Masimo Corporation, a global leader in non-invasive monitoring technologies, announced on March 22, 2024, that its Board of directors had authorized management to evaluate a proposed separation of its Consumer Business. The Consumer Business (Spin-Off) will include Masimo’s consumer audio and consumer health products, such as the Stork baby monitor and the Freedom smartwatch and band. The company is considering strategic alternatives like a spin-off, Joint Venture, or merger of the Consumer business to accelerate the distribution of its expanding portfolio of consumer-facing healthcare products. The separation may be completed in 2025 or beyond, subject to due diligence and regulatory approvals.
Following the acquisition of Sound United in April 2022, Masimo’s consumer business faced challenges due to a fall in demand for consumer audio products and lower consumer discretionary purchases. Activist investor Politan Capital Management disclosed an 8.9% ownership stake in Masimo and sued the company for mismanagement. Politan secured two seats on the Masimo Board with plans to push for changes. The spin-off of the less-profitable consumer business is expected to improve the profitability of Masimo’s healthcare business, allowing the company to focus on its growing business with better margins.
Amidst the tussle between Masimo and Politan Capital, Politan supported the strategic review for the separation of the Consumer Business but expressed concerns about governance and IP arrangements. Masimo assured that the Board is fully involved in evaluating the separation and responsible for approving it. The company and Politan have sparred over potential poor corporate governance in the spin-off. Masimo filed a lawsuit against Apple in January 2020 for patent infringement related to pulse oximeter devices in the Apple Watch. After a legal battle, the ITC found Apple’s Series 9 and Ultra 2 watches infringed some of Masimo’s patents, resulting in a limited exclusion order banning their import into the US.
For FY24, Masimo anticipates total revenue of $2.05 billion to $2.17 billion, with Healthcare revenue of $1.35 billion to $1.39 billion and Non-Healthcare revenue of $700 million to $780 million. The company expects an adjusted gross margin of around 52% and adjusted earnings per share of $3.44 to $3.60. In the first quarter of 2024, Masimo predicts total revenue of $476 million to $501 million, with Healthcare revenue of $331 million to $341 million and Non-Healthcare revenue of $145 million to $160 million. The company also expects an adjusted gross margin of around 52% and adjusted earnings per share of $0.67 to $0.74.
Masimo Corporation is a global leader in patient monitoring technologies, automation, and connectivity solutions. The Healthcare segment offers non-invasive monitoring technologies and hospital automation solutions, while the Non-healthcare segment includes home sound integration technologies and in-vehicle audio systems. The company reported total revenue of approximately $2.0 billion in FY23. The Consumer Business (Spin-Off) will include the non-healthcare portfolio acquired with Sound United, as well as the Stork baby monitor, the Freedom smartwatch, and band from its healthcare portfolio. The new entity is expected to generate additional sales through consumer products and licensee agreements.
