Masimo said it has implemented measures that reduced its tariff burden by more than half and resolved a cybersecurity incident that occurred in the spring.
The patient monitoring company said second-quarter revenue met expectations, and adjusted earnings per share grew 46% year over year due to continuing cost structure actions under new CEO Katie Szyman. The executive joined Masimo in February from BD, taking the job months after founder Joe Kiani left the company following a protracted proxy battle.
On a Tuesday earnings call, Szyman unveiled several senior leadership hires, including Greg Meehan in the role of chief commercial officer. Also named were Huimin Wang as president of Japan and Asia Pacific, Tim Benner as chief marketing and strategy officer, Linnette Torres as executive vice president of quality and regulatory, and Giri Chodavarapu as chief information officer. In addition, Omar Ahmed was promoted to chief technology and innovation officer.
Still, analysts raised concerns about the lack of a contract renewal with longtime customer Philips, weighing on Masimo’s shares. The status of Masimo’s relationship with Philips was a topic on the call, with one analyst pointing to a competitor’s renewed partnership with the equipment manufacturer.
Medtronic announced last month that it signed a multiyear agreement with Philips in patient monitoring.
Szyman said Masimo’s agreement with Philips is still in place, and the companies are in talks to continue the partnership “well into the future.” The relationship with Philips remains “very strong,” she said.
Masimo, which boosted its full-year earnings forecast, said the update includes a $17 million to $19 million increase to its cost of sales from tariffs and 25-cent impact on earnings per share, down from the range of 45 cents to 50 cents forecast in May. Including the impact of tariffs, adjusted earnings are now projected in a range of $5.20 to $5.45 per share, up from the previous $4.80 to $5.15.
Cyberattack and Sound United sale
CFO Micah Young said Masimo incurred net expenses of about $4.5 million to recover and fortify its systems with the help of a team of outside experts, following a spring cybersecurity incident. Masimo discovered unauthorized activity on its on-premises network on April 27. The attack on some of its manufacturing facilities disrupted the company’s website and several computer systems. When it disclosed the incident in May, the company warned the attack had affected its ability to fulfill orders.
The divestiture of Sound United, announced in May, remains on track to close by the end of the year, Young said. Masimo plans to sell the consumer audio business for $350 million to Samsung Electronics’ Harman International unit, to focus on its professional healthcare business.
