Masimo Corporation

Masimo reported Q3 Healthcare revenue of $371 million, up 8% year over year, and adjusted EPS of $1.32, up 38%. Operating cash flow was $57 million. Gross margin was 62.2%, down 70 basis points year over year, while operating margin was 27.1%, up 450 basis points year over year. The quarter also included $124 million of new contract value, 17% year-over-year growth in unrecognized contract revenue expected to be realized within 12 months to $507 million, and 66,000 technology boards and monitors shipped, up 8% year over year. For fiscal 2025, Masimo tightened revenue guidance to $1.510 billion-$1.530 billion from $1.505 billion-$1.535 billion, raised operating margin guidance to 27.3%-27.7% from 27.0%-27.5%, and increased EPS guidance to $5.40-$5.55 from $5.20-$5.45. Management said the revenue guide now includes a $6 million headwind from a shift to a distributor model in some international markets, partially offset by $4 million of FX benefits, and noted the extra selling week in Q4 adds about 1 point to full-year growth.

Katie Szyman framed the quarter as evidence that the company’s core healthcare business is gaining momentum, citing demand for innovative technology, better commercial execution, and recurring-revenue contracts. She emphasized three growth waves: improving commercial excellence, accelerating intelligent monitoring with AI-enabled sensors and monitors, and innovating wearables. Her tone was upbeat and confident, especially around the Philips opportunity, the expanded strategic partnership, and new clinical data supporting Masimo’s accuracy in challenging settings.

Micah Young focused on the financial leverage in the model: 8% revenue growth, 38% EPS growth, and $57 million of operating cash flow. He said Q3 gross margin of 62.2% was held back by $5 million of tariff costs, but operating margin still reached 27.1%, or 28.5% excluding tariffs, helped by cost optimization. He also detailed capital deployment from the Sound United sale: $328 million of net proceeds, $56 million used to repay debt, $163 million used for buybacks by quarter-end, and another $187 million of repurchases in Q4, totaling $350 million returned to shareholders through repurchasing 2.4 million shares.

Analysts pressed management on what could drive further near-term outperformance, the outlook for 2026, consumables growth softness, the $6 million distributor-model headwind, and the expanded Philips relationship. Management said Q4 should be strong because of higher consumables shipments, especially from a large international contract, while acknowledging unusual year-over-year comps in consumables and capital equipment. On Philips, Szyman said Masimo remains under-indexed versus its global share and sees room to close the gap over time, but she could not disclose the installed-base position due to confidentiality.