Masimo Sells Consumer Audio Business, Faces Challenges Amid Industry Shifts

Masimo Corporation, a leading patient monitoring company, has announced significant changes to its business strategy and operations, marking a pivotal moment in the medical device industry. The company's decision to divest its consumer audio portfolio comes amid financial adjustments and cybersecurity concerns, reflecting broader trends in the healthcare technology sector.

Divestiture of Sound United

Masimo has reached an agreement to sell its Sound United consumer audio business to Harman International, a subsidiary of Samsung Electronics, for $350 million. This sale represents a substantial loss on Masimo's initial $1 billion investment in 2022, which had been a point of contention among investors. The transaction, expected to close by the end of 2025, subject to regulatory approvals, allows Masimo to refocus on its core professional healthcare business.

Quentin Koffey, Masimo's Vice Chairman, emphasized that the sale of Sound United fulfills one of the new board's primary objectives. This strategic move comes in the wake of a proxy fight that resulted in the departure of Joe Kiani, Masimo's founder and longtime CEO, highlighting the significant shift in the company's direction.

Financial Outlook and Tariff Impact

In conjunction with the divestiture announcement, Masimo has revised its financial guidance for 2025. The company lowered its earnings per share forecast due to the impact of tariffs but maintained its revenue outlook. Specifically, Masimo expects tariffs to reduce its 2025 non-GAAP earnings per share by 45 to 50 cents, adjusting the range to $4.80 to $5.15 before any mitigation efforts.

To address these challenges, Masimo has developed mitigation plans, including potential adjustments to product sourcing and operations. The company plans to reassess and modify these strategies as needed to navigate the evolving economic landscape.

Cybersecurity Incident and Operational Challenges

Adding to Masimo's current challenges, the company disclosed a cybersecurity incident that has impacted its operations. Discovered on April 27, the attack affected some of Masimo's manufacturing facilities, disrupting its website and several computer systems. While the company does not anticipate this incident to affect its financial guidance, it has acknowledged limitations in its ability to fulfill orders as a result.

This cybersecurity breach underscores the growing importance of digital security in the medical device industry, where the protection of sensitive data and maintenance of operational continuity are paramount.