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We first wrote about Masimo Corporation (MASI) over 10 years ago, when the stock was trading at $19.30 per share and shortly after CEO and Chairman Joe Kiani had made his third insider purchase of all time, stating the following:
Started in one of the co-founder’s garage, Masimo Corporation is a medical technology company that was founded in 1989 by current Chairman and CEO Joe Kiani. The company develops, manufactures, and markets noninvasive patient monitoring products worldwide. Besides having a founder at the helm more than two decades after the company was started and a technology moat through nearly 600 patents, the company has a history of solid revenue growth, sports operating margins of 22% and return on equity of 23%. This small cap company with an enterprise value of just under $1 billion and $439 million in annual revenue has 2,500 employees and saw product revenue increase 4-fold in the last five years.
Much has changed since then, especially with the stock price sitting at around $141.46 as of now, and the company growing significantly. Masimo is now considered a mid-cap company with an enterprise value of $8.25 billion and annual revenue for fiscal year 2021 (ending in January 2022) totaling around $1.24 billion. The company has a fairly high P/E of 46.45, which can be partially explained by the fact that gross margins are a rich 55% and Masimo grew its trailing twelve months revenue 45% year-over-year. For the next year, revenue grow is supposed to moderate but is still expected to be a healthy 27%.
Pulse Oximetry is a way of assessing a person’s breathing by measuring the oxygen saturation of arterial blood. Beyond the Pulse Oximetry devices that Masimo manufactures as mentioned in our earlier article, Masimo has expanded into many noninvasive healthcare products, ranging from its SedLine Brain Function Monitoring to a newly developed (due to the COVID-19 pandemic) Masimo SafetyNet solution. In 2022, Masimo also launched its W1 health watch, meant to track key health data, including heart rate, oxygen levels, and respiration rate. Additionally, in April 2022, Masimo completed the acquisition of Sound United, a consumer technology company that owns many audio and home entertainment brands.
However, one thing that has not changed is that Joe Kiani continues to helm the company as its CEO and Chairman of the Board. We like companies with founders at the helm and Mr. Kiani has been leading the company for over 30 years since it was founded in 1989. Mr. Kiani recently made two purchases of Masimo totaling just under $5 million, the first purchase that he has made in over a decade. He did opportunistically sell stock as the price went up and sold at prices as high as $300 back in November 2021. While the stock price has definitely taken a hit over the last year, it has increased over 650% from Mr. Kiani’s 2012 purchase highlighted in our focus article.