Masimo Reports Second Quarter 2008 Financial Results

August 4, 2008

Record results mark 20th consecutive quarter of revenue growth

Q2 2008 Highlights:

* Product revenues increased 30% to a record $61.9 million
* Direct (Non-OEM) Business revenues increased by 46%
* Shipped 29,000 new pulse oximeters and Pulse CO-Oximeters

IRVINE, Calif., Aug. 4 /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 second fiscal quarter.

For the second quarter of 2008, Masimo reported product revenues of $61.9 million representing a 30% increase over $47.6 million for the second quarter of 2007. Including royalty revenues, Masimo reported total 2008 second quarter revenues of $74.8 million compared to $63.7 million for the second quarter of 2007. Net income for the 2008 second quarter was $10.6 million or $0.18 per common share compared to $10.6 million or $0.13 per common share for the second quarter of 2007.

During the second quarter of 2008, Masimo also reported that it shipped 29,000 Masimo SET and Masimo Rainbow SET oximetry units, excluding handheld units, compared to 29,700 units in the same prior year quarter. For the first half of 2008, Masimo shipped 57,600 new units representing an annualized increase of 24% over the estimated 471,000 Masimo units in the market as of December 2007 and has now increased its total worldwide net installed base to 515,000 units. In the second quarter of 2008, revenues from Masimo Rainbow SET products increased 40% from the same prior year quarter.

Joe E. Kiani, Chairman and Chief Executive Officer of Masimo, said, "We believe that the benefit to patients, clinicians and hospitals of our life saving Masimo SET and Masimo Rainbow SET technologies continue to create momentum for the adoption of our products. Despite the generally difficult economic environment, we believe our business model continues to resonate with hospitals who demand the best technology for their patients. In addition, after a strong first quarter, we are pleased that sales of our Rainbow SET products have continued to gain momentum and set a new record in the second quarter of 2008."

As of June 28, 2008, cash and cash equivalents totaled $102.9 million-an increase from both December 29, 2007 of $96.7 million and from March 29, 2008 of $86.3 million. As previously announced, during the 2008 first fiscal quarter, Masimo repaid in full a $26.7 million debt obligation, the majority of which was established in early fiscal 2007.

Financial Guidance

Based on the results of the first half of fiscal year 2008, Masimo now expects its total fiscal year 2008 product revenues to be approximately $253 million and total revenues, including royalties, to be approximately $300 million. These figures are up from the previous guidance of $246 million and $292 million, respectively. Masimo also now expects earnings per common share to be approximately $0.64 per share, up from the prior guidance of $0.52 per share.

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) 356-3095 for domestic callers and (617) 597-5391 for international callers. The reservation number for both dial-in numbers is 90085495. 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 website through September 4, 2008. In addition, a telephonic replay of the call will be available until August 18, 2008. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 86583404.

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)), oxygen content (SpOC(TM)), 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 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 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 Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2008 filed with the Securities and Exchange Commission on May 1, 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 Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2008, whether as a result of new information, future events or otherwise, except as may be required under the applicable securities laws.

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.

                              MASIMO CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                             December 29, 2007   June 28, 2008
    ASSETS                                                         (Unaudited)
    Current assets
     Cash and cash equivalents                      $96,733          $102,903
     Accounts receivable, net of allowance for
      doubtful accounts                              26,970            29,576
     Royalties receivable                            13,866            11,375
     Inventories                                     23,110            29,256
     Prepaid expenses                                 7,084             7,079
     Deferred tax assets                             14,334            14,334
     Other current assets                             1,543             1,156
      Total current assets                          183,640           195,679
    Deferred cost of goods sold                      26,249            27,764
    Property and equipment, net                      11,164            11,837
    Deferred tax assets                               5,332             5,332
    Restricted cash                                     513               518
    Intangible assets, net                            5,589             6,793
    Goodwill                                            448               448
    Other assets                                      2,576             2,539

      Total assets                                 $235,511          $250,910

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities
     Accounts payable                               $14,640           $16,810
     Accrued compensation                            12,409            13,059
     Accrued liabilities                              6,211             5,135
     Dividends payable                                  183               183
     Deferred revenue                                16,827            21,946
     Current portion of long-term debt               11,539               647
      Total current liabilities                      61,809            57,780
    Deferred revenue                                    366               336
    Long-term debt, less current portion             19,502               285
    Other liabilities                                 3,768             3,837
      Total liabilities                              85,445            62,238
    Commitments and contingencies
    Stockholders' equity
     Common stock                                        55                56
     Treasury stock                                  (1,209)           (1,209)
     Additional paid-in capital                     143,297           162,399
     Accumulated other comprehensive loss            (1,034)             (923)
     Retained earnings                                8,957            28,349
      Total stockholders' equity                    150,066           188,672

    Total liabilities and stockholders' equity     $235,511          $250,910


                              MASIMO CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 (in thousands, except per share information)
                                 (unaudited)

                                         Three Months Ended  Six Months Ended
                                          June 30, June 28, June 30,  June 28,
                                            2007     2008     2007      2008

    Revenue:
     Product                              $47,627  $61,850  $93,391  $121,523
     Royalty and license fee               16,053   12,916   29,243    24,353
    Total revenue                          63,680   74,766  122,634   145,876
    Cost of goods sold                     17,919   21,403   34,820    42,524
    Gross profit                           45,761   53,363   87,814   103,352
    Operating expenses:
     Research and development               5,460    5,980   10,914    12,278
     Selling, general and administrative   21,577   30,366   42,979    59,895
     Antitrust litigation                     465      277      475       445
    Total operating expenses               27,502   36,623   54,368    72,618
    Operating income                       18,259   16,740   33,446    30,734
    Non-operating income (expense):
     Interest income                          189      625      544     1,584
     Interest expense                        (685)     (60)  (1,112)     (703)
     Other                                    170       75      211       178
    Total non-operating income (expense)     (326)     640     (357)    1,059
    Income before provision for income
     taxes                                 17,933   17,380   33,089    31,793
    Provision for income taxes              7,377    6,779   13,436    12,401
    Net income                             10,556   10,601   19,653    19,392
    Accretion of preferred stock           (1,956)       -   (3,913)        -
    Undistributed income attributable to
     preferred stockholders                (5,802)       -  (10,630)        -
    Net income attributable to common
     stockholders                          $2,798  $10,601   $5,110   $19,392

    Net income per common share:
     Basic                                  $0.17    $0.19    $0.31     $0.35
     Diluted                                $0.13    $0.18    $0.25     $0.32


     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  Six Months Ended
                                         June 30,  June 28, June 30, June 28,
                                           2007      2008     2007     2008
    Cost of goods sold                      $45      $75      $78     $104
    Research and development                164      607      275    1,019
    Selling, general and administrative    $849   $1,487   $1,295   $2,624


                              MASIMO CORPORATION
            Reconciliation of GAAP to Non-GAAP Earnings per Share
                                 (unaudited)

     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 SFAS No. 128 "Earnings per Share", or SFAS
     128, in accordance with GAAP and the non-GAAP if-converted method based
     solely 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.

     We believe that the following non-GAAP earnings per share information for
     the three and six months ended June 30, 2007 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 the three and
     six months ended June 28, 2008 and future reported earnings per share.
     Accordingly, we are disclosing this information to permit additional
     analysis of our performance (in thousands, except share data):

                                2007                            2008
                  As Reported          Non-GAAP             As Reported
                Three      Six     Three       Six       Three         Six
                months    months   months     months     months       months
                ended     ended    ended      ended      ended        ended
                June 30,  June 30, June 30,   June 30,   June 28,     June 28,
                 2007      2007     2007       2007       2008         2008

    Numerator:
     Net income
      as rep-
      orted    $10,556    $19,653 $10,556      $19,653    $10,601      $19,392
     Accretion of
      preferred
      stock     (1,956)    (3,913)      -            -          -            -
     Undistributed
      income
      attributable
      to preferred
      stock-
      holders   (5,802)   (10,630)      -            -          -            -

     Net income
      attributable
      to common
      stock-
      holders   $2,798     $5,110 $10,556      $19,653    $10,601      $19,392


    Denominator:
     Weighted average
      common shares
      outstanding
      - number of
      shares used
      in per share
      calculation -
      Basic 16,692,547 16,642,779
     Options to
      purchase
      common
      stock  4,039,467  4,056,332
     Weighted
      average
      number of
      shares used
      in per
      common share
      calculation -
      Dil-
      uted  20,732,014 20,699,111

     Weighted
      average
      common
      shares
      outstanding              16,692,547   16,642,779
     Weighted
      average
      preferred
      shares
      outstanding              34,612,503   34,612,503
     Number of
      shares used
      in per share
      calculation
      - Basic                  51,305,050   51,255,282 56,166,934   55,637,976
     Options to
      purchase
      common
      stock                     4,039,467    4,056,332  3,883,688    4,413,349
     Weighted
      average
      number of
      shares used
      in per share
      calculation
      - Diluted                55,344,517   55,311,614 60,050,622   60,051,325

    Net income
     per share:
     Basic       $0.17      $0.31   $0.21        $0.38      $0.19        $0.35
     Diluted     $0.13      $0.25   $0.19        $0.36      $0.18        $0.32

SOURCE Masimo Corporation

CONTACT: Investors, Mark P. de Raad, Executive Vice President and Chief Financial Officer, +1-949-297-7080, mderaad@masimo.com, or Media, Dana Banks, Manager, Public Relations, +1-949-297-7348, dbanks@masimo.com, both of Masimo Corporation

Web site: http://www.masimo.com