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Masimo (MASI) Q4 Earnings Surpass Estimates, Margins Down
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Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of $1.32 in the fourth quarter of 2022, up 9.1% year over year. The figure surpassed the Zacks Consensus Estimate by 12.8%.
The adjustments include acquisition, integration and related costs, and acquired intangible asset amortization expenses, among others.
Our projection of adjusted EPS was $1.15.
GAAP EPS for the quarter was 76 cents, down by 35.6% from the year-earlier figure.
Full-year adjusted EPS was $4.59, up 15% from the end of the comparable 2021 period. The figure surpassed the Zacks Consensus Estimate by 3.4%.
Our projection of full-year adjusted EPS was $4.43.
Revenues in Detail
Masimo registered revenues of $617 million in the fourth quarter, up 88.3% year over year on a reported basis. The figure surpassed the Zacks Consensus Estimate by 2.7%.
At the constant exchange rate (CER), fourth-quarter revenues improved 9%.
The fourth-quarter revenue compares to our estimate of $597 million.
The year-over-year uptick in revenues was primarily driven by strength in its healthcare business.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, were 78,800 in the fourth quarter of 2022.
Full-year revenues were $2.04 billion, reflecting a 64.3% surge from the comparable 2021 period. The figure surpassed the Zacks Consensus Estimate by 0.9%.
At CER, full-year revenues improved 11%.
Our projection of full-year revenues was $2.02 billion, which was in line with the Zacks Consensus Estimate.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the fourth quarter were $351.9 million, representing growth of 7.4% on a reported basis and 10.1% at CER.
This compares to our projection of $347.7 million of Healthcare revenues in the fourth quarter.
Non-healthcare revenues in the fourth quarter were $265.1 million. This compares to our projection of $249.3 million of Non-healthcare revenues in the fourth quarter.
Masimo Corporation Price, Consensus and EPS Surprise
In the quarter under review, Masimo’s gross profit rose 45.8% to $313.3 million. Gross margin contracted a huge 1482 basis points (bps) to 50.8%.
We had projected 50.7% of gross margin for the fourth quarter.
Selling, general & administrative expenses jumped 78.2% to $185.5 million. Research and development expenses went up 62.6% year over year to $54.3 million. Total adjusted operating expenses of $239.8 million increased 74.4% year over year.
Total adjusted operating profit amounted to $73.5 million, reflecting a 5% decline from the prior-year quarter. The adjusted operating margin in the fourth quarter contracted a huge 1171 bps to 11.9%.
Financial Position
Masimo exited the full-year 2022 with cash and cash equivalents of $202.9 million compared with $745.3 million at the end of 2021. Long-term debt at the end of the full-year 2022 was $941.6 million.
Cumulative net cash flow from operating activities at the end of 2022 was $29.5 million compared with $264.8 million a year ago.
Guidance
Masimo has initiated its full-year 2023 financial outlook and provided projections for the first quarter.
For the full year, total revenues are projected to be in the range of $2,415 million to $2,460 million. The Zacks Consensus Estimate for the metric is currently pegged at $2.37 billion.
Healthcare revenues are expected to lie within $1,450 million to $1,465 million, while Non-healthcare revenues for the year are likely to be within $965 million to $995 million.
Adjusted EPS for 2023 is projected to be within $4.70-$4.80. The Zacks Consensus Estimate for the same is pegged at $4.37.
For the first quarter of 2023, Masimo expects its total revenues in the range of $550 million to $565 million. The Zacks Consensus Estimate for the metric is currently pegged at $553.8 million.
Healthcare revenues are expected to lie within $340 million to $345 million, whereas non-healthcare revenues are likely to be within $210 million to $220 million for the quarter.
Adjusted EPS for the fourth quarter is projected to be within 81-86 cents. The Zacks Consensus Estimate for the same is pegged at 92 cents.
Our Take
Masimo exited the fourth quarter of 2022 with better-than-expected results. The robust uptick in the top line and its healthcare business is encouraging. The company recorded robust order shipments during the reported quarter, which is encouraging. The expansion of the company’s installed base is also impressive.
Masimo has also been deriving benefits from its acquisition of Sound United, owner of iconic brands such as Bowers & Wilkins, Denon and Marantz, raising our optimism. A strong product pipeline, which includes planned launches of Masimo’s next-generation earbuds with adaptive acoustic technology, the Freedom watch with the Android operating system and B1 sleep and fitness bands, are also promising. A slew of favorable studies on Masimo’s products and enhancement to its telehealth capabilities are also promising.
On the flip side, the company continues to operate in an unstable macroeconomic environment, including supply-chain challenges and currency headwinds, which raises our apprehension. The contraction of both margins in the quarter does not bode well. Masimo faces fierce competition from MedTech bigwigs, which is another area of concern.
Zacks Rank & Key Picks
Masimo currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
BD, carrying a Zacks Rank #2 (Buy), reported first-quarter fiscal 2023 adjusted EPS of $2.98, beating the Zacks Consensus Estimate by 11.6%. Revenues of $4.59 billion outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BD has a long-term estimated growth rate of 7.8%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average being 6.5%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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Masimo (MASI) Q4 Earnings Surpass Estimates, Margins Down
Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of $1.32 in the fourth quarter of 2022, up 9.1% year over year. The figure surpassed the Zacks Consensus Estimate by 12.8%.
The adjustments include acquisition, integration and related costs, and acquired intangible asset amortization expenses, among others.
Our projection of adjusted EPS was $1.15.
GAAP EPS for the quarter was 76 cents, down by 35.6% from the year-earlier figure.
Full-year adjusted EPS was $4.59, up 15% from the end of the comparable 2021 period. The figure surpassed the Zacks Consensus Estimate by 3.4%.
Our projection of full-year adjusted EPS was $4.43.
Revenues in Detail
Masimo registered revenues of $617 million in the fourth quarter, up 88.3% year over year on a reported basis. The figure surpassed the Zacks Consensus Estimate by 2.7%.
At the constant exchange rate (CER), fourth-quarter revenues improved 9%.
The fourth-quarter revenue compares to our estimate of $597 million.
The year-over-year uptick in revenues was primarily driven by strength in its healthcare business.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, were 78,800 in the fourth quarter of 2022.
Full-year revenues were $2.04 billion, reflecting a 64.3% surge from the comparable 2021 period. The figure surpassed the Zacks Consensus Estimate by 0.9%.
At CER, full-year revenues improved 11%.
Our projection of full-year revenues was $2.02 billion, which was in line with the Zacks Consensus Estimate.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the fourth quarter were $351.9 million, representing growth of 7.4% on a reported basis and 10.1% at CER.
This compares to our projection of $347.7 million of Healthcare revenues in the fourth quarter.
Non-healthcare revenues in the fourth quarter were $265.1 million. This compares to our projection of $249.3 million of Non-healthcare revenues in the fourth quarter.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote
Margin Analysis
In the quarter under review, Masimo’s gross profit rose 45.8% to $313.3 million. Gross margin contracted a huge 1482 basis points (bps) to 50.8%.
We had projected 50.7% of gross margin for the fourth quarter.
Selling, general & administrative expenses jumped 78.2% to $185.5 million. Research and development expenses went up 62.6% year over year to $54.3 million. Total adjusted operating expenses of $239.8 million increased 74.4% year over year.
Total adjusted operating profit amounted to $73.5 million, reflecting a 5% decline from the prior-year quarter. The adjusted operating margin in the fourth quarter contracted a huge 1171 bps to 11.9%.
Financial Position
Masimo exited the full-year 2022 with cash and cash equivalents of $202.9 million compared with $745.3 million at the end of 2021. Long-term debt at the end of the full-year 2022 was $941.6 million.
Cumulative net cash flow from operating activities at the end of 2022 was $29.5 million compared with $264.8 million a year ago.
Guidance
Masimo has initiated its full-year 2023 financial outlook and provided projections for the first quarter.
For the full year, total revenues are projected to be in the range of $2,415 million to $2,460 million. The Zacks Consensus Estimate for the metric is currently pegged at $2.37 billion.
Healthcare revenues are expected to lie within $1,450 million to $1,465 million, while Non-healthcare revenues for the year are likely to be within $965 million to $995 million.
Adjusted EPS for 2023 is projected to be within $4.70-$4.80. The Zacks Consensus Estimate for the same is pegged at $4.37.
For the first quarter of 2023, Masimo expects its total revenues in the range of $550 million to $565 million. The Zacks Consensus Estimate for the metric is currently pegged at $553.8 million.
Healthcare revenues are expected to lie within $340 million to $345 million, whereas non-healthcare revenues are likely to be within $210 million to $220 million for the quarter.
Adjusted EPS for the fourth quarter is projected to be within 81-86 cents. The Zacks Consensus Estimate for the same is pegged at 92 cents.
Our Take
Masimo exited the fourth quarter of 2022 with better-than-expected results. The robust uptick in the top line and its healthcare business is encouraging. The company recorded robust order shipments during the reported quarter, which is encouraging. The expansion of the company’s installed base is also impressive.
Masimo has also been deriving benefits from its acquisition of Sound United, owner of iconic brands such as Bowers & Wilkins, Denon and Marantz, raising our optimism. A strong product pipeline, which includes planned launches of Masimo’s next-generation earbuds with adaptive acoustic technology, the Freedom watch with the Android operating system and B1 sleep and fitness bands, are also promising. A slew of favorable studies on Masimo’s products and enhancement to its telehealth capabilities are also promising.
On the flip side, the company continues to operate in an unstable macroeconomic environment, including supply-chain challenges and currency headwinds, which raises our apprehension. The contraction of both margins in the quarter does not bode well. Masimo faces fierce competition from MedTech bigwigs, which is another area of concern.
Zacks Rank & Key Picks
Masimo currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
BD, carrying a Zacks Rank #2 (Buy), reported first-quarter fiscal 2023 adjusted EPS of $2.98, beating the Zacks Consensus Estimate by 11.6%. Revenues of $4.59 billion outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BD has a long-term estimated growth rate of 7.8%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average being 6.5%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.