Masimo Corporation reported a GAAP earnings per share (EPS) of 18 cents, which was slightly lower than the 20 cents reported in the third quarter of 2023. However, the non-GAAP EPS for the third quarter of 2024 was 98 cents, showing an improvement from the 75 cents achieved in the same period of the prior year.
Total revenues for the quarter were $504.6 million, reflecting a year-over-year increase from $478.9 million in the third quarter of 2023. This was divided into healthcare revenues of $343.3 million and non-healthcare revenues of $161.3 million. These figures highlight Masimo's continued growth, particularly within its healthcare segment, which has been the primary driver of revenue expansion.
Masimo demonstrated stable performance in the third quarter of 2024, with notable improvements in healthcare revenues despite challenges within non-healthcare divisions. The quarterly performance underscores strong momentum within its core healthcare business, especially high-demand monitoring technologies while signaling strategic adjustments to address underperforming areas. This reorientation, coupled with an upward revision in full-year EPS guidance, reflects management’s commitment to bolstering profitability and driving sustainable growth for the future.
Key Business Metrics
Healthcare Segment Revenue
Healthcare segment revenues were $343.3 million, growing 11.5% year over year on a GAAP basis and 11.7% on a constant currency basis, demonstrating resilience and consistent demand. The growth in this segment aligns with Masimo's focus on providing innovative healthcare solutions, with a particular emphasis on patient monitoring systems that cater to hospital and critical care needs.
Operating Income
Masimo reported a GAAP operating income of $30.1 million, up from $25.2 million in the third quarter of 2023. The non-GAAP operating income, excluding costs associated with litigation, acquisitions, and other adjustments, was $80.8 million. This growth reflects improved operational efficiency and effective cost management in core areas, although litigation-related expenses impacted GAAP profitability.
Non-Healthcare Segment Revenues
Revenues from the non-healthcare segment totaled $161.3 million, highlighting challenges within this part of the business. The consumer division, in particular, is undergoing a strategic review as management reallocates resources to higher-growth, healthcare-related initiatives. This segment’s performance has lagged behind the healthcare division, prompting plans for potential restructuring.
Operating Expenses
Key cost components included selling, general, and administrative expenses, which reached $184.8 million, up from $156.1 million in the third quarter of 2023, and research and development expenses at $48.3 million compared to $46.5 million in the previous year. This increase in SG&A costs was driven by continued investments in expanding sales capabilities and strengthening the product portfolio.
Net Income
On a non-GAAP basis, Masimo’s net income was $52.9 million, a significant improvement from $40.5 million in the third quarter of 2023. These non-GAAP results indicate solid core profitability, especially when determining litigation costs and other one-time expenses. The company also incurred a substantial $30.4 million in litigation expenses, notably due to ongoing legal proceedings, which impacted overall GAAP profitability.
Balance Sheet Update (As of Sept. 28, 2024)
Masimo reported cash and cash equivalents totaling $158.5 million, a slight decrease from $163 million as of Dec. 30, 2023.
Total assets rose to $3.1 billion, up from $3 billion.
Long-term debt was reduced to $733.2 million from $871.7 million.
Stockholders’ equity also saw an increase, reaching $1.5 billion compared to $1.4 billion as of Dec. 30, 2023.
Cash Flows
Masimo generated net cash from operating activities of $145.9 million for the first nine months ended Sept. 28, 2024, a significant increase from $17 million in the same period of 2023.
Management Guidance
For the fourth quarter of 2024, Masimo expects consolidated revenues to range between $581 million and $611 million, with healthcare revenues projected to be $363-$373 million and non-healthcare revenues between $218 million and $238 million.
Full-year guidance for 2024 has been adjusted to reflect a consolidated revenue range of $2.075 billion to $2.105 billion. Non-GAAP EPS guidance for the full year has been raised to $3.95-$4.10 from $3.80-$4.00, reflecting confidence in the company’s ongoing healthcare initiatives and improved margins.
Other Developments
During the third quarter of 2024, Masimo continued its strategic review of the consumer business, reallocating resources to support healthcare projects with significant market potential. This reallocation aims to enhance shareholder value by focusing on products that meet critical market needs and reduce expenditures on less profitable or lower-priority areas. The company is also exploring potential changes to its portfolio to align with its long-term growth objectives in the healthcare sector.
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Masimo's Q3 Earnings Rise Y/Y, Healthcare Demand Drives Growth
Masimo Corporation reported a GAAP earnings per share (EPS) of 18 cents, which was slightly lower than the 20 cents reported in the third quarter of 2023. However, the non-GAAP EPS for the third quarter of 2024 was 98 cents, showing an improvement from the 75 cents achieved in the same period of the prior year.
Total revenues for the quarter were $504.6 million, reflecting a year-over-year increase from $478.9 million in the third quarter of 2023. This was divided into healthcare revenues of $343.3 million and non-healthcare revenues of $161.3 million. These figures highlight Masimo's continued growth, particularly within its healthcare segment, which has been the primary driver of revenue expansion.
Masimo demonstrated stable performance in the third quarter of 2024, with notable improvements in healthcare revenues despite challenges within non-healthcare divisions. The quarterly performance underscores strong momentum within its core healthcare business, especially high-demand monitoring technologies while signaling strategic adjustments to address underperforming areas. This reorientation, coupled with an upward revision in full-year EPS guidance, reflects management’s commitment to bolstering profitability and driving sustainable growth for the future.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote
Key Business Metrics
Healthcare Segment Revenue
Healthcare segment revenues were $343.3 million, growing 11.5% year over year on a GAAP basis and 11.7% on a constant currency basis, demonstrating resilience and consistent demand. The growth in this segment aligns with Masimo's focus on providing innovative healthcare solutions, with a particular emphasis on patient monitoring systems that cater to hospital and critical care needs.
Operating Income
Masimo reported a GAAP operating income of $30.1 million, up from $25.2 million in the third quarter of 2023. The non-GAAP operating income, excluding costs associated with litigation, acquisitions, and other adjustments, was $80.8 million. This growth reflects improved operational efficiency and effective cost management in core areas, although litigation-related expenses impacted GAAP profitability.
Non-Healthcare Segment Revenues
Revenues from the non-healthcare segment totaled $161.3 million, highlighting challenges within this part of the business. The consumer division, in particular, is undergoing a strategic review as management reallocates resources to higher-growth, healthcare-related initiatives. This segment’s performance has lagged behind the healthcare division, prompting plans for potential restructuring.
Operating Expenses
Key cost components included selling, general, and administrative expenses, which reached $184.8 million, up from $156.1 million in the third quarter of 2023, and research and development expenses at $48.3 million compared to $46.5 million in the previous year. This increase in SG&A costs was driven by continued investments in expanding sales capabilities and strengthening the product portfolio.
Net Income
On a non-GAAP basis, Masimo’s net income was $52.9 million, a significant improvement from $40.5 million in the third quarter of 2023. These non-GAAP results indicate solid core profitability, especially when determining litigation costs and other one-time expenses. The company also incurred a substantial $30.4 million in litigation expenses, notably due to ongoing legal proceedings, which impacted overall GAAP profitability.
Balance Sheet Update (As of Sept. 28, 2024)
Masimo reported cash and cash equivalents totaling $158.5 million, a slight decrease from $163 million as of Dec. 30, 2023.
Total assets rose to $3.1 billion, up from $3 billion.
Long-term debt was reduced to $733.2 million from $871.7 million.
Stockholders’ equity also saw an increase, reaching $1.5 billion compared to $1.4 billion as of Dec. 30, 2023.
Cash Flows
Masimo generated net cash from operating activities of $145.9 million for the first nine months ended Sept. 28, 2024, a significant increase from $17 million in the same period of 2023.
Management Guidance
For the fourth quarter of 2024, Masimo expects consolidated revenues to range between $581 million and $611 million, with healthcare revenues projected to be $363-$373 million and non-healthcare revenues between $218 million and $238 million.
Full-year guidance for 2024 has been adjusted to reflect a consolidated revenue range of $2.075 billion to $2.105 billion. Non-GAAP EPS guidance for the full year has been raised to $3.95-$4.10 from $3.80-$4.00, reflecting confidence in the company’s ongoing healthcare initiatives and improved margins.
Other Developments
During the third quarter of 2024, Masimo continued its strategic review of the consumer business, reallocating resources to support healthcare projects with significant market potential. This reallocation aims to enhance shareholder value by focusing on products that meet critical market needs and reduce expenditures on less profitable or lower-priority areas. The company is also exploring potential changes to its portfolio to align with its long-term growth objectives in the healthcare sector.