Source: Instrument House, it may not be reproduced without authorization, and it can only be reproduced after 24 hours.
On March 22, Masimo, a leader in non-invasive monitoring technology, announced that its board of directors has authorized the company's management to conduct an organizational structure evaluation of the proposed divestitures of the consumer business.
Masimo expects the spin-off to include its consumer audio and consumer health products, including the Stork baby monitor and the Freedom smartwatch and bracelet. Masimo will retain its specialty healthcare and telehealth offerings.
Masimo expects the spin-off to improve the profitability of the healthcare business, and the company will seek to complete the spin-off as soon as possible.
It is worth noting that the consumer audio business that Masimo will divest this time is Viper Holdings, the parent company of the world's top audio brand Sound United, which was acquired by the company for US$1.025 billion (about 7.413 billion yuan) before 2022, and this acquisition amount entered the top ten mergers and acquisitions in the global medical equipment field that year.
As a result, Masimo's planned spin-off after only two years of investing heavily in acquisitions has raised questions from some investors.
Analysts believe that the gross margin and operating margin of the healthcare business are significantly higher than that of the non-healthcare business, and the move should be able to restore strong cash flow for Masimo.
01
This company is a dry Apple Watch
It is reported that the proposal to spin off the consumer business was put forward by Joe Kiani, chairman and CEO of Masimo, who said, "I truly believe that by bringing healthcare into the home, not only can people live longer, but they can also live longer with their health. We have the unique and necessary technology to enable what I call 22nd century healthcare in the years to come. I proposed a separation of the consumer business in January, and the board has agreed to move forward. The spin-off is expected to maximize shareholder value and provide the best path to success for Masimo's healthcare and new consumer businesses. ”
In addition to the consumer audio business, the spin-off includes a number of consumer health products, such as the Stork baby monitor and the Freedom smartwatch and bracelet, while Masimo will retain its professional healthcare and telehealth products.
Stork baby monitor
Following the spin-off, Joe Kiani is expected to be appointed chairman of the newly formed consumer goods company.
Founded in 1989, Masimo is a global medical technology company dedicated to the development and production of leading monitoring technologies and equipment for the medical industry. Especially in the field of pulse oximetry technology, it occupies a leading position in the world.
Back in 1995, Masimo launched the world's first pulse oximeter, the MasimoSET, which could be measured during exercise and hypoglycemic perfusion. In 2005, Masimo introduced rainbowSETPulseCO-Oximetry technology, which enables non-invasive, continuous measurement of blood components. Masimo's core products currently include pulse oximeters, MasimoSET and rainbowSET.
At the same time, the company provides high-end technologies and solutions for non-invasive monitoring of pulse oximetry, carbon oxygen and methemoglobin for 40 brands and more than 100 models of patient monitor manufacturers, with OEM partners all over the world. The blood oxygen detection module of the high-end monitoring products of many giants at home and abroad adopts Masimo's technology.
Recently, Masimo's most well-known incident is a patent lawsuit with Apple, which is aimed at one of the major selling points of the Apple Watch in recent years: blood oxygen detection.
Apple's Series 6 series watches, launched in 2020, added blood oxygen measurement for the first time, and every watch released since then has had the feature.
Changes in blood oxygen levels can be related to the health of vital organs such as breathing, heart, brain, etc., and can also be an early sign of a disease such as COVID. Therefore, measuring blood oxygen levels through Apple Watch can help users keep abreast of their physical condition and prevent and control some potential health risks, increasing the market appeal of Apple Watch.
Masimo filed a lawsuit in January 2020 in federal court for the Central District of California, arguing that the Apple Watch's feature infringed 10 of its patents, accusing Apple of using the opportunity of the two companies to discuss a potential collaboration to steal technical information and "poach," including hiring Masimo's chief medical officer.
And it means that the Apple Watch measurement is not accurate. Masimo has previously provided a study showing that the Apple Watch's pulse oximeter misses more than 90% of potentially life-threatening events and is not approved for medical use by the US FDA.
Masimo W1
In contrast, Masimo's Masimo W1™ medical-grade watch, launched in September 2022, is the first wearable device on the market to provide consumers with accurate, continuous health data. The product can provide continuous health data such as oxygen levels, hydration index, pulse, heart and respiratory rate, and more. On November 17, 2023, the FDA approved the Masimo W1™ watch for a wider range of medical uses or conditions, which includes continuous pulse oximeters.
On 10/26/23, the International Trade Commission (ITC) ruled that Apple's Apple Watch with blood oxygen measurement infringed Masimo's pulse oximeter patent.
As a result of the ruling, Apple stopped Apple Watch Series 9 and Apple Watch Ultra 2 purchases on Apple's U.S. website, and the inventory in Apple retail stores was not replenished after it was sold out on 12/24/23.
Stopping Apple's sale in his hometown in the United States made Masimo famous and known to more consumers.
02
Won the world's largest audio brand
Masimo itself entered the consumer goods sector two years ago.
Viper Holdings, the parent company of Sound United, the world's top audio brand, acquired for US$1.025 billion (about RMB 7.413 billion) before 2022.
Sound United is one of the world's largest premium audio companies with globally recognized iconic brands, including Bowers & Wilkins, Denon, Polk Audio, Marantz, Definitive Technology, Classé and Boston Acoustics.
At the time, Masimo revealed that the company would leverage Sound United's consumer channel to accelerate the distribution of Masimo's expanding portfolio of consumer products.
At the same time, Sound United's expertise in consumer electronics and audio engineering will also advance Masimo's strategy to enable connected monitoring between the hospital and the home, bringing Masimo's clinical solutions to the home and portable markets, and Sound United's premium technology to the hospital to advance hospital automation connectivity and cloud-based technologies that accelerate wearables and integrated home-based telehealth solutions.
However, at the time, the market generally believed that this big deal far exceeded the size of the acquisition of traditional medical device companies, and the day after the acquisition was announced, Masimo's stock price plummeted by 35%, the largest percentage decline in history.
03
Industry giants accelerate spin-offs
The number of divestitures and carve-outs in the medical device industry has increased significantly each year, a trend that has been particularly pronounced over the past decade. For example, Johnson & Johnson, GE, 3M, Danaher and other companies will be spun off in 2023.
This may be due to a shift in the strategic focus of medical device companies: in 2010-20, medical device companies were more focused on revenue growth and economies of scale, and now they are more focused on profitability.
For example, in the first quarter of fiscal year 2023, Zimmer Bonmei achieved revenue of US$1.831 billion, a year-on-year increase of 10.09%, and a net profit of US$233 million, a year-on-year increase of 1516.67%.
In addition, the spin-off resulted in greater investment focus in strategic focus areas across the company, as well as a greater focus on redeploying capital to opportunities that best align with its long-term growth strategy to drive a strategy that continues to drive lasting growth.
So in the future, which medical equipment giants will join the spin-off army, and the device home will continue to pay attention.