Masimo sells Sound United to Harman/Samsung, forming an audio powerhouse

Masimo has officially sealed the deal to sell its Sound United brands to Harman after speculations had been brewing for a year. This move marks the end of Masimo’s foray into the home audio industry, with the sale expected to be finalized by the end of 2025. The $350-million sale will see iconic brands like Denon, Marantz, Definitive Technology, and more joining the extensive portfolio of Harman hi-fi audio brands.

Back in April 2024, Masimo had separated its consumer division into Masimo Consumer, which included the audio brands acquired under Sound United. This move hinted at a possible sell-off of its consumer-facing businesses. Before acquiring Sound United, Masimo had a focus on consumer medical monitoring devices, evident with the launch of the W1 smartwatch shortly after acquiring the audio brands.

Masimo’s decision to set up Masimo Consumer as a separate entity was aimed at protecting the shareholder value of the company by divesting its less profitable consumer business. It made strategic sense for Masimo to focus on supplying medical equipment to hospitals, a sector that typically offers higher profit margins compared to consumer products. The sudden shift into the home audio market, especially as one of the largest manufacturers, raised concerns among Masimo’s board and investors, which was reflected in a significant dip in the company’s stock value post-acquisition.

The sale of Sound United to Harman signifies the conclusion of a long-drawn power struggle within Masimo, involving founder and former CEO Joe Kiani and activist investors like Quentin Koffey, who advocated for Masimo’s exit from the audio business. Following the acquisition, Kiani highlighted the benefits of Sound United’s distribution network in enhancing Masimo’s consumer medical business, a viewpoint that was not shared by all factions within the company.

After stepping down as CEO of Masimo in late 2024 due to a shareholder vote, Kiani’s departure marked significant changes within the company, including the promise to divest the Sound United audio brands. Despite the founder’s exit, Masimo is moving forward under the leadership of new CEO Catherine Szyman, signaling a renewed focus on its core business and transparency for investors.

Analysts predict a positive future for Masimo under Szyman’s leadership, with a resurging interest in its medical devices and continued operations for Masimo Consumer, albeit without the audio brands. The rebound in sales for Masimo Consumer could have potentially included the Sound United brands, indicating a recovery in the audio industry post-pandemic disruptions.

A recurring theme in Masimo’s recent SEC filings and analyst reports is the imminent need to sell off the audio brands, evident from the categorization of these brands as “discontinued operations.” With the sale to Harman underway, Masimo is set to realign its focus towards its core competencies in the medical equipment sector, bidding farewell to its stint in the home audio market.