• Consolidated Revenue: $601 million for Q4 2024, 9% growth on a constant currency basis.
• Healthcare Revenue: $368 million, 9% growth.
• Non-Healthcare Revenue: $232 million, 11% growth.
• Gross Margin: 52% consolidated; 63% for healthcare, 35% for non-healthcare.
• Operating Profit: $134 million, 46% growth year-over-year.
• Operating Margin: 22.4%, improved 570 basis points year-over-year.
• Non-GAAP EPS: $1.80, 44% growth year-over-year.
• GAAP Net Loss: $6.52 per share, due to non-cash impairment charges.
• Operating Cash Flow: $50 million for Q4 2024.
• Full Year 2024 Revenue: $2.94 billion; healthcare revenues $1.395 billion, non-healthcare revenues $699 million.
• Full Year Gross Margin: 53% consolidated.
• Full Year Operating Margin: 17% consolidated.
• Full Year Non-GAAP EPS: $4.40.
• Full Year Operating Cash Flow: $196 million.
• 2025 Healthcare Revenue Guidance: $1.5 billion to $1.53 billion, 8% to 11% constant currency growth.
• 2025 Non-GAAP Operating Profit Guidance: $413 million to $428 million, 27.5% to 28% operating margins.
• 2025 Non-GAAP EPS Guidance: $5.10 to $5.40, 22% to 29% growth.

• Warning! GuruFocus has detected 9 Warning Signs with MASI.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Masimo Corp (NASDAQ:MASI) reported a 9% growth in consolidated revenues for the fourth quarter of 2024, reaching $601 million.
• Healthcare revenues grew by 9% to $368 million, with shipments of 65,000 technology boards and monitors, hitting the high end of expectations.
• The company achieved a consolidated operating profit of $134 million, representing a 46% growth compared to the previous year.
• Non-GAAP net earnings per share increased by 44% to $1.80, showcasing strong financial performance.
• Masimo Corp (NASDAQ:MASI) has a strong pipeline of new contracts, with an incremental value of $432 million, indicating future revenue growth potential.

Negative Points

• The company reported a GAAP net loss of $6.52 per share due to non-cash impairment charges related to Goodwill and Intangibles.
• There is uncertainty surrounding the potential sale of the consumer business, with timing and terms yet to be finalized.
• Masimo Corp (NASDAQ:MASI) faces potential risks from new tariffs on products sourced from Mexico, which could impact 25% of healthcare cost of goods sold.
• The company is undergoing strategic realignment, which includes focusing on fewer R&D projects and optimizing cost structures, indicating potential challenges in resource allocation.
• The impact of changes in accounting rules has led to a decline in capital equipment revenues, which may continue to affect financial performance.

Q & A Highlights

Q: Can you explain the increase in operating margin guidance for 2025 compared to earlier projections? A: Micah Young, CFO, explained that the operating margin guidance was increased from 26.5% to a range of 27.5% to 28% for 2025. This improvement is due to the completion of project and portfolio rationalization, corporate cost reductions, and reduced marketing expenses for non-revenue-generating products. These initiatives have already started showing results, leading to the updated guidance.

Q: What assumptions are being made in the 2025 guidance regarding hospital census and market share gains? A: Micah Young stated that the guidance assumes a low single-digit growth in hospital census and inpatient admissions. The company has had strong contracting years, which sets them up for growth in 2025 as they continue to install under these contracts, building revenues throughout the year.

Q: How do you plan to apply your experience to Masimo's product pipeline and growth strategy? A: Katie Szyman, CEO, emphasized her focus on expanding Masimo's leadership in core markets and healthcare innovation. She aims to execute commercial excellence on existing innovations and believes in the potential of non-invasive monitoring to expand patient monitoring in hospitals. Her background in patient monitoring aligns with Masimo's mission to monitor more patients continuously.

Q: Can you elaborate on the contingency plans regarding potential tariffs on products sourced from Mexico? A: Micah Young mentioned that Masimo has expanded its global manufacturing footprint, including Malaysia, which provides flexibility to shift production if tariffs are imposed. The company is evaluating the potential to move more products to Malaysia and is considering pricing strategies as part of their contingency plans.

Q: What is the status of the Apple litigation, and how does it impact Masimo's business? A: Micah Young provided an update on the Apple litigation, noting that Apple has appealed the ITC's exclusion order on Apple watches with pulse oximetry. Masimo is awaiting a judge's decision on a retrial of the trade secret theft case and trial dates for patent infringement cases. The litigation remains part of Masimo's healthcare business.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.