v3.25.2
Related Party Transactions
 6 Months Ended
Jun. 28, 2025
Related Party Transactions [Abstract]  
Related Party Transactions
3. Related Party Transactions
On October 24, 2024, following a review by outside counsel, the Board adopted resolutions to terminate the employment of Mr. Kiani, our former Chairman and Chief Executive Officer (CEO), effective October 24, 2024. See Note 24, “Commitments and Contingencies”, for further details.
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. Joe Kiani, the Company’s former Chairman and CEO, is also the Executive Chairman and CEO of Willow. Effective as of January 3, 2016, in connection with changes in the capital structure of Willow, the Company determined that Willow was no longer required to be consolidated with the Company for financial reporting purposes. Although the Company believes that Willow continues to be considered a variable interest entity, the Company has determined that it is no longer the primary beneficiary of Willow as it does not have the power to direct the activities of Willow that most significantly impact Willow’s economic performance and has no obligation to absorb Willow’s losses.
The Company is a party to the following agreements with Willow:
•Cross-Licensing Agreement - The Company and Willow are parties to a cross-licensing agreement (Cross-Licensing Agreement), which governs each party’s rights to certain intellectual property held by the two companies. The Company is subject to certain annual minimum aggregate royalty obligations 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, Mr. Kiani ceasing to serve as CEO of either the Company or Willow, the Company’s annual minimum royalty obligation was $5.0 million. On October 24, 2024, a change in control, as defined in the Willow Cross-Licensing Agreement, occurred when Mr. Kiani’s employment as the Company’s CEO was terminated. As a result, pursuant to the terms of the Willow Cross-Licensing Agreement, (i) the option to license technology developed by Willow for use in blood glucose monitoring was deemed automatically exercised and a $2.5 million license fee for this technology was paid by the Company to Willow; and (ii) the minimum aggregate annual royalties payable to Willow for carbon monoxide, methemoglobin fractional arterial oxygen saturation, hemoglobin and/or glucose measurements increased to $15.0 million per year until the exclusivity period of the agreement ends, plus up to $2.0 million for each additional rainbow® parameter (with no maximum ceiling for non-vital sign measurements). See Note 9, “Intangible Assets, Net”, for further details. 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 $4.9 million and $4.2 million for the three months ended June 28, 2025 and June 29, 2024, respectively. Aggregate recorded royalty expenses to Willow by the Company under the Cross-Licensing Agreement were $10.6 million and $9.0 million for the six months ended June 28, 2025 and June 29, 2024, 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. As of June 28, 2025, the unamortized asset balance was $8.5 million.
•Administrative Services Agreement - The Company was a party to an administrative services agreement with Willow (G&A Services Agreement), which governs certain general and administrative services that the Company provided to Willow. Amounts charged by the Company pursuant to the G&A Services Agreement were less than $0.1 million for each of the three months ended June 28, 2025 and June 29, 2024, respectively. Amounts charged by the Company pursuant to the G&A Services Agreement were $0.1 million and $0.2 million for each of the six months ended June 28, 2025 and June 29, 2024, respectively. On March 31, 2025, Willow provided the Company with a notice to terminate the Services Agreement under Section 7.2, effective April 30, 2025.
•Lease Agreement - Effective December 2019, the Company entered into a lease agreement with Willow for approximately 34,000 square feet of office, research and development space at one of the Company’s owned facilities in Irvine (Willow Lease). The term of the Willow Lease expired on December 31, 2024, and was not renewed. The Company recognized no lease income for the three and six months ended June 28, 2025. The Company recognized approximately $0.3 million and $0.6 million of lease income for the three and six months ended June 29, 2024.
Net amounts accrued and unpaid to Willow at June 28, 2025 and December 28, 2024 were approximately $2.9 million and $4.9 million, respectively. See Note 24, “Commitments and Contingencies”, under the heading of “Willow Cross-Licensing Agreement Provisions” for further details.
The Masimo Foundation for Ethics, Innovation and Competition in Healthcare (Masimo Foundation) is a non-profit organization that was founded in 2010 to provide a platform for encouraging ethics, innovation and competition in healthcare. Mr. Kiani is the Chairman of the Masimo Foundation. In addition, the Company’s Executive Vice President (EVP), Chief Financial Officer served as the Treasurer of the Masimo Foundation and the Company’s EVP, General Counsel and Corporate Secretary served as the Secretary for the Masimo Foundation. Effective January 9, 2025, the Masimo Foundation Board appointed a new Treasurer and Secretary, and Messrs. McClenahan and Young resigned from their respective roles with the Masimo Foundation.
During the three and six months ended June 28, 2025, the Company made no cash contributions to the Masimo Foundation. During the three months ended June 29, 2024, the Company made no cash contributions to the Masimo Foundation. During the six months ended June 29, 2024, the Company made cash contributions of approximately $1.0 million to the Masimo Foundation. During the three and six months ended June 28, 2025, the Company made no in-kind contributions to the Masimo Foundation. During the three and six months ended June 29, 2024, the Company made various in-kind contributions to the Masimo Foundation, mainly in the form of donated administrative services. The Company halted all payments to the Masimo Foundation as of the end of the third quarter of 2024, and does not intend to make any future contributions to the Masimo Foundation.
Mr. Kiani is also a co-founder, a member of the board of directors and Chief Executive Officer of Like Minded Media Ventures (LMMV), a team of storytellers that create content focused in the areas of true stories, social causes and science. LMMV creates stories with a multi-platform strategy, bridging the gap between film, television, digital and social media. During the second quarter of 2020, the Company entered into a marketing service agreement with LMMV for audiovisual production services promoting brand awareness, including television commercials and digital advertising. During each of the three and six months ended June 29, 2024, the Company incurred no marketing expenses to LMMV under the marketing service agreement. At December 28, 2024, there were no amounts due to LMMV for services rendered. During the fourth quarter of 2024, the Company terminated the marketing services agreement with LMMV. No payment was due in connection with the termination of this agreement.
The Company maintained an aircraft time share agreement, pursuant to which the Company agreed from time to time to make its aircraft available to Mr. Kiani, in his former capacity as Chairman and CEO, for lease on a time-sharing basis. The agreement provided that Mr. Kiani would pay the Company for personal use based on agreed upon reimbursement rates. For each of the three and six months ended June 29, 2024, the Company charged Mr. Kiani less than $0.1 million related to such reimbursements.
The time share agreement with Mr. Kiani was terminated upon the termination of his employment with the Company.
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 September 24, 2024, 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 8.8% 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 the three months and six months ended June 28, 2025, the Company paid zero and less than $0.1 million to Politan. For the three and six months ended June 28, 2025, the Company received a $2.0 million payment from Politan related to legal expenses. There were no related party transactions between Masimo and Politan for the three and six months ended June 29, 2024.
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 June 28, 2025 and June 29, 2024, sales to Cardinal were approximately $25.8 million and $25.1 million, respectively. For each of the six months ended June 28, 2025 and June 29, 2024, sales to Cardinal were approximately $57.6 million and $55.7 million, respectively.
As of June 28, 2025 and December 28, 2024, amounts owed from Cardinal were approximately $17.4 million and $14.3 million, respectively.