Masimo Corp (MASI) Q3 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

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Revenue Growth: 8% increase in the third quarter. Operating Margin Expansion: 450 basis points increase year-over-year. Adjusted Earnings Per Share (EPS): Increased by 38% year-over-year to $1.32. Operating Cash Flow: $57 million for the third quarter. Healthcare Revenue: $371 million, representing 8% growth. Consumables Growth: 1% increase this quarter. Capital Equipment and Other Revenues: Grew 67% this quarter. Incremental Value of New Contracts: $124 million, a 48% year-over-year increase. Unrecognized Contract Revenue: $507 million expected within the next 12 months, a 17% increase year-over-year. Technology Boards and Monitors Shipped: 66,000 units, an 8% increase from the previous year. Gross Margin: 62.2%, a decline of 70 basis points due to tariff impacts. Net Proceeds from Divestiture: $328 million from the sale of Sound United. Capital Returned to Shareholders: $350 million through repurchase of 2.4 million shares. Updated Fiscal 2025 Revenue Guidance: $1.510 billion to $1.530 billion. Updated Operating Margin Guidance: 27.3% to 27.7%. Updated EPS Guidance: $5.40 to $5.55.

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Release Date: November 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Masimo Corp (NASDAQ:MASI) reported an 8% revenue growth in the third quarter, driven by strong demand for its innovative technology. The company achieved a 450 basis points expansion in operating margin and a 38% increase in adjusted earnings per share year-over-year. Masimo Corp (NASDAQ:MASI) successfully closed the sale of Sound United to Harman, marking a key milestone in its strategic initiatives. The company announced an expansion of its strategic partnership with Philips, which is expected to significantly increase its market share over the next five years. Masimo Corp (NASDAQ:MASI) is investing in AI and machine learning to enhance its intelligent monitoring capabilities, with plans to launch next-generation smart sensors and AI-enabled patient monitors.

Negative Points

The company's gross margin declined by 70 basis points due to tariff impacts outweighing operational improvements. Consumables growth was only 1% this quarter, compared to a 20% growth rate in the third quarter of 2024, indicating a slowdown. Tariffs increased the cost of sales by $5 million this quarter, negatively impacting margins. The shift to a distributor model in some international markets created a $6 million headwind to full-year revenue guidance. Capital equipment and other revenues experienced a decline last year, and although they grew 67% this quarter, the growth is partly due to a low base effect.

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Q & A Highlights

Q: How does Masimo envision the rest of the year and potential for further outperformance? What are the drivers for this, and how does it set up for 2026? A: Micah Young, CFO, stated that while they don't provide guidance for 2026 at this time, the strength in contracting seen in Q3 is expected to drive strong consumable growth in Q4. This, along with operational improvements and share buybacks, sets a positive outlook for the end of the year and into 2026.

Q: Can you expand on the share gains with Philips and the confidence in future growth? A: Catherine Szyman, CEO, explained that Masimo started with almost no market share in Philips' installed base in 2016. Despite gains, they remain under-indexed compared to their global market share, presenting a significant growth opportunity over the next five years.

Q: What was unusual about the third quarter's consumables growth, and will it return to normal rates? A: Micah Young, CFO, noted that last year's Q3 had a 20% growth due to higher ordering patterns, creating a tough comparison. On a multiyear basis, consumables show double-digit growth, and they expect increased shipments and growth normalization by Q4.

Q: What is the strategy for Masimo's wearables, and will it require new hardware? A: Catherine Szyman, CEO, mentioned that Masimo has launched the Radius VSM, which is being piloted in major institutions. The W1 is used for telehealth, and the Radius PPG is in pilot phase, with plans for a full market launch in collaboration with Philips in the next 1-2 years.

Q: How will the expanded partnership with Philips influence Masimo's product roadmap and revenue mix? A: Catherine Szyman, CEO, stated that while the product mix may not change dramatically in the short term, the partnership will help drive growth and presence, particularly in advanced monitoring categories like brain and capnography.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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