Masimo Reports Fourth Quarter and Full-Year 2020 Financial Results

Fourth Quarter 2020 Highlights:

  • Product revenue increased 19.2% to $295.1 million, or 18.1% on a constant currency basis;
  • GAAP net income per diluted share was $1.21; and
  • Non-GAAP net income per diluted share was $0.98.

Full-Year 2020 Highlights:

  • Product revenue increased 22.1% to $1,143.7 million, or 22.1% on a constant currency basis;
  • GAAP net income per diluted share was $4.14; and
  • Non-GAAP net income per diluted share was $3.60.

 

IRVINE, Calif.--()--Masimo (Nasdaq: MASI) today announced its financial results for the fourth quarter and full-year ended January 2, 2021.

Fourth Quarter 2020 Results:

Total revenue for the fourth quarter of 2020, including royalty and other revenue, increased 19.2% to $295.1 million, compared to $247.5 million in the fourth quarter of 2019. Product revenue increased 19.2% to $295.1 million, or 18.1% on a constant currency basis, compared to $247.4 million in the fourth quarter of 2019. Excluding handheld and fingertip pulse oximeters, shipments of noninvasive technology boards and instruments increased 35.2% to 83,000 in the fourth quarter of 2020, compared to 61,400 in the fourth quarter of 2019.

For the fourth quarter 2020, GAAP operating margin was 22.0%, compared to 24.9% in the fourth quarter of 2019. Fourth quarter 2020 non-GAAP operating margin was 23.1%, compared to 25.7% in the fourth quarter of 2019.

For the fourth quarter 2020, GAAP net income was $70.7 million, or $1.21 per diluted share, compared to GAAP net income of $52.9 million or $0.92 per diluted share, in the fourth quarter 2019. Fourth quarter 2020 non-GAAP net income was $57.3 million, or $0.98 per diluted share, compared to net income of $52.1 million or $0.91 per diluted share, in the fourth quarter 2019.

Full-Year 2020 Results:

Total revenue for the full-year of 2020, including royalty and other revenue, increased 22.0% to $1,143.7 million, compared to $937.8 million for the full-year 2019. Product revenue increased 22.1% on a reported and constant currency basis to $1,143.7 million, compared to $936.4 million for the full-year 2019. Excluding handheld and fingertip pulse oximeters, shipments of noninvasive technology boards and instruments increased 91.8% to 472,300 for the full-year 2020, compared to 246,200 for the full-year 2019.

For the full-year of 2020, GAAP operating margin was 22.4%, compared to 23.6% in the prior year period. Full-year 2020 non-GAAP operating margin was 23.1%, compared to 24.0% in the prior year period.

For the full-year of 2020, GAAP net income was $240.3 million, or $4.14 per diluted share compared to net income of $196.2 million, or $3.44 per diluted share in 2019. Non-GAAP net income was $209.2 million or $3.60 per diluted share compared to net income of $183.9 million, or $3.22 per diluted share in 2019.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said “Throughout 2020, as our customers on the front lines responded to this crisis and rose to the challenge, so did our team. We have invested heavily in innovation and product supply efforts to deliver clinically relevant solutions that improve patient outcomes and reduce the cost of care. As we enter a new year, I am confident that Masimo will continue its leadership in delivering innovative solutions to clinicians and patients around the world.”

2021 Financial Guidance
The Company provided the following estimates for its full-year 2021 guidance:

 

 

2021 Guidance(1)

(in millions, except percentages and earnings per share)

 

GAAP

 

Non-GAAP

Total revenue

 

$

1,200.0

 

 

$

1,200.0

 

Product revenue

 

$

1,200.0

 

 

$

1,200.0

 

Percentage growth - as reported

 

4.9

%

 

 

N/A

 

Percentage growth - constant currency

 

 

N/A

 

 

3.6

%

Gross margin

 

66.8

%

 

67.0

%

Operating margin

 

23.5

%

 

24.5

%

Diluted earnings per share

 

$

3.81

 

 

$

3.80

 

Estimated tax rate

 

20.7

%

 

24.1

%

______________

(1)

Consistent with prior guidance provided on January 13, 2021.

  • Product revenue increasing to $1.200 billion, which reflects reported growth of 4.9% and constant currency growth of 3.6%;
  • GAAP diluted earnings per share increasing to $3.81;
  • Non-GAAP diluted earnings per share increasing to $3.80; and
  • Included in our 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.

Fourth Quarter and Full-Year 2020 Actuals versus Fourth Quarter and Full-Year 2019 Actuals:

RECONCILIATION OF GAAP TO NON-GAAP CONSTANT CURRENCY PRODUCT REVENUE(1):

 

 

 

 

 

Quarter Ended

(in thousands, except percentages)

 

January 2,
2021

 

December 28,
2019

GAAP product revenue

 

$

295,054

 

 

 

$

247,434

 

Non-GAAP constant currency adjustments:

 

 

 

 

 

Constant currency F/X adjustments

 

(2,917

)

 

 

 

 

 

Total non-GAAP constant currency adjustments

 

(2,917

)

 

 

 

 

 

 

Non-GAAP constant currency product revenue

 

$

292,137

 

 

 

$

247,434

 

 

Product revenue growth %

GAAP

19.2

%

Non-GAAP constant currency

18.1

%

__________________

(1)

May not foot due to rounding.

RECONCILIATION OF GAAP TO NON-GAAP CONSTANT CURRENCY PRODUCT REVENUE(1):

 

 

 

 

 

Year Ended

(in thousands, except percentages)

 

January 2,
2021

 

December 28,
2019

GAAP product revenue

 

$

1,143,744

 

 

$

936,408

 

Non-GAAP constant currency adjustments:

 

 

 

 

 

Constant currency F/X adjustments

 

(491

)

 

 

 

 

Total non-GAAP constant currency adjustments

 

(491

)

 

 

 

 

 

Non-GAAP constant currency product revenue

 

$

1,143,253

 

 

$

936,408

 

 

 

 

 

 

 

 

 

Product revenue growth %

 

 

 

 

 

GAAP

 

22.1

%

 

 

 

Non-GAAP constant currency

 

22.1

%

 

 

 

__________________

(1)

May not foot due to rounding.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):

 

 

 

Quarter Ended

 

 

 

January 2,
2021

 

December 28,
2019

(in thousands, except per share amounts)

 

$

 

Per Diluted Share

 

$

 

Per Diluted Share

GAAP net income

 

$

70,669

 

 

 

$

1.21

 

 

 

$

52,921

 

 

 

$

0.92

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Royalty and other revenue, net of related costs

 

 

 

 

 

 

 

(45

)

 

 

 

 

 

Acquisition/strategic investment related costs

 

3,249

 

 

 

0.06

 

 

 

2,135

 

 

 

0.04

 

 

 

Non-operating other (income) expense

 

(1,384

)

 

 

(0.02

)

 

 

312

 

 

 

0.01

 

 

 

Tax impact of pre-tax non-GAAP adjustments above

 

(5,214

)

 

 

(0.09

)

 

 

(566

)

 

 

(0.01

)

 

 

Excess tax benefits from stock-based compensation

 

(10,001

)

 

 

(0.17

)

 

 

(2,631

)

 

 

(0.05

)

 

 

Total non-GAAP adjustments

 

(13,350

)

 

 

(0.23

)

 

 

(796

)

 

 

(0.01

)

 

Non-GAAP net income

 

$

57,318

 

 

 

$

0.98

 

 

 

$

52,126

 

 

 

$

0.91

 

 

Weighted average shares outstanding - diluted

 

 

 

58,237

 

 

 

 

 

57,267

 

 

__________________

(1)

May not foot due to rounding.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):

 

 

 

 

 

 

 

Year Ended

 

 

 

January 2,
2021

 

December 28,
2019

(in thousands, except per share amounts)

 

$

 

Per Diluted Share

 

$

 

Per Diluted Share

GAAP net income

 

$

240,302

 

 

 

$

4.14

 

 

 

$

196,216

 

 

 

$

3.44

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Royalty and other revenue, net of related costs

 

 

 

 

 

 

 

(1,262

)

 

 

(0.02

)

 

 

Acquisition/strategic investment related costs

 

8,286

 

 

 

0.14

 

 

 

4,729

 

 

 

0.08

 

 

 

Litigation damages, awards and settlements

 

(474

)

 

 

(0.01

)

 

 

 

 

 

 

 

 

Non-operating other (income) expense

 

(2,631

)

 

 

(0.05

)

 

 

627

 

 

 

0.01

 

 

 

Tax impact of pre-tax non-GAAP adjustments above

 

(6,096

)

 

 

(0.11

)

 

 

(689

)

 

 

(0.01

)

 

 

Excess tax benefits from stock-based compensation

 

(30,172

)

 

 

(0.52

)

 

 

(15,692

)

 

 

(0.27

)

 

 

Total non-GAAP adjustments

 

(31,086

)

 

 

(0.54

)

 

 

(12,286

)

 

 

(0.22

)

 

Non-GAAP net income

 

$

209,216

 

 

 

$

3.60

 

 

 

$

183,930

 

 

 

$

3.22

 

 

Weighted average shares outstanding - diluted

 

 

 

58,037

 

 

 

 

 

57,100

 

 

__________________

(1)

May not foot due to rounding.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING MARGIN(1):

 

 

 

 

Quarter Ended

 

 

 

 

January 2,
2021

 

December 28,
2019

(in thousands, except percentages)

 

$

 

$

GAAP operating income/margin

 

$

64,895

 

 

$

61,557

 

Non-GAAP adjustments:

 

 

 

 

Royalty and other revenue, net of related costs

 

 

 

(45

)

Acquisition/strategic investment related costs

 

3,249

 

 

2,135

 

Total non-GAAP adjustments

 

3,249

 

 

2,090

 

Non-GAAP operating income/margin

 

$

68,145

 

 

$

63,647

 

 
GAAP operating income/margin %

22.0

%

24.9

%

Non-GAAP operating income/margin %

23.1

%

25.7

%

__________________

(1)

May not foot due to rounding.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING MARGIN(1):

 

 

 

 

Year Ended

 

 

 

 

January 2,
2021

 

December 28,
2019

(in thousands, except percentages)

 

$

 

$

GAAP operating income/margin

 

$

255,823

 

 

$

221,216

 

Non-GAAP adjustments:

 

 

 

 

Royalty and other revenue, net of related costs

 

 

 

(1,262

)

Acquisition/strategic investment related costs

 

8,286

 

 

4,729

 

Litigation damages, awards and settlements

 

(474

)

 

 

Total non-GAAP adjustments

 

7,812

 

 

3,467

 

Non-GAAP operating income/margin

 

$

263,636

 

 

$

224,683

 

 
GAAP operating income/margin %

22.4

%

23.6

%

Non-GAAP operating income/margin %

23.1

%

24.0

%

__________________

(1)

May not foot due to rounding.

Full-Year 2021 Guidance versus Full-Year 2020 Actuals:

RECONCILIATION OF GAAP PRODUCT REVENUE GROWTH % TO CONSTANT CURRENCY PRODUCT REVENUE GROWTH %(1):

(in thousands, except percentages)

 

Full-Year 2021

Guidance(2)

 

Full-Year 2020
Actuals

GAAP product revenue

 

$

1,200,000

 

 

$

1,143,744

 

Non-GAAP constant currency adjustments:

 

 

 

 

 

Constant currency F/X adjustments

 

(15,000

)

 

 

 

 

Total non-GAAP constant currency adjustments

 

(15,000

)

 

 

Non-GAAP constant currency product revenue

 

$

1,185,000

 

 

$

1,143,744

 

 

Product revenue growth %:

GAAP

4.9

%

Non-GAAP constant currency

3.6

%

__________________

(1)

May not foot due to rounding.

(2)

Consistent with prior guidance provided on January 13, 2021.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):

 

 

 

 

 

 

 

 

 

 

 

Full-Year 2021

Guidance(2)

 

Full-Year 2020
Actuals

(in thousands, except per share amounts)

 

$

 

Per Diluted Share

 

$

 

Per Diluted Share

GAAP net income

 

$

223,600

 

 

 

$

3.81

 

 

 

$

240,302

 

 

 

$

4.14

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Acquisition/strategic investment related costs

 

12,000

 

 

 

0.20

 

 

 

8,286

 

 

 

0.14

 

 

 

Litigation damages, awards and settlements

 

 

 

 

 

 

 

(474

)

 

 

(0.01

)

 

 

Non-operating other (income) expense

 

 

 

 

 

 

 

(2,631

)

 

 

(0.05

)

 

 

Tax impact of pre-tax non-GAAP adjustments above

 

(2,500

)

 

 

(0.04

)

 

 

(6,096

)

 

 

(0.11

)

 

 

Excess tax benefits from stock-based compensation

 

(10,000

)

 

 

(0.17

)

 

 

(30,172

)

 

 

(0.52

)

 

 

Total non-GAAP adjustments

 

(500

)

 

 

(0.01

)

 

 

(31,086

)

 

 

(0.54

)

 

Non-GAAP product net income

 

$

223,100

 

 

 

$

3.80

 

 

 

$

209,216

 

 

 

$

3.60

 

 

Weighted average shares outstanding - diluted

 

 

 

58,700

 

 

 

 

 

58,037

 

 

__________________

(1)

May not foot due to rounding.

(2)

Consistent with prior guidance provided on January 13, 2021.

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND OPERATING MARGIN(1):

 

 

 

 

 

 

 

 

 

Full-Year 2021

Guidance(2)

 

Full-Year 2020
Actuals

(in thousands, except percentages)

 

$

 

$

GAAP gross margin

 

$

801,300

 

 

$

743,065

 

Non-GAAP adjustments:

 

 

 

 

 

Acquisition/strategic investment-related costs

 

 

2,500

 

 

 

1,807

 

 

Total non-GAAP adjustments

 

 

2,500

 

 

 

1,807

 

Non-GAAP gross margin

 

$

803,800

 

 

$

744,872

 

 

 

 

 

 

 

GAAP gross margin %

 

66.8

%

 

65.0

%

Non-GAAP gross margin %

 

67.0

%

 

65.1

%

GAAP operating income/margin

$

281,900

$

255,823

 

Non-GAAP adjustments:

Acquisition/strategic investment-related costs

12,000

8,286

 

Litigation damages, awards and settlements

(474

)

Total non-GAAP adjustments

12,000

7,812

 

Non-GAAP operating income/margin

$

293,900

$

263,636

 

GAAP operating income/margin %

23.5

%

22.4

%

Non-GAAP operating income/margin %

24.5

%

23.1

%

__________________

(1)

May not foot due to rounding.

(2)

Consistent with prior guidance provided on January 13, 2021.

Conference Call:

The conference call to review Masimo’s complete financial results for the fourth quarter and full-year ended January 2, 2021 will begin at 1:30 p.m. PT (4:30 p.m. ET) on 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. A live webcast of the conference call will be available online from the investor relations page of the Company’s corporate website at www.masimo.com.

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 Perfusionpulse 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 SafetyNetin 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 ISACapnography 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 2021 financial guidance; including with respect to product revenue, product revenue growth and constant currency revenue growth, GAAP diluted earnings per share, Non-GAAP diluted earnings per share and year-over-year currency tailwinds; our long-term outlook; our ability to continue in its leadership in delivering innovative solutions to clinicians and patients worldwide; 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; and demand for our technologies; . 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 ; 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.

MASIMO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

 

January 2,
2021

 

December 28,
2019

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

641,447

 

 

 

$

567,687

 

 

Short-term investments

 

 

 

120,000

 

 

Accounts receivable, net of allowance for doubtful accounts

141,350

 

 

 

132,433

 

 

Inventories

215,952

 

 

 

115,871

 

 

Other current assets

102,416

 

 

 

60,071

 

 

Total current assets

1,101,165

 

 

 

996,062

 

 

Lease receivable, noncurrent

57,666

 

 

 

49,936

 

 

Deferred costs and other contract assets

20,076

 

 

 

16,214

 

 

Property and equipment, net

272,511

 

 

 

219,552

 

 

Intangible assets, net

73,923

 

 

 

27,251

 

 

Goodwill

103,206

 

 

 

22,350

 

 

Deferred tax assets

39,363

 

 

 

35,972

 

 

Other non-current assets

44,642

 

 

 

28,791

 

 

Total assets

$

1,712,552

 

 

 

$

1,396,128

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

64,061

 

 

 

$

54,548

 

 

Accrued compensation

71,601

 

 

 

54,705

 

 

Deferred revenue and other contract-related liabilities, current

44,935

 

 

 

25,939

 

 

Other current liabilities

53,239

 

 

 

37,027

 

 

Total current liabilities

233,836

 

 

 

172,219

 

 

Other non-current liabilities

71,076

 

 

 

56,035

 

 

Total liabilities

304,912

 

 

 

228,254

 

 

Commitments and contingencies

 

 

 

Masimo Corporation Stockholders’ equity

 

 

 

Common stock

55

 

 

 

54

 

 

Treasury stock

(638,736

)

 

 

(526,580

)

 

Additional paid-in capital

703,693

 

 

 

600,624

 

 

Accumulated other comprehensive income (loss)

1,413

 

 

 

(6,718

)

 

Retained earnings

1,341,235

 

 

 

1,100,494

 

 

Total Masimo Corporation stockholders’ equity

1,407,640

 

 

 

1,167,874

 

 

Noncontrolling interest

$

(20

)

 

 

$

 

 

Total equity

$

1,407,640

 

 

 

$

1,167,874

 

 

Total liabilities and equity

$

1,712,552

 

 

 

$

1,396,128

 

 

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

 

Three Months Ended

 

Twelve Months Ended

 

January 2,
2021

 

December 28,
2019

 

January 2,
2021

 

December 28,
2019

Revenue:

 

 

 

 

 

 

 

Product

$

295,054

 

 

 

$

247,434

 

 

$

1,143,744

 

 

 

$

936,408

 

 

Royalty and other revenue

 

 

 

76

 

 

 

 

 

1,429

 

 

Total revenue

295,054

 

 

 

247,510

 

 

1,143,744

 

 

 

937,837

 

 

Cost of goods sold

108,128

 

 

 

80,587

 

 

400,679

 

 

 

308,665

 

 

Gross profit

186,926

 

 

 

166,923

 

 

743,065

 

 

 

629,172

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

90,343

 

 

 

81,943

 

 

369,057

 

 

 

314,661

 

 

Research and development

31,688

 

 

 

23,423

 

 

118,659

 

 

 

93,295

 

 

Litigation awards, settlements/or defense costs

 

 

 

 

 

(474

)

 

 

 

 

Total operating expenses

122,031

 

 

 

105,366

 

 

487,242

 

 

 

407,956

 

 

Operating income

64,895

 

 

 

61,557

 

 

255,823

 

 

 

221,216

 

 

Non-operating income

1,805

 

 

 

2,812

 

 

7,913

 

 

 

12,950

 

 

Income before provision for income taxes

66,700

 

 

 

64,369

 

 

263,736

 

 

 

234,166

 

 

Provision for income taxes

(3,949

)

 

 

11,448

 

 

23,454

 

 

 

37,950

 

 

Net income including noncontrolling interest

70,649

 

 

 

52,921

 

 

240,282

 

 

 

196,216

 

 

Net loss attributable to noncontrolling interest

20

 

 

 

 

 

20

 

 

 

 

 

Net income attributable to Masimo Corporation stockholders

$

70,669

 

 

 

$

52,921

 

 

$

240,302

 

 

 

$

196,216

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

Foreign currency translation gains (losses)

6,627

 

 

 

1,076

 

 

8,131

 

 

 

(519

)

 

Comprehensive income attributable to Masimo Corporation stockholders

$

77,296

 

 

 

$

53,997

 

 

$

248,433

 

 

 

$

195,697

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Masimo Corporation stockholders:

 

 

 

 

 

 

 

Basic

$

1.28

 

 

 

$

0.99

 

 

$

4.39

 

 

 

$

3.67

 

 

Diluted

$

1.21

 

 

 

$

0.92

 

 

$

4.14

 

 

 

$

3.44

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in per share calculations:

 

 

 

 

 

 

 

Basic

55,138

 

 

 

53,633

 

 

54,700

 

 

 

53,434

 

 

Diluted

58,237

 

 

 

57,267

 

 

58,037

 

 

 

57,100

 

 

The following table presents details of the stock-based compensation expense that is included in each functional line item in the condensed consolidated statements of operations (in thousands):

 

Three Months Ended

 

Twelve Months Ended

 

January 2,
2021

 

December 28,
2019

 

January 2,
2021

 

December 28,
2019

Cost of goods sold

$

216

 

 

$

106

 

 

$

714

 

 

$

445

 

Selling, general and administrative

4,019

 

 

7,417

 

 

31,462

 

 

30,450

 

Research and development

1,618

 

 

2,067

 

 

10,049

 

 

8,340

 

Total

$

5,853

 

 

$

9,590

 

 

$

42,225

 

 

$

39,235

 

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

Twelve Months Ended

 

January 2,
2021

 

December 28,
2019

Cash flows from operating activities:

 

 

 

Net income including noncontrolling interest

$

240,282

 

 

 

$

196,216

 

 

Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:

 

 

 

Depreciation and amortization

29,300

 

 

 

23,487

 

 

Stock-based compensation

42,225

 

 

 

39,233

 

 

Loss on disposal of equipment, intangibles and other assets

554

 

 

 

357

 

 

Benefit (provision) for doubtful accounts

82

 

 

 

687

 

 

(Benefit) from deferred income taxes

(4,964

)

 

 

(5,965

)

 

Changes in operating assets and liabilities:

 

 

 

(Increase) in trade accounts receivable

(2,229

)

 

 

(23,580

)

 

(Increase) in inventories

(94,434

)

 

 

(21,257

)

 

(Increase) in other current assets

(29,984

)

 

 

(8,536

)

 

(Increase) in lease receivable, net

(7,749

)

 

 

(11,958

)

 

(Increase) decrease in deferred costs and other contract assets

(2,806

)

 

 

3,308

 

 

(Increase) in other non-current assets

(1,320

)

 

 

(226

)

 

Increase in accounts payable

7,637

 

 

 

9,934

 

 

Increase in accrued compensation

15,544

 

 

 

5,338

 

 

Increase in deferred revenue and other contract-related liabilities

10,871

 

 

 

7,739

 

 

(Decrease) increase in income taxes payable

(1,301

)

 

 

4,079

 

 

Increase in accrued liabilities

9,391

 

 

 

746

 

 

(Decrease) increase in other non-current liabilities

(136

)

 

 

2,038

 

 

Net cash provided by operating activities

210,963

 

 

 

221,640

 

 

Cash flows from investing activities:

 

 

 

Maturities of short-term investments

120,000

 

 

 

160,000

 

 

Purchases of short-term investments

 

 

 

(280,000

)

 

Purchases of property and equipment, net

(72,549

)

 

 

(68,375

)

 

Increase in intangible assets

(7,408

)

 

 

(4,117

)

 

Business combinations, net of cash acquired

(112,706

)

 

 

 

 

Deposit to acquire noncontrolling interest

(3,374

)

 

 

 

 

Other strategic investing activities

(6,750

)

 

 

(5,189

)

 

Net cash (used in) investing activities

(82,787

)

 

 

(197,681

)

 

Cash flows from financing activities:

 

 

 

Proceeds from issuance of common stock

58,424

 

 

 

28,339

 

 

Repurchases of common stock

(110,540

)

 

 

(37,555

)

 

Payroll tax withholdings on behalf of employees for stock options

(2,191

)

 

 

(123

)

 

Net cash (used in) provided by financing activities

(54,307

)

 

 

(9,339

)

 

Effect of foreign currency exchange rates on cash

3,060

 

 

 

814

 

 

Net increase in cash, cash equivalents and restricted cash

76,929

 

 

 

15,434

 

 

Cash, cash equivalents and restricted cash at beginning of period

568,075

 

 

 

552,641

 

 

Cash, cash equivalents and restricted cash at end of period

$

645,004

 

 

 

$

568,075

 

 

 

Contacts

Investor Contact: Eli Kammerman
(949) 297-7077
ekammerman@masimo.com

Media Contact: Evan Lamb
(949) 396-3376
elamb@masimo.com

Contacts

Investor Contact: Eli Kammerman
(949) 297-7077
ekammerman@masimo.com

Media Contact: Evan Lamb
(949) 396-3376
elamb@masimo.com