Patient Monitoring Device Maker Masimo Contemplates Separation of Consumer Business As Activist Investor Seeks Expanded Board Presence

Monday, activist investor Quentin Koffey, the founder of Politan Capital Management, nominated two candidates for election to the Masimo Board of Directors at the upcoming 2024 Annual Meeting of Stockholders.

Wall Street Journal was the first to report that the company is gearing up for a proxy fight to secure two additional seats on the board of Masimo Corporation MASI. 

The move comes as Politan already holds two board seats and aims to bolster its influence within the company. 

Masimo, with a market value of approximately $7.1 billion, offers monitoring technologies, including pulse oximeters utilized in hospital settings.

Koffey’s Politan Capital Management has maintained a significant stake of around 9% in Masimo since 2022. 

Having clinched two board seats in the preceding year’s annual meeting, including one for Koffey himself, Politan now eyes further expansion within Masimo’s six-person board. 

Masimo’s trajectory faced a notable setback in 2022 following its decision to acquire a consumer-technology company, Sound United, specializing in high-end audio equipment for roughly $1 billion. 

The move drew criticism from analysts and investors questioning its strategic rationale.

Masimo’s founder and CEO, Joe Kiani, defended the acquisition, emphasizing its potential to grant the company access to retail channels like Best Buy. 

Friday, the company’s Board of Directors authorized management to evaluate a proposed separation of its consumer business. 

Masimo expects the separation to include its consumer audio and health products, including the Stork baby monitor and the Freedom smartwatch and band. 

Masimo will retain its professional healthcare and telehealth products. 

Also Read: Masimo CEO ‘Wholeheartedly’ Feels Apple Watch Users Are Better Off Without Blood Oxygen Monitoring Feature.

Masimo expects that this will improve the profitability of the healthcare business. 

Joe Kiani is expected to remain Chairman and CEO of Masimo and to be named Chairman of the newly created company. 

Masimo will seek to complete the separation as soon as feasible.

The Wall Street Journal noted that while Politan supports the review of Masimo’s consumer division, it expresses concerns about the company’s governance and its commitment to executing the separation thoroughly.

Price Action: MASI shares traded 13.7% higher at $153.45 during after-hours trading on Friday.