By the end of July, Masimo Corporation (NASDAQ:MASI) appeared to be on track for even better gains than the stock's impressive 26% jump last year. The company, which makes non-invasive monitoring technologies, reported great first-quarter results in May. Masimo's launches of new products promised the potential of even better days ahead.

Investors were hoping that Masimo would keep the good times rolling when it announced its second-quarter earnings results after the market closed on Wednesday. And their hopes were fulfilled. Masimo yet again delivered a strong performance. Here are the highlights from its second-quarter results.

Hand with finger pulse oximter

Image source: Getty Images.

Masimo results: The raw numbers

Metric 

Q2 2018 

Q2 2017 

Year-Over-Year Change

Sales

$211.6 million $192.3 million

10%

Net income from continuing operations

$43.9 million $45.1 million

(2.8%)

Adjusted earnings per share (EPS)

$0.73 $0.55

24.7%

Data source: Masimo.

What happened with Masimo this quarter?

Masimo's year-over-year revenue growth picked up momentum in the second quarter. Although revenue from royalties and other sources fell to $9.6 million, product sales more than offset the decline. Masimo reported product revenue of $202 million in the second quarter, up 12% over the prior-year period, driven by record shipments of its pulse oximetry devices.

What about Masimo's small year-over-year drop in GAAP net income? It was due entirely to a higher provision for income taxes. The company enjoyed a $1.1 million tax benefit in the second quarter of 2017 but had to pay nearly $9.2 million in income taxes in the second quarter of this year.

The adjusted EPS year-over-year comparison better reflects Masimo's operational performance. There wasn't a trick to how the company achieved a big increase in its adjusted EPS. Masimo kept its growth rate for spending below its growth rate for sales. That boosts earnings 100% of the time. Masimo also received a little help in improving its adjusted EPS through share buybacks. 

Masimo ended the second quarter with total cash and cash equivalents of $429.6 million. That reflected an increase of $60.1 million from the previous quarter.

What management had to say

Masimo CEO Joe Kiani stated:

Our second-quarter results reflect the broad-based success we are realizing for our innovative technologies and systems solutions to optimize patient care. We had a record quarter for shipments of our technology boards and monitors, at 58,700, a clear illustration of the rising demand for our high-value products. We are once again raising guidance for revenue and earnings in 2018 as we continue to grow our customer base and expand our product portfolio.

Looking forward

Just as it did in May, Masimo again raised its full-year 2018 guidance. The company now expects product revenue of $850 million this year, with product revenue of $822 million. Masimo's previous guidance projected full-year revenue of $836 million, with product revenue of $818 million.

The company also expects GAAP EPS of $3.07 and non-GAAP EPS of $2.90. That's an increase from Masimo's previous outlook of GAAP EPS of $3.01 and non-GAAP EPS of $2.88.

In addition, investors can look forward to more stock buybacks. Masimo announced that its board of directors authorized the purchase of up to 5 million shares over the next three years. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Masimo. The Motley Fool has a disclosure policy.