Record results mark 21st consecutive quarter of revenue growth
Q3 2008 Highlights:
- Product revenues increased 29% to a record $66.0 million
- Direct (Non-OEM) Business revenues increased by 48%
- Shipped 30,700 new pulse oximeters and Pulse CO-Oximeters
IRVINE, Calif., Oct. 27 /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 third fiscal quarter.
For the third quarter of 2008, Masimo reported product revenues of
$66.0 million representing a 29% increase over $51.1 million for the third
quarter of 2007. Including royalty revenues, Masimo reported total 2008 third
quarter revenues of $78.1 million compared to $64.4 million for the third
quarter of 2007. Net income for the 2008 third quarter was $13.1 million or
$0.22 per common share compared to $6.9 million or $0.16 per common share for
the third quarter of 2007.
During the third quarter of 2008, Masimo also reported that it shipped
30,700 Masimo SET and Masimo Rainbow SET oximetry units, excluding handheld
units, compared to 30,800 units in the same prior year quarter. For the first
nine months of 2008, Masimo has shipped 88,400 new units representing an
annualized increase of 25% over the estimated 470,000 Masimo units in the
market as of December 2007 and has now increased its total worldwide net
installed base to 540,000 units.
In the third quarter of 2008, revenues from Masimo Rainbow SET products
increased by 85% from the same prior year quarter to $3.0 million. For the
first nine months of 2008, revenues from Masimo Rainbow SET products were
$8.7 million, an increase of 71% compared to the first nine months of 2007.
Joe E. Kiani, Chairman and Chief Executive Officer of Masimo, said, "We
are happy with the continued strength in our core pulse oximetry business and
growth in Rainbow SET product revenues. Our business model, which is based on
innovation and recurring revenue from our installed base, is showing
resilience in a difficult economic environment."
As of September 27, 2008, cash and cash equivalents totaled
$122.6 million, an increase from December 29, 2007 of $96.7 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 information available as of October 27, 2008, relating to the
results of the first nine months of fiscal year 2008, Masimo now expects its
total fiscal year 2008 product revenues to be approximately $256 million and
total revenues, including royalties, to be approximately $303 million. These
figures are up from the previously released guidance of $253 million and $300
million, respectively. Masimo also now expects earnings per common share for
fiscal year 2008 to be approximately $0.71 per share, up from the previously
released guidance of $0.64 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 (800) 399-7902 for domestic
callers and (706) 634-0949 for international callers. The reservation number
for both dial-in numbers is 68032269. 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 November 27, 2008. In
addition, a telephonic replay of the call will be available until November 9,
2008. The replay dial-in numbers are (800) 642-1687 for domestic callers and
(706) 645-9291 for international callers. Please use reservation code
68032269. Our financial guidance will be limited to the statements made in
this press release.
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 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 financial condition,
results of operations, prospects and business generally; expectations
regarding our ability to design and deliver innovative new noninvasive
technologies; and expectations for total revenues, including royalties,
product revenues and GAAP earnings per share 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 and adversely 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 impact of the decline in the U.S. 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 Quarterly Report on Form 10-Q
for the fiscal quarter ended June 28, 2008 filed with the Securities and
Exchange Commission on August 5, 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 June 28, 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, September 27,
2007 2008
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $96,733 $122,603
Accounts receivable, net of allowance
for doubtful accounts 26,970 29,511
Royalties receivable 13,866 11,375
Inventories 23,110 29,261
Prepaid expenses 7,084 7,998
Deferred tax assets 14,334 14,334
Other current assets 1,543 873
Total current assets 183,640 215,955
Deferred cost of goods sold 26,249 27,031
Property and equipment, net 11,164 12,816
Deferred tax assets 5,332 5,332
Intangible assets, net 5,589 7,289
Other assets 3,537 2,809
Total assets $235,511 $271,232
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $14,640 $14,510
Accrued compensation 12,409 13,404
Accrued liabilities 6,394 6,105
Deferred revenue 16,827 18,606
Current portion of long-term debt 11,539 548
Total current liabilities 61,809 53,173
Long-term debt, less current portion 19,502 202
Other liabilities 4,134 4,048
Total liabilities 85,445 57,423
Commitments and contingencies
Stockholders' equity
Common stock 55 57
Treasury stock (1,209) (1,209)
Additional paid-in capital 143,297 174,245
Accumulated other comprehensive loss (1,034) (698)
Retained earnings 8,957 41,414
Total stockholders' equity 150,066 213,809
Total liabilities and stockholders'
equity $235,511 $271,232
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share information)
(unaudited)
Three Months Ended Nine Months Ended
September September September September
29, 27, 29, 27,
2007 2008 2007 2008
Revenue:
Product $51,122 $66,001 $144,513 $187,524
Royalty and license fee 13,254 12,131 42,497 36,484
Total revenue 64,376 78,132 187,010 224,008
Cost of goods sold 18,809 22,393 53,630 64,917
Gross profit 45,567 55,739 133,380 159,091
Operating expenses:
Research and development 6,540 6,020 17,455 18,298
Selling, general and
administrative 21,594 29,167 64,575 89,062
Antitrust litigation 508 46 982 491
Total operating expenses 28,642 35,233 83,012 107,851
Operating income 16,925 20,506 50,368 51,240
Non-operating income (expense):
Interest income 726 545 1,270 2,129
Interest expense (719) (19) (1,831) (722)
Other 559 (413) 770 (235)
Total non-operating income (expense) 566 113 209 1,172
Income before provision for income
taxes 17,491 20,619 50,577 52,412
Provision for income taxes 6,941 7,554 20,377 19,955
Net income 10,550 13,065 30,200 32,457
Accretion of preferred stock (925) - (4,837) -
Undistributed income attributable to
preferred stockholders (2,739) - (13,526) -
Net income attributable to common
stockholders $6,886 $13,065 $11,837 $32,457
Net income per common share:
Basic $0.18 $0.23 $0.49 $0.58
Diluted $0.16 $0.22 $0.40 $0.54
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 Nine Months Ended
September September September September
29, 27, 29, 27,
2007 2008 2007 2008
Cost of goods sold $56 $55 $134 $159
Research and development 191 608 466 1,627
Selling, general and administrative $697 $1,328 $1,992 $3,952
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, or EITF 03-6,
"Participating Securities and the Two-Class Method under FASB Statement
No. 128", and Statement of Financial Accounting Standards No. 128, or
SFAS 128, "Earnings per Share", in accordance with GAAP and the non-GAAP
if-converted method based solely upon SFAS 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 our 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, we use the
if-converted method under SFAS 128 to calculate earnings per share.
We believe that the following non-GAAP earnings per share information for
the three and nine months ended September 29, 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
nine months ended September 27, 2008 and future reported earnings per
share. Accordingly, we are disclosing this unaudited information to
permit additional analysis of our performance (in thousands, except share
data):
2007
As Reported Non-GAAP
Three Three Three Three
Months Months Months Months
Ended Ended Ended Ended
September September September September
29, 29, 29, 29,
2007 2007 2007 2007
Net income attributable to
common stockholders:
Net income - two class
method (1) $4,985 $24,871
Accretion of preferred
stock (925) (4,837)
Income attributable to
preferred stockholders (2,739) (13,526)
Net income attributable
to common stockholders $1,321 $6,508
Basic net income per
common share:
Weighted average common
shares outstanding -
two class method 16,704,285 16,654,586
Basic earnings per
share during which
two classes of equity
securities were
outstanding $0.08 $0.39
Net income for period
during which single
class of equity
securities was
outstanding (1) $5,565 $5,329 $10,550 $30,200
Weighted average
common shares
outstanding -
single class (2) 54,630,610 54,630,610 53,064,738 51,860,652
Basic net income
per share during
which single class
of equity securities
was outstanding $0.10 $0.10
Basic net income per
common share $0.18 $0.49 $0.20 $0.58
Diluted net income per
common share:
Weighted average
common shares
outstanding - two
class method 16,704,285 16,654,586
Diluted common
share equivalent:
stock options 4,221,224 4,078,314
20,925,509 20,732,900
Diluted earnings
per share for
period during
which two classes
of equity securities
were outstanding $0.06 $0.31
Net income for period
during which single
class of equity
securities was
outstanding (1) $5,565 $5,329 $10,550 $30,200
Weighted average
common shares
outstanding -
single class (2) 54,630,610 54,630,610 53,064,738 51,860,652
Diluted common share
equivalent: stock
options 4,747,848 4,747,848 4,527,282 4,231,074
59,378,458 59,378,458 57,592,020 56,091,726
Diluted net income per
share for period during
which single class of
equity securities was
outstanding $0.10 $0.09
Diluted net income per
common share $0.16 $0.40 $0.18 $0.54
2008
As Reported
Three Three
Months Months
Ended Ended
September September
27, 27,
2008 2008
Net income attributable to common stockholders:
Net income - two class method (1)
Accretion of preferred stock
Income attributable to preferred stockholders
Net income attributable to common stockholders
Basic net income per common share:
Weighted average common shares
outstanding - two class method
Basic earnings per share during which
two classes of equity securities
were outstanding
Net income for period during which
single class of equity securities
was outstanding (1) $13,065 $32,457
Weighted average common shares
outstanding - single class (2) 56,774,983 56,016,978
Basic net income per share during
which single class of equity
securities was outstanding
Basic net income per common share $0.23 $0.58
Diluted net income per common share:
Weighted average common shares
outstanding - two class method
Diluted common share equivalent:
stock options
Diluted earnings per share for period
during which two classes of equity
securities were outstanding
Net income for period during which
single class of equity securities
was outstanding (1) $13,065 $32,457
Weighted average common shares
outstanding - single class (2) 56,774,983 56,016,978
Diluted common share equivalent:
stock options 3,601,755 4,159,815
60,376,738 60,176,793
Diluted net income per share for
period during which single class of
equity securities was outstanding
Diluted net income per common share $0.22 $0.54
(1) Net income for the three 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. The
convertible preferred stock was converted into common stock on
August 13, 2007, the closing date of the Company's initial public
offering. 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 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
reporting period, respectively.
(2) Weighted average shares outstanding used to compute basic net income
per share after conversion of convertible preferred stock; one class
of common shares was outstanding for the period from August 13, 2007
to September 29, 2007.
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