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Masimo Reports Second Quarter 2012 Financial Results

IRVINE, Calif., Aug. 1, 2012 /PRNewswire/ -- Masimo (NASDAQ: MASI) today announced its financial results for the second quarter ended June 30, 2012.

Masimo's total second quarter revenue, including royalties, rose 12% to $122.8 million, compared to $109.6 million for the second quarter of 2011.  Second quarter 2012 product revenue rose 12% to $115.3 million, compared to $102.6 million for the second quarter of 2011.  The company's worldwide end-user business grew 16% in the second quarter of 2012 and represented 85% of product revenue.  OEM sales, which accounted for 15% of total product revenue, declined 5% compared to the same period in 2011.  Revenue from sales of Masimo rainbow products rose 7% to $9.7 million in the second quarter, compared to $9.1 million for the second quarter of 2011.  Second quarter 2012 rainbow revenue included a 48% increase in total hemoglobin (SpHb) sales, compared to the second quarter of 2011.Net income for the second quarter was $17.7 million, or $0.30 per diluted share, compared to net income of $17.0 million, or $0.28 per diluted share, in the second quarter of 2011.  Net income for the second quarter of 2012 included an income tax benefit resulting from the conclusion of a prior year tax audit, which increased the company's diluted earnings per share by $0.03.During the second quarter, the company shipped approximately 37,300 Masimo SET pulse oximetry and Masimo rainbow SET Pulse CO-Oximetry units, excluding handheld units, unchanged from the same prior-year period.  Masimo estimates its worldwide installed base as of June 30, 2012 to be 1,033,000 units, up 12% from 922,000 units as of July 2, 2011.Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, "With 12% growth in our product revenue and worldwide installed base, Masimo continued to significantly outpace market growth.  Our end-user, or direct, business delivered even stronger growth at 16% versus the second quarter of 2011, fueled by increased consumable sales in the U.S., Europe, Asia and other regions. This performance is a testament to the superiority of our gold standard Masimo SET pulse oximetry technology and the growing appeal of our breakthrough Masimo rainbow SET platform, which is the first and only platform to provide continuous, noninvasive monitoring of carbon monoxide, total hemoglobin, methemoglobin, fluid responsiveness and respiration rate."

As of June 30, 2012, cash and cash equivalents were $121.5 million, compared to $129.9 million as of December 31, 2011.  The change reflects primarily net cash generated from operations, offset by $7.2 million in cash used to purchase the assets of Spire Semiconductor in March 2012 and $26.3 million in cash used to repurchase shares of Masimo common stock.  In the second quarter of 2012, the company completed its full three million share repurchase program authorized by the Board of Directors in August 2011. 

Financial Guidance
Masimo today announced the acquisition of PHASEIN, AB and, as a result, is providing updated 2012 financial guidance.  Masimo now expects total revenue of approximately $494 million, including $466 million in product revenue and $28 million in royalty revenue.  This compares to prior guidance of $458 million in product revenue and $28 million in royalty revenue.  As a result of the acquisition, Masimo estimates a $0.04 dilutive impact on its previous 2012 EPS guidance of approximately $1.15.  In addition, Masimo is also updating its guidance for the remainder of 2012 to reflect slightly lower product gross profit margin expectations, a slightly higher effective tax rate and the inclusion of first half 2012 foreign exchange losses.  The impact of these revisions to guidance is offset by the $0.03 tax benefit the company recognized in the second quarter of 2012.  As a result of the acquisition and the other assumptions noted above, the company now expects 2012 GAAP earnings per share to be approximately $1.11, compared to prior guidance of approximately $1.15. 

Conference Call
Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET) to discuss the results.  A live webcast of the conference call will be available online from the investor relations page of the company's corporate website at  The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706) 758-3929 for international callers.  The reservation code for both dial-in numbers is 10077057.  After the live webcast, the call will be available on Masimo's website through September 1, 2012.  In addition, a telephonic replay of the call will be available through August 15, 2012. The replay dial-in numbers are (800) 585-8367 for domestic callers and +1 (855) 859-2056 for international callers.  Please use reservation code 10077057.

About Masimo
Masimo (NASDAQ: MASI) is the global leader in innovative noninvasive 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 rainbow® SET Pulse CO-OximetryTM technology, allowing noninvasive and continuous monitoring of blood constituents that previously required invasive procedures, including total hemoglobin (SpHb®), oxygen content (SpOCTM), carboxyhemoglobin (SpCO®), methemoglobin (SpMet®), and Pleth Variability Index (PVI®), in addition to SpO2, pulse rate, and perfusion index (PI).  In 2008, the company introduced Masimo Patient SafetyNet™, a remote monitoring and wireless clinician notification system designed to help hospitals avoid preventable deaths and injuries associated with failure to rescue events.  In 2009, Masimo introduced rainbow Acoustic MonitoringTM, the first-ever noninvasive and continuous monitoring of acoustic respiration rate (RRa™).  Masimo's rainbow SET technology platform offers a breakthrough in patient safety by helping clinicians detect life-threatening conditions and helping guide treatment options.  In 2010, Masimo acquired SEDLine®, a pioneer in the development of innovative brain function monitoring technology and devices.  Masimo SET and Masimo rainbow SET technologies can also be found in over 100 multiparameter patient monitors from over 50 medical device manufacturers around the world.  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 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 and business generally; expectations regarding our ability to design and deliver innovative new noninvasive technologies; and demand for our technologies.  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 and adversely from those described in the forward-looking statements.  These risks include, but are not limited to, those related to: our dependence on Masimo SET and Masimo rainbow SET 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; any failure to continue developing innovative products and technologies; the lack of acceptance of any of our current or future products and technologies; obtaining regulatory approval of our current and future products and technologies; the risk that the implementation of our international realignment will not continue to produce anticipated operational and financial benefits, including a continued lower effective tax rate; 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 impact of the decline in the worldwide credit markets on us and our customers; the integration of acquisitions; 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 most recent periodic reports filed with the Securities and Exchange Commission ("SEC"), including our most recent Form 10-K and Form 10-Q, all of which you may obtain for free on the SEC's website at Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise.  We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 Investor Contact: Sheree AronsonMedia Contact: Mike Drummond(949) 297-7043 (949) 

Masimo, SET, Signal Extraction Technology, Improving Patient Outcome and Reducing Cost of Care... by Taking Noninvasive Monitoring to New Sites and Applications, Rainbow, SpHb, SpOC, SpCO, SpMet, PVI, Rainbow Acoustic Monitoring, RRa, Radical-7, Rad-87, Rad-57,Rad-8, Rad-5,Pulse CO-Oximetry, Pulse CO-Oximeter, and SEDLine  are trademarks or registered trademarks of Masimo Corporation.



 MASIMO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) June 30,December 31,20122011ASSETSCurrent assetsCash and cash equivalents



129,882Accounts receivable, net of allowance for doubtful accounts 64,51757,013Royalties receivable7,2537,102Inventories45,73545,944Prepaid expenses9,9259,410Deferred tax assets11,56111,576Other current assets4,1702,008Total current assets264,678262,935Deferred cost of goods sold52,02351,679Property and equipment, net21,37715,239Intangible assets, net12,87611,393Goodwill5,633448Deferred tax assets17,08316,766Other assets7,3377,644Total assets



366,104LIABILITIES AND EQUITYCurrent liabilitiesAccounts payable



27,302Accrued compensation18,52119,717Accrued liabilities14,63312,297Income taxes payable368570Deferred revenue18,38016,019Current portion of capital lease obligations4648Total current liabilities74,65175,953Deferred revenue842984Capital lease obligations, less current portion5174Other liabilities10,3059,427Total liabilities85,84986,438EquityMasimo Corporation stockholders' equity:Common stock5758Treasury stock(63,664)(37,396)Additional paid-in capital251,779243,528Accumulated other comprehensive income1,2171,274Retained earnings102,83569,364Total Masimo Corporation stockholders' equity292,224276,828Noncontrolling interest2,9342,838Total equity295,158279,666Total liabilities and equity



366,104MASIMO CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands, except per share amounts) Three Months EndedSix  Months EndedJune 30,July 2,June 30,July 2,2012201120122011Revenue:Product





204,132Royalty7,4587,01014,46718,475Total revenue122,775109,565242,003222,607Cost of goods sold41,34334,31481,26670,524Gross profit81,43275,251160,737152,083Operating expenses:Selling, general and administrative47,64943,67394,12185,141Research and development11,1109,44621,61519,421Total operating expenses58,75953,119115,736104,562Operating income22,67322,13245,00147,521Non-operating income (expense)(462)528(1,044)722Income before provision for income taxes22,21122,66043,95748,243Provision for income taxes4,4435,75110,42313,180Net income including noncontrolling interest17,76816,90933,53435,063Net (income) loss attributable to the noncontrolling interest(71)129(63)(12)Net income attributable to Masimo Corporation





35,051Net income per share attributable to Masimo Corporation stockholders:Basic










0.57Weighted average shares used in per share calculations:Basic57,14159,84257,66059,720Diluted58,08461,23258,61261,096The following table presents details of the share-based compensation expense that is included in each functional line item in the condensed consolidated statements of income above (in thousands): Three Months EndedSix  Months EndedJune 30,July 2,June 30,July 2,2012201120122011Cost of goods sold





281Selling, general and administrative3,1133,1326,0565,647Research and development7498741,4511,646Total







 MASIMO CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) June 30, July 2, 20122011Cash flows from operating activities:Net income including noncontrolling interest



Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: Depreciation and amortization

3,9733,840Share-based compensation

7,8377,574Provision (benefit) for doubtful accounts

(216)92Provision for obsolete inventory

533850Provision for warranty costs

1,2221,334Benefit from deferred taxes

(319)—Income tax benefit from exercise of stock options granted prior to  January 1, 2006

1381,058Excess tax (deficit) benefit from share-based payment


285(89)Changes in operating assets and liabilities:Increase in accounts receivable

(7,154)(2,433)(Increase) decrease in royalties receivable

(151)4,748(Increase) decrease in inventories

152(776)Increase in deferred cost of goods sold

(367)(5,135)Increase in prepaid expenses

(325)(2,043)Increase in other assets

(1,896)(101)Decrease in accounts payable

(5,410)(2,045)Decrease in accrued compensation

(1,166)(6,257)Increase (decrease) in accrued liabilities

310(831)Increase (decrease) in income taxes payable

(485)676Increase (decrease) in deferred revenue

2,218(1,394)Increase (decrease) in other liabilities

(1,544)654Net cash provided by operating activities

31,16934,785Cash flows from investing activities:Purchases of property and equipment

(4,842)(2,123)Increase in intangible assets

(1,220)(848)Cash paid for acquisition

(7,150)—Net cash used in investing activities

(13,212)(2,971)Cash flows from financing activities:Repayments of capital lease obligations

(23)(27)Proceeds from issuance of common stock

5935,127Excess tax deficit (benefit) from share-based payment arrangements

(285)89Repurchases of common stock

(26,268)—Net cash provided by (used in) financing activities

(25,983)5,189Effect of foreign currency exchange rates on cash

(339)386Net increase (decrease) in cash and cash equivalents

(8,365)37,389Cash and cash equivalents at beginning of period

129,88288,305Cash and cash equivalents at end of period

$   121,517

$   125,694



SOURCE Masimo Corporation
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