The acquisition of Sound United by Masimo is paying off in more ways than one, with the business reporting another quarter of growth for the medical equipment Company, who is now taking advantage of the Heos operating system they acquired as part of the acquisition of the global sound Company last year to develop new products.
In the last quarter, Sound United contributed US$265.1 million to Masimo revenues. This was up from $222M in the prior quarter.
Combined Australia and Asia revenues as at December 2022 was US$326.8M, at January 2021 revenues in the region was only US$123.6M, a major contributor being the Sound United Operation.
Masimo, who is set to launch a smartwatch in Australia, reported total consolidated revenue of US $617 million for the quarter, which was an 88.3% increase over revenues of $327.6 million booked in the prior quarter the previous year.
The big driver was a 7.4 per cent increase in Masimo’s healthcare division.
Sound United sells Bowers & Wilkins, Polk, Definitive Technology, Marantz and Denon products, as well as several custom install brands in Australia.
Consumer audio growth was fueled by new product introductions, improved supply chain conditions, and strong momentum in the premium audio market, according to Company executives.
Joe Kiani, Masimo Chairman and CEO, says, “2022 was a momentous year for Masimo. Our healthcare business outperformed expectations. We accelerated our strategy to capture the vast consumer health market opportunity with the acquisition of Sound United and the introduction of new wearable technologies such as our W1™ biosensing watch.”
He added, “The acquisition has provided us with immediate scale across consumer engineering, sales, marketing and distribution that would have otherwise taken many years of dilutive investment to build. Instead, we’ve already completed the integration and are working to realise the tremendous potential of the hearables, wearables and telemonitoring markets unlocked by our unique combination of healthcare and consumer technology capabilities.”
During a conference call, he said, “Bowers & Wilkins and Marantz are holding up well in the face of a challenging economic environment, due to their reputation for exceptional quality and design. Our consumer and healthcare teams are working independently and collaboratively on multiple projects to create exciting new consumer products and professional healthcare products, as well as innovative consumer health products. These products will incorporate technology and design from both teams that will be highly differentiated in their target markets, and we expect they will be well received.”
Insiders are claiming that Sound United in Australia is set to become more than a sound Company, and that the combination of premium-grade health technology and the use of the Heos automation system, which was developed for audio, is set to take the Company into new markets, in particular home technology health care.
The latest financials was the first time in the history of the Company that it has exceeded more than $2 billion in revenues in a given year.
Gross markup at Sound United came in at 36.3 per cent, which is lower than what Masimo makes on their healthcare technology.
“I’m excited about the long-term opportunities in this business, as our integrated platform enables innovative new solutions for consumers. And not just audio, but health,” claims Kiani.
Masimo funded this acquisition of Sound United by borrowing around $1 billion, the debt service of which amounted to $25.7 million this year, contributing to their non-operating loss now shown on the Company’s books.
CEO Kiani did say that the non-healthcare audio business (Sound United) grew on a pro forma basis.
CFO Micah Young specifically called out Marantz and Denon, on a conference call, claiming “both saw double-digit gains” in the fourth quarter.
The US $265 million revenue generated by Sound United represented 9% constant currency growth on a pro forma basis.
As far as profits go, the company say the Q4 operating income was $73.5 million, or down -5% as compared to the operating income of $77.4 million in the quarter last year.
Net income for the quarter was $41.1 million.
