Masimo (Nasdaq: MASI) + issued a news release today confirming the resignation of founder and CEO Joe Kiani after last week’s shareholder vote that ousted him from the position of board chair.

Shares of Masimo ticked up 6.5% to $134.34 apiece in early-morning trading today.

The Irvine, California-based company said it picked Michelle Brennan, a current member of the board, as interim CEO. Brennan, a former Johnson & Johnson executive, was central to the proxy battle between Masimo and Politan Capital Management that saw Kiani replaced as chair. Kiani said before the vote that he planed to leave the company if he’s ousted from the board.

Politan, an activist investor, said last Friday that shareholders voted to seat its nominees, citing preliminary analysis by its proxy solicitor. Masimo said in a news release today that former Stryker CFO Bill Jellison and former Agilent Technologies SVP and Chief Technology Officer Darlene Solomon now join Managing Partner and Chief Investment Officer Quentin Koffey and Brennan on Masimo’s six-person board. Shareholders voted Koffey and Brennan onto the board last year. Politan controls about 9% of Masimo’s stock.

Masimo retained search firm Korn Ferry to assist with its CEO succession planning.

“I am grateful for the trust of the board and excited by the opportunity to help Masimo continue to grow and lead as an innovation-focused company,” Brennan said. “As we go through this transition, the Board and management team are excited to learn from and work with our employees, while focusing on ensuring seamless service and support for our customers.”

Meanwhile, Masimo said its board remains committed to the evaluation of alternatives for its consumer business. Such a move would undo a two-year-old $1 billion acquisition of Sound United and its high-end audio and home theater systems.

The company reaffirmed its guidance for the third quarter of 2024 following the changes at the top.

CFO Micah Young and COO Bilal Muhsin said in a joint statement:

“We are excited about the strong momentum of the business and its future prospects for growth. We look forward to providing more details on the upcoming third quarter earnings call next month.”

Muhsin and hundreds of engineers previously said they would leave if Kiani was ousted.

The analysts’ view on the latest developments at Masimo

BTIG analysts Marie Thibault and Sam Eiber note that an SEC 8-K confirmed that Kiani submitted his resignation on Sept. 19, the same day as the shareholder vote.

That same day, Kiani filed a claim in California state court relating to his employment agreement. The analysts say he seeks declaratory relief that he validly terminated his employment for “good reason.” They expect the legal effort to play a key role in a potentially large payout for Kiani.

On the business side, the analysts reiterate that it appears that Young and Muhsin plan to remain in their roles at Masimo as the company continues to look at options around the consumer businesses. The analysts maintain their “Buy” rating for Masimo.

“The leadership and consumer business updates are not surprises but this release confirms expectations,” the analysts wrote. “We think the reaffirmed guidance should help calm any nerves around an immediate change to core fundamentals of the performance of the healthcare business. We expect MASI shares to react positively today on the news.”