Complete fourth quarter and full-year 2020
financial results will be announced on Tuesday, February 23,
2021.
- Preliminary full-year 2020 product revenue of approximately
$1.139 billion to $1.144 billion;
- Preliminary full-year 2020 GAAP earnings per diluted share and
non-GAAP earnings per diluted share are expected to exceed guidance
of $3.77 and $3.46 per diluted share, respectively; and
- Full year 2021 financial guidance includes product revenue,
GAAP earnings per diluted share and non-GAAP earnings per diluted
share of approximately $1.200 billion, $3.81 and $3.80,
respectively.
Masimo Corporation (Nasdaq: MASI) today announced select
preliminary financial and operational results for the full-year
ended January 2, 2021 and provided estimates for its full-year 2021
financial guidance.
Preliminary Full-Year 2020
Results:
Masimo expects that its product revenue for the full-year 2020
will range from $1.139 billion to $1.144 billion, which reflects
reported growth of 21.6% to 22.2% and constant currency growth of
21.6% to 22.1%, respectively. The Company also expects full-year
2020 shipments of noninvasive technology boards and instruments of
approximately 472,000.
Additionally, Masimo expects that full-year 2020 GAAP earnings
per diluted share and non-GAAP earnings per diluted share will
exceed previously issued financial guidance of $3.77 and $3.46 per
diluted share, respectively.
The preliminary financial information presented in this press
release is based on Masimo’s current expectations and may be
adjusted as a result of, among other things, completion of
customary annual audit procedures. Management plans to discuss
Masimo’s complete fourth quarter and full-year 2020 financial
results after the market closes on Tuesday, February 23, 2021.
LiDCO Transaction:
The Company recently announced that it had reached an agreement
on the terms of a recommended cash offer to acquire the share
capital of LiDCO Group Plc, a leading provider of advanced
hemodynamic monitoring solutions (LiDCO). Masimo expects that the
transaction will close in the first quarter and contribute
approximately one percentage point to its full-year 2021 revenue
guidance growth rate. Furthermore, the Company expects the
transaction to be slightly dilutive to non-GAAP earnings per
diluted share in 2021, with accretion to non-GAAP earnings per
diluted share beginning in 2022. The financial impact of the
transaction is included in Masimo’s full-year 2021 financial
guidance being issued today.
Q4 2020 Share
Repurchases:
The Company repurchased approximately 453,000 shares of Masimo
common stock for a total cost of approximately $110.2 million
during the fourth quarter of 2020. The impact of the share
repurchases on our weighted average shares outstanding is reflected
in Masimo’s full-year 2021 financial guidance being issued
today.
2021 Financial Guidance:
The Company provided the following estimates for its full-year
2021 guidance:
2021 Guidance
(in millions, except percentages and
earnings per share)
GAAP
Non-GAAP
Product revenue
$1,200
$1,200
Percentage growth - as reported
4.9% to 5.4%
N/A
Percentage growth - constant currency
N/A
3.6% to 4.0%
Gross margin
66.8%
67.0%
Operating margin
23.5%
24.5%
Earnings per diluted share
$3.81
$3.80
- Product revenue increasing to $1.200 billion, which reflects
reported growth of 4.9% to 5.4% and constant currency growth of
3.6% to 4.0%;
- GAAP earnings per diluted share of $3.81;
- Non-GAAP earnings per diluted share of $3.80; and
- Included in our non-GAAP full-year 2021 revenue guidance is
approximately $15.0 million of year-over-year currency tailwinds.
Supplementary Non-GAAP Financial Information
For additional non-GAAP financial details, please visit the
Investor Relations section of the Company’s website at www.masimo.com to access Supplementary Financial
Information.
Non-GAAP Financial Measures
The non-GAAP financial measures contained herein are a
supplement to the corresponding financial measures prepared in
accordance with U.S. GAAP. The non-GAAP financial measures
presented exclude the items described below. Management believes
that adjustments for these items assist investors in making
comparisons of period-to-period operating results. Furthermore,
management also believes that these items are not indicative of the
Company’s on-going core operating performance. These non-GAAP
financial measures have certain limitations in that they do not
reflect all of the costs associated with the operations of the
Company’s business as determined in accordance with GAAP.
Therefore, investors should consider non-GAAP financial measures
in addition to, and not as a substitute for, or as superior to,
measures of financial performance prepared in accordance with GAAP.
The non-GAAP financial measures presented by the Company may be
different from the non-GAAP financial measures used by other
companies.
The Company has presented the following non-GAAP measures to
assist investors in understanding the Company’s core net operating
results on an on-going basis: (i) constant currency product revenue
growth %, (ii) non-GAAP net income, (iii) non-GAAP (net income)
earnings per diluted share and (iv) non-GAAP operating
income/margin. These non-GAAP financial measures may also assist
investors in making comparisons of the Company’s core operating
results with those of other companies. Management believes constant
currency product revenue growth, non-GAAP operating income/margin,
non-GAAP net income and non-GAAP earnings per diluted share are
important measures in the evaluation of the Company’s performance
and uses these measures to better understand and evaluate our
business.
The non-GAAP financial measures reflect adjustments for the
following items, as well as the related income tax effects
thereof:
Constant currency adjustments.
Some of our sales agreements with foreign customers provide for
payment in currencies other than the U.S. Dollar. These foreign
currency revenues, when converted into U.S. Dollars, can vary
significantly from period to period depending on the average and
quarter-end exchange rates during a respective period. We believe
that comparing these foreign currency denominated revenues by
holding the exchange rates constant with the prior year period is
useful to management and investors in evaluating our product
revenue growth rates on a period-to-period basis. We anticipate
that fluctuations in foreign exchange rates and the related
constant currency adjustments for calculation of our product
revenue growth rate will continue to occur in future periods.
Royalty and other revenue, net of related
costs.
We derive royalty and other revenue, net of related costs, from
certain non-recurring contractual arrangements that we do not
expect to continue in the future. We believe the exclusion of
royalty and other revenue, net of related costs, associated with
these non-recurring revenue streams is useful to management and
investors in evaluating the performance of our ongoing operations
on a period-to-period basis.
Acquisition/Strategic investment-related
costs, including depreciation and amortization.
In the event the Company acquires, invests in or divests certain
business operations, there may be non-recurring gains, losses or
expenses that will be recognized related to the assets and/or
liabilities sold or acquired that are not representative of normal
on-going cash flows. Furthermore, there may be depreciation and
amortization related to the revaluation of assets and liabilities
(primarily intangible assets, property, plant and equipment
adjustments, inventory revaluation, lease liabilities, etc.) to
fair value through purchase accounting related to value created by
the seller prior to the acquisition/strategic investment that does
not reflect the normal on-going costs of operating our core
business. We believe that exclusion of these gains, losses or costs
in presenting non-GAAP financial measures provides management and
investors a more effective means of evaluating historical
performance and projected costs and the potential for realizing
cost efficiencies within our core business. Depreciation and
amortization related to the revaluation of acquisition related
assets and liabilities will generally recur in future periods.
Litigation damages, awards and
settlements.
In connection with litigation proceedings arising in the course
of our business, we have recorded expenses as a defendant in such
proceedings in the form of damages, as well as gains as a plaintiff
in such proceedings in the form of litigation awards and settlement
proceeds. Litigation matters can vary in their characteristics,
frequency and significance to our operating results. We believe
that exclusion of these gains (net of any related costs incurred in
the period the award or settlement is recognized) and losses is
useful to management and investors in evaluating the performance of
our ongoing operations on a period-to-period basis. In this regard,
we note that these expenses and gains are generally unrelated to
our core business and/or are infrequent in nature.
Realized and unrealized gains or losses
from foreign currency transactions.
We are exposed to foreign currency gains or losses on
outstanding foreign currency denominated receivables and payables
related to certain customer sales agreements, product costs and
other operating expenses. As the Company does not actively hedge
these currency exposures, changes in the underlying currency rates
relative to the U.S. Dollar may result in realized and unrealized
foreign currency gains and losses between the time these
receivables and payables arise and the time that they are settled
in cash. Since such realized and unrealized foreign currency gains
and losses are the result of macro-economic factors and can vary
significantly from one period to the next, we believe that
exclusion of such realized and unrealized gains and losses are
useful to management and investors in evaluating the performance of
our ongoing operations on a period-to-period basis. Realized and
unrealized foreign currency gains and losses are likely to recur in
future periods.
Excess tax benefits from stock-based
compensation.
Current authoritative accounting guidance requires that excess
tax benefits or costs recognized on stock-based compensation
expense be reflected in our provision for income taxes rather than
paid-in capital. Since we cannot control or predict when stock
option awards will be exercised or the price at which such awards
will be exercised, the impact of such guidance can create
significant volatility in our effective tax rate from one period to
the next. We believe that exclusion of these excess tax benefits or
costs is useful to management and investors in evaluating the
performance of our ongoing operations on a period-to-period basis.
These excess tax benefits or costs will generally recur in future
periods as long as we continue to issue equity awards to our
employees.
RECONCILIATION OF GAAP PRODUCT REVENUE GROWTH %
TO CONSTANT CURRENCY PRODUCT
REVENUE GROWTH %:
Full-Year 2020
Guidance(1)
(in thousands, except
percentages)
Full Year 2019 Actuals
Low
High
Full-Year 2021
Guidance(1)
GAAP product revenue
$
936,408
$
1,139,000
$
1,144,000
$
1,200,000
Non-GAAP constant currency
adjustments:
Constant currency F/X adjustments
—
(500
)
(500
)
(15,000
)
Total non-GAAP constant currency
adjustments
—
(500
)
(500
)
(15,000
)
Non-GAAP constant currency product
revenue
$
936,408
$
1,138,500
$
1,143,500
$
1,185,000
Product revenue growth %:
GAAP
—
%
21.6
%
22.2
%
4.9% to 5.4%
Non-GAAP (constant currency)
—
%
21.6
%
22.1
%
3.6% to 4.0%
__________________
(1) Guidance provided on January 13, 2021.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET
INCOME PER DILUTED SHARE(1):
Full-Year 2020
Guidance(2)
Full-Year 2021
Guidance(3)
(in thousands, except per share
amounts)
$
Per Diluted Share
$
Per Diluted Share
GAAP net income
$
219,400
$
3.77
$
223,600
$
3.81
Non-GAAP adjustments:
Acquisition/strategic investment related
costs
6,900
0.12
12,000
0.20
Litigation damages, awards and
settlements
(500
)
(0.01
)
—
—
Non-operating other (income) expense
(1,200
)
(0.02
)
—
—
Tax impact of pre-tax non-GAAP adjustments
above
(1,300
)
(0.02
)
(2,500
)
(0.04
)
Excess tax benefits from stock-based
compensation
(21,700
)
(0.37
)
(10,000
)
(0.17
)
Total non-GAAP adjustments
(17,800
)
(0.31
)
(500
)
(0.01
)
Non-GAAP net income
$
201,600
$
3.46
$
223,100
$
3.80
Weighted average shares outstanding -
diluted
58,200
58,700
__________________
(1) May not foot due to rounding.
(2) Guidance provided on October 27, 2020.
(3) Guidance provided on January 13, 2021.
RECONCILIATION OF GAAP TO NON-GAAP GROSS
PROFIT AND OPERATING MARGIN(1):
Full-Year 2020
Guidance(2)
Full-Year 2021
Guidance(3)
(in thousands, except
percentages)
$
$
GAAP gross profit
$
739,500
$
801,300
Non-GAAP adjustments:
Acquisition/strategic investment-related
costs
1,900
2,500
Total non-GAAP adjustments
1,900
2,500
Non-GAAP gross profit
$
741,400
$
803,800
GAAP gross margin %
65.6
%
66.8
%
Non-GAAP gross margin %
65.7
%
67.0
%
GAAP operating profit
$
253,300
$
281,900
Non-GAAP adjustments:
Acquisition/strategic investment-related
costs
6,900
12,000
Litigation damages, awards and
settlements
(500
)
—
Total non-GAAP adjustments
6,400
12,000
Non-GAAP operating profit
$
259,700
$
293,900
GAAP operating margin %
22.5
%
23.5
%
Non-GAAP operating margin %
23.0
%
24.5
%
__________________
(1) May not foot due to rounding.
(2) Guidance provided on October 27, 2020.
(3) Guidance provided on January 13, 2021.
Conference Call:
The conference call to review Masimo’s complete fourth quarter
and full-year 2020 results will begin at 1:30 p.m. PT (4:30 p.m.
ET) on Tuesday, February 23, 2021, and will be hosted by Joe Kiani,
Chairman and Chief Executive Officer, and Micah Young, Executive
Vice President and Chief Financial Officer.
To register for the conference call and receive the dial-in
number, please use the link below. Upon registering, each
participant will be provided with call details and a registrant ID
number.
Conference Call Registration Link:
http://www.directeventreg.com/registration/event/3927609
A replay of the webcast and conference call will be available
shortly after the conclusion of the call and will be archived on
the Company’s website.
About Masimo
Masimo (Nasdaq: MASI) is a global medical technology company
that develops and produces a wide array of industry-leading
monitoring technologies, including innovative measurements,
sensors, patient monitors, and automation and connectivity
solutions. Our mission is to improve patient outcomes and reduce
the cost of care. Masimo SET® Measure-through Motion and Low
Perfusion™ pulse oximetry, introduced in 1995, has been shown in
over 100 independent and objective studies to outperform other
pulse oximetry technologies. Masimo SET® has also been shown to
help clinicians reduce severe retinopathy of prematurity in
neonates, improve CCHD screening in newborns, and, when used for
continuous monitoring with Masimo Patient SafetyNet™ in
post-surgical wards, reduce rapid response team activations, ICU
transfers, and costs. Masimo SET® is estimated to be used on more
than 200 million patients in leading hospitals and other healthcare
settings around the world, and is the primary pulse oximetry at 9
of the top 10 hospitals listed in the 2019-20 U.S. News and World
Report Best Hospitals Honor Roll. Masimo continues to refine SET®
and in 2018, announced that SpO2 accuracy on RD SET® sensors during
conditions of motion has been significantly improved, providing
clinicians with even greater confidence that the SpO2 values they
rely on accurately reflect a patient’s physiological status. In
2005, Masimo introduced rainbow® Pulse CO-Oximetry technology,
allowing noninvasive and continuous monitoring of blood
constituents that previously could only be measured invasively,
including total hemoglobin (SpHb®), oxygen content (SpOC™),
carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), Pleth
Variability Index (PVi®), RPVi™ (rainbow® PVi), and Oxygen Reserve
Index (ORi™). In 2013, Masimo introduced the Root® Patient
Monitoring and Connectivity Platform, built from the ground up to
be as flexible and expandable as possible to facilitate the
addition of other Masimo and third-party monitoring technologies;
key Masimo additions include Next Generation SedLine® Brain
Function Monitoring, O3®Regional Oximetry, and ISA™ Capnography
with NomoLine® sampling lines. Masimo’s family of continuous and
spot-check monitoring Pulse CO-Oximeters® includes devices designed
for use in a variety of clinical and non-clinical scenarios,
including tetherless, wearable technology, such as Radius-7®and
Radius PPG™, portable devices like Rad-67™, fingertip pulse
oximeters like MightySat® Rx, and devices available for use both in
the hospital and at home, such as Rad-97™. Masimo hospital
automation and connectivity solutions are centered around the Iris®
platform, and include Iris Gateway™, Patient SafetyNet, Replica™,
Halo ION™, UniView™, and Masimo SafetyNet™. Additional information
about Masimo and its products may be found at www.masimo.com.
Published clinical studies on Masimo products can be found at
www.masimo.com/evidence/featured-studies/feature/.
Forward-Looking Statements
All statements other than statements of historical facts
included in this press release that address activities, events or
developments that we expect, believe or anticipate will or may
occur in the future are forward-looking statements including, in
particular, the statements about our expectations for full-year
2020 product revenue, revenue growth and constant currency revenue
growth; full-year 2020 shipments of noninvasive technology boards
and monitors; full-year 2020 GAAP earnings per diluted share and
non-GAAP earnings per diluted share; full year 2021 financial
guidance; our long-term outlook; demand for our products;
anticipated revenue and earnings growth; our financial condition,
results of operations and business generally; expectations
regarding our ability to design and deliver innovative new
noninvasive technologies and reduce the cost of care; demand for
our technologies; expectations with respect to the LiDCO
transaction, including the anticipated closing date and the
expected impact of the transaction on our financial results. These
forward-looking statements are based on management’s current
expectations and beliefs and are subject to uncertainties and
factors, all of which are difficult to predict and many of which
are beyond our control and could cause actual results to differ
materially and adversely from those described in the
forward-looking statements. These risks include, but are not
limited to, those related to: risks related to the closing of the
LiDCO transaction; risks related to the completion of customary
annual audit procedures; our dependence on Masimo SET® and Masimo
rainbow SET™ products and technologies for substantially all of our
revenue; any failure in protecting our intellectual property
exposure to competitors’ assertions of intellectual property
claims; the highly competitive nature of the markets in which we
sell our products and technologies; any failure to continue
developing innovative products and technologies; the lack of
acceptance of any of our current or future products and
technologies; obtaining regulatory approval of our current and
future products and technologies; the risk that the implementation
of our international realignment will not continue to produce
anticipated operational and financial benefits, including a
continued lower effective tax rate; the loss of our customers; the
failure to retain and recruit senior management; product liability
claims exposure; a failure to obtain expected returns from the
amount of intangible assets we have recorded; the maintenance of
our brand; the amount and type of equity awards that we may grant
to employees and service providers in the future; our ongoing
litigation and related matters; risks related to global economic
and marketplace uncertainties related to the impact of the COVID-19
pandemic; and other factors discussed in the “Risk Factors” section
of our most recent periodic reports filed with the Securities and
Exchange Commission (“SEC”), including our most recent Form 10-K
and Form 10-Q, all of which you may obtain for free on the SEC’s
website at www.sec.gov. Although we believe that the expectations
reflected in our forward-looking statements are reasonable, we do
not know whether our expectations will prove correct. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof, even if
subsequently made available by us on our website or otherwise. We
do not undertake any obligation to update, amend or clarify these
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
Masimo, SET, Signal Extraction Technology, Improving Patient
Outcome and Reducing Cost of Care... by Taking Noninvasive
Monitoring to New Sites and Applications, rainbow, SpHb, SpOC,
SpCO, SpMet, PVI and ORI are trademarks or registered trademarks of
Masimo Corporation.
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version on businesswire.com: https://www.businesswire.com/news/home/20210113005890/en/
Investor Contact: Eli Kammerman (949) 297-7077
ekammerman@masimo.com
Media Contact: Evan Lamb (949) 396-3376
elamb@masimo.com
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