Politan Highlights Need for Further Change in Masimo’s Boardroom Ahead of Thursday’s Annual Meeting

Details How Independent Third Parties and the Evidence in Legal Proceedings Have Consistently Refuted Masimo’s “Defensive Rhetoric” and How Company’s Attacks on Politan Continue to “Crumble Under Basic Scrutiny”

Shareholders Can Vote for Politan’s Independent Nominees, Darlene Solomon and William Jellison, on the WHITE Card and Can Visit www.AdvanceMasimo.com for Further Information

NEW YORK--(BUSINESS WIRE)--Politan Capital Management (together with its affiliates, “Politan”), an 8.9% shareholder of Masimo Corporation (“Masimo” or the “Company”) (NASDAQ: MASI), today issued an open letter to shareholders in advance of the Company’s 2024 Annual Meeting of Stockholders (the “Annual Meeting”), set for September 19.

The full text of the letter is below:

Dear Fellow Masimo Shareholders,

Over the past several months, Politan and our independent director nominees have been fortunate to have had the chance to hear from many of you, and to offer our own perspectives on Masimo’s vast potential. In a few days the Annual Meeting will occur, and shareholders will finally be able to select a Board comprised of a majority of truly independent directors. We know there has been an overwhelming volume of materials to digest in the last few weeks – and a seemingly unending number of attacks and claims published by Masimo’s Board. We encourage you to visit here for detailed comments by courts, blue-chip financial advisors, proxy advisory firms and expert witnesses to Masimo’s seemingly endless false and misleading assertions.

The efforts of Masimo’s Board to block a fair election continued this past weekend, when Masimo on Friday asked the California Federal Court to again delay the meeting, and then the following day asked to effectively invalidate Politan’s current proxy card – which the Court denied earlier today. Masimo justified these requests by claiming it has been greatly harmed by Politan having disclosed that the Court denied the Company’s request for a preliminary injunction a day earlier than the Court intended. The Court did find Politan violated the sealing order and therefore was in contempt. Though we relied on the advice of counsel and as such believed we were in compliance with the Court (see statement from our counsel here), ultimately the buck stops with me and I regret this occurred. In order to be as transparent as possible around these issues, we made the Court’s orders and Masimo’s Saturday brief readily accessible for shareholders by publishing them on our website. This way, shareholders can get the facts as opposed to Masimo’s spin.

Masimo has also desperately attempted to get shareholders to ignore ISS and Glass Lewis, by falsely implying the reports are stale. In fact, both groups could have revised their reports and have chosen not to. Consider what they wrote about the Board’s credibility:^1,2

• “The board's various arguments were generally unsupported by the facts, and were disingenuous or clearly false…There was no convincing evidence that the board exercised genuine oversight of management, and by extension, there was not a shred of observable accountability to shareholders.”

• “…Kiani has demonstrated that he has no regard for public shareholders. He has been at the center of so many corporate governance scandals and abuses that no credible argument exists to the contrary.”

• “In summary, they have continued their established pattern of presenting arguments that they apparently think will resonate with the investor base, but that crumble under basic scrutiny.”

• “Masimo investors have, in our view, abundant cause to conclude that the existing board remains obdurately committed to legacy oversight methodologies which have consistently enabled and amplified poor governance architecture, wide operational misses, nil-return strategic excursions, seemingly de minimis accountability and, ultimately, a lax commitment to acknowledging and addressing profound damage to shareholder value.”

As Thursday approaches, we urge you to focus on the following:

• Masimo’s frivolous litigation further confirmed the Board’s failure of oversight: The Company’s unsuccessful attempt to prevent Politan from voting its proxies by filing the lawsuit in California federal court – which was initiated the day after Masimo suffered a “scathing” rebuke from a second leading proxy advisor and was accompanied by a two-month delay of the vote – demonstrated the following:³

• Mr. Kiani withheld information fundamental to directors’ ability to fulfill their most basic fiduciary duties: Discovery confirmed numerous examples of Ms. Brennan and I being denied basic information. Despite Masimo’s constant insistence during the campaign to the contrary, the Court noted that the Company could not provide evidence of ever showing the Board a budget. Further, as the Court observed, “…Koffey’s requests for information were denied by Kiani, even though former Masimo Board member Adam Mikkelson acknowledged in a private e-mail to Kiani that some of the information requested ‘will likely be relevant for all board members.’”⁴
  
  As we have previously warned, the Board at Masimo is kept in the dark. This includes not being adequately informed of material risks like the DOJ and SEC investigations, the whistleblower lawsuit involving 16 former employees and Mr. Kiani’s pledge of 75% of his stock ownership as collateral for a personal loan.
  

• Mr. Kiani knew about RTW’s empty voting scheme to manipulate the election – and then repeatedly and publicly denied it: Discovery has revealed multiple communications between Mr. Kiani and the executives at RTW in charge of voting the firm’s Masimo position. The communications show Mr. Kiani and his advisors not only knew about RTW artificially inflating its vote totals to ~10% through empty voting, but even knew which specific shareholder would only be able to vote “a fraction of the…shares…the firm owns.” Discovery also showed that Mr. Kiani shared a confidential press release and 8K with RTW regarding Politan’s nominations the night before it was issued – a clear violation of the SEC’s Regulation FD rules and further evidence of the improper relationship between Mr. Kiani and RTW.⁵ This collusion to manipulate the election is only one of the ever-increasing number of examples demonstrating Mr. Kiani’s disregard for the shareholder franchise.
  

• The Board’s threats of disruption are not credible: Masimo has repeatedly claimed that if the Company loses the shareholder vote, Mr. Kiani will leave and the result would be significant disruption to the business. In truth, Masimo’s core healthcare business consists of multi-year contracts involving best-in-class technology and high switching costs – a business structure that is highly resilient to management change. Moreover, we believe it is clear that Mr. Kiani does not run the day-to-day business and was already planning to leave, along with the COO, as part of the separation transaction he proposed – without any business disruption concerns. In addition, employee disapproval of Mr. Kiani is the worst in the industry by a significant margin, and discovery has further revealed that, as the Head of Engineering stated, Company engineers have “lost trust in what Joe says.” Politan has had months to prepare for the possibility that Mr. Kiani decides to leave the Company. We also question how the Board could ever argue it can provide effective oversight when it also continuously claims Mr. Kiani is “irreplaceable.” Under this framework, the Board would never be able to disagree with Mr. Kiani – much less hold him accountable.
  

• Masimo’s central accusation was false and based on “quadruple hearsay”⁶ and Politan’s use of expert networks was entirely appropriate: The Company initially alleged that Politan was conspiring with the Wolf Haldenstein law firm to assist in litigation against Masimo. This was categorically false. During the course of discovery, it was revealed that the confidential witnesses who were the basis of the accusation did not exist. Once the Wolf Haldenstein accusation was refuted, the Company pivoted to another fantastical allegation: trying to paint Politan’s use of standard expert network firms for investment diligence as a nefarious act. Instead, the Court wrote this was more like the “conduct of a responsible investor than one bent on smearing the company it invested in.”⁷
  

• Masimo’s characterizations of our voluntary disclosures are false: The Company is trying to spin supplemental information we provided during the course of the proceeding as something it is not. The facts are that we proactively filed Masimo’s entire complaint and made clarifying disclosures – no matter how minor, including ones the Court found to be immaterial – such as our September 9 filing, in order to ensure there was no confusion on any points relevant to the Court or to shareholders. We were not ordered to make a single disclosure. We believe that had we chosen to countersue, the Company would have had extensive corrections to issue, as demonstrated by the overwhelming written record produced in discovery and statements from expert witnesses. Instead, our focus was on ensuring the Annual Meeting occurred as expeditiously as possible.
  

• If the necessary level of change does not occur at Masimo this year, it likely never will: The unique set of circumstances at Masimo requires a unique level of urgency. Consider the following:
  

• We believe Mr. Kiani’s proposed separation of the consumer business presents a clear and imminent threat to shareholder value: Following the 2024 Annual Meeting, Mr. Kiani may enter into an irreversible separation of Masimo’s consumer business with permanent negative valuation implications. Blue-chip investment bank Centerview Partners, which was hired to advise the Special Committee evaluating the separation, submitted a declaration stating that it advised the directors on the committee that the separation of IP proposed by Mr. Kiani would create a “negative valuation overhang,” and that if a separation were to proceed on such terms, it would “decrease value for Masimo shareholders.”
  
  Further, Glass Lewis stated that the “functionally unchecked separation effort spearheaded by Mr. Kiani” could “place the interests of Mr. Kiani well above those of the Company and its shareholders.” As well, when commenting on how immaterial Masimo’s allegation was, the Court wrote, “From the Court’s perspective, a reasonable shareholder would be more concerned with Kiani signing a term sheet, albeit a non-binding one, with a potential joint-venture partner without consulting Masimo’s complete Board.”
  

• Mr. Kiani’s disruption keeps getting worse: Over five years, Masimo stock has underperformed peers by nearly 100% and the stock has collapsed by ~40% or more on multiple occasions, the Company has consistently missed financial targets, received multiple DOJ subpoenas regarding its recall processes, an SEC subpoena regarding accounting allegations by multiple employees and whistleblower lawsuits involving 16 former employees. Meanwhile, Mr. Kiani has continually sought a separation that risks permanently impairing Masimo, was aware of a scheme to deprive shareholders of their voting rights and launched frivolous litigation (using shareholders’ resources) intended to preserve his control. Without independent board oversight, shareholders will be left asking, what is next?
  

• The Masimo Board has a track record of broken governance and empty promises: The issues harming the Company and its stakeholders are not new. As ISS noted, “[Masimo] has a corporate governance track record that is firmly among the most troubling of any modern public company.” For over a decade, shareholders have made their desire for better governance and accountability clear with votes against directors and compensation that rank among the very bottom of any public company in the U.S.
  
  Instead, the Company has consistently responded with promises that aren’t fulfilled and potential that goes unrealized. For example, over a decade ago and again last year before the 2023 Annual Meeting, Masimo promised to expand the Board to at least seven members, yet today it remains at five. As well, last year Masimo promised shareholders in the run up to the Annual Meeting to improve governance and that the business was doing great. Weeks later, Masimo reported an unprecedented collapse in revenues that led to a ~50% stock price decline and went on to block any effort by Mr. Koffey and Ms. Brennan to improve oversight. Without a majority of independent directors, this pattern will continue.
  

• If Mr. Kiani remains in control of Masimo’s Board, we believe that he intends to continue to pursue frivolous litigation in an effort to make the cost of defending itself too onerous for Politan to remain on the Board: For more than two years, we have navigated a “phalanx of impediments”⁸ to our efforts at Masimo – incurring immense costs in the process. We believe Mr. Kiani and his affiliated directors have demonstrated that if we are not able to ensure a majority of independent Board members, they will stop at nothing to remove any shred of independence from Masimo’s boardroom. We estimate that Company spending against Politan has climbed to ~$75M as of the end of second quarter of this year. The cost of defending ourselves against such frivolous litigation is immense and unsustainable; we believe that is precisely why Mr. Kiani pursues it.
  

• Politan’s nominees would bring critically needed expertise to Masimo’s boardroom: We worked with an independent, nationally recognized executive search firm to identify two directors that have no pre-existing relationship with Politan or Masimo and who bring crucial expertise that is sorely needed on the Board:
  
  

• Dr. Darlene Solomon, former CTO of Agilent Technologies, Inc. (NYSE: A), brings deep expertise in R&D strategy, a successful public board track record and experience overseeing three large scale, successful separation transactions requiring critical expertise in the division of IP and retention of technical talent. She is ideally suited to help Masimo navigate a separation of its Consumer Business and the associated IP division and technical talent retention matters in a manner that maximizes value. She can also support the Company in aligning its product portfolio and R&D pipeline to realize its long-term growth potential.
  

• William (Bill) Jellison, former CFO of Stryker Corporation (NYSE: SYK), brings deep medical technology executive capability, successful public board experience and a strong track record of value-creating capital allocation including significant transaction expertise. He is ideally suited to chair the Audit Committee amidst an SEC investigation into accounting, as Masimo has not had an experienced audit chair in over five years, and could help oversee cost structure optimization efforts and the alignment of spending to long-term growth plans.
  

• As Glass Lewis stated: “…[W]e ultimately find both Mr. Jellison and Dr. Solomon to be highly credible and capable candidates bringing appropriate industry expertise, potentially critical M&A/IP knowledge and reasonable public board experience (including relevant committee service). We believe there is suitable cause to conclude these nominees will act independently and that neither candidate is beholden to the interests of Politan or Quentin Koffey.”

***

In these last few days before the Annual Meeting, we remain focused on the exceptional opportunity at Masimo and the chance this election represents to make clear that shareholders deserve better. Once again, we appreciate your time and engagement throughout this process.

Sincerely,

Quentin Koffey

Politan Capital Management

Your vote is important, no matter how many shares of Common Stock you own. We urge you to sign, date, and return the WHITE universal proxy card today to vote FOR the election of the Politan Nominees and in accordance with the Politan Parties’ recommendations on the other proposals on the agenda for the 2024 Annual Meeting.

If you have any questions, require assistance in voting your
WHITE universal proxy card or voting instruction form,
or need additional copies of Politan’s proxy materials,
please contact D.F. King using the contact information provided here:

D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Stockholders call toll-free: [phone]
Banks and Brokers call: [phone]
By Email: [e-mail]

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information herein contains “forward-looking statements.” Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “potential,” “targets,” “forecasts,” “seeks,” “could,” “should” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if any of the underlying assumptions of Politan Capital Management LP (“Politan”) or any of the other participants in the proxy solicitation described herein prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Politan that the future plans, estimates or expectations contemplated will ever be achieved.

Certain statements and information included herein may have been sourced from third parties. Politan does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as may be expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein.

Politan disclaims any obligation to update the information herein or to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such information, projected results or statements or to reflect the occurrence of anticipated or unanticipated events.

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

Politan and the other Participants (as defined below) have filed a definitive proxy statement and accompanying WHITE universal proxy card or voting instruction form with the Securities and Exchange Commission (the “SEC”) to be used to solicit proxies for, among other matters, the election of its slate of director nominees at the 2024 annual stockholders meeting (the “2024 Annual Meeting”) of Masimo Corporation, a Delaware corporation (“Masimo”). Shortly after filing its definitive proxy statement with the SEC, Politan furnished the definitive proxy statement and accompanying WHITE universal proxy card or voting instruction form to some or all of the stockholders entitled to vote at the 2024 Annual Meeting.

The participants in the proxy solicitation are Politan, Politan Capital Management GP LLC (“Politan Management”), Politan Capital Partners GP LLC (“Politan GP”), Politan Capital NY LLC (the “Record Stockholder”), Politan Intermediate Ltd., Politan Capital Partners Master Fund LP (“Politan Master Fund”), Politan Capital Partners LP (“Politan LP”), Politan Capital Offshore Partners LP (“Politan Offshore” and, collectively with Politan Master Fund and Politan LP, the “Politan Funds”), Quentin Koffey, Matthew Hall, Aaron Kapito (all of the foregoing persons, collectively, the “Politan Parties”), William Jellison and Darlene Solomon (such individuals, collectively with the Politan Parties, the “Participants”).

As of the date hereof, the Politan Parties in this solicitation collectively own an aggregate of 4,713,518 shares (the “Politan Group Shares”) of common stock, par value $0.001 per share, of Masimo (the “Common Stock”). Mr. Koffey may be deemed to own an aggregate of 4,714,746 shares of Common Stock (the “Koffey Shares”), which consists of 1,228 restricted stock units that vested on June 26, 2024 as well as the Politan Group Shares. Politan, as the investment adviser to the Politan Funds, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Politan Group Shares, and, therefore, Politan may be deemed to be the beneficial owner of all of the Politan Group Shares. The Record Stockholder is the direct and record owner of 1,000 shares of Common Stock that comprise part of the Politan Group Shares. Both the Politan Group Shares and the Koffey Shares represent approximately 8.9% of the outstanding shares of Common Stock based on 53,478,694 shares of Common Stock outstanding as of August 12, 2024, as reported in Masimo’s revised definitive proxy statement filed on August 15, 2024. As the general partner of Politan, Politan Management may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) all of the Politan Group Shares and, therefore, Politan Management may be deemed to be the beneficial owner of all of the Politan Group Shares. As the general partner of the Politan Funds, Politan GP may be deemed to have the shared power to vote or to direct the vote of (and the shared power to dispose or direct the disposition of) all of the Politan Group Shares, and therefore Politan GP may be deemed to be the beneficial owner of all of the Politan Group Shares. Mr. Koffey, including by virtue of his position as the Managing Partner and Chief Investment Officer of Politan and as the Managing Member of Politan Management and Politan GP, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) all of the Koffey Shares.

IMPORTANT INFORMATION AND WHERE TO FIND IT

POLITAN STRONGLY ADVISES ALL STOCKHOLDERS OF MASIMO TO READ ITS DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS TO SUCH PROXY STATEMENT AND OTHER PROXY MATERIALS FILED BY POLITAN WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE AT WWW.SEC.GOV. THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS ARE ALSO AVAILABLE ON THE SEC WEBSITE, FREE OF CHARGE, OR BY DIRECTING A REQUEST TO THE PARTICIPANTS’ PROXY SOLICITOR, D.F. KING & CO., INC., 48 WALL STREET, 22ND FLOOR, NEW YORK, NEW YORK 10005 STOCKHOLDERS CAN CALL TOLL-FREE: [phone].

_______________________________
^1	Glass, Lewis & Co., proxy paper, July 11, 2024 (permission to quote Glass Lewis was neither sought nor obtained).
^2	Institutional Shareholder Services Inc., vote recommendation, July 15, 2024 (permission to quote ISS was neither sought nor obtained).
^3	CNBC, July 12, 2024.
^4	Masimo v. Politan Capital Management LP, et al., 8:24-cv-01568-JVS-JDE, Dkt. 221, Order Regarding Motion for Preliminary Injunction (PUBLIC VERSION) at 30 (Sept. 11, 2024) (“PI Order”).
^5	CNBC, September 6, 2024.
^6	Bloomberg Law, August 30, 2024.
^7	PI Order at 10.
^8	Politan Capital Management LP v. Kiani, et al., C.A. No. 2022-0948-NAC, Transcript at 138 (Nov. 17, 2023).