What happened

After unveiling first-quarter financial results that exceeded industry watchers' forecasts and boosting its full-year revenue guidance, insulin pump maker Insulet (NASDAQ:PODD) saw its shares soaring 10% at 11 a.m. EDT Friday.

So what

There's a massive need for better diabetes treatment options. More than 30 million people have diabetes in the United States alone, and inadequate control of blood sugar contributes to life-threatening disease progression.

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IMAGE SOURCE: GETTY IMAGES.

Historically, diabetics have relied on point-in-time finger sticks to measure glucose levels and multiple daily insulin injections to manage their blood sugar. More recently, insulin-intensive patients have been shifting from that approach toward sophisticated devices that improve quality of life, including Insulet's wearable insulin pump, Omnipod.

In Q1, Insulet reported sales of $159.6 million, up 29.1% year over year, and GAAP earnings per share of $0.07, both of which outpaced estimates by $5 million and $0.06 per share, respectively. The top-line results were above management's guidance for sales of between $152 million and $156 million.

Gross margin improved 5.5% to 66.9% in the quarter, supporting the company's shift to an operating profit from break-even results in the same quarter last year.

The company also increased its full-year revenue for 2019 to between $667 million and $690 million, up from between $662 million and $687 million previously. If the company delivers on that target, it will represent year-over-year sales growth exceeding 18%.

Importantly, CEO Shacey Petrovic indicated confidence toward attaining management's long-term targets, saying, "We are well on our way to delivering our 2021 financial targets of $1 billion in revenue, 70% gross margin and mid-teens operating margin, reinforcing our confidence in Insulet's prospects for long-term, sustainable and profitable growth."

Now what

The quarterly results and updated forecast are encouraging because Insulet faces stiff competition from increasingly automated insulin delivery systems that pair wearable glucose sensors with insulin pumps. Tandem Diabetes (NASDAQ:TNDM) launched its first-generation automated system -- the T:Slim X2 with Basal IQ -- last fall, and in Q1, Tandem reported top-line revenue growth of 142%.

Insulet doesn't have its own automated system available yet. However, its Horizon system is under development, with an expected launch as early as 2020. The company's nearly 20% revenue forecast for 2019, despite heightened competition, is encouraging ahead of Horizon, particularly considering management estimates its pumps are only used by a "low-single-digit" percentage of insulin-dependent diabetics worldwide, which suggests plenty of remaining growth opportunity.