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Sunday, Aug 14, 2022

Masimo’s Best Buy?

Masimo Corp., founded in 1989, (Nasdaq: MASI) has completed seven acquisitions over its history.

Furthermore, “every one of them has been successful,” Chairman and CEO Joe Kiani told analysts last week.

He also noted that in the past, the Irvine-based healthcare monitoring device company has gone outside its core business for some buys—a decade ago it bought chipmaker Spire Semiconductor, for instance.

The Spire purchase “was one of the best things we did,” Kiani noted. The company got “much better products at much lower cost.”

Kiani’s confidence on acquisition No. 8 didn’t resonate with Wall Street, at least initially, after news of the company’s largest-ever purchase, a $1 billion deal to buy Carlsbad-based consumer electronics firm Sound United, was announced last Tuesday.

Sound United’s line of products includes speakers, sound bars and other products for audiophiles.

Masimo, Orange County’s fifth-most valuable public company, lost nearly $5 billion in market value following news of the proposed deal; volatility led the Nasdaq to suspend trading in the stock for a period on Wednesday.

After a slight increase later in the week, the company’s stock was trading at roughly the same price on Friday as where it was at the onset of the pandemic, giving the firm a nearly $9 billion valuation.

The consumer pivot left some analysts pondering whether a company whose best-known products are monitoring devices found in hospitals could also be successful selling smartwatches and other items for consumers at the local Best Buy.

Masimo’s made its name taking on large healthcare device giants like Medtronic with its products; now it’ll be competing, in part, against Irvine’s Vizio Holding Corp. for sales of sound bars for TVs.

Kiani said while some of Sound United’s products could be repurposed and sold to hospitals, the bigger opportunity was bringing as-of-yet undisclosed new offerings from Masimo to the general public.

He wasn’t specific on products you’ll be seeing as a result of the purchase, not wanting to tip his hand for the company’s competitors (Masimo is still involved in patent infringement litigation with Apple over the Cupertino giant’s smartwatch technology).

Investors will like what they see when those products are revealed, he insisted.

“Our portfolio of products for consumer health and wellness is expanding as we launch more wearable technologies into the market,” Kiani said.

“I always criticize the tech talkers. We’re doers, we’re not tech talkers,” he told analysts. “So, why don’t you let us deliver, and then you’ll see it.”

See page 12 for more on the deal.

New Pieology CEO Shawn Thompson isn’t the only local exec bullish on pizza’s continued growth potential.

Chris Britt and Ed St. Geme, the co-CEOs of the Newport Beach’s Mountain Mike Pizza, the fast-growing chain with 245 locations to its name last week announced they’d bought out a key PE backer, Levine Leichtman Capital Partners of Los Angeles. Terms weren’t announced.

The 2017 investment in the pizza chain by LLCP was “extremely successful,” the PE firm said. Mountain Mike’s reported 24% sales growth last year, to over $250 million.

See Emily Santiago-Molina’s page 1 story for more on 130-restaurant chain Pieology’s plans for expanding their footprint.

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