Record results mark 17th consecutive quarter of revenue growth
Third Quarter Highlights:
* Product revenues increased 29% to a record $51.1 million
* Masimo SET pulse oximeter units increase 32% to a record 30,800 units
IRVINE, Calif., Oct. 30 /PRNewswire-FirstCall/ -- Masimo Corporation
(Nasdaq: MASI), the inventor of Pulse CO-Oximetry and Read-Through Motion &
Low Perfusion pulse oximetry, today announced its financial results for the
quarter ended September 29, 2007, with product revenues of $51.1 million
representing a 29% increase over $39.8 million for the third quarter of 2006.
Including royalty revenues, Masimo reported total third quarter revenues of
$64.4 million compared to $57.6 million for the third quarter of 2006. Net
income for the quarter was $10.6 million representing $0.16 GAAP or $0.18
non-GAAP earnings per common share.
Masimo also reported that it shipped a record 30,800 Masimo SET and Masimo
Rainbow SET pulse oximeter units, excluding handheld pulse oximeters, during
the third quarter of 2007, up 32% from 23,300 in the comparable prior year
period, resulting in an estimated worldwide installed base of 448,000 Masimo
SET pulse oximeters.
For the quarter ended September 29, 2007, due entirely to the impact of a
$2.8 million, net of tax, decline in royalty payments as contemplated in our
2006 patent litigation settlement, GAAP net income declined from $12.3 million
in the quarter ended September 30, 2006 to $10.6 million in the current
quarter ended September 29, 2007. Masimo reported third quarter 2007 net
income attributable to common stockholders of $6.9 million or $0.16 per common
share as compared to $3.3 million or $0.16 per common share for the third
quarter 2006. For the quarter ended September 29, 2007, on a non-GAAP basis
and adjusting only for the assumed conversion of preferred stock into common
stock in connection with the Masimo's recently completed initial public
offering, net income was $0.18 per common share, as compared to $0.22 per
common share in the prior year period.
Joe E. Kiani, Chairman and Chief Executive Officer of Masimo, said, "We
are happy to report third quarter results that exceeded expectations. Our
strong performance is a clear reflection of the fact that our innovative
products and technologies are finding widespread adoption in virtually every
segment of the clinical community. We will continue to build on these results
by focusing our efforts on helping clinicians do what's best for patient care,
providing them noninvasive patient monitoring technologies like our Masimo
Rainbow SET platform that seek to 'solve the unsolvable' challenges in
healthcare."
For the nine month period ended September 29, 2007, Masimo's product
revenues were $144.5 million, up 29% from $112.3 million in the same prior
year period. Including royalty revenues, Masimo's total revenues were
$187.0 million for the nine month period ended September 29, 2007, up from
$162.7 million in the same prior year period. In the nine month period ended
September 29, 2007, Masimo shipped a record 87,000 Masimo SET and Masimo
Rainbow SET pulse oximeter units, excluding handheld pulse oximeters, compared
to 69,900 in the same prior year period.
Net income for the nine month period ended September 29, 2007 was
$30.2 million compared to $170.9 million in the comparable prior year period,
which included $262.6 million in net patent litigation settlement proceeds and
various one-time stock based compensation charges related to dividend and
bonus payments authorized in the first quarter of 2006. For the nine month
period ended September 29, 2007, Masimo's reported net income attributable to
common stockholders was $11.8 million, or $0.40 per common share, as compared
to $2.79 per common share for the nine month period ended September 30, 2006.
For the nine month period ended September 29, 2007, on a non-GAAP basis and
adjusting only for the assumed conversion of preferred stock into common stock
in connection with Masimo's recently completed initial public offering,
Masimo's net income was $0.54 per common share, as compared to $3.12 per share
in the same prior year period.
Cash, cash equivalents and short-term investments were $88.6 million at
September 29, 2007.
In August 2007, Masimo completed its initial public offering of
13,704,120 million common shares, comprised of 10,416,626 shares sold on
behalf of selling stockholders and 3,287,494 shares sold on behalf of the
Company, inclusive of the underwriters' full exercise of its over-allotment
option. The shares were sold at $17.00 per share, for total offering of
$233.0 million of which the net proceeds to the Company was approximately
$47.8 million.
Financial Guidance
For the full year 2007, Masimo now expects total revenues to be
approximately $250 million up from $245 million and total product revenues to
be approximately $197 million up from $195 million. Masimo also expects full
year GAAP earnings per share to be approximately $0.50 per share up from
$0.43 per share and non-GAAP earnings per share, adjusted only for the assumed
conversion of preferred stock into common stock in connection with the
Company's recently completed initial public offering, to be approximately
$0.63 up from $0.55. The projections and guidance set forth above are
estimates only and actual performance could differ.
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 (800) 659-2037 for domestic
callers and (617) 614-2713 for international callers. The reservation number
for both dial-in numbers is 20647778. 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 http://www.masimo.com.
After the live web cast, the call will remain available on Masimo's web
site through November 30, 2007. In addition, a telephonic replay of the call
will be available until November 13, 2007. The replay dial-in numbers are
(888) 286-8010 for domestic callers and (617) 801-6888 for international
callers. Please use reservation code 39086455.
Non-GAAP Measures
Masimo prepares its consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America, or
U.S. GAAP. In an effort to provide investors with additional information
regarding the Company's results and to provide a meaningful period-over-period
comparison of the Company's financial performance, the Company uses non-GAAP
financial measures as defined by the Securities and Exchange Commission. The
differences between the U.S. GAAP and non-GAAP financial measures are
reconciled below. In presenting comparable results, the Company discloses
non-GAAP financial measures when it believes such measures will be useful to
investors, analysts and other interested parties in evaluating the Company's
underlying business performance on a comparable basis with past and future
reported earnings per share and with the financial guidance provided in this
release. Management uses the non-GAAP financial measures to evaluate the
Company's financial performance against internal budgets and targets.
Importantly, the Company believes non-GAAP financial measures should be
considered in addition to, and not in lieu of, U.S. GAAP financial measures.
These non-GAAP financial measures are not based on a comprehensive set of
accounting rules or principles. The Company's non-GAAP financial measures may
be different from non-GAAP financial measures used by other companies.
About Masimo
Masimo develops innovative monitoring technologies that significantly
improve patient care-helping solve "unsolvable" problems. In 1995, the company
debuted Read-Through Motion and Low Perfusion pulse oximetry, known as Masimo
SET, and with it virtually eliminated false alarms and increased pulse
oximetry's ability to detect life-threatening events. More than 100
independent and objective studies have confirmed that Masimo SET technology
allows clinicians to accurately monitor blood oxygen saturation in critical
care situations. Our Masimo SET platform has significantly addressed many of
the previous technology limitations, has substantially contributed to improved
patient outcomes and has been referred to by several industry sources as the
gold standard in pulse oximetry. In 2005, Masimo introduced Masimo Rainbow SET
Pulse CO-Oximetry, which, for the first time, noninvasively monitors the level
of carbon monoxide and methemoglobin in the blood, 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
http://www.masimo.com.
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 plans, objectives,
strategies and prospects regarding, among other things, the financial
condition, results of operations and business of ours and our subsidiaries;
the market acceptance of products such as Patient SafetyNet; the value of new
measuring new parameters such as PVI; expectations regarding our ability to
design and deliver innovative new noninvasive technologies and expand into
additional areas of vital signs monitoring and measurements; whether
publications from prior independent clinical studies regarding PVI will be
duplicated in future studies; and expectations for total revenues, product
revenues, GAAP earnings per share and non-GAAP earnings per share for the full
fiscal year 2007. These forward-looking statements are based on current
expectations about future events affecting us and are subject to uncertainties
and factors relating to our operations and business environment, all of which
are difficult to predict and many of which are beyond our control including:
risks related to our reliance on Masimo SET and related products for
substantially all of our revenue; risks related to any failure in protecting
our intellectual property; risks related to exposure to competitors'
assertions of intellectual property claims; risks related to the highly
competitive nature of the markets in which we sell our products; risks related
to the failure to continue developing innovative products; risks related to
the introduction of competing products; risks related to the lack of
acceptance of new products, including the Masimo Patient SafetyNet; risks
related to the loss of our customers; risks related to increases in prices for
raw materials or the loss of key supplier contracts; risks related to the
failure to retain senior management or replace lost senior management; risks
related to product liability claims exposure; risks related to the absence of
expected returns from the amount of intangible assets we have recorded; the
risk that our financial performance in the fourth quarter of 2007 may not meet
expectations; risks and uncertainties related to the maintenance and strength
of our brand; and other factors discussed in the "Risk Factors" section of our
quarterly report on Form 10-Q for the quarter ended June 30, 2007, filed with
the Securities and Exchange Commission on September 20, 2007. 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 quarterly report on Form 10-Q for the quarter ended June 30,
2007, whether as a result of new information, future events or otherwise,
except as may be required under the federal securities laws.
Masimo Corporation
Investors:
Mark P. de Raad
Executive Vice President and
Chief Financial Officer
(949) 297-7080
mderaad@masimo.com
Media:
Tom McCall
Vice President, Corporate Communications
(949) 297-7075
tmccall@masimo.com
Masimo, SET, Signal Extraction Technology, Radical, Radical-7, Rad57,
APOD, and Improving Outcomes and Reducing Cost of Care by Taking Noninvasive
Monitoring to New Sites and Application, Patient SafetyNet, Rainbow, SpCO,
SpMet, PVI, and Pulse CO-Oximeter are registered trademarks or trademarks of
Masimo Corporation.
MASIMO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, September 29,
2006 2007
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $55,382 $88,557
Accounts receivable, net of allowance for
doubtful accounts 22,350 27,353
Royalties receivable 1,289 13,125
Inventories 17,135 23,025
Deferred tax assets 18,116 20,402
Other current assets 3,043 4,639
Total current assets 117,315 177,101
Deferred cost of goods sold 21,899 25,233
Property and equipment, net 10,290 10,814
Deferred tax assets 3,163 3,761
Restricted cash 507 511
Intangible assets, net 4,592 4,967
Goodwill 448 448
Other assets 859 1,883
Total assets $159,073 $224,718
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $10,142 $10,252
Accrued compensation 12,207 10,475
Accrued liabilities 4,655 7,239
Dividends payable 37,533 183
Income taxes payable 1,245 6,114
Deferred revenue 13,880 17,937
Current portion of long-term debt 7,528 11,847
Total current liabilities 87,190 64,047
Deferred revenue 490 625
Long-term debt, less current portion 13,514 22,229
Other liabilities 918 1,137
Total liabilities 102,112 88,038
Commitments and contingencies - -
Stockholders' equity
Convertible preferred stock 88,328 -
Common stock 17 55
Treasury stock (628) (1,209)
Additional paid-in capital - 141,607
Accumulated other comprehensive loss (317) (673)
Accumulated deficit (30,439) (3,100)
Total stockholders' equity 56,961 136,680
Total liabilities and stockholders'
equity $159,073 $224,718
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share information)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 29, Sept. 30, Sept. 29,
2006 2007 2006 2007
Revenue:
Product $39,755 $51,122 $112,279 $144,513
Royalty and
license fee 17,891 13,254 50,447 42,497
Total revenue 57,646 64,376 162,726 187,010
Cost of goods sold 14,704 18,809 45,798 53,630
Gross profit 42,942 45,567 116,928 133,380
Operating expenses:
Research and
development 4,330 6,540 19,267 17,455
Selling, general
and administrative 18,281 21,594 69,462 64,575
Patent litigation
proceeds - - (262,601) -
Antitrust litigation 30 508 103 982
Total operating
expenses 22,641 28,642 (173,769) 83,012
Operating income 20,301 16,925 290,697 50,368
Non-operating income
(expense):
Interest income 1,298 726 5,936 1,270
Interest expense (437) (719) (1,413) (1,831)
Other 134 559 321 770
Total non-operating
income 995 566 4,844 209
Income before
provision for
income taxes 21,296 17,491 295,541 50,577
Provision for income
taxes 9,000 6,941 124,626 20,377
Net income 12,296 10,550 170,915 30,200
Preferred stock
dividend - - (58,571) -
Accretion of
preferred stock (1,956) (925) (6,029) (4,837)
Undistributed income
attributable to
preferred
stockholders (6,998) (2,739) (49,172) (13,526)
Net income
attributable
to common
stockholders $3,342 $6,886 $57,143 $11,837
Net income per
common share:
Basic $0.20 $0.18 $3.46 $0.49
Diluted $0.16 $0.16 $2.79 $0.40
The following table presents details of the stock-based compensation
expense that is included in each functional line item in the condensed
consolidated statement of operations above (in thousands):
Three Months Ended Nine Months Ended
Sept. 30, Sept. 29, Sept. 30, Sept. 29,
2006 2007 2006 2007
Cost of goods sold $49 $56 $2,015 $134
Research and
development 73 191 8,491 466
Selling, general
and administrative 273 697 21,701 1,992
MASIMO CORPORATION
Unaudited Reconciliation of GAAP to Non-GAAP Diluted Earnings per Share
The following tables provide a comparison of our diluted 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 Financial Accounting Standards Board No. 128 "Earnings
per Share", or FASB 128, in accordance with GAAP and the non-GAAP if converted
method based upon FASB 128. The non-GAAP if converted method assumes
conversion of all shares of the Company's preferred stock into common stock as
of December 31, 2005.
Upon the closing of our initial public offering on August 13, 2007, all
outstanding shares of our prior Series A through Series G convertible
preferred stock were converted into an aggregate of 34,612,503 shares of
common stock. Therefore, effective August 13, 2007, we transitioned from
computing diluted earnings per share from the two class method in accordance
with EITF 03-6 to the if converted method in accordance with FASB 128. Net
income for the three and nine months ended September 29, 2007 was allocated
between the periods during which two classes of equity securities were
outstanding and during which a single class of equity securities was
outstanding based on the respective number of days. For the three months
ended September 29, 2007, two classes of equity securities were outstanding
for 43 days and a single class of equity securities was outstanding for
48 days, or 47.3% and 52.7% of the total days in the three month reporting
period, respectively. For the nine months ended September 29, 2007, two
classes of equity securities were outstanding for 224 days and a single class
of equity securities was outstanding for 48 days, or 82.4% and 17.6% of the
total days in the nine month reporting period, respectively.
We believe that the following non-GAAP diluted 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 diluted earnings per share. Accordingly,
we are disclosing this information to permit additional analysis of our
performance (in thousands, except share data):
Three Months Ended Nine Months Ended
Sept. 30, Sept. 29, Sept. 30, Sept. 29,
2006 2007 2006 2007
Numerator:
GAAP: Net income
attributable to
common stockholders $3,342 $6,886 $57,143 $11,837
Less: Net income
attributable to
common stockholders
during which two
classes of equity
securities were
outstanding 3,342 1,321 57,143 6,508
Net income
attributable to
common stockholders
during which a single
class of equity
securities was
outstanding $- $5,565 $- $5,329
GAAP: Net income
attributable to
common
stockholders $3,342 $6,886 $57,143 $11,837
Preferred stock
dividend - - 58,571 -
Accretion of preferred
stock 1,956 925 6,029 4,837
Undistributed income
attributable to
preferred
stockholders 6,998 2,739 49,172 13,526
Non-GAAP: Net income
attributable to
common
stockholders $12,296 $10,550 $170,915 $30,200
Denominator:
Weighted average
number of common
shares outstanding
under the two
class method
- Diluted 20,408,668 20,925,509 20,470,129 20,732,900
Weighted average
number of common
shares outstanding
under the single
class method
- Diluted - 59,378,458 - 59,378,458
Non-GAAP: Weighted
average common
shares
outstanding
- Diluted 55,022,791 57,592,020 54,758,974 56,091,726
Earnings per share
- Diluted:
Earnings per share
- Two class $0.16 $0.06 $2.79 $0.31
Earnings per share
- Single class - 0.10 - 0.09
GAAP: Earnings per
share - Diluted $0.16 $0.16 $2.79 $0.40
Non-GAAP: Earnings
per share - Diluted $0.22 $0.18 $3.12 $0.54
SOURCE Masimo Corporation