Masimo CEO Ousted from the Board

Joe Kiani founded Masimo in 1989, growing the company from a literal garage startup into a public patient monitoring company that posted $2 billion in revenue last year. Now, Kiani's position as CEO at the Irvine, CA-based company is in jeopardy, and he has been ousted from the board.

After a long and litigious proxy war, Masimo shareholders elected both of New York, NY-based Politan Capital Management’s nominees. This is the second proxy battle Politan has won against Masimo in as many years. Last year shareholders elected Michelle Brennan and Quentin Koffey. This year’s vote puts Darlene Solomon and William Jellison on Masimo’s board. Politan is a 9% shareholder of Masimo.

Solomon, Jellison, Brennan, and Koffey issued a joint statement about the outcome of the vote, but it does little to answer the many questions undoubtedly on stakeholders’ minds.

“While each of us is independent and brings our own unique perspectives, we are united in our enthusiasm for Masimo’s future as a leading, innovation-focused growth company,” the activist-nominated board members said. “We look forward to meeting with, learning from, and working together with the healthcare and consumer employees to make Masimo an even greater company. We would also like customers to know that we will be completely focused on preventing any disruption to their service and support. We will have more to share soon.”

Masimo investors have many questions

As Politan now has four of six board seats and Kiani has been ousted from the board of his own company, investors have many questions about what happens now. Marie Thibault, a medtech analyst at BTIG, shared several such questions in a report this morning:

Thibault wrote in her report Friday morning that the activist’s focus on a separation of the consumer business and improving profit margins are in line with BTIG’s “buy” thesis on Masimo’s stock. Previously, the analyst has noted that the firm’s “buy” thesis on Masimo is predicated on “Looking past this summer’s noise and focusing on a business that is returning to consistent beats-and-raises, generating cash, and improving margins.”

“Seeing [Masimo] achieve consistency in commercial execution and communicating detailed plans and timelines will be key to maintaining our positive outlook,” Thibault wrote. “Over the coming months, we think a resolution on the corporate governance issues that led to this proxy vote and calmer seas could allow some investors to take another look at the [Masimo] story.”