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Masimo (MASI) Q1 Earnings Surpass Estimates, Margins Down
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Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 87 cents in the first quarter of 2023, down 6.5% year over year. However, the figure surpassed the Zacks Consensus Estimate by 4.8%.
The adjustments include acquisition, integration and related costs, and acquired intangible asset amortization expenses, among others.
Our projection of adjusted EPS was 83 cents, in line with the Zacks Consensus Estimate.
GAAP EPS for the quarter was 39 cents, down by 51.9% from the year-earlier figure.
Revenues in Detail
Masimo registered revenues of $565 million in the first quarter, up 85.7% year over year on a reported basis. The figure surpassed the Zacks Consensus Estimate by 1.4%.
The first-quarter revenue compares to our estimate of $551.4 million.
The year-over-year uptick in revenues was primarily driven by strength in its healthcare business.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, were 77,300 in the first quarter of 2023.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the first quarter were $346.7 million, representing growth of 13.9% on a reported basis and 15.8% at a constant exchange rate (CER).
This compares to our projection of $341.4 million of Healthcare revenues in the first quarter.
Non-healthcare revenues in the first quarter were $218.3 million. This compares to our projection of $210 million of Non-healthcare revenues in the quarter.
Masimo Corporation Price, Consensus and EPS Surprise
In the quarter under review, Masimo’s gross profit rose 39.1% to $284.8 million. Gross margin contracted a huge 1688 basis points (bps) to 50.4%.
We had projected 52.4% of gross margin for the first quarter.
Selling, general & administrative expenses jumped 80.3% to $196.3 million. Research and development expenses went up 39.9% year over year to $50.5 million. Total operating expenses of $246.8 million increased 70.2% year over year.
Total operating profit amounted to $38 million, reflecting a 36.3% decline from the prior-year quarter. The operating margin in the first quarter contracted a huge 1290 bps to 6.7%.
We had projected 7.8% of the operating margin for the first quarter.
Financial Position
Masimo exited first-quarter 2023 with cash and cash equivalents of $174.1 million compared with $202.9 million at the end of 2022. Long-term debt at the end of first-quarter 2023 was $897.5 million compared with $941.6 million at 2022-end.
Net cash flow from operating activities at the end of first-quarter 2023 was $0.4 million compared with $23.2 million a year ago.
Guidance
Masimo has reiterated its 2023 financial outlook.
For the full year, total revenues are continued to be projected in the range of $2,415 million-$2,460 million. The Zacks Consensus Estimate for the metric is currently pegged at $2.43 billion.
Healthcare revenues are still expected to lie within $1,450 million-$1,465 million (up 8-9% and 8-10% on a reported basis and at CER, respectively), while Non-healthcare revenues for the year are continued to be expected within $965 million-$995 million.
Adjusted EPS for 2023 is continued to be projected within $4.70-$4.80. The Zacks Consensus Estimate for the same is pegged at $4.75.
Our Take
Masimo exited the first quarter of 2023 with better-than-expected results. The robust uptick in the top line and its healthcare business was impressive. The company recorded robust order shipments during the reported quarter, which was encouraging. The expansion of the company’s installed base was also impressive.
On the first-quarter earnings call, Masimo’s management confirmed having new customers in its pulse oximetry business and witnessed increasing traction for rainbow and advanced parameter products, which strengthened the healthcare revenues in the quarter. Masimo also registered solid growth in its SedLine and O3 brain monitoring, normal line capnography and gas monitoring products. Robust growth for hearables led the performance of the company’s consumer business along with the strong market reception for some recently launched products. These look promising for the stock.
A strong product pipeline, which includes the recently-launched STORK baby monitor and opioid halo and planned launches of Denon Pearl, AAT earbuds, are also promising. A slew of favorable studies on Masimo’s products and enhancement to its telehealth capabilities are also promising.
On the flip side, the dismal bottom-line performances were disappointing. The contraction of both margins in the quarter does not bode well.
Zacks Rank & Other Key Picks
Masimo currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are AmerisourceBergen Corporation , Merit Medical Systems, Inc. (MMSI - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
AmerisourceBergen, carrying a Zacks Rank of 2, reported second-quarter fiscal 2023 adjusted EPS of $3.50, beating the Zacks Consensus Estimate by 6.4%. Revenues of $ $63.46 billion outpaced the consensus mark by 4.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AmerisourceBergen has a long-term estimated growth rate of 8.9%. ABC’s earnings surpassed estimates in all the trailing four quarters, the average being 3.1%.
Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Cardinal Health reported a third-quarter fiscal 2023 adjusted EPS of $1.74, beating the Zacks Consensus Estimate by 17.6%. Revenues of $50.49 billion surpassed the Zacks Consensus Estimate by 1.7%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 12.4%. CAH’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 12.3%.
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Masimo (MASI) Q1 Earnings Surpass Estimates, Margins Down
Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 87 cents in the first quarter of 2023, down 6.5% year over year. However, the figure surpassed the Zacks Consensus Estimate by 4.8%.
The adjustments include acquisition, integration and related costs, and acquired intangible asset amortization expenses, among others.
Our projection of adjusted EPS was 83 cents, in line with the Zacks Consensus Estimate.
GAAP EPS for the quarter was 39 cents, down by 51.9% from the year-earlier figure.
Revenues in Detail
Masimo registered revenues of $565 million in the first quarter, up 85.7% year over year on a reported basis. The figure surpassed the Zacks Consensus Estimate by 1.4%.
The first-quarter revenue compares to our estimate of $551.4 million.
The year-over-year uptick in revenues was primarily driven by strength in its healthcare business.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, were 77,300 in the first quarter of 2023.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the first quarter were $346.7 million, representing growth of 13.9% on a reported basis and 15.8% at a constant exchange rate (CER).
This compares to our projection of $341.4 million of Healthcare revenues in the first quarter.
Non-healthcare revenues in the first quarter were $218.3 million. This compares to our projection of $210 million of Non-healthcare revenues in the quarter.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote
Margin Analysis
In the quarter under review, Masimo’s gross profit rose 39.1% to $284.8 million. Gross margin contracted a huge 1688 basis points (bps) to 50.4%.
We had projected 52.4% of gross margin for the first quarter.
Selling, general & administrative expenses jumped 80.3% to $196.3 million. Research and development expenses went up 39.9% year over year to $50.5 million. Total operating expenses of $246.8 million increased 70.2% year over year.
Total operating profit amounted to $38 million, reflecting a 36.3% decline from the prior-year quarter. The operating margin in the first quarter contracted a huge 1290 bps to 6.7%.
We had projected 7.8% of the operating margin for the first quarter.
Financial Position
Masimo exited first-quarter 2023 with cash and cash equivalents of $174.1 million compared with $202.9 million at the end of 2022. Long-term debt at the end of first-quarter 2023 was $897.5 million compared with $941.6 million at 2022-end.
Net cash flow from operating activities at the end of first-quarter 2023 was $0.4 million compared with $23.2 million a year ago.
Guidance
Masimo has reiterated its 2023 financial outlook.
For the full year, total revenues are continued to be projected in the range of $2,415 million-$2,460 million. The Zacks Consensus Estimate for the metric is currently pegged at $2.43 billion.
Healthcare revenues are still expected to lie within $1,450 million-$1,465 million (up 8-9% and 8-10% on a reported basis and at CER, respectively), while Non-healthcare revenues for the year are continued to be expected within $965 million-$995 million.
Adjusted EPS for 2023 is continued to be projected within $4.70-$4.80. The Zacks Consensus Estimate for the same is pegged at $4.75.
Our Take
Masimo exited the first quarter of 2023 with better-than-expected results. The robust uptick in the top line and its healthcare business was impressive. The company recorded robust order shipments during the reported quarter, which was encouraging. The expansion of the company’s installed base was also impressive.
On the first-quarter earnings call, Masimo’s management confirmed having new customers in its pulse oximetry business and witnessed increasing traction for rainbow and advanced parameter products, which strengthened the healthcare revenues in the quarter. Masimo also registered solid growth in its SedLine and O3 brain monitoring, normal line capnography and gas monitoring products. Robust growth for hearables led the performance of the company’s consumer business along with the strong market reception for some recently launched products. These look promising for the stock.
A strong product pipeline, which includes the recently-launched STORK baby monitor and opioid halo and planned launches of Denon Pearl, AAT earbuds, are also promising. A slew of favorable studies on Masimo’s products and enhancement to its telehealth capabilities are also promising.
On the flip side, the dismal bottom-line performances were disappointing. The contraction of both margins in the quarter does not bode well.
Zacks Rank & Other Key Picks
Masimo currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are AmerisourceBergen Corporation , Merit Medical Systems, Inc. (MMSI - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
AmerisourceBergen, carrying a Zacks Rank of 2, reported second-quarter fiscal 2023 adjusted EPS of $3.50, beating the Zacks Consensus Estimate by 6.4%. Revenues of $ $63.46 billion outpaced the consensus mark by 4.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AmerisourceBergen has a long-term estimated growth rate of 8.9%. ABC’s earnings surpassed estimates in all the trailing four quarters, the average being 3.1%.
Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Cardinal Health reported a third-quarter fiscal 2023 adjusted EPS of $1.74, beating the Zacks Consensus Estimate by 17.6%. Revenues of $50.49 billion surpassed the Zacks Consensus Estimate by 1.7%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 12.4%. CAH’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 12.3%.