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Masimo (MASI) Gets Non-Binding Offer for Consumer Business
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Masimo (MASI - Free Report) recently announced that, on Jul 2, it received a non-binding term sheet confirmation from a third party, which included an acquisition offer for MASI’s consumer business. MASI did not provide any details about the third party.
Masimo and the third party entered into a non-binding term sheet in May to sell the majority stake in MASI’s consumer audio and consumer health businesses. The third party offered to acquire a stake in MASI’s consumer business for a purchase price in the range of $850 million to $950 million, on a cash and debt-free basis, following the completion of six weeks of due diligence.
More on the Deal
Apart from the undisclosed third party, one to two other companies may join the offer to form a potential joint venture, per the term sheet. Masimo and the third party are currently in discussions for finalizing acquisition-deal terms, including the grant of certain intellectual property rights to the venture to be formed following the separation of the consumer business.
Masimo had paid more than a billion dollars to acquire Viper Holdings Corporation, which owns Sound United, adding the consumer business to its portfolio in 2022. The current term sheet offer is lower than the acquisition price paid by Masimo, implying a potential loss for shareholders. Masimo currently continues to evaluate options that will help it get an optimal value-maximizing structure for its consumer business, including the active consideration of a possible spin-off of the consumer business into a new public company.
Politan Tussle
The term-sheet offer comes amid Masimo’s tussle with activist investor Politan Capital, which has been criticizing the Viper Holdings deal since it joined the company’s board last year. Politan has been pressurizing for a separation of the consumer business since joining. Politan is also concerned about the transfer of IP rights to the consumer business unit following its separation.
Politan is looking to oust MASI’s founder and CEO, Joe Kiani, and gain control of Masimo’s board during a proxy vote later this month that may lead to rejection of the term-sheet offer if Politan objects to the rights transfer.
Shares of Masimo have declined 5.1% so far this year against the industry’s 3.4% rise and the S&P 500’s 18.8% growth.
Image Source: Zacks Investment Research
Another Development
Apart from announcing the term-sheet offer, Masimo announced preliminary results for the second quarter. Consolidated revenues are likely to be $496 million, up 9% year over year on a reported basis and 10% at constant currency during the quarter. Masimo witnessed strength in its healthcare business in the second quarter, along with a strong order backlog as it entered the third quarter. Sensor utilization and hospital census have also improved from 2023. The company achieved a record second quarter in terms of converting customers to Masimo’s technologies, with an expected $134 million of incremental contract value.
Zacks Rank & Other Key Picks
Masimo currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita (DVA - Free Report) , DexCom (DXCM - Free Report) and Universal Health Services (UHS - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 13.6%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 29.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 33% year to date compared with the industry’s 3.9% growth.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22.9%. DXCM’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 34.1%.
DexCom’s shares have lost 10.7% against the industry’s 2.9% growth year to date.
Universal Health Services, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.2% for 2024. UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.12%.
Universal Health Services’ shares have risen 18.2% year to date compared with the industry’s 18.1% growth.
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Masimo (MASI) Gets Non-Binding Offer for Consumer Business
Masimo (MASI - Free Report) recently announced that, on Jul 2, it received a non-binding term sheet confirmation from a third party, which included an acquisition offer for MASI’s consumer business. MASI did not provide any details about the third party.
Masimo and the third party entered into a non-binding term sheet in May to sell the majority stake in MASI’s consumer audio and consumer health businesses. The third party offered to acquire a stake in MASI’s consumer business for a purchase price in the range of $850 million to $950 million, on a cash and debt-free basis, following the completion of six weeks of due diligence.
More on the Deal
Apart from the undisclosed third party, one to two other companies may join the offer to form a potential joint venture, per the term sheet. Masimo and the third party are currently in discussions for finalizing acquisition-deal terms, including the grant of certain intellectual property rights to the venture to be formed following the separation of the consumer business.
Masimo had paid more than a billion dollars to acquire Viper Holdings Corporation, which owns Sound United, adding the consumer business to its portfolio in 2022. The current term sheet offer is lower than the acquisition price paid by Masimo, implying a potential loss for shareholders. Masimo currently continues to evaluate options that will help it get an optimal value-maximizing structure for its consumer business, including the active consideration of a possible spin-off of the consumer business into a new public company.
Politan Tussle
The term-sheet offer comes amid Masimo’s tussle with activist investor Politan Capital, which has been criticizing the Viper Holdings deal since it joined the company’s board last year. Politan has been pressurizing for a separation of the consumer business since joining. Politan is also concerned about the transfer of IP rights to the consumer business unit following its separation.
Politan is looking to oust MASI’s founder and CEO, Joe Kiani, and gain control of Masimo’s board during a proxy vote later this month that may lead to rejection of the term-sheet offer if Politan objects to the rights transfer.
Shares of Masimo have declined 5.1% so far this year against the industry’s 3.4% rise and the S&P 500’s 18.8% growth.
Image Source: Zacks Investment Research
Another Development
Apart from announcing the term-sheet offer, Masimo announced preliminary results for the second quarter. Consolidated revenues are likely to be $496 million, up 9% year over year on a reported basis and 10% at constant currency during the quarter. Masimo witnessed strength in its healthcare business in the second quarter, along with a strong order backlog as it entered the third quarter. Sensor utilization and hospital census have also improved from 2023. The company achieved a record second quarter in terms of converting customers to Masimo’s technologies, with an expected $134 million of incremental contract value.
Zacks Rank & Other Key Picks
Masimo currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita (DVA - Free Report) , DexCom (DXCM - Free Report) and Universal Health Services (UHS - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 13.6%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 29.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 33% year to date compared with the industry’s 3.9% growth.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22.9%. DXCM’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 34.1%.
DexCom’s shares have lost 10.7% against the industry’s 2.9% growth year to date.
Universal Health Services, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.2% for 2024. UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.12%.
Universal Health Services’ shares have risen 18.2% year to date compared with the industry’s 18.1% growth.