Masimo (Nasdaq: MASI) reported third-quarter results that beat the consensus forecast on Wall Street — but it held down its Q4 guidance.
“We delivered strong results in the third quarter, with revenue and earnings exceeding expectations. Our healthcare segment achieved double-digit constant currency growth, and our consumer non-healthcare segment reported another quarter of better-than-expected results. Our performance in the third quarter was achieved in a challenging environment and made possible by commendable contributions from our entire team,” CEO Joe Kiani said in a news release yesterday evening.
The Irvine, California–based maker of health monitoring tech and high-end sound systems earned $37.9 million, or 70¢ per share, off $549.3 million for the quarter that ended Oct. 1, 2022. The bottom line was down by more than a third, while the top line was up by nearly 79% compared with Q3 2021.
Healthcare revenue was $327.2 million, up 6.4%. Non-healthcare revenue was $222.1 million.
Adjusted to exclude one-time items, earnings per share were $1. That’s 8¢ ahead of The Street, where analysts expected revenue of $533.44 million.
Masimo facing headwinds
Masimo faces many challenges shared with many other medtech companies, especially those relying on circuit boards and electronic components. On top of supply chain challenges, a strong dollar makes it harder for U.S. companies to export. In addition, there’s inflation, and healthcare staffing shortages make it harder for providers to adopt new technologies.
The company expects a normal seasonal increase in patient admissions in Q4. Flu cases are already running strong this year, and hospitals have postponed surgeries to the final months of the year. “However, due to the challenging healthcare environment with softer hospital census levels and ongoing supply chain challenges, we are not raising our guidance range,” Kiani said during the company’s earnings call yesterday evening.
The company is projecting $581–611 million in revenue for Q4. The Q4 revenue means that it’s reducing the top end of its full-year guidance. Masimo now expects $2.00–$2.03 billion in revenue this year, versus a previous projection of $1.985–2.045 billion.
“Despite the strength displayed in the consumer segment and the solid healthcare result, MASI is wary of ongoing challenges, citing component constraints and the macro environment for the consumer side, as well as softer hospital admissions, staffing shortages and supply chain hurdles on the healthcare side,” said BTIG analysts Marie Thibault and Sam Eiber.
Thibault and Eiber noted that Masimo continues to make progress with its health-monitoring smartwatch: “The W1 watch is in full release, and while it wasn’t a material contributor to Q3 revenue, it is being used in pilot programs in the U.S. and the Middle East to monitor patients with chronic conditions.”
Investors reacted by sending MASI down more than 8% to $112.49 apiece today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up slightly.