Masimo (MASI) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. Since a changing e ...

Masimo Corporation (MASI) delivered adjusted earnings per share (EPS) of 86 cents in the second quarter of 2024, up 13.2% year over year. The figure beat the Zacks Consensus Estimate by 11.7%. The adjustments include acquired intangible asset amortization, and acquisitions, integrations, divestitures, and related costs, among others. GAAP EPS for the quarter was 29 cents, flat year over year. Revenues in Detail Masimo registered revenues of $496.3 million in the second quarter, up 9% year over year on a rep ...

Financial Data and Key Metrics - Healthcare revenues for Q2 2024 were $344 million, representing 23% growth YoY [9] - Consumable and service revenues grew 29%, while capital and other revenues declined 9% [9] - Non-healthcare revenues were $152 million, an 11% decline YoY [11] - Consolidated non-GAAP gross margin was 54%, with healthcare gross margins at 62.5% and non-healthcare at 35% [11] - Non-GAAP operating profit was $73 million, with an operating margin of 15% [12] - Non-GAAP EPS for Q2 was $0.86, a 13% increase YoY [12] - Operating cash flow was $75 million, and $93 million of debt was paid down, reducing outstanding debt to $782 million [12] Business Line Performance - Pulse oximetry consumables grew 35%, capnography consumables grew 35%, and brain monitoring consumables grew 19% [9] - Rainbow consumable revenues declined 5% due to timing of shipments outside the US, but double-digit growth is expected for the full year [9] - Driver shipments for Q2 were 59,000, above expectations, with steady increases anticipated for the remainder of the year [10] - Non-healthcare revenues were impacted by a weakening luxury consumer market and a slow housing market [11] Market Performance - Strong hospital conversions contributed to $134 million in incremental value for Q2, a 28% increase YoY [6][10] - Unrecognized contract revenues reached $1.6 billion at the end of Q2, a 16% increase [10] - Hospital census growth and increased admissions are driving demand for Masimo sensors [6][9] Strategic Direction and Industry Competition - The company is evaluating the separation of its consumer business, with potential options including a JV, sale, or spinoff [8][16] - The separation aims to maximize shareholder value and achieve long-term goals, including doubling EPS to $8 in five years [8][17] - The company is focused on expanding its healthcare footprint and improving operational efficiencies, including relocating sensor manufacturing to Malaysia [6][7] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong execution in the healthcare business, driven by hospital conversions and operational efficiencies [6][7] - The company is confident in achieving long-term goals, including 30% operating margins for the healthcare business within five years [7][11] - The consumer business is facing challenges due to economic pressures, but growth is expected in hearables and headphones in Q4 [36] Other Important Information - The company provided preliminary estimates of the financial impact of separating the consumer business, with potential improvements in non-GAAP operating margins by 610 basis points to 21% if the audio business is sold, or by 260 basis points to 24% if combined with the consumer health business [17][18] - The company plans to use proceeds from any separation to pay down debt and reduce interest expenses [18] Q&A Session Summary Question: Sustainability of Core Business Improvements - Management emphasized strong hospital census and backlog as indicators of sustainable growth, with no revenue or margin pull-forward [21][22] Question: JV Partner Situation and Separation Timeline - The company extended exclusivity with a potential JV partner until August 15, with no definitive timeline for a decision [23][24] - The Board is considering all options for separation, including a JV, sale, or spinoff, and will act decisively to maximize shareholder value [25][27] Question: Q3 Revenue Guidance and Trends - Q3 healthcare revenue guidance reflects strong contracting and normalized installations, with cautious optimism on hospital census growth [29][30][31] Question: Oxygen Reserve Index Adoption - Adoption of Oxygen Reserve Index in the US is driving growth in Rainbow consumables, with double-digit growth expected for the full year [32] Question: Consumer Business Outlook - Growth in the consumer business is expected from hearables and headphones, particularly in Q4, despite economic pressures [36] Question: Gross Margin and Cost Reduction Initiatives - The transition of sensor manufacturing to Malaysia is ahead of schedule, with gross margins expected to improve to 63% in Q4 [38][39] - Cost reduction initiatives are focused on product updates and operational efficiencies, contributing to margin expansion [40][42] Question: Driver Shipments and Growth Mix - Driver shipments are expected to increase, with half of the 59,000 drivers shipped in Q2 being new incremental drivers [45][46] - Growth is expected to be driven by a mix of driver base expansion and increased consumable revenue per driver [47] Question: Apple Litigation Update - The company has ongoing litigation with Apple, with trials expected in late 2024 and 2025, potentially broadening injunctions against Apple [49][50] Question: Q4 Guidance and Aggressiveness - Q4 guidance reflects strong growth in healthcare revenues and improved gross margins, with a better tax rate contributing to EPS growth [53][54] Question: Separation Estimates and Assumptions - The company provided updated estimates for the financial impact of separating the consumer business, with consistent assumptions and minor adjustments [66][67] Question: Preference for JV Over Audio Separation - The JV option is preferred due to potential cash proceeds and long-term upside in the consumer health business, despite short-term challenges [70][71]

Masimo (MASI) reported $496.3 million in revenue for the quarter ended June 2024, representing a year-overyear increase of 9%. EPS of $0.86 for the same period compares to $0.62 a year ago. The reported revenue represents a surprise of +0.24% over the Zacks Consensus Estimate of $495.09 million. With the consensus EPS estimate being $0.77, the EPS surprise was +11.69%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expe ...

Masimo (MASI) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.77 per share. This compares to earnings of $0.62 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 11.69%. A quarter ago, it was expected that this medical technology company would post earnings of $0.71 per share when it actually produced earnings of $0.77, delivering a surprise of 8.45%. Over the last four quarters, th ...

Masimo Stork: More Than Just a Watchful Eye Unlike traditional baby monitors, Masimo Stork goes beyond clear video and sound. It utilizes the same FDAcleared SET® Technology that's been trusted in hospital NICUs for over 25 years. This innovative tech monitors your baby's vitals – second by second! Masimo Stork tracks oxygen saturation, pulse rate, and even skin temperature, providing real-time data on your baby's well-being. ORLANDO, Fla., July 27, 2024 (GLOBE NEWSWIRE) -- As you prepare your little one's ...

Over the past year, this Zacks Rank #2 (Buy) company's shares have lost 7.1% against the industry's 6% growth. The S&P 500 has witnessed 17.6% growth in the said time frame. Image Source: Zacks Investment Research Product Portfolio: We are optimistic about Masimo's healthcare business, which develops, manufactures and markets a variety of non-invasive patient monitoring technologies, hospital automation and connectivity solutions, remote monitoring devices and consumer health products. Strong Q1 Results: Ma ...

Reasons Behind the Litigation The company's shares have lost 6.3% year to date against 4.3% growth of the industry. The S&P 500 has increased 16.9% during the same time frame. The conflict between Masimo and Politan has been a protracted one, centered around Politan's efforts to unseat CEO Joe Kiani. Last year, Politan secured two seats on Masimo's board. In a letter dated Jun 26, COO Bilal Muhsin expressed his intention to resign if Koffey and Politan gain control of the company. Nearly 300 Masimo Healthca ...

The unusually sharp report, a copy of which was viewed by CNBC, said shareholders should vote for activist Politan Capital Management's board nominees, Bill Jellison and Darlene Solomon. ISS' paper comes on the heels of an equally trenchant report from advisory peer Glass Lewis, which issued an identical recommendation last week. Kiani, a close confidant of President Biden and the co-founder of the device company, "has demonstrated that he has no regard for public shareholders," ISS wrote in its report, and ...

Joe Kiani, Founder, Chairman & CEO, Masimo; on Startup University Stage on day three of Collision 2024 at the Enercare Centre in Toronto, Canada. Politan is targeting founder Kiani for removal from the board, but the billionaire executive has said that would trigger a $400 million change-in-control package and result in his departure. Glass Lewis did not buy that argument, writing that "Masimo's more alarmist commentary notwithstanding, the current campaign is not about removing or replacing the Company's C ...