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Monday, Jul 22, 2024

A Busy Docket for Device Maker Masimo

Things at Masimo Corp. (Nasdaq: MASI) were already busy for Micah Young. They’re expected to get even busier in the next few months.

All eyes have been on Masimo since the medical device company, best known for its monitoring products used at hospitals, announced a potential spinoff of its consumer business last month.

Masimo is listening to its shareholders with the latest decision, Young said.

“I think it was challenging for stockholders to really understand how to value the company when it’s more of a hybrid between healthcare and consumer,” Young told the Business Journal.

“We think the best opportunity is to separate it out where both companies can succeed and drive value for shareholders.”

The announcement was met with positive initial reactions. Shares in Masimo went up 14% in after-hours trading the day of the news and opened at $154 per share the following Monday, according to Young.

Masimo, now valued around $7.5 billion, is still in the assessment phase of the spinoff but wants to move “as quickly as possible” so it can provide more details to its investors, Young said.

“There’s many ways to separate a company, whether it’s spinning it into a new public company or selling it to a partner, but our goal is to keep it fully [separated] from the healthcare business,” Young said.

Young received the Business Journal’s CFO of the Year Award in the public category last May for helping steer the company into new markets like watches and baby monitors.

Those units would be part of the new consumer product company, if the spinoff moves ahead.

Young described 2023 as a difficult transition year for Masimo coming off the high demand it experienced during the pandemic.

Despite this, Masimo managed to finish the year strong, ending with $549 million in fourth-quarter revenue, beating the Zacks consensus.

“We achieved over $77 million in operating cash flow and that was really due to the strong earnings, as well as focused improvements in working capital,” Young said.

Young said Masimo dealt with some distractions last year, including a challenging proxy battle with Politan Capital Management, which continues to push for change, as well as ongoing legal battles with Apple.

Masimo is now “laser focused” on the spinoff as it faces a second battle with the activist investor, Young said.

“We want to get back to that story of meeting and exceeding expectations,” Young said.

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