The acquisition of Sound United the owner of brands that include Bowers & Wilkins Marantz, Polk and Denon is paying off for US medical group Masimo who recently announced a 78% lift in revenues following the acquisition.

Third quarter revenues came in at US$549.3 million, an increase of $241.9 million with the $1.065 billion dollar acquisition of the global audio group contributing to the increase in revenues.

Of the revenue total, Sound United contributed $222.1 million or 40.4% of the total which in real terms and when compared to previous quarters was down 2% overall.

Also taking a hit was gross profits which were hurt by a significant increase in manufacturing and distribution costs associated with the overall increase in the cost of manufacturing goods.

In a conference call with Wall Street analysts’ management claimed that a deteriorating macroeconomic environment, the impact of a very negative foreign exchange rates, and supply chain challenges, especially for their healthcare business was affecting the overall business.

This week Masimo had a major win in a US Court when a former employee was found to have stolen Company secrets. As a result of this Masimo is taking legal action against Apple who are accused of using the stolen technology in the Apple Watch.

Masimo who has their own W1 smartwatch have not said whether they are set to sell their watch in Australia.

Sound United which is listed in the Masimo financials as ‘No Healthcare’ is forecasting growth of between 5-10% in the current quarter. Revenues are tipped to grow from $245M to $260M, there is no separate breakout of Sound United Australian operation.

Gross margins in the none healthcare division (Sound United) is tipped to remain stable at 55% while Operating Profits are tipped to rise from US$349 to $357M.

Observers claim that the acquisition of Sound United was based on the business wanting to grow sales of the W1 smartwatch with several investors sceptical of the company’s plans for Sound United.

Politan Capital Management, founded by Quentin Koffey, an activist investment company, has taken a significant investment in the company and is agitating for seats on the board.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said “We delivered strong results in the third quarter with revenue and earnings exceeding expectations”.

“ 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.”