The long Masimo drama has a Hollywood Ending, at least for shareholders. The sale announced on Tuesday 17 February is a rich one–$180 per share, cash. (Masimo was trading in the ~$130/share range last week, making this a close to 40% boost.). Both boards have approved the transaction, expected to close in H2 2026. At that time, Irvine California-based Masimo, which specializes in pulse oximetry and patient monitoring devices, will operate as a standalone company within Danaher’s Diagnostics segment along with Radiometer (blood analysis), Leica Biosystems, Cepheid, and Beckman Coulter Diagnostics. Danaher, based in Washington, DC, has not made any transitional management announcements. It is subject to the usual regulatory review and a formal Masimo shareholder vote.
For those who like to run the numbers, Danaher claims it is paying “18x estimated 2027 EBITDA, or 15x 2027 estimated EBITDA including the full benefit of expected annual synergies. Masimo is expected to generate EBITDA of more than $530 million in 2027.” It is being financed with cash on hand and debt financing–no share payouts or contingencies. It expands the Danaher Diagnostics portfolio into pulse oximetry. Still, it came as a surprise to industry analysts such as JP Morgan and puts it up against industry giant Medtronic, according to Reuters.
Masimo had considered other partners prior to Danaher, but apparently kept it well under wraps. This ends a roller coaster ride that started in 2022, and included a Bad Buy, patent infringement lawsuits, topped by a messy proxy fight. A guide to what transpired:
- A not-quite-all-there diversion into consumer health monitoring devices including watches. Masimo extended their patents into devices, which could be broadly understood, but then initiated a flurry of legal actions against Apple. Consumer health, interestingly, was then used to justify the Sound United buy.
- Founder/now-former CEO Joe Kiani then diverted into consumer audio with Sound United, at a cost of over $1 billion. Sound United was a catchall of major higher-end brands such as Polk and Denon. Shareholders revolted, cracking Masimo’s market cap by roughly $5 billion. The mistake was corrected last year with a sale to Samsung’s HARMON division for $350 million, a loss of over 60%. [TTA 7 May 2025]
- Joe Kiani’s closely-held management of the company and board was soon challenged by activist investor Politan Capital. The proxy fight in September 2024 wasn’t even close, with the Kiani director slate losing big with shareholders. Kiani, a friend to former president Biden, was booted out of his 35-year directorship and CEO spot before the election and tied up with legal actions.
- Late last April, their websites and systems for manufacturing and operations were brought down with a major cyberattack. With great irony, it struck right at the time of the annual shareholder meeting. Weeks later, their websites for both US and Canada were still disorganized.
- The court battles continue. In the Federal Central Court of California, Masimo’s suit was approved to proceed before Labor Day 2025. This charged ’empty voting’ conspiracy and collusion between Kiani and shareholder RTW Investments in the proxy fight. Apparently Masimo earlier dropped the charges against Kiani but the court upheld them. MPO Other lawsuits by Kiani center on his severance package and dismissal. The SEC in late 2024 announced an investigation of RTW’s involvment in the ’empty voting’ scheme, but as of today there is no update on its status.
- Last November, Masimo scored a solid win in Federal Court when a jury awarded them $634 million of Apple’s money, The infringment was made by features in the Apple Watch’s workout mode and heart rate notifications. Of course, Apple plans to appeal based on the 2022 patent expiry. There is also a separate International Trade Commission (ITC) action banning Apple from importing the Apple Watch 9 and Ultra 2. For Masimo, an additional insult upon injury is that Masimo also accused Apple of hiring away key employees. Reuters
For Politan, known as a ‘take no prisoners’ activist investor, this is a major success–to take over, turn around a troubled company in approximately two years, and sell it profitably to a large company like Danaher. Danaher also buys it with Politan firmly in control, happy shareholders, and nearly all the soap opera wrapped up or due to soon. Masimo CEO Katie Szyman has a track record of smoothly transitioning smaller companies to larger ones, for instance her previous two companies, Edwards Lifesciences to BD. Masimo’s chair, Michelle Brennan, is retired from a senior global management post at J&J. Not bad for a year’s work. TTA 22 Jan 2025
This is quite unlike the rolling troubles Politan Capital has at its other big healthcare investment, Centene.
MedTech Dive. Danaher release. TTA’s back file on Masimo, starting in 2023, is here.
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