In its first earnings report since the departure of longtime CEO Joe Kiani, Masimo said Tuesday it is focused on reducing spending to drive long-term growth.
The company continues to evaluate strategic alternatives for the consumer business, executives said on the third-quarter earnings call. CFO Micah Young said the board has not yet determined how the business will be separated.
But if Masimo decides to no longer pursue a spinoff of the consumer segment into a publicly traded company, it expects to treat the business as a discontinued operation, Young explained, with results excluded from non-GAAP earnings if it remains with the company into the first quarter of 2025.
Masimo acquired its consumer audio business from Sound United for $1 billion in 2022.
Interim CEO Michelle Brennan praised Masimo’s “strong team” after meeting with many employees over the past month. Brennan, who joined the board last year, stepped into the CEO position when Kiani resigned in September following a two-year proxy battle with Politan Capital Management.
“Notably, we have not seen any critical talent departure since the annual meeting and, in fact, have seen attrition rates decline,” Brennan told investors on the call.
The company said the search for a permanent CEO is ongoing.
“It seems increasingly clear that the new [Masimo] team is working well and the company is getting back on track,” Stifel analyst Rick Wise said in a note to clients Tuesday.
Young said Masimo is lowering corporate overhead costs, with cuts such as selling the corporate jet and reducing marketing expenses for products that aren't producing meaningful revenue and returns.
The company is de-emphasizing two products focused on opioid management, Chief Operating Officer Bilal Muhsin said.
“We are working through a lot of things to really refocus resources in the organization, reallocate those resources to drive our top-line growth and really focus on the projects that are going to deliver the best returns,” Young said.
Masimo reported third-quarter consolidated revenue of $504.6 million, up 5% from the year-ago quarter. Healthcare revenue rose year over year by about 12% to $343.3 million, and non-healthcare revenue declined 6% year over year to $161.3 million.
The non-healthcare segment saw continued slowing in demand for its consumer audio products, the company said, citing a weakening environment for luxury purchases and a sluggish housing market, which affects product installations and upgrades.
