Masimo Faces Cyber Attack and Strategic Shifts Amid Industry Challenges

Cyber Attack Disrupts Masimo's Operations

Masimo, a prominent remote patient monitoring company, has reported a significant cyber attack affecting its manufacturing facilities and slowing production. The company disclosed the incident in a recent SEC filing alongside its quarterly earnings report. While the full scope and impacts of the intrusion are still under investigation, Masimo believes that its cloud-based hospital data systems remain unaffected, with no evidence of employee or patient data being compromised.

The unauthorized activity within Masimo's on-premise network was identified on April 27, prompting immediate action to isolate affected systems. As a result, certain manufacturing facilities have been operating at reduced capacity, temporarily impacting the company's ability to process, fulfill, and ship customer orders in a timely manner. Masimo is actively working to restore normal business operations and mitigate the impact of the incident, coordinating efforts with law enforcement agencies.

Despite these challenges, CEO Katie Szyman expressed confidence that the cyber attack would not significantly impact the company's financial guidance for the year. However, other factors have led to adjustments in Masimo's financial outlook.

Financial Adjustments and Strategic Realignment

Masimo has revised its financial projections, primarily due to the impact of tariffs. The company has lowered its guidance for operating profits to a range of $383 million to $403 million, down from the previous estimate of $420 million to $436 million. Profit margins are also expected to contract, with a new range of 25.5% to 26.4%, compared to the earlier projection of 28.0% to 28.5%.

In response to these challenges, Masimo is considering adjustments to its supply chain strategy, although specific plans will be deferred until there is more clarity on the tariff situation. Despite these headwinds, the company maintains its revenue forecast of approximately $1.5 billion for the year, representing an 8% to 11% growth.

In a significant strategic move, Masimo has announced plans to sell its Sound United business to Harman International, a subsidiary of Samsung Electronics, for $350 million in cash. This divestiture includes professional and home audio brands such as Bowers & Wilkins, Denon, and Marantz. The sale marks an important milestone in Masimo's efforts to refocus on its core healthcare business and address concerns raised during recent proxy battles with Politan Capital Management.

Quentin Koffey, co-founder of Politan and now vice chairman of Masimo's board of directors, emphasized the importance of this transaction in positioning the company for accelerated revenue growth and disciplined margin management. The move aligns with the new board's priorities and reflects Masimo's commitment to a healthcare-focused strategy.