Masimo Q2 2025 slides: 46% EPS growth despite tariff headwinds, guidance raised

Introduction & Market Context

Masimo Corporation (NASDAQ:MASI) presented its second quarter 2025 earnings results on August 5, 2025, showcasing robust financial performance despite facing significant tariff challenges. The healthcare technology company, known for its pulse oximetry and monitoring solutions, reported substantial growth in revenue, operating profit, and earnings per share while implementing strategies to mitigate the impact of new tariffs.

Following the release, Masimo’s stock traded up 0.45% in after-hours trading to $162, building on the day’s 1.62% gain that saw shares close at $161.27. This positive market reaction reflects investor confidence in the company’s ability to navigate tariff headwinds while maintaining strong operational performance.

Quarterly Performance Highlights

Masimo reported non-GAAP revenue of $370 million for Q2 2025, representing a 7% increase on a constant currency basis compared to the same period last year. The company achieved an impressive 38% year-over-year increase in non-GAAP operating profit, reaching $102 million, while non-GAAP operating margin expanded 600 basis points to 27.5%.

As shown in the following quarterly results comparison:

Non-GAAP earnings per share grew 46% year-over-year to $1.33, continuing the strong momentum seen in Q1 2025 when the company reported EPS of $1.36. The slight sequential decline from Q1 to Q2 appears largely attributable to the impact of new tariffs, which the company quantified at approximately $0.03 per share for the quarter.

The company’s revenue growth was primarily driven by an 8% increase in consumable and service revenue on a constant currency basis, while capital and other revenue decreased by 2%. This performance is visualized in the following chart:

Detailed Financial Analysis

Masimo’s GAAP results were equally impressive, with revenue increasing 8% to $371 million and operating profit surging 54% to $64 million compared to Q2 2024. GAAP operating margin expanded by 520 basis points to 17.4%, while GAAP earnings per share grew 78% to $0.82.

The company’s gross margin performance remained strong, as illustrated in this chart from the presentation:

The business demonstrated solid operational metrics beyond financial results, shipping 63,100 technology boards and instruments during the quarter. Masimo also reported $80 million in incremental value from new contracts and $1.72 billion in unrecognized contract revenue, indicating a healthy pipeline for future growth.

Tariff Impact and Mitigation Strategies

A significant portion of Masimo’s presentation focused on addressing the impact of new tariffs and the company’s mitigation efforts. The updated guidance incorporates a $17 to $19 million increase to cost of sales due to tariffs, representing a 120 to 130 basis point impact on operating margin and a $0.25 impact on EPS for the full year.

The following slide details the tariff situation by region:

Masimo has implemented several mitigation strategies to address these challenges, including changes in tariff policy assumptions, supply chain adjustments, and medium-term mitigation measures. The company visualized the impact of these efforts in the following chart:

Without mitigation, tariffs would have had a 390-550 basis point impact on cost of goods sold. Through implemented actions, Masimo has reduced this to 200-260 basis points, with plans to further lower the impact to 100-150 basis points through medium-term mitigation measures.

Forward-Looking Statements

Despite tariff headwinds, Masimo provided an optimistic outlook for the full year 2025, as shown in this guidance slide:

The company updated its full-year 2025 non-GAAP guidance to revenue of $1.505 to $1.535 billion, representing 8% to 11% growth on a constant currency basis. Non-GAAP operating profit is expected to reach $406 to $422 million, a 23% to 28% increase year-over-year, with operating margins expanding 330 to 380 basis points to 27.0% to 27.5%.

Non-GAAP earnings per share guidance was set at $5.20 to $5.45, representing 24% to 30% growth compared to 2024. This guidance includes the impact of new tariffs; excluding these effects, the company would have projected even stronger results with operating margins of 28.2% to 28.8% and EPS of $5.45 to $5.70.

The updated guidance demonstrates management’s confidence in Masimo’s ability to maintain its growth trajectory while effectively managing external challenges. This outlook aligns with the company’s strong performance in Q1 2025, when it exceeded analyst expectations with an EPS of $1.36 against a forecast of $1.21.

Masimo’s Q2 2025 presentation reflects a company successfully balancing growth initiatives with pragmatic responses to external challenges, positioning itself for continued success throughout the remainder of 2025.

Full presentation:

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