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Masimo (MASI) Q2 Earnings Beat Estimates, Gross Margin Up
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Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 86 cents in the second quarter of 2024, up 13.2% year over year. The figure beat the Zacks Consensus Estimate by 11.7%.
The adjustments include acquired intangible asset amortization, and acquisitions, integrations, divestitures, and related costs, among others.
GAAP EPS for the quarter was 29 cents, flat year over year.
Revenues in Detail
Masimo registered revenues of $496.3 million in the second quarter, up 9% year over year on a reported basis. The figure beat the Zacks Consensus Estimate by 0.2%.
The top line was aided by robust Healthcare revenues, partially offset by lower revenues from the Non-healthcare segment.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 58,600 in the second quarter of 2024.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the second quarter totaled $343.9 million, indicating an uptick of 22.4% on a reported basis and 23% at constant exchange rate (CER) year over year. This compares to our projection of revenues of $335 million in the second quarter.
Within Masimo’s Healthcare segment, the consumable and service revenues grew 29%, partially offset by an expected decline of 9% in capital and other revenues. Within consumable and service revenues, the set pulse oximetry consumables grew 35%, capnography consumables grew 35%, and brain monitoring consumables grew 19%. However, this was partially offset by a decline of 5% in rainbow consumable revenues due to the timing of shipments outside the United States. Also, the incremental value of new contracts was $134 million in the second quarter, up 28% year over year.
Non-healthcare revenues in the second quarter amounted to $152.4 million, implying a decline of 12.5% on a reported basis and 10.8% at CER year over year. This compares to our projection of revenues of $158.3 million in the second quarter.
Per management, the Non-healthcare business continues to be affected by the weakening environment for luxury consumer purchases and slowness in the housing market, which affects product installations and upgrades.
Masimo Corporation Price, Consensus and EPS Surprise
In the quarter under review, Masimo’s gross profit increased 15.2% year over year to $254.8 million. The gross margin expanded 276 basis points (bps) to 51.3%. We had projected 49.9% of gross margin in the second quarter of 2024.
Selling, general & administrative expenses increased 17% to $177.5 million. Research and development expenses rose 21.9% year over year to $49 million. Total operating expenses of $226.5 million increased 18% on a year-over-year basis.
Total operating profit was $28.3 million, indicating a decline of 3.4% from the prior-year quarter’s level. The operating margin in the second quarter contracted 73 bps to 5.7%.
Financial Position
Masimo exited second-quarter 2024 with cash and cash equivalents of $129.6 million compared with $157.6 million at the end of the first quarter. Long-term debt at the end of second-quarter 2024 was $746.5 million compared with $841.4 million at the first-quarter end.
Cumulative net cash provided by operating activities at the end of second-quarter 2024 was $120.3 million compared with $24 million a year ago.
Guidance
Masimo has provided its outlook for the third quarter and revised the same for 2024.
For the third quarter, total revenues are projected to be in the range of $495 million-$515 million. The Zacks Consensus Estimate is currently pegged at $507.9 million.
Healthcare revenues are expected to be between $335 million and $345 million, while Non-healthcare revenues are anticipated to be in the range of $160 million to $170 million.
Adjusted EPS for the third quarter is projected to be in the band of 81-86 cents. The Zacks Consensus Estimate is pegged at 85 cents.
For 2024, total revenues are now estimated to be in the range of $2,085 million-$2,135 million, narrowed from the earlier projection of $2,055 million-$2,165 million. The Zacks Consensus Estimate is currently pegged at $2.10 billion.
For 2024, Healthcare revenues are now expected to be in the $1,385 million-$1,405 million range, up from the previous outlook of $1,355 million-$1,385 million.
Non-healthcare revenues are now expected to be in the band of $700 million-$730 million, narrowed from the prior expectations of $700 million-$780 million.
Adjusted EPS for 2024 is now projected to be in the range of $3.80-$4.00, up from the earlier projection of $3.54-$3.70. The Zacks Consensus Estimate is pegged at $3.63.
Our Take
Masimo exited the second quarter of 2024 with better-than-expected results. The uptick in consolidated revenues and Healthcare revenues was encouraging. The gross margin expansion also bodes well.
On the second-quarter earnings call, Masimo’s management confirmed that it saw strong demand for Masimo sensors due to the combination of strong hospital conversions over the past few years, normalization of installations, and rising hospital admissions after a tumultuous post-COVID environment. This raises our optimism.
On the flip side, the continued decline in its Non-healthcare revenues was disappointing. Rising operating costs leading to the contraction of the operating margin in the quarter do not bode well. Masimo continued to navigate through challenging macroeconomic conditions, including inflationary costs and increases in labor costs. This also raises our apprehension.
Zacks Rank & Key Picks
Masimo currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Blueprint Medicines Corporation (BPMC - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Blueprint Medicines, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2024 loss per share of 80 cents, beating the Zacks Consensus Estimate by 37.5%. Revenues of $138.2 million outpaced the consensus mark by 32.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Blueprint Medicines has a long-term estimated growth rate of 34%. BPMC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.9%.
Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.
Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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Masimo (MASI) Q2 Earnings Beat Estimates, Gross Margin Up
Masimo Corporation (MASI - Free Report) delivered adjusted earnings per share (EPS) of 86 cents in the second quarter of 2024, up 13.2% year over year. The figure beat the Zacks Consensus Estimate by 11.7%.
The adjustments include acquired intangible asset amortization, and acquisitions, integrations, divestitures, and related costs, among others.
GAAP EPS for the quarter was 29 cents, flat year over year.
Revenues in Detail
Masimo registered revenues of $496.3 million in the second quarter, up 9% year over year on a reported basis. The figure beat the Zacks Consensus Estimate by 0.2%.
The top line was aided by robust Healthcare revenues, partially offset by lower revenues from the Non-healthcare segment.
Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 58,600 in the second quarter of 2024.
Segmental Details
Masimo derives its revenues from two business sources — Healthcare and Non-healthcare.
Healthcare revenues in the second quarter totaled $343.9 million, indicating an uptick of 22.4% on a reported basis and 23% at constant exchange rate (CER) year over year. This compares to our projection of revenues of $335 million in the second quarter.
Within Masimo’s Healthcare segment, the consumable and service revenues grew 29%, partially offset by an expected decline of 9% in capital and other revenues. Within consumable and service revenues, the set pulse oximetry consumables grew 35%, capnography consumables grew 35%, and brain monitoring consumables grew 19%. However, this was partially offset by a decline of 5% in rainbow consumable revenues due to the timing of shipments outside the United States. Also, the incremental value of new contracts was $134 million in the second quarter, up 28% year over year.
Non-healthcare revenues in the second quarter amounted to $152.4 million, implying a decline of 12.5% on a reported basis and 10.8% at CER year over year. This compares to our projection of revenues of $158.3 million in the second quarter.
Per management, the Non-healthcare business continues to be affected by the weakening environment for luxury consumer purchases and slowness in the housing market, which affects product installations and upgrades.
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 increased 15.2% year over year to $254.8 million. The gross margin expanded 276 basis points (bps) to 51.3%. We had projected 49.9% of gross margin in the second quarter of 2024.
Selling, general & administrative expenses increased 17% to $177.5 million. Research and development expenses rose 21.9% year over year to $49 million. Total operating expenses of $226.5 million increased 18% on a year-over-year basis.
Total operating profit was $28.3 million, indicating a decline of 3.4% from the prior-year quarter’s level. The operating margin in the second quarter contracted 73 bps to 5.7%.
Financial Position
Masimo exited second-quarter 2024 with cash and cash equivalents of $129.6 million compared with $157.6 million at the end of the first quarter. Long-term debt at the end of second-quarter 2024 was $746.5 million compared with $841.4 million at the first-quarter end.
Cumulative net cash provided by operating activities at the end of second-quarter 2024 was $120.3 million compared with $24 million a year ago.
Guidance
Masimo has provided its outlook for the third quarter and revised the same for 2024.
For the third quarter, total revenues are projected to be in the range of $495 million-$515 million. The Zacks Consensus Estimate is currently pegged at $507.9 million.
Healthcare revenues are expected to be between $335 million and $345 million, while Non-healthcare revenues are anticipated to be in the range of $160 million to $170 million.
Adjusted EPS for the third quarter is projected to be in the band of 81-86 cents. The Zacks Consensus Estimate is pegged at 85 cents.
For 2024, total revenues are now estimated to be in the range of $2,085 million-$2,135 million, narrowed from the earlier projection of $2,055 million-$2,165 million. The Zacks Consensus Estimate is currently pegged at $2.10 billion.
For 2024, Healthcare revenues are now expected to be in the $1,385 million-$1,405 million range, up from the previous outlook of $1,355 million-$1,385 million.
Non-healthcare revenues are now expected to be in the band of $700 million-$730 million, narrowed from the prior expectations of $700 million-$780 million.
Adjusted EPS for 2024 is now projected to be in the range of $3.80-$4.00, up from the earlier projection of $3.54-$3.70. The Zacks Consensus Estimate is pegged at $3.63.
Our Take
Masimo exited the second quarter of 2024 with better-than-expected results. The uptick in consolidated revenues and Healthcare revenues was encouraging. The gross margin expansion also bodes well.
On the second-quarter earnings call, Masimo’s management confirmed that it saw strong demand for Masimo sensors due to the combination of strong hospital conversions over the past few years, normalization of installations, and rising hospital admissions after a tumultuous post-COVID environment. This raises our optimism.
On the flip side, the continued decline in its Non-healthcare revenues was disappointing. Rising operating costs leading to the contraction of the operating margin in the quarter do not bode well. Masimo continued to navigate through challenging macroeconomic conditions, including inflationary costs and increases in labor costs. This also raises our apprehension.
Zacks Rank & Key Picks
Masimo currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Blueprint Medicines Corporation (BPMC - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Blueprint Medicines, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2024 loss per share of 80 cents, beating the Zacks Consensus Estimate by 37.5%. Revenues of $138.2 million outpaced the consensus mark by 32.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Blueprint Medicines has a long-term estimated growth rate of 34%. BPMC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.9%.
Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.
Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.