Yesterday, the San Diego–based creator of life-boosting products and services elaborated on why it spent $1.025 billion to buy Sound United this year. Sound United is behind sound and home theater system brands including Bowers & Wilkins, Denon, Polk Audio and Marantz.
Investors initially appeared puzzled about the acquisition, but they have since warmed to it. During its 2022 Investor Day yesterday, Masimo gave them more reasons — 4 million, to be exact. That’s the number of worldwide installations of the multi-room HEOS (home entertainment operating system). Masimo officials think they can leverage it.
It starts with an initial software upgrade of 20,000 HEOS Denon Home devices and Masimo Home Health Hubs in the U.S. Next year, the software activation will expand to a total of 4 million HEOS-enabled premium devices from Denon, Marantz and Definitive Technology.
The software upgrade enables the HEOS platform to provide an always-on connection to the Masimo Health secure cloud. In addition, home entertainment systems with HEOS can aggregate, record, and display health data from the company’s wearable health and wellness devices.
“Today represents a major milestone in the integration of our iconic, premium audio brands and our revolutionary healthcare products designed to save and improve lives,” the company’s CEO Joe Kiani said in a news release posted yesterday.
“Leveraging Masimo’s clinically proven monitoring technologies, alongside the state-of-the-art engineering and reach of the HEOS technology platform, Masimo plans to transform existing healthcare, safety, and entertainment paradigms to improve life in the hospital and in the home.”
More about how Masimo is leveraging its Sound United buy
A person with Masimo health trackers and a HEOS could move throughout their home with continuous access to a wide range of health metrics. Think oxygen saturation, pulse rate, respiration rate, hydration, temperature, and more. Plus, the HEOS with Masimo Cloud could help host telehealth sessions from home, streamlining data transfer to clinicians.
The PowerPoint presentation from yesterday’s investor day listed more about how acquiring Sound United could enable Masimo to transform into a major consumer tech company. Think of a company that not only boosts people’s health but also “engineers opportunities to get the most out of life.”
For example, Masimo gained 20,000 points of global retail distribution and a 450-strong global consumer sales and marketing staff. In addition, it nearly doubled its number of engineers to 825.
Plus, Masimo can now make a play in what it described as an $85 billion hearables market. Yesterday, the company introduced its Adaptive Acoustic Technology (AAT). Masimo AAT can transmit pilot sound into the ear and capture the cochlea response. Then, it automatically generates a hearing profile, adapting acoustic sound and music to the personalized profile.
How is 2023 looking for Masimo?
Next year, Masimo officials expect revenue in the $2.33–$2.40 billion range, up 6–8% on a constant currency basis. The projection includes $64 million in foreign currency headwinds. Healthcare revenue will grow 9–10%, with non-healthcare revenue up 2–5%.
EPS in 2023 will be $4.25–4.45, with 44¢ in FX headwinds, according to the company.
Wall Street analysts, on average, expect EPS of $4.43 on $2.36 billion in revenue.
MASI shares are up more than 4%, to $147.16 apiece, from where they were five days ago.
BTIG analysts Marie Thibault and Sam Eiber were upbeat that Masimo announced new offerings.
“New product unveilings included the Stork baby monitoring system, which MASI hopes to position as a high-accuracy, safe, trustworthy product; the Freedom watch and B1 wearable to complement the W1 watch; hearable earbuds with Adaptive Acoustic Technology (AAT) initially intended for communication and entertainment; and for the hospital setting, a Sepsis Index and Hand Hygiene Protocol,” Thibault and Eiber said.
“While revenue contribution from these new products is expected to be nominal in 2023, we were pleased to see that several of these debuts are expected within the next year.”
