Masimo (MASI) Beats On Q4 Earnings & Revenues, View Positive

Masimo Corp. (NASDAQ:MASI) reported earnings of 72 cents per share in the fourth quarter of 2017, outperforming the Zacks Consensus Estimate of 61 cents. The bottom line improved from the year-ago quarter’s figure of 51 cents.

Revenues improved 22.9% to $225.2 million from $183.2 million in the year-ago quarter and beat the Zacks Consensus Estimate of $202 million.

Segmental Analysis

Product Revenues

Product revenues delivered another strong quarter of double-digit growth. In the fourth quarter, Masimo acquired significant renewals from renowned hospitals and hospital systems. U.S. revenue growth in the segment was in double digits. Product revenues also witnessed impressive growth in overseas markets. New products, including NomoLine capnography, SedLine Brain Function Monitoring and O3 organ oximetry contributed to the result. Revenues in the segment were $199.2 million, up 13.4% year over year.

The company’s worldwide direct product revenues increased 13.5% to $173.4 million on a year-over-year basis. Direct product revenues were 87.1% of total product revenues.

OEM sales increased 12.6% on a year-over-year basis to $25.8 million in the fourth quarter. This accounted for 12.9% of total product revenues.

Revenues from sales of Masimo rainbow products surged 42.5% to $24.0 million in the fourth quarter of 2017 compared with $16.9 million in the year-ago quarter.

Royalty and Other Revenues

Revenues in this segment were $26 million for the quarter, up from $7.5 million in the year-ago quarter. Per management, Royalty revenues from Medtronic (NYSE:MDT) declined $0.5 million to $7 million.

Margin Analysis

Total gross profit in the fourth quarter was $153.9 million, up 23.8% year over year. Gross margin was 68.3% of net revenues, up 40 basis points (bps) year over year.

Product gross margin for the fourth quarter was 65.3% of net revenues, compared with 66.5% in the year-ago quarter.

Balance Sheet

At the end of fourth quarter, total cash and cash equivalents were $315.3 million compared with $306.0 million in the year-ago quarter.

During 2017, Masimo repurchased approximately 0.8 million shares of common stock at a total cost of $68.3 million.

Guidance

For 2018, revenues are estimated at $836 million.

Total 2018 product revenues are estimated at $808 million.

Royalty and other revenues are estimated at around $28 million.

Adjusted earnings per share for 2018 ar expected at $2.80, reflecting an increase of approximately 14% year over year.

Other Companies with Solid Earnings Results

Other MedTech companies that reported impressive results this earnings season are PetMed Express (NASDAQ:PETS) and PerkinElmer (NYSE:PKI)

PetMed reported third-quarter fiscal 2018 results on Jan 22. Adjusted earnings per share were 44 cents, up 88.3% from the prior-year quarter. Revenues rose 13.7% on a year-over-year basis to $60.1 million.

PerkinElmer reported fourth-quarter 2017 adjusted earnings per share of 97 cents on Jan 25. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

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