Earnings call transcript: Masimo Q2 2025 beats forecasts, stock gains

Masimo Corporation reported its second-quarter 2025 earnings, surpassing forecasts with an EPS of $1.33, beating the expected $1.22. Revenue reached $371 million, slightly above the forecast of $368.64 million. The company’s stock responded positively, rising 1.62% to $162 in after-hours trading. According to InvestingPro analysis, Masimo appears overvalued at current levels, with a Financial Health Score of "GOOD" and beta of 1.21, indicating moderate market sensitivity.

Key Takeaways

• Masimo’s Q2 2025 EPS exceeded expectations by 9.02%.
• Revenue grew by 7.4% on a constant currency basis.
• Stock price increased by 1.62% in after-hours trading.
• The company updated its full-year EPS guidance, raising it by 35 cents at the midpoint.

Company Performance

Masimo’s performance in Q2 2025 demonstrated robust growth, with significant improvements in both revenue and profit margins. The company achieved a 7.4% increase in healthcare revenue and a 46% growth in non-GAAP EPS compared to the previous year. Notably, the operating margin improved by 600 basis points year-over-year, reflecting effective cost management and operational efficiency. InvestingPro data shows the company maintains strong liquidity with a current ratio of 2.17, while operating with a moderate debt-to-equity ratio of 0.72.

Financial Highlights

• Revenue: $371 million, up 7.4% YoY
• Earnings per share: $1.33, up 46% YoY
• Gross margin: 62.9%, improved by 40 basis points YoY
• Operating margin: 27.5%, improved by 600 basis points YoY
• Operating cash flow: $62 million

Earnings vs. Forecast

Masimo’s Q2 2025 earnings per share of $1.33 surpassed the forecast of $1.22, marking a 9.02% surprise. Revenue slightly exceeded expectations at $371 million compared to the forecasted $368.64 million. This performance underscores the company’s ability to outperform market expectations consistently.

Market Reaction

Following the earnings announcement, Masimo’s stock price increased by 1.62% in after-hours trading, reaching $162. This movement reflects investor confidence in the company’s strong financial performance and positive outlook. The stock’s current price is within its 52-week range of $101.61 to $194.88, indicating room for further growth. InvestingPro highlights two key insights: the company has delivered high returns over the past year (53.9%) and decade, though 5 analysts have recently revised their earnings expectations downward. Subscribers can access 10 additional ProTips and comprehensive valuation metrics.

Outlook & Guidance

Masimo updated its full-year revenue guidance to $1,505-$1,535 million, projecting an 8-11% growth on a constant currency basis. The company also raised its EPS guidance to $5.20-$5.45, representing a 24-30% growth for the year. Upcoming product launches, such as the next-generation root monitor, are expected to drive future revenue.

Executive Commentary

CEO Katie Zymond emphasized the company’s resilience despite tariff impacts, stating, "We are projecting 24% to 30% EPS growth this year." CFO Micah Young highlighted ongoing mitigation strategies, noting, "We are continuing to work through medium-term mitigation efforts that we’ve identified to date."

Risks and Challenges

• Tariff impacts remain a concern, though mitigated to $17-$19 million.
• Market competition in adjacent segments like capnography and brain monitoring.
• Potential supply chain disruptions affecting product launches.
• Macroeconomic pressures that could impact healthcare spending.

Q&A

During the earnings call, analysts inquired about the impact of the realigned U.S. sales force, with executives indicating that significant results are expected by 2026. Questions also focused on the resolution of a recent cybersecurity incident, which was addressed without material impact.

Full transcript - Masimo Corporation (MASI) Q2 2025:

Conference Call Operator: Good afternoon, ladies and gentlemen, and welcome to Masimo Second Quarter twenty twenty five Earnings Conference Call. The company’s press release is available at www.masimo.com. At this time, all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. I’m pleased to introduce Eli Cameron, Massimo’s Vice President of Business Development and Investor Relations.

Please go ahead.

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo: Thank you. Hello, everyone. Joining me today are CEO, Katie Zymond and CFO, Micah Young. Before we begin, I’d like to inform you that this call will contain forward looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.

These risks and uncertainties are described in detail in our periodic filings with the SEC. Also, this call will include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non GAAP or adjusted financial measures. In addition to GAAP results, these non GAAP financial measures are intended to provide additional information to enable investors to assess the company’s operating results in the same way management assesses such results. It is important to note that the Sound United business is now being classified as held for sale and reported in discontinued operations.

As a result, our non GAAP financial measures have been updated to reflect operations of Masimo’s healthcare business for both current and historical reporting periods. Therefore, the financial measures we will be covering today will be primarily on a non GAAP basis unless noted otherwise. Reconciliation of these measures to the most directly comparable GAAP financial measures are included within the earnings release, earnings presentation and supplementary financial information on our website. Investors should consider all of our statements today, together with our reports filed with the SEC, including our most recent Form 10 ks and 10 Q, in order to make informed investment decisions. I’ll now pass the call to Katie Zymond.

Katie Zymond, CEO, Masimo: Thank you, Eli, and good afternoon, everyone. For the second quarter, our core Healthcare business delivered strong growth in earnings performance. Revenue was $370,000,000 and we achieved earnings per share of $1.33 with 600 basis points of operating margin expansion. This exceptional performance reflects the continuation of the effective cost structure actions taken last year and is the result of hard work and strong execution across the entire organization. I have spoken repeatedly about the incredible talent and innovation we have at Masimo.

Building on that foundation, we’ve undertaken a thoughtful effort to expand our leadership team in key focus areas. First, we added the role of chief commercial officer with Greg Meehan. Greg brings over twenty five years of experience building and optimizing commercial organizations in the medical technology industry, where he delivered double digit growth and improved profit margins by building high performance teams. Second, we added a president of the Japan and Asia Pacific region, Doctor. Kamen Wang.

Kamen is an anesthesiologist and business development leader with over thirty years of experience overseeing growth oriented sales and marketing organizations in the region. Next, we have a new chief marketing and strategy officer, Tim Benner. Tim has an impressive track record of overseeing the launch and commercialization of transformational therapies such as MitraClip, TAVR, and AI based platforms for market leading companies. Tim joined us from Menari Medical where he led global sales, global marketing, and market access across the company’s category leading portfolio. We also added an executive vice president of quality and regulatory, Lynette Torres.

Lynette brings over twenty years of deep expertise in shaping global quality and regulatory compliance strategies and most recently led these efforts at Integra Life Sciences. Lastly, we have a new Chief Information Technology Officer, Giri Chodavarapu. Giri is an was an IT expert with a proven track record of driving large scale digital transformations and developing tech enabled products to support business growth and enhance enterprise cybersecurity. These hirings follow the earlier addition of our chief human resource officer, Lisa Hellman, who led human resources at Hologic, a leading women’s medical technology company. All of these leaders share a deep commitment to the patient experience, and each of them is highly qualified to help us drive our next chapter of growth and innovation.

It’s a testament to the exceptional talent we already have, as well as our leading industry position that we have been able to attract such skilled and dynamic additions to our team. With this new structure, we now have the key pillars in place to augment commercial and operating excellence to execute our growth strategy. The prior responsibilities of our chief operating officer have been redistributed across other roles, including the elevation of our engineering operations team leaders to my executive staff. Omar Ahmed has been promoted to chief technology and innovation officer. Anand Samphat has been elevated to my staff as the executive vice president of operations.

We do not anticipate further substantial additions to leadership aside from the eventual appointment of a permanent general counsel. Now let me turn to our strategic and financial goals and what we are doing to achieve them. As we have stated, we are focused on investing in our core health care business to achieve our goals and accelerate our long term revenue growth. I’m excited about the opportunities we have to accomplish this goal, and we’d like to briefly recap our growth strategy. As I mentioned before, we are focused on three waves of growth: elevating commercial excellence, accelerating intelligent monitoring and innovating wearable technologies.

First, I’d like to address our focus on elevating commercial excellence globally. As I mentioned, we’ve added key leaders to bring a strong focus on commercial execution, including our new Chief Commercial Officer, our new leader in Japan and Asia Pacific and our Chief Marketing and Strategy Officer. These leaders are dedicated to driving growth across our portfolio. As described on our last earnings call, we strategically aligned our U. S.

Sales force, moving from specialty teams centralized by product category to regionally led groups within our pulse oximetry infrastructure. We believe we have the best pulse oximetry sales force in the industry, and we want to leverage the strength of that team to pull through other categories and increase our market position across all categories long term. Looking at categories such as capnography, brain monitoring, hemodynamics and automation, those markets are worth somewhere between 1,000,000,000 and $2,000,000,000 and in aggregate are growing by high single digits. Today, our market share is less than 20% in each of those segments. The sales team alignment allows us to increase the sales representation in each U.

S. Region such that each region now has a dedicated representative for each of the specialties, which, in turn, should help us capture more pull through because we ideally would have the same large market share in those areas as we do in pulse oximetry. In summary, we are leveraging our leadership position in pulse oximetry to broaden our impact on patients and to broaden our market presence across other advanced monitoring categories. Our goal is to achieve growth in those adjacent markets of 10% to 20%. Now let’s turn to our second wave of growth, accelerating the adoption of intelligent monitoring.

In this area, we are working to upgrade our sensors and create next gen monitors featuring advanced AI based algorithms. We expect this will help us to continue to grow our market share while creating greater value as customers pay for the innovation we deliver. In the past, our team developed incredibly advanced algorithms for the consumer market, and we are now redeploying those innovations into sensors for use in hospitals. One example is our ability to detect cardiac dysfunction, such as atrial fibrillation, using just a pulse oximetry sensor. This will enable the detection of patients who are in distress earlier, and it will allow clinicians to take remedial action very quickly.

Our third wave of growth will come from innovating wearables longer term. We continue to evaluate our significant opportunities to change the way patients are monitored around the world. We have a strong portfolio of wearable technology and telemonitoring solutions that we are piloting today. There are numerous unmet patient needs that we are well positioned to address, and we have strong capabilities and momentum behind us to do so through further innovation of our wearable technologies and solutions. This third wave of innovation will expand our long term growth potential.

In recent months, I visited our employees and customers around the world. So far, I’ve visited customers, regional officers, and our major manufacturing locations across The United States, Saudi Arabia, Mexicali, Japan, Korea, and Malaysia. In fact, I don’t know where I wasn’t this last quarter. In total, I’ve met more than 90% of our incredible team. I’ve been impressed by their passion for Masimo and the patients we serve as well as their creativity and commitment to innovation.

This commitment is what will drive our continued growth, and I have great confidence in the team’s ability to execute on our strategic growth priorities. Just a few words on tariffs. Our operations and finance teams have worked relentlessly to reduce our exposure to new tariffs by implementing highly effective mitigation measures. I’m very proud of our team and want to highlight that their efforts have played a big part in our ability to guide to a tariff impact that is more than 50% less than our original estimate. Micah will expand on this more and provide updated guidance.

But I do want to highlight that our updated EPS guidance now exceeds our original projections provided at the beginning of the year before the tariff situation had even started. Despite the impact of tariffs, we are projecting 24% to 30% EPS growth this year. I’d really like to thank our entire global team for delivering another excellent quarter. Our products and technologies continue to impact millions of patients around the world. I am honored to be a part of this team.

With that, I’ll turn

Micah Young, CFO, Masimo: it over to Micah. Thank you, Katie, and good afternoon, everyone. I wanna begin by expressing how proud I am of our global team for their outstanding efforts this quarter. They successfully managed the challenges of the cybersecurity event, implemented measures that reduced our tariff burden by more than 50%, and continued to deliver strong results with revenue meeting expectations and EPS growing by 46%. For the second quarter, health care revenue was 370,000,000, up 7.4 on a constant currency basis.

Our consumable and service revenue grew 8.4%, and our capital equipment and other revenue declined 2%. As I mentioned earlier this year, we’re observing a transition from capital lease to operating lease accounting under ASC eight forty two. This shift created more than a one percentage point headwind for our total growth, revenue growth, and is the reason for the decrease in capital and other revenue. Notably, revenues are on track to reach our full year guidance as we are seeing more normal seasonality this year compared to last. We also shipped 63,100 technology boards and monitors this quarter, which is within our expected range.

Moving down to p and l, our gross margin of 62.9% improved 40 basis points year over year, driven by 90 basis points of operational improvement, partially offset by 50 basis points of tariff impact. Tariffs increased cost of sales by 2,000,000 this quarter, which is in line with our expectation. Our operating margin of 27.5% improved 600 basis points year over year, driven by 650 basis points of operational improvement, partially offset by 50 basis points of tariff impact. The cost structure optimization measures implemented in 2024 are clearly delivering margin benefits. Our non GAAP earnings per share was $1.33, representing 46% growth versus the prior year.

In addition to our improved operating margin, we realized a lower tax rate in the quarter as we are seeing greater profits from outside of The US, which carry a lower tax rate. Operating cash flow for the health care business was 62,000,000, which allowed us to repay 38,000,000 debt and repurchase 14,000,000 worth of common stock. Now moving to our updated fiscal two thousand twenty five financial guidance. We are projecting revenue of 1,505,000,000 to 1,535,000,000, which reflects 8% to 11% growth on a constant currency basis. Excluding the impact of new tariffs, our updated guidance implies operating margins of 28.3% to 28.7%, reflecting a year over year improvement of 460 to 500 basis points.

Further, our updated guidance excluding tariffs implies earnings per share of $5.45 to $5.70, reflecting year over year growth of 30% to 36%. Including the impact of new tariffs, we are updating our guidance for operating margins to be in the range of 27% to 27 and a half percent, representing an increase of 130 basis points at the midpoint versus prior guidance. This is being driven by 25 basis points of operational improvement and 105 basis points of tariff expense reduction versus our prior assumptions. Further, we are updating our guidance for earnings per share, including tariffs, to be in the range of $5.20 to $5.45, representing an increase of 35¢ at the midpoint versus prior guidance. This is driven by 12¢ of operational improvement and 23¢ of tariff expense deduction.

Our updated guidance now incorporates 17 to 19,000,000 of tariff of impact from new tariffs compared to our prior guidance of 33 to 37,000,000. This represents a 17,000,000 reduction in tariffs at the midpoint versus prior guidance with over 60% of the reduction coming from our intensive efforts to mitigate the impact. Breaking down our updated guidance range assumptions for tariffs, products manufactured in Mexico and not currently eligible for USMCA exemption now represent 2% of our total cost of sales, and we are assuming a 30% tariff rate. Products manufactured in Malaysia that are subject to US tariffs now represent 18% of our total cost of sales, and we are assuming a 19% tariff rate. Patient cable sourced in China represents four percent of our total cost of sales, and we are assuming a 59% tariff rate, which combines the new tariff rate of 34% with the preexisting section three zero one tariff rate of 25%.

And we are now including the potential impact of new tariffs on copper. Copper raw materials represent up to 4% of our total cost of sales, and we are assuming a tariff rate of 50%. Although this is still a very fluid situation with all the changes in tariff rates and assumptions, it’s important to note that a majority of the improvements in tariffs is being driven by our mitigation actions. These actions involve adjustments to our supply chain as well as an intensive administrative effort to qualify our products for exemption, including those under USMCA. I’d like to take a moment to thank our operations and finance teams for their hard work implementing these mitigation plans.

As shown in our earn earnings presentation material today, we’ve already executed a variety of actions that are contributing to more than a 50% reduction in the gross tariff impact we have estimated last quarter. We don’t view our mitigation efforts as fully complete, and we have already identified additional medium term mitigation measures to reduce the tariff burden even further over time. Moving on to site the cybersecurity related incident reported last quarter. In the second quarter, we incurred net expenses of expenses of approximately 4,500,000 to recover and fortify our systems with the help from a team of outside experts. These expenses are excluded from our non GAAP results as they are nonrecurring in nature and expected to be recovered through our insurance policy.

Finally, the vest divestiture of Sound United announced last quarter remains on track to close by the end of the year, subject to obtaining necessary regulatory clearance. Regarding use of proceeds, we anticipate share repurchase will be our priority as we believe that we’ll be more accretive at our current share price. Looking ahead, capital deployment strategies might involve a mix of share buybacks, debt reduction, and tuck in acquisitions of technologies that enhance our in hospital monitoring capabilities. And as a reminder, our 2025 financial guidance does not reflect any benefit from the use of proceeds from the sale of San Jose. In closing, our second quarter results clearly highlight the exceptional earnings power of our health care business.

Notably, we have more than compensated for the impact of tariffs this year as our revised EPS guidance now exceeds our original projections coming into the year. Our global team has demonstrated consistent execution, successfully navigating challenges such as the network outage and new tariffs while still delivering another outstanding quarter. With that, we’ll open the call to questions. Operator?

Conference Call Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Marie Thibault of BTIG. Please go ahead.

Marie Thibault, Analyst, BTIG: Hi, good afternoon. Thanks for taking the questions. Wanted to start here with the guidance update. Nice to see that nudged a bit higher. Micah, if you could tell us a little bit about how you’re considering what the inputs into that guidance range?

Any details on kind of hospital census, the capital equipment environment, any impact you saw from cybersecurity in the quarter, all the things that went into thinking about that guidance raise.

Micah Young, CFO, Masimo: Yeah. Thank you, Marie. Well, I think you see from the results for the quarter, we came in line with our expectations. We we are seeing some benefits from from foreign exchange that we are passing through this year and during the quarter. And, you know, we’re holding to that eight to 11% constant currency growth range for the year.

Really, our our assumptions for the full year haven’t really changed. We’re still assuming strong consumer growth for the full year, consumable service revenue. We’re assuming capital sales growth kind of in that low single digit range there. And those were all those something that we had from the end of the year. You know, everything’s coming pretty much in line.

I think the only thing is is we, you know, is we are seeing some if you look at kind of the shift in August, that was contemplated this year. We assumed that headwind coming into the year, end of the full year, and it’s it’s pointing out as expected. So everything is really lining up for us right now, and and we feel feel good about, where we’re landing for the quarter and where we’re tracking for the year.

Marie Thibault, Analyst, BTIG: Okay. Very helpful. And then I guess I wanted to ask a little bit about the the Salesforce alignment and the progress there. Understand it’s obviously gonna take a little bit of time, but any, early feedback that you’re seeing from that, new structure, and any timelines that we should think about, in terms of seeing increased adoption of these advanced parameters?

Katie Zymond, CEO, Masimo: Yeah. So thanks, Marie, for

Rick Wise, Analyst, Stifel: the

Katie Zymond, CEO, Masimo: question. I think, really, for us, having a dedicated specialty sales rep for each pulse ox sales territory and really for the major regions across The US is is so far, the feedback has been really positive that we’re having better follow through in each of the regions. But because our business is tied to committed contracts and the changes only happen in the ’2, it’s too early for us right now to quantify changes in the growth outlook or to kinda know exactly when the impact is gonna happen. But we would expect to see the impact more into 2026.

Marie Thibault, Analyst, BTIG: Okay. Very helpful. Thank you so much, Katie.

Katie Zymond, CEO, Masimo: Thank you, Marie. Thanks, Marie.

Conference Call Operator: Your next question comes from the line of Jason Benner of Piper Sandler. Please go ahead.

Jason Benner, Analyst, Piper Sandler: Hey, good afternoon, everyone. I want to start with maybe the status of the relationship with Philips, a big customer and partner of yours in the patient monitoring side. We’re pretty deep into what was a ten year contract Masimo had with Philips. There was a recent announcement from one of your competitors regarding expanded enhanced partnership with Philips that’s raised some questions from investors just about your own standing with Philips. So just given like kind of the platform today and with that preamble out there, what’s the status of Masimo’s relationship with Philips?

What does the opportunity set for revenue growth within that Philips customer base look like over the next decade relative to the past decade? You know, can Phillips still be growth accretive for Masimo?

Katie Zymond, CEO, Masimo: Jason, yeah. Thanks for the question. So as you know, the Phillips agreement is still in place between Masimo and Phillips. And over time, obviously, we need to evolve that agreement. So, personally, I’ve been involved in a lot of meetings and conversations with Phillips.

And even though we saw, as you said, a competitive press release about a relationship with Phillips, The Massimo relationship with Philips remains very strong, and we are in conversations to continue that partnership well into the future. Really, two major market leaders working together. We see that as really important for us going forward strategically. I personally have known the Philips organization for, you know, long time in the industry for a long long period of time, and so I’m personally engaging in the kind of conversations about a continued partnership. If you look over the last ten years, to your point, we’ve seen a significant increase in the Massimo presence inside the Philips kind of installed base, and we would anticipate that that should continue.

Jason Benner, Analyst, Piper Sandler: Alright. Perfect. Thanks, Katie. And, Michael, one for you. I think you mentioned still having some path on or having a path in front of you on just medium term mitigation to further alleviate some of the pressures you’re feeling this year on the tariff front.

I know it’s early, but do you have any early comments about how we should be thinking about the annual impact as we look ahead to ’26 from tariffs like on a net basis? Got a lot of moving parts here in the positive and negative columns. I think you’re also confident about securing a 100 basis points of core margin improvement each year. So just trying to make sure we’re all appropriately calibrated as we as we look ahead to next year. So any comments you have there would be great.

Micah Young, CFO, Masimo: Yeah. Thank you, Jason. So this year, our guidance implies 17,000,000 to 19,000,000 of tariff

: impact, and that’s really, you know, some that hit us in q two, but then stepping kinda stepping up in the back half. If you if you look at

Micah Young, CFO, Masimo: the earnings presentation materials we put out there today, we put out the impact as you look at it on an annualized basis. And if you look at it before any mitigation, we were facing headwinds of about 390 to 550 basis points. The changes in tariff policy and and rate assumptions, that improved about 70 to a 100 basis points. And then if you look at the mitigation actions we’ve implemented to date, a lot of that I mentioned on in my prepared remarks, where we adjust our supply chain, we we qualified exemptions, for products, a lot of administrative effort, that’s delivering about a 120 to a 190 basis points of of tariff reduction on an annualized basis. So if you kinda do if you kinda look at it annualized after the mitigation actions we’ve implemented to date, that puts us around 200 to 260 basis points of of tariff impact the cost of goods sold.

And as you mentioned, we are continuing to work through medium term mitigation efforts that we’ve identified to date. Those are opportunities that we’ll be working through, and those could also contribute we’re we’re estimating at this time about a 100 to a 110 basis points of improvement and cut it down nearly in half from from where we we are today. So that will take, some time to implement, and we’re still working through, evaluating all those measures. But, you know, we’re not giving up here. We’re we’re really trying to get after this.

We we’ve seen the success we’ve had in bringing that exposure down already, and, we are working relentlessly to, sort of mitigate this over time.

Mike Matson, Analyst, Needham: Alright. Thank you. You’re welcome.

Conference Call Operator: Your next question comes from the line of Michael Pollack of Wolfe Research. Please go ahead.

Jason Benner, Analyst, Piper Sandler: Hey, good afternoon. I have a question on the true incremental metric that is disclosed in the deck. It was down over 20% in the first quarter. It looks to be down year on year 40% in the second quarter year to date off 33%. So I’m interested in more color on why this metric is the way that it is.

Why might it get better from here? And I guess, specifically, I’ll ask these these Salesforce changes that are being made. Is that an item that’s precluded bookings performance in the first half and and maybe for leads in in the back half? Any any feel here would be great. Thank you.

Micah Young, CFO, Masimo: Yeah. Thanks, Mike. So the first half of the year, incremental value new contracts is is over 155,000,000. We’re on track for another solid year, for contracting, with a strong pipeline in the second half. As as we’ve talked about this before, it’s highly dependent on the timing of large deals that come up for bid throughout this year.

And, you know, we’re still seeing good increase too in in, you know, other metrics like unrecognized contract revenues up 7% year over year. We are, of course, you know, delivering shipments. We saw very strong consumer in the quarter, and and we’re tracking well. We do have a good pipeline, for the second half, and and we plan to execute on the full year.

Jason Benner, Analyst, Piper Sandler: And I guess maybe just the only follow-up then is the the Salesforce changes not an influence that you would call out. It’s more deal deal timing.

Katie Zymond, CEO, Masimo: Yes. Yeah. Yeah. Definitely.

Micah Young, CFO, Masimo: Definitely related deal timing. I mean, it’s it’s it’s all about when certain contract comes up with bid. And that can fluctuate in quarter to quarter, year to year to year. So we feel we’ve got a very good pipeline ahead of us, and, you know, we’re we’re expecting to actually be very strong in the back half.

Mike Matson, Analyst, Needham: Okay. Thank you.

Micah Young, CFO, Masimo: Thank you.

Conference Call Operator: Your next question comes from the line of Rick Wise of Stifel. Please go ahead.

Rick Wise, Analyst, Stifel: Good afternoon, everybody. Hi, Katie. Hi, Mike. Maybe to start off, you could give us a little more color on thinking about board shipments. Obviously, seemed like a solid number.

I think if I remember correctly, you talked about $248,260 for the year. And just if I’m doing the math right, I may not be that would imply sort of a, based on first half numbers, a deceleration in second half. So anyway, how should we think about it? How should we think about the second half? Help set our expectations.

Micah Young, CFO, Masimo: Yeah. So, Rick, we’re still kind of in that 60 to 65,000 is what we expect per quarter this year. So that’s kinda how you should think about it as we move into q three and q four. It’s right in that range. And we came in at the just above the the midpoint of this range where we have the part of the range for for the for the second quarter.

Yeah.

Katie Zymond, CEO, Masimo: Rick, I can just say kinda coming in that board shipments really vary depending on the OEMs, when they’re ordering. It’s just very seasonal, so it’s hard to say that you can get a trend out of just a couple quarters. I mean, it’s hard to hard to predict. So I think the overall year is is good to bank on.

Rick Wise, Analyst, Stifel: Yeah. And just a a a big picture question for you, Katie. You you’ve come in and, you know, done obviously, made some important additions and changes. Thank you for being so clear about these initiatives. Several people have asked about it.

Let me ask it this way. You know, commercial excellence, this adjacent market share, the the, you know, the intelligent monitors, How do we think about there’s a lot of incremental sounding stuff in there in a good way. When do we really start? When would you hope when would you want us to hold you accountable for potential acceleration in top line or or however you wanna say it related to these initiatives? Thanks a lot.

Katie Zymond, CEO, Masimo: Yeah. Thanks, Rick. Great question. So as you know, we’re gonna be holding an investor conference in December. And at that time, we’ll have a lot more details available for, like, what is the timing of some of these new products with intelligent monitoring acceleration, etcetera.

So we know sort of the year, etcetera, right now, but we don’t know the exact kinda quarter. And so we’ll have a lot more clarity about that at that time, and then we’ll be able to give more updated guidance. So I understand how it’s like, well, when will we see this upside? But I think it’s gonna take us a little bit more time to to do some of that detailed planning. But I would for sure say by the investor conference, we should be able to give you some clear expectations as we go into next year.

Rick Wise, Analyst, Stifel: Great. Thanks so much.

Katie Zymond, CEO, Masimo: Thank you.

Conference Call Operator: Your next question comes from the line of Vic Chopra of Wells Fargo. Please go ahead.

Vic Chopra, Analyst, Wells Fargo: Hey, good afternoon and congrats on a nice quarter. Maybe just a quick question for me is, can you provide an update on your progress with your new hemodynamic monitoring technology? Do you still expect to launch in 2026? And maybe talk about your ability to compete in the market? Yes.

Katie Zymond, CEO, Masimo: So thanks for the question. So on hemodynamics, we really expect to launch So we already have some pilots out there with the Lidco technology that was acquired several years ago using a smart cable connecting to our monitors, our existing route monitor. What you’re hearing us talk about is that next year, we’ll be creating a new next gen root monitor, and that next gen monitor will have kind of even better technology, if you will, with new screens, etcetera, related to hemodynamics. So you would see that coming out towards the back half of next year, and we will continue to launch into using the smart cable onto our existing roof for piloting and for getting kind of detailed patient feedback and customer feedback. And so so that’s sort of the status.

I don’t know if that directly answered your question, but that’s where we see us in the back half of next year with a kind of full product launch and with a dedicated team kind of going after that.

Vic Chopra, Analyst, Wells Fargo: Great. That’s helpful. Just a quick follow-up, if I could.

Conference Call Operator: Can you just let

Vic Chopra, Analyst, Wells Fargo: us know on the cyber attack if you expect any impact in q three? Are you back to normal operating levels? Thank you.

Micah Young, CFO, Masimo: Yes. Thank you, Vic. So, yeah, we’re back fully operational. We we did provide that update during the quarter, the second quarter. And, of course, as you saw, we finished right in line with where we were hoping to for the quarter.

So so it’s a great recovery by

Vic Chopra, Analyst, Wells Fargo: the team. We we

Micah Young, CFO, Masimo: don’t view any material impact on the quarter or full year, and we’re we’re fully operational. All systems are are running. So manufacturing’s up, Our order taking’s up, and also our ability to ship out of our all of our distribution warehouse. So we’re excited. We’re very thankful for all the the hard work by the global team and being able to to to meet the quarter and get us on track for for a great year.

Katie Zymond, CEO, Masimo: Yeah. And I think the only other additional comment is that as we brought our systems back up, as anyone would do, we tried to bring them up in a fortified way so that we would kinda be stronger, honestly, to prevent future attacks. And so we feel really good about that. And we got some amazing expert help to make that happen. And it was all kind of, as as Micah mentioned before, within the context of the insurance.

And so, in fact, I mean, it’s never great to have a cyber attack, but I think it really helped us get stronger as an organization.

Conference Call Operator: Your next question comes from the line of Matt Taylor of Jefferies. Please go ahead.

Micah Young, CFO, Masimo: Hi. Thanks for taking the question. I just wanted to ask you about any change in competitive dynamics. And your main competitor did call out on their last earnings call some pressures from generics and and reprocessing, and I was wondering if you you saw any of that increasing out in the marketplace.

Katie Zymond, CEO, Masimo: Yeah. Thanks for the question. So what what we would say is that we have not experienced the same pressure. I mean, there’s always reprocess sensors kind of out there in the marketplace, so we did not see it have a significant impact us on us in the quarter, and we just haven’t seen any as much of an increase as we’ve seen as the competition was mentioning.

Micah Young, CFO, Masimo: And maybe one follow-up. So could you give us any color on some of the product lines outside of Polestock? Things like rainbow, capnography, o three, any broad strokes in terms of how those are doing or anything new there? Yeah. Thank you, Matt.

Yeah. So we’ll give a more of a comprehensive update at the end the year. But right now, what we’ve seen year to date, we’re tracking very well on our on our growth rates there across our advanced primary categories. Rainbow’s tracking tracking well. We’re seeing good, strong growth from capnography and brain monitoring, and that they’re thinking about it as in line with our long range target growth rates for those categories.

Great. Thank you so much, Micah. You’re welcome. Thank

Katie Zymond, CEO, Masimo: you. Thanks, Matt.

Conference Call Operator: Your next question comes from the line of Mike Matson of Needham. Please go ahead.

Mike Matson, Analyst, Needham: Yes. Thanks. A few, I guess, for Micah. So third quarter seasonality looks like consensus has got you sort of about flat, about three seventy million know, I know you don’t give quarterly guidance, but just any color you can provide there in terms of what we should be expecting sequentially would be helpful.

Micah Young, CFO, Masimo: Yes. Yes. Thanks, Mike. If you look at you remember if you recall in the last earnings call, I mentioned that, you know, and even coming into the year with guidance, we expect normal seasonality this year. Last year was a little bit outside the norm where we saw strength and, you know, strong hospital admissions growth in the second and third quarters last year.

This year, we’re we’re seeing kind of that normal seasonality of the business, which is becoming a little bit more predictable for us. But if you look at that, we expected revenue to step down in q two and then step down further in q three and then our seasonally strong q four. So that’s that’s kind of how we’re seeing it play out this year. Keep in mind, we do have an extra week of revenue in the fourth quarter. So if you adjust for that week, that’s the best way to look at it and kinda, you know, back into that normal seasonality that we’ve laid out, for the year.

Mike Matson, Analyst, Needham: Okay. Got it. And then just with the the guidance, for both revenue and EPS, you know, you raised the guy the revenue range a little bit by, like, 5,000,000, I think, but your constant currency growth is the same. But, I mean, the dollars weakened quite a bit. I can’t remember if you’re hedging on the top line or something or, you know and then just maybe talk about what you’re what you’re expecting for currency impact both to revenue and to your earnings or EPS for the year.

Micah Young, CFO, Masimo: Absolutely. So we’re maintaining a range of eight to 11% constant currency growth and and basically seeing through the benefits of more favorable exchange rates on our reported revenue with you. So that’s that’s, how we’re thinking about the guide. So we raised the, reported revenues by 5,000,000. It goes into the range and and held our constant currency guidance.

Rick Wise, Analyst, Stifel: Okay. So how much of

Mike Matson, Analyst, Needham: the what’s the net currency benefit, I guess, to revenue? The 5,000,000? Or

Micah Young, CFO, Masimo: It’s 5 the 5,000,000. Yes. Okay. Alright. Exactly.

How we’re seeing it play out. Yes. So far. And then

Mike Matson, Analyst, Needham: I guess that’s just not really material in terms of the the bottom line?

Micah Young, CFO, Masimo: It’s contributing. It’s, you know, it does drop through a little bit little bit above our our overall operating margin rate. So it’s really dropping to the bottom.

Mike Matson, Analyst, Needham: Okay. Got it. Thanks. Thank you.

Conference Call Operator: There are no further questions at this time. And with that, I will turn the call back to Katie Simon for closing remarks. Please go ahead.

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo: Operator, I think we may still have one more question in the queue. Can you double check that, please?

Conference Call Operator: That is still noted. My apologies. Our next question comes from the line of Jason Bedford of Raymond James. Please go ahead.

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo0: Good afternoon. Thanks, Eli. I owe you a beer for that.

Mike Matson, Analyst, Needham: Alright. So

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo0: so maybe just a few cleanup questions here. Katie, you mentioned the the goal to improve share in in your advanced parameters, capnography, brain monitoring. You know, in which of these markets do you think you have the the best opportunity to gain share? And can you just can you gain share with just more Salesforce focus, or do you need a new product story tied to to these expected share gains?

Katie Zymond, CEO, Masimo: Yeah. Thanks for the question. Great question. So we would say that we have fantastic technologies. If you look at over the last five to seven years, we’ve acquired some great technologies in those spaces.

So I would say it’s a combination. So we’re gonna have better Salesforce focus and alignment. And then the second thing is you’ll start to see us come out with some next gen sensors that will play into those spaces as well as the next gen monitors that will come out in the next couple years that will actually help to supplement that. So it’s not gonna be, like, overnight, but you’re gonna see it kinda gradually increasing. But we do believe that we have fantastic technology in that category.

It’s just that we kind of come have come later into those markets, and so we don’t have as much of a stock and install base across the board, especially on some of the OEM manufacturers’ presence. So that’s another thing that we’re kinda working on as well. And so I would say if you look at the across the space, we’re pretty excited. The way that we sort of listed those adjacent markets would be kind of our order of excitement is the way I think about it.

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo0: Okay. Okay. That’s helpful. Micah, somewhat related to an earlier question, just unrecognized contract revenue. It looks like it was down sequentially for the for the second straight quarter.

I guess the easy question is why, but is there a timing dynamic as well tied to that?

Micah Young, CFO, Masimo: Yeah. There is. So so we saw the consumable revenues up about 6% sequentially in q one and q two, which we expected, and that was all tied to where we’re recognizing now the large OUS tender board. So we’re seeing the the the mix of the fees the super on capital kind of normalizing normalized in q two, and that’s what that is. It’s it’s recognizing the revenue on that contract.

So so that would be possible for us this quarter.

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo0: Okay. Okay. And then last question, somewhat uninteresting. Lower tax rate in ’2 q, I haven’t gone through all of the guidance here, but what is the assumed tax rate for the year tied to the new EPS guidance?

: Yes. So, for the full year, at the midpoint of our guidance range, we’re about around 23.8% at the midpoint.

Eli Cameron, Vice President of Business Development and Investor Relations, Masimo0: Okay. Okay. Thank you.

Micah Young, CFO, Masimo: Great. Thank you.

Conference Call Operator: There are no further questions at this time. I will now turn the call back to Katie Simon for closing remarks. Please go ahead.

Katie Zymond, CEO, Masimo: So first of all, thanks to everybody for joining the call today and for your interest in Masimo. We look forward to joining you again on our next earnings call next quarter.

Marie Thibault, Analyst, BTIG: Thanks, everyone.

Conference Call Operator: Ladies and gentlemen, this concludes today’s conference call. We thank you for participating and ask that you please disconnect your lines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.