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Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of $1.25 in the fourth quarter of 2023, down 11.9% year over year. The figure beat the Zacks Consensus Estimate by 31.6%.
The adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.
GAAP EPS for the quarter was 63 cents, down 17.1% from the year-earlier figure.
Full-year 2023 adjusted EPS was $3.79, down 22.2% compared with that at the end of the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 14.5%.
Revenues in Detail
Masimo registered revenues of $548.9 million in the fourth quarter, down 11% year over year on a reported basis. The figure beat the Zacks Consensus Estimate by 0.9%.
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 58,500 in the fourth quarter of 2023.
Full-year 2023 revenues were $2.05 billion, reflecting a 14.5% decline from the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 0.5%.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the fourth quarter totaled $339.9 million, indicating a decline of 3.4% on a reported basis and 3.7% at constant exchange rate (CER). This compares to our projection of revenues of $327.7 million in the fourth quarter.
Non-healthcare revenues in the fourth quarter amounted to $209 million, implying a decline of 21.2% on a reported basis and 22.5% at CER. This compares to our projection of revenues of $217.1 million in the fourth quarter.
Masimo Corporation Price, Consensus and EPS Surprise
In the quarter under review, Masimo’s gross profit decreased 16.2% year over year to $262.7 million. The gross margin contracted 293 basis points (bps) to 47.9%.
We had projected 50.9% of gross margin in the fourth quarter of 2023.
Selling, general & administrative expenses decreased 13.9% to $159.8 million. Research and development expenses declined 30% year over year to $38 million. Total adjusted operating expenses of $197.8 million decreased 17.5% on a year-over-year basis.
Total adjusted operating profit was $64.9 million, indicating a decline of 11.7% from the prior-year quarter’s level. The adjusted operating margin in the fourth quarter contracted 9 bps to 11.8%.
Financial Position
Masimo exited 2023 with cash and cash equivalents of $163 million compared with $202.9 million at the end of 2022. Long-term debt at the end of 2023 was $871.7 million compared with $941.6 million at 2022-end.
Cumulative net cash provided by operating activities at the end of 2023 was $94.1 million compared with $29.4 million a year ago.
Guidance
Masimo has provided its outlook for the first quarter and initiated the same for 2024.
For the first quarter, total revenues are projected to be in the range of $476 million-$501 million. The Zacks Consensus Estimate is currently pegged at $508.1 million.
Healthcare revenues are expected to be between $$331 million and $341 million, while Non-healthcare revenues are to be anticipated in the range of $145 million-$160 million.
Adjusted EPS for the first quarter is projected to be in the band of 67-74 cents. The Zacks Consensus Estimate is pegged at 70 cents.
For 2024, total revenues are estimated to be in the range of $2,045 million-$2,165 million. The Zacks Consensus Estimate is currently pegged at $2.09 billion.
For 2024, Healthcare revenues are expected to be in the $1,345 million-$1,385 million range, while Non-healthcare revenues are expected to be in the band of $700 million-$780 million.
Adjusted EPS for 2024 is projected to be in the range of $3.44-$3.60. The Zacks Consensus Estimate is pegged at $3.33.
Our Take
Masimo exited the fourth quarter of 2023 with better-than-expected results. Management confirmed that the company gained from record contract wins in its healthcare business, important FDA clearances for innovative new products and strong growth in its hearables business, which was encouraging.
On the fourth-quarter earnings call, Masimo’s management confirmed that its hospital-at-home initiatives continued to gain traction with healthcare systems. Management also confirmed that the company has three product launches planned for 2024 — Freedom, H1 and the next-generation version of its Root Connectivity platform. These look promising for the stock.
On the flip side, the dismal top-line and bottom-line performances and a decline in both its segmental revenues were disappointing. Rising operating costs leading to the contraction of both margins in the quarter do not bode well. Masimo continued to navigate through challenging macroeconomic conditions, including high interest rates, which weighed on consumer spending. This also raises our apprehension.
Zacks Rank & Other Key Picks
Masimo currently sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. (COR - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted EPS of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cencora has a long-term estimated growth rate of 8.6%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Elevance Health reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently flaunts a Zacks Rank #1.
Cardinal Health has a long-term estimated growth rate of 15.9%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.
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Masimo (MASI) Q4 Earnings Beat Estimates, Margins Decline
Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of $1.25 in the fourth quarter of 2023, down 11.9% year over year. The figure beat the Zacks Consensus Estimate by 31.6%.
The adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.
GAAP EPS for the quarter was 63 cents, down 17.1% from the year-earlier figure.
Full-year 2023 adjusted EPS was $3.79, down 22.2% compared with that at the end of the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 14.5%.
Revenues in Detail
Masimo registered revenues of $548.9 million in the fourth quarter, down 11% year over year on a reported basis. The figure beat the Zacks Consensus Estimate by 0.9%.
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 58,500 in the fourth quarter of 2023.
Full-year 2023 revenues were $2.05 billion, reflecting a 14.5% decline from the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 0.5%.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the fourth quarter totaled $339.9 million, indicating a decline of 3.4% on a reported basis and 3.7% at constant exchange rate (CER). This compares to our projection of revenues of $327.7 million in the fourth quarter.
Non-healthcare revenues in the fourth quarter amounted to $209 million, implying a decline of 21.2% on a reported basis and 22.5% at CER. This compares to our projection of revenues of $217.1 million 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 decreased 16.2% year over year to $262.7 million. The gross margin contracted 293 basis points (bps) to 47.9%.
We had projected 50.9% of gross margin in the fourth quarter of 2023.
Selling, general & administrative expenses decreased 13.9% to $159.8 million. Research and development expenses declined 30% year over year to $38 million. Total adjusted operating expenses of $197.8 million decreased 17.5% on a year-over-year basis.
Total adjusted operating profit was $64.9 million, indicating a decline of 11.7% from the prior-year quarter’s level. The adjusted operating margin in the fourth quarter contracted 9 bps to 11.8%.
Financial Position
Masimo exited 2023 with cash and cash equivalents of $163 million compared with $202.9 million at the end of 2022. Long-term debt at the end of 2023 was $871.7 million compared with $941.6 million at 2022-end.
Cumulative net cash provided by operating activities at the end of 2023 was $94.1 million compared with $29.4 million a year ago.
Guidance
Masimo has provided its outlook for the first quarter and initiated the same for 2024.
For the first quarter, total revenues are projected to be in the range of $476 million-$501 million. The Zacks Consensus Estimate is currently pegged at $508.1 million.
Healthcare revenues are expected to be between $$331 million and $341 million, while Non-healthcare revenues are to be anticipated in the range of $145 million-$160 million.
Adjusted EPS for the first quarter is projected to be in the band of 67-74 cents. The Zacks Consensus Estimate is pegged at 70 cents.
For 2024, total revenues are estimated to be in the range of $2,045 million-$2,165 million. The Zacks Consensus Estimate is currently pegged at $2.09 billion.
For 2024, Healthcare revenues are expected to be in the $1,345 million-$1,385 million range, while Non-healthcare revenues are expected to be in the band of $700 million-$780 million.
Adjusted EPS for 2024 is projected to be in the range of $3.44-$3.60. The Zacks Consensus Estimate is pegged at $3.33.
Our Take
Masimo exited the fourth quarter of 2023 with better-than-expected results. Management confirmed that the company gained from record contract wins in its healthcare business, important FDA clearances for innovative new products and strong growth in its hearables business, which was encouraging.
On the fourth-quarter earnings call, Masimo’s management confirmed that its hospital-at-home initiatives continued to gain traction with healthcare systems. Management also confirmed that the company has three product launches planned for 2024 — Freedom, H1 and the next-generation version of its Root Connectivity platform. These look promising for the stock.
On the flip side, the dismal top-line and bottom-line performances and a decline in both its segmental revenues were disappointing. Rising operating costs leading to the contraction of both margins in the quarter do not bode well. Masimo continued to navigate through challenging macroeconomic conditions, including high interest rates, which weighed on consumer spending. This also raises our apprehension.
Zacks Rank & Other Key Picks
Masimo currently sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. (COR - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted EPS of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cencora has a long-term estimated growth rate of 8.6%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Elevance Health reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently flaunts a Zacks Rank #1.
Cardinal Health has a long-term estimated growth rate of 15.9%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.