Masimo, renowned for its pulse oximeters and notable legal victories concerning the Apple Watch, finds itself entangled in a proxy battle initiated by activist investor Quentin Koffey’s Politan Capital.
Holding approximately a 9% stake in Masimo, Politan Capital has declared its intention to nominate two individuals to the company’s board.
This development follows closely on the heels of Masimo’s announcement to explore a spinoff of its audio unit, purchased for $1 billion in 2022—a decision previously met with investor dissatisfaction, given its perceived departure from Masimo’s core health-tech focus.
The proposed nominees by Politan Capital are Darlene Solomon, a former executive at Agilent, and Bill Jellison, former CFO of Stryker, both of whom offer extensive expertise in research, development, and M&A strategy.
Refocusing Strategies and Governance Challenges
The decision by Masimo to potentially split its consumer business, encompassing high-end audio equipment, baby monitors, and smartwatches, is aimed at redirecting the company’s focus toward its foundational professional healthcare and telehealth products.
CEO Joe Kiani, also the chairman, has expressed his intent to retain his leadership positions post-separation, underscoring the move as a strategic realignment towards core competencies.
Nevertheless, concerns raised by Politan regarding Masimo’s corporate governance and the execution of the separation process have brought attention to instances where Koffey and another Politan-appointed director felt marginalized in board deliberations.
Market Reaction and Investor Confidence
Masimo’s stock witnessed a significant surge exceeding 10% during after-hours trading following the announcement of a potential spinoff and the ongoing proxy battle.
This surge indicates investor confidence in Masimo’s strategic refocusing and acknowledges Politan Capital’s role in advocating for governance enhancements and operational efficiency. Also, it highlights the market’s preference for Masimo’s core health-tech offerings over its consumer technology ventures.
