MASI Q3 Deep Dive: Margin Expansion and Product Pipeline Shape Outlook

November 05, 2025 at 08:38 AM EST

MASI Cover Image

Medical tech company Masimo (NASDAQ: MASI) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 8.2% year on year to $371.5 million. The company expects the full year’s revenue to be around $1.52 billion, close to analysts’ estimates. Its non-GAAP profit of $1.32 per share was 10.3% above analysts’ consensus estimates.

Is now the time to buy MASI? Find out in our full research report (it’s free for active Edge members).

Masimo (MASI) Q3 CY2025 Highlights:

Revenue: $371.5 million vs analyst estimates of $366.5 million (8.2% year-on-year growth, 1.4% beat)
Adjusted EPS: $1.32 vs analyst estimates of $1.20 (10.3% beat)
Adjusted EBITDA: $109.3 million vs analyst estimates of $111.4 million (29.4% margin, 1.9% miss)
The company reconfirmed its revenue guidance for the full year of $1.52 billion at the midpoint
Management raised its full-year Adjusted EPS guidance to $5.71 at the midpoint, a 7.1% increase
Operating Margin: 22.5%, up from 11.1% in the same quarter last year
Constant Currency Revenue rose 7.6% year on year (5.4% in the same quarter last year)
Market Capitalization: $8.09 billion

StockStory’s Take

Masimo’s third quarter results for 2025 were met with a significant negative market reaction, despite the company surpassing Wall Street’s revenue and adjusted profit expectations. Management attributed the quarter’s topline performance to robust contracting activity, with CEO Catherine Szyman highlighting “strong underlying demand” for Masimo’s healthcare technologies and an 8% year-on-year increase in shipments of technology boards and monitors. CFO Micah Young emphasized that margin expansion was primarily driven by operational improvements and cost efficiencies, partially offset by tariff-related headwinds. The company also closed the divestiture of Sound United, which provided capital for share repurchases and debt reduction.

Looking ahead, Masimo’s updated guidance relies on accelerating consumables growth, expanded commercial partnerships, and the launch of next-generation monitoring products. Management pointed to the expansion of the Philips partnership and upcoming releases of AI-enabled smart sensors as key contributors to future performance. CFO Micah Young stated, “We expect a very strong finish in the fourth quarter with increased shipments in consumables,” while Szyman noted that ongoing investment in intelligent monitoring and wearables will be central to sustaining long-term growth. The company aims to leverage these initiatives to drive recurring revenue and support continued operating margin improvements.

Key Insights from Management’s Remarks

Management cited robust contract wins, ongoing margin expansion, and new product initiatives as central to third quarter performance and guidance.

Contracting momentum: Masimo reported a 48% year-over-year increase in new contract value, marking its strongest third quarter for contracting. This was attributed to the U.S. commercial team’s performance and is expected to drive future consumables growth as new installations come online.
Operational efficiency: Margin gains were driven by cost optimization measures implemented over the past year. Operating margin improved despite $5 million in tariff-related costs, which eroded gross margin but were offset by process improvements and scale.
Sound United divestiture: The sale of its consumer audio business to Harman generated $328 million in proceeds, which Masimo used for debt repayment and share repurchases, returning $350 million to shareholders and strengthening its balance sheet.
Advanced monitoring acceleration: Management highlighted wins in categories like capnography and hemodynamics, which are benefiting from a realigned, regionally focused salesforce and cross-selling initiatives. These specialty categories are seeing growth rates targeted in the double digits.
AI and wearable innovation: Masimo is advancing its intelligent monitoring initiatives, with upcoming launches of AI-enabled sensors for opioid-induced respiratory depression detection and next-generation wearable products under pilot at major institutions. Management expects these to support clinical outcomes and generate new revenue streams.

Drivers of Future Performance

Masimo’s outlook for the remainder of the year is shaped by accelerating consumables growth, expansion of strategic partnerships, and the commercial rollout of new AI-enabled monitoring products.

Consumables growth rebound: Management expects consumables revenue to accelerate in the fourth quarter, driven by contract wins and the normalization of year-over-year comparisons after challenging prior periods. CFO Micah Young highlighted an anticipated “strong finish” as large international contracts contribute to higher shipments.
Strategic partnership expansion: The expanded collaboration with Philips is expected to increase Masimo’s share in the Philips installed base, particularly for advanced sensor categories. CEO Catherine Szyman noted that Masimo remains “under-indexed” in this channel and sees significant runway to grow its presence over the next five years.
Product innovation pipeline: The company is preparing to launch next-generation smart sensors and AI-driven monitors, including hospital-based solutions for opioid-induced respiratory depression. These products are expected to meet new regulatory requirements and support recurring revenue growth, with pilots underway in major U.S. and international institutions.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) the pace of consumables revenue acceleration and contract pull-through, (2) progress in expanding Masimo’s share within the Philips installed base, and (3) execution of new AI-enabled product launches and regulatory milestones. Updates on the commercial rollout of wearable monitoring solutions and additional strategic partnerships will also be important markers for assessing long-term growth potential.

Masimo currently trades at $144.69, down from $148.97 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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