Masimo Moves Forward from Boardroom Drama

Masimo appears to be moving forward after a long and litigious proxy war that ended with founder Joe Kiani being ousted from the board in September and resigning as CEO.

The Irvine, CA-based company still has Kiani’s lawsuit to contend with, but so far, the threat of business disruptions and a mass exodus of engineers has not played out.

Instead, the management team seems focused on optimizing its product portfolio and resources, rightsizing corporate overhead costs, and searching for a permanent CEO.

“I've been very clear that my intention is to guide the company through this initial transition period until a permanent CEO is found and then continue to focus on contributing as a member of the board for the long term,” said Michelle Brennan, the company’s interim CEO. “I'm not going to commit to the exact timing of the search process, but I can say that getting a permanent CEO in place is a top priority for the board. We have Korn Ferry assisting us, and the board is already meeting with excellent candidates.”

Brennan said the board is looking at both internal and external candidates with a medtech background.

“We would like to have a balance of operational as well as technical or experience in refreshing pipelines. We want to make sure that the fit is really good with the culture that is here at Masimo because we have a very strong culture of innovation-focused and a family-type of atmosphere,” she said. “So, we want to make sure that the new CEO will come in and hit the ground running and really is the right person for the long term.”

Related:Joe Kiani’s Tumultuous End at Masimo

In the meantime, things appear to be running more smoothly now that the proxy battle with Politan Capital Management is in the rearview.

“While our foremost focus is on innovation-driven growth, we are also happy to see our margins expand as we rightsize corporate overhead costs, drive improved gross margin, reduce marketing expenses associated with products that do not show promise of generating meaningful revenue, and take other reasonable cost actions on items unrelated to our top-line growth, such as selling the corporate jet, among other things,” CFO Micah Young said during the company’s third-quarter earnings call Tuesday, according to SeekingAlpha transcripts of the call. “It is still early, and our work is ongoing. But as we look forward to 2025, we believe actions identified to date will deliver at least 200 basis points of additional operating margin, while we continue to deliver on our long-term revenue growth expectations.”

Related:Masimo Management Walks a Fine Line Between Cooperation and Coercion

Among the products that the company has “deemphasized” is the Opioid Halo, a wearable designed to monitor patients on opioids at home, as well as Bridge, a therapeutic device designed to make it less painful for patients to come off opioids, COO Bilal Muhsin said.

Masimo will also be discontinuing feasibility studies on non-invasive monitoring of cancer, bilirubin, and diabetes. Brennan said the company had not made the progress it expected in bringing those products to market.

Young said Masimo still has products that are being used to monitor opioid use in a hospital setting.

“I want to make sure that's clear, that those products will still be very, very important for the business as we're in the hospital. It's just as we think about the remote monitoring, especially of illicit users, those types of things, that's where we think it's a much more challenging pathway,” he said.