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Masimo (MASI) Q3 Earnings Beat Estimates, Margins Fall
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Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 63 cents in the third quarter of 2023, down 37% year over year. The figure beat the Zacks Consensus Estimate by 6.78%.
uThe adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.
GAAP EPS for the quarter was 20 cents, down 71.4% from the year-earlier figure.
Revenues in Detail
Masimo registered revenues of $478.9 million in the third quarter, down 12.8% year over year on a reported basis. The figure missed the Zacks Consensus Estimate by 4.67%.
The year-over-year decline in the top line primarily resulted from lower revenues from the company’s healthcare and non-healthcare segments.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 63,100 in the third quarter of 2023.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the third quarter totaled $307.8 million, indicating a decline of 5.9% on a reported basis and 6.1% at constant exchange rate (CER).
Non-healthcare revenues in the third quarter amounted to $171.1 million, implying a decline of 23% on a reported basis and 23.6% at CER.
Margin Analysis
In the quarter under review, Masimo’s gross profit decreased 16.9% year over year to $234.8 million. The gross margin contracted 240 basis points (bps) to 49%.
Selling, general & administrative expenses decreased 10.6% to $156.1 million. Research and development expenses declined 12.4% year over year to $46.5 million. Total operating expenses of $209.6 million decreased 7.9% on a year-over-year basis.
Total operating profit was $25.2 million, indicating a decline of 54% from the prior-year quarter’s level. The operating margin in the third quarter contracted 480 bps to 5.2%.
Financial Position
Masimo exited third-quarter 2023 with cash and cash equivalents of $124.4 million compared with $150.7 million at the end of the second quarter. Long-term debt at the end of third-quarter 2023 was $910.1 million compared with $888.8 million in the previous quarter.
Cumulative net cash flow from operating activities at the end of third-quarter 2023 was $27 million compared with $36 million a year ago.
Guidance
Masimo has provided its outlook for the fourth quarter and revised the same for 2023.
For the fourth quarter, total revenues are projected to be in the range of $526-$576 million. The Zacks Consensus Estimate for the same is currently pegged at $622.64 million.
Healthcare revenues are expected to be between $320 million and $345 million (indicating a decline of 2-9% on both reported basis and at CER), while Non-healthcare revenues are anticipated in the range of $206-$231 million.
Adjusted EPS for the fourth quarter is projected to be in the band of 74-94 cents. The Zacks Consensus Estimate for the same is pegged at $1.36.
For the full year, total revenues are now estimated to be in the range of $2,025-$2,075 million, down from the previous band of $2,100-$2,200 million. The Zacks Consensus Estimate for the same is currently pegged at $2.15 billion.
Healthcare revenues are now expected to be in the $1,255-$1,280 million range (implying a decline of 4-6% on both reported basis and at CER), down from the previous guidance of $1,300-$1,350 million.
Non-healthcare revenues for the year are now expected to be in the band of $770-$795 million compared with the previous guided range of $800-$850 million.
Adjusted EPS for 2023 is now projected in the $2.85-$3.05 range, down from the previously estimated band of $3.35-$3.55. The Zacks Consensus Estimate for the same is pegged at $3.45.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo exited the third quarter of 2023 with better-than-expected revenues. The expansion of the company’s installed base was impressive. Management confirmed that the company gained new hospital customers during the quarter, which was encouraging.
On the flip side, lower-than-expected top and bottom-line projections were disappointing. The decline in its Healthcare and Non-healthcare segmental revenues was worrying. The contraction of both margins in the quarter raises concern.
Zacks Rank & Stocks to Consider
Masimo currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , DexCom (DXCM - Free Report) and Integer Holdings (ITGR - Free Report) .
Revenues of $10.14 billion outpaced the consensus mark by 3.6%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.76%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, which beat the Zacks Consensus Estimate by 47.1%. Revenues of $975 million beat the Zacks Consensus Estimate by 4%. The company currently carries a Zacks Rank #2.
DXCM has a long-term estimated growth rate of 33.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.43%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27 and revenues of $405 million, which beat their respective Zacks Consensus Estimate by 21% and 8.7%. It currently carries a Zacks Rank #2.
ITGR has a long-term estimated growth rate of 15.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.98%.
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Masimo (MASI) Q3 Earnings Beat Estimates, Margins Fall
Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 63 cents in the third quarter of 2023, down 37% year over year. The figure beat the Zacks Consensus Estimate by 6.78%.
uThe adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.
GAAP EPS for the quarter was 20 cents, down 71.4% from the year-earlier figure.
Revenues in Detail
Masimo registered revenues of $478.9 million in the third quarter, down 12.8% year over year on a reported basis. The figure missed the Zacks Consensus Estimate by 4.67%.
The year-over-year decline in the top line primarily resulted from lower revenues from the company’s healthcare and non-healthcare segments.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 63,100 in the third quarter of 2023.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the third quarter totaled $307.8 million, indicating a decline of 5.9% on a reported basis and 6.1% at constant exchange rate (CER).
Non-healthcare revenues in the third quarter amounted to $171.1 million, implying a decline of 23% on a reported basis and 23.6% at CER.
Margin Analysis
In the quarter under review, Masimo’s gross profit decreased 16.9% year over year to $234.8 million. The gross margin contracted 240 basis points (bps) to 49%.
Selling, general & administrative expenses decreased 10.6% to $156.1 million. Research and development expenses declined 12.4% year over year to $46.5 million. Total operating expenses of $209.6 million decreased 7.9% on a year-over-year basis.
Total operating profit was $25.2 million, indicating a decline of 54% from the prior-year quarter’s level. The operating margin in the third quarter contracted 480 bps to 5.2%.
Financial Position
Masimo exited third-quarter 2023 with cash and cash equivalents of $124.4 million compared with $150.7 million at the end of the second quarter. Long-term debt at the end of third-quarter 2023 was $910.1 million compared with $888.8 million in the previous quarter.
Cumulative net cash flow from operating activities at the end of third-quarter 2023 was $27 million compared with $36 million a year ago.
Guidance
Masimo has provided its outlook for the fourth quarter and revised the same for 2023.
For the fourth quarter, total revenues are projected to be in the range of $526-$576 million. The Zacks Consensus Estimate for the same is currently pegged at $622.64 million.
Healthcare revenues are expected to be between $320 million and $345 million (indicating a decline of 2-9% on both reported basis and at CER), while Non-healthcare revenues are anticipated in the range of $206-$231 million.
Adjusted EPS for the fourth quarter is projected to be in the band of 74-94 cents. The Zacks Consensus Estimate for the same is pegged at $1.36.
For the full year, total revenues are now estimated to be in the range of $2,025-$2,075 million, down from the previous band of $2,100-$2,200 million. The Zacks Consensus Estimate for the same is currently pegged at $2.15 billion.
Healthcare revenues are now expected to be in the $1,255-$1,280 million range (implying a decline of 4-6% on both reported basis and at CER), down from the previous guidance of $1,300-$1,350 million.
Non-healthcare revenues for the year are now expected to be in the band of $770-$795 million compared with the previous guided range of $800-$850 million.
Adjusted EPS for 2023 is now projected in the $2.85-$3.05 range, down from the previously estimated band of $3.35-$3.55. The Zacks Consensus Estimate for the same is pegged at $3.45.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote
Our Take
Masimo exited the third quarter of 2023 with better-than-expected revenues. The expansion of the company’s installed base was impressive. Management confirmed that the company gained new hospital customers during the quarter, which was encouraging.
On the flip side, lower-than-expected top and bottom-line projections were disappointing. The decline in its Healthcare and Non-healthcare segmental revenues was worrying. The contraction of both margins in the quarter raises concern.
Zacks Rank & Stocks to Consider
Masimo currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , DexCom (DXCM - Free Report) and Integer Holdings (ITGR - Free Report) .
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported third-quarter 2023 adjusted EPS of $1.14, which beat the Zacks Consensus Estimate by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues of $10.14 billion outpaced the consensus mark by 3.6%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.76%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, which beat the Zacks Consensus Estimate by 47.1%. Revenues of $975 million beat the Zacks Consensus Estimate by 4%. The company currently carries a Zacks Rank #2.
DXCM has a long-term estimated growth rate of 33.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.43%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27 and revenues of $405 million, which beat their respective Zacks Consensus Estimate by 21% and 8.7%. It currently carries a Zacks Rank #2.
ITGR has a long-term estimated growth rate of 15.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.98%.