Investors thoroughly enjoyed learning how Masimo Corporation (NASDAQ:MASI) performed in the first quarter back in May. The maker of non-invasive monitoring technologies reported impressive revenue and earnings gains. Masimo even upped its full-year guidance based on the strong performance.

But were Masimo's second-quarter results enough to keep shareholders happy? The company provided an update on the latest quarter after the market closed on Wednesday. Here are the highlights.

Hand resting on top of papers with index finger in pulse oximeter

Image source: Getty Images.

Masimo results: The raw numbers


Q2 2017 

Q2 2016 

Year-Over-Year Change


 $192.9 million  $172.6 million


Net income from continuing operations

 $46.7 million  $30 million


Diluted EPS

 $0.83  $0.57


Data source: Masimo.

What happened with Masimo this quarter?

Sales increased on nearly every front for Masimo in the second quarter. Product revenue increased 11.1% year over year to $182.8 million, including a 13.8% bump in direct product revenue, which generates nearly 88% of total product revenue. Sales of Masimo rainbow products increased 14.6% over the prior-year period to $17.1 million. Royalty and other revenue grew by 26.2% to $10.1 million. The one weak spot was with original equipment manufacturer sales, which fell 5.4% year over year to $22.4 million.

Masimo's huge improvement on the bottom line from the prior-year period stemmed in part from a tax hit of nearly $6.9 million in the second quarter of last year. Without this one-time impact, the company's earnings increased by 27.4% -- still quite impressive.

What really helped was that Masimo controlled its spending very well. Total operating expense increased by less than 4% over the prior-year period. Slow-growing expenses combined with faster-growing sales is a recipe for success for any company.

Despite its solid performance in the second quarter, Masimo's cash position weakened somewhat. As of the end of the second quarter, the company had total cash and cash investments of $331.4 million. That's down from $343.8 million at the end of the first quarter. 

What management had to say

Masimo Chairman and CEO Joe Kiani said:

Our second-quarter results exceeded our expectations and continue to illustrate the strength in our business. I am very happy to be able to report that for the first time ever, excluding handheld and finger oximeters, we shipped 50,000 SET pulse oximeters and rainbow SET pulse CO-oximeters in the quarter as we continue to see broad adoption of our products throughout the world. Our outlook for the remainder of 2017 remains strong and we are happy to be able to increase our financial guidance for fiscal 2017.

Looking forward

As Kiani's statement indicated, Masimo upped its full-year guidance. The company now expects 2017 revenue of $769 million. Previously, Masimo projected full-year revenue of $759 million. The company also thinks full-year earnings per diluted share will come in at around $2.80, compared with the earlier estimate of $2.65.

Business is clearly booming for Masimo. The company's pulse oximetry products continue to enjoy strong demand. Masimo also appears to be executing well operationally.

Masimo has successfully protected its intellectual property. It even flipped a rival into a partner by forging an agreement with Koninklijke Philips NV (NYSE:PHG) to jointly develop products that use both companies' technology. Philips also agreed to pay Masimo $300 million to settle patent infringement litigation.

Future acquisitions could also help fuel additional growth for Masimo. The company has made several smart deals in the past. While troubles could develop, the future for Masimo's business appears to be quite good right now.   

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.