Executive Vice President & Chief Financial Officer, MASIMO CORP
Masimo CEO: Our healthcare investors don't know how to deal with the consumer side of the business
Joe Kiani, Masimo CEO, joins 'Closing Bell Overtime' to talk the proxy fight, its healthcare versus its consumer segment, ...
About Micah Young
Micah Young, Executive Vice President and Chief Financial Officer at Masimo, accompanied CEO Joe Kiani on a listening tour of major shareholders that led to discussions about spinning off the company's consumer health business. Kiani stated that the tour revealed a disconnect: healthcare investors were unfamiliar with the consumer side of the business, and the company sought a way to separate that segment without abandoning its broader goals for patients, people, and shareholders. Kiani also discussed the upcoming launch of a hospital-grade baby monitor with pulse oximetry, priced at approximately $200 without a camera and $300 with a camera featuring edge AI to detect if a baby has rolled face down. He described the product as the first hospital-grade pulse oximeter available for home use and said it should be significant for Masimo's stockholders. Kiani explained that Masimo's strategy involves both selling its own end-user products and working with OEMs, a "push/pull" approach he said has worked in healthcare.
Transcript (10 segments)
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Interviewer0:00
One politan nominee will simply deadlock the board, something broadly criticized by governance experts which would merely continue the status quo. Joining us is Masimo founder, chairman and CEO, Joe Kiani. Joe, welcome. So, this is going to a vote, you think?
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Joe Kiani0:18
I think so. Nice to see you, Jon. But, unfortunately, yeah, I think it is going to go to a vote. It's a shame, because we're going to spend a lot of energy, a lot of money fighting this thing, but the shareholders will have to decide what they want for the future.
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Interviewer0:34
How much does this spin-off and the timing of it, you think matter to your argument to essentially keep control of your company?
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Joe Kiani0:44
Well, we began talking about doing a spin-off after my CFO and I went on a listening tour meeting our major shareholders, and what we realized short term we're going to be right. Long term I was going to be right that the best thing is to keep it all together but short term we're a healthcare company, and our healthcare investors don't know how to deal with the consumer side of our business, so the time, we decided there might be a way to separate the consumer health without giving up the dream of what we're hoping to accomplish, for patients, people and our shareholders effectively.
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Interviewer1:29
So you're going to separate. At least you're moving in that direction. You're willing to do it, but you don't think the total separation is necessarily the right thing long term and it seems to me that like the Stork baby monitor is maybe an example of why you think that. Now, I haven't actually seen it but it sounds like it's this silicon boot that you can put on the baby's foot and pulse oximetry is involved and it essentially not going to tell you when the baby cries but if there's a problem healthwise with the baby that can be picked up by that kind of equipment that you have the IP for. Am I understanding that correctly?
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Joe Kiani2:07
You are right. This is actually it. This is the boot. It wraps around the baby's foot and if the baby during the night has a drop in their saturation, which happens a lot, unfortunately, with patients that -- with babies that have sudden infant death syndrome, it'll send an alert to the family, to the parents about the drop in O2 and hopefully we can avoid these types of problems. So, yeah, we're very excited about it. This is something I envisioned, not exaggerating, 35 years ago, May is the 35th anniversary of Masimo. So happy we're finally getting it out but it's this product and others like these wearables that let me know that we're on the cusp of doing some incredible things for the future, but also things we're doing in the healthcare system like the new generation Root that we're going to be creating that will hopefully be launched this year as our anniversary present or customers and stockholders.
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Interviewer3:10
I want to go back to this Stork boot. Watches and Apple Watch is out there. I know how you feel about Apple watches, but this new parent stuff, I mean, you know, 13, 15 years ago I was a new parent, I know what that can do in the market. What's the expected price range for this sort of thing, and I can't think of anything else in the market -- it's like hospital equipment at home, I mean, it seems to me like it could be pretty expensive.
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Joe Kiani3:43
Well, that's the thing. We worked for many years to make it smaller, make it lower cost. We're offering the boot monitor without the camera and this is the camera that has its own cool edge A.I. built into it to tell you if the baby has rolled down face down or other issues in the future but the monitor itself for pulse oximetry drop is going to be about $200. With the camera you're talking about $300. It should change everything. There has never been a hospital grade, let alone Masimo which we are the most reliable pulse oximeter on the planet been available for parents at home, so, yeah, it should be big. It should change things and it should be great for Masimo's stockholders.
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Interviewer4:31
So if I'm a stockholder, I might ask you why not just license that out and be in every baby monitor -- high-end baby monitor practically in the developed world. Why do it yourself?
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Joe Kiani4:44
Well, number one, I have started -- I started Masimo to be an OEM company, meaning I didn't want to make our own end user products but wanted to be integrated in other people's products and used to call it Dolby. Intel Inside is more modern and when I learned if you try OEM it's like taking a shower with your raincoat on. You turn on the shower. You don't get very wet. You have to be in there with your own direct products and work with OEMs. You got to do both. It's a push/pull strategy that's worked for us in the healthcare. We're not a leading pulse oximeter company in hospitals because of our own