MASIMO CORP [MASI] Filings

10-Q 1 masi-20220702.htm 10-Q masi-20220702

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


☐			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

________________________________________________

MASIMO CORPORATION

(Exact Name of Registrant as Specified in its Charter)

________________________________________________

Delaware

33-0368882

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification Number)

52 Discovery

Irvine,

California

92618

(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

☒

☐

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

☒

☐

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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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

☐

☒

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

Table of Contents

MASIMO CORPORATION

FORM 10-Q FOR THE QUARTER ENDED JULY 2, 2022

TABLE OF CONTENTS


PART I. Financial Information

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets as of July 2, 2022 and January 1, 2022	3

	Condensed Consolidated Statements of Operations for the three and six months ended July 2, 2022 and July 3, 2021	4

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 2, 2022 and July 3, 2021	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended July 2, 2022 and July 3, 2021	6

	Condensed Consolidated Statements of Cash Flows for the six months ended July 2, 2022 and July 3, 2021	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54

Item 4.	Controls and Procedures	55

PART II. Other Information

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87



Item 6.	Exhibits	88

Signatures		90

Table of Contents

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
Inventories	449.2		201.4
Other current assets	138.3		91.0
Total current assets	1,158.2		1,238.5
Lease receivable, noncurrent	75.4		73.6
Deferred costs and other contract assets	35.4		28.1
Property and equipment, net	370.7		272.8

Customer relationships, net - (Note 9)	215.6		15.3
Acquired technologies, net - (Note 9)	170.9		20.7
Other intangible assets, net	78.0		36.5
Trademarks - (Note 9)	262.0		—
Goodwill	434.5		100.3
Deferred tax assets	55.1		52.6
Other non-current assets	105.3		48.6
Total assets	$	2,961.1	$	1,887.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	244.5	$	75.5
Accrued compensation	75.5		70.8
Deferred revenue and other contract liabilities, current	75.4		50.9
Other current liabilities	156.6		70.4
Total current liabilities	552.0		267.6
Long-term debt	922.4		—

Other non-current liabilities	284.0		69.1
Total liabilities	1,758.4		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 capital	759.2		752.5
Accumulated other comprehensive loss	(23.1)		(5.5)
Retained earnings	1,635.6		1,570.9


Total stockholders’ equity	1,202.7		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.

Table of Contents

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share amounts)


	Three Months Ended				Six 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 sold	307.1		112.2		406.6		214.4
Gross profit	258.2		192.9		462.9		389.8
Operating expenses:
Selling, general and administrative	188.3		93.9		297.2		190.5
Research and development	47.8		33.9		83.9		68.5

Total operating expenses	236.1		127.8		381.1		259.0
Operating income	22.1		65.1		81.8		130.8
Non-operating income (loss)	4.5		0.1		3.9		(0.7)
Income before provision for income taxes	26.6		65.2		85.7		130.1
Provision for income taxes	8.5		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:
Basic	53.9		55.0		54.7		55.1
Diluted	55.3		57.4		56.4		57.6

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

Table of Contents

MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in millions)


	Three Months Ended				Six 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.

Table of Contents



MASIMO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions)
	Three and Six Months Ended July 2, 2022
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount














































































































































































































































Balance at January 1, 2022	55.3	$	0.1	16.5	$	(767.7)	$	752.5	$	(5.5)	$	1,570.9	$	1,550.3
Stock options exercised	0.1	—		—	—		2.7		—		—		2.7
Restricted/Performance stock units vested	0.2	—		—	—		—		—		—		—
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, 2022	55.5	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, 2022	52.5	$	0.1	19.5	$	(1,169.1)	$	759.2	$	(23.1)	$	1,635.6	$	1,202.7

Table of Contents


	Three and Six Months Ended July 3, 2021
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
































































































































































































Balance at January 2, 2021	55.3	$	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 vested	0.3	—		—	—		—		—		—		—
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, 2021	55.1	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, 2021	55.1	$	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.

Table of Contents

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 amortization	79.9		17.3
Stock-based compensation	28.2		20.9
Gain on disposal of equipment, intangibles and other assets	0.3		0.2

Provision for credit losses	0.9		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 payable	40.4		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 liabilities	4.8		(1.2)

Decrease in other non-current liabilities	(1.0)		(0.8)
Net cash provided by operating activities	25.6		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 credit	927.0		—
Repayments on line of credit	0.1		—

Debt issuance costs	(8.9)		—

Proceeds from issuance of common stock	4.6		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)

MASIMO CORP [MASI] Filings
10-Q	[2022-08-10]
10-Q	[2022-05-03]
10-K	[2022-02-16]
10-Q	[2021-10-26]
10-Q	[2021-07-27]
10-Q	[2021-04-27]
10-K	[2021-02-23]
10-Q	[2020-10-27]
10-Q	[2020-07-28]
10-Q	[2020-04-28]
10-K	[2020-02-19]
10-Q	[2019-10-30]
10-Q	[2019-07-31]
10-Q	[2019-05-06]
10-K	[2019-02-26]
10-Q	[2018-10-31]
10-Q	[2018-08-01]
10-Q	[2018-05-07]
10-K	[2018-02-28]
10-Q	[2017-10-31]
10-Q	[2017-08-02]
10-Q	[2017-05-04]
10-K	[2017-02-15]
10-Q	[2016-11-02]
10-Q	[2016-08-03]
10-Q	[2016-05-04]
10-K	[2016-02-24]
10-Q	[2015-11-06]
10-Q	[2015-08-04]
10-Q	[2015-05-06]
10-K	[2015-02-17]
10-Q	[2014-10-29]
10-Q	[2014-08-07]
10-Q	[2014-05-01]
10-K	[2014-02-14]
10-Q	[2013-10-31]
10-Q	[2013-08-01]
10-Q	[2013-05-08]
10-K	[2013-02-15]
10-Q	[2012-11-02]
10-Q	[2012-08-02]
10-Q	[2012-05-03]
10-K	[2012-02-17]