Vasquez v. Masimo Corporation

On November 14, 2023, Labaton Keller Sucharow was appointed Lead Counsel in a securities class action against Masimo Corporation (Masimo or the Company) and certain executives (collectively, Defendants).  The lawsuit alleges violations under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act), U.S. Securities and Exchange Commission (SEC) Rule 10b-5 on behalf of all persons and entities that purchased or otherwise acquired Masimo common stock between May 4, 2022, through August 8, 2023, inclusive (the Class Period).

Masimo is a global medical technology company that develops, manufactures, and markets a variety of noninvasive monitoring technologies.  The Company’s organizational structure includes two reportable segments, healthcare and non-healthcare, designed to accelerate growth strategies and strengthen its focus on patient care.

The Complaint alleged that Defendants’ disseminated materially false and misleading statements and concealed adverse facts related to Masimo’s two core businesses—its traditional healthcare unit and its new Sound United acquisition (non-healthcare unit).  Masimo allegedly (i) misled the market about the healthcare division’s inability to introduce successful new products to the marketplace that would support Defendants’ revenue forecasts during the Class Period; (ii) concealed that the healthcare business was accumulating excessive inventory of single-use sensors—a key driver of the Company’s financial success—as customers shifted their preferences to using reusable sensors in many care settings to reduce costs; and (iii) misled the market about the Company’s non-healthcare business, Sound United, which was purchased for $1.025 billion and touted for synergies and expansion opportunities all while failing to integrate the acquisition, disclose a known and pervasive lack of internal controls and inadequate accounting practices, and hiding Sound United’s ballooning inventory costs preventing it from investing in new products.

On November 5, 2024, Plaintiffs overcame Defendants’ motion to dismiss in large part, enabling Section 20(a) claims against Defendants to proceed as well as additional claims against Masimo and the Company’s CFO Defendant Micah Young.  The Court noted that Plaintiffs have adequately alleged scienter as to Masimo and Defendant Micah Young.

The case is Vasquez v. Masimo Corporation, No. 3:23-cv-01546-L-DEB (S.D. Cal.).  Labaton Keller Sucharow represents Lead Plaintiffs Boston Retirement System, Central Pennsylvania Teamsters Pension Fund - Defined Benefit Plan, and Central Pennsylvania Teamsters Pension Fund - Retirement Income Plan 1987.