Masimo Stock Plunges After Q4 Results, Sound United Deal

Masimo Corp's MASI Q4 product revenue increased 11% Y/Y to $327.6 million, or 11.5% on a constant currency basis, beating the consensus of $320.93 million.

• Excluding handheld and fingertip pulse oximeters, shipments of noninvasive technology boards and instruments were 76,000 in the fourth quarter.
• The adjusted operating margin was 25.7%, compared to 23.1% last year.
• The company reported an adjusted EPS of $1.21, compared to $0.98 a year ago, beating the consensus of $1.10.
• Masimo held $748.4 million in cash & equivalents at the end of FY21.
• Acquisition: Masimo agreed to acquire Viper Holdings Corporation, owner of Sound United, a consumer technology company that owns Bowers & Wilkins, Denon, Polk Audio, and Marantz, for approximately $1.025 billion.
• Masimo will finance the acquisition through a combination of cash on hand and borrowings under a new credit facility and expects the transaction to close in mid-2022.
• The company expects the transaction to be immediately accretive to its non-GAAP EPS upon closing.
• Guidance: Masimo expects FY22 adjusted EPS of $4.34, compared to the consensus of $4.33.
• The company projects product revenue of $1.35 billion.
• Analyst: Piper Sandler analyst Jason Bednar downgraded Masimo from Overweight to Neutral and lowered the price target from $330 to $200.
• UBS analyst Matthew Taylor maintained Masimo with a Buy and lowered the price target from $325 to $295.
• Price Action: MASI shares traded lower by 17.9% at $188.00 during pre-market trading on Wednesday.