Masimo Plunges on Weak Q2 Preliminary Results

Masimo (MASI:US) reported preliminary results for the second quarter to the end of June. Results were much weaker-than-expected, prompting a 21% selloff in the MASI stock on Tuesday. Shares were trading as much as 28% lower at one point during the pre-market trading session.

Masimo said it expects to report Q2 revenue of $455 million (up or down $2 million), which is about $100 million lower than what the analysts were expecting. The Q2 earnings come amid the weakness in the healthcare business, which is expected to generate $280 million - $282 million in Q2 sales.

“Though the healthcare business made significant market share gains through new contracting in the second quarter, healthcare revenue for the second quarter 2023 was lower than expected due to multiple factors,” the company said in a business update.

These include delayed large orders, lower single-patient use sensor sales, lower demand for capital equipment from hospitals, as well as the weaker-than-expected conversion of new customers. 

As a result, Masimo is taking action to cut costs in the upcoming months. More detail will be known when the company reports full Q2 results on August 08.

Joe Kiani, Chairman and CEO of Masimo, stated, “While we are disappointed in our revenue results this quarter, our hospital business is strong, as our growth in contracting shows. We do believe sensor utilization and sensor revenue growth rates will return to normal levels.”

Moreover, Masimo cut its full-year revenue guidance for the healthcare business to $1.3 billion - $1.45 billion while sales for the non-healthcare business are seen falling to $800 million - $850 million from $965 million - $995 million.

Last December, Congressman Kevin Hern reported the $50,000 - $100,000 sale of MASI shares on December 19, when the stock closed at $138.72. Following Tuesday’s selloff, the stock trades around the $115 mark.