Masimo Corporation MASI delivered adjusted earnings per share (EPS) of 98 cents in the third quarter of 2024, up 30.7% year over year. The figure beat the Zacks Consensus Estimate by 16.7%.
The adjustments include acquired intangible asset amortization, and acquisitions, integrations, divestitures, and related costs, among others.
GAAP EPS for the quarter was 18 cents, down 10% year over year.
MASI’s Revenues in Detail
Masimo registered revenues of $504.6 million in the third quarter, up 5.4% year over year on a reported basis. The figure beat the Zacks Consensus Estimate by 0.4%.
The top line was aided by robust Healthcare revenues, partially offset by lower revenues from the Non-healthcare segment.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 60,500 in the third quarter of 2024.
Shares of this company gained nearly 5.6% in today’s pre-market trading.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Masimo’s Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the third quarter totaled $343.3 million, indicating an uptick of 11.5% on a reported basis and 11.7% at constant exchange rate (CER) year over year. This compares to our projection of revenues of $335.2 million in the third quarter.
Within Masimo’s Healthcare segment, the consumable and service revenues saw strong growth, partially offset by a decline in capital equipment and other related products.
Non-healthcare revenues in the third quarter amounted to $161.3 million, implying a decline of 6% year over year on both reported basis and at CER. This compares to our projection of revenues of $166 million in the third quarter.
Per management, the Non-healthcare business continues to be affected by the weakening environment for luxury consumer purchases and the slowness in the housing market, which affects product installations and upgrades.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation Price, Consensus and EPS Surprise
In the quarter under review, Masimo’s gross profit increased 12.1% year over year to $263.2 million. The gross margin expanded 313 basis points (bps) to 52.2%. We had projected 51.3% of gross margin in the third quarter of 2024.
Selling, general & administrative expenses increased 18.4% year over year to $184.8 million. Research and development expenses rose 3.9% year over year to $48.3 million. Total adjusted operating expenses of $233.1 million increased 15.1% on a year-over-year basis.
Total adjusted operating profit was $30.1 million, indicating a decline of 6.5% from the prior-year quarter’s level. The adjusted operating margin in the third quarter contracted 76 bps to 5.9%.
Masimo’s Financial Position
Masimo exited third-quarter 2024 with cash and cash equivalents of $158.5 million compared with $129.6 million at the end of the second quarter. Long-term debt at the end of third-quarter 2024 was $733.2 million compared with $746.5 million at the second-quarter end.
Cumulative net cash provided by operating activities at the end of third-quarter 2024 was $145.9 million compared with $17 million a year ago.
MASI’s Guidance
Masimo has provided its outlook for the fourth quarter and revised the same for 2024.
For the fourth quarter, total revenues are projected to be in the range of $581 million-$611 million. The Zacks Consensus Estimate is currently pegged at $607.4 million.
Healthcare revenues are expected to be between $363 million and $373 million, while Non-healthcare revenues are anticipated to be in the range of $218 million-$238 million.
Adjusted EPS for the fourth quarter is projected to be in the band of $1.35-$1.50. The Zacks Consensus Estimate is pegged at $1.41.
For 2024, total revenues are now estimated to be in the range of $2,075 million-$2,105 million, lowered from the earlier projection of $2,085 million-$2,135 million. The Zacks Consensus Estimate is currently pegged at $2.10 billion.
For 2024, Healthcare revenues are now expected to be in the range $1,390 million-$1,400 million, narrowed from the previous outlook of $1,385 million-$1,405 million.
Non-healthcare revenues are now expected to be in the band of $685 million-$705 million, lowered from the prior expectations of $700 million-$730 million.
Adjusted EPS for 2024 is now projected to be in the range of $3.95-$4.10, up from the earlier projection of $3.80-$4.00. The Zacks Consensus Estimate is pegged at $3.88.
Our Take
Masimo exited the third quarter of 2024 with better-than-expected results. The uptick in consolidated revenues and Healthcare revenues was encouraging. The gross margin expansion also bodes well.
In August, Masimo announced that the Masimo W1 medical watch had received the FDA’s 510(k) clearance for connectivity, allowing it to be integrated with the Masimo SafetyNet comprehensive telemonitoring solution. During the quarter, the company partnered with a few healthcare providers which will be implementing MASI’s products in their workflow. These raise our optimism.
On the flip side, the continued decline in its Non-healthcare revenues was disappointing. Rising operating costs leading to the contraction of the adjusted operating margin in the quarter do not bode well.
Masimo’s Zacks Rank & Other Key Picks
MASI currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.
Quest Diagnostics, carrying a Zacks Rank of 2, reported third-quarter 2024 adjusted EPS of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.4%.
ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.
Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.
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