MASI

Masimo ($MASI) Insiders Buy Aggressively Amid Stock Decline, Healthcare Focus Strategy Post-Restructuring Draws Attention

08/14/2025 20:53

Masimo ($MASI) shares have fallen to the mid-$150s in August, but company insiders are stepping up with aggressive buying, drawing significant market attention. Notably, Director William Jellison purchased 3,000 shares at $146 per share on August 11, while Chairman Michelle Brennan made consecutive purchases of 100 shares each on August 12 and 13, demonstrating strong insider confidence. Masimo, founded in 1989, is a global leader in medical technology, particularly renowned for its SET® Pulse Oximetry technology for blood oxygen saturation monitoring. All major U.S. hospitals utilize Masimo's technology, and the company has expanded its offerings through the Rainbow® SET platform for noninvasive blood parameter monitoring. Recently, the company has been diversifying into hospital automation platforms and telehealth solutions. The timing of these insider purchases is particularly significant as they come as the company completes a major restructuring phase. Following founder Joe Kiani's departure as CEO in September 2024 after a shareholder dispute with Politan Capital Management, Michelle Brennan served as interim CEO before transitioning to Chairman. In January 2025, Katie Szyman, formerly of Becton Dickinson, was appointed as the new CEO, completing the management transition. Even more noteworthy is the company's strategic focus on core healthcare operations by divesting non-essential segments. Samsung's subsidiary Harman acquired Masimo's audio business for $350 million in May, allowing the company to concentrate resources on medical technology. These restructuring effects are evident in financial metrics: Q2 2025 healthcare segment revenue grew 7.4% year-over-year, with gross margin improving to 62.9%. However, investors should remain cautious about certain challenges. Overall revenue continues to decline, and the company reported a net loss of $270 million over the trailing twelve months. The high P/E ratio of 76x presents valuation concerns, and ongoing patent disputes with Apple add uncertainty. Nevertheless, the insider buying aligns with several positive signals. William Jellison, an independent director nominated by Politan, invested $440,000 from a shareholder advocacy perspective. Chairman Michelle Brennan's consecutive purchases indicate current management's optimism about the company's future at these price levels. The company maintains operational cash flow of $170 million and cash reserves of $150 million, ensuring financial stability. Additionally, supply chain improvements reducing tariff impacts by over 50% and development of next-generation hemodynamic monitoring systems provide medium-term growth catalysts. Investors should focus on the healthcare segment's sustained growth trajectory. If this division maintains double-digit growth, it could drive overall profitability improvements. Conversely, continued revenue declines or unfavorable outcomes in Apple litigation could necessitate further adjustments. Analysts project 2025 EPS at $5.33 with price targets around $184. From current levels in the mid-$150s, this suggests upside potential of over 20%. However, while the broader medical device industry is expected to grow 8.2% annually, Masimo faces projected annual revenue declines of 1.6% over the next three years, limiting relative industry attractiveness. Ultimately, Masimo presents both positive changes from completed restructuring and healthcare focus, alongside risks from high valuations and profitability recovery challenges. While insider buying signals are encouraging, investment decisions should carefully monitor whether healthcare segment growth continues in upcoming quarters and overall profitability improves.