Masimo shares surge on plans of spinning off consumer division

Shares surge: Masimo Corp is considering spinning off its consumer business, which includes consumer health and audio products.

Shares of the company surged 13 per cent in extended trading after news of the potential spin off came out.

Masimo, which manufactures medical devices like pulse oximeters has also ventured into consumer markets with products such as baby monitors and smartwatches under its own brand.

In a move that initially startled investors, the company expanded its portfolio by acquiring audio products manufacturer Sound United LLC for $1 billion in 2022. This acquisition was met with skepticism, resulting in a 37 per cent drop in Masimo’s share price and a $5 billion decrease in market value.

Following this, Quentin Koffey’s Politan Capital Management acquired a 9 per cent stake in Masimo, aiming to encourage the company towards implementing significant changes.

In response to these developments, Masimo has declared its intention to retain its healthcare and telehealth offerings while considering the spinoff to enhance the profitability of its healthcare business.

Joe Kiani, the current CEO, is expected to continue leading the company and is also slated to assume the position of chairman for the potential new entity arising from the spinoff. Masimo, based in Irvine, California, aims to complete this separation as promptly as possible.

This announcement comes amid Masimo’s ongoing legal battle with Apple, in which Masimo accuses the tech giant of misappropriating trade secrets for blood-oxygen reading technology used in its watches and infringing on Masimo’s patents.

(With Reuters Inputs)