Hospira (NYSE:HSP) is kind of a weird business, merging elements of a generics company, a medical distributor, and even a contract manufacturer. Hospira's hardly unique, however; much of the same could be said for Baxter (NYSE:BAX), one of the company's major competitors. Weird or not, Hospira's third-quarter results were pretty healthy.

Reported revenue was up 0.1% to more than $650 million. (Growth investors, please control your enthusiasm.) My regular readers know that I don't go in for all of the "if/then" adjustments that company managers often try to slip beneath our noses, but I think a deeper look might be instructive here. If you factor out the impact of the company terminating a distribution agreement, revenue seems to have actually grown about 8%, with volume growth of more than 4% and pricing growth of nearly 2%.

I suspect that the company's margin performance will really raise some eyebrows this quarter. As reported, gross margin improved significantly (from 29.5% to 34.7%). The improvement was even more substantial if you go with the company's adjusted performance, which excludes various transition, deal-related, and facility closing expenses. Likewise, operating margin improvement was meaningful, and the company posted adjusted income growth of 14%.

With a good moat and modest growth, Hospira strikes me as a stock that can treat investors well if they are patient and buy it wisely. The company has strong market share in several large markets (specialty injectables, medication management, infusion therapy) but none of these fields are exactly growing like gangbusters.

On the plus side, though, Hospira has the benefits of scale and good relationships with its customers. Additionally, competitors like Baxter, Cardinal Health (NYSE:CAH), American PharmaceuticalPartners (NASDAQ:APPX), and Becton Dickinson (NYSE:BSX) are tough cookies, but not likely to do anything blindingly stupid just to grab a little extra share.

Investors should also be aware of the company's ties to Abbott Labs (NYSE:ABT) and ICUMedical (NASDAQ:ICUI). Hospira used to be part of Abbott and still gets more than 6% of its revenue from them. With ICU, the company has a manufacturing and marketing agreement that pertains to components that are involved in more than 10% of the company's sales.

As I said before, I think buying this stock wisely may be the key to good long-term returns. Unfortunately, today's spike in the stock price just chewed up my preferred margin of safety. Though I'm encouraged by Hospira's performance, I'll be waiting for a better price before I consider buying.

For more medical Foolishness:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).