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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 4, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number 001-33642

________________________________________________

MASIMO CORPORATION

(Exact Name of Registrant as Specified in its Charter)

________________________________________________

Delaware

33-0368882

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification Number)

52 Discovery

Irvine,

California

92618

(Address of Principal Executive Offices)

(Zip Code)

(949)

297-7000

(Registrant’s Telephone Number, Including Area Code)

Securities Registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

MASI

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class

Number of Shares Outstanding as of
April 4, 2026

Common stock, $0.001 par value

52,365,808

Table of Contents

MASIMO CORPORATION

FORM 10-Q FOR THE QUARTER ENDED APRIL 4, 2026

TABLE OF CONTENTS


PART I. Financial Information

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets as of April 4, 2026 and January 3, 2026	4

	Condensed Consolidated Statements of Operations for the three months ended April 4, 2026 and March 29, 2025	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended A p ril 4, 2026 and March 29, 2025	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended April 4, 2026 and March 29, 2025	7

	Condensed Consolidated Statements of Cash Flows for the three months ended April 4, 2026 and March 29, 2025	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56

Item 4.	Controls and Procedures	58

PART II. Other Information

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58



Item 5.	Other Information	58

Item 6.	Exhibits	59

Signatures		60

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

MASIMO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except par values)


	April 4, 2026		January 3, 2026
ASSETS
Current assets
Cash and cash equivalents	$	124.6	$	152.3

Trade accounts receivable, net of allowance for credit losses of $4.5 million and $4.5 million at April 4, 2026 and January 3, 2026, respectively	228.0		260.9
Related party receivables - (Note 3)	10.7		14.9

Inventories	400.0		380.3

Other current assets	107.2		116.6
Other current assets, held-for-sale - (Note 18)	—		1.0
Total current assets	870.5		926.0
Lease receivable, non-current	43.3		43.1
Deferred costs and other contract assets	64.7		62.6
Property and equipment, net	355.6		355.1

Intangibles assets, net	51.0		52.1




Goodwill	100.9		101.0
Deferred tax assets	114.1		114.2
Other non-current assets	42.6		44.7
Other non-current assets, held-for-sale - (Note 18)	—		0.1
Total assets	$	1,642.7	$	1,698.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	89.0	$	103.0
Accrued compensation	53.8		83.7
Deferred revenue and other contract liabilities, current	70.2		73.2
Other current liabilities	112.4		109.2
Other current liabilities, held-for-sale - (Note 18)	—		2.5
Total current liabilities	325.4		371.6
Long-term debt	445.7		518.0

Deferred tax liabilities	0.4		0.2
Other non-current liabilities	82.3		87.8
Other non-current liabilities, held-for-sale - (Note 18)	—		0.1
Total liabilities	853.8		977.7
Commitments and contingencies - (Note 24)
Stockholders’ equity

Preferred stock, $0.001 par value; 5.0 million shares authorized; 0 shares issued and outstanding	—		—
Common stock, $0.001 par value; 100.0 million shares authorized; 52.4 million and 52.1 million shares issued and outstanding at April 4, 2026 and January 3, 2026, respectively	0.1		0.1
Treasury stock, 22.0 million and 22.0 million shares at April 4, 2026 and January 3, 2026, respectively	(1,534.9)		(1,534.9)
Additional paid-in capital	940.4		929.1
Accumulated other comprehensive loss	(13.2)		(12.5)
Retained earnings	1,396.5		1,339.4


Total stockholders’ equity	788.9		721.2
Total liabilities and stockholders’ equity	$	1,642.7	$	1,698.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share amounts)


	Three Months Ended
	April 4, 2026		March 29, 2025



Revenue:
Revenue - (excluding related party revenue)	$	375.1	$	340.2
Related party revenue - (Note 3)	28.5		31.8
Total revenue	403.6		372.0
Cost of goods sold	152.8		138.0
Gross profit	250.8		234.0
Operating expenses:
Selling, general and administrative	143.4		119.4
Research and development	30.0		33.9

Litigation settlements	—		2.7
Total operating expenses	173.4		156.0
Operating income	77.4		78.0
Non-operating loss	(6.1)		(9.6)
Income from continuing operations before provision for income taxes	71.3		68.4
Provision for income taxes	15.0		21.2
Net income from continuing operations, net of tax	56.3		47.2
Net income (loss) from discontinued operations, net of tax - (Note 18)	0.8		(217.9)
Net income (loss)	$	57.1	$	(170.7)







Net income (loss) per share:
Basic income per share - continuing operations	$	1.08	$	0.87
Basic income (loss) per share - discontinued operations	0.02		(4.04)
Basic income (loss) per share	$	1.10	$	(3.17)

Diluted income per share - continuing operations	$	1.07	$	0.86
Diluted income (loss) per share - discontinued operations	0.02		(3.98)
Diluted income (loss) per share	$	1.09	$	(3.12)

Weighted-average shares used in per share calculations:
Basic	52.2		54.0
Diluted	52.6		54.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)


	Three Months Ended
	April 4, 2026		March 29, 2025
Net income (loss)	$	57.1	$	(170.7)
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain from foreign currency translation adjustments	(1.3)		24.8
Reclass of unrealized foreign currency translation gains upon disposition of discontinued operations	(0.6)		—

Unrealized gain (loss) on cash flow hedges	1.2		(2.7)



Total comprehensive income (loss)	$	56.4	$	(148.6)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MASIMO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions)
	Three Months Ended April 4, 2026
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount



































































































































































































































































































































































































Balance at January 3, 2026	52.1	$	0.1	22.0	$	(1,534.9)	$	929.1	$	(12.5)	$	1,339.4	$	721.2
Stock options exercised	0.2	—		—	—		10.0		—		—		10.0
Restricted/Performance stock units vested	0.1	—		—	—		—		—		—		—
Shares paid for tax withholding	—	—		—	—		(7.6)		—		—		(7.6)
Stock-based compensation	—	—		—	—		8.9		—		—		8.9



Net income	—	—		—	—		—		—		57.1		57.1
Foreign currency translation adjustment	—	—		—	—		—		(1.3)		—		(1.3)
Reclass of unrealized foreign currency translation gains upon disposition of discontinued operations	—	—		—	—		—		(0.6)		—		(0.6)

Unrealized gain on cash flow hedge	—	—		—	—		—		1.2		—		1.2
Balance at April 4, 2026	52.4	$	0.1	22.0	$	(1,534.9)	$	940.4	$	(13.2)	$	1,396.5	$	788.9


	Three Months Ended March 29, 2025
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount












































































































































































































































































































































Balance at December 28, 2024	53.6	$	0.1	19.5	$	(1,169.2)	$	838.3	$	(108.2)	$	1,490.9	$	1,051.9
Stock options exercised	0.5	—		—	—		43.8		—		—		43.8
Restricted/Performance stock units vested	0.2	—		—	—		—		—		—		—
Shares paid for tax withholding	(0.1)	—		—	—		(11.3)		—		—		(11.3)
Stock-based compensation	—	—		—	—		10.6		—		—		10.6


Net (loss)	—	—		—	—		—		—		(170.7)		(170.7)
Foreign currency translation adjustment	—	—		—	—		—		24.8		—		24.8

Unrealized (loss) on cash flow hedge	—	—		—	—		—		(2.7)		—		(2.7)
Balance at March 29, 2025	54.2	$	0.1	19.5	$	(1,169.2)	$	881.4	$	(86.1)	$	1,320.2	$	946.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MASIMO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


	Three Months Ended
	April 4, 2026		March 29, 2025
Cash flows from operating activities:
Net (loss) income	$	57.1	$	(170.7)
Loss from discontinued operations, net of tax	0.8		(217.9)
Net income from continuing operations	56.3		47.2
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	8.1		8.6
Stock-based compensation expense	8.9		9.1
Loss (gain) on disposal of equipment, intangibles and other assets	0.7		(0.1)

Provision for credit losses	0.1		0.3
Provision for deferred income taxes	—		5.9
Amortization of debt issuance cost	0.3		0.5

Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable	32.4		(2.9)
(Increase) decrease in related party receivable	4.2		(0.5)
(Increase) decrease in inventories	(22.4)		(6.6)
(Increase) decrease in other current assets	9.4		5.5
(Increase) decrease in lease receivable, net	(0.3)		(0.6)
(Increase) decrease in deferred costs and other contract assets	(2.0)		0.7

(Increase) decrease in other non-current assets	(0.6)		4.4
Increase (decrease) in accounts payable	(31.7)		(6.1)
Increase (decrease) in accrued compensation	(29.9)		(17.0)
Increase (decrease) in accrued liabilities	11.1		(8.1)
Increase (decrease) in income tax payable	7.9		0.2
Increase (decrease) in deferred revenue and other contract-related liabilities	(3.4)		(1.9)

Increase (decrease) in other non-current liabilities	(2.3)		(0.7)
Net cash provided by (used in) operating activities from continuing operations	46.8		37.9
Net cash provided by (used in) operating activities from discontinued operations	(1.5)		(6.8)
Net cash provided by (used in) operating activities	45.3		31.1
Cash flows from investing activities:

Purchases of property and equipment	(4.3)		(2.6)
Proceeds from sale of property and equipment	—		19.6
Increase in intangible assets	(1.0)		(1.5)

Other strategic investing activities	1.1		—
Net cash provided by (used in) investing activities from continuing operations	(4.2)		15.5
Net cash provided by (used in) investing activities from discontinued operations	—		(4.8)
Net cash provided by (used in) investing activities	(4.2)		10.7
Cash flows from financing activities:
Borrowings under line of credit	15.0		—
Repayments on line of credit	(87.6)		(78.8)



Proceeds from issuance of common stock	10.0		43.1
Payroll tax withholdings on behalf of employees for vested equity awards	(7.6)		(11.3)


Net cash provided by (used in) financing activities from continuing operations	(70.2)		(47.0)
Net cash provided by (used in) financing activities from discontinued operations	—		(0.8)

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Net cash provided by (used in) financing activities	(70.2)		(47.8)
Effect of foreign currency exchange rates on cash	0.4		1.1
Net increase in cash, cash equivalents and restricted cash	(28.7)		(4.9)
Cash, cash equivalents and restricted cash at beginning of period	153.3		181.4
Cash, cash equivalents and restricted cash at end of period	$	124.6	$	176.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of the Company

Masimo Corporation (the “Company”) is a global medical technology company that develops and produces a wide array of industry-leading monitoring technologies, including innovative measurements, sensors, and patient monitors. Powered by the Masimo Hospital Automation™ and Masimo SafetyNet® platforms, Masimo connectivity, automation, and telehealth and telemonitoring solutions are improving and automating care delivery both in the hospital and beyond. As of April 4, 2026, the Company operates one reportable segment: healthcare.

The Company’s healthcare products and patient monitoring solutions generally incorporate a monitor or circuit board, proprietary single-patient use or reusable sensors, software and/or cables. The Company primarily sells its healthcare products to hospitals, emergency medical service providers, home care providers, physician offices, veterinarians, and long-term care facilities through its direct sales force, distributors and original equipment manufacturer (OEM) partners.

The Company’s former non-healthcare consumer business incorporated audio and home integration technologies, which were primarily sold or licensed direct-to-consumers, or through authorized retailers and wholesalers.

As of December 28, 2024, the non-healthcare consumer business remained part of the Company’s continuing operations, but was being evaluated for divestiture. As of March 29, 2025, as the sales evaluation process progressed, the non-healthcare consumer business was classified as held-for-sale, and reported as discontinued operations. On May 6, 2025, the Company announced that it entered into a definitive agreement to sell Viper Holdings Corporation, a Delaware corporation which previously owned and operated the Company’s non-healthcare business (together with its subsidiaries, “Sound United”) to Harman International Industries, Incorporated, a wholly-owned subsidiary of Samsung Electronics., Ltd. On September 23, 2025, the Company completed the sale of Sound United. For additional information with respect to the non-healthcare consumer business separation, discontinued operations of this business and sale, see Note 18, “Discontinued Operations”.

Merger Agreement

On February 16, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Danaher Corporation, a Delaware corporation (“Danaher”) and Mobius Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Danaher (“Merger Sub”), pursuant to which, among other things, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Danaher. As set forth in the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $0.001 per share, of the Company (other than any shares owned by Danaher, Merger Sub or the Company or any of their wholly owned subsidiaries or shares in respect of which appraisal has been duly demanded, and not effectively withdrawn or otherwise waived or lost, pursuant to Section 262 of the General Corporation Law of the State of Delaware) issued and outstanding immediately prior to the effective time of the Merger will be automatically converted into the right to receive $180.00 in cash, without interest. The Merger is expected to close in 2026, subject to customary closing conditions, including approval by our stockholders and the receipt of required regulatory approvals. On May 1, 2026, our stockholders adopted the Merger Agreement at a special meeting of stockholders.

If the Merger is completed, our common stock will be delisted from the Nasdaq Stock Market and deregistered under the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable following the effective time of the Merger.

In connection with the proposed Merger, the Company incurred approximately $17.9 million in selling, general and administrative expenses during the first quarter of fiscal 2026, and we expect to incur additional financial advisory, legal, accounting, and other professional fees in connection with the Merger.

Additional information about the Merger Agreement and the Merger is set forth in the Company’s definitive proxy statement on Schedule 14A was filed with the SEC on April 1, 2026.

The terms “the Company” and “Masimo” refer to Masimo Corporation and, where applicable, its consolidated subsidiaries.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

(GAAP) have been condensed or omitted pursuant to such rules and regulations. The accompanying condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, including normal recurring accruals, necessary to present fairly the Company’s condensed consolidated financial statements. The accompanying condensed consolidated balance sheet as of January 3, 2026 was derived from the Company’s audited consolidated financial statements at that date. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026 (fiscal year 2025), filed with the SEC on February 27, 2026. The results for the three months ended April 4, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending January 2, 2027 (fiscal year 2026) or for any other interim period or for any future year.

Fiscal Periods

The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 week fiscal year, a 52 week fiscal year includes four quarters of 13 weeks while a 53 week fiscal year includes three 13 week fiscal quarters and one 14 week fiscal quarter. The Company’s last 53 week fiscal year was fiscal year 2025. Fiscal year 2026 is a 52 week fiscal year ending January 2, 2027. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted.

Reclassifications

Certain amounts for the current and comparative periods in the accompanying condensed consolidated financial statements have been reclassified or recast to conform to the discontinued operations presentation, including certain balance sheets, statements of operations, statements of comprehensive income (loss), and statements of cash flows in the consolidated financial statements for the year ended January 3, 2026, see Note 18, “Discontinued Operations”.

Use of Estimates

The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of standalone selling prices, variable consideration, total consideration allocated to each performance obligation within a contract, inventory valuation, valuation of the Company’s equity awards, impairment of long-lived assets, intangible assets and goodwill; derivative and equity instruments, deferred taxes and any associated valuation allowances, deferred revenue, accounting for pensions, uncertain income tax positions, litigation costs, and related accruals. See Note 24, “Commitments and Contingencies” for further details. Actual results could differ from such estimates.

Assets Held-For-Sale and Discontinued Operations

In the third quarter of 2024, the Company announced that its board of directors (the “Board”) remained committed to the previously announced review of alternatives for the Company’s non-healthcare business, and that the Board had engaged Centerview Partners and Morgan Stanley as financial advisors and Sullivan & Cromwell as a legal advisor. As of December 28, 2024, the non-healthcare business remained part of the Company’s continuing operations. The sales process progressed in early 2025, and during the first quarter of 2025, the non-healthcare business was classified as held-for-sale and reported in discontinued operations. On May 6, 2025, the Company announced that it entered into a definitive agreement to sell Sound United to Harman International Industries, Incorporated, a wholly-owned subsidiary of Samsung Electronics., Ltd. On September 23, 2025, the Company completed the sale of Sound United.

The non-healthcare results for the periods presented are reflected in our condensed consolidated statements of operations and condensed consolidated statement of cash flows as discontinued operations. Additionally, the related assets and liabilities are classified as held-for-sale in our condensed consolidated balance sheets, see Note 18, “Discontinued Operations”.

Unless otherwise indicated, the financial disclosures and related information provided herein relate to our continuing operations, which exclude our non-healthcare business, and we have recast prior period amounts to conform to this discontinued operations presentation.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Fair Value Measurements

The Company accounts for certain financial instruments at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its financial instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures, and considers the estimated amount the Company would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and the Company’s creditworthiness for unrealized loss positions. In certain instances, the Company may utilize financial models to measure the fair value of its financial instruments. In doing so, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

Recurring Fair Value Measurement

On a recurring basis, the Company measures certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, the Company applies valuation techniques to estimate fair value. Authoritative guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

● Level 1—Quoted prices in active markets for identical assets or liabilities.

● Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at April 4, 2026:


	Total Carrying Value		Fair Value Measurement Hierarchy
(in millions)			Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	124.6	$	124.6	$	—	$	—


Pension assets	30.5		27.1		3.4		—
Derivative instruments - cash flow hedges(1)	0.9		0.9		—		—








Total assets	$	156.0	$	152.6	$	3.4	$	—

Liabilities
Derivative instruments - cash flow hedges	$	0.1	$	0.1	$	—	$	—
Pension benefit obligation	24.8		24.8		—		—

Total liabilities	$	24.9	$	24.9	$	—	$	—

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at January 3, 2026:


	Total Carrying Value		Fair Value Measurement Hierarchy
(in millions)			Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	55.5	$	55.5	$	—	$	—

Money market funds	96.8		96.8		—		—
Pension assets	24.8		22.0		2.8		—






Derivative instruments - cash flow hedges(1)	1.0		1.0		—		—


Total assets	$	178.1	$	175.3	$	2.8	$	—

Liabilities
Derivative instruments - cash flow hedges	$	1.4	$	1.4	$	—	$	—
Pension benefit obligation	30.3		30.3		—		—
Total liabilities	$	31.7	$	31.7	$	—	$	—

______________

(1) Includes accrued interest.

The Company invests in checking, savings and money market fund accounts, which are classified within Level 1 of the fair value hierarchy as they are valued using quoted market prices. These investments are classified as cash and cash equivalents within the Company’s accompanying condensed consolidated balance sheets, in accordance with GAAP and its accounting policies.

The Company maintains certain derivative investments whose prices are based on quoted market prices in an active market and are classified within Level 1 of the fair value hierarchy.

The Company’s pension assets consist of Level 1 and Level 2 investments. The fair values of Level 2 assets are based on observable inputs such as prices or quotes for similar assets, adjusted for any differences in terms or conditions that may affect the value of the instrument being valued. The valuation techniques used for Level 2 assets may include the use of models or other valuation techniques, but these methods are all based on observable market inputs.

Non-Recurring Fair Value Measurements

For certain other financial assets and liabilities, including restricted cash, accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily goodwill, intangible assets and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment.

Furthermore, the Company did not elect to apply the fair value option to specific assets or liabilities on a contract-by-contract basis. The Company did not have any transfers between Level 2 and Level 3 during the three months ended April 4, 2026.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less, or highly liquid investments that are readily convertible into known amounts of cash, to be cash equivalents. The Company carries cash and cash equivalents at cost, which approximates fair value, and they are Level 1 under the fair value hierarchy.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consist of trade receivables recorded at the time of invoicing of product sales, reduced by reserves for estimated bad debts and returns. Trade accounts receivable, net of allowance for credit losses as of April 4, 2026, January 3, 2026, and December 28, 2024 were $238.7 million, $275.8 million, and $283.2 million, respectively. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Credit is extended based on an evaluation of the customer’s financial condition. Collateral is generally not required. The Company records an allowance for credit losses that it does not expect to collect based on relevant information, including historical experience, current conditions, and reasonable and

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

supportable forecasts. Accounts are charged off against the allowance when the Company believes they are uncollectible. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Based on the risk characteristics, the Company has identified U.S. and international customers as separate portfolios, and measures expected credit losses on such receivables using an aging methodology.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory valuation adjustments are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory items that have a market price less than the carrying value in inventory. The Company generally determines inventory valuation adjustments based on an evaluation of the expected future use of its inventory on an item by item basis and applies historical obsolescence rates to estimate the loss on inventory expected to have a recovery value below cost. The Company also records other specific inventory valuation adjustments when it becomes aware of circumstances that result in an expected recovery value below cost. For inventory items that have been written down, the reduced value becomes the new cost basis.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows:


			Useful Lives


Buildings and building improvements			7 to 39 years
Computer equipment and software			2 to 12 years
Demonstration units			2 to 3 years
Furniture and office equipment			2 to 15 years
Leasehold improvements			Lesser of useful life or term of lease
Machinery, equipment, tooling and other			3 to 20 years
Operating lease assets			Lesser of useful life or term of lease

Land is not depreciated and construction-in-progress is not depreciated until placed in service. Normal repair and maintenance costs are expensed as incurred, whereas significant improvements that materially increase values or extend useful lives are capitalized and depreciated over the remaining estimated useful lives of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss on the sale or retirement is recognized in income.

Lessee Right-of-Use (ROU) Assets and Lease Liabilities

The Company determines if an arrangement contains a lease at inception. ROU assets represent the Company’s right to use an asset underlying an operating lease for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from an operating lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company generally estimates the applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. Many of the Company’s lessee agreements include options to extend the lease, which the Company does not include in its lease terms unless they are reasonably certain to be exercised. The Company utilizes a portfolio approach to account for the ROU assets and liabilities associated with certain equipment leases.

The Company has also made an accounting policy election not to separate lease and non-lease components for its real estate leases and to exclude short-term leases with a term of twelve months or less from its ROU assets and lease liabilities. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Intangible Assets

Intangible assets consist primarily of patents, trademarks, software development costs, customer relationships and acquired technology. Costs related to patents and trademarks, which include legal and application fees, are capitalized and amortized over the estimated useful lives using the straight-line method. Patent and trademark amortization commences once final approval of the patent or trademark has been obtained. Patent costs are amortized over the lesser of 10 years or the patent’s remaining legal life, which assumes renewals, and trademark costs are amortized over 17 years, and their associated amortization cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. For intangibles purchased in an asset acquisition or business combination, which mainly include patents, trademarks, customer relationships, acquired and developed technologies and contractual licenses, the useful life is determined largely by valuation estimates of remaining economic life.

The Company’s policy is to renew its patents and trademarks. Costs to renew patents and trademarks are capitalized and amortized over the remaining useful life of the intangible asset. The Company periodically evaluates the amortization period and carrying basis of patents and trademarks to determine whether any events or circumstances warrant a revised estimated useful life or reduction in value. Capitalized application costs are charged to operations when it is determined that the patent or trademark will not be obtained or is abandoned.

Software development costs are accounted for in accordance with ASC Topic 985-20, Software - Costs of Software to be Sold, Leased, or Marketed. Once technological feasibility has been established, qualifying costs incurred in development are capitalized until available for general release to customers, and subsequently reported at the lower of unamortized cost or net realizable value.

Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. In assessing goodwill impairment, the Company has the option to first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. As of April 4, 2026, the Company has one reporting unit, healthcare. The Company’s qualitative assessment of the recoverability of goodwill considers various macro-economic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, or if the Company elects to bypass the qualitative analysis, then the Company performs a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of such reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to such reporting unit. The annual impairment test is performed during the fourth fiscal quarter.

Similar to goodwill, indefinite-lived intangible assets are not amortized but instead are subject to annual impairment testing, unless circumstances dictate more frequent testing, if impairment indicators exist. Impairment for indefinite-lived assets exists if the carrying value of the indefinite-lived intangible asset exceeds its fair value. Determining whether impairment indicators exist and estimating the fair value of the Company’s indefinite-lived intangible assets if necessary for impairment testing require significant judgment. Qualitative factors considered in this assessment include industry and market conditions, overall financial performance, and other relevant events and factors.

The Company reviews finite lived intangible assets and long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell, see Note 18, “Discontinued Operations”, for further details.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Employee Defined Benefit Plans

The Company maintains noncontributory defined benefit plans that cover certain employees in certain international locations. The Company recognizes the funded status, or the difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the condensed consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive (loss) income. If the projected benefit obligation exceeds the fair value of plan assets, the difference or underfunded status represents the pension liability. The Company records a net periodic pension cost in the condensed consolidated statement of operations. The liabilities and annual income or expense are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate and the expected long-term rate of asset return. The Company’s accounting policy includes an annual re-measurement of pension assets and obligations. In addition, the Company re-measures pension assets and obligations for significant events, as of the nearest month-end date on the calendar. The fair values of plan assets are determined based on prevailing market prices. See Note 21, “Employee Benefits”, for further details.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for net operating loss and tax credit carryforwards. Tax positions that meet a more-likely-than-not recognition threshold are recognized in the first reporting period that it becomes more-likely-than-not such tax position will be sustained upon examination. A tax position that meets this more-likely-than-not recognition threshold is recorded at the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Previously recognized income tax positions that fail to meet the recognition threshold in a subsequent period are derecognized in that period. Differences between actual results and the Company’s assumptions, or changes in the Company’s assumptions in future periods, are recorded in the period they become known. The Company records potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

As a multinational corporation, the Company is subject to complex tax laws and regulations in various jurisdictions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from the Company’s estimates, which could result in the need to record additional liabilities or potentially to reverse previously recorded tax liabilities.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is recorded against any deferred tax assets when, in the judgment of management, it is more likely than not that all or part of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including recent financial performance, scheduled reversals of temporary differences, projected future taxable income, availability of taxable income in carryback periods and tax planning strategies.

Income taxes are highly susceptible to changes from period to period, requiring management to make assumptions about the Company’s future income over the lives of its deferred tax assets and the impact of changes in valuation allowances. Any difference in the assumptions, judgments and estimates mentioned above could result in changes to the Company’s results of operations.

Revenue Recognition, Deferred Revenue and Other Contract Liabilities

The Company generally recognizes revenue following a single, principles-based five-step model to be applied to all contracts with customers and generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers that are remitted to government authorities, when control over the promised goods or services are transferred to the customer.

While the majority of the Company’s revenue contracts and transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation, judgment and analysis are required to determine the appropriate accounting, including: (i) the amount of the total consideration, as well as variable consideration, (ii) whether the arrangement contains an embedded lease, and if so, whether such embedded lease is a sales-type lease or an operating lease, (iii) the identification of the distinct performance obligations contained within the

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

arrangement, (iv) how the arrangement consideration should be allocated to each performance obligation when multiple performance obligations exist, including the determination of standalone selling price, and (v) when to recognize revenue on the performance obligations. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. Revenue from fixed lease payments related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue from fixed lease payments related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease and variable lease payments are recognized as they occur.

The Company derives the majority of its revenue from four primary sources: (i) direct sales under deferred equipment agreements with end-user hospitals where the Company provides up-front monitoring equipment at no up-front charge in exchange for a multi-year sensor purchase commitment; (ii) other direct sales of noninvasive monitoring solutions to end-user hospitals, emergency medical response organizations and other direct customers; (iii) sales of noninvasive monitoring solutions to distributors who then typically resell to end-user hospitals, emergency medical response organizations and other customers; and (iv) sales of integrated circuit boards to OEM customers who incorporate the Company’s embedded software technology into their multiparameter monitoring devices. Subject to customer credit considerations, the majority of such sales are made on open accounts using industry standard payment terms based on the geography within which the specific customer is located.

The Company enters into agreements to sell its monitoring solutions and services, sometimes as a part of arrangements with multiple performance obligations that include various combinations of product sales, equipment leases, software and services. In the case of contracts with multiple performance obligations, the authoritative guidance provides that the total consideration be allocated to each performance obligation on the basis of relative standalone selling prices. When a standalone selling price is not readily observable, the Company estimates the standalone selling price by considering multiple factors including, but not limited to, features and functionality of the product, geographies, type of customer, contractual prices pursuant to Group Purchasing Organization (GPO) contracts, the Company’s pricing and discount practices, and other market conditions.

Sales under deferred equipment agreements are generally structured such that the Company agrees to provide certain monitoring-related equipment, software, installation, training and/or warranty support at no up-front charge in exchange for the customer’s commitment to purchase sensors over the term of the agreement, which generally ranges from three years to six years. The Company allocates contract consideration under deferred equipment agreements containing fixed annual sensor purchase commitments to the underlying lease and non-lease components at contract inception. In determining whether any underlying lease components are related to a sales-type lease or an operating lease, the Company evaluates the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by the Company, as well as the Company’s expectations surrounding potential contract/lease extensions or renewals and the customer’s likelihood to exercise any purchase options.

For contracts that contain variable lease payments that are not dependent on an index or rate, the Company classifies as operating leases any lease components that would have otherwise been classified as sales-type leases that would result in a selling loss upon lease commencement. Revenue allocable to non-lease performance obligations is generally recognized as such non-lease performance obligations are satisfied. Revenue allocable to lease components under sales-type lease arrangements is generally recognized when control over the equipment is transferred to the customer.

Revenue allocable to lease components under operating lease arrangements is generally recognized over the term of the operating lease. The Company generally does not expect to derive any significant value in excess of such asset’s unamortized book value from equipment underlying its operating lease arrangements after the end of the agreement.

Revenue from the sale of products and software to end-user hospitals, emergency medical response organizations, other direct customers, distributors and OEM customers, is recognized by the Company when control of such performance obligations transfers to the customer based upon the terms of the contract or underlying purchase order.

Revenue related to OEM rainbow® parameter software licenses is recognized by the Company upon the OEM’s shipment of its product to its customer, as reported to the Company by the OEM.

The Company provides certain customers with various sales incentives that may take the form of discounts or rebates. The Company records estimates related to these programs as a reduction to revenue at the time of sale. In general, customers do not have a right of return for credit or refund. However, the Company allows returns under certain circumstances. At the end of each period, the Company estimates and accrues for these returns as a reduction to revenue. The Company estimates the revenue constraints related to these forms of variable consideration based on various factors, including expected purchasing volumes, prior sales and returns history, and specific contractual terms and limitations.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Shipping and Handling Costs and Fees

All shipping and handling costs are expensed as incurred and are recorded as a component of cost of goods sold in the accompanying condensed consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of revenue.

Taxes Collected From Customers and Remitted to Governmental Authorities

The Company’s policy is to present revenue net of taxes collected from customers and remitted to governmental authorities.

Deferred Costs and Other Contract Assets

The costs of monitoring-related equipment provided to customers under operating lease arrangements within the Company’s deferred equipment agreements are generally deferred and amortized to cost of goods sold over the life of the underlying contracts. Some of the Company’s deferred equipment agreements also contain provisions for certain allowances to be made directly to the end-user hospital customer at the inception of the arrangement. These allowances are generally allocated to the lease and non-lease components and recognized as a reduction to revenue as the underlying performance obligations are satisfied.

The Company generally invoices its customers under deferred equipment agreements as sensors are provided to the customer. However, the Company may recognize revenue for certain non-lease performance obligations under deferred equipment agreements with fixed annual commitments at the time such performance obligations are satisfied and prior to the customer being invoiced. When this occurs, the Company records an unbilled contract receivable related to such revenue until the customer has been invoiced pursuant to the terms of the underlying deferred equipment agreement.

The incremental costs of obtaining a contract with a customer are capitalized and deferred if the Company expects such costs to be recoverable over the life of the contract and the contract term is greater than one year. Such deferred costs generally relate to certain incentive sales commissions earned by the Company’s internal sales team in connection with the execution of deferred equipment agreements and are amortized to expense over the expected term of the underlying contract.

Warranty

The Company generally provides a warranty against defects in material and workmanship for a period ranging from six months to forty-eight months, depending on the product type. In traditional sales activities, including direct and OEM sales, the Company establishes an accrued liability for the estimated warranty costs at the time of revenue recognition, with a corresponding provision to cost of goods sold. Customers may also purchase extended warranty coverage or service level upgrades separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage and service level upgrades is generally recognized over the life of the contract, which reasonably approximates the period over which such services will be provided. The related extended warranty and service level upgrade costs are expensed as incurred.

Changes in the product warranty accrual were as follows:


	Three Months Ended
(in millions)	April 4, 2026		March 29, 2025
Product warranty accrual, beginning of period	$	6.1	$	2.9

Accrual for warranties issued	0.8		1.0
Changes in pre-existing warranties (including changes in estimates)	0.3		(0.3)
Settlements made	(0.5)		(0.8)
Product warranty accrual, end of period	$	6.7	$	2.8

Advertising Costs

Advertising costs include certain advertising and marketing fees, which are expensed as incurred. Advertising costs are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. Advertising costs for the three months ended April 4, 2026 and March 29, 2025 were $2.5 million and $2.3 million, respectively.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Litigation Costs and Contingencies

The Company records a charge equal to at least the minimum estimated liability for a loss contingency or litigation settlement when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements, and (ii) the range of loss can be reasonably estimated. The determination of whether a loss contingency, or litigation settlement is probable or reasonably possible involves a significant amount of management judgment, as does the estimation of the range of loss given the nature of contingencies. Liabilities related to litigation settlements with multiple elements are recorded based on the fair value of each element. Legal and other litigation related expenses are recognized as the services are provided. The Company records insurance and other indemnity recoveries for litigation expenses when both of the following conditions are met: (a) the recovery is probable, and (b) collectability is reasonably assured. Insurance recoveries are only recorded to the extent the litigation costs to which they relate have been incurred and recognized in the financial statements.

Foreign Currency Translation

The Company’s international headquarters is in Switzerland, and its functional currency is the U.S. Dollar. The Company has many other foreign subsidiaries, and the largest transactions in foreign currency translations occur in the Saudi Riyal and European Euro.

The Company records certain revenues and expenses in foreign currencies. These revenues and expenses are translated into U.S. Dollars based on the average exchange rate for the reporting period. Assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the exchange rate in effect as of the balance sheet date. Translation gains and losses related to foreign currency assets and liabilities of a subsidiary that are denominated in the functional currency of such subsidiary are included as a component of accumulated other comprehensive (loss) income within the accompanying condensed consolidated balance sheets. Realized and unrealized foreign currency gains and losses related to foreign currency assets and liabilities of the Company, or a subsidiary that are not denominated in the underlying functional currency are included as a component of non-operating (loss) income within the accompanying condensed consolidated statements of operations.

Derivatives Instruments and Hedging Activities

The Company addresses market risk from changes in interest rates risks through risk management programs, which include the use of derivative instruments. The Company’s exposure to a counterparty’s credit risk is generally limited to the amounts of the net obligation to the counterparty. The Company established policies to enter into contracts only with major investment-grade financial institutions to mitigate such counterparty credit risk. The Company also established a policy to further monitor the counterparty risks throughout the life of the instruments. None of the derivative instruments currently held by the Company were entered into for speculative trading purposes.

All derivative financial instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the tenor of the instrument. The Company has elected not to separate a derivative instrument into current and long-term portions. A derivative instrument whose fair value is a net liability is classified as current in total. A derivative instrument whose fair value is a net asset and whose current portion is an asset is classified as non-current in total. For a derivative instrument that meets the criteria to qualify for hedge accounting, the Company marks the fair value of the derivative instrument to market periodically through other comprehensive income (loss). When the hedged items are recorded to income (loss), the associated deferred gains (losses) of the derivatives in accumulated other comprehensive income (loss) will be reclassified into earnings. Any fluctuation in the fair value of a derivative instrument that does not meet the criteria for hedge accounting is recorded to earnings (expense) in the period it occurs.

Comprehensive Income (Loss)

Comprehensive income (loss) includes foreign currency translation adjustments, changes to pension benefits, unrealized gains (losses) on cash flow hedges and any related tax benefits (expenses) that have been excluded from net income (loss) and reflected in stockholders’ equity.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Net Income (Loss) Per Share

A computation of basic and diluted net income (loss) per share is as follows:


	Three Months Ended
(in millions, except per share amounts)	April 4, 2026		March 29, 2025

Net income from continuing operations, net of tax	$	56.3	$	47.2
Net income (loss) from discontinued operations, net of tax - (Note 18)	0.8		(217.9)
Net income (loss)	$	57.1	$	(170.7)



Basic net income (loss) per share:

Weighted-average shares outstanding - basic	52.2		54.0

Continuing operations per basic share	$	1.08	$	0.87
Discontinued operations per basic share	0.02		(4.04)
Basic income (loss) per share	$	1.10	$	(3.17)


Diluted net income (loss) per share:
Weighted-average shares outstanding - basic	52.2		54.0
Diluted share equivalents: stock options, RSUs and PSUs	0.4		0.8
Weighted-average shares outstanding - diluted	52.6		54.8

Continuing operations per diluted share	$	1.07	$	0.86
Discontinued operations per diluted share	0.02		(3.98)
Net income (loss) per diluted share	$	1.09	$	(3.12)

Basic net income (loss) per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Net income (loss) per diluted share is computed by dividing the net income by the weighted-average number of shares and potential shares outstanding during the period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options and the vesting of both restricted share units (RSUs) and performance stock units (PSUs). For the three months ended April 4, 2026 and March 29, 2025, weighted options to purchase 0.5 million and 0.6 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. Certain RSUs were considered contingently issuable shares as their vesting was contingent upon the occurrence of certain future events. Since such events have not occurred and were not considered probable of occurring as of each of April 4, 2026 and March 29, 2025, 2.7 million weighted-average shares related to such RSUs have been excluded from the calculation of potential shares.

On October 24, 2024, following an external legal review, the Board adopted resolutions to terminate the employment of Mr. Joe Kiani, our former Chairman and Chief Executive Officer, effective October 24, 2024. In connection with the Board’s determination, the 2.7 million RSU grant to Mr. Kiani was cancelled. For additional information with respect to these RSUs, see “Employment and Severance Agreements” in Note 24, “Commitments and Contingencies”.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Supplemental Cash Flow Information

Supplemental cash flow information includes the following:


	Three Months Ended
(in millions)	April 4, 2026		March 29, 2025
Cash paid during the year for:
Interest expense:
Continuing operations	$	5.2	$	11.5
Discontinued operations	—		0.5
Income taxes:
Continuing operations	$	4.7	$	2.1
Discontinued operations	—		3.4
Operating lease liabilities:
Continuing operations	$	2.2	$	2.7
Discontinued operations	—		3.4

Non-cash operating activities:
ROU assets obtained in exchange for lease liabilities:
Continuing operations	$	0.9	$	(0.4)


Non-cash investing activities - continuing operations:


Unpaid purchases of property and equipment	$	2.1	$	1.2


Unpaid strategic investments	—		0.1



Non-cash financing activities - continuing operations:
Unsettled common stock proceeds from option exercises	$	—	$	0.7



Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents:
Continuing operations	$	124.6	$	130.8
Discontinued operations	—		41.2
Restricted cash:
Continuing operations	$	—	$	2.7
Discontinued operations	—		1.8
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	124.6	$	176.5

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Recently Adopted Accounting Pronouncements

There have been no material changes to the accounting policies discussed in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026, filed with the SEC on February 27, 2026.

Recently Announced Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses. The guidance in ASU No. 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included ASU No. 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. In January 2025, the FASB issued ASU No. 2025-01 to clarify the effective date of ASU No. 2024-03. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606 by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted. The Company adopted this amended standard in the first quarter of 2026 and such adoption did not have a material impact on its consolidated financial statements or results of operations.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This new standard simplifies the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, though early adoption is permitted. The Company is currently evaluating the impact of this amended standard on its consolidated financial statements.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This new standard expands hedge accounting eligibility, including provisions for choose-your-rate debt instruments. The ASU 2025-09 is effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of this amended standard on its consolidated financial statements.

3. Related Party Transactions

Willow Laboratories, Inc. (Willow), formerly known as Cercacor Laboratories, Inc., is an independent entity that was spun off from the Company to its stockholders in 1998. Mr. Joe Kiani, the Company’s former Chairman and CEO, is also the Executive Chairman of Willow. Effective October 24, 2024, Willow is no longer considered a related party relationship due to the termination of Mr. Kiani.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

The Company is a party to the following agreement with Willow:

•Cross-Licensing Agreement - The Company and Willow are parties to a cross-licensing agreement (Cross-Licensing Agreement), which purports to govern each party’s rights to certain intellectual property held by the two companies. The Cross-Licensing Agreement, by its term, purports to obligate the Company to pay certain annual minimum aggregate royalties for use of the rainbow® licensed technology. Prior to a change in control, which is defined in the Willow Cross-Licensing Agreement to include, among other things, when Mr. Kiani is not the CEO of either company, the Company’s purported annual minimum royalty obligation was $5.0 million. On October 24, 2024, Mr. Kiani’s employment as the Company’s CEO was terminated. Following Mr. Kiani’s termination, the Company paid Willow (i) a $2.5 million license fee for technology for use in blood glucose monitoring; and (ii) minimum aggregate annual royalties for carbon monoxide, methemoglobin fractional arterial oxygen saturation, hemoglobin and/or glucose measurements in the amount of $15.0 million, plus $2.0 million for an additional parameter. See Note 9, “Intangible Assets, Net”, for further details. As described in Note 24, “Commitments and Contingencies - Litigation”, the Company is in a dispute with Willow regarding the Cross-Licensing Agreement and payments under the Cross-Licensing Agreement. The change in control does not otherwise impact the scope or duration of the license rights.

Aggregate recorded royalty expenses to Willow by the Company under the Cross-Licensing Agreement were $5.8 million and $5.7 million for the three months ended April 4, 2026 and March 29, 2025, respectively.

During the first quarter 2025, pursuant to the terms of the Cross-Licensing Agreement, Willow elected to invoice the Company for the remaining year’s minimum royalty of approximately $12.8 million, which has been paid to Willow in the second quarter 2025 and fully amortized as of January 3, 2026. During the fourth quarter 2025, Willow elected to invoice the Company approximately $27.0 million, consisting of Willow’s calculation of the 2026 minimum royalty and other amounts Willow claims are due. Following a legal review, the amount due was determined to be approximately $17.0 million, which the Company believes represents the actual amount due under the terms of the Cross-Licensing Agreement. This amount was recorded as a liability and remained unpaid as of January 3, 2026, and was subsequently paid on January 30, 2026. As of April 4, 2026, the unamortized asset balance was $12.8 million.

Net amount accrued and unpaid to Willow was approximately $8.1 million and $6.4 million as of April 4, 2026 and January 3, 2026, respectively. See Note 24, “Commitments and Contingencies”, under the heading of “Willow Cross-Licensing Agreement Provisions” for further details.

On June 26, 2023, at the Company’s 2023 Annual Meeting of Stockholders, its stockholders voted to elect two directors nominated by Politan Capital Management LP and certain of its affiliates (Politan) to the Company’s Board of Directors (Board). On September 19, 2024, at the Company’s 2024 Annual Meeting of Stockholders, two additional directors nominated by Politan were elected to the Board. As of February 17, 2026, the date of the last reported Schedule 13-D/A filed with the U.S. Securities and Exchange Commission (SEC) by Politan, Politan beneficially owned approximately 6.2% of the outstanding shares of the Company. The Vice Chairman of the Company’s board of directors, Quentin Koffey, also serves as Chief Investment Officer of Politan. For each of the three months ended April 4, 2026 and March 29, 2025, the Company paid less than $0.1 million to Politan.

On September 24, 2024, Michelle Brennan, a member of the Board, was appointed to the role of interim CEO of the Company. On February 12, 2025, Ms. Brennan’s role as interim CEO ceased, and she was appointed Chairman of the Board. Ms. Brennan also sits on the board of directors of Cardinal Health, Inc. (Cardinal). For each of the three months ended April 4, 2026 and March 29, 2025, sales to Cardinal were approximately $28.5 million and $31.8 million, respectively.

As of April 4, 2026 and January 3, 2026, amounts owed from Cardinal were approximately $10.7 million and $14.9 million, respectively.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

4. Inventories

Inventories consist of the following:


(in millions)	April 4, 2026		January 3, 2026
Raw materials	$	178.5	$	152.8
Work-in-process	21.8		21.8
Finished goods	199.7		205.7
Total inventories	$	400.0	$	380.3

5. Other Current Assets

Other current assets consist of the following:


(in millions)	April 4, 2026		January 3, 2026
Prepaid expenses	$	24.4	$	24.1
Lease receivable, current	22.7		22.8
Indirect taxes receivable	19.7		20.9
Prepaid rebates and royalties, current(1)	17.7		21.8

Prepaid income taxes	11.2		16.1
Contract assets, current	7.8		8.0





Other current assets	3.7		2.9
Total other current assets	$	107.2	$	116.6

______________

(1) Prepaid rebates and royalties, current includes $12.8 million of royalty related to Willow. See Note 3, “Related Party Transactions” for further details.

6. Lease Receivable

For deferred equipment agreements that contain embedded operating leases, upon lease commencement, the Company defers and records the equipment cost of operating lease assets within property, plant and equipment, net of accumulated depreciation. These operating lease assets are subsequently amortized to cost of goods sold over the lease term on a straight-line basis.

For deferred equipment agreements that contain embedded sales-type leases, the Company recognizes lease revenue and costs, as well as a lease receivable, at the time the lease commences. Lease revenue related to both operating-type and sales-type leases are included within revenue in the accompanying condensed consolidated statements of operations. For the three months ended April 4, 2026 and March 29, 2025, lease revenue was approximately $18.0 million and $12.0 million, respectively. Costs related to embedded leases within the Company’s deferred equipment agreements are included in cost of goods sold in the accompanying condensed consolidated statements of operations.

Lease receivable from sales-type leases consists of the following:


(in millions)	April 4, 2026		January 3, 2026
Lease receivable	$	66.2	$	66.1
Allowance for credit loss	(0.2)		(0.2)
Lease receivable, net	66.0		65.9
Less: current portion of lease receivable	(22.7)		(22.8)
Lease receivable, non-current	$	43.3	$	43.1

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

As of April 4, 2026, estimated future maturities of customer sales-type lease receivables and operating lease payments for each of the following fiscal years are as follows:


	Future Lease Receivables/Payments (in millions)
Fiscal year	Sales-Type Leases		Operating Leases

2026 (balance of year)	$	17.8	$	17.5
2027	19.0		21.8
2028	13.0		17.5
2029	8.7		13.8
2030	4.9		8.4
Thereafter	2.6		12.4
Total	$	66.0	$	91.4
Less: imputed interest(1)	—
Present value of total lease payments	$	66.0

______________

(1) The calculation of the rates implicit in the leases resulted in negative discount rates. Therefore, the Company as a lessor used a 0% discount rate to measure the net investment in the lease.

7. Deferred Costs and Other Contract Assets

Deferred costs and other contract assets consist of the following:


(in millions)	April 4, 2026		January 3, 2026
Deferred commissions	$	26.1	$	26.2
Unbilled contract receivables	23.9		21.3
Prepaid contract allowances	13.9		14.3

Deferred equipment agreements, net	0.8		0.8
Deferred costs and other contract assets	$	64.7	$	62.6

For the three months ended April 4, 2026 and March 29, 2025, deferred commission amortization expense was $2.2 million and $2.1 million, respectively.

For the year ended December 28, 2024, total deferred costs and other contracts were $61.0 million.

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MASIMO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

8. Property and Equipment, net

Property and equipment, net, consists of the following:


(in millions)	April 4, 2026		January 3, 2026
Operating lease assets	$	214.7	$	204.1
Machinery, equipment, tooling and other	152.1		150.6
Building and building improvements	151.8		151.8
Land	47.7		47.7
Computer equipment and software	41.6		41.3
Leasehold improvements	34.6		34.3

Furniture and office equipment	16.2		16.5
Demonstration units	0.5		0.5

Construction-in-progress (CIP)	26.7		24.5
Total property and equipment	685.9		671.3
Accumulated depreciation	(330.3)		(316.2)
Property and equipment, net	$	355.6	$	355.1

MASIMO CORP 10-Q