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Masimo Reports Second Quarter 2021 Financial Results

07/27/2021

Second Quarter 2021 Highlights

  • Product revenue was $305.1 million;
  • GAAP net income per diluted share was $0.88; and
  • Non-GAAP net income per diluted share was $0.94.

 

IRVINE, Calif.--(BUSINESS WIRE)-- Masimo (Nasdaq: MASI) today announced its financial results for the second quarter of 2021, ended July 3, 2021.

Second Quarter 2021 Results:

Product revenue increased 1.4% to $305.1 million, and decreased 0.1% on a constant currency basis, compared to $301.0 million in the second quarter of 2020. Excluding handheld and fingertip pulse oximeters, shipments of noninvasive technology boards and instruments were 72,500 in the second quarter of 2021.

GAAP operating margin for the second quarter 2021 was 21.3% compared to 20.7% in the second quarter of 2020. Second quarter 2021 non-GAAP operating margin was 23.4% compared to 21.1% in the second quarter of 2020.

For the second quarter of 2021, GAAP net income was $50.2 million, or $0.88 per diluted share compared to net income of $55.8 million, or $0.96 per diluted share, in the second quarter of 2020. Non-GAAP net income was $54.0 million, or $0.94 per diluted share, compared to net income of $49.3 million, or $0.85 per diluted share, in the second quarter of 2020.

Total cash and cash equivalents were $576.0 million as of July 3, 2021.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said “We are happy to report strong second quarter results. While we expected the drivers and capital orders of 2021 to be lower than we achieved in 2020 due to high demand during the height of COVID-19, and expected sensor volumes to rebound as elective surgeries recover, we did not anticipate the very strong increase in single-patient-use sensors that we realized this quarter. This produced higher revenues that exceeded expectations for this period.”

2021 Financial Guidance

The Company provided the following updated estimates for its full-year 2021 guidance:

 

 

2021 Updated Guidance(1)

 

Prior 2021 Guidance(1)

(in millions, except percentages and earnings per share)

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

Total revenue

 

$

1,216.0

 

 

$

1,216.0

 

 

$

1,205.0

 

 

$

1,205.0

 

Product revenue

 

$

1,216.0

 

 

$

1,216.0

 

 

$

1,205.0

 

 

$

1,205.0

 

Percentage growth - as reported

 

6.3

%

 

N/A

 

5.4

%

 

N/A

Percentage growth - constant currency

 

N/A

 

5.4

%

 

N/A

 

4.5

%

Gross margin

 

65.3

%

 

66.0

%

 

66.7

%

 

67.0

%

Operating margin

 

22.3

%

 

23.8

%

 

23.2

%

 

24.5

%

Earnings per diluted share

 

$

3.83

 

 

$

3.85

 

 

$

3.83

 

 

$

3.83

 

Estimated tax rate

 

18.2

%

 

23.4

%

 

20.0

%

 

24.3

%

(1)

Updated guidance provided July 27, 2021. Prior guidance provided April 26, 2021.

  • Product revenue increasing to $1,216 million, which reflects reported growth of 6.3% and constant currency growth of 5.4%;
  • GAAP earnings per diluted share remains at $3.83;
  • Non-GAAP earnings per diluted share increasing to $3.85;
  • Included in our full-year 2021 revenue guidance is approximately $10.0 million of year-over-year currency tailwinds, which is consistent with our prior guidance.

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. 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. Furthermore, management also believes that these items are not indicative of the Company’s on-going 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 net operating results on an on-going basis: (i) constant currency product revenue growth %, (ii) non-GAAP net income, (iii) non-GAAP (net income) earnings per diluted share and (iv) non-GAAP operating income/margin. These non-GAAP financial measures may also assist investors in making comparisons of the Company’s operating results with those of other companies. Management believes constant currency product revenue growth, non-GAAP operating income/margin, non-GAAP net income and non-GAAP earnings per diluted share 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:

Constant currency revenue adjustments

Some of our sales agreements with foreign customers provide for payment in currencies other than the U.S. Dollar. These foreign currency revenues, when converted into U.S. Dollars, can vary significantly from period-to-period depending on the average and quarter-end exchange rates during a respective period. We believe that comparing these foreign currency denominated revenues by holding the exchange rates constant with the prior year period is useful to management and investors in evaluating our product revenue growth rates on a period-to-period basis. We anticipate that fluctuations in foreign exchange rates and the related constant currency adjustments for calculation of our product revenue growth rate will continue to occur in future periods.

Royalty and other revenue, net of related costs

We derive royalty and other revenue, net of related costs, from certain non-recurring contractual arrangements that we do not expect to continue in the future. We believe the exclusion of royalty and other revenue, net of related costs, associated with these non-recurring revenue streams is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis.

Acquisition, integration and related costs

These transactions represent gains, losses, and other related costs associated with acquisitions, integrations, investments and divestitures. These items also include but are not limited to amortization and depreciation of intangible assets, asset impairments, and in-process research and development. We believe that the exclusion of these items is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis.

Litigation related expenses, settlements and awards

These transactions represent gains, losses, and other related costs associated with certain litigation matters, which can vary in their characteristics, frequency and significance to our operating results. We believe that the exclusion of these items is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis.

Other adjustments

In the event there are gains, losses and other adjustments which impact period-to-period comparability and do not represent the underlying ongoing results of the business, the Company may choose to exclude these from non-GAAP earnings.

Realized and unrealized gains or losses

These transactions represent gains, losses, and other related costs associated with foreign currency denominated transactions and investments. As the Company does not actively hedge these currency exposures, changes in the underlying currency rates relative to the U.S. Dollar may result in realized and unrealized foreign currency gains and losses between the time these receivables and payables arise and the time that they are settled in cash. Unrealized and realized gains and losses on investments may impact the Company’s reported results of operations for a period. These items are highly variable, difficult to predict and outside the control of those responsible for the underlying operations of the business. We believe that exclusion of these items is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis.

Tax impact of non-GAAP adjustments

In order to reflect the tax effected impact of the non-GAAP adjustments, the Company will adjust the non-GAAP earnings by the approximate tax impact of these adjustments.

Excess tax benefits from stock-based compensation expense

GAAP requires that excess tax benefits recognized on stock-based compensation expense be reflected in our provision for income taxes rather than paid-in capital. As these excess tax benefits may be highly variable from period-to-period, the Company may choose to exclude these tax benefits from non-GAAP earnings to facilitate comparability between periods and with peers.

Second Quarter 2021 Actuals versus Second Quarter 2020 Actuals

RECONCILIATION OF GAAP TO NON-GAAP CONSTANT CURRENCY PRODUCT REVENUE(1):

 

 

 

Three Months Ended

(in thousands, except percentages)

July 3,
2021

June 27,
2020

GAAP product revenue

$

305,118

 

$

300,953

Non-GAAP constant currency adjustments:

 

 

Constant currency F/X adjustments

 

(4,335

)

 

N/A

Total non-GAAP constant currency adjustments

 

(4,335

)

 

N/A

Non-GAAP constant currency product revenue

$

300,783

 

$

300,953

 

Product revenue growth %

 

GAAP

 

1.4

%

Non-GAAP constant currency

 

(0.1

)%

(1)

May not foot due to rounding.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):

 

 

 

Three Months Ended

 

 

 

July 3,
2021

 

June 27,
2020

(in thousands, except per share amounts)

 

$

 

Per Diluted Share

 

$

 

Per Diluted Share

GAAP net income

 

$

50,235

 

 

$

0.88

 

 

$

55,772

 

 

$

0.96

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Acquisition, integration and related costs

 

2,509

 

 

0.04

 

 

1,313

 

 

0.02

 

 

Litigation related expenses, settlements and awards(2)

 

373

 

 

0.01

 

 

25

 

 

 

 

Other adjustments(3)

3,362

 

 

0.06

 

 

 

 

 

 

Realized and unrealized gains or losses

 

59

 

 

 

 

(11

)

 

 

 

Tax impact of non-GAAP adjustments

 

(1,218

)

 

(0.02

)

 

(361

)

 

(0.01

)

 

Excess tax benefits from stock-based compensation expense

 

(1,324

)

 

(0.02

)

 

(7,486

)

 

(0.13

)

 

Total non-GAAP adjustments

 

3,760

 

 

0.07

 

 

(6,519

)

 

(0.11

)

Non-GAAP net income

 

$

53,997

 

 

$

0.94

 

 

$

49,253

 

 

$

0.85

 

Weighted average shares outstanding - diluted

 

 

 

57,379

 

 

 

 

58,204

 

(1)

May not foot due to rounding.

(2)

Litigation related expenses, settlements and awards includes legal expenses in 2021 related to a complaint filed against Apple, Inc. with the U.S. International Trade Commission (ITC).

(3)

Other adjustments includes a charge in the second quarter of 2021 related to assisting a long-term OEM customer with their medical device correction.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING MARGIN(1):

 

 

 

 

Three Months Ended

 

 

 

 

July 3,
2021

June 27,
2020

(in thousands, except percentages)

 

$

 

$

GAAP operating income/margin

 

$

65,136

 

 

$

62,220

 

Non-GAAP adjustments:

 

 

 

 

 

Acquisition, integration and related costs

 

2,509

 

 

1,313

 

 

Litigation related expenses, settlements and awards(2)

 

373

 

 

25

 

 

Other adjustments(3)

 

3,362

 

 

 

 

 

Total non-GAAP adjustments

 

6,244

 

 

1,338

 

Non-GAAP operating income/margin

 

$

71,381

 

 

$

63,558

 

 

 

GAAP operating income/margin %

 

21.3

%

 

20.7

%

 

 

Non-GAAP operating income/margin %

 

23.4

%

 

21.1

%

(1)

May not foot due to rounding.

(2)

Litigation related expenses, settlements and awards includes legal expenses in 2021 related to a complaint filed against Apple, Inc. with the U.S. International Trade Commission (ITC).

(3)

Other adjustments includes a charge in the second quarter of 2021 related to assisting a long-term OEM customer with their medical device correction.

Full-Year 2021 Guidance versus Full-Year 2020 Actuals

RECONCILIATION OF GAAP PRODUCT REVENUE GROWTH % TO CONSTANT CURRENCY PRODUCT REVENUE GROWTH %(1):

(in thousands, except percentages)

 

Full-Year 2021

Updated Guidance(2)

 

Full-Year 2020

Actuals

GAAP product revenue

 

$

1,216,000

 

 

$

1,143,744

 

Non-GAAP constant currency adjustments:

 

 

 

 

 

Constant currency F/X adjustments

 

(10,000

)

 

N/A

 

 

Total non-GAAP constant currency adjustments

 

(10,000

)

 

N/A

Non-GAAP constant currency product revenue

 

$

1,206,000

 

 

$

1,143,744

 

Product revenue growth %:

 

 

 

 

 

GAAP

 

6.3

%

 

 

 

Non-GAAP constant currency

 

5.4

%

 

 

(1)

May not foot due to rounding.

(2)

Updated guidance provided July 27, 2021. Prior guidance provided April 26, 2021.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):

 

 

 

 

 

 

 

 

 

Full-Year 2021

Updated Guidance(2)

 

Full-Year 2020

Actuals

(in thousands, except per share amounts)

$

 

Per Diluted Share

 

$

 

Per Diluted Share

GAAP net income

$

221,300

 

 

$

3.83

 

 

$

240,302

 

 

$

4.14

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Acquisition, integration and related costs

10,100

 

 

0.18

 

 

8,286

 

 

0.14

 

 

Litigation related expenses, settlements and awards(3)

5,000

 

 

0.09

 

 

(474

)

 

(0.01

)

 

Other adjustments(4)

3,400

 

 

0.06

 

 

 

 

 

 

Realized and unrealized gains or losses

900

 

 

0.02

 

 

(2,631

)

 

(0.05

)

 

Tax impact of non-GAAP adjustments

(3,500

)

 

(0.06

)

 

(6,096

)

 

(0.11

)

 

Excess tax benefits from stock-based compensation expense

(15,000

)

 

(0.26

)

 

(30,172

)

 

(0.52

)

 

Total non-GAAP adjustments

800

 

 

0.01

 

 

(31,086

)

 

(0.54

)

Non-GAAP product net income

$

222,100

 

 

$

3.85

 

 

$

209,216

 

 

$

3.60

 

Weighted average shares outstanding - diluted

 

 

57,700

 

 

 

 

58,037

 

(1)

May not foot due to rounding.

(2)

Updated guidance provided July 27, 2021. Prior guidance provided April 26, 2021.

(3)

Litigation related expenses, settlements and awards includes legal expenses in 2021 related to a complaint filed against Apple, Inc. with the U.S. International Trade Commission (ITC).

(4)

Other adjustments includes a charge in the second quarter of 2021 related to assisting a long-term OEM customer with their medical device correction.

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND OPERATING MARGIN(1):

 

 

 

 

Full-Year 2021

Updated Guidance(2)

Full-Year 2020

Actuals

(in thousands, except percentages)

$

$

GAAP gross margin

$

794,500

 

$

743,065

 

Non-GAAP adjustments:

 

 

Acquisition, integration and related costs

 

4,100

 

 

1,807

 

Other adjustments(4)

 

3,400

 

 

 

Total non-GAAP adjustments

 

7,500

 

 

1,807

 

Non-GAAP gross margin

$

802,000

 

$

744,872

 

GAAP gross margin %

 

65.3

%

 

65.0

%

Non-GAAP gross margin %

 

66.0

%

 

65.1

%

GAAP operating income/margin

$

270,900

 

$

255,823

 

Non-GAAP adjustments:

 

 

Acquisition, integration and related costs

 

10,100

 

 

8,286

 

Litigation related expenses, settlements and awards(3)

 

5,000

 

 

(474

)

Other adjustments(4)

 

3,400

 

 

 

Total non-GAAP adjustments

 

18,500

 

 

7,812

 

Non-GAAP operating income/margin

$

289,400

 

$

263,636

 

GAAP operating income/margin %

 

22.3

%

 

22.4

%

Non-GAAP operating income/margin %

 

23.8

%

 

23.1

%

(1)

May not foot due to rounding.

(2)

Updated guidance provided July 27, 2021. Prior guidance provided April 26, 2021.

(3)

Litigation related expenses, settlements and awards includes legal expenses in 2021 related to a complaint filed against Apple, Inc. with the U.S. International Trade Commission (ITC).

(4)

Other adjustments includes a charge in the second quarter of 2021 related to assisting a long-term OEM customer with their medical device correction.

Conference Call:

The conference call to review the results will begin at 1:30 p.m. PT today (4:30 p.m. ET) and will be hosted by Joe Kiani, Chairman and Chief Executive Officer, and Micah Young, Executive Vice President and Chief Financial Officer.

To register for the conference call and receive the dial-in number, please use the link below. Upon registering, each participant will be provided with call details and a registrant ID number.

Conference Call Registration Link:

http://www.directeventreg.com/registration/event/8737508

A replay of the webcast and conference call will be available shortly after the conclusion of the call and will be archived on the Company’s website.

About Masimo

Masimo (Nasdaq: MASI) is a global medical technology company that develops and produces a wide array of industry-leading monitoring technologies, including innovative measurements, sensors, patient monitors, and automation and connectivity solutions. Our mission is to improve patient outcomes and reduce the cost of care. Masimo SET® Measure-through Motion and Low Perfusion pulse oximetry, introduced in 1995, has been shown in over 100 independent and objective studies to outperform other pulse oximetry technologies.4 Masimo SET® has also been shown to help clinicians reduce severe retinopathy of prematurity in neonates,5 improve CCHD screening in newborns,6 and, when used for continuous monitoring with Masimo Patient SafetyNetin post-surgical wards, reduce rapid response team activations, ICU transfers, and costs.7-10 Masimo SET® is estimated to be used on more than 200 million patients in leading hospitals and other healthcare settings around the world,1 and is the primary pulse oximetry at 9 of the top 10 hospitals according to the 2020-21 U.S. News and World Report Best Hospitals Honor Roll.3 Masimo continues to refine SET® and in 2018, announced that SpO2 accuracy on RD SET® sensors during conditions of motion has been significantly improved, providing clinicians with even greater confidence that the SpO2 values they rely on accurately reflect a patient’s physiological status. 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®), RPVi (rainbow® PVi), and Oxygen Reserve Index (ORi). In 2013, Masimo introduced the Root® Patient Monitoring and Connectivity Platform, built from the ground up to be as flexible and expandable as possible to facilitate the addition of other Masimo and third-party monitoring technologies; key Masimo additions include Next Generation SedLine® Brain Function Monitoring, O3® Regional Oximetry, and ISA Capnography with NomoLine® sampling lines. Masimo’s family of continuous and spot-check monitoring Pulse CO-Oximeters® includes devices designed for use in a variety of clinical and non-clinical scenarios, including tetherless, wearable technology, such as Radius-7® and Radius PPG, portable devices like Rad-67, fingertip pulse oximeters like MightySat® Rx, and devices available for use both in the hospital and at home, such as Rad-97®. Masimo hospital automation and connectivity solutions are centered around the Masimo Hospital Automation platform, and include Iris® Gateway, iSirona, Patient SafetyNet, Replica, Halo ION, UniView, UniView :60, and Masimo SafetyNet. Additional information about Masimo and its products may be found at www.masimo.com. Published clinical studies on Masimo products can be found at www.masimo.com/evidence/featured-studies/feature/.

ORi and RPVi have not received FDA 510(k) clearance and are not available for sale in the United States. The use of the trademark Patient SafetyNet is under license from University HealthSystem Consortium.

 

References

1.

Estimate: Masimo data on file.

2.

https://content.govdelivery.com/accounts/USFDA/bulletins/2c276cb.

3.

http://health.usnews.com/health-care/best-hospitals/articles/best-hospitals-honor-roll-and-overview.

4.

Published clinical studies on pulse oximetry and the benefits of Masimo SET® can be found on our website at http://www.masimo.com. Comparative studies include independent and objective studies which are comprised of abstracts presented at scientific meetings and peer-reviewed journal articles.

5.

Castillo A et al. Prevention of Retinopathy of Prematurity in Preterm Infants through Changes in Clinical Practice and SpO2 Technology. Acta Paediatr. 2011 Feb;100(2):188-92.

6.

de-Wahl Granelli A et al. Impact of pulse oximetry screening on the detection of duct dependent congenital heart disease: a Swedish prospective screening study in 39,821 newborns. BMJ. 2009;Jan 8;338.

7.

Taenzer A et al. Impact of pulse oximetry surveillance on rescue events and intensive care unit transfers: a before-and-after concurrence study. Anesthesiology. 2010:112(2):282-287.

8.

Taenzer A et al. Postoperative Monitoring – The Dartmouth Experience. Anesthesia Patient Safety Foundation Newsletter. Spring-Summer 2012.

9.

McGrath S et al. Surveillance Monitoring Management for General Care Units: Strategy, Design, and Implementation. The Joint Commission Journal on Quality and Patient Safety. 2016 Jul;42(7):293-302.

10.

McGrath S et al. Inpatient Respiratory Arrest Associated With Sedative and Analgesic Medications: Impact of Continuous Monitoring on Patient Mortality and Severe Morbidity. J Patient Saf. 2020 14 Mar. DOI: 10.1097/PTS.0000000000000696.

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 year 2021 financial guidance; 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: the completion of customary quarterly financial statement review procedures; 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; risks related to global economic and marketplace uncertainties related to the impact of the COVID-19 pandemic; 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)

 

July 3,
2021

 

January 2,
2021

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

575,955

 

 

$

641,447

 

Accounts receivable, net of allowance for credit losses

179,354

 

 

141,350

 

Inventories

206,607

 

 

215,952

 

Other current assets

89,920

 

 

102,416

 

Total current assets

1,051,836

 

 

1,101,165

 

Lease receivable, noncurrent

65,198

 

 

57,666

 

Deferred costs and other contract assets

21,704

 

 

20,076

 

Property and equipment, net

274,723

 

 

272,511

 

Intangible assets, net

75,025

 

 

73,923

 

Goodwill

102,486

 

 

103,206

 

Deferred tax assets

39,312

 

 

39,363

 

Other non-current assets

51,404

 

 

44,642

 

Total assets

$

1,681,688

 

 

$

1,712,552

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

66,248

 

 

$

64,061

 

Accrued compensation

55,043

 

 

71,601

 

Deferred revenue and other contract liabilities, current

44,158

 

 

44,935

 

Other current liabilities

54,580

 

 

53,239

 

Total current liabilities

220,029

 

 

233,836

 

Other non-current liabilities

70,424

 

 

71,076

 

Total liabilities

290,453

 

 

304,912

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock

55

 

 

55

 

Treasury stock

(767,653

)

 

(638,736

)

Additional paid-in capital

714,267

 

 

703,693

 

Accumulated other comprehensive (loss) income

(267

)

 

1,413

 

Retained earnings

1,444,833

 

 

1,341,215

 

Total stockholders’ equity

1,391,235

 

 

1,407,640

 

Total liabilities and stockholders’ equity

$

1,681,688

 

 

$

1,712,552

 

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

 

Three Months Ended

 

Six Months Ended

 

July 3,
2021

 

June 27,
2020

 

July 3,
2021

 

June 27,
2020

Product revenue

$

305,118

 

 

$

300,953

 

 

$

604,161

 

 

$

570,578

 

Cost of goods sold

112,206

 

 

109,369

 

 

214,374

 

 

193,365

 

Gross profit

192,912

 

 

191,584

 

 

389,787

 

 

377,213

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

93,833

 

 

98,461

 

 

190,533

 

 

188,338

 

Research and development

33,943

 

 

30,878

 

 

68,454

 

 

58,119

 

Litigation settlements and (awards)

 

 

25

 

 

 

 

(474

)

Total operating expenses

127,776

 

 

129,364

 

 

258,987

 

 

245,983

 

Operating income

65,136

 

 

62,220

 

 

130,800

 

 

131,230

 

Non-operating income (loss)

80

 

 

1,405

 

 

(657

)

 

4,751

 

Income before provision for income taxes

65,216

 

 

63,625

 

 

130,143

 

 

135,981

 

Provision for income taxes

14,981

 

 

7,853

 

 

26,525

 

 

15,753

 

Net income

$

50,235

 

 

$

55,772

 

 

$

103,618

 

 

$

120,228

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.91

 

 

$

1.02

 

 

$

1.88

 

 

$

2.21

 

Diluted

$

0.88

 

 

$

0.96

 

 

$

1.80

 

 

$

2.08

 

 

 

 

 

 

 

 

 

Weighted-average shares used in per share calculations:

 

 

 

 

 

 

 

Basic

55,032

 

 

54,764

 

 

55,116

 

 

54,316

 

Diluted

57,379

 

 

58,204

 

 

57,630

 

 

57,913

 

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

 

Six Months Ended

 

July 3,
2021

 

June 27,
2020

 

July 3,
2021

 

June 27,
2020

Cost of goods sold

$

192

 

 

$

183

 

 

$

397

 

 

$

314

 

Selling, general and administrative

5,076

 

 

10,048

 

 

14,488

 

 

18,778

 

Research and development

2,994

 

 

2,957

 

 

6,085

 

 

5,368

 

Total

$

8,262

 

 

$

13,188

 

 

$

20,970

 

 

$

24,460

 

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

Six Months Ended

 

July 3,
2021

 

June 27,
2020

Cash flows from operating activities:

 

 

 

Net income

$

103,618

 

 

$

120,228

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

17,314

 

 

13,587

 

Stock-based compensation

20,970

 

 

24,460

 

Loss on disposal of equipment, intangibles and other assets

166

 

 

196

 

Provision (Benefit) for credit losses

497

 

 

(170

)

Benefit from deferred income taxes

 

 

77

 

Changes in operating assets and liabilities:

 

 

 

Increase in accounts receivable

(38,700

)

 

(41,295

)

Increase in lease receivable, net

(7,544

)

 

(2,183

)

Decrease (increase) in inventories

8,627

 

 

(37,548

)

Decrease (increase) in other current assets

6,456

 

 

(12,004

)

Increase in deferred costs and other contract assets

(1,652

)

 

(2,105

)

Increase in other non-current assets

(166

)

 

(442

)

Increase in accounts payable

1,974

 

 

32,798

 

Decrease in accrued compensation

(16,303

)

 

(2,025

)

(Decrease) increase in accrued liabilities

(5,998

)

 

5,876

 

(Decrease) increase in income tax payable

(2,034

)

 

248

 

(Decrease) increase in deferred revenue and other contract-related liabilities

(1,231

)

 

6,920

 

Decrease in other non-current liabilities

(736

)

 

(558

)

Net cash provided by operating activities

85,258

 

 

106,060

 

Cash flows from investing activities:

 

 

 

Maturities of short-term investments

 

 

70,000

 

Purchases of property and equipment, net

(14,242

)

 

(51,263

)

Increase in intangible assets

(2,977

)

 

(4,322

)

Business combinations, net of cash acquired

 

 

(78,310

)

Other strategic investing activities

 

 

(6,750

)

Net cash used in investing activities

(17,219

)

 

(70,645

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of common stock

9,137

 

 

34,629

 

Payroll tax withholdings on behalf of employees for vested equity awards

(16,724

)

 

(1,424

)

Repurchases of common stock

(128,917

)

 

(591

)

Net cash (used in) provided by financing activities

(136,504

)

 

32,614

 

Effect of foreign currency exchange rates on cash

804

 

 

(847

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(67,661

)

 

67,182

 

Cash, cash equivalents and restricted cash at beginning of period

645,004

 

 

568,075

 

Cash, cash equivalents and restricted cash at end of period

$

577,343

 

 

$

635,257

 

 

Investor Contact: Eli Kammerman
(949) 297-7077
ekammerman@masimo.com

Media Contact: Evan Lamb
(949) 396-3376
elamb@masimo.com

Source: Masimo

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