Masimo's Q1 2024 Contracts Surge

Masimo, a leading medical technology company, has presented its investor presentation for June 2024, highlighting several key aspects of its financial performance and future prospects.

The company's healthcare business is on track for growth, with the incremental value of new contracts consistently increasing over the years. In Q1 2024, the incremental value of new contracts reached $1.508 billion, more than doubling any previous first quarter period from 2017 to 2022. Additionally, the unrecognized contract revenue reached $1.5 billion in Q1 2024, representing an 11% increase over Q1 2023.

The total consumable and service revenue has shown strong growth, averaging 10% per year since 2017. Notably, SET pulse oximetry consumable revenues have grown 8% per year, consistently taking market share. Furthermore, consumable revenues for Masimo’s high-growth categories, including rainbow & hemodynamics, capnography & gas, and brain monitoring, have individually and collectively grown more than 20% per year.

Masimo's driver installed base has increased by 60% from 1.6 million drivers in 2017 to 2.6 million as of Q1 2024. Moreover, consumable revenue per driver has experienced growth from pre-COVID levels, driven by strong utilization and increasing adoption of premium rainbow™ sensors.

The company is pursuing a potential separation that would result in two separate companies – consumer and professional healthcare. This move aims to maximize shareholder value and provide both entities with the best path for success. The professional healthcare business is targeted to achieve an operating margin of 23.2% to 24.8% post-separation in 2024, with a goal of reaching a 30% operating margin over the next five years.

Masimo's aggressive focus on expanding its footprint with existing customers and winning new customers has laid a solid foundation for resuming strong growth in the professional healthcare business. The company is aiming for high-single-digit organic revenue growth in 2024, supported by its record contracting in 2023 and Q1 2024.

These figures and objectives outlined in the presentation indicate Masimo's commitment to driving growth and improving its financial performance in the coming years. The market has reacted to these announcements by moving the company's shares -4.0% to a price of $130.39. Check out the company's full 8-K submission here.

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