What happened

Shares of Natus Medical (NASDAQ:BABY) are up 12.4% as of 12:15 p.m. EDT following the release of the company's second-quarter earnings report. It wasn't exactly a blowout quarter for the hearing and neurology specialist, but given all the turmoil it has had lately (a proxy fight and its CEO retiring), investors appear to be excited about Natus clearing the bar and moving forward.

So what

Revenue was up 7% year over year to $130.7 million, at the high end of management's guidance for revenue of $129 million to $131 million. The company didn't break out sales by category in its press release except to point out that the neurology business grew by 2% organically.

Technician helping adjust a hearing aid in a woman's ear

Image source: Getty Images.

On the profit line, Natus did much better than management had expected, with adjusted earnings of $0.35 per share, blowing past its lackluster guidance of $0.25 to $0.27 per share. While the beat is impressive -- even if it was a low bar -- the company still has a ways to go to get its margins back in line: Despite the 7% revenue growth, adjuster earnings were only up about 3% compared to the year-ago quarter.

Now what

Management lowered its full-year guidance slightly and now expects revenue of $525 million to $535 million and adjusted earnings of $1.50 to $1.60 per share. While the lowered expectations are disappointing, it still looks like Natus will have a solid second half of the year.

For example, adjusted earnings for the third quarter are expected to be between $0.40 to $0.44 per share, which would leave $0.54 per share to be captured in the fourth quarter based on the first-half results and the midpoints of management's guidance. If Natus can hit those numbers, it'll be accelerating into 2019, and today's move higher will be well-justified.

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Natus Medical. The Motley Fool has a disclosure policy.