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Masimo's (MASI) Q3 Earnings Surpass Estimates, '21 View Up

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·4 min read
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Masimo Corporation MASI delivered adjusted earnings per share (“EPS”) of 94 cents in the third quarter of 2021, up 17.5% year over year. The figure surpassed the Zacks Consensus Estimate by 3.3%.

The adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.

GAAP EPS for the quarter was $1.00, up by 17.6% from the year-earlier figure.

Revenues in Detail

Masimo registered revenues of $307.4 million in the third quarter, up 10.5% year over year on a reported basis. The figure also surpassed the Zacks Consensus Estimate by 3.9%.

At constant exchange rate (CER), revenues grew by 10.1%.

Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, were 74,600 in the third quarter of 2021. The company also recorded a 27% increase in single-patient-use sensor sales volume.

Masimo Corporation Price, Consensus and EPS Surprise

Masimo Corporation Price, Consensus and EPS Surprise
Masimo Corporation Price, Consensus and EPS Surprise

Masimo Corporation price-consensus-eps-surprise-chart | Masimo Corporation Quote

Margin Analysis

In the quarter under review, Masimo’s gross profit rose 13.8% to $203.7 million. Gross margin expanded 191 basis points (bps) to 66.3%.

Selling, general & administrative expenses climbed 11.4% to $100.6 million. Research and development expenses went up 22.7% year over year to $35.4 million. Adjusted operating expenses of $136.1 million increased 14.1% year over year.

Adjusted operating profit totaled $67.6 million, reflecting a 13.3% uptick from the prior-year quarter. Adjusted operating margin in the third quarter expanded by 53 bps to 21.9%.

Financial Position

Masimo exited the third quarter of 2021 with cash and cash equivalents of $652.4 million compared with $575.9 million at the end of the second quarter.

Cumulative net cash flow from operating activities at the end of the third quarter was $167.2 million compared with $146.5 million a year ago.

Masimo repurchased $128.9 million worth of common stock at the end of the third quarter compared with $591 million worth of common stock a year ago.

2021 Guidance

Masimo has updated its earlier-provided full-year 2021 financial outlook.

Total revenues are now projected at $1,230 million, reflecting reported growth of 7.5% and CER growth of 6.8%. This is up from the previous view of $1,216 million, which reflected an uptick of 6.3% and 5.4% on a reported and CER basis, respectively. The Zacks Consensus Estimate for the metric is currently pegged at $1.22 billion.

Adjusted EPS is projected at $3.88, up from the previous outlook of $3.85. The Zacks Consensus Estimate for the same is pegged at $3.85.

Our Take

Masimo exited the third quarter with better-than-expected results. The company recorded a strong rebound in sensor sales (on the back of steady expansion of monitoring in hospitals), along with robust order shipments, which is encouraging. Expansion of the company’s installed base is also impressive. The company received the CE mark for, and commercially launched the single-patient-use adhesive rainbow SuperSensor in Europe in September, and received the CE mark for its SafetyNet Alert and introduced the same in western Europe in August, which are impressive. A slew of favorable studies on Masimo’s products also raises our optimism. Expansion of both margins bodes well for the stock. A raised financial outlook for 2021 augurs well.

On the flip side, the company faces fierce competition from the MedTech bigwigs, raising our apprehension.

Zacks Rank & Key Picks

Masimo currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Abbott Laboratories ABT, and HCA Healthcare, Inc. HCA.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted EPS of $3.96, which beat the Zacks Consensus Estimate by 33.8%. Third-quarter revenues of $2.77 billion outpaced the consensus mark by 12.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Abbott reported third-quarter 2021 adjusted EPS of $1.40, which surpassed the Zacks Consensus Estimate by 52.2%. Third-quarter revenues of $10.93 billion outpaced the Zacks Consensus Estimate by 15.3%. It currently carries a Zacks Rank #2.

HCA Healthcare reported third-quarter 2021 adjusted EPS of $4.57, surpassing the Zacks Consensus Estimate by 11.5%. Revenues of $15.28 billion surpassed the Zacks Consensus Estimate by 4.7%. It currently carries a Zacks Rank #2.


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