart.

Image source: Getty Images.

In the past, it's been tough for Tandem Diabetes to capture market share because of stiff competition from larger rivals, including Medtronic (NYSE:MDT) and Insulet (NASDAQ:PODD). However, it got a leg up on those competitors last summer, when the FDA approved a solution combining Tandem's pump and Basal-IQ algorithm, which uses data to predict dangerous insulin highs and lows, with a continuous glucose monitor made by DexCom (NASDAQ:DXCM).

Following the launch of this system in August, Tandem Diabetes shipped 8,434 pumps in the third quarter, up 118% year over year, and its revenue climbed 71.5% to $46.3 million because of robust demand. The third-quarter performance has management thinking it can break even on adjusted EBITDA for the first time in Q4 2018, which may mean it can take the leap to bottom-line profitability soon. 

Now what

Tandem Diabetes' market share is roughly 12%, and that means it has plenty of runway to grow revenue in 2019. It also doesn't hurt that one competitor, Johnson & Johnson's (NYSE:JNJ) Animas, exited the industry in late 2017, creating more opportunities for Tandem Diabetes to win converts. 

The path forward, however, might get bumpier in 2019. The rally in its share price last year puts its market cap over $2.2 billion, and competitors, including Insulet, could launch their own automated solutions in the next year or two, crimping demand. That suggests investors will want to keep close tabs on rivals and Tandem Diabetes' growth rates to make sure customers don't abandon it. 

Check out the latest Tandem Diabetes earnings call transcript.