Executive Summary

Q3 2026 primary source documents (8-K 2.02 press release and earnings call transcript) are not yet available. We anchor this recap on Wall Street consensus for Q3 2026 and Masimo’s most recent reported quarter (Q3 2025), plus prior quarters, to provide trajectory and themes. Q3 2026 consensus: EPS $1.443*, revenue $398.4M*, EBITDA $120.6M* (7 EPS estimates; 6 revenue estimates). Values retrieved from S&P Global.
Q3 2025 results showed an operational inflection: GAAP revenue $371.5M (+8.2% YoY), GAAP EPS $0.99, non-GAAP EPS $1.32 (+38% YoY), with operating margin expansion and cash flow strength; full-year EPS guidance raised to $5.40–$5.55 .
The quarter’s stock reaction to Q3 2025 was constructive: shares gained ~1.7% pre-market as results beat consensus and margins expanded .
Catalysts into Q3 2026: accelerating consumables on stronger contracting, AI-enabled sensor launches (e.g., OIRD detection) aligned to CMS 2026 reporting, and deeper Philips partnership share gains; tariff mitigation continues to shape margin trajectory .

What Went Well and What Went Wrong

What Went Well

Non-GAAP EPS growth of 38% YoY to $1.32, driven by sales growth and efficiency initiatives; operating margin expanded ~450 bps YoY .
Raised FY2025 EPS guidance to $5.40–$5.55 (from $5.20–$5.45), and operating margin to 27.3%–27.7% (from 27.0%–27.5%), citing stronger contracting and execution (CFO commentary) .
Management emphasized momentum in advanced monitoring and AI-enabled sensors with CMS 2026 OIRD reporting tailwind: “Our new technology detecting OIRD… will help hospitals keep these patients safe and meet the reporting requirements.” (CEO) .

What Went Wrong

Gross margin declined ~70 bps YoY to 62.2% in Q3 2025 due to tariff impacts despite operational improvements .
Consumables grew only 1% YoY in Q3 2025 (vs +20% in Q3 2024), with management citing unusual comps and transition effects in some markets .
International distributor model shift created a revenue headwind to FY guidance; tariffs increased cost of sales (~$5M impact in Q3 2025), partially offset by mitigation .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025	Q3 2026E
Revenue ($USD Millions)	$372	$371	$371.5	$398.4*
GAAP EPS ($)	$0.86	$0.82	$0.99	n/a
Non-GAAP/Adjusted EPS ($)	$1.36	$1.33	$1.32	$1.443*
Gross Margin (%)	n/a	n/a	62.2%	n/a
Operating Margin (%)	n/a	28.0% (non-GAAP, ex-tariffs)	27.1%	n/a

Note: Asterisk denotes values retrieved from S&P Global.

Segment breakdown (where disclosed):

Segment KPI	Q2 2025	Q3 2025
Consumables & Service Revenue ($M)	$338; +8% YoY	+1% YoY (revenue not disclosed)
Capital & Other Revenue ($M)	$32; -2% YoY	+67% YoY (revenue not disclosed)

KPIs:

KPI	Q2 2025	Q3 2025
Technology boards & instruments shipped (units)	63,100	66,000
Incremental value of new contracts ($M)	$80	$124
Unrecognized contract revenue (total; near-term within 12 months)	$1,720M total	$507M expected in next 12 months
Operating cash flow ($M)	n/a	$57
Share repurchases (YTD/Q3)	n/a	$350M; 2.4M shares

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non-GAAP EPS	FY2025	$5.20–$5.45 (incl. tariffs)	$5.40–$5.55 (incl. tariffs)	Raised
Non-GAAP Operating Margin	FY2025	27.0%–27.5% (incl. tariffs)	27.3%–27.7% (incl. tariffs)	Raised
Non-GAAP Operating Profit ($M)	FY2025	$406–$422 (incl. tariffs)	$412–$424 (incl. tariffs)	Raised

Note: No formal FY2026 guidance provided on Q3 2025 call; management will initiate 2026 guidance later (52-week year) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
AI-enabled sensors (OIRD)	Strategy pivot to healthcare; pipeline focus	Non-GAAP EPS leverage; tariff clarity; AI roadmap referenced in materials	OIRD detection tied to CMS 2026 reporting; AI-enabled monitors launching	Strengthening execution narrative
Tariffs / mitigation	Guidance framed with and without tariffs	Tariff mitigation improved outlook; operating margin expansion	Gross margin -70 bps YoY; EPS/OM raised despite tariffs	Headwind manageable
Philips partnership	Strategic focus and share gains potential	N/A	Under-indexed in Philips installed base; multi-year share gain runway	Positive multi-year
Contracting momentum	Refocus post Sound United; capital allocation to buybacks	Incremental contracts $80M	Q3 incremental contracts $124M; strong Q4 expected (CFO)	Acceleration
Supply chain / distributor model	N/A	Transition highlighted; guidance considers impacts	Distributor model shift reduces FY revenue; comps normalize into Q4 (CFO)	Transitional but waning
Divestiture (Sound United)	Agreement to divest; proceeds prioritized for buybacks	Assets held-for-sale; guidance excludes benefits	Sale closed Sept 23, 2025; cash $312.3M; LT debt down	Balance sheet strengthened

Management Commentary

“We saw continued positive momentum across our core healthcare business… Revenues grew 8%, operating margin improved by 450 basis points, and EPS grew by 38%.” — CEO Katie Szyman, Q3 2025 press release .
“In 2026, CMS is going to require hospitals to report opioid-related adverse events… Our new technology detecting OIRD… will help hospitals keep these patients safe.” — CEO commentary on AI-enabled sensors and regulatory tailwinds .
“We are raising our operating margin guidance to 27.3%–27.7%… and our EPS guidance to $5.40–$5.55… driven by improvements in operating margin, share repurchases, and lower interest expense.” — CFO Micah Young .

Q&A Highlights

Analyst focus on drivers of outperformance and 2026 setup: CFO highlighted stronger contracting in Q3 and expected strong Q4 closing, with consumables acceleration as comps normalize; no FY2026 guidance on Q3 call .
Clarifications on partnerships and share gains: CEO noted under-indexing in Philips installed base vs global market share, creating a multi-year growth opportunity .
Tariff trajectory and mitigation: Management reaffirmed mitigation measures and maintained raised EPS/margin guidance despite tariff headwinds .

Estimates Context

Q3 2026 consensus (S&P Global): EPS $1.44286*, revenue $398.377M*, EBITDA $120.578M*; 7 EPS estimates, 6 revenue estimates. Values retrieved from S&P Global.
Benchmarking: Q3 2025 actual revenue was $371.5M; Q3 2026 revenue consensus implies ~7.2% YoY growth off last year’s base .
Implications: Given raised FY2025 margin guidance and ongoing contracting/Philips share gains, Street appears to be baking in continued mid-single to high-single-digit top-line growth into Q3 2026 alongside sustained EPS leverage; monitor tariff normalization and AI product launch timing. Values retrieved from S&P Global.

Key Takeaways for Investors

Near-term setup: With stronger contracting and comps normalizing, Masimo exited Q3 2025 with raised EPS/margin guidance and tangible KPI momentum (contracts, shipments), supporting a constructive path into 2026 .
Watch Q3 2026 print vs Street: Revenue $398.4M* and EPS $1.443* are the key hurdles; sustained margin discipline is critical in light of tariffs. Values retrieved from S&P Global.
Product catalysts: AI-enabled OIRD sensors aligned to CMS 2026 measure and next-gen monitors could bolster advanced monitoring mix and pull-through .
Strategic partnerships: Under-indexing within Philips installed base suggests a multi-year share gain runway, supporting consumables strength and recurring revenue resilience .
Balance sheet flexibility: Post-divestiture cash build and reduced debt, combined with buybacks, enhance capital allocation options into 2026 .
Risk checks: Tariff headwinds and distributor model shifts can pressure gross margin and revenue; mitigation progress and execution on contracting are key to estimate stability .
Trading lens: Positive estimate revisions could follow continued KPI strength and clearer timing on AI-enabled launches; conversely, any slippage in consumables acceleration or tariff impact could weigh on margins and sentiment.

Asterisk denotes values retrieved from S&P Global.

MASIMO CORP (MASI)·Q3 2026 Earnings Summary