MASI Stock Slips Despite Q1 Earnings and Revenue Beat, Margins Expand

Masimo Corporation MASI delivered adjusted earnings per share (EPS) of $1.36 in the first quarter of 2025, up 56.3% year over year. The figure beat the Zacks Consensus Estimate by 9.7%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The adjustments include acquired intangible asset amortization, and acquisitions, integrations, divestitures, and related costs, among others.

GAAP EPS for the quarter was 86 cents, up 45.8% from the year-ago period’s EPS of 59 cents.

MASI’s Revenues in Detail

Masimo registered revenues of $372 million in the first quarter, up 9.5% year over year on a reported basis. The figure beat the Zacks Consensus Estimate by 1.3%.

At constant exchange rate (CER), revenues were $375.2 million, up 10.5% year over year.

Per management, the top line was aided by the timing of shipments related to a large tender contract renewal that resulted in higher capital sales. This was partially offset by consumable sales.

The shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, totaled 72,200 in the first quarter of 2025, up 43.3% year over year.

Shares of this company lost nearly 7.1% in yesterday’s after-hours trading.

Masimo’s Segmental Details

Masimo derived its revenues from two business sources — Revenue (excluding related party revenues) and Related party revenues.

Revenue (excluding related party revenues) in the first quarter totaled $340.2 million (up 10.1% year over year on a reported basis), while Related party revenues were $31.8 million (up 3.9% year over year on a reported basis).

Segment-wise, Masimo derived its revenues from Healthcare and Other.

Healthcare revenues in the first quarter totaled $371 million, up 9.2% on a reported basis and 10% at CER year over year. This compares to our projection of revenues of $367.3 million in the first quarter.

Within Masimo’s Healthcare segment, the consumable and service revenues grew 8%, while capital equipment and other revenues grew 32% year over year.

Other revenues in the first quarter amounted to $1 million.

Masimo Corporation Price, Consensus and EPS Surprise

Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote

MASI’s Margin Analysis

In the quarter under review, Masimo’s gross profit increased 13.3% year over year to $234 million. The gross margin expanded 207 basis points (bps) to 62.9%. We had projected a gross margin of 62.7% for the first quarter.

Selling, general & administrative expenses increased 3.2% year over year to $119.4 million. Research and development expenses declined 10.3% year over year to $33.9 million. Total adjusted operating expenses of $153.3 million decreased 0.1% on a year-over-year basis.

Total adjusted operating profit totaled $80.7 million, reflecting a 51.9% surge from the year-ago quarter. The adjusted operating margin in the first quarter expanded 606 bps to 21.7%.

Masimo’s Financial Position

Masimo exited first-quarter 2025 with cash and cash equivalents of $130.8 million compared with $123.6 million at the end of 2024. Long-term debt at the end of first-quarter 2025 was $636 million compared with $714.3 million at 2024-end.

Net cash provided by operating activities at the end of first-quarter 2025 was $37.9 million compared with $38.6 million a year ago.

MASI’s Guidance

Masimo has revised its outlook for 2025.

For 2025, total revenues are continued to be expected in the range of $1,500 million to $1,530 million, up 8-11% at CER from the comparable 2024 period. The Zacks Consensus Estimate is pegged at $1.52 billion.

Excluding the impact of tariffs, the adjusted EPS for 2025 is now projected to be in the range of $5.30-$5.60, up from the prior outlook of $5.10-$5.40 (reflecting growth of 22-29% from the comparable 2024 figures). The Zacks Consensus Estimate is pegged at $5.28.

Including the tariff impact, the adjusted EPS for 2025 is projected to be in the range of $4.80-$5.15.

Our Take

Masimo exited the first quarter of 2025 with better-than-expected results. The solid top and bottom-line performances and uptick in Healthcare revenues were encouraging. The continued strength in the consumable and service revenues and capital equipment and other revenues looked promising. The expansion of both margins bodes well for the stock.

Yesterday, Masimo entered into a definitive agreement to sell its Sound United consumer audio business to HARMAN International, a wholly-owned subsidiary of Samsung Electronics Co., Ltd. The sale follows the previously announced review of MASI’s consumer audio business and will support the company’s strategic focus on driving innovation in its core professional healthcare segment. This raises our optimism.

On the flip side, management confirmed that it expects the impact of tariffs to increase each quarter for the remainder of the year during the earnings call. This raises our apprehension.

Masimo’s Zacks Rank & Other Key Picks

MASI currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space that have announced quarterly results are CVS Health Corporation CVS, Integer Holdings Corporation ITGR and Boston Scientific Corporation BSX.

CVS Health, carrying a Zacks Rank of 2, reported first-quarter 2025 adjusted EPS of $2.25, beating the Zacks Consensus Estimate by 31.6%. Revenues of $94.59 billion outpaced the consensus mark by 1.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CVS Health has a long-term estimated growth rate of 11.4%. CVS’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.1%.

Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.

Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.

Boston Scientific reported first-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 11.9%. Revenues of $4.66 billion surpassed the Zacks Consensus Estimate by 2.3%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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