Q4 2017 Highlights (compared to Q4 2016):
-
Total revenue, including royalty and other revenue, increased 22.9% to
$225.2 million
-
Product revenue increased 13.4% to $199.2 million
- Masimo rainbow® revenue increased 42.5% to $24.0 million
-
54,100 SET® and rainbow SET™ oximeters were
shipped
-
GAAP net income of $0.4 million, or $0.01 per diluted share, which
included a non-recurring charge of $43.5 million, or $0.78 per diluted
share, related to the Tax Cuts and Jobs Act of 2017. Non-GAAP net
income was $40.0 million, or $0.72 per diluted share.
IRVINE, Calif.--(BUSINESS WIRE)--Feb. 27, 2018--
Masimo (NASDAQ: MASI) today announced its financial results for the
fourth quarter ended December 30, 2017.
Fourth Quarter 2017 Results:
Fourth quarter total revenue, including royalty and other revenue,
increased 22.9% to $225.2 million, up from $183.2 million for the fourth
quarter of 2016. Product revenues for the fourth quarter of 2017
increased 13.4% to $199.2 million, compared to $175.7 million for the
fourth quarter of 2016.
The Company’s worldwide direct product revenue, which accounted for
87.1% of total product revenue, increased by 13.5% to $173.4 million in
the fourth quarter of 2017 compared to $152.8 million for the fourth
quarter of 2016. OEM sales, which accounted for 12.9% of total product
revenue, increased 12.6% to $25.8 million in the fourth quarter of 2017
compared to $22.9 million for the fourth quarter of 2016. Revenue from
sales of Masimo rainbow® products increased 42.5% to $24.0
million in the fourth quarter of 2017 compared to $16.9 million for the
fourth quarter of 2016.
GAAP net income for the fourth quarter of 2017 was $0.4 million, or
$0.01 per diluted share, compared to GAAP net income of $215.3 million,
or $3.97 per diluted share, in the fourth quarter of 2016. Included in
the fourth quarter 2017 earnings per share was a non-recurring charge of
$43.5 million, or $0.78 per diluted share, related to the Tax Cuts and
Jobs Act of 2017 (2017 Tax Act) that was signed into law on December 22,
2017. The fourth quarter 2016 earnings per share included a
non-recurring gain of $270.0 million, or $3.43 per diluted share,
related to the Philips Settlement Agreement. On a non-GAAP basis, the
Company reported fourth quarter net income of $40.0 million, or $0.72
per diluted share, compared to net income of $24.6 million, or $0.45 per
diluted share, in the fourth quarter of 2016.
During the fourth quarter of 2017, the Company shipped approximately
54,100 SET® pulse oximeters and rainbow SET™ Pulse
CO-Oximeters®, excluding handheld and finger oximeters.
Masimo estimates its worldwide installed base of oximeters to be
1,591,000 units as of December 30, 2017, up 5.8% from 1,504,000 units as
of December 31, 2016.
As of December 30, 2017, total cash and cash equivalents were $315.3
million compared to $306.0 million as of December 31, 2016. During 2017,
the Company repurchased approximately 0.8 million shares of common stock
at a total cost of $68.3 million.
Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, “Our
fourth quarter and full year 2017 results clearly illustrate the
strength of our technology and hence, our business as we once again
exceeded expectations for product revenues and earnings. We realized
another record high for shipments of our SET® Pulse Oximeters which
reached 54,100 for the quarter and exceeded 200,000 for the year, a
significant milestone for the Company. We anticipate rising adoption of
our technologies as more care providers appreciate the value they
provide for patients.”
2018 Financial Guidance
The Company provided the following estimates for its full year 2018
guidance:
|
|
2018 Guidance |
| (in millions, except percentages and earnings per share) |
|
GAAP |
|
Non-GAAP |
|
Total revenue, including royalty and other revenue
|
|
$
|
836
|
|
|
$
|
836
|
|
|
Product revenue
|
|
$
|
808
|
|
|
$
|
808
|
|
|
Royalty and other revenue
|
|
$
|
28
|
|
|
$
|
28
|
|
|
Operating margin
|
|
24.2
|
%
|
|
24.4
|
%
|
|
Diluted earnings per share
|
|
$
|
2.90
|
|
|
$
|
2.80
|
|
|
EBITDA
|
|
26.9
|
%
|
|
29.9
|
%
|
|
Estimated tax rate
|
|
22.0
|
%
|
|
25.0
|
%
|
-
Total revenue, including royalty and other revenue, of $836 million;
-
Product revenue increasing 9% to $808 million compared to $741 million
for 2017;
-
GAAP diluted earnings per share of $2.90, an increase of approximately
23% compared to $2.36 for 2017; and
-
Non-GAAP diluted earnings per share of $2.80, an increase of
approximately 14% compared to $2.45 for 2017.
Supplementary Non-GAAP Financial Information
For additional non-GAAP financial details, please visit the Investor
Relations section of the Company’s website at www.masimo.com
to access Supplementary Financial Information.
Non-GAAP Financial Measures
The non-GAAP financial measures contained herein are a supplement to the
corresponding financial measures prepared in accordance with U.S.
generally accepted accounting principles (GAAP). The non-GAAP financial
measures presented exclude the items described below. Management
believes that adjustments for these items assist investors in making
comparisons of period-to-period operating results or that these items
are not indicative of the Company’s on-going core operating performance.
These non-GAAP financial measures have certain limitations in that they
do not reflect all of the costs associated with the operations of the
Company’s business as determined in accordance with GAAP. Therefore,
investors should consider non-GAAP financial measures in addition to,
and not as a substitute for, or as superior to, measures of financial
performance prepared in accordance with GAAP. The non-GAAP financial
measures presented by the Company may be different from the non-GAAP
financial measures used by other companies.
The Company has presented the following non-GAAP measures to assist
investors in understanding the Company’s core net operating results on
an on-going basis: (i) non-GAAP net income, (ii) non-GAAP diluted
earnings per share, (iii) non-GAAP gross profit, (iv) non-GAAP operating
income and (v) adjusted EBITDA. These non-GAAP financial measures may
also assist investors in making comparisons of the Company’s core
operating results with those of other companies. Management believes
non-GAAP gross profit, non-GAAP operating income, non-GAAP net income,
non-GAAP net income per diluted share and adjusted EBITDA are important
measures in the evaluation of the Company’s performance and uses these
measures to better understand and evaluate our business.
The non-GAAP financial measures reflect adjustments for the following
items, as well as the related income tax effects thereof:
Acquisition-related costs, including
depreciation and amortization.
Depreciation and amortization related to the revaluation of assets and
liabilities (primarily intangible assets, property, plant and equipment
adjustments, inventory revaluation, lease liabilities, etc.) to fair
value through purchase accounting related to value created by the seller
prior to the acquisition rather than ongoing costs of operating our core
business. As a result, we believe that exclusion of these costs in
presenting non-GAAP financial measures provides management and investors
a more effective means of evaluating historical performance and
projected costs and the potential for realizing cost efficiencies within
our core business. Depreciation and amortization related to the
revaluation of acquisition related assets and liabilities will generally
recur in future periods.
Litigation damages, awards and settlements.
In connection with litigation proceedings arising in the course of our
business, we have recorded expenses as a defendant in such proceedings
in the form of damages, as well as gains as a plaintiff in such
proceedings in the form of litigation awards and settlement proceeds;
most recently in connection with our November 2016 settlement agreement
with Koninklijke Philips N.V. We believe that exclusion of these
expenses and gains is useful to management and investors in evaluating
the performance of our ongoing operations on a period-to-period basis.
In this regard, we note that these expenses and gains are generally
unrelated to our core business and/or infrequent in nature.
Excess tax benefits from stock-based
compensation.
Accounting Standard Update No. 2016-09, Compensation—Stock
Compensation (Topic 718): Improvements to Employee Share-Based Payment
Accounting (ASU 2016-09), requires that excess tax benefits or
costs recognized on stock-based compensation expense be reflected in our
provision for income taxes rather than paid-in capital. Since we cannot
control or predict when stock option awards will be exercised or the
price at which such awards will be exercised, the impact of ASU 2016-09
can create significant volatility in our effective tax rate from one
period to the next. We believe that exclusion of these excess tax
benefits or costs is useful to management and investors in evaluating
the performance of our ongoing operations on a period-to-period basis.
These excess tax benefits or costs will generally recur in future
periods as long as we continue to issue equity awards to our employees.
Tax impacts that may not be representative of
the ongoing results of our core operations.
The 2017 Tax Act was signed into law in December 2017, and became
effective January 1, 2018. The 2017 Tax Act included a number of changes
to existing U.S. federal tax law impacting businesses including, among
other things, a permanent reduction in the corporate income tax rate
from 35% to 21%, a one-time transition tax on the “deemed repatriation”
of cumulative undistributed foreign earnings as of December 31, 2017 and
changes in the prospective taxation of the foreign operations of U.S.
multinational companies. We believe that exclusion of the tax charges
related to the 2017 Tax Act is useful to management and investors in
evaluating the performance of our ongoing operations on a
period-to-period basis. In this regard, we note that this tax charge is
unrelated to our core business and non-recurring in nature.
Fourth Quarter 2017 Actuals versus Fourth Quarter
2016 Actuals:
|
RECONCILIATION OF GAAP TO NON-GAAP NET
INCOME AND NET INCOME PER DILUTED SHARE
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
December 30, 2017 |
|
December 31, 2016 |
| (in thousands, except earnings per share) |
|
$ |
|
Per Diluted Share |
|
$ |
|
Per Diluted Share |
|
GAAP net income
|
|
$
|
367
|
|
|
$
|
0.01
|
|
|
$
|
215,293
|
|
|
$
|
3.97
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition related depreciation and amortization
|
|
390
|
|
|
—
|
|
|
434
|
|
|
0.01
|
|
|
Litigation damages, awards and settlements
|
|
—
|
|
|
—
|
|
|
(270,000
|
)
|
|
(4.98
|
)
|
|
Tax impact of above item1 |
|
(88
|
)
|
|
—
|
|
|
84,096
|
|
|
1.55
|
|
|
Excess tax benefits from stock-based compensation
|
|
(4,149
|
)
|
|
(0.07
|
)
|
|
(5,263
|
)
|
|
(0.10
|
)
|
|
Tax impact of U.S. Tax Reform2 |
|
43,483
|
|
|
0.78
|
|
|
—
|
|
|
—
|
|
|
Total non-GAAP adjustments
|
|
39,636
|
|
|
0.71
|
|
|
(190,733
|
)
|
|
(3.52
|
)
|
|
Non-GAAP net income
|
|
$
|
40,003
|
|
|
$
|
0.72
|
|
|
$
|
24,560
|
|
|
$
|
0.45
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
55,595
|
|
|
|
|
54,166
|
|
|
|
1
|
|
The impact results from tax effecting the pre-tax adjustments above
at the effective statutory rate, taking into account any discrete
items applicable to the pre-tax non-GAAP adjustments.
|
|
|
|
|
|
2
|
|
The 2017 Tax Act resulted in an unfavorable charge of $43.5 million
in the fourth quarter of 2017. Included in this charge was $9.0
million related to the re-measurement of deferred taxes due to the
reduction in the federal corporate tax rate, $28.0 million related
to the transition tax on the deemed repatriation of foreign
earnings, and $6.5 million related to estimated foreign withholding
taxes, net of estimated foreign tax credit benefit, and state income
taxes related to the Company’s tentative decision to repatriate up
to $180.0 million of accumulated undistributed foreign earnings to
the U.S. in the future. The amount recognized is a provisional
estimate and subject to change, possibly materially, due to, among
other things, refinements of the Company’s calculations, changes in
interpretations and assumptions the Company has made or additional
guidance issued by the U.S. Treasury, Securities and Exchange
Commission or Financial Accounting Standards Board.
|
|
|
|
|
Full Year 2017 Actuals versus Full Year 2018
Guidance:
|
RECONCILIATION OF GAAP TO NON-GAAP NET
INCOME AND NET INCOME PER DILUTED SHARE
|
|
|
|
|
|
|
|
|
|
|
2017 Actuals |
|
2018 Guidance1 |
| (in thousands, except earnings per share) |
|
$ |
|
Per Diluted Share |
|
$ |
|
Per Diluted Share |
|
GAAP net income
|
|
$
|
131,616
|
|
|
$
|
2.36
|
|
|
$
|
161,500
|
|
|
$
|
2.90
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition related depreciation and amortization
|
|
1,597
|
|
|
0.02
|
|
|
1,500
|
|
|
0.03
|
|
|
Tax impact of above item2 |
|
(366
|
)
|
|
(0.01
|
)
|
|
(300
|
)
|
|
(0.01
|
)
|
|
Excess tax benefits from stock-based compensation
|
|
(39,242
|
)
|
|
(0.70
|
)
|
|
(6,500
|
)
|
|
(0.12
|
)
|
|
Tax impact of U.S. Tax Reform3 |
|
43,483
|
|
|
0.78
|
|
|
—
|
|
|
—
|
|
|
Total non-GAAP adjustments
|
|
5,472
|
|
|
0.09
|
|
|
(5,300
|
)
|
|
(0.10
|
)
|
|
Non-GAAP net income
|
|
$
|
137,088
|
|
|
$
|
2.45
|
|
|
$
|
156,200
|
|
|
$
|
2.80
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
55,874
|
|
|
|
|
55,750
|
|
|
|
1
|
|
Estimated effective tax rate of 22% applied to GAAP earnings and 25%
applied to non-GAAP earnings.
|
|
|
|
|
|
2
|
|
The impact results from tax effecting the pre-tax adjustments above
at the effective statutory rate, taking into account any discrete
items applicable to the pre-tax non-GAAP adjustments.
|
|
|
|
|
|
3
|
|
The 2017 Tax Act resulted in an unfavorable charge of $43.5 million
in the fourth quarter of 2017. Included in this charge was $9.0
million related to the re-measurement of deferred taxes due to the
reduction in the federal corporate tax rate, $28.0 million related
to the transition tax on the deemed repatriation of foreign
earnings, and $6.5 million related to estimated foreign withholding
taxes, net of estimated foreign tax credit benefit, and state income
taxes related to the Company’s tentative decision to repatriate up
to $180.0 million of accumulated undistributed foreign earnings to
the U.S. in the future. The amount recognized is a provisional
estimate and subject to change, possibly materially, due to, among
other things, refinements of the Company’s calculations, changes in
interpretations and assumptions the Company has made or additional
guidance issued by the U.S. Treasury, Securities and Exchange
Commission or Financial Accounting Standards Board.
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP GROSS
PROFIT AND OPERATING INCOME
|
|
|
|
|
|
|
|
|
|
|
Full Year 2017 Actuals |
|
Full Year 2018 Guidance |
| (in thousands, except earnings per share) |
|
$ |
|
% of Revenue |
|
$ |
|
% of Revenue |
|
GAAP gross profit
|
|
$
|
535,100
|
|
|
67.0
|
%
|
|
$
|
557,700
|
|
|
66.7
|
%
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition related depreciation and amortization
|
|
500
|
|
|
0.1
|
|
|
500
|
|
|
0.1
|
|
|
Total non-GAAP adjustments
|
|
500
|
|
|
0.1
|
|
|
500
|
|
|
0.1
|
|
|
Non-GAAP gross profit
|
|
$
|
535,600
|
|
|
67.1
|
%
|
|
$
|
558,200
|
|
|
66.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income
|
|
$
|
197,360
|
|
|
24.7
|
%
|
|
$
|
202,600
|
|
|
24.2
|
%
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition related depreciation and amortization
|
|
1,597
|
|
|
0.2
|
|
|
1,500
|
|
|
0.2
|
|
|
Total non-GAAP adjustments
|
|
1,597
|
|
|
0.2
|
|
|
1,500
|
|
|
0.2
|
|
|
Non-GAAP operating income
|
|
$
|
198,957
|
|
|
24.9
|
%
|
|
$
|
204,100
|
|
|
24.4
|
%
|
|
|
|
RECONCILIATION OF EBITDA TO ADJUSTED
EBITDA
|
|
|
|
|
|
|
|
|
|
|
Full Year 2017 Actuals |
|
Full Year 2018 Guidance |
|
(in thousands, except earnings per share)
|
|
$ |
|
% of Revenue |
|
$ |
|
% of Revenue |
|
GAAP net income
|
|
$
|
131,616
|
|
|
16.5
|
%
|
|
$
|
161,500
|
|
|
19.3
|
%
|
|
Other (income)/expense1 |
|
(2,013
|
)
|
|
(0.3
|
)
|
|
(4,000
|
)
|
|
(0.5
|
)
|
|
Provision for income taxes
|
|
67,758
|
|
|
8.5
|
|
|
45,200
|
|
|
5.4
|
|
|
Depreciation and amortization
|
|
20,061
|
|
|
2.5
|
|
|
22,400
|
|
|
2.7
|
|
|
EBITDA
|
|
217,422
|
|
|
27.2
|
|
|
225,100
|
|
|
26.9
|
|
|
Add: Non-cash stock-based compensation expense
|
|
17,187
|
|
|
2.2
|
|
|
25,000
|
|
|
3.0
|
|
|
Adjusted EBITDA
|
|
$
|
234,609
|
|
|
29.4
|
%
|
|
$
|
250,100
|
|
|
29.9
|
%
|
1 Other (income)/expense includes interest (income)/expense
and net foreign currency (gains)/losses.
Conference Call
Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET)
to discuss the results. A live webcast of the call will be available
online from the investor relations page of the Company’s website at www.masimo.com.
The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706)
758-3929 for international callers. The reservation code for both
dial-in numbers is 9789137. After the live webcast, the call will be
available on Masimo’s website through March 27, 2018. In addition, a
telephonic replay of the call will be available through March 6, 2018.
The replay dial-in numbers are (855) 859-2056 for domestic callers and
+1 (404) 537-3406 for international callers. Please use reservation code
9789137.
About Masimo
Masimo (NASDAQ: MASI) is a global leader in innovative noninvasive
monitoring technologies. Our mission is to improve patient outcomes and
reduce the cost of care by taking noninvasive monitoring to new sites
and applications. In 1995, the Company debuted Masimo SET®
Measure-through Motion and Low Perfusion® pulse oximetry,
which has been shown in multiple studies to significantly reduce false
alarms and accurately monitor for true alarms. Masimo SET® is
estimated to be used on more than 100 million patients in leading
hospitals and other healthcare settings around the world. In 2005,
Masimo introduced rainbow® Pulse CO-Oximetry technology,
allowing noninvasive and continuous monitoring of blood constituents
that previously could only be measured invasively, including total
hemoglobin (SpHb®), oxygen content (SpOC), carboxyhemoglobin
(SpCO®), methemoglobin (SpMet®), Pleth Variability
Index (PVi®) and more recently, Oxygen Reserve Index (ORi™),
in addition to SpO2, pulse rate and perfusion index (PI). In 2014,
Masimo introduced Root™, an intuitive patient monitoring and
connectivity platform with the Masimo Open Connect® (MOC-9®)
interface. Masimo is also taking an active leadership role in mobile
health applications (mHealth) with products such as the Radius-7®
wearable patient monitor and the MightySat™ fingertip pulse
oximeter. Additional information about Masimo and its products may be
found at www.masimo.com.
Forward-Looking Statements
All statements other than statements of historical facts included in
this press release that address activities, events or developments that
we expect, believe or anticipate will or may occur in the future are
forward-looking statements including, in particular, the statements
about our expectations for full fiscal year GAAP and non-GAAP 2018
total, product, royalty and other revenues, earnings per diluted share,
operating margin, EBITDA, and estimated tax rate, and our long-term
outlook; demand for our products; anticipated revenue and earnings
growth; our financial condition, results of operations and business
generally; expectations regarding our ability to design and deliver
innovative new noninvasive technologies and reduce the cost of care; and
demand for our technologies. These forward-looking statements are based
on management’s current expectations and beliefs and are subject to
uncertainties and factors, all of which are difficult to predict and
many of which are beyond our control and could cause actual results to
differ materially and adversely from those described in the
forward-looking statements. These risks include, but are not limited to,
those related to: our dependence on Masimo SET® and Masimo
rainbow SET™ products and technologies for substantially all
of our revenue; any failure in protecting our intellectual property
exposure to competitors’ assertions of intellectual property claims; the
highly competitive nature of the markets in which we sell our products
and technologies; any failure to continue developing innovative products
and technologies; the lack of acceptance of any of our current or future
products and technologies; obtaining regulatory approval of our current
and future products and technologies; the risk that the implementation
of our international realignment will not continue to produce
anticipated operational and financial benefits, including a continued
lower effective tax rate; the loss of our customers; the failure to
retain and recruit senior management; product liability claims exposure;
a failure to obtain expected returns from the amount of intangible
assets we have recorded; the maintenance of our brand; the amount and
type of equity awards that we may grant to employees and service
providers in the future; our ongoing litigation and related matters; and
other factors discussed in the “Risk Factors” section of our most recent
periodic reports filed with the Securities and Exchange Commission
(“SEC”), including our most recent Form 10-K and Form 10-Q, all of which
you may obtain for free on the SEC’s website at www.sec.gov.
Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we do not know whether our
expectations will prove correct. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof, even if subsequently made available by us on our website or
otherwise. We do not undertake any obligation to update, amend or
clarify these forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under
applicable securities laws.
Masimo, SET, Signal Extraction Technology, Improving Patient Outcome
and Reducing Cost of Care... by Taking Noninvasive Monitoring to New
Sites and Applications, rainbow, SpHb, SpOC, SpCO, SpMet, PVI and ORI
are trademarks or registered trademarks of Masimo Corporation.
|
|
| MASIMO CORPORATION |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (unaudited, in thousands) |
|
|
December 30,
2017 |
|
December 31,
2016 |
| ASSETS |
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
315,302
|
|
|
$
|
305,970
|
|
|
Accounts receivable, net of allowance for doubtful accounts
|
|
121,309
|
|
|
101,667
|
|
|
Inventories
|
|
95,944
|
|
|
72,542
|
|
|
Prepaid income taxes
|
|
3,494
|
|
|
981
|
|
|
Other current assets
|
|
28,070
|
|
|
26,067
|
|
|
Total current assets
|
|
564,119
|
|
|
507,227
|
|
|
Deferred cost of goods sold
|
|
99,600
|
|
|
79,948
|
|
|
Property and equipment, net
|
|
164,096
|
|
|
135,996
|
|
|
Intangible assets, net
|
|
27,123
|
|
|
29,376
|
|
|
Goodwill
|
|
20,617
|
|
|
19,780
|
|
|
Deferred income taxes
|
|
23,898
|
|
|
38,975
|
|
|
Other assets
|
|
10,782
|
|
|
9,223
|
|
|
Total assets
|
|
$
|
910,235
|
|
|
$
|
820,525
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
33,779
|
|
|
$
|
34,335
|
|
|
Accrued compensation
|
|
39,515
|
|
|
43,180
|
|
|
Accrued and other liabilities
|
|
38,052
|
|
|
28,266
|
|
|
Income taxes payable
|
|
4,292
|
|
|
76,316
|
|
|
Deferred revenue
|
|
35,929
|
|
|
38,198
|
|
|
Current portion of capital lease obligations
|
|
—
|
|
|
71
|
|
|
Total current liabilities
|
|
151,567
|
|
|
220,366
|
|
|
Deferred revenue
|
|
237
|
|
|
25,336
|
|
|
Other liabilities
|
|
51,520
|
|
|
14,587
|
|
|
Total liabilities
|
|
203,324
|
|
|
260,289
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
Common stock
|
|
52
|
|
|
50
|
|
|
Treasury stock
|
|
(472,536
|
)
|
|
(404,276
|
)
|
|
Additional paid-in capital
|
|
461,494
|
|
|
382,263
|
|
|
Accumulated other comprehensive loss
|
|
(2,941
|
)
|
|
(7,027
|
)
|
|
Retained earnings
|
|
720,842
|
|
|
589,226
|
|
|
Total stockholders’ equity
|
|
706,911
|
|
|
560,236
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
910,235
|
|
|
$
|
820,525
|
|
|
|
| MASIMO CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (unaudited, in thousands, except per share amounts) |
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 30,
2017 |
|
December 31,
2016 |
|
December 30,
2017 |
|
December 31,
2016 |
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
199,154
|
|
|
$
|
175,663
|
|
|
$
|
741,324
|
|
|
$
|
663,846
|
|
|
Royalty and other revenue
|
|
26,027
|
|
|
7,538
|
|
|
56,784
|
|
|
30,779
|
|
|
Total revenue
|
|
225,181
|
|
|
183,201
|
|
|
798,108
|
|
|
694,625
|
|
|
Cost of goods sold
|
|
71,317
|
|
|
58,872
|
|
|
263,008
|
|
|
230,826
|
|
|
Gross profit
|
|
153,864
|
|
|
124,329
|
|
|
535,100
|
|
|
463,799
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
78,447
|
|
|
69,423
|
|
|
275,786
|
|
|
253,667
|
|
|
Research and development
|
|
16,094
|
|
|
14,506
|
|
|
61,953
|
|
|
59,362
|
|
|
Litigation settlement, award and/or defense costs
|
|
—
|
|
|
(270,000
|
)
|
|
—
|
|
|
(270,000
|
)
|
|
Total operating expenses
|
|
94,541
|
|
|
(186,071
|
)
|
|
337,739
|
|
|
43,029
|
|
|
Operating income
|
|
59,323
|
|
|
310,400
|
|
|
197,361
|
|
|
420,770
|
|
|
Non-operating (income) expense
|
|
(694
|
)
|
|
2,852
|
|
|
(2,013
|
)
|
|
2,429
|
|
|
Income before provision for income taxes
|
|
60,017
|
|
|
307,548
|
|
|
199,374
|
|
|
418,341
|
|
|
Provision for income taxes
|
|
59,650
|
|
|
92,255
|
|
|
67,758
|
|
|
117,675
|
|
|
Net income
|
|
$
|
367
|
|
|
$
|
215,293
|
|
|
$
|
131,616
|
|
|
$
|
300,666
|
|
|
Other comprehensive gain (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains (losses)
|
|
(70
|
)
|
|
(2,008
|
)
|
|
4,201
|
|
|
(2,288
|
)
|
|
Unrealized loss on marketable securities
|
|
(115
|
)
|
|
—
|
|
|
(115
|
)
|
|
—
|
|
|
Comprehensive income
|
|
$
|
182
|
|
|
$
|
213,285
|
|
|
$
|
135,702
|
|
|
$
|
298,378
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
|
$
|
4.31
|
|
|
$
|
2.55
|
|
|
$
|
6.07
|
|
|
Diluted
|
|
$
|
0.01
|
|
|
$
|
3.97
|
|
|
$
|
2.36
|
|
|
$
|
5.65
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in per share calculations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
51,656
|
|
|
49,964
|
|
|
51,516
|
|
|
49,530
|
|
|
Diluted
|
|
55,595
|
|
|
54,166
|
|
|
55,874
|
|
|
53,195
|
|
The following table presents details of the stock-based compensation
expense that is included in each functional line item in the condensed
consolidated statements of operations (in thousands):
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 30,
2017 |
|
December 31,
2016 |
|
December 30,
2017 |
|
December 31,
2016 |
|
Cost of goods sold
|
|
$
|
94
|
|
|
$
|
86
|
|
|
$
|
351
|
|
|
$
|
355
|
|
Selling, general and administrative
|
|
4,588
|
|
|
2,129
|
|
|
13,272
|
|
|
9,443
|
|
Research and development
|
|
1,313
|
|
|
595
|
|
|
3,564
|
|
|
2,705
|
|
Total
|
|
$
|
5,995
|
|
|
$
|
2,810
|
|
|
$
|
17,187
|
|
|
$
|
12,503
|
|
|
| MASIMO CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (unaudited, in thousands) |
|
|
Twelve Months Ended |
|
|
December 30, 2017 |
|
December 31, 2016 |
| Cash flows from operating activities: |
|
|
|
|
|
Net income including noncontrolling interest
|
|
$
|
131,616
|
|
|
$
|
300,666
|
|
|
Adjustments to reconcile net income including noncontrolling
interest to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
20,061
|
|
|
16,817
|
|
|
Stock-based compensation
|
|
17,187
|
|
|
12,503
|
|
|
Loss on disposal of property, equipment and intangibles
|
|
522
|
|
|
658
|
|
|
Provision for doubtful accounts
|
|
251
|
|
|
259
|
|
|
Provision for amount due from former foreign agent
|
|
10,477
|
|
|
—
|
|
|
Gain on deconsolidation of variable interest entity
|
|
—
|
|
|
(273
|
)
|
|
Benefit from deferred income taxes
|
|
24,023
|
|
|
5,405
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Increase in trade accounts receivable
|
|
(19,772
|
)
|
|
(21,243
|
)
|
|
Increase in inventories
|
|
(22,923
|
)
|
|
(10,831
|
)
|
|
Increase in deferred cost of goods sold
|
|
(19,438
|
)
|
|
(8,251
|
)
|
|
Increase in prepaid expenses
|
|
(3,855
|
)
|
|
(3,422
|
)
|
|
(Increase) decrease in prepaid income taxes
|
|
(2,498
|
)
|
|
1,355
|
|
|
Increase in other assets
|
|
(8,905
|
)
|
|
(3,692
|
)
|
|
(Decrease) increase in accounts payable
|
|
(4,058
|
)
|
|
11,048
|
|
|
(Decrease) increase in accrued compensation
|
|
(4,292
|
)
|
|
5,675
|
|
|
Increase (decrease) in accrued and other current liabilities
|
|
11,156
|
|
|
(11,929
|
)
|
|
(Decrease) increase in income taxes payable
|
|
(72,087
|
)
|
|
73,755
|
|
|
(Decrease) increase in deferred revenue
|
|
(27,370
|
)
|
|
41,977
|
|
|
Increase in other liabilities
|
|
28,013
|
|
|
6,565
|
|
|
Net cash provided by operating activities
|
|
58,108
|
|
|
417,042
|
|
| Cash flows from investing activities: |
|
|
|
|
|
Purchases of property and equipment
|
|
(43,684
|
)
|
|
(19,707
|
)
|
|
Increase in intangible assets
|
|
(3,079
|
)
|
|
(4,644
|
)
|
|
Acquisition of long-term equity investments
|
|
(1,145
|
)
|
|
(200
|
)
|
|
Reduction in cash resulting from deconsolidation of variable
interest entity
|
|
—
|
|
|
(763
|
)
|
|
Net cash used in investing activities
|
|
(47,908
|
)
|
|
(25,314
|
)
|
| Cash flows from financing activities: |
|
|
|
|
|
Borrowings under revolving line of credit
|
|
—
|
|
|
45,000
|
|
|
Repayments under revolving line of credit
|
|
—
|
|
|
(230,000
|
)
|
|
Debt issuance costs
|
|
—
|
|
|
(621
|
)
|
|
Repayments on capital lease obligations
|
|
(71
|
)
|
|
(75
|
)
|
|
Proceeds from issuance of common stock
|
|
62,205
|
|
|
37,290
|
|
|
Repurchases of common stock
|
|
(66,272
|
)
|
|
(68,218
|
)
|
|
Net cash used in financing activities
|
|
(4,138
|
)
|
|
(216,624
|
)
|
|
Effect of foreign currency exchange rates on cash
|
|
3,269
|
|
|
(1,451
|
)
|
|
Net increase in cash, cash equivalents and restricted cash
|
|
7,285
|
|
|
175,736
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
308,198
|
|
|
132,462
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
315,483
|
|
|
$
|
308,198
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180227006568/en/
Source: Masimo
Masimo
Investor Contact:
Eli Kammerman
(949)
297-7077
[email protected]
or
Media
Contact:
Irene Paigah
(858) 859-7001
[email protected]