Masimo Tops EPS, Revenue Expectations

Masimo (NASDAQ:MASI), a provider of noninvasive patient monitoring technology, released its fourth-quarter earnings for 2024, on Feb. 25, 2025. The results presented a mixed picture: strong performance was seen in its core healthcare segment, with revenue reaching $601 million, surpassing analyst expectations of $592 million. The company's non-GAAP earnings per share (EPS) were also noteworthy at $1.80, outstripping both the analyst forecast of $1.43 and management's guidance of $1.35 to $1.50. However, non-healthcare operations continued to struggle, overshadowed by past strategic decisions and accompanying impairment charges.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in 2024-11-05 earnings report.

About Masimo: Focus on Innovation and Strategic Realignment

Masimo is positioned at the forefront of noninvasive monitoring technologies, notably with its SET and rainbow SET Pulse CO-Oximetry systems. These innovations enhance patient care by providing more accurate measurements compared to traditional devices. Masimo leverages partnerships with original equipment manufacturers (OEMs) to widely deploy its technologies across healthcare institutions. However, it is also realigning its strategies, particularly focusing on core businesses following its acquisition of Sound United.

In recent years, Masimo aimed to expand into the consumer market— a move bolstered by its acquisition of Sound United, which also resulted in significant financial strains. Strategic pivots under new leadership now aim to redirect resources toward healthcare, with an emphasis on deriving value from technological innovations and strategic partnerships. Ultimately, these factors significantly impact the company’s operations and long-term growth opportunities in healthcare and consumer markets.

Quarterly Performance and Strategic Developments

Masimo's fourth-quarter revenue grew by 9% year-over-year to $601 million, supported by an 8% increase in healthcare revenue to $368 million, staying within management's expectations of $363 million to $373 million. Non-healthcare revenue also grew, albeit amid ongoing strategic adjustments, by 11% to $232 million. The healthcare operations contributed significantly to the company’s non-GAAP EPS of $1.80, exceeding the analyst and management estimates.

However, the company's profitability was affected by a $304 million impairment charge related to the acquisition of Sound United, which contributed to a GAAP net loss.

A notable shift occurred with the appointment of CEO Katie Szyman, who is steering the company back toward its core healthcare business. The CEO transition accompanies a strategic focus shift, moving away from consumer electronics and concentrating on healthcare products that leverage its advanced technologies.

The quarter also saw efficient resource allocation as Masimo continued to defend its technological innovations against competitive pressures from giants like Apple.

Guidance and Future Outlook

Looking into 2025, Masimo is cautiously optimistic. It has set fiscal year projections for healthcare revenue from $1,500 million to $1,530 million, with non-GAAP EPS expectations of $5.10 to $5.40.

The company is undergoing a strategic review of the Sound United business. Such actions signal a concentrated push to strengthen profitability and shareholder value through a focus on core operations. Investors should observe Masimo’s response to competitive challenges and its use of strategic realignments to influence long-term outcomes and market position.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 905% — a market-crushing outperformance compared to 174% for the S&P 500.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

Learn more »

*Stock Advisor returns as of February 24, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Apple and Masimo. The Motley Fool has a disclosure policy.