What happened

After InMode (INMD 1.12%) reported third-quarter financial results that bested analysts forecasts, its shares rocketed 18.5% higher by 1:30 p.m. EST on Tuesday.

So what

InMode manufactures equipment that uses radio frequency energy to perform medical aesthetic and women's health procedures, such as body contouring. The company has been publicly traded for only a few months, but its top-line and bottom-line performance so far is encouraging. 

A woman sits on a bench in front of a mural of a rocket lifting off the ground.

Image source: Getty Images.

In Q2, sales were up 54.6% year over year to $38.8 million, and earnings per share under generally accepted accounting principles (GAAP) totaled $0.45, up from $0.21 a year earlier.

The momentum continued last quarter, with management reporting that third-quarter revenue grew 57.4% year over year to $40.01 million and EPS increased 62% from last year to $0.42. That was $4.27 million and $0.11 per share better, respectively, than analysts anticipated. 

The bottom-line beat was driven by operating leverage because fixed costs grew at a slower rate than sales. Operating margin clocked in at 40%, compared with 33% in the third quarter of 2018.

Now what

InMode's devices offer patients a minimally invasive solution versus traditional surgery, and that advantage is likely to help continue supporting demand. And the company is pushing deeper internationally, providing it with an even larger addressable market. With no long-term debt, cash and equivalents and securities and deposits of $166.3 million, and proven profitability, this appears to be a small-cap healthcare stock worth owning.