masi-20220809
0000937556false00009375562022-08-092022-08-09

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________
FORM 8-K
________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2022
MASIMO CORPORATION
(Exact name of registrant as specified in its charter)
________________________________________________
DE001-3364233-0368882
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)
52 DiscoveryIrvine,CA92618
(Address of Principal Executive Offices)(Zip Code)
(949)
297-7000
Registrant’s telephone number, including area code:
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities Registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueMASIThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.☐



Item 2.02.Results of Operations and Financial Condition.
On August 9, 2022, Masimo Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended July 2, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.
In accordance with General Instructions B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01.Regulation FD Disclosure.
In connection with the Company’s conference call scheduled to be held on August 9, 2022, the Company’s Chief Financial Officer will review supplemental information regarding the Company’s financial results for the second quarter ended July 2, 2022. In addition, the Company is making available to investors additional supplemental financial information for fiscal 2018, fiscal 2019, fiscal 2020 and the first and second quarters of fiscal 2022 pursuant to the materials furnished as Exhibit 99.2 to this Current Report.
In accordance with General Instructions B.2 of Form 8-K, the information in Item 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01.Financial Statements and Exhibits.
(d) The following items are filed as exhibits to the Current Report on Form 8-K.
Exhibit
 No.
Description
99.1
99.2
99.3
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Masimo Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
MASIMO CORPORATION
Date: August 9, 2022By:
/s/ MICAH YOUNG
Micah Young
Executive Vice President & Chief Financial Officer
(Principal Financial Officer)


Exhibit 99.1
Masimo Reports Second Quarter 2022 Financial Results
Second Quarter 2022 Highlights
•Consolidated revenue was $565 million;
•Healthcare revenue was $357 million, representing 17% reported growth and 19% constant currency growth;
•Non-healthcare revenue was $208 million; and
•Repurchased 3 million shares of Masimo common stock for $401 million.
Irvine, California, August 9, 2022 - Masimo (Nasdaq: MASI) today announced its financial results for the second quarter of 2022, ended July 2, 2022.
Second Quarter 2022 Financial Results
Consolidated revenue was $565.3 million, representing 85.3% reported growth compared to $305.1 million in the second quarter of 2021. Healthcare revenue was $357.0 million, which represents 17.0% reported growth and 19.0% constant currency growth on a constant currency basis. Non-healthcare revenue was $208.3 million.
Excluding handheld and fingertip pulse oximeters, shipments of noninvasive technology boards and instruments were 77,100, increasing 6.3% over the second quarter of 2021.
For the second quarter of 2022, on a consolidated basis, GAAP net income was $18.1 million, or $0.33 per diluted share, which includes expenses related to the Sound United acquisition. Non-GAAP net income was $74.8 million, or $1.35 per diluted share, for the quarter.
Joe Kiani, Chairman and Chief Executive Officer of Masimo, said “We delivered strong performance in the second quarter with revenue and earnings exceeding the high end of our guidance range. Our healthcare business fulfilled most of the delayed shipments from the first quarter by increasing manufacturing output, which boosted our growth in the second quarter. As a result, our healthcare business delivered 11% constant currency revenue growth for the first half of the year. We are raising our financial guidance on a constant currency basis for fiscal year 2022. I’m excited about the expanded potential to address new markets with our recently acquired consumer business, which will advance solutions for our customers at hospitals and at home.”
For additional financial details, please visit the Investor Relations section of the Company’s website at investor.masimo.com to access the second quarter 2022 Earnings Presentation materials.
Share Repurchase Program
During the second quarter of 2022, the Company repurchased 3 million shares of Masimo common stock for $401 million. This completed the share repurchase program approved in third quarter of 2021.
In addition, the Masimo’s Board of Directors recently approved a new repurchase program, authorizing the repurchase of up to an additional 5 million shares of our common stock on or before December 31, 2027.
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Third-Quarter 2022 and Full-year 2022 Financial Guidance
The Company provided the following estimates for its third-quarter and full-year 2022 guidance:
Third-Quarter 2022 Guidance(1)
Full-Year 2022 Guidance(1)
(in millions, except earnings per diluted share)GAAPNon-GAAPGAAPNon-GAAP
Consolidated revenue$515 to $545$515 to $545$1,985 to $2,045$1,985 to $2,045
Healthcare revenue$320 to $330$320 to $330$1,330 to $1,345$1,330 to $1,345
Non-healthcare revenue$195 to $215$195 to $215$655 to $700$655 to $700
Consolidated earnings per diluted share$0.51 to $0.63$0.85 to $0.97$2.61 to $2.84$4.34 to $4.57
______________
(1)    Guidance provided August 9, 2022.
•For our healthcare segment, our third-quarter 2022 and full-year 2022 revenue guidance includes year-over-year foreign currency headwinds of $10 million and $30 million, respectively.
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Supplementary Non-GAAP Financial Information
For additional non-GAAP financial details, please visit the Investor Relations section of the Company’s website at investor.masimo.com to access Supplementary Financial Information.
Non-GAAP Financial Measures
The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with U.S. GAAP. The non-GAAP financial measures presented exclude the items described below. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results. Furthermore, management also believes that these items are not indicative of the Company’s on-going operating performance. These non-GAAP financial measures have certain limitations in that they do not reflect all of the costs associated with the operations of the Company’s business as determined in accordance with GAAP.
Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies.
The Company has presented the following non-GAAP measures to assist investors in understanding the Company’s net operating results on an on-going basis: (i) constant currency product revenue growth %, (ii) non-GAAP net income, (iii) non-GAAP (net income) earnings per diluted share and (iv) non-GAAP operating income/margin. These non-GAAP financial measures may also assist investors in making comparisons of the Company’s operating results with those of other companies. Management believes constant currency product revenue growth, non-GAAP operating income/margin, non-GAAP net income and non-GAAP earnings per diluted share are important measures in the evaluation of the Company’s performance and uses these measures to better understand and evaluate our business.
The non-GAAP financial measures reflect adjustments for the following items:
Constant currency revenue adjustments
Some of our sales agreements with foreign customers provide for payment in currencies other than the U.S. Dollar. These foreign currency revenues, when converted into U.S. Dollars, can vary significantly from period-to-period depending on the average and quarter-end exchange rates during a respective period. We believe that comparing these foreign currency denominated revenues by holding the exchange rates constant with the prior year period is useful to management and investors in evaluating our revenue growth rates on a period-to-period basis. We anticipate that fluctuations in foreign exchange rates and the related constant currency adjustments for calculation of our revenue growth rate will continue to occur in future periods.
Acquisition, integration and related costs
These transactions represent gains, losses, and other related costs associated with acquisitions, integrations, investments, divestitures, assets impairments, and in-process research and development.
Acquired tangible asset amortization
These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired tangible assets and asset valuation step-ups.
Acquired intangible asset amortization
These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired intangible assets including, but not limited to customer relationships, intellectual property, trade names and non-competition agreements.
Litigation related expenses, settlements and awards
These transactions represent gains, losses, and other related costs associated with certain litigation matters, which can vary in their characteristics, frequency and significance to our operating results.
Other adjustments
In the event there are gains, losses and other adjustments which impact period-to-period comparability and do not represent the underlying ongoing results of the business, the Company may choose to exclude these from non-GAAP earnings.
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Realized and unrealized gains or losses
These transactions represent gains, losses, and other related costs associated with foreign currency denominated transactions and investments. Changes in the underlying currency rates relative to the U.S. Dollar may result in realized and unrealized foreign currency gains and losses between the time these receivables and payables arise and the time that they are settled in cash. Unrealized and realized gains and losses on investments may impact the Company’s reported results of operations for a period. These items are highly variable, difficult to predict and outside the control of those responsible for the underlying operations of the business. Other items also included here are mark-to-market gains and losses of derivative contracts that are not designated as hedging instruments or the ineffective portions of cash flow hedges.
Tax impact of non-GAAP adjustments
In order to reflect the tax effected impact of the non-GAAP adjustments, the Company will adjust the non-GAAP earnings by the approximate tax impact of these adjustments.
Excess tax benefits from stock-based compensation expense
GAAP requires that excess tax benefits recognized on stock-based compensation expense be reflected in our provision for income taxes rather than paid-in capital. As these excess tax benefits may be highly variable from period-to-period, the Company may choose to exclude these tax benefits from non-GAAP earnings to facilitate comparability between periods and with peers.
Financing related adjustments
The Company may enter into various financial arrangements whereby costs are incurred and certain instrument features are valued and expensed accordingly but are not necessarily indicative of the on-going cash flow generation of the Company and therefore excludes these costs from non-GAAP earnings. For GAAP earnings per diluted share purposes, the Company cannot reflect the anti-dilutive impact, if applicable, in its diluted shares calculations. However, the Company believes that reflecting the anti-dilutive impact of these instruments in non-GAAP earnings per diluted share provides management and investors with useful information in evaluating the financial performance of the Company on a per share basis.
Second Quarter 2022 Actuals versus Second Quarter 2021 Actuals
RECONCILIATION OF HEALTHCARE GAAP TO NON-GAAP CONSTANT CURRENCY REVENUE(1):
Three Months EndedSix Months Ended
(in millions, except percentages)July 2,
2022		July 3,
2021		July 2, 2022July 3, 2021
GAAP healthcare revenue$357.0 $305.1 $661.2 $604.2 
Constant currency revenue adjustments6.0 N/A10.3 N/A
Non-GAAP healthcare constant currency revenue$363.0 $305.1 $671.6 $604.2 
GAAP healthcare revenue growth %17.0 %9.4 %
Non-GAAP healthcare constant currency revenue growth %19.0 %11.2 %
__________________
(1)      May not foot due to rounding.
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RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):
Three Months Ended
July 2,
2022		July 3,
2021
(in millions, except per diluted share amounts)$Per Diluted Share$Per Diluted Share
GAAP net income$18.1 $0.33 $50.2 $0.88 
Non-GAAP adjustments:
Acquired tangible asset amortization48.2 0.87 0.1 — 
Acquired intangible asset amortization9.3 0.17 1.5 0.03 
Acquisition, integration and related costs19.7 0.36 0.9 0.02 
Litigation related expenses, settlements and awards7.2 0.13 0.4 0.01 
Other adjustments(0.5)(0.01)3.4 0.06 
Realized and unrealized gains or losses(8.2)(0.15)0.1 — 
Financing related adjustments0.6 0.01 — — 
Tax impact of non-GAAP adjustments(19.5)(0.35)(1.2)(0.02)
Excess tax benefits from stock-based compensation expense
(0.2)— (1.3)(0.02)
Total non-GAAP adjustments56.6 1.02 3.8 0.07 
Non-GAAP net income$74.8 $1.35 $54.0 $0.94 
Weighted average shares outstanding - diluted55.3 57.4 
__________________
(1)      May not foot due to rounding.
Third-Quarter 2022 and Full-Year Financial Guidance
RECONCILIATION OF HEALTHCARE GAAP TO NON-GAAP CONSTANT CURRENCY REVENUE(1):
Guidance(2)
(in millions, except percentages)Third-Quarter 2022Full-Year 2022
GAAP healthcare revenue$320 to $330$1,330 to $1,345
Constant currency revenue adjustments1030 
Non-GAAP healthcare constant currency revenue$330 to $340$1,360 to $1,375
GAAP healthcare revenue growth %4.1% to 7.3%7.3% to 8.5%
Non-GAAP healthcare constant currency revenue growth %7.4% to 10.7%9.8% to 11.0%
__________________
(1)     May not foot due to rounding.
(2)    Guidance provided August 9, 2022.
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RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET INCOME PER DILUTED SHARE(1):
Guidance(2)
Third-Quarter 2022Full-Year 2022
(in millions, except per diluted share amounts)$Per Diluted Share$Per Diluted Share
GAAP net income$27.7 to $33.9$0.51 to $0.63$144.2 to $157.2$2.61 to $2.84
Non-GAAP adjustments:
Acquired tangible asset amortization8.8 0.16 59.3 1.07 
Acquired intangible asset amortization10.4 0.19 31.6 0.57 
Acquisition, integration and related costs3.6 0.07 29.5 0.53 
Litigation related expenses, settlements and awards1.2 0.02 15.7 0.28 
Other adjustments— — (0.5)(0.01)
Realized and unrealized gains or losses— — (7.4)(0.13)
Financing related adjustments0.5 0.01 1.5 0.03 
Tax impact of non-GAAP adjustments(6.0)(0.11)(32.1)(0.58)
Excess tax benefits from stock-based compensation expense
— — (1.9)(0.03)
Total non-GAAP adjustments18.4 0.34 95.7 1.73 
Non-GAAP net income$46.2 to $52.3$0.85 to $0.97$239.9 to $252.9$4.34 to $4.57
Weighted average shares outstanding - diluted54.2 55.3 
__________________
(1)      May not foot due to rounding.
(2)    Guidance provided August 9, 2022.









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Conference Call:
The conference call to review the results will begin at 1:30 p.m. PT today (4:30 p.m. ET) and will be hosted by Joe Kiani, Chairman and Chief Executive Officer, and Micah Young, Executive Vice President and Chief Financial Officer.
To register for the conference call and receive the dial-in number, please use the link below. Upon registering, each participant will be provided with call details and a registrant ID number.
Conference Call Registration Link:
https://conferencingportals.com/event/nUSpRIEm
A replay of the webcast and conference call will be available shortly after the conclusion of the call and will be archived on the Company’s website.
About Masimo
Masimo (Nasdaq: MASI) is a global medical technology company that develops and produces a wide array of industry-leading monitoring technologies, including innovative measurements, sensors, patient monitors, and automation and connectivity solutions. Our mission is to improve patient outcomes, reduce the cost of care. Masimo SET® Measure-through Motion and Low Perfusion™ pulse oximetry, introduced in 1995, has been shown in over 100 independent and objective studies to outperform other pulse oximetry technologies. Masimo SET® has also been shown to help clinicians reduce severe retinopathy of prematurity in neonates, improve CCHD screening in newborns, and, when used for continuous monitoring with Masimo Patient SafetyNet™ in post-surgical wards, reduce rapid response team activations, ICU transfers, and costs. Masimo SET® is estimated to be used on more than 200 million patients in leading hospitals and other healthcare settings around the world, and is the primary pulse oximetry at 9 of the top 10 hospitals as ranked in the 2021-22 U.S. News and World Report Best Hospitals Honor Roll. Masimo continues to refine SET® and in 2018, announced that SpO2 accuracy on RD SET® sensors during conditions of motion has been significantly improved, providing clinicians with even greater confidence that the SpO2 values they rely on accurately reflect a patient’s physiological status. In 2005, Masimo introduced rainbow® Pulse CO-Oximetry technology, allowing noninvasive and continuous monitoring of blood constituents that previously could only be measured invasively, including total hemoglobin (SpHb®), oxygen content (SpOC™), carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), Pleth Variability Index (PVi®), RPVi™ (rainbow® PVi), and Oxygen Reserve Index (ORi™). In 2013, Masimo introduced the Root® Patient Monitoring and Connectivity Platform, built from the ground up to be as flexible and expandable as possible to facilitate the addition of other Masimo and third-party monitoring technologies; key Masimo additions include Next Generation SedLine® Brain Function Monitoring, O3® Regional Oximetry, and ISA™ Capnography with NomoLine® sampling lines. Masimo’s family of continuous and spot-check monitoring Pulse CO-Oximeters® includes devices designed for use in a variety of clinical and non-clinical scenarios, including tetherless, wearable technology, such as Radius-7® and Radius PPG™, portable devices like Rad-67®, fingertip pulse oximeters like MightySat® Rx, and devices available for use both in the hospital and at home, such as Rad-97®. Masimo hospital automation and connectivity solutions are centered around the Masimo Hospital Automation™ platform, and include Iris® Gateway, iSirona™, Patient SafetyNet, Replica™, Halo ION™, UniView®, UniView :60™, and Masimo SafetyNet™. Additional information about Masimo and its products may be found at www.masimo.com. Published clinical studies on Masimo products can be found at www.masimo.com/evidence/featured-studies/feature/.
ORi and RPVi have not received FDA 510(k) clearance and are not available for sale in the United States. The use of the trademark Patient SafetyNet is under license from University HealthSystem Consortium.
Forward-Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about our expectations for third quarter and full year 2022 financial guidance; our long-term outlook; demand for our products; anticipated revenue and earnings growth; our financial condition, results of operations and business generally; expectations regarding our ability to design and deliver innovative new noninvasive technologies and reduce the cost of care; our ability to address supply chain challenges; anticipated benefits from our acquisition of Sound United; and demand for our technologies. These forward-looking statements are based on management’s current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to: our dependence on Masimo SET® and Masimo rainbow SET™ products and technologies for substantially all of our revenue; any failure in protecting our intellectual property exposure to competitors’ assertions of intellectual property claims; the highly competitive nature of the markets in which we sell our products and technologies; any failure to continue developing innovative products and technologies; our ability to successfully integrate Sound United’s brands into our business; our ability to address and expand into new markets; the lack of acceptance of any of our current or future products and technologies; obtaining regulatory approval of our current and future products and technologies; the risk that the implementation of our international realignment will not continue to produce anticipated operational and financial benefits, including a continued lower effective tax rate; the loss of our customers; the failure to retain and recruit senior management; product liability claims exposure; a failure to obtain expected returns from the amount of intangible assets we have recorded; the maintenance of our brand; the amount and type of equity awards that we may grant to employees and service providers in the future; our ongoing litigation and related matters; risks related to global economic and marketplace uncertainties related to the impact of the COVID-19 pandemic; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), including our most recent Form 10-K and Form 10-Q, all of which you may obtain for free on the SEC’s website at www.sec.gov. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
# # #
Investor Contact: Eli KammermanMedia Contact: Evan Lamb
(949) 297-7077(949) 396-3376
[email protected][email protected]
Masimo, SET, Signal Extraction Technology, Improving Patient Outcome and Reducing Cost of Care... by Taking Noninvasive Monitoring to New Sites and Applications, rainbow, SpHb, SpOC, SpCO, SpMet, PVI and ORI are trademarks or registered trademarks of Masimo Corporation.
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MASIMO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)
July 2,
2022		January 1,
2022
ASSETS
Current assets
Cash and cash equivalents$218.0 $745.3 
Accounts receivable, net of allowance for credit losses352.7 200.8 
Inventories449.2 201.4 
Other current assets138.3 91.0 
Total current assets1,158.2 1,238.5 
Lease receivable, noncurrent75.4 73.6 
Deferred costs and other contract assets35.4 28.1 
Property and equipment, net370.7 272.8 
Customer relationships, net215.6 15.3 
Acquired technologies, net170.9 20.7 
Other intangible assets, net78.0 36.5 
Trademarks262.0 — 
Goodwill434.5 100.3 
Deferred tax assets55.1 52.6 
Other non-current assets105.3 48.6 
Total assets$2,961.1 $1,887.0 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$244.5 $75.5 
Accrued compensation75.5 70.8 
Deferred revenue and other contract liabilities, current75.4 50.9 
Other current liabilities156.6 70.4 
Total current liabilities552.0 267.6 
Long-term debt922.4 — 
Other non-current liabilities284.0 69.1 
Total liabilities1,758.4 336.7 
Commitments and contingencies
Stockholders’ equity
Common stock0.1 0.1 
Treasury stock(1,169.1)(767.7)
Additional paid-in capital759.2 752.5 
Accumulated other comprehensive loss(23.1)(5.5)
Retained earnings1,635.6 1,570.9 
Total stockholders’ equity1,202.7 1,550.3 
Total liabilities and stockholders’ equity$2,961.1 $1,887.0 


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MASIMO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share amounts)
Three Months EndedSix 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 sold307.1 112.2 406.6 214.4 
Gross profit258.2 192.9 462.9 389.8 
Operating expenses:
Selling, general and administrative188.3 93.9 297.2 190.5 
Research and development47.8 33.9 83.9 68.5 
Total operating expenses236.1 127.8 381.1 259.0 
Operating income22.1 65.1 81.8 130.8 
Non-operating income (loss)4.5 0.1 3.9 (0.7)
Income before provision for income taxes26.6 65.2 85.7 130.1 
Provision for income taxes8.5 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:
Basic53.9 55.0 54.7 55.1 
Diluted55.3 57.4 56.4 57.6 
The following table presents details of the stock-based compensation expense that is included in each functional line item in the condensed consolidated statements of operations (in millions):
Three Months EndedSix Months Ended
July 2,
2022		July 3,
2021		July 2,
2022		July 3,
2021
Cost of goods sold$0.3 $0.2 $0.5 $0.4 
Selling, general and administrative12.8 5.1 20.2 14.5 
Research and development4.2 3.0 7.5 6.1 
Total$17.3 $8.3 $28.2 $21.0 

-9-


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 amortization79.9 17.3 
Stock-based compensation28.2 20.9 
Gain on disposal of equipment, intangibles and other assets0.3 0.2 
Provision for credit losses0.9 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 payable40.4 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 liabilities4.8 (1.2)
Decrease in other non-current liabilities(1.0)(0.8)
Net cash provided by operating activities25.6 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 credit927.0 — 
Repayments on line of credit0.1 — 
Debt issuance costs(8.9)— 
Proceeds from issuance of common stock4.6 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)
Net cash provided by (used in) financing activities496.0 (136.5)
Effect of foreign currency exchange rates on cash(22.2)0.8 
Net decrease in cash, cash equivalents and restricted cash(527.8)(67.7)
Cash, cash equivalents and restricted cash at beginning of period748.4 645.0 
Cash, cash equivalents and restricted cash at end of period$220.6 $577.3 

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Masimo Earnings Second Quarter 2022

 
These presentations contain forward-looking statements within the meaning of federal securities laws, including, among others, statements about our expectations, plans, strategies or prospects. We generally use the words “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “estimate,” “project,” “assume,” “guide,” “target,” “forecast,” “see,” “seek,” “can,” “should,” “could,” “would,” “intend,” “predict,” “potential,” “strategy,” “is confident that,” “future,” “opportunity,” “work toward,” and similar expressions to identify forward- looking statements. All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements. Such statements are based upon the current beliefs, expectations and assumptions of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual results to differ materially from the forward-looking statements. Forward-looking statements speak only as of the date they are made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers of these presentations are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in these presentations. The risks and uncertainties that may cause actual results to differ materially from Masimo’s current expectations are more fully described in Masimo’s reports filed with the U.S. Securities and Exchange Commission (SEC), including our most recent Form 10-K and Form 10-Q. Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.masimo.com or upon request. The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with U.S. GAAP. The non-GAAP financial measures presented exclude certain items that are more fully described in the Appendix. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results. Furthermore, management also believes that these items are not indicative of the Company’s on-going core operating performance. These non-GAAP financial measures have certain limitations in that they do not reflect all of the costs associated with the operations of the Company’s business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies. The Company has presented the following non-GAAP financial measures to assist investors in understanding the Company’s core net operating results on an on-going basis: (i) constant currency revenue growth %, (ii) non-GAAP gross profit/margin %, (iii) non-GAAP SG&A expense, (iv) non-GAAP R&D expense, (v) non-GAAP litigation settlements and (awards), (vi) non-GAAP operating expense %, (vii) non-GAAP operating income/margin %, (viii) non-GAAP earnings per diluted share and (ix) adjusted free cash flow. These non-GAAP financial measures may also assist investors in making comparisons of the company’s core operating results with those of other companies. Management believes these non-GAAP financial measures are important in the evaluation of the Company’s performance and uses these measures to better understand and evaluate our business. For additional financial details, including GAAP to non-GAAP reconciliations, please visit the Investor Relations section of the Company’s website at www.masimo.com to access Supplementary Financial Information. Safe Harbor Statement

 
Healthcare revenue of $357 million, representing 17% reported growth and 19% constant currency growth; Shipped 77,100 technology boards and instruments during the quarter; and Shipped 2.4 million technology boards and instruments over the last 10 years, increasing 7% over the prior year period; and Launched the Masimo W1 biosensing health watch under a limited market release. Completed acquisition of Sound United on April 11, 2022; Invested $401 million to repurchase 3 million shares of Masimo common stock, representing a 5% reduction of our shares outstanding; and Approved a new program to repurchase up to an additional 5 million shares over the next 5 years. Business Highlights Healthcare Non-healthcare revenue of $208 million from April 11, 2022 through fiscal quarter end; On a pro forma basis for the full quarter, non- healthcare revenues were $215 million, representing 4% reported growth and 10% constant currency growth; and Bowers & Wilkins launched its new wireless, active noise cancelling Px7 S2 headphones. Non-Healthcare Second Quarter 2022 Business Highlights (1) (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information.

 
Second Quarter 2022 Financial Highlights (1) $565 million $1.35 per share Revenue Non-GAAP Gross Margin Non-GAAP Operating Profit Non-GAAP EPS $107 million 54.7% Healthcare revenue of $357 million, representing 17% reported growth and 19% constant currency growth; AND Non-healthcare revenue of $208 million from April 11, 2022 through fiscal quarter end. Healthcare 66.3%; AND Non-healthcare 34.8%. (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information. Consolidated Non-GAAP operating profit of $107 million, representing 49% reported growth. Consolidated Non-GAAP earnings per diluted share of $1.35, representing 44% reported growth.

 
(In millions; except EPS) Actual Prior Year vs. Prior Year Revenue $565 $305 85% Healthcare 357 305 17% Non-Healthcare 208 N/A N/A Gross Profit $309 $197 57% Healthcare 237 197 20% Non-Healthcare 73 N/A N/A Gross Margin 54.7% 64.7% -1000 bps Healthcare 66.3% 64.7% 160 bps Non-Healthcare 34.8% N/A N/A Operating Profit $107 $71 49% Healthcare 106 N/A N/A Non-Healthcare 15 N/A N/A Corporate Overhead (15) N/A N/A Operating Margin 18.9% 23.4% -450 bps Non-Operating Inc. / (Exp.) ($4) $0 -2711% Pre-Tax Income $103 $72 44% Income Taxes $28 $18 61% Tax Rate 27.4% 24.5% 290 bps Net Income $75 $54 38% Shares 55.3 57.4 -4% Earnings Per Share $1.35 $0.94 44% Second Quarter 2022 Actual vs. Prior Year | Non-GAAP (1) (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information. Pro Forma Constant Currency Revenue Growth Consolidated 15% Healthcare 19% Non-Healthcare 10%

 
Third Quarter 2022 Guidance as of August 9, 2022 | Non-GAAP (1) $515 to $545 million $0.85 to $0.97 per share Revenue Non-GAAP Gross Margin Non-GAAP Operating Profit Non-GAAP EPS $72 to $80 million ~53% Healthcare revenue of $320 to $330 million, representing ~4% to 7% reported growth and ~7% to 11% constant currency growth; AND Non-healthcare revenue of $195 to $215 million. Healthcare ~65%; AND Non-healthcare ~33% to 34%. (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information.

 
Full Year 2022 Guidance as of August 9, 2022 | Non-GAAP (1) $1,985 to $2,045 million $4.34 to $4.57 per share Revenue Non-GAAP Gross Margin Non-GAAP Operating Profit Non-GAAP EPS $346 to $364 million ~55% Healthcare revenue of $1,330 to $1,345 million, representing ~7% to 9% reported growth and ~10% to 11% constant currency growth; AND Non-healthcare revenue of $655 to $700 million from April 11, 2022 through fiscal year end. Healthcare 65.5%; AND Non-healthcare ~34% to 35%. (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information.

 
August 9, 2022 Guidance vs. Prior Year (In millions; except EPS) Low High Prior Year Low High Revenue $1,985 $2,045 $1,239 60% 65% Healthcare 1,330 1,345 1,239 7% 9% Non-Healthcare 655 700 N/A N/A N/A Gross Profit $1,096 $1,125 $816 34% 38% Healthcare 871 881 816 7% 8% Non-Healthcare 225 245 N/A N/A N/A Gross Margin 55.2% 55.0% 65.8% -1060 bps -1080 bps Healthcare 65.5% 65.5% 65.8% -30 bps -30 bps Non-Healthcare 34.4% 34.9% N/A N/A N/A Operating Profit $346 $364 $295 17% 23% Healthcare 348 351 N/A N/A N/A Non-Healthcare 39 56 N/A N/A N/A Corporate Overhead (40) (44) N/A N/A N/A Operating Margin 17.4% 17.8% 23.8% -640 bps -600 bps Non-Operating Inc. / (Exp.) ($23) ($23) $0 -5589% -5589% Pre-Tax Income $323 $340 $295 9% 15% Income Taxes $83 $87 $65 28% 35% Tax Rate 25.7% 25.7% 22.0% 370 bps 370 bps Net Income $240 $253 $230 4% 10% Shares 55.3 55.3 57.7 -4% -4% Earnings Per Share $4.34 $4.57 $3.99 9% 15% Full Year 2022 Guidance vs. Prior Year | Non-GAAP (1) (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information. Pro Forma Constant Currency Revenue Growth Low High Consolidated 9% 12% Healthcare 10% 11% Non-Healthcare 8% 13%

 
Full Year 2022 Guidance vs. Prior Guidance | Non-GAAP (1) (1) Non-GAAP measures shown have been adjusted for certain items that are fully described in the Appendix. Please visit the Investor Relations section of the Company’s website at www.masimo.com to access additional information related to our Non-GAAP adjustments and Supplementary Financial Information. Revenue Gross Margin Operating Profit Operating Margin $2,000 to $2,060 $1,985 to $2,045 ($44) In millions $29 $365 to $386 $346 to $364 ($25) In millions $3 to $6 56.3% to 56.5% 55.0% to 55.2% (70) bps (60) bps 18.3% to 18.7% 17.4% to 17.8% (90) bps Segment Mix (25) bps Supply Chain Inefficiencies (35) bps Segment Mix (15) bps Supply Chain Inefficiencies (35) bps Operating Leverage +50 bps Unchanged

 
Appendix GAAP to Non-GAAP Reconciliations

 
GAAP to Non-GAAP Reconciliations | Consolidated Income Statement (Unaudited; in millions, except per share data) (1) Q1 2021 Q2 2021 1H 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 1H 2022 Low High Low High GAAP revenue $299.0 $305.1 $604.2 $307.4 $327.6 $1,239.2 $304.2 $565.3 $869.5 $515.0 $545.0 $1,985.0 $2,045.0 GAAP gross profit $196.9 $192.9 $389.8 $203.7 $214.9 $808.3 $204.8 $258.2 $462.9 $259.4 $274.6 $1,026.6 $1,056.0 Acquired tangible asset amortization 0.1 0.1 0.3 0.1 0.1 0.5 - 46.2 46.2 6.4 6.4 52.6 52.6 Acquired intangible asset amortization 0.6 0.6 1.2 0.6 0.6 2.4 0.6 4.9 5.5 5.6 5.6 16.7 16.7 Acquisition, integration and related costs 0.1 0.5 0.5 0.0 0.3 0.9 0.0 0.0 0.1 - - 0.1 0.1 Other adjustments - 3.4 3.4 - - 3.4 - - - - - - - Non-GAAP gross profit $197.7 $197.5 $395.2 $204.5 $215.9 $815.5 $205.4 $309.2 $514.6 $271.4 $286.6 $1,095.9 $1,125.3 GAAP selling, general and administrative expenses $96.7 $93.9 $190.5 $100.6 $104.1 $395.3 $108.9 $188.3 $297.2 Acquired tangible asset amortization - - - - - - - (2.1) (2.1) Acquired intangible asset amortization (1.0) (0.9) (1.9) (0.9) (0.9) (3.7) (0.9) (4.4) (5.3) Acquisition, integration and related costs (1.0) (0.4) (1.4) (0.3) (0.5) (2.2) (3.1) (19.7) (22.8) Litigation related expenses and settlements - (0.4) (0.4) (1.2) (3.9) (5.4) (5.5) (7.2) (12.7) Other adjustments - - - - (0.5) (0.5) - - - Non-GAAP selling, general and administrative expenses $94.7 $92.2 $186.9 $98.3 $98.3 $383.5 $99.5 $154.9 $254.3 GAAP research and development expenses $34.5 $33.9 $68.5 $35.4 $33.4 $137.2 $36.1 $47.8 $83.9 Acquired intangible asset amortization - - - - - - - - - Acquisition, integration and related costs - - - - - - - (0.1) (0.1) Non-GAAP research and development expenses $34.5 $33.9 $68.5 $35.4 $33.4 $137.2 $36.1 $47.8 $83.9 GAAP litigation settlements and awards $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Litigation related expenses and settlements - - - - - - - - - Non-GAAP litigation settlements and awards $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 GAAP operating expenses $131.2 $127.8 $259.0 $136.1 $137.5 $532.5 $145.0 $236.1 $381.1 Acquired tangible asset amortization - - - - - - - (2.1) (2.1) Acquired intangible asset amortization (1.0) (0.9) (1.9) (0.9) (0.9) (3.7) (0.9) (4.4) (5.3) Acquisition, integration and related costs (1.0) (0.4) (1.4) (0.3) (0.5) (2.2) (3.1) (19.7) (22.8) Litigation related expenses and settlements - (0.4) (0.4) (1.2) (3.9) (5.4) (5.5) (7.2) (12.7) Other adjustments - - - - (0.5) (0.5) - - - Non-GAAP operating expenses $129.2 $126.1 $255.3 $133.7 $131.7 $520.7 $135.6 $202.6 $338.2 GAAP operating profit $65.7 $65.1 $130.8 $67.6 $77.4 $275.8 $59.7 $22.1 $81.8 $48.1 $56.4 $210.0 $227.4 Acquired tangible asset amortization 0.1 0.1 0.3 0.1 0.1 0.5 - 48.2 48.2 8.8 8.8 59.3 59.3 Acquired intangible asset amortization 1.6 1.5 3.1 1.5 1.5 6.1 1.5 9.3 10.8 10.4 10.4 31.6 31.6 Acquisition, integration and related costs 1.0 0.9 1.9 0.3 0.8 3.1 3.1 19.7 22.9 3.6 3.6 29.5 29.5 Litigation related expenses and settlements - 0.4 0.4 1.2 3.9 5.4 5.5 7.2 12.7 1.2 1.2 15.7 15.7 Other adjustments - 3.4 3.4 - 0.5 3.9 - - - - - - - Non-GAAP operating profit $68.5 $71.4 $139.8 $70.8 $84.2 $294.8 $69.8 $106.6 $176.4 $72.1 $80.4 $346.1 $363.6 Q3 2022 Guidance (2) FY 2022 Guidance (2)

 
GAAP to Non-GAAP Reconciliations | Consolidated Income Statement (Unaudited; in millions, except per share data) (1) Q1 2021 Q2 2021 1H 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 1H 2022 Low High Low High GAAP non-operating income (expense) ($0.7) $0.1 ($0.7) ($0.1) ($0.7) ($1.4) ($0.6) $4.5 $3.9 ($9.9) ($9.9) ($16.8) ($16.8) Realized and unrealized gains or losses 0.8 0.1 0.9 0.2 0.8 1.9 0.8 (8.2) (7.4) - - (7.4) (7.4) Financing related adjustments - - - - - - - 0.6 0.6 0.5 0.5 1.5 1.5 Other adjustments - - - - - - - (0.5) (0.5) - - (0.5) (0.5) Non-GAAP non-operating income (expense) $0.1 $0.1 $0.2 $0.2 $0.1 $0.4 $0.2 ($3.6) ($3.4) ($9.4) ($9.4) ($23.2) ($23.2) GAAP provision for income taxes $11.5 $15.0 $26.5 $9.8 $8.4 $44.7 $12.5 $8.5 $21.0 $10.5 $12.7 $49.0 $53.5 Tax impact of non-GAAP adjustments 0.6 1.2 1.8 0.5 1.4 3.7 2.5 19.5 22.1 6.0 6.0 32.1 32.1 Excess tax benefits from stock-based compensation 4.3 1.3 5.6 6.4 4.4 16.4 1.7 0.2 1.9 - - 1.9 1.9 Non-GAAP provision for income taxes $16.4 $17.5 $34.0 $16.7 $14.2 $64.9 $16.8 $28.2 $45.0 $16.6 $18.8 $83.0 $87.5 GAAP net income (loss) $53.4 $50.2 $103.6 $57.8 $68.3 $229.6 $46.6 $18.1 $64.7 $27.7 $33.9 $144.2 $157.2 Acquired tangible asset amortization 0.1 0.1 0.3 0.1 0.1 0.5 - 48.2 48.2 8.8 8.8 59.3 59.3 Acquired intangible asset amortization 1.6 1.5 3.1 1.5 1.5 6.1 1.5 9.3 10.8 10.4 10.4 31.6 31.6 Acquisition, integration and related costs 1.0 0.9 1.9 0.3 0.8 3.1 3.1 19.7 22.9 3.6 3.6 29.5 29.5 Litigation related expenses and settlements - 0.4 0.4 1.2 3.9 5.4 5.5 7.2 12.7 1.2 1.2 15.7 15.7 Other adjustments - 3.4 3.4 - 0.5 3.9 - (0.5) (0.5) - - (0.5) (0.5) Realized and unrealized gains or losses 0.8 0.1 0.9 0.2 0.8 1.9 0.8 (8.2) (7.4) - - (7.4) (7.4) Financing related adjustments - - - - - - - 0.6 0.6 0.5 0.5 1.5 1.5 Tax impact of non-GAAP adjustments (0.6) (1.2) (1.8) (0.5) (1.4) (3.7) (2.5) (19.5) (22.1) (6.0) (6.0) (32.1) (32.1) Excess tax benefits from stock-based compensation (4.3) (1.3) (5.6) (6.4) (4.4) (16.4) (1.7) (0.2) (1.9) - - (1.9) (1.9) Non-GAAP net income (loss) $52.1 $54.0 $106.1 $54.3 $70.1 $230.4 $53.2 $74.8 $128.0 $46.2 $52.3 $239.9 $252.9 GAAP net income (loss) per share $0.92 $0.88 $1.80 $1.00 $1.18 $3.98 $0.81 $0.33 $1.15 $0.51 $0.63 $2.61 $2.84 Acquired tangible asset amortization 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.87 0.86 0.16 0.16 1.07 1.07 Acquired intangible asset amortization 0.03 0.03 0.05 0.03 0.03 0.11 0.03 0.17 0.19 0.19 0.19 0.57 0.57 Acquisition, integration and related costs 0.02 0.02 0.03 0.01 0.01 0.05 0.05 0.36 0.41 0.07 0.07 0.53 0.53 Litigation related expenses and settlements 0.00 0.01 0.01 0.02 0.07 0.09 0.10 0.13 0.22 0.02 0.02 0.28 0.28 Other adjustments 0.00 0.06 0.06 0.00 0.01 0.07 0.00 (0.01) (0.01) 0.00 0.00 (0.01) (0.01) Realized and unrealized gains or losses 0.01 0.00 0.01 0.00 0.01 0.03 0.01 (0.15) (0.13) 0.00 0.00 (0.13) (0.13) Financing related adjustments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.03 0.03 Tax impact of non-GAAP adjustments (0.01) (0.02) (0.03) (0.01) (0.02) (0.06) (0.04) (0.35) (0.39) (0.11) (0.11) (0.58) (0.58) Excess tax benefits from stock-based compensation (0.07) (0.02) (0.10) (0.11) (0.08) (0.28) (0.03) (0.00) (0.03) 0.00 0.00 (0.03) (0.03) Non-GAAP net income (loss) per share $0.90 $0.94 $1.84 $0.94 $1.21 $3.99 $0.93 $1.35 $2.27 $0.85 $0.97 $4.34 $4.57 Weighted average shares outstanding - Diluted 57.9 57.4 57.6 57.7 57.8 57.7 57.3 55.3 56.3 54.2 54.2 55.3 55.3 Q3 2022 Guidance (2) FY 2022 Guidance (2)

 
GAAP to Non-GAAP Reconciliations | Segment Reporting (Unaudited; in millions) (1) Q3 2022 Guidance (2) FY 2022 Guidance (2) Q1 2021 Q2 2021 1H 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 1H 2022 Low High Low High Revenue Healthcare 299.0 305.1 604.2 307.4 327.6 1,239.2 304.2 357.0 661.2 320.0 330.0 1,330.0 1,345.0 Non-Healthcare - - - - - - - 208.3 208.3 195.0 215.0 655.0 700.0 GAAP revenue $299.0 $305.1 $604.2 $307.4 $327.6 $1,239.2 $304.2 $565.3 $869.5 $515.0 $545.0 $1,985.0 $2,045.0 Gross profit Healthcare 197.7 197.5 395.2 204.5 215.9 815.5 205.4 236.7 442.1 207.3 213.7 870.9 880.7 Non-Healthcare - - - - - - - 72.5 72.5 64.2 72.9 225.0 244.6 Other (0.8) (4.6) (5.4) (0.8) (1.0) (7.2) (0.6) (51.1) (51.8) (12.0) (12.0) (69.3) (69.3) GAAP gross profit $196.9 $192.9 $389.8 $203.7 $214.9 $808.3 $204.8 $258.2 $462.9 $259.4 $274.6 $1,026.6 $1,056.0 Acquired tangible asset amortization 0.1 0.1 0.3 0.1 0.1 0.5 - 46.2 46.2 6.4 6.4 52.6 52.6 Acquired intangible asset amortization 0.6 0.6 1.2 0.6 0.6 2.4 0.6 4.9 5.5 5.6 5.6 16.7 16.7 Acquisition, integration and related costs 0.1 0.5 0.5 0.0 0.3 0.9 0.0 0.0 0.1 - - 0.1 0.1 Other adjustments - 3.4 3.4 - - 3.4 - - - - - - - GAAP adjustments $0.8 $4.6 $5.4 $0.8 $1.0 $7.2 $0.6 $51.1 $51.8 $12.0 $12.0 $69.3 $69.3 Healthcare 197.7 197.5 395.2 204.5 215.9 815.5 205.4 236.7 442.1 207.3 213.7 870.9 880.7 Non-Healthcare - - - - - - - 72.5 72.5 64.2 72.9 225.0 244.6 Other - - - - - - - - - - - - - Non-GAAP gross profit $197.7 $197.5 $395.2 $204.5 $215.9 $815.5 $205.4 $309.2 $514.6 $271.4 $286.6 $1,095.9 $1,125.3 Operating Profit Healthcare N/A N/A N/A N/A N/A N/A N/A 106.5 N/A 80.8 83.3 347.6 351.5 Non-Healthcare N/A N/A N/A N/A N/A N/A N/A 15.2 N/A 3.8 11.6 38.7 56.2 Corporate Overhead N/A N/A N/A N/A N/A N/A N/A (15.1) N/A (12.5) (14.5) (40.2) (44.2) Other N/A N/A N/A N/A N/A N/A N/A (84.5) N/A (24.0) (24.0) (136.1) (136.1) GAAP operating profit $65.7 $65.1 $130.8 $67.6 $77.4 $275.8 $59.7 $22.1 $81.8 $48.1 $56.4 $210.0 $227.4 Acquired tangible asset amortization 0.1 0.1 0.3 0.1 0.1 0.5 - 48.2 48.2 8.8 8.8 59.3 59.3 Acquired intangible asset amortization 1.6 1.5 3.1 1.5 1.5 6.1 1.5 9.3 10.8 10.4 10.4 31.6 31.6 Acquisition, integration and related costs 1.0 0.9 1.9 0.3 0.8 3.1 3.1 19.7 22.9 3.6 3.6 29.5 29.5 Litigation related expenses and settlements - 0.4 0.4 1.2 3.9 5.4 5.5 7.2 12.7 1.2 1.2 15.7 15.7 Other adjustments - 3.4 3.4 - 0.5 3.9 - - - - - - - GAAP adjustments $2.8 $6.2 $9.0 $3.2 $6.8 $19.0 $10.1 $84.5 $94.6 $24.0 $24.0 $136.1 $136.1 Healthcare N/A N/A N/A N/A N/A N/A N/A 106.5 N/A 80.8 83.3 347.6 351.5 Non-Healthcare N/A N/A N/A N/A N/A N/A N/A 15.2 N/A 3.8 11.6 38.7 56.2 Corporate Overhead N/A N/A N/A N/A N/A N/A N/A (15.1) N/A (12.5) (14.5) (40.2) (44.2) Other N/A N/A N/A N/A N/A N/A N/A - N/A - - - - Non-GAAP operating profit $68.5 $71.4 $139.8 $70.8 $84.2 $294.8 $69.8 $106.6 $176.4 $72.1 $80.4 $346.1 $363.6

 
GAAP to Non-GAAP Reconciliations | Constant Currency Revenue (Unaudited; in millions, except percentages) (1,3) Q3 2022 Guidance (2) FY 2022 Guidance (2) Q1 2021 Q2 2021 1H 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 1H 2022 Low High Low High Revenue Healthcare 299.0 305.1 604.2 307.4 327.6 1,239.2 304.2 357.0 661.2 320.0 330.0 1,330.0 1,345.0 Non-Healthcare - - - - - - - 208.3 208.3 195.0 215.0 655.0 700.0 GAAP revenue $299.0 $305.1 $604.2 $307.4 $327.6 $1,239.2 $304.2 $565.3 $869.5 $515.0 $545.0 $1,985.0 $2,045.0 Healthcare N/A N/A N/A N/A N/A N/A 4.3 6.0 10.3 10.2 10.2 30.0 30.0 Non-Healthcare N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Constant currency adjustments N/A N/A N/A N/A N/A N/A $4.3 $6.0 $10.3 $10.2 $10.2 $30.0 $30.0 Healthcare 299.0 305.1 604.2 307.4 327.6 1,239.2 308.6 363.0 671.6 330.2 340.2 1,360.0 1,375.0 Non-Healthcare - - - - - - - 208.3 208.3 195.0 215.0 655.0 700.0 Non-GAAP revenue (constant currency) $299.0 $305.1 $604.2 $307.4 $327.6 $1,239.2 $308.6 $571.3 $879.8 $525.2 $555.2 $2,015.0 $2,075.0 Healthcare N/A N/A N/A N/A N/A N/A 1.7% 17.0% 9.4% 4.1% 7.3% 7.3% 8.5% Non-Healthcare N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A GAAP revenue growth N/A N/A N/A N/A N/A N/A 1.7% 85.3% 43.9% 67.5% 77.3% 60.2% 65.0% Healthcare N/A N/A N/A N/A N/A N/A 3.2% 19.0% 11.2% 7.4% 10.7% 9.8% 11.0% Non-Healthcare N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Non-GAAP revenue growth (constant currency) N/A N/A N/A N/A N/A N/A 3.2% 87.2% 45.6% 70.8% 80.6% 62.6% 67.5% Pro Forma Revenue (4) Healthcare 299.0 305.1 604.2 307.4 327.6 1,239.2 304.2 357.0 661.2 320.0 330.0 1,330.0 1,345.0 Non-Healthcare 211.1 206.4 417.5 227.2 264.0 908.7 250.6 215.2 465.8 195.0 215.0 912.6 957.6 GAAP revenue $510.1 $511.5 $1,021.6 $534.6 $591.6 $2,147.8 $554.9 $572.2 $1,127.1 $515.0 $545.0 $2,242.6 $2,302.6 Healthcare N/A N/A N/A N/A N/A N/A 4.3 6.0 10.3 10.2 10.2 30.0 30.0 Non-Healthcare N/A N/A N/A N/A N/A N/A 7.3 12.2 19.5 23.0 23.0 70.0 70.0 Constant currency adjustments N/A N/A N/A N/A N/A N/A $11.6 $18.2 $29.8 $33.2 $33.2 $100.0 $100.0 Healthcare 299.0 305.1 604.2 307.4 327.6 1,239.2 308.6 363.0 671.6 330.2 340.2 1,360.0 1,375.0 Non-Healthcare 211.1 206.4 417.5 227.2 264.0 908.7 257.9 227.4 485.3 218.0 238.0 982.6 1,027.6 Non-GAAP revenue (constant currency) $510.1 $511.5 $1,021.6 $534.6 $591.6 $2,147.8 $566.5 $590.5 $1,156.9 $548.2 $578.2 $2,342.6 $2,402.6 Healthcare N/A N/A N/A N/A N/A N/A 1.7% 17.0% 9.4% 4.1% 7.3% 7.3% 8.5% Non-Healthcare N/A N/A N/A N/A N/A N/A 18.7% 4.3% 11.6% -14.2% -5.4% 0.4% 5.4% GAAP revenue growth N/A N/A N/A N/A N/A N/A 8.8% 11.9% 10.3% -3.7% 1.9% 4.4% 7.2% Healthcare N/A N/A N/A N/A N/A N/A 3.2% 19.0% 11.2% 7.4% 10.7% 9.8% 11.0% Non-Healthcare N/A N/A N/A N/A N/A N/A 22.2% 10.2% 16.3% -4.1% 4.7% 8.1% 13.1% Non-GAAP revenue growth (constant currency) N/A N/A N/A N/A N/A N/A 11.1% 15.4% 13.2% 2.5% 8.1% 9.1% 11.9% (1) Totals may not foot due to rounding. Quarterly reported amounts may vary from amounts previously reported due to rounding conventions. (3) Constant currency adjustments are intended to reflect current year revenue at prior year foreign exchange rates for comparison purposes. (4) Represents pro forma financial information, which is being provided for year-over-year comparison purposes only. Pro forma financial information includes historical results for the acquired Sound United business prior to the transaction date on April 11, 2022. (2) Updated for guidance provided on August 9, 2022

 
The non-GAAP financial measures reflect adjustments for the following items, as well as the related income tax effects thereof, as these items may impact period-to-period comparability; furthermore, management also believes that these items are not indicative of the Company’s on-going core operating performance: Constant currency revenue adjustments: Some of our sales agreements with foreign customers provide for payment in currencies other than the U.S. Dollar. These foreign currency revenues, when converted into U.S. Dollars, can vary significantly from period-to-period depending on the average and quarter-end exchange rates during a respective period. We believe that comparing these foreign currency denominated revenues by holding the exchange rates constant with the prior year period is useful to management and investors in evaluating our revenue growth rates on a period-to-period basis. We anticipate that fluctuations in foreign exchange rates and the related constant currency adjustments for calculation of our revenue growth rate will continue to occur in future periods. Acquired tangible asset amortization: These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired tangible assets and asset valuation step-ups. Acquired intangible asset amortization: These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired intangible assets including, but not limited to customer relationships, intellectual property, trade names and non-competition agreements. Acquisition, integration and related costs: These transactions represent gains, losses, and other related costs associated with acquisitions, integrations, investments and divestitures, including but not limited to, asset impairments and in-process research and development. Litigation related expenses, settlements and awards: These transactions represent gains, losses, and other related costs associated with certain litigation matters, which can vary in their characteristics, frequency and significance to our operating results. Other adjustments: In the event there are gains, losses and other adjustments which impact period-to-period comparability and do not represent the underlying ongoing results of the business, the Company may choose to exclude these from non- GAAP earnings. Realized and unrealized gains or losses: These transactions represent gains, losses, and other related costs associated with foreign currency denominated transactions and investments. Changes in the underlying currency rates relative to the U.S. Dollar may result in realized and unrealized foreign currency gains and losses between the time these receivables and payables arise and the time that they are settled in cash. Unrealized and realized gains and losses on investments may impact the Company’s reported results of operations for a period. These items are highly variable, difficult to predict and outside the control of those responsible for the underlying operations of the business. Other items also included here are mark-to-market gains and losses of derivative contracts that are not designated as hedging instruments or the ineffective portions of cash flow hedges. Financing related adjustments: The Company may enter into various financial arrangements whereby costs are incurred and certain instrument features are valued and expensed accordingly but are not necessarily indicative of the on-going cash flow generation of the Company and therefore excludes these costs from non-GAAP earnings. For GAAP earnings per diluted share purposes, the Company cannot reflect the anti-dilutive impact, if applicable, in its diluted shares calculations. However, the Company believes that reflecting the anti-dilutive impact of these instruments in non-GAAP earnings per diluted share provides management and investors with useful information in evaluating the financial performance of the Company on a per share basis. Tax impact of non-GAAP adjustments: In order to reflect the tax effected impact of the non-GAAP adjustments, the Company will adjust the non-GAAP earnings by the approximate tax impact of these adjustments. Excess tax benefits from stock-based compensation: GAAP requires that excess tax benefits recognized on stock-based compensation expense be reflected in our provision for income taxes rather than paid-in capital. As these excess tax benefits may be highly variable from period-to-period, the Company may choose to exclude these tax benefits from non-GAAP earnings to facilitate comparability between periods and with peers. Description of Non-GAAP Adjustments

 
© 2019 Masimo Non-GAAP Measures, Adjustments and Definitions Revised August 9, 2022

 
© 2019 Masimo Forward-Looking Statements Masimo Corporation (“Masimo”, “MASI”, or the “Company”) cautions you that statements included in this presentation that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause the Company’s results to differ materially and adversely from historical results or those expressed or implied by such forward-looking statements. Further information on Masimo’s disclaimer and forward-looking statements and the potential risks and uncertainties that could cause actual results to differ materially are more fully described in the Company’s press releases and periodic filings with the Securities and Exchange Commission.

 
© 2019 Masimo The Company uses certain non-GAAP financial measures such as constant currency product revenue growth, non-GAAP gross profit/margin percentage, non-GAAP SG&A expense percentage, non-GAAP R&D expense percentage, non-GAAP operating income/margin percentage, non-GAAP provision for income taxes/tax rate, non-GAAP net income, non-GAAP net income per diluted share, adjusted EBITDA and adjusted free cash flow. These non-GAAP financial measures may include certain adjustments related to the following items: > Constant currency revenue adjustments > Acquisition, integration and related costs > Acquired tangible asset amortization > Acquired intangible asset amortization > Litigation related expenses, settlements and awards > Business transition and related costs > Realized and unrealized gains or losses > Financing related adjustments > Tax impact of non-GAAP adjustments > Tax events > Excess tax benefits from stock-based compensation expense > Other adjustments Non-GAAP Measures & Adjustments

 
© 2019 Masimo Non-GAAP Measures & Adjustments (continued) The Company also uses non-GAAP liquidity measures such as adjusted free cash flow, which excludes certain cash items related to the foregoing that may impact period-to-period comparability, and adjusted EBITDA, which excludes non-cash stock-based compensation expense. The Company uses these non-GAAP financial measures to enable it to further and more consistently analyze the period-to-period financial performance and liquidity of its core business operations, which are generally designated as “non-GAAP” measures herein. Management believes that providing investors with these non-GAAP financial measures gives investors additional information to enable them to assess, in the same way management assesses, the Company’s current and future core operating performance. These non-GAAP financial measures have certain limitations in that they do not reflect all of the costs and expenditures associated with the operations of the Company’s business as determined in accordance with GAAP. Therefore, investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies. Reconciliations of the non-GAAP financial measures to the nearest comparable GAAP financial measures can be found on the Investor Relations section of the Company’s website.

 
© 2019 Masimo Non-GAAP Definitions > Constant currency revenue adjustments ▪ Some of our sales agreements with foreign customers provide for payment in currencies other than the U.S. Dollar. These foreign currency revenues, when converted into U.S. Dollars, can vary significantly from period-to-period depending on the average and quarter-end exchange rates during a respective period. We believe that comparing these foreign currency denominated revenues by holding the exchange rates constant with the prior year period is useful to management and investors in evaluating our revenue growth rates on a period-to-period basis. We anticipate that fluctuations in foreign exchange rates and the related constant currency adjustments for calculation of our revenue growth rate will continue to occur in future periods. > Acquisition, integration and related costs ▪ These transactions represent gains, losses, and other related costs associated with acquisitions, integrations, investments, divestitures, assets impairments, and in-process research and development. > Acquired tangible asset amortization ▪ These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired tangible assets and asset valuation step-ups. > Acquired intangible asset amortization ▪ These transactions represent amortization expense in connection with business or assets acquisitions associated with acquired intangible assets including, but not limited to customer relationships, intellectual property, trade names and non- competition agreements.

 
© 2019 Masimo Non-GAAP Definitions (continued) > Litigation related expenses, settlements and awards ▪ These transactions represent gains, losses, and other related costs associated with certain litigation matters, which can vary in their characteristics, frequency and significance to our operating results. > Business transition and related costs ▪ These transactions represent gains, losses, and other related costs associated with business transition plans. These items may include but are not limited to severance, relocation, consulting, leasehold exit costs, asset impairment, and other related costs to rationalize our operational footprint and optimize business results. > Realized and unrealized gains or losses ▪ These transactions represent gains, losses, and other related costs associated with foreign currency denominated transactions and investments. Changes in the underlying currency rates relative to the U.S. Dollar may result in realized and unrealized foreign currency gains and losses between the time these receivables and payables arise and the time that they are settled in cash. Unrealized and realized gains and losses on investments may impact the Company’s reported results of operations for a period. These items are highly variable, difficult to predict and outside the control of those responsible for the underlying operations of the business. Other items also included here are mark-to-market gains and losses of derivative contracts that are not designated as hedging instruments or the ineffective portions of cash flow hedges.

 
© 2019 Masimo Non-GAAP Definitions (continued) > Financing related adjustments ▪ The Company may enter into various financial arrangements whereby costs are incurred and certain instrument features are valued and expensed accordingly but are not necessarily indicative of the on-going cash flow generation of the Company and therefore excludes these costs from non-GAAP earnings. For GAAP earnings per diluted share purposes, the Company cannot reflect the anti-dilutive impact, if applicable, in its diluted shares calculations. However, the Company believes that reflecting the anti-dilutive impact of these instruments in non-GAAP earnings per diluted share provides management and investors with useful information in evaluating the financial performance of the Company on a per share basis. > Tax impact of non-GAAP adjustments ▪ In order to reflect the tax effected impact of the non-GAAP adjustments, the Company will adjust the non-GAAP earnings by the approximate tax impact of these adjustments. > Tax events ▪ This represents certain tax events that impact period over period comparability and do not represent the underlying ongoing results of the core operations. The Company may choose to exclude these tax events from non-GAAP earnings. > Excess tax benefits from stock-based compensation expense ▪ GAAP requires that excess tax benefits recognized on stock-based compensation expense be reflected in our provision for income taxes rather than paid-in capital. As these excess tax benefits may be highly variable from period-to-period, the Company may choose to exclude these tax benefits from non-GAAP earnings to facilitate comparability between periods and with peers.

 
© 2019 Masimo Non-GAAP Definitions (continued) > Adjusted free cash flow ▪ Represents free cash flow (cash flow from operations less cash used in the purchase of property, plant and equipment) adjusted for the impact of cash receipts or payments relating to certain previously described non-GAAP adjustments, which may impact period-to-period comparability. > Adjusted EBITDA ▪ Represents earnings before non-operating income/expense, taxes, depreciation and amortization, as adjusted for the applicable non-GAAP adjustments previously described, and further excluding non-cash stock-based compensation expense. > Other adjustments ▪ In the event there are gains, losses and other adjustments which impact period-to-period comparability and do not represent the underlying ongoing results of the business, the Company may choose to exclude these from non-GAAP earnings.