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Masimo Reports First Quarter 2008 Financial Results

Record results mark 19th consecutive quarter of revenue growth

Q1 2008 Highlights:

- Product revenues increased 30% to a record $59.7 million

- Shipped 28,600 new pulse oximeters

- Rainbow revenues increased 104%

IRVINE, Calif., April 29, 2008 /PRNewswire-FirstCall/ -- Masimo Corporation (Nasdaq: MASI), the inventor of Pulse CO-Oximetry and Measure-Through-Motion-and-Low-Perfusion pulse oximetry, today announced its financial results for the 2008 first quarter ended March 29, 2008.

For the first quarter of 2008, Masimo reported product revenues of $59.7 million representing a 30% increase over $45.8 million for the first quarter of 2007. Including royalty revenues, Masimo reported total 2008 first quarter revenues of $71.1 million compared to $59.0 million for the first quarter of 2007. Net income for the 2008 first quarter was $8.8 million representing $0.15 per common share compared to $9.1 million or $0.11 per common share for the first quarter of 2007.

Masimo also reported that it shipped 28,600 Masimo SET and Masimo Rainbow SET oximetry units, excluding handheld units, during the first quarter of 2008. This represented an 8% increase from 26,500 units in the comparable prior year period, resulting in a new estimated net worldwide installed base of 491,000 Masimo SET pulse oximeters.

Joe E. Kiani, Chairman and Chief Executive Officer of Masimo, said, "We are happy to report first quarter results that once again exceeded expectations. We believe that these results reflect the increasing momentum for the clinical adoption of our life saving Masimo SET and Masimo Rainbow SET technologies. In fact, in the first quarter of 2iod

during which single class

of equity securities was

outstanding NA $8,791 $9,097 $8,791

Weighted average common

shares outstanding -

single class NA 5,109,018 51,204,665 55,109,018

Basic net income per share

for period during which

single class of equity

securities was

outstanding NA $0.16

Basic net income per

common share $0.14 $0.16 $0.18 $0.16

Diluted net income per

common share:

Weighted average common

shares outstanding - two

class method 16,592,163 NA

Diluted common share

equivalent: stock options 4,070,367 NA

20,662,530 NA

Diluted earnings per share

for period during which

two classes of equity

securities were

outstanding $0.11 NA

Net income for period

during which single class

of equity securities was

outstanding NA $8,791 $9,097 $8,791

Weighted average common

shares outstanding -

single class NA 55,109,018 51,204,665 55,109,018

Diluted common share

equivalent: stock options NA 4,815,323 4,070,368 4,815,323

NA 59,924,341 55,275,033 59,924,341

Diluted net income per

share for period during

which single class of

equity securities was

outstanding NA $0.15

Diluted net income per

common share $0.11 $0.15 $0.16 $0.15

008, demand for our new Masimo Rainbow SET technologies, on the strength of our Rad-57 handheld carbon monoxide measuring device, increased over 100% compared to Q1 last year."

Cash and cash equivalents totaled $86.3 million at March 29, 2008. Masimo also reported that during the 2008 first quarter, it satisfied in full a $26.7 million debt obligation, the majority of which was originally established in early fiscal 2007.

Conference Call

Masimo will hold a conference call today at 2:00 p.m. PT (5:00 p.m. ET) to discuss the results. The dial-in numbers are (866) 831-6247 for domestic callers and (617) 213-8856 for international callers. The reservation number for both dial-in numbers is 82345350. A live web cast of the conference call will be available online from the "Investor Relations" page of the Company's corporate web site at

After the live web cast, the call will remain available on Masimo's web site through May 29, 2008. In addition, a telephonic replay of the call will be available until May 13, 2008. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 71776300.

About Masimo

Masimo (Nasdaq: MASI) develops innovative monitoring technologies that significantly improve patient care-helping solve "unsolvable" problems. In 1995, the company debuted Measure-Through-Motion-and-Low-Perfusion pulse oximetry, known as Masimo SET, which virtually eliminated false alarms and increased pulse oximetry's ability to detect life-threatening events. More than 100 independent and objective studies demonstrate Masimo SET provides the most reliable SpO2 and pulse rate measurements even under the most challenging clinical conditions, including patient motion and low peripheral perfusion. In 2005, Masimo introduced Masimo Rainbow SET, a breakthrough noninvasive blood constituent monitoring platform that can measure many blood constituents that previously required invasive procedures. Rainbow SET continuously and noninvasively measures total hemoglobin (SpHb(TM)) and oxygen content (SpOC(TM)) (both pending regulatory clearances), carboxyhemoglobin (SpCO(R)), methemoglobin (SpMet(R)), and PVI(TM), in addition to oxyhemoglobin (SpO2), pulse rate (PR), and perfusion index (PI), allowing early detection and treatment of potentially life-threatening conditions. Founded in 1989, Masimo has the mission of "Improving Patient Outcomes and Reducing Cost of Care by Taking Noninvasive Monitoring to New Sites and Applications." Additional information about Masimo and its products may be found at

Forward-Looking Statements

This press release includes forward-looking statements. All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about: our financial condition, results of operations, prospects and business generally; the market acceptance of our technologies and products; the value of measuring new parameters; expectations regarding our ability to design and deliver innovative new noninvasive technologies; and expectations for total revenues, product revenues, GAAP earnings per share, non-GAAP pro forma earnings per share and stock based compensation expenses for the full fiscal year 2008. These forward-looking statements are based on management's current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, those related to: our reliance on Masimo SET and related products and technologies for substantially all of our revenue; any failure in protecting our intellectual property exposure to competitors' assertions of intellectual property claims; the highly competitive nature of the markets in which we sell our products and technologies; the failure to continue developing innovative products and technologies; the lack of acceptance of any new products and technologies of ours; obtaining regulatory approval of our current and future products and technologies, including the recently announced total hemoglobin measurement; the loss of our customers the failure to retain and recruit senior management; product liability claims exposure; a failure to obtain expected returns from the amount of intangible assets we have recorded; the maintenance of our brand; the amount and type of equity awards that we may grant to employees and service providers in the future; and other factors discussed in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 29, 2007 filed with the Securities and Exchange Commission on March 4, 2008. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to update, amend or clarify these forward-looking statements or the risk factors contained in our Annual Report on Form 10-K for the fiscal year ended December 29, 2007, whether as a result of new information, future events or otherwise, except as may be required under the applicable securities laws.

Masimo Corporation

Investor Contact:

Mark P. de Raad

Executive Vice President and Chief Financial Officer

Masimo Corporation

(949) 297-7080

Media Contact:

Dana Banks

Manager, Public Relations

Masimo Corporation

(949) 297-7348

Masimo, SET, Signal Extraction Technology, Improving Outcomes and Reducing Cost of Care by Taking Noninvasive Monitoring to New Sites and Applications, Rainbow, SpHb, SpCO, SpMet, PVI, Pulse CO-Oximetry and Pulse CO-Oximeter are trademarks or registered trademarks of Masimo Corporation.



(in thousands)

December 29, 2007 March 29, 2008



Current assets

Cash and cash equivalents $96,733 $86,347

Accounts receivable, net of allowance

for doubtful accounts 26,970 30,218

Royalties receivable 13,866 11,375

Inventories 23,110 25,984

Prepaid expenses 7,084 4,278

Deferred tax assets 14,334 14,250

Other current assets 1,543 1,689

Total current assets 183,640 174,141

Deferred cost of goods sold 26,249 27,022

Property and equipment, net 11,164 11,133

Deferred tax assets 5,332 5,332

Restricted cash 513 518

Intangible assets, net 5,589 6,011

Goodwill 448 448

Other assets 2,576 2,547

Total assets $235,511 $227,152


Current liabilities

Accounts payable $14,640 $16,929

Accrued compensation 12,409 10,244

Accrued liabilities 6,211 5,542

Dividends payable 183 183

Deferred revenue 16,827 20,983

Current portion of long-term debt 11,539 900

Total current liabilities 61,809 54,781

Deferred revenue 366 339

Long-term debt, less current portion 19,502 532

Other liabilities 3,768 3,794

Total liabilities 85,445 59,446

Commitments and contingencies

Stockholders' equity

Common stock 55 56

Treasury stock (1,209) (1,209)

Additional paid-in capital 143,297 151,723

Accumulated other comprehensive loss (1,034) (612)

Retained earnings 8,957 17,748

Total stockholders' equity 150,066 167,706

Total liabilities and stockholders'

equity $235,511 $227,152



(in thousands, except per share information)


Three Months Ended

March 31, 2007 March 29, 2008


Product $45,764 $59,673

Royalty and license fee 13,190 11,437

Total revenue 58,954 71,110

Cost of goods sold 16,901 21,121

Gross profit 42,053 49,989

Operating expenses:

Research and development 5,454 6,298

Selling, general and administrative 21,402 29,529

Antitrust litigation 10 168

Total operating expenses 26,866 35,995

Operating income 15,187 13,994

Non-operating income (expense):

Interest income 355 959

Interest expense (427) (643)

Other 41 103

Total non-operating income (expense) (31) 419

Income before provision for income taxes 15,156 14,413

Provision for income taxes 6,059 5,622

Net income 9,097 8,791

Accretion of preferred stock (1,956) -

Undistributed income attributable to

preferred stockholders (4,828) -

Net income attributable to common

stockholders $2,313 $8,791

Net income per common share:

Basic $0.14 $0.16

Diluted $0.11 $0.15

The following table presents details of the stock-based compensation

expense that is included in each functional line item in the condensed

consolidated statements of income above (in thousands):

Three Months Ended

March 31, 2007 March 29, 2008

Cost of goods sold $34 $29

Research and development 111 412

Selling, general and administrative 446 1,137


Reconciliation of GAAP to Non-GAAP Diluted Earnings per Share


The following tables provide a comparison of our earnings per share

calculated under Emerging Issues Task Force Issue No. 03-6, "Participating

Securities and the Two-Class Method under FASB Statement No. 128", or EITF

03-6, and Statement of Financial Accounting Standards No. 128 "Earnings

per Share", or SFAS No. 128, in accordance with GAAP and the non-GAAP

if-converted method based upon SFAS No. 128. The non-GAAP if-converted

method assumes conversion of all shares of our preferred stock into common

stock as of December 31, 2006.

Upon closing of the Company's initial public offering on August 13, 2007,

all of the outstanding convertible preferred shares were converted into

common shares. Therefore, subsequent to this stock conversion the Company

uses the if-converted method under SFAS No. 128 to calculate earnings per

share. Accordingly, for the three months ended March 29, 2008, the Company

calculated net income per share using the if-converted method for the

entire period while the two-class method was used for the entire period

ended March 31, 2007.

We believe that the following non-GAAP earnings per share information is

relevant and useful information that can be used by analysts, investors

and other interested parties to assess our performance on a comparable

basis to future reported earnings per share. Accordingly, we are

disclosing this information to permit additional analysis of our

performance (in thousands, except share data):

As Reported Non-GAAP

Three Three Three Three

months months months months

ended ended ended ended

March 31, March 29, March 31, March 29,

2007 2008 2007 2008

Net income attributable

to common stockholders:

Net income - two class

method $9,097 NA

Accretion of preferred

stock (1,956) NA

Income attributable to

preferred stockholders (4,828) NA

Net income attributable to

common stockholders $2,313 NA

Basic net income per

common share:

Weighted average common

shares outstanding - two

class method 16,592,163 NA

Basic earnings per share

for period during which

two classes of equity

securities were outstanding $0.14 NA

Net income for per

SOURCE Masimo Corporation
Copyright©2008 PR Newswire.
All rights reserved

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