Masimo Swings to Loss Amid Sound United Divestiture, Healthcare Shines

TL;DR

**Masimo's massive net loss is a one-time hit from shedding its consumer business; the core healthcare segment is actually thriving, making it a buy on the dip.**

AI Summary

Masimo Corporation reported a net loss of $100.4 million for the three months ended September 27, 2025, a significant decline from a net income of $9.8 million in the prior-year period. For the nine months ended September 27, 2025, the company posted a net loss of $219.8 million, compared to a net income of $44.7 million in the same period of 2024. This substantial loss is primarily attributed to a net loss from discontinued operations of $154.1 million for the three months and $365.6 million for the nine months, related to the sale of its non-healthcare consumer business, Sound United, to Harman International Industries, Incorporated on September 23, 2025. Revenue from continuing operations increased by 8.5% to $371.5 million for the three months and 8.5% to $1,114.4 million for the nine months, driven by growth in healthcare products. Operating income from continuing operations surged to $83.6 million for the quarter, up from $38.2 million, and to $226.1 million for the nine months, up from $133.3 million, reflecting improved operational efficiency. Cash and cash equivalents significantly increased to $312.3 million as of September 27, 2025, from $123.6 million at December 28, 2024, partly due to proceeds from the Sound United sale. Long-term debt decreased from $714.3 million to $559.1 million.

Why It Matters

Masimo's strategic divestiture of Sound United, completed on September 23, 2025, marks a pivotal shift, allowing the company to refocus entirely on its core healthcare segment. While the sale resulted in a substantial net loss from discontinued operations, the improved operating income and revenue growth in continuing healthcare operations suggest a stronger, more streamlined future. This focus could enhance Masimo's competitive position against rivals like Medtronic and Philips in patient monitoring, potentially leading to increased innovation and market share. For investors, this signals a clearer investment thesis centered on medical technology, while employees and customers in the healthcare division could benefit from concentrated resources and development.

Risk Assessment

Risk Level: medium — The company reported a significant net loss of $219.8 million for the nine months ended September 27, 2025, primarily due to a $365.6 million loss from discontinued operations. While this is a strategic divestiture, the magnitude of the loss and the associated reclassification adjustments introduce complexity and potential for unforeseen impacts on future financial reporting and investor sentiment. Additionally, the company's total liabilities remain substantial at $1,007.5 million.

Analyst Insight

Investors should view the reported net loss as a non-recurring event tied to the Sound United divestiture and focus on the strong performance of Masimo's continuing healthcare operations. Consider this a strategic repositioning; the increased cash and reduced debt post-sale provide a healthier balance sheet for future growth in its core medical technology business.

Financial Highlights

debt To Equity

0.69

revenue

$1,114.4M

operating Margin

20.3%

total Assets

$1,817.5M

total Debt

$559.1M

net Income

-$219.8M

eps

N/A

gross Margin

62.6%

cash Position

$312.3M

revenue Growth

+8.5%

Revenue Breakdown

Key Numbers

• $100.4M — Net Loss (3 months) (Significant decline from $9.8M net income in prior year, primarily due to discontinued operations.)
• $219.8M — Net Loss (9 months) (Compared to $44.7M net income in prior year, driven by discontinued operations.)
• $365.6M — Loss from Discontinued Operations (9 months) (Primary driver of the overall net loss, related to the Sound United sale.)
• $371.5M — Total Revenue (3 months) (Increased by 8.5% from $343.3M in prior year, indicating strong core business growth.)
• $1,114.4M — Total Revenue (9 months) (Increased by 8.5% from $1,026.8M in prior year, reflecting consistent growth.)
• $83.6M — Operating Income (3 months) (Increased significantly from $38.2M in prior year, showing improved operational efficiency.)
• $226.1M — Operating Income (9 months) (Increased from $133.3M in prior year, demonstrating strong performance in continuing operations.)
• $312.3M — Cash and Cash Equivalents (Increased from $123.6M at December 28, 2024, bolstered by divestiture proceeds.)
• $559.1M — Long-Term Debt (Decreased from $714.3M at December 28, 2024, improving the balance sheet.)
• 53,713,949 — Common Shares Outstanding (As of September 27, 2025, reflecting share repurchases.)

Key Players & Entities

• MASIMO CORP (company) — Registrant
• Sound United (company) — Divested non-healthcare consumer business
• Harman International Industries, Incorporated (company) — Acquirer of Sound United
• Samsung Electronics., Ltd. (company) — Parent company of Harman International Industries, Incorporated
• Centerview Partners (company) — Financial advisor for divestiture
• Morgan Stanley (company) — Financial advisor for divestiture
• Sullivan & Cromwell (company) — Legal advisor for divestiture
• $100.4 million (dollar_amount) — Net loss for three months ended September 27, 2025
• $219.8 million (dollar_amount) — Net loss for nine months ended September 27, 2025
• $365.6 million (dollar_amount) — Net loss from discontinued operations for nine months ended September 27, 2025

FAQ

Risk Factors

• Ongoing Litigation and Legal Proceedings [high — legal]: Masimo is involved in various legal proceedings, including patent infringement lawsuits and other claims. For example, the company has been involved in significant litigation related to its acquisition of certain businesses. These legal battles can result in substantial financial penalties, injunctions, and reputational damage, impacting future profitability and operational flexibility. The company's ability to successfully defend against these claims is a key risk.
• Competition and Technological Advancements [high — market]: The medical device industry is highly competitive, with rapid technological advancements. Masimo faces competition from established players and new entrants. Failure to innovate and adapt to new technologies, such as advancements in non-invasive monitoring, could lead to a loss of market share. The company's success depends on its ability to maintain its technological edge and introduce new, compelling products.
• Supply Chain Disruptions and Manufacturing [medium — operational]: Masimo relies on a complex global supply chain for its components and manufacturing. Disruptions due to geopolitical events, natural disasters, or supplier issues can impact production and delivery timelines. For instance, the company experienced challenges in securing certain components in the past. Any significant interruption could lead to lost sales and increased costs.
• Regulatory Approvals and Compliance [medium — regulatory]: The company's products are subject to stringent regulatory approvals from bodies like the FDA and international equivalents. Delays in obtaining approvals or changes in regulatory requirements can hinder product launches and market access. Compliance with evolving healthcare regulations, including data privacy (e.g., HIPAA), is also critical and requires ongoing investment and vigilance.
• Impact of Discontinued Operations and Divestitures [medium — financial]: The significant net loss of $365.6 million for the nine months ended September 27, 2025, is primarily due to the sale of its non-healthcare consumer business, Sound United. While this divestiture strengthens the focus on healthcare, the associated losses and integration/divestiture costs can create short-term financial volatility and impact earnings per share. Managing the financial implications of such strategic shifts is crucial.
• Integration of Acquisitions [medium — operational]: Masimo has a history of strategic acquisitions. The successful integration of acquired businesses is critical to realizing their full potential and achieving expected synergies. Challenges in integration, such as cultural differences, IT system compatibility, or failure to achieve projected cost savings, can negatively impact financial performance and operational efficiency.
• Customer Concentration and Relationships [low — market]: While not explicitly detailed with numbers in this filing, reliance on a few key customers or distributors in specific markets could pose a risk. The loss of a major customer or a significant deterioration in relationships could materially affect revenue. Maintaining strong customer relationships and diversifying the customer base is important.
• Interest Rate and Foreign Exchange Fluctuations [low — financial]: As a global company, Masimo is exposed to fluctuations in interest rates and foreign currency exchange rates. Changes in these rates can impact the cost of borrowing, the value of international sales and assets, and overall profitability. The company's long-term debt stood at $559.1 million as of September 27, 2025, making interest rate changes a relevant consideration.

Industry Context

Masimo operates in the highly competitive and rapidly evolving medical technology sector, specifically focusing on non-invasive monitoring solutions. The industry is characterized by significant R&D investment, stringent regulatory oversight (FDA, etc.), and a trend towards integrated digital health solutions. Key competitors include established players in patient monitoring and diagnostic devices, as well as emerging companies focused on specific niche technologies.

Regulatory Implications

Masimo's products are subject to rigorous regulatory scrutiny from bodies like the FDA. Compliance with evolving healthcare regulations, including data privacy laws (e.g., HIPAA), is paramount. Any failure to obtain or maintain regulatory approvals, or any compliance breaches, could lead to product recalls, fines, and significant reputational damage, impacting market access and financial performance.

What Investors Should Do

1. Monitor the performance of continuing operations closely.
2. Evaluate the impact of the Sound United divestiture on future strategy and profitability.
3. Assess the company's debt reduction and cash management strategy.
4. Stay informed about ongoing litigation and regulatory developments.

Key Dates

• 2025-09-27: End of the third quarter and nine-month period — Reporting period for the financial results, showing a net loss of $100.4M for the quarter and $219.8M for the nine months, but strong revenue growth in continuing operations and improved operating income.
• 2025-09-23: Sale of Sound United business to Harman International Industries — This divestiture is the primary driver of the large net loss from discontinued operations ($154.1M for the quarter, $365.6M for the nine months), but it allows Masimo to focus on its core healthcare business.
• 2025-09-27: Balance Sheet Date — Reflects a significantly improved cash position of $312.3M (up from $123.6M at Dec 28, 2024) and reduced long-term debt to $559.1M (down from $714.3M).
• 2024-09-28: Prior year comparative period — Provided context for the significant shift from net income ($9.8M for the quarter, $44.7M for the nine months) in the prior year to a net loss in the current year, largely due to the discontinued operations.
• 2024-12-28: Prior year-end balance sheet date — Used as a comparison point for the current balance sheet, highlighting the increase in cash and decrease in debt.

Glossary

Discontinued Operations

Represents the results of a business segment that a company has sold or plans to sell. These are reported separately on the income statement to show the performance of the ongoing business. (Crucial for understanding Masimo's reported net loss, as the $365.6 million loss for the nine months is attributed to the sale of the Sound United business.)

Continuing Operations

Refers to the revenue and expenses generated by the business segments that a company intends to keep operating. This provides a clearer view of the core business's performance. (Highlights the positive growth trend for Masimo, with revenue from continuing operations increasing by 8.5% and operating income surging.)

Treasury Stock

Stock that a company has repurchased from the open market. It is recorded as a contra-equity account and reduces total stockholders' equity. (Masimo's treasury stock increased significantly from $1,169.2 million to $1,367.6 million, indicating substantial share buyback activity which reduces the number of outstanding shares.)

Accumulated Other Comprehensive Loss

A component of stockholders' equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension plan adjustments. (Masimo's Accumulated Other Comprehensive Loss decreased from -$108.2 million to -$13.4 million, suggesting a favorable swing in these items, possibly related to foreign currency translation.)

Held-for-sale

Assets or disposal groups that management has committed to selling and are available for immediate sale in their present condition. They are typically reported separately on the balance sheet. (The balance sheet shows significant 'Assets held-for-sale' and 'Other current assets, held-for-sale' in the prior year ($403.4M and $615.2M respectively), which have largely been disposed of or reclassified by September 27, 2025, contributing to the decrease in total assets.)

Operating Income

A measure of a company's profit after deducting operating expenses from revenue. It reflects the profitability of the core business operations. (Masimo's operating income from continuing operations significantly increased to $83.6 million for the quarter and $226.1 million for the nine months, demonstrating improved operational efficiency.)

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Gross profit increased to $230.6 million for the quarter and $697.9 million for the nine months, indicating a healthy margin on sales.)

Common Stock Issued and Outstanding

The number of shares of common stock that have been issued by the company and are currently held by investors. (The number of shares outstanding decreased from 53.6 million to 53.1 million, likely due to share repurchases, which can increase earnings per share.)

Year-Over-Year Comparison

Compared to the prior year's periods, Masimo has shifted from net income to a substantial net loss, primarily due to the $365.6 million loss from discontinued operations related to the Sound United sale. However, the core business shows strength, with revenue from continuing operations growing by 8.5% to $1,114.4 million for the nine months and operating income from continuing operations significantly increasing to $226.1 million, reflecting improved operational efficiency. The balance sheet has also strengthened, with cash and cash equivalents more than doubling to $312.3 million and long-term debt decreasing by $155.2 million to $559.1 million.

Key Financial Figures

• $0.001 — nge on which registered Common Stock, $0.001 par value MASI The Nasdaq Stock Marke

Filing Documents

• masi-20250927.htm (10-Q) — 2422KB
• masi-20250927x10xqex101.htm (EX-10.1) — 8KB
• masi-20250927x10xqex102.htm (EX-10.2) — 20KB
• masi-20250927x10xqex103.htm (EX-10.3) — 21KB
• masi-20250927x10qex104.htm (EX-10.4) — 24KB
• masi-20250927x10qex105.htm (EX-10.5) — 97KB
• masi-20250927x10qex211.htm (EX-21.1) — 32KB
• masi-20250927x10qex311.htm (EX-31.1) — 8KB
• masi-20250927x10qex312.htm (EX-31.2) — 8KB
• masi-20250927x10qex321.htm (EX-32.1) — 8KB
• image1a.jpg (GRAPHIC) — 15KB
• image2a.jpg (GRAPHIC) — 15KB
• image3.jpg (GRAPHIC) — 15KB
• imagea.jpg (GRAPHIC) — 15KB
• masi-20250927_g1.jpg (GRAPHIC) — 199KB
• 0000937556-25-000161.txt ( ) — 13891KB
• masi-20250927.xsd (EX-101.SCH) — 81KB
• masi-20250927_cal.xml (EX-101.CAL) — 154KB
• masi-20250927_def.xml (EX-101.DEF) — 455KB
• masi-20250927_lab.xml (EX-101.LAB) — 1032KB
• masi-20250927_pre.xml (EX-101.PRE) — 756KB
• masi-20250927_htm.xml (XML) — 2175KB

Financial Information

PART I. Financial Information

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of September 27, 2025 and December 28, 2024 4 Condensed Consolidated Statements of Operations for the three and nine months ended September 27, 2025 and September 28, 2024 5 Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 27, 2025 and September 28, 2024 6 Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 27, 2025 and September 28, 2024 7 Condensed Consolidated Statements of Cash Flows for the nine months ended September 27, 2025 and September 28, 2024 9 Notes to Condensed Consolidated Financial Statements 11

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 52

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 62

Controls and Procedures

Item 4. Controls and Procedures 64

Other Information

PART II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 64

Risk Factors

Item 1A. Risk Factors 65

Other Information

Item 5. Other Information 68

Exhibits

Item 6. Exhibits 69

Signatures

Signatures 70 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 3 Table of Contents MASIMO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in millions, except par values) September 27, 2025 December 28, 2024 ASSETS Current assets Cash and cash equivalents $ 312.3 $ 123.6 Trade accounts receivable, net of allowance for credit losses of $ 4.5 million and $ 3.5 million at September 27, 2025 and December 28, 2024, respectively 281.6 268.9 Related party receivables - (Note 3) 7.6 14.3 Assets held-for-sale - (Note 8) — 17.4 Inventories 338.6 294.8 Other current assets 107.3 103.4 Other current assets, held-for-sale - (Note 18) 0.9 403.4 Total current assets 1,048.3 1,225.8 Lease receivable, non-current 48.5 58.7 Deferred costs and other contract assets 58.5 61.0 Property and equipment, net 345.3 337.0 Intangibles assets, net 56.7 61.6 Goodwill 100.8 96.7 Deferred tax assets 119.3 118.4 Other non-current assets 38.7 51.3 Other non-current assets, held-for-sale - (Note 18) 1.4 615.2 Total assets $ 1,817.5 $ 2,625.7 LIABILITIES AND STOCKHOLDERS ' EQUITY Current liabilities Accounts payable $ 117.9 $ 129.0 Accrued compensation 69.7 78.7 Deferred revenue and other contract liabilities, current 68.4 76.9 Other current liabilities 112.4 115.4 Other current liabilities, held-for-sale - (Note 18) 1.3 217.7 Total current liabilities 369.7 617.7 Long-term debt 559.1 714.3 Deferred tax liabilities — 0.2 Other non-current liabilities 78.6 70.9 Other non-current liabilities, held-for-sale - (Note 18) 0.1 170.7 Total liabilities 1,007.5 1,573.8 Commitments and contingencies - (Note 24) Stockholders' equity Preferred stock, $ 0.001 par value; 5.0 million shares authorized; 0 shares issued and outstanding — — Common stock, $ 0.001 par value; 100.0 million shares authorized; 53.1 million and 53.6 million shares issued and outstanding at September 27, 2025 and December 28, 2024, respectively 0.1 0.1 Treasury stock, 20.9 million and 19.5 million shares at S

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