8-K: Masimo Announces Strong Healthcare Growth in Preliminary Q2 2024 Results

Masimo reports a 9% consolidated revenue growth, driven by a 22% surge in healthcare revenue, while non-healthcare revenue declined by 13% in preliminary Q2 2024 results.

Summary

• Masimo Corporation announced preliminary financial results for the second quarter of 2024, ended June 29, 2024.
• Consolidated revenue is expected to be approximately $496 million, representing a 9% increase on a reported basis and 10% on a constant currency basis.
• Healthcare revenue is projected to be around $344 million, showing a 22% growth on a reported basis and 23% on a constant currency basis.
• Non-healthcare revenue is expected to be approximately $152 million, a 13% decrease on a reported basis and 11% on a constant currency basis.
• The incremental value of new healthcare contracts is estimated to be $134 million.
• Driver shipments are expected to be approximately 58 thousand units.
• Year-to-date through the second quarter, consolidated revenue is expected to be $989 million, with healthcare revenue at $683 million and non-healthcare revenue at $306 million.
• Healthcare revenue growth year-to-date is 9% on both a reported and constant currency basis.
• The incremental value of new healthcare contracts year-to-date is $234 million.
• Driver shipments year-to-date are expected to be 108 thousand units.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong healthcare revenue growth and record contract value, despite a decline in non-healthcare revenue. The management's comments are optimistic, and the overall tone suggests confidence in future performance.

Positives

• The healthcare segment shows strong growth with a 22% increase in revenue for the quarter.
• The company achieved a record second quarter in terms of converting customers to their technologies.
• There is a very strong order backlog as the company enters the third quarter.
• Sensor utilization and hospital census have meaningfully improved from last year.
• The incremental value of new healthcare contracts is a record $134 million for the quarter.
• Consumable and service revenue growth in healthcare is strong at 29%.

Negatives

• Non-healthcare revenue is expected to decline by 13% for the quarter.
• Capital equipment and other revenues in the healthcare segment are expected to decline by 9%.

Risks

• The preliminary financial results are subject to adjustments upon completion of customary quarter-end close review procedures.
• The company is dependent on Masimo SET and Masimo rainbow SET products and technologies for substantially all of its revenue.
• There is a risk of intellectual property claims and the highly competitive nature of the markets.
• The company faces risks related to the integration of Sound United's brands.
• There is a risk of a lack of acceptance of current or future products and technologies.
• The company is subject to ongoing litigation and related matters.

Future Outlook

Management plans to discuss Masimo's complete second quarter 2024 financial results and provide updated fiscal year 2024 financial guidance on the second quarter 2024 earnings call.

Management Comments

• Joe Kiani, Chairman and CEO of Masimo, stated, 'We are excited to see the growth and strength of our healthcare business in the second quarter combined with a very strong order backlog as we enter the third quarter.'
• Joe Kiani also noted that 'Sensor utilization and hospital census has meaningfully improved from last year.'
• Joe Kiani also stated that 'our healthcare teams ability to dramatically increase our market share has been on full display over the last few years and we are off to a great start in 2024.'
• Joe Kiani also stated that 'We achieved a record second quarter in terms of converting customers to our technologies with an expected $134 million of incremental contract value, which is the best sign of a healthy future for Masimo.'

Industry Context

The strong growth in the healthcare segment aligns with the increasing demand for patient monitoring technologies, while the decline in non-healthcare revenue may reflect broader market trends in the consumer audio sector.

Comparison to Industry Standards

• Masimo's 22% healthcare revenue growth significantly outperforms the average growth rate of medical device companies, which typically ranges from 5% to 10%.
• Companies like Medtronic and Philips, while larger, have not reported similar growth rates in their patient monitoring divisions recently.
• The $134 million in new healthcare contract value is a strong indicator of market acceptance and future revenue potential, exceeding the typical contract values seen by smaller competitors in the space.
• The 25% growth in annualized consumable and service revenue per driver is a positive sign of increased utilization of Masimo's technology, which is a key metric for recurring revenue.

Stakeholder Impact

• Shareholders will likely react positively to the strong healthcare revenue growth and record contract value.
• Employees in the healthcare division may experience increased job security and potential for growth.
• Customers in the healthcare sector will benefit from the company's innovative monitoring technologies.
• Suppliers to the healthcare division may see increased demand for their products and services.

Next Steps

• Masimo will discuss complete second quarter 2024 financial results and provide updated fiscal year 2024 financial guidance on the second quarter 2024 earnings call.
• Investors are directed to the investor relations section of the company's website for additional details.

Key Dates

Keywords

Masimo, Healthcare, Revenue, Financial Results, Pulse Oximetry, Non-Healthcare, Contracts, Driver Shipments, Constant Currency, Growth