Masimo Corp., whose founder Joe Kiani exited the company in late September, is focusing on fewer projects amid the separation of its consumer business.
The move underscores Masimo’s bid to position itself for long-term growth, as it previously announced in last month’s third-quarter earnings call. At the time, they hinted at downsizing.
Masimo laid off 75 employees in Irvine effective Jan. 13., affecting senior roles in engineering, design and marketing, among others, according to a Nov. 13 layoff notice filed with California’s employment department.
“We are allocating resources to fewer projects, concentrating on sizable market opportunities that address clear unmet needs, and ensuring we can continue to invest heavily in innovation,” a Masimo spokesperson told the Business Journal.
“Unfortunately, this has also meant shifting and reducing headcount in certain areas to better position the company to meet our goals and be able to bring lasting benefits to the patients we serve.”
Shares in the company have been up more than 50% since activist investor Politan Capital Management won the proxy battle against Masimo, gaining two additional seats and ousting Kiani from the board.
Masimo is currently Orange County’s fifth-largest public company with a market cap of $9.2 billion at press time.
Shifting Company Strategy
During the Nov. 5 conference call, Chief Operating Officer Bilal Muhsin said the company is shifting away from products such as Bridge and Opioid Halo, wearable devices used for managing opioid withdrawal and preventing opioid overdose respectively.
“Both of those products are examples of what we’ve reduced from our current portfolio,” Muhsin said.
While Opioid Halo remains an important aspect of the business in hospitals, reimbursements for remote settings have proven to be “much more challenging,” Chief Financial Officer Micah Young said.
Masimo has also discontinued its feasibility studies on non-invasive monitoring of cancer, bilirubin and diabetes due to a lack of progress on bringing these products to market, according to interim CEO Michelle Brennan.
Kiani, who resigned as CEO after being ousted from the board, took issue with the pre-holiday layoffs, according to his LinkedIn post.
“Right before Thanksgiving, Politan-controlled Masimo laid off hundreds of great people and killed life saving products like Bridge, Opioid Halo & Stork,” Kiani wrote on LinkedIn last week.
“Masimo didn’t need to do that. But, Politan has two goals, and one of them is to make a quick buck.”
Masimo’s redirected focus comes as the company considers whether to potentially spin off or sell its consumer business to an undisclosed bidder whose offering between $850 million to $950 million for a majority stake in the unit, according to a regulatory filing.
As for the retrial between Masimo and Apple Inc., a verdict has yet to be reached.
The bench trial, which began on Nov. 5, is a trade secret case over pulse oximetry technology used in smart watches. Judge James Selna, who oversaw last year’s jury trial, will decide whether Apple poached Masimo’s employees and stole trade secrets to develop the Apple Watch.
Closing arguments will take place in January, according to Steve Jensen of Knobbe Martens, one of the attorneys representing Masimo in the case.
CEO Succession Plans
Masimo said it’s looking for someone with a medtech background for its next CEO.
“We would like to have a balance of operational as well as technical or experience in refreshing pipelines,” said Brennan, tapped in September to serve as interim CEO for six months.
“We want to make sure that the fit is really good with the culture that is here at Masimo because we have a very strong culture of innovation-focused and a family-type of atmosphere. So, we want to make sure that the new CEO will come in and hit the ground running and really is the right person for the long-term.”
Brennan has made it clear that she intends to guide the company through this initial transition period, then return to being a board member long-term.
No timeline has been given as to when a new CEO will be selected.
