Masimo 2025 Q1 Earnings Net Income Plummets Over 1000%

Masimo (MASI) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The company's performance fell short of expectations, with net income experiencing a significant decline. Additionally, Masimo adjusted its guidance to reflect new tariff impacts, anticipating lower EPS growth. Despite strong revenue growth in the healthcare segment, the overall financial performance was marred by the substantial net loss. The company remains optimistic about future prospects, focusing on healthcare innovation and commercial excellence.

Revenue
Masimo reported a 9.5% increase in total revenue for 2025 Q1, reaching $372 million, compared to $339.60 million in 2024 Q1. The healthcare segment was the primary driver with $371 million, while the other segment contributed $1 million to the total revenue.

Earnings/Net Income
Masimo faced a sharp downturn, reporting a net loss of $3.17 per share in 2025 Q1, contrasting with a profit of $0.36 per share in 2024 Q1. This reflects a negative change of 980.6% in EPS and a substantial net loss of $-170.70 million, marking a 1003.2% deterioration from the previous year's net income of $18.90 million. The EPS performance indicates severe financial challenges.

Post-Earnings Price Action Review
The strategy of acquiring Masimo shares post-revenue increase and holding them for 30 days has consistently delivered poor outcomes over the past five years. This approach has yielded a -4.33% return, significantly trailing the benchmark return of 83.12%. The excess return was -87.46%, and the compound annual growth rate was -0.89%, underscoring substantial losses. Furthermore, the strategy experienced a high maximum drawdown of -16.23% and exhibited a low Sharpe ratio of -0.12, indicating considerable risk and unfavorable returns. Investors should exercise caution, as this strategy has consistently underperformed due to its inherent volatility and negative outcomes.

CEO Commentary
Katie Szyman, Chief Executive Officer, highlighted the robust performance of Masimo's healthcare division, noting double-digit revenue and over 50% EPS growth. She emphasized the company's technological edge and praised the team's commitment to their mission. Szyman acknowledged areas for improvement in commercial excellence and innovation, expressing optimism about leveraging current momentum. The divestment of the consumer audio business was cited as a strategic shift to concentrate on healthcare innovation, projecting a positive future outlook.

Guidance
Masimo projects fiscal 2025 revenue between $1,500 million and $1,530 million, indicating 8% to 11% constant currency growth. The company forecasts non-GAAP EPS of $5.30 to $5.60, a $0.20 increase at the midpoint from previous guidance. Including tariff impacts, operating margins are expected at 25.5% to 26.4%, with EPS ranging from $4.80 to $5.15. Tariffs are anticipated to affect EPS by $0.45 to $0.50, with cost increases estimated at $33 million to $37 million for the fiscal year.

Additional News
Masimo has announced the sale of its Sound United consumer audio division to HARMAN International for $350 million, as part of its strategic focus on healthcare innovation. The divestiture allows Masimo to allocate resources more effectively towards its core healthcare operations. Additionally, Quentin Koffey, Vice Chairman of Masimo’s Board of Directors, emphasized the importance of finding a suitable home for the consumer audio business and reaffirmed the company's commitment to accelerating revenue growth while maintaining disciplined margins. This move is expected to strengthen Masimo's position in the healthcare sector, with a renewed focus on innovation and operational efficiency.