Masimo Corporation (NASDAQ: MASI) saw its shares surge over 6% in after-hours trading on Tuesday after reporting better-than-expected fourth-quarter results and issuing robust guidance for 2025. The company's strong performance, driven by its healthcare segment, and strategic initiatives to streamline operations have contributed to the stock's rally.

In the fourth quarter, Masimo posted non-GAAP earnings per share of $1.80, surpassing analysts' expectations of $1.43. Revenue climbed 9.4% year-over-year to $600.7 million, exceeding the consensus estimate of $592.6 million. The company's healthcare segment, which includes its flagship pulse oximetry products, saw revenue growth of 8.7% on a constant currency basis, fueled by strong demand for consumables and services.

For the full year 2025, Masimo provided an upbeat outlook, projecting healthcare revenue growth of 8% to 11% on a constant currency basis, with non-GAAP earnings per share in the range of $5.10 to $5.40. These projections surpassed analysts' expectations, reflecting the company's confidence in its strategic initiatives and operational efficiencies.

According to news reports, Masimo's strong performance can be attributed to several factors:

Healthcare Segment Strength: The company's healthcare segment, which includes its flagship pulse oximetry products, has been a key driver of growth. Masimo's innovative technologies, such as Measure-through Motion and Low Perfusion pulse oximetry, have gained widespread adoption in hospitals and healthcare facilities worldwide. The increasing demand for these products, coupled with the company's focus on expanding its market presence, has contributed to the segment's robust performance.

Operational Efficiencies: Masimo has implemented various initiatives to streamline operations and improve cost structure. These include transitioning sensor manufacturing to Malaysia and strategic cost-cutting measures in the non-healthcare segment. These efforts have supported profitability and margin expansion, enhancing the company's overall financial performance.

Strategic Realignment: In the fourth quarter, Masimo announced plans to divest its non-healthcare consumer audio business, allowing it to focus exclusively on its core healthcare operations. This strategic realignment is expected to further optimize the company's resources and improve operational efficiency, driving long-term growth and profitability.