Masimo $MASI Reports Beats, Acquires Sound United

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MASI stock had trading halts kick in on February 16, 2022, after the company reported EPS and revenue beats and that it is acquiring Sound United.

Masimo Reports Fourth Quarter and Full-Year 2021 Financial Results and Announces Agreement to Acquire Sound United

Masimo (Nasdaq: MASI) announced its financial results for the fourth quarter and full-year ended January 1, 2022. Masimo reported Q4 adjusted EPS of $1.21 versus the consensus estimate of $1.10. The company reported Q4 revenue of $327.6M versus the consensus estimate of $320.25M.

Product revenue increased 11.0% to $327.6 million, or 11.5% on a constant currency basis, compared to $295.1 million in the fourth quarter of 2020. Excluding handheld and fingertip pulse oximeters, shipments of noninvasive technology boards and instruments were 76,000 in the fourth quarter of 2021.

For the fourth quarter of 2021, GAAP operating margin was 23.6%, compared to 22.0% in the fourth quarter of 2020. Fourth-quarter 2021 non-GAAP operating margin was 25.7%, compared to 23.1% in the fourth quarter of 2020.

For the fourth quarter of 2021, GAAP net income was $68.3 million, or $1.18 per diluted share, compared to GAAP net income of $70.6 million or $1.21 per diluted share, in the fourth quarter of 2020. Fourth-quarter 2021 non-GAAP net income was $70.1 million, or $1.21 per diluted share, compared to net income of $57.3 million, or $0.98 per diluted share, in the fourth quarter of 2020.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, “While 2021 was a very challenging year in global healthcare and for millions of patients, we were able to help ease the burden on hospitals and caregivers by providing them with our breakthrough technologies. Our team truly demonstrated our commitment to our mission and guiding principles by putting our customers’ and patients’ priorities first. Last year, we manufactured and installed record amounts of innovative products, building on our reputation for innovation, responsiveness, and dedication to customers. As we enter 2022, we look forward to introducing new innovations and solutions to improve patient outcomes and reduce the cost of care.”

Sound United Enters into Agreement to Be Acquired by Masimo Corporation

Sound United, LLC, a leading innovator of premium, high-performance audio products for consumers around the world, today announced that it has entered into a definitive agreement to be acquired by Masimo Corporation (Nasdaq: MASI) (“Masimo”). Masimo is a leading global medical technology company that develops, manufactures, and markets various noninvasive monitoring technologies for hospital and home settings.

Sound United operates iconic consumer brands: Bowers & Wilkins, Denon, Polk Audio, Marantz, Definitive Technology, Classé, and Boston Acoustics. A commitment links the brands to the highest production standards and a focus on unparalleled audio quality and performance. Sound United delivers significant competitive benefits through its platform advantages, including global distribution across online, retail, and custom installation channels; a cloud-connected home ecosystem; and state-of-the-art R&D function focused on creating the highest-quality consumer products with world-class industrial design.

“I have long been a fan (and proud owner) of Sound United’s iconic brands and am honored to steward them through the next generation of technological evolution,” Masimo Founder, Chair & CEO Joe Kiani commented. “Masimo shares Sound United’s commitment to providing innovative, best-in-class products and experiences, with a relentless focus on improving the consumer experience.”

A combined Masimo and Sound United will create stronger relationships with consumers and seamlessly deliver high-quality consumer products. The company will leverage Sound United’s expertise across consumer channels to accelerate the distribution of Masimo’s expanding portfolio of consumer products. The resulting company will benefit from a world-class professional, and consumer engineering function focused on products that make an impact on the lives of our consumers.

“We’re excited about this transaction and see significant potential in combining our expertise in consumer electronics and audio engineering with Masimo’s strengths in healthcare and monitoring,” said Kevin Duffy, CEO of Sound United. “With our track record of industry-first innovation, best-in-class products, and a global distribution network, we are the ideal partner for Masimo to transform the consumer healthcare experience. I look forward to working with the Masimo team to enrich the lives of consumers.”

The transaction is expected to close near the middle of 2022, subject to the receipt of regulatory approvals and other customary closing conditions.

Post-closing, Kevin Duffy will continue to lead Sound United, reporting directly to Masimo Chairman and Chief Executive Officer Joe Kiani.

Sound United is a portfolio company of Boston-based private equity firm Charlesbank Capital Partners, LLC. Citigroup acted as financial advisor to Masimo, and Paul Hastings LLP served as legal counsel. Evercore served as lead financial advisor to Sound United. Stifel and Solomon Partners also provided financial advice to Sound United, and Goodwin Procter LLP served as legal counsel.

Sound United was founded in 2012 with a simple mission – to bring joy to the world through sound. Today, we are one of the world’s largest portfolio audio companies and home to several legendary audio brands—Denon®, Marantz®, Bowers and Wilkins, Polk Audio, Classé, Definitive Technology, HEOS, and Boston Acoustics®. Each brand boasts its own philosophy and unique approach to bringing home entertainment to life.

With centuries of collective experience, Sound United oversees the design and manufacture of a diverse array of premium audio products, including loudspeakers, soundbars, AV receivers, wireless speakers, amplifiers, turntables, and headphones. We create distinct and memorable listening experiences for a wide range of consumers in more than 130 countries.

Masimo price target lowered to $295 from $325 at UBS

UBS analyst Matthew Taylor lowered the firm’s price target on Masimo to $295 from $325 but kept a Buy rating on the shares after its Q4 earnings beat. The company continues to see solid trends and expects another solid year of shipments. Still, moving into consumer areas with the acquisition of Sound United also adds risks by drawing in consumer assets that do not have the same moat or garner the same multiple as Masimo’s core franchise, the analyst tells investors in a research note.

Masimo downgraded to Neutral from Overweight at Piper Sandler

Piper Sandler analyst Jason Bednar downgraded Masimo to Neutral from Overweight with a price target of $200, down from $330, following the Q4 results. The company’s acquisition of Sound United, a consumer technology company that specializes in high-end home audio equipment, brings “too many questions/unknowns” regarding the fit acquisition rationale, Bednar tells investors in a research note. The analyst believes “investors faced with the same conundrum will have a hard time stepping in to buy shares even despite immediate accretion.”

📺 The Birth of Masimo: How Project Stork and SET® Pulse Oximetry Revolutionized Neonatal Care


📉 MASI Stock Technical Analysis

Masi Stock

Both the long and short-term trends are negative. It is better to avoid buying stocks with negative trends. MASI is part of the Health Care Equipment & Supplies industry. There are 217 other stocks in this industry, MASI did better than 61% of them. MASI is currently making a new 52 week low. This is a very bad signal. MASI is lagging the S&P500 Index which is trading in the middle of its 52-week range.

There is a resistance zone ranging from 211.21 to 211.22. This zone is formed by a combination of multiple trend lines in the weekly time frame. There is also resistance at 217.39 from a horizontal line in the weekly time frame. Finally, there is a resistance zone ranging from 226.57 to 227.39. This zone is formed by a combination of multiple trend lines and important moving averages in the daily time frame.

The technical rating of MASI is bad and it also does not present a quality setup at the moment. MASI stock has a Setup Rating of 2 out of 10. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when MASI stock consolidates and has a Setup Rating of 8 or higher.

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