Earning Preview: Masimo revenue is expected to decrease by 31.08%, and institutional views are cautious
Abstract
Masimo Corporation will report fiscal fourth-quarter 2025 results after market close (Post Market) on February 26, 2026, with investors watching revenue cadence, margin consistency relative to the prior quarter, and management commentary amid an announced cash acquisition by Danaher at $180 per share.Market Forecast
Consensus modeling and Masimo Corporation’s internal projections point to fiscal Q4 revenue around 408.31 million US dollars, down 31.08% year over year, and adjusted EPS of approximately 1.48, up 3.77% year over year; the company has preliminarily indicated fiscal Q4 revenue near 411.00 million US dollars and adjusted EPS above 1.54. Forecasted EBIT is 111.02 million US dollars, with an estimated year-over-year increase of 1.27%; margin forecasts for the quarter are not provided, so they are omitted.Masimo Corporation’s core healthcare monitoring franchise remains the centerpiece of the quarter, with stability driven by recurring utilization and installed-base activity. Within the revenue mix, the healthcare segment generated 371.20 million US dollars last quarter, and, given its contribution is approximately 99.92% of total sales, its year-over-year change effectively mirrors the consolidated trend at negative 26.44%.
Last Quarter Review
Masimo Corporation delivered fiscal third-quarter results featuring revenue of 371.20 million US dollars, a gross profit margin of 62.07%, GAAP net profit attributable to shareholders of negative 100.00 million US dollars, a net profit margin of negative 27.03%, and adjusted EPS of 1.32, which increased 34.69% year over year.The quarter’s operational performance included a modest top-line surprise of 4.35 million US dollars versus revenue estimates and an adjusted EPS beat of 0.12, while GAAP net profit declined quarter on quarter at a rate of negative 295.71% due to items that weighed on reported profitability. The healthcare segment contributed 371.20 million US dollars in revenue; because it accounted for about 99.92% of the mix, its year-over-year change effectively tracked consolidated performance at negative 26.44%.
Current Quarter Outlook
Main business drivers
The near-term setup for Masimo Corporation’s core healthcare monitoring operations is anchored by the company’s preliminary fiscal fourth-quarter outlook of approximately 411.00 million US dollars in revenue and non-GAAP EPS above 1.54. That pre-announcement effectively frames the top-line and earnings cadence for the quarter, suggesting sequential growth from fiscal Q3’s 371.20 million US dollars as orders close out the year and recurring utilization supports the consumable and sensor run-rate. Without explicit margin guidance, investors will look to last quarter’s 62.07% gross margin as the reference point, with mix dynamics—hardware placements versus recurring sensors—likely to influence whether margins expand or contract modestly around that level.On earnings, the external consensus of approximately 1.48 for adjusted EPS, up 3.77% year over year, sits slightly below management’s preliminary “above 1.54” indication, setting up a potential positive variance relative to street expectations if the company’s internal figure holds. EBIT is forecast at 111.02 million US dollars, reflecting a 1.27% year-over-year increase; this modest EBIT growth alongside a double-digit revenue decline implies tighter cost control and incremental operating efficiencies diluting part of the top-line pressure. Taken together, the street’s framework and the preliminary guide highlight a quarter where operational execution offsets part of the external demand headwinds implied by the negative revenue year-over-year comparison.
From a cash-generation perspective, fourth-quarter dynamics typically hinge on working-capital cycles and the timing of receivables tied to health-system procurements. While the company has not provided specific cash-flow targets for the quarter, the combination of sequential revenue growth from fiscal Q3 and ongoing cost discipline should underpin healthy operating leverage in non-GAAP results—even as GAAP profitability last quarter was negatively affected, as reflected in the negative 27.03% net margin. Investors will parse commentary for clarity on mix, pricing, and any non-recurring costs contributing to GAAP-versus-non-GAAP divergence.
Most promising business this quarter
Masimo Corporation’s healthcare segment is the centerpiece in the current quarter, having delivered 371.20 million US dollars in fiscal Q3 and effectively mirroring the consolidated year-over-year decline of 26.44% given its approximately 99.92% contribution to revenue. The fourth quarter’s pre-announced revenue near 411.00 million US dollars indicates sequential acceleration in this segment’s contribution, a pattern consistent with year-end purchasing cycles and ongoing utilization of consumables and sensors in the installed base. That sequential dynamic is noteworthy because it suggests improved throughput while the year-over-year comparison remains pressured, likely reflecting macro procurement pacing and the prior-year base.Within the healthcare segment, revenue durability generally hinges on recurring-use products tethered to patient monitoring usage in hospital settings, plus incremental upgrades and replacement cycles. For the fourth quarter, the topline guide indicates that recurring volume, supported by utilization in acute-care environments, is expected to backfill part of the weakness implied by the year-over-year decline. If consumables maintain stable pricing and volume, the aggregate margin profile of the segment could remain close to last quarter’s 62.07% gross margin, albeit with variations based on product mix and end-customer purchasing behavior.
The segment’s potential to outperform consensus in the quarter depends on two observable factors: the magnitude of year-end orders and the mix shift toward higher-margin recurring items. Because management’s preliminary EPS guide is above street estimates, it implicitly supports the thesis that product mix and cost controls can deliver a better-than-consensus earnings result even as reported revenue growth is negative year over year. In any scenario, the most promising near-term lever remains the healthcare segment’s recurring revenue streams, which tend to steady performance through cycles of capital expenditure variability.
Factors most impacting the stock price this quarter
The dominant factor near term is the agreed cash acquisition of Masimo Corporation by Danaher at 180.00 US dollars per share, which reshapes the equity’s trading profile around deal certainty, timeline, and regulatory clearance rather than standalone operational beats or misses. In such circumstances, the stock typically trades in a spread relative to the takeout price, and earnings-day volatility can be dampened unless results meaningfully alter the perceived risk to closing. Analyst actions since mid-February reflect this dynamic, with several firms shifting to neutral or no-rating stances, emphasizing the transaction as the key driver.Earnings on February 26, 2026 will still matter for two reasons. First, results that are consistent with the preliminary guidance of approximately 411.00 million US dollars in revenue and adjusted EPS above 1.54 can reinforce the business’s stability heading into the merger process, which can modestly compress the deal spread. Second, any deviation—such as weaker margins or unexpected GAAP items—could widen the spread if it introduces questions about near-term cash generation or potential covenants, even if the headline purchase price is fixed. That said, the reliance on non-GAAP metrics in investor framing points to underlying operational performance being the primary lens for earnings interpretation.
Regulatory and procedural milestones will be tracked closely after earnings, including filings and any indicated timeline to close. Commentary from Masimo Corporation about integration planning and reporting cadence until the transaction’s completion can also influence investor sentiment. Meanwhile, consensus expectations for the quarter—408.31 million US dollars in revenue and 1.48 in adjusted EPS—sit slightly below the company’s preliminaries; a reaffirmation or beat could shift the narrative from “deal-only” to “deal-plus-operational resilience,” which helps explain why neutral ratings have not translated into outright negative price targets, with several institutions effectively anchoring views around 180.00 US dollars due to the offer.
Analyst Opinions
The majority of recently collected views since January 1, 2026 are cautious or neutral, skewed by the announced acquisition and rating changes that emphasize deal execution over standalone fundamentals. Wells Fargo downgraded Masimo Corporation to Hold with a 180.00 US dollars price target, aligning with the takeout price and signaling an expectation that shares trade around the transaction valuation rather than through it on fundamentals alone. BTIG downgraded Masimo Corporation to Neutral from Buy, reflecting the shift in investment framework to a merger-arbitrage profile, and highlighting that near-term upside is constrained by the fixed offer level despite a supportive operational backdrop.Additional commentary noted that some institutions moved to No Rating following the transaction announcement, consistent with standard practice when coverage prioritizes fundamental valuation work that becomes less relevant under an agreed cash acquisition. FactSet data cited in market reports indicated the average rating at Hold with a mean price target around 178.00 US dollars, positioning the outlook as cautious relative to the 180.00 US dollars offer and consistent with typical deal-risk haircuts pending closing. Across these views, the emphasis is not on sell-side downgrades driven by deteriorating operations but on reclassifying the stock’s near-term risk-reward under merger conditions.
From an analytical perspective, the dominant neutral stance stems from three core points. First, with the offer at 180.00 US dollars per share in cash, upside is capped unless competing bids appear or the board updates terms—events that are not currently indicated. Second, earnings catalysts, while relevant, are secondary in the immediacy of the transaction and function more as validation of operational continuity than a route to price discovery beyond the offer. Third, deal execution risk—encompassing regulatory review, procedural timelines, and potential closing conditions—introduces a modest discount in price targets and ratings that prefer to wait for clarity.
In sum, the balance of opinions is majority cautious/neutral, and that view is grounded in the mechanics of the cash offer, validated by rating shifts to Hold or Neutral and a price-target convergence around the 178.00–180.00 US dollars range. The upcoming earnings event can contribute to incremental confidence if Masimo Corporation aligns with or exceeds its preliminary guidance of approximately 411.00 million US dollars in revenue and adjusted EPS above 1.54, yet, given the transaction framework, most institutions anticipate movements to be contained within typical merger-arbitrage spreads rather than driven by fundamental reratings.
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