Days out from what is tipped to be an explosive AGM Masimo has released their financials and it’s not looking pretty for the consumer division.
While the healthcare division of the US Company is in growth mode, the consumer division has seen a 13% fall in sales, with the division appearing to have been all but jettisoned by management of the parent Company, with the former Sound United business hardly getting a mention as management gushed about the performance of their health business ahead of what’s tipped to be a key AGM for the business as directors fight each other for board seat representation.
Masimo Consumer sells iconic consumer brands including Bowers & Wilkins, Denon, Polk Audio, Marantz, Definitive Technology, Classé, and Boston Acoustic
The business is set to deliver revenues of US$152 million for the quarter.
The result is a decline of US$22 million or -13% as compared to revenues of $174 million in the second quarter of Fiscal 2023.
Out of 10 latest financials report the only reference came when management wrote ‘On March 22, 2024, Masimo announced that its Board of Directors has authorized management to evaluate a proposed separation of its consumer business. Masimo is committed to pursuing a separation that would result in two separate companies (consumer and professional healthcare)”.
Masimo expects that the separated entity (“Newco”) will include its consumer audio (including hearables) and consumer health products (including the Stork baby monitor and the Freedom smart watch and band).
“Masimo will retain its professional healthcare and telehealth products”.
The statements were there to bolster the perception of the healthcare business with management claiming ” Masimo expects that the separation will improve the profitability of the healthcare business (“Remainco”)”
The financial information provided in the above report reflected a separation of the consumer business without cash proceeds (e.g., spin-off).
If a sale agreement is reached with insiders already tipping that a deal is close, Masimo would be able to pay to the health division A$1.296 billion as buy back of the money that the Company spent buying the Sound United business.
It would also reduce interest expenses of A$69M a year.
The business is tipped to use money from the sale of the former Sound United business to “Pay down” Apple litigation costs.
The decline in revenues of the former Sound United business under Masimo are significant.
On a quarterly basis only, the business is shown to have had revenues of US$208M in 2022, this fell to US$174 in 2023 with their latest result for the quarter coming in at US$152M.
Year to date revenues for the Masimo consumer business are $989M.
