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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________
FORM 10-Q
________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 001-33642
masi-20220702_g1.jpg
________________________________________________
MASIMO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
________________________________________________
Delaware33-0368882
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
52 DiscoveryIrvine,California92618
(Address of Principal Executive Offices)(Zip Code)
(949)297-7000
(Registrant’s Telephone Number, Including Area Code)
Securities Registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
MASI
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)     
Yes
No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class
Number of Shares Outstanding as of
July 2, 2022
Common stock, $0.001 par value
52,530,244


MASIMO CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JULY 2, 2022
TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2

PART I. FINANCIAL INFORMATION
Item 1.     Financial Statements
MASIMO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except par values)
July 2,
2022
January 1,
2022
ASSETS
Current assets
Cash and cash equivalents$218.0 $745.3 
Trade accounts receivable, net of allowance for credit losses of $2.7 million and $2.2 million at July 2, 2022 and January 1, 2022, respectively
352.7 200.8 
Inventories449.2 201.4 
Other current assets138.3 91.0 
Total current assets1,158.2 1,238.5 
Lease receivable, noncurrent75.4 73.6 
Deferred costs and other contract assets35.4 28.1 
Property and equipment, net370.7 272.8 
Customer relationships, net - (Note 9)215.6 15.3 
Acquired technologies, net - (Note 9)170.9 20.7 
Other intangible assets, net78.0 36.5 
Trademarks - (Note 9)262.0  
Goodwill434.5 100.3 
Deferred tax assets55.1 52.6 
Other non-current assets105.3 48.6 
Total assets$2,961.1 $1,887.0 
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities
Accounts payable$244.5 $75.5 
Accrued compensation75.5 70.8 
Deferred revenue and other contract liabilities, current75.4 50.9 
Other current liabilities156.6 70.4 
Total current liabilities552.0 267.6 
Long-term debt922.4  
Other non-current liabilities284.0 69.1 
Total liabilities1,758.4 336.7 
Commitments and contingencies - (Note 23)
Stockholders’ equity
Preferred stock, $0.001 par value; 5.0 million shares authorized; 0 shares issued and outstanding
  
Common stock, $0.001 par value; 100 million shares authorized; 52.5 million and 55.3 million shares issued and outstanding at July 2, 2022 and January 1, 2022, respectively
0.1 0.1 
Treasury stock, 19.5 million and 16.5 million shares at July 2, 2022 and January 1, 2022, respectively
(1,169.1)(767.7)
Additional paid-in capital759.2 752.5 
Accumulated other comprehensive loss(23.1)(5.5)
Retained earnings1,635.6 1,570.9 
Total stockholders’ equity1,202.7 1,550.3 
Total liabilities and stockholders’ equity$2,961.1 $1,887.0 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share amounts)
 
Three Months EndedSix Months Ended
July 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Revenue$565.3 $305.1 $869.5 $604.2 
Cost of goods sold307.1 112.2 406.6 214.4 
Gross profit258.2 192.9 462.9 389.8 
Operating expenses:
Selling, general and administrative188.3 93.9 297.2 190.5 
Research and development47.8 33.9 83.9 68.5 
Total operating expenses236.1 127.8 381.1 259.0 
Operating income22.1 65.1 81.8 130.8 
Non-operating income (loss)4.5 0.1 3.9 (0.7)
Income before provision for income taxes26.6 65.2 85.7 130.1 
Provision for income taxes8.5 15.0 21.0 26.5 
Net income$18.1 $50.2 $64.7 $103.6 
Net income per share:
Basic$0.34 $0.91 $1.18 $1.88 
Diluted$0.33 $0.88 $1.15 $1.80 
Weighted-average shares used in per share calculations:
Basic53.9 55.0 54.7 55.1 
Diluted55.3 57.4 56.4 57.6 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in millions)
 
Three Months EndedSix Months Ended
July 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Net income$18.1 $50.2 $64.7 $103.6 
Other comprehensive income, net of tax:
Unrealized (losses) gains from foreign currency translation adjustments(14.0)1.2 (16.9)(1.7)
       Change in pension benefits(0.7) (0.7) 
Total comprehensive income$3.4 $51.4 $47.1 $101.9 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
Three and Six Months Ended July 2, 2022
Common StockTreasury StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders’
Equity
SharesAmountSharesAmount
Balance at January 1, 202255.3 $0.1 16.5 $(767.7)$752.5 $(5.5)$1,570.9 $1,550.3 
Stock options exercised0.1 — — — 2.7 — — 2.7 
Restricted/Performance stock units vested0.2 — — — — — — — 
Shares paid for tax withholding(0.1)— — — (25.4)— — (25.4)
Stock-based compensation— — — — 10.9 — — 10.9 
Net income— — — — — — 46.6 46.6 
Foreign currency translation adjustment— — — — — (2.9)— (2.9)
Balance at April 2, 202255.5 0.1 16.5 (767.7)740.7 (8.4)1,617.5 1,582.2 
Stock options exercised — — — 1.2 — — 1.2 
Stock-based compensation— — — — 17.3 — — 17.3 
Repurchases of common stock(3.0)— 3.0 (401.4)— — — (401.4)
Net income— — — — — — 18.1 18.1 
Foreign currency translation adjustment— — — — — (14.0)— (14.0)
Unrealized loss on pension plan— — — — — (0.7)— (0.7)
Balance at July 2, 202252.5 $0.1 19.5 $(1,169.1)$759.2 $(23.1)$1,635.6 $1,202.7 

6

Three and Six Months Ended July 3, 2021
Common StockTreasury StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
Stockholders’
Equity
SharesAmountSharesAmount
Balance at January 2, 202155.3 $0.1 16.0 $(638.7)$703.7 $1.4 $1,341.2 $1,407.7 
Stock options exercised— — — — 2.9 — — 2.9 
Restricted/Performance stock units vested0.3 — — — — — — — 
Shares paid for tax withholding— — — — (16.7)— — (16.7)
Stock-based compensation— — — — 12.7 — — 12.7 
Repurchases of common stock(0.5)— 0.5 (128.9)— — — (128.9)
Net income— — — — — — 53.4 53.4 
Foreign currency translation adjustment— — — — — (2.9)— (2.9)
Balance at April 3, 202155.1 0.1 16.5 (767.6)702.6 (1.5)1,394.6 1,328.2 
Stock options exercised— — — — 3.4 — — 3.4 
Stock-based compensation— — — — 8.3 — — 8.3 
Net income— — — — — — 50.2 50.2 
Foreign currency translation adjustment— — — — — 1.2 — 1.2 
Balance at July 3, 202155.1 $0.1 16.5 $(767.6)$714.3 $(0.3)$1,444.8 $1,391.3 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Six Months Ended
July 2,
2022
July 3,
2021
Cash flows from operating activities:
Net income$64.7 $103.6 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization79.9 17.3 
Stock-based compensation28.2 20.9 
Gain on disposal of equipment, intangibles and other assets0.3 0.2 
Provision for credit losses0.9 0.5 
Changes in operating assets and liabilities:
Increase in accounts receivable(44.7)(38.7)
(Increase) decrease in inventories(67.8)8.6 
(Increase) decrease in other current assets(8.2)6.5 
Increase in lease receivable, net(1.7)(7.5)
Increase in deferred costs and other contract assets(21.6)(1.7)
Increase in other non-current assets(0.3)(0.2)
Increase in accounts payable40.4 2.0 
Decrease in accrued compensation(22.6)(16.3)
Decrease in accrued liabilities(7.2)(6.0)
Decrease in income tax payable(18.5)(2.0)
Increase (decrease) in deferred revenue and other contract-related liabilities4.8 (1.2)
Decrease in other non-current liabilities(1.0)(0.8)
Net cash provided by operating activities25.6 85.2 
Cash flows from investing activities:
Purchases of property and equipment, net(30.0)(14.2)
Increase in intangible assets(10.5)(3.0)
Business combinations, net of cash acquired(985.5) 
Other strategic investing activities(1.2) 
Net cash used in investing activities(1,027.2)(17.2)
Cash flows from financing activities:
Borrowings under line of credit927.0  
Repayments on line of credit0.1  
Debt issuance costs(8.9) 
Proceeds from issuance of common stock4.6 9.1 
Payroll tax withholdings on behalf of employees for vested equity awards(25.4)(16.7)
Repurchases of common stock(401.4)(128.9)