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Masimo (MASI) Q1 Earnings Beat Estimates, '24 EPS View Up
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Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 77 cents in the first quarter of 2024, down 11.5% year over year. The figure, however, beat the Zacks Consensus Estimate by 8.5%.
The adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.
GAAP EPS was 35 cents, down 10.3% from the year-earlier figure.
Revenues in Detail
Masimo registered revenues of $492.8 million, down 12.8% year over year on a reported basis. However, the figure beat the Zacks Consensus Estimate by 1%.
The year-over-year decline in the top line primarily resulted from lower revenues from the company’s healthcare and non-healthcare segments.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 50,400 during the quarter.
Segmental Details
Masimo derives its revenues from two business sources, Healthcare and Non-healthcare.
Healthcare revenues in the first quarter totaled $339.6 million, indicating a decline of 2.1% on a reported basis and 1.6% at the constant exchange rate (CER). This compares with our projection of $332 million.
The decline in Healthcare revenues is primarily driven by a 21% reduction in capital equipment and other revenues, partially offset by growth in consumables and service revenues. The decline in capital equipment was primarily due to higher purchases by hospitals during COVID. However, the company stated that sensor orders in the United States and Europe were strong during the first quarter. Sales are likely to start reflecting year-over-year growth from the second quarter.
Non-healthcare revenues amounted to $153.2 million, implying a decline of 29.8% on a reported basis and 29.4% at CER. This compares with our projection of $155.1 million. The decline is primarily driven by lower consumer spending on luxury and premium products amid unfavorable macroeconomic conditions, including higher interest rates.
Margin Analysis
Masimo’s gross profit decreased 15.1% year over year to $262.7 million. The gross margin contracted 140 basis points (bps) to 49%.
We had projected the gross margin to be 62%.
Selling, general & administrative expenses decreased 18.5% to $159.9 million. Research and development expenses declined 5.3% to $47.8 million. Total adjusted operating expenses of $207.7 million decreased 15.8% on a year-over-year basis.
Total adjusted operating profit was $34 million, indicating a decline of 10.5% from the prior-year quarter’s level. The adjusted operating margin contracted 160 bps to 13.8%.
Financial Position
Masimo exited the first quarter with cash and cash equivalents of $157.6 million compared with $163 million at the end of 2023. Long-term debt at the end of the first quarter was $841.4 million compared with $871.7 million in 2023 end.
Cumulative net cash provided by operating activities was $45.8 million compared with $0.4 million in the year-ago period.
Guidance
Masimo has provided its outlook for the second quarter and raised the lower-end of revenue guidance for 2024. The company raised guidance for full-year earnings as well.
For the second quarter, total revenues are projected to be in the range of $480-$510 million. The Zacks Consensus Estimate is currently pegged at $500 million.
Healthcare revenues are expected to be between $330 million and $340 million, while Non-healthcare revenues are anticipated in the range of $150 -$170 million.
Adjusted EPS is projected to be in the band of 73-79 cents. The Zacks Consensus Estimate is pegged at 81 cents.
For 2024, total revenues are now estimated to be in the range of $2,055-$2,165 million (previously $2,045-$2,165 million). The consensus estimate is currently pegged at $2.1 billion.
Healthcare revenues are expected to be in the range of $1,355-$1,385 million (previously $1,345-$1,385 million), while Non-healthcare revenues are expected to be in the band of $700-$780 million.
Adjusted EPS for 2024 is projected to be in the range of $3.54-$3.70, up from the previously guided range of $3.44-$3.60. The Zacks Consensus Estimate is pegged at $3.51.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo exited the first quarter with better-than-expected results. Robust demand for MASI’s sensors in the United States and Europe looks promising. The company continues to gain market share along with higher contracts with hospitals. Moreover, it expects to see improvement in shipments from the second quarter, which are likely to cross 55,000. Shipments will likely recover to more than 60,000 in the second half of 2024.
However, the decline in non-healthcare revenues is likely to continue for the rest of 2024 due to lower consumer spending.
Meanwhile, Masimo’s move to shift its sensor manufacturing from Mexico to Malaysia is encouraging, leading to lower production costs. The company has shifted more than two-thirds of sensor production during the first quarter, leading to improved gross margins for the Healthcare segment sequentially in the first quarter. Following the shifting of full capacity, the gross margin will benefit further as we move ahead in 2024. The company raised the EPS guidance to reflect the same. It is also working to separate the consumer healthcare business and professional healthcare business, which is estimated to boost the healthcare operating margin by 220-380 bps.
Zacks Rank and Stocks to Consider
Masimo currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, currently carrying a Zacks Rank #2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the consensus estimate by 4.9%. It currently carries a Zacks Rank of 2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.5%.
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Masimo (MASI) Q1 Earnings Beat Estimates, '24 EPS View Up
Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 77 cents in the first quarter of 2024, down 11.5% year over year. The figure, however, beat the Zacks Consensus Estimate by 8.5%.
The adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.
GAAP EPS was 35 cents, down 10.3% from the year-earlier figure.
Revenues in Detail
Masimo registered revenues of $492.8 million, down 12.8% year over year on a reported basis. However, the figure beat the Zacks Consensus Estimate by 1%.
The year-over-year decline in the top line primarily resulted from lower revenues from the company’s healthcare and non-healthcare segments.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 50,400 during the quarter.
Segmental Details
Masimo derives its revenues from two business sources, Healthcare and Non-healthcare.
Healthcare revenues in the first quarter totaled $339.6 million, indicating a decline of 2.1% on a reported basis and 1.6% at the constant exchange rate (CER). This compares with our projection of $332 million.
The decline in Healthcare revenues is primarily driven by a 21% reduction in capital equipment and other revenues, partially offset by growth in consumables and service revenues. The decline in capital equipment was primarily due to higher purchases by hospitals during COVID. However, the company stated that sensor orders in the United States and Europe were strong during the first quarter. Sales are likely to start reflecting year-over-year growth from the second quarter.
Non-healthcare revenues amounted to $153.2 million, implying a decline of 29.8% on a reported basis and 29.4% at CER. This compares with our projection of $155.1 million. The decline is primarily driven by lower consumer spending on luxury and premium products amid unfavorable macroeconomic conditions, including higher interest rates.
Margin Analysis
Masimo’s gross profit decreased 15.1% year over year to $262.7 million. The gross margin contracted 140 basis points (bps) to 49%.
We had projected the gross margin to be 62%.
Selling, general & administrative expenses decreased 18.5% to $159.9 million. Research and development expenses declined 5.3% to $47.8 million. Total adjusted operating expenses of $207.7 million decreased 15.8% on a year-over-year basis.
Total adjusted operating profit was $34 million, indicating a decline of 10.5% from the prior-year quarter’s level. The adjusted operating margin contracted 160 bps to 13.8%.
Financial Position
Masimo exited the first quarter with cash and cash equivalents of $157.6 million compared with $163 million at the end of 2023. Long-term debt at the end of the first quarter was $841.4 million compared with $871.7 million in 2023 end.
Cumulative net cash provided by operating activities was $45.8 million compared with $0.4 million in the year-ago period.
Guidance
Masimo has provided its outlook for the second quarter and raised the lower-end of revenue guidance for 2024. The company raised guidance for full-year earnings as well.
For the second quarter, total revenues are projected to be in the range of $480-$510 million. The Zacks Consensus Estimate is currently pegged at $500 million.
Healthcare revenues are expected to be between $330 million and $340 million, while Non-healthcare revenues are anticipated in the range of $150 -$170 million.
Adjusted EPS is projected to be in the band of 73-79 cents. The Zacks Consensus Estimate is pegged at 81 cents.
For 2024, total revenues are now estimated to be in the range of $2,055-$2,165 million (previously $2,045-$2,165 million). The consensus estimate is currently pegged at $2.1 billion.
Healthcare revenues are expected to be in the range of $1,355-$1,385 million (previously $1,345-$1,385 million), while Non-healthcare revenues are expected to be in the band of $700-$780 million.
Adjusted EPS for 2024 is projected to be in the range of $3.54-$3.70, up from the previously guided range of $3.44-$3.60. The Zacks Consensus Estimate is pegged at $3.51.
Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote
Our Take
Masimo exited the first quarter with better-than-expected results. Robust demand for MASI’s sensors in the United States and Europe looks promising. The company continues to gain market share along with higher contracts with hospitals. Moreover, it expects to see improvement in shipments from the second quarter, which are likely to cross 55,000. Shipments will likely recover to more than 60,000 in the second half of 2024.
However, the decline in non-healthcare revenues is likely to continue for the rest of 2024 due to lower consumer spending.
Meanwhile, Masimo’s move to shift its sensor manufacturing from Mexico to Malaysia is encouraging, leading to lower production costs. The company has shifted more than two-thirds of sensor production during the first quarter, leading to improved gross margins for the Healthcare segment sequentially in the first quarter. Following the shifting of full capacity, the gross margin will benefit further as we move ahead in 2024. The company raised the EPS guidance to reflect the same. It is also working to separate the consumer healthcare business and professional healthcare business, which is estimated to boost the healthcare operating margin by 220-380 bps.
Zacks Rank and Stocks to Consider
Masimo currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, currently carrying a Zacks Rank #2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the consensus estimate by 4.9%. It currently carries a Zacks Rank of 2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.5%.