Masimo reports consolidated revenue of USD 478.9M in Q3

Masimo Corporation announced its financial results for the third quarter of 2023, ended September 30, 2023.

Third quarter 2023 financial results
Consolidated revenue was $478.9 million, comprised of healthcare revenue of $307.8 million and non-healthcare revenue of $171.1 million.

Shipments of noninvasive technology boards and instruments were 63,100.

Consolidated GAAP operating income was $25.2 million. Consolidated non-GAAP operating income was $56.9 million. Consolidated GAAP net income was $10.6 million, or $0.20 per diluted share. Consolidated non-GAAP net income was $33.7 million, or $0.63 per diluted share.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, “Our performance for the third quarter was within our guidance range communicated last quarter. That said, our healthcare business is navigating a clear transition away from Covid-era conditions. We are beginning to see that customer behavior and sensor purchasing patterns are shifting back to the pre-pandemic growth trend line we saw from 2017 to 2019. Together with our record contracting performance through the third quarter, this reinforces our conviction in the underlying long-term growth rate for our healthcare business. As we emerge from this transition year, these trends, along with our new product launches and rapid growth in our hearables category, are setting the stage for a strong 2024.”

For additional financial details, please visit the Investor Relations section of the Company’s website at investor.masimo.com to access the third quarter 2023 earnings presentation materials.

Updated fourth-quarter 2023 and full-year 2023 financial guidance
The Company provided the following updated estimates for its fourth-quarter 2023 and full-year financial guidance:

• For the healthcare segment, fourth-quarter 2023 revenue guidance includes year-over-year foreign currency tailwinds of $1 million and full-year 2023 revenue guidance includes year-over-year foreign currency headwinds of $6 million.

• For the non-healthcare segment, fourth-quarter 2023 revenue guidance includes year-over-year foreign currency tailwinds of $3 million and full-year 2023 revenue guidance includes year-over-year foreign currency headwinds of $9 million.

Supplementary non-GAAP financial information
For additional non-GAAP financial details, please visit the Investor Relations section of the Company’s website at investor.masimo.com to access Supplementary Financial Information.

Non-GAAP financial measures
The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with U.S. GAAP. The non-GAAP financial measures presented exclude the items described below. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results. Furthermore, management also believes that these items are not indicative of the Company’s on-going operating performance. These non-GAAP financial measures have certain limitations in that they do not reflect all of the costs associated with the operations of the Company’s business as determined in accordance with GAAP.

Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies.

The Company has presented the following non-GAAP measures to assist investors in understanding the Company’s net operating results on an on-going basis: (i) constant currency revenue growth %, (ii) non-GAAP net income, (iii) non-GAAP (net income) earnings per diluted share and (iv) non-GAAP operating income/margin. These non-GAAP financial measures may also assist investors in making comparisons of the Company’s operating results with those of other companies. Management believes constant currency revenue growth, non-GAAP operating income/margin, non-GAAP net income and non-GAAP earnings per diluted share are important measures in the evaluation of the Company’s performance and uses these measures to better understand and evaluate our business.

The non-GAAP financial measures reflect adjustments for the following items:

Constant currency revenue adjustments
Some of our sales agreements with foreign customers provide for payment in currencies other than the U.S. Dollar. These foreign currency revenues, when converted into U.S. Dollars, can vary significantly from period-to-period depending on the average and quarter-end exchange rates during a respective period. We believe that comparing these foreign currency denominated revenues by holding the exchange rates constant with the prior year period is useful to management and investors in evaluating our revenue growth rates on a period-to-period basis. We anticipate that fluctuations in foreign exchange rates and the related constant currency adjustments for calculation of our revenue growth rate will continue to occur in future periods.

Acquisition, integration and related costs

These transactions represent gains, losses, and other related costs associated with acquisitions, integrations, investments, divestitures, assets impairments, and in-process research and development.

Acquired tangible asset amortization
These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired tangible assets and asset valuation step-ups.

Acquired intangible asset amortization
These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired intangible assets including, but not limited to customer relationships, intellectual property, trade names and non-competition agreements.

Business transition and related costs
These transactions represent gains, losses, and other related costs associated with business transition plans. These items may include but are not limited to severance, relocation, consulting, leasehold exit costs, asset impairment, and other related costs to rationalize our operational footprint and optimize business results.

Litigation related expenses, settlements and awards
These transactions represent gains, losses, and other related costs associated with certain litigation matters, which can vary in their characteristics, frequency and significance to our operating results.

Other adjustments
In the event there are gains, losses and other adjustments which impact period-to-period comparability and do not represent the underlying ongoing results of the business, the Company may choose to exclude these from non-GAAP earnings.

Realized and unrealized gains or losses
These transactions represent gains, losses, and other related costs associated with foreign currency denominated transactions and investments. Changes in the underlying currency rates relative to the U.S. Dollar may result in realized and unrealized foreign currency gains and losses between the time these receivables and payables arise and the time that they are settled in cash. Unrealized and realized gains and losses on investments may impact the Company’s reported results of operations for a period. These items are highly variable, difficult to predict and outside the control of those responsible for the underlying operations of the business. Other items also included here are mark-to-market gains and losses of derivative contracts that are not designated as hedging instruments or the ineffective portions of cash flow hedges.

Tax impact of non-GAAP adjustments
In order to reflect the tax effected impact of the non-GAAP adjustments, the Company will adjust the non-GAAP earnings by the approximate tax impact of these adjustments.

Excess tax benefits from stock-based compensation expense
GAAP requires that excess tax benefits recognized on stock-based compensation expense be reflected in our provision for income taxes rather than paid-in capital. As these excess tax benefits may be highly variable from period-to-period, the Company may choose to exclude these tax benefits from non-GAAP earnings to facilitate comparability between periods and with peers.