What happened

In response to the company posting expectation-topping results in its fiscal second quarter, shares of ResMed (RMD 0.12%), a medical device maker focused on sleep-disorder breathing products, jumped 17% as of 11:35 a.m. EST on Tuesday.

So what

Here's an overview of the headline numbers from the period.

  • Sales climbed 13% to $601 million. This figured slammed past the $577 million that Wall Street had projected.
  • Non-GAAP net income soared 39% to $144 million. The huge jump was due to a favorable tax swing and positive operating leverage.
  • Non-GAAP earnings per share landed at $1.00. This was also much better than the $0.78 that market watchers had forecasted. 

CEO Mick Farrell credited the great numbers to strong demand for the company's new products and solid execution:

Our masks have performed well around the world, device sales are solid, and our cloud-based software continues to grow rapidly. Our operating excellence initiatives are achieving leverage in the business with more runway ahead.

Wall Street applauded the big earnings beat.

A businessman giving a thumbs-up with money in the background

Image source: Getty Images.

Now what

ResMed's conference call with investors contained a few interesting nuggets that suggest that the good times are here to stay.

First, according to Farrell, the company launched a ResMed-branded portable oxygen concentrator called Mobi. He believes that this new product will help the company stand out in this market and more effectively compete against companies such as Inogen.

Second, management said that France has increased its reimbursement for telemonitoring sleep devices. This change is expected to lead to growth in the region and the company remains in open talks with other governments to convince them to follow suit.

Finally, CFO Brett Sandercock stated that recent changes to the tax code in the U.S. and Australia should significantly lower the company's effective tax rate in fiscal 2018. While management doesn't give guidance, Wall Street likely believes that this favorable turn of events will help the company post stronger-than-expected earnings growth for the remainder of the year.

In total, ResMed provides investors with plenty of reasons to believe that double-digit growth is achievable for the foreseeable future. If true, then buying into this growth story at all-time highs might not be such a bad idea.