Attached files

file filename
8-K - FORM 8-K - MASIMO CORPd8k.htm

Exhibit 99.1


Masimo Reports Second Quarter 2011 Financial Results

Q2 2011 Highlights (compared to Q2 2010):



Total revenue, including royalties, rose 9% to $109.6 million



Product revenue rose 17% to $102.6 million



Masimo SET® and Masimo rainbow® SET unit shipments rose 2% to 37,300



Masimo rainbow revenue rose 26% to $9.1 million



GAAP EPS was $0.28 versus $0.24 in the prior period, which included $0.01 in one-time expenses. Excluding the prior period one-time items, GAAP EPS rose 12% from an adjusted $0.25 in Q2 2010

Irvine, California, August 9, 2011 – Masimo (NASDAQ: MASI) today announced its financial results for the second quarter ended July 2, 2011.

Masimo’s total revenue, including royalties, for the second quarter rose 9% to $109.6 million, compared to $100.1 million for the second quarter of 2010. Masimo’s second quarter product revenue rose 17% to $102.6 million, compared to $88.0 million for the second quarter of 2010. Revenue from Masimo rainbow products rose 26% to $9.1 million in the second quarter, compared to $7.2 million for the second quarter of 2010.

Net income for the second quarter was $17.0 million, or $0.28 per diluted share, compared to reported net income of $14.3 million, or $0.24 per diluted share, in the second quarter of 2010, which included $0.01 per diluted share in one-time marketing-related expenses. Excluding these one-time expenses, diluted earnings per share rose 12% in the second quarter of 2011 from the year-ago period.

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, up 2% compared to approximately 36,700 in the same prior year period. Masimo estimates its worldwide installed base as of July 2, 2011 to be 922,000 units, up 17% from 789,000 units as of July 3, 2010.

As of July 2, 2011, cash and cash equivalents was $125.7 million, compared to $88.3 million as of January 1, 2011.

Conference Call

Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET) to discuss the results. 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 78780959. After the live webcast, the call will be available on Masimo’s website through September 9, 2011. In addition, a telephonic replay of the call will be available through August 16, 2011. The replay dial-in numbers are (800) 642-1687 for domestic callers and +1 (706) 645-9291 for international callers. Please use reservation code 78780959.

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, Masimo introduced 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 global 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 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”), 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 Aronson

   Media Contact: Dana Banks

Vice President, Investor Relations, Masimo Corporation

   Manager, Public Relations, Masimo Corporation

(949) 297-7043

   (949) 297-7348

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.



(unaudited, in thousands)


     July 2,
    January 1,



Current assets


Cash and cash equivalents

   $ 125,694      $ 88,305   

Accounts receivable, net of allowance for doubtful accounts

     52,036        49,694   

Royalties receivable

     7,252        12,000   


     44,954        45,028   

Prepaid expenses

     9,976        7,887   

Deferred tax assets

     12,561        12,555   

Other current assets

     1,806        2,136   







Total current assets

     254,279        217,605   

Deferred cost of goods sold

     52,380        47,184   

Property and equipment, net

     15,132        15,951   

Intangible assets, net

     10,472        10,497   

Deferred tax assets

     12,579        12,560   

Other assets

     6,900        6,438   







Total assets

   $ 351,742      $ 310,235   









Current liabilities


Accounts payable

   $ 20,127      $ 22,150   

Accrued compensation

     15,087        21,074   

Accrued liabilities

     10,426        9,832   

Income taxes payable

     1,327        722   

Deferred revenue

     15,268        16,369   

Current portion of capital lease obligations

     47        50   







Total current liabilities

     62,282        70,197   

Deferred revenue

     1,262        1,554   

Capital lease obligations, less current portion

     99        122   

Other liabilities

     9,003        8,323   







Total liabilities

     72,646        80,196   



Masimo Corporation stockholders’ equity:


Common stock

     60        59   

Treasury stock

     (1,209     (1,209

Additional paid-in capital

     235,992        222,206   

Accumulated other comprehensive income

     1,092        925   

Retained earnings

     40,715        5,664   







Total Masimo Corporation stockholders’ equity

     276,650        227,645   

Noncontrolling interest

     2,446        2,394   







Total equity

     279,096        230,039   







Total liabilities and equity

   $ 351,742      $ 310,235   









(unaudited, in thousands, except per share amounts)


     Three Months Ended     Six Months Ended  
     July 2,
     July 3,
    July 2,
    July 3,




   $ 102,555       $ 87,958      $ 204,132      $ 173,824   


     7,010         12,122        18,475        25,021   













Total revenue

     109,565         100,080        222,607        198,845   

Cost of goods sold

     34,314         29,775        70,524        59,003   













Gross profit

     75,251         70,305        152,083        139,842   

Operating expenses:


Selling, general and administrative

     43,673         41,004        85,141        90,315   

Research and development

     9,446         9,051        19,421        18,461   

Antitrust litigation proceeds

     —           (760     —          (30,728













Total operating expenses

     53,119         49,295        104,562        78,048   













Operating income

     22,132         21,010        47,521        61,794   

Non-operating income (expense)

     528         309        722        (38













Income before provision for income taxes

     22,660         21,319        48,243        61,756   

Provision for income taxes

     5,751         7,403        13,180        21,676   













Net income including noncontrolling interests

     16,909         13,916        35,063        40,080   

Net (income) loss attributable to the noncontrolling interests

     129         371        (12     917   













Net income attributable to Masimo Corporation

   $ 17,038       $ 14,287      $ 35,051      $ 40,997   













Net income per share attributable to Masimo Corporation stockholders:



   $ 0.28       $ 0.24      $ 0.59      $ 0.70   














   $ 0.28       $ 0.24      $ 0.57      $ 0.68   













Weighted average shares used in per share calculations:



     59,842         58,798        59,720        58,532   














     61,232         60,510        61,096        60,496   













Cash dividend declared per share

   $ —         $ —        $ —        $ 2.00   












The 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 Ended     Six Months Ended  
     July 2,
     July 3,
    July 2,
    July 3,

Cost of goods sold

   $ 135       $ 118      $ 281      $ 211   

Selling, general and administrative

     3,132         2,659        5,647        4,736   

Research and development

     874         723        1,646        1,371   














   $ 4,141       $ 3,500      $ 7,574      $ 6,318   















(unaudited, in thousands)


     Six Months Ended  
     July 2,
    July 3,

Cash flows from operating activities:


Net income including noncontrolling interests

   $ 35,063      $ 40,080   

Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:


Depreciation and amortization

     3,840        3,151   

Share-based compensation

     7,574        6,318   

Provision for doubtful accounts

     92        154   

Provision for obsolete inventory

     850        359   

Provision for warranty costs

     1,334        1,150   

Provision for deferred income taxes

     —          133   

Income tax benefit from exercise of stock options granted prior to January 1, 2006

     1,058        1,631   

Excess tax benefit from share-based payment arrangements

     (89     (537

Changes in operating assets and liabilities:


Increase in accounts receivable

     (2,433     (10,338

Decrease in royalties receivable

     4,748        —     

Increase in inventories

     (776     (5,910

Increase in deferred cost of goods sold

     (5,135     (4,499

(Increase) decrease in prepaid expenses

     (2,043     1,243   

Increase in other assets

     (101     (1,963

Increase (decrease) in accounts payable

     (2,045     5,084   

Decrease in accrued compensation

     (6,257     (1,752

Decrease in accrued liabilities

     (831     (1,291

Increase in income taxes payable

     676        1,073   

Increase (decrease) in deferred revenue

     (1,394     2,703   

Increase in other liabilities

     654        1,064   







Net cash provided by operating activities

     34,785        37,853   







Cash flows from investing activities:


Purchase of short-term investments

     —          (75,986

Proceeds from sale and maturities of short-term investments

     —          132,975   

Purchases of property and equipment

     (2,123     (3,930

Increase in intangible assets

     (848     (911







Net cash provided by (used in) investing activities

     (2,971     52,148   







Cash flows from financing activities:


Repayments of capital lease obligations

     (27     (28

Proceeds from issuance of common stock

     5,127        5,662   

Excess tax benefit from share-based payment arrangements

     89        537   

Dividends paid

     —          (117,506







Net cash provided by (used in) financing activities

     5,189        (111,335

Effect of foreign currency exchange rates on cash

     386        251   







Net increase (decrease) in cash and cash equivalents

     37,389        (21,083

Cash and cash equivalents at beginning of period

     88,305        132,054   







Cash and cash equivalents at end of period

   $ 125,694      $ 110,971