Masimo(MASI) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results and Outlook CEO Commentary Masimo's CEO reported strong Q2 results driven by core healthcare growth, market share expansion, and effective tariff mitigation - Delivered strong results in Q2 2025, with core healthcare business demonstrating strong growth and earnings[3] - Focused on building a leading position in pulse oximetry, increasing market share in global markets, and driving commercial excellence[3] - Successfully implemented tariff mitigation measures, reducing the tariff impact by 50% compared to original estimates[3] Second Quarter 2025 Results from Continuing Operations Masimo reported strong financial performance for Q2 2025, with GAAP revenue growing 8% and Non-GAAP EPS increasing 46% year-over-year Second Quarter 2025 Key Financial Results (Continuing Operations) | Metric | Q2 2025 Value | Q2 2024 Value | YoY Growth | Source Chunk | | :--------------------------------- | :------------ | :------------ | :--------- | :----------- | | GAAP Revenue | $371 million | $343.9 million | 8% | 6, 27 | | Non-GAAP Revenue (Constant Currency) | $370 million | $343.9 million | 7% | 6, 27 | | GAAP Net Income per Diluted Share | $0.82 | $0.46 | 78.26% | 6, 28 | | Non-GAAP Net Income per Diluted Share | $1.33 | $0.91 | 46% | 6, 28 | 2025 Outlook for Continuing Operations Masimo updated its full-year 2025 guidance for continuing operations, anticipating strong revenue growth and healthy profitability Full-Year 2025 Guidance for Continuing Operations (Non-GAAP) | Metric | Excluding Tariff Impact (Low) | Excluding Tariff Impact (High) | Including Tariff Impact (Low) | Including Tariff Impact (High) | Source Chunk | | :--------------------------------- | :---------------------------- | :----------------------------- | :---------------------------- | :----------------------------- | :----------- | | Revenue | $1,505 million | $1,535 million | N/A | N/A | 4, 30 | | Revenue Growth (Constant Currency) | 8% | 11% | N/A | N/A | 4, 30 | | Operating Profit | $425 million | $440 million | $406 million | $422 million | 7 | | Operating Margin | 28.3% | 28.7% | 27.0% | 27.5% | 7 | | Earnings per Diluted Share | $5.45 | $5.70 | $5.20 | $5.45 | 7 | Non-GAAP Financial Measures Explanation Purpose and Limitations of Non-GAAP Measures Non-GAAP measures supplement GAAP for period-to-period comparison by excluding non-ongoing items, but have limitations and are not substitutes for GAAP - Non-GAAP measures supplement GAAP, assisting investors in period-to-period operating result comparisons by excluding non-ongoing performance items[10][12] - Limitations include not reflecting all GAAP-determined costs and not being a substitute for GAAP financial performance measures[11] Details of Non-GAAP Adjustments Constant Currency Revenue Adjustments This adjustment removes the impact of foreign currency exchange rate fluctuations on revenue, allowing for a more consistent evaluation of underlying revenue growth rates - Adjusts for foreign currency fluctuations to provide a consistent evaluation of revenue growth rates[13] Acquired Tangible Asset Amortization This adjustment excludes amortization expenses related to tangible assets acquired through business or asset acquisitions, including asset valuation step-ups - Excludes amortization expense from acquired tangible assets and asset valuation step-ups[14] Business Transition and Related Costs This adjustment removes gains, losses, and other costs associated with business transition plans, which are not indicative of ongoing operations - Excludes gains, losses, and costs related to business transition plans (e.g., severance, relocation, asset impairment)[15] Acquired Intangible Asset Amortization This adjustment excludes amortization expenses from acquired intangible assets, including customer relationships, intellectual property, and trade names - Excludes amortization expense from acquired intangible assets like customer relationships, intellectual property, and trade names[16] Acquisitions, Integrations, Divestitures, and Related Costs This adjustment accounts for gains, losses, and other costs associated with acquisitions, integrations, investments, divestitures, and asset impairments - Excludes gains, losses, and costs related to M&A activities, investments, divestitures, and asset impairments[17] Litigation Related Expenses and Settlements This adjustment excludes gains, losses, and costs from specific litigation matters, notably all Apple litigation expenses, to improve period-to-period comparability - Excludes gains, losses, and costs from certain litigation matters, including all Apple litigation expenses (federal, PTO, ITC proceedings)[18] - Apple litigation expenses are deemed unique and not indicative of ongoing operating performance, facilitating better period-to-period comparisons[18] Other Adjustments This category includes other gains, losses, and adjustments that impact period-to-period comparability and do not represent the underlying ongoing results of the business - Excludes gains, losses, and other adjustments that impact period-to-period comparability and do not represent ongoing business results[19] Realized and Unrealized Gains or Losses This adjustment excludes highly variable and unpredictable gains, losses, and related costs from foreign currency denominated transactions and investments - Excludes highly variable and unpredictable realized/unrealized gains or losses from foreign currency transactions and investments[20] Financing Related Adjustments This adjustment excludes certain financing-related costs not indicative of ongoing cash flow generation and reflects the anti-dilutive impact of instruments for non-GAAP EPS - Excludes financing costs not indicative of ongoing cash flow generation[21] - Reflects anti-dilutive impact of instruments in non-GAAP EPS for better per-share performance evaluation[21] Tax Impact of Non-GAAP Adjustments This adjustment modifies non-GAAP earnings to reflect the approximate tax effect of all other non-GAAP adjustments, ensuring a comprehensive view of adjusted financial performance - Adjusts non-GAAP earnings by the approximate tax impact of all other non-GAAP adjustments[22] Excess Tax Benefits from Stock-Based Compensation Expense This adjustment excludes highly variable excess tax benefits recognized from stock-based compensation expense to improve comparability between periods and with peers - Excludes highly variable excess tax benefits from stock-based compensation expense to enhance comparability[23] Forward-Looking Non-GAAP Financial Measures Quantitative reconciliations for forward-looking non-GAAP measures are not provided due to unreasonable efforts and to avoid implying misleading precision - Quantitative reconciliations for forward-looking non-GAAP measures are not provided due to unreasonable efforts[24] - Excluded items (e.g., acquisition charges, litigation expenses) are difficult to predict, and providing reconciliations could imply misleading precision[24] Consolidated Financial Statements GAAP to Non-GAAP Financial Measures Reconciliation This section details GAAP to Non-GAAP reconciliations for Q2 2025 and 2024 revenue and net income, plus full-year 2025 revenue guidance Q2 2025 Revenue Reconciliation (in millions) | Metric | June 28, 2025 | June 29, 2024 | Source Chunk | | :--------------------------------- | :------------ | :------------ | :----------- | | GAAP revenue | $370.9 | $343.9 | 27 | | Business transition and related costs | (0.6) | N/A | 27 | | Non-GAAP revenue | $370.3 | $343.9 | 27 | | Constant currency revenue adjustments | (0.8) | N/A | 27 | | Non-GAAP constant currency revenue | $369.4 | $343.9 | 27 | | GAAP revenue growth percentage | 7.9% | N/A | 27 | | Non-GAAP constant currency revenue growth percentage | 7.4% | N/A | 27 | Q2 2025 Net Income Reconciliation (in millions, except per diluted share) | Metric | June 28, 2025 (Total) | June 28, 2025 (Per Diluted Share) | June 29, 2024 (Total) | June 29, 2024 (Per Diluted Share) | Source Chunk | | :--------------------------------- | :-------------------- | :-------------------------------- | :-------------------- | :-------------------------------- | :----------- | | GAAP net income from continuing operations | $44.9 | $0.82 | $24.8 | $0.46 | 28 | | Acquired intangible asset amortization | 0.8 | 0.02 | 1.1 | 0.02 | 28 | | Acquisitions, integrations, divestitures, and related costs | 7.2 | 0.13 | 6.1 | 0.11 | 28 | | Business transition and related costs | 0.8 | 0.01 | 7.2 | 0.13 | 28 | | Litigation related expenses, settlements and awards | 24.1 | 0.44 | 17.2 | 0.32 | 28 | | Other adjustments | 4.5 | 0.08 | 0.3 | 0.01 | 28 | | Realized and unrealized gains or losses | 1.6 | 0.03 | 1.7 | 0.03 | 28 | | Financing related adjustments | 0.5 | 0.01 | 0.5 | 0.01 | 28 | | Tax impact of non-GAAP adjustments | (9.7) | (0.18) | (7.6) | (0.14) | 28 | | Excess tax benefits from stock-based compensation | (1.6) | (0.03) | (2.0) | (0.04) | 28 | | Total non-GAAP adjustments | 28.1 | 0.51 | 24.4 | 0.45 | 28 | | Non-GAAP net income from continuing operations | $73.1 | $1.33 | $49.2 | $0.91 | 28 | Full-Year 2025 Revenue Guidance Reconciliation (in millions) | Metric | Low Guidance | High Guidance | Full-Year 2024 Actual | Source Chunk | | :--------------------------------- | :----------- | :------------ | :-------------------- | :----------- | | GAAP revenue | $1,507 | $1,537 | $1,395 | 30 | | Business transition and related costs | (2) | (2) | — | 30 | | Non-GAAP revenue | $1,505 | $1,535 | $1,395 | 30 | | Constant currency revenue adjustments | 8 | 8 | N/A | 30 | | Non-GAAP constant currency revenue | $1,513 | $1,543 | $1,395 | 30 | | GAAP revenue growth percentage | 8% | 10% | N/A | 30 | | Non-GAAP constant currency revenue growth percentage | 8% | 11% | N/A | 30 | Condensed Consolidated Balance Sheets Masimo's condensed consolidated balance sheet shows a decrease in total assets and liabilities, with relatively stable stockholders' equity, from December 2024 to June 2025 Key Balance Sheet Data (in millions) | Metric | June 28, 2025 | December 28, 2024 | Change | Source Chunk | | :-------------------------- | :------------ | :---------------- | :----- | :----------- | | Total assets | $2,402.6 | $2,625.7 | $(223.1) | 32 | | Total liabilities | $1,359.8 | $1,573.8 | $(214.0) | 32 | | Total stockholders' equity | $1,042.8 | $1,051.9 | $(9.1) | 32 | | Cash and cash equivalents | $149.6 | $123.6 | $26.0 | 32 | | Inventories | $318.5 | $294.8 | $23.7 | 32 | | Long-term debt | $598.7 | $714.3 | $(115.6) | 32 | Condensed Consolidated Statements of Operations For Q2 2025, Masimo reported increased total revenue, gross profit, operating income, net income, and diluted EPS compared to the prior year Key Income Statement Data (in millions, except per share amounts) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | Source Chunk | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------- | | Total revenue | $370.9 | $343.9 | $742.9 | $683.5 | 34 | | Cost of goods sold | $137.6 | $136.6 | $275.6 | $269.6 | 34 | | Gross profit | $233.3 | $207.3 | $467.3 | $413.9 | 34 | | Operating income | $64.5 | $41.9 | $142.5 | $95.1 | 34 | | Net income from continuing operations, net of tax | $44.9 | $24.8 | $92.1 | $56.9 | 34 | | Diluted income per share - continuing operations | $0.82 | $0.46 | $1.68 | $1.05 | 34 | Condensed Consolidated Statements of Cash Flows For the six months ended June 28, 2025, Masimo generated $100.5 million in operating cash flow, with improved investing activities and a net cash outflow from financing Key Cash Flow Data (in millions) | Metric | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | Source Chunk | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net cash provided by (used in) operating activities | $100.5 | $120.3 | 36 | | Net cash provided by (used in) investing activities | $1.5 | $(21.2) | 36 | | Net cash provided by (used in) financing activities | $(87.7) | $(117.5) | 38 | | Net increase in cash, cash equivalents and restricted cash | $15.7 | $(32.6) | 38 | | Cash, cash equivalents and restricted cash at end of period | $197.1 | $135.6 | 38 | Additional Company Information About Masimo Masimo is a global medical technology company dedicated to improving patient outcomes and reducing care costs through innovative monitoring technologies - Masimo is a global medical technology company focused on developing industry-leading monitoring technologies[40] - Mission: improve life, patient outcomes, reduce cost of care, and expand noninvasive monitoring applications[40] - Masimo SET® pulse oximetry is a leading technology, used on over 200 million patients annually and in all top 10 U.S. hospitals[40] Conference Call and Website Information Masimo held its Q2 2025 investor conference call on August 5, 2025, with webcast replay and investor presentation available online - Q2 2025 investor conference call held on August 5, 2025[8] - Webcast replay and investor presentation available on Masimo's Investor Relations website (https://investor.masimo.com)[8](index=8&type=chunk)[9] Forward-Looking Statements Forward-looking statements are based on current expectations, subject to uncertainties and risks that may cause actual results to differ materially - All statements about future activities, events, or developments are forward-looking and based on management's current expectations and beliefs[25] - Subject to uncertainties and factors (e.g., intellectual property, competition, regulatory approval, tariffs, litigation) that could cause actual results to differ materially[25] - Readers are cautioned not to place undue reliance on these statements, and the company does not undertake to update them[25] Investor and Media Contacts Contact information is provided for investor relations and media inquiries, including specific contacts for Masimo and an external media relations partner - Investor Contact: Eli Kammerman (ekammerman@masimo.com, 949-297-7077)[41] - Media Contact: Evan Lamb (elamb@masimo.com, 949-396-3376) and Longacre Square Partners (masimo@longacresquare.com)[41]