Masimo’s first quarter results were met with a significant negative market reaction, reflecting investor concern over new headwinds despite revenue and adjusted earnings surpassing Wall Street expectations. Management attributed the strong revenue growth primarily to solid demand across core healthcare offerings and the timing of a large tender contract, which temporarily boosted capital equipment sales. CEO Katie Szyman highlighted the company’s operational improvements and the expansion of recurring consumable and service revenue, while also noting areas for improvement in commercial execution. CFO Micah Young pointed to meaningful operating margin expansion driven by last year’s cost optimizations and a renewed focus on the core healthcare business. However, the company acknowledged that timing-related lumpiness in tender contracts led to lower consumables sales, with expectations that these trends will normalize in future quarters.
Is now the time to buy MASI? Find out in our full research report (it’s free).
Masimo (MASI) Q1 CY2025 Highlights:
- Revenue: $372 million vs analyst estimates of $367.9 million (9.5% year-on-year growth, 1.1% beat)
- Adjusted EPS: $1.36 vs analyst estimates of $1.22 (11.5% beat)
- Adjusted EBITDA: $123.8 million vs analyst estimates of $108.5 million (33.3% margin, 14.1% beat)
- Management lowered its full-year Adjusted EPS guidance to $4.98 at the midpoint, a 5.2% decrease
- Operating Margin: 21%, up from 15.6% in the same quarter last year
- Constant Currency Revenue rose 10.5% year on year (-12.5% in the same quarter last year)
- Market Capitalization: $9.04 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Masimo’s Q1 Earnings Call
- Frederick Wise (Stifel) asked about the impact of the large tender contract on future quarters. CFO Micah Young clarified the effect was timing-related and expects normalization in upcoming quarters.
- Vik Chopra (Wells Fargo) questioned whether tariffs would alter long-term margin goals. Young responded that underlying margins remain strong and mitigation plans are in place, but the ultimate impact depends on trade policy resolution.
- Jason Bednar (Piper Sandler) inquired about hospital capital spending trends and the effect of a recent IT incident. Young stated that recurring revenue is robust and the IT issue should not change guidance based on current information.
- Mike Matson (Needham) queried the rationale for prioritizing share repurchases over debt reduction following the Sound United sale. Young said capital allocation will depend on market conditions but buybacks are currently prioritized.
- Matt Taylor (Jefferies) sought clarification on margin expansion and the practical impact of tariff mitigation initiatives. Young emphasized ongoing investments and noted that the real benefit of mitigation actions may materialize toward year-end and into next year.
Catalysts in Upcoming Quarters
Over the next few quarters, the StockStory team will be closely monitoring (1) the execution of tariff mitigation strategies and any relief from trade negotiations, (2) the effectiveness of the new regionally-focused sales force in driving cross-category product growth, and (3) the pace and impact of innovation in next-generation monitoring devices and algorithms. Additionally, updates on the deployment of Sound United sale proceeds and operational performance normalization after recent contract timing shifts will serve as key indicators of Masimo’s ability to navigate current market challenges.
Masimo currently trades at $164.49, up from $160.67 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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