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Masimo Reports Second Quarter 2009 Financial Results

08/04/2009
--Q2 2009 Highlights:--- Earnings per share increased by 22% to $0.22 per share from $0.18 in prior year--- Product revenues increased 13% to $70.0 million from $62.1 million in prior year--- Rainbow revenues increased 56% to $4.5 million from $2.9 million in prior year
IRVINE, Calif., Aug 04, 2009 /PRNewswire-FirstCall via COMTEX/ -- 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 second quarter of 2009.

For the second quarter of 2009, Masimo reported product revenues of $70.0 million representing a 13% increase over $62.1 million for the second quarter of 2008. Including royalty revenues, Masimo reported total 2009 second quarter revenues of $83.6 million compared to $74.8 million for the second quarter of 2008. For the second quarter of 2009, Masimo reported earnings per share of $0.22 compared to $0.18 per share for the second quarter of 2008.

Masimo reported that it shipped 27,100 Masimo SET and Masimo Rainbow SET oximetry units, excluding handheld units, during the second quarter of 2009, resulting in an estimated 605,000 of Masimo SET and Masimo Rainbow SET pulse oximeters in use worldwide. In the second quarter of 2009, revenues from Masimo Rainbow SET products increased to $4.5 million from $2.9 million in the same prior year quarter.

For the first six months of 2009, Masimo reported product revenues of $144.5 million representing a 19% increase over $121.8 million for the first six months of 2008. Including royalty revenues, Masimo reported total 2009 year to date revenues of $169.1 million, representing a 16% increase compared to $145.9 million for the prior year period. For the first half of 2009, Masimo reported earnings per share of $0.43, up 34% from $0.32 per share for the first half of 2008.

Joe E. Kiani, Chairman and Chief Executive Officer of Masimo, said, "We had a good quarter given the recession--while revenues were down quarter over quarter, they grew 13% year over year, thanks to continued strong Masimo SET growth and even stronger Masimo Rainbow SET growth. These results underline both the resilience of our business model and the power of our innovation in noninvasive monitoring, which is helping our customers improve and automate patient care."

Masimo also reported that as of July 4, 2009, cash and cash equivalents totaled $156.6 million, up from $146.9 million at January 3, 2009.

Financial Guidance

While providing financial guidance in this economic environment continues to be more difficult than in prior periods, Masimo is reaffirming its 2009 earnings guidance of $0.83 to $0.87 per share; however, Masimo is adjusting its total 2009 product revenue guidance to between $295 million and $300 million, down from its prior guidance of $310 million to $315 million. Masimo also expects its 2009 royalty revenues to be in the range of $44 million to $46 million, compared to prior guidance of $42 million to $46 million. For the full year 2009, Masimo now expects its total revenues to be between $339 million and $346 million, down from $352 million to $361 million. The projections and guidance set forth above are estimates only and actual results could differ.

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) 679-9937 for international callers. The reservation number for both dial-in numbers is 21245431. 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 www.masimo.com. After the live web cast, the call will remain available on Masimo's website through September 4, 2009. In addition, a telephonic replay of the call will be available until August 18, 2009. The replay dial-in numbers are (800) 642-1687 for domestic callers and +1 (706) 645-9291 for international callers. Please use reservation code 21245431.

About Masimo

Masimo (NASDAQ: MASI) develops, manufactures and markets 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 clinical and laboratory 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(R)), oxygen content (SpOC(TM)), carboxyhemoglobin (SpCO(R)), methemoglobin (SpMet(R)) and plethysmograph variability index (PVI(R)), 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. Any information contained in, or that can be accessed through, our website is not incorporated by reference into, nor is it in any way a part of, this release.

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 estimates for total revenues, including royalty and product revenues, and earnings per share for the full fiscal year 2009. 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 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 risk that the implementation of our international realignment, even if timely implemented, will not produce the anticipated operational and financial benefits, including a 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 www.sec.gov. 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.

    Masimo Corporation
    Investor Contact:
    Mark P. de Raad
    Executive Vice President and Chief Financial Officer
    Masimo Corporation
    (949) 297-7080
    mderaad@masimo.com

    Media Contact:
    Dana Banks
    Manager, Public Relations
    Masimo Corporation
    (949) 297-7348
    dbanks@masimo.com


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)

                                              July 4,   January 3,
                                               2009       2009
                                               ----       ----
                                           (Unaudited)
     ASSETS
     Current assets
       Cash and cash equivalents             $156,566   $146,910
       Accounts receivable, net of
        allowance for doubtful accounts        38,464     30,715
       Royalties receivable                    11,106     11,375
       Inventories                             29,812     27,400
       Prepaid expenses                         6,941      4,780
       Deferred tax assets                     10,511     10,511
       Other current assets                       525        551
           Total current assets               253,925    232,242
     Deferred cost of goods sold               28,938     28,431
     Property and equipment, net               12,400     12,979
     Deferred tax assets                        8,796      8,781
     Intangible assets, net                     7,702      7,410
     Other assets                               3,776      3,505

           Total assets                      $315,537   $293,348

     LIABILITIES AND STOCKHOLDERS'
      EQUITY
     Current liabilities
       Accounts payable                       $14,044    $15,914
       Accrued compensation                    13,720     15,607
       Accrued liabilities                      6,350      5,566
       Income taxes payable                       306     10,862
       Deferred revenue                        18,796     17,233
       Current portion of long-term debt          224        465

           Total current liabilities           53,440     65,647
     Long-term debt, less current
      portion                                     201        157
     Other liabilities                          8,354      8,046

           Total liabilities                   61,995     73,850
     Commitments and contingencies
     Stockholders' equity
       Common stock                                58         57
       Treasury stock                          (1,209)    (1,209)
       Additional paid-in capital             187,396    179,666
       Accumulated other comprehensive loss      (243)        (7)
       Retained earnings                       66,997     40,884
         Total Masimo Corporation's
          stockholders' equity                252,999    219,391
         Noncontrolling interest                  543        107
           Total stockholders' equity         253,542    219,498
           Total liabilities and
            stockholders' equity             $315,537   $293,348


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


                                  Three Months Ended      Six Months Ended
                                 ---------------------  ---------------------
                                  July 4,     June 28,  July 4,      June 28,
                                   2009         2008     2009         2008
                                   ----         ----     ----         ----
     Revenue:
       Product                    $70,047      $62,094  $144,544     $121,829
       Royalty                     13,522       12,672    24,517       24,047
                                   ------       ------   -------      -------
     Total revenue                 83,569       74,766   169,061      145,876
     Cost of goods sold            23,574       21,403    48,319       42,524
                                   ------       ------   -------      -------
     Gross profit                  59,995       53,363   120,742      103,352
     Operating expenses:
       Research and development     7,252        5,980    15,019       12,278
       Selling, general and
        administrative             32,766       30,366    65,646       59,895
       Antitrust litigation            29          277        43          445
                                   ------       ------   -------      -------
     Total operating expenses      40,047       36,623    80,708       72,618
                                   ------       ------   -------      -------
     Operating income              19,948       16,740    40,034       30,734
     Non-operating income
      (expense):
       Interest income                 68          625       113        1,584
       Interest expense                (7)         (60)      (17)        (703)
       Other                          307           75       (15)         178
                                   ------       ------   -------      -------
     Total non-operating income
      (expense)                       368          640        81        1,059
                                   ------       ------   -------      -------
     Income before provision
      for income taxes             20,316       17,380    40,115       31,793
     Provision for income taxes     7,065        6,779    13,600       12,401
                                   ------       ------   -------      -------
     Net income including
      noncontrolling interest      13,251       10,601    26,515       19,392
     Net income attributable to
      the noncontrolling
      interest                       (159)           -      (402)           -
                                   ------       ------   -------      -------
     Net income attributable to
      Masimo Corporation          $13,092      $10,601   $26,113      $19,392
                                  =======      =======   =======      =======
     Net income per share
      attributable to Masimo
      Corporation stockholders:
       Basic                        $0.23        $0.19     $0.45        $0.35
                                  =======      =======   =======      =======
       Diluted                      $0.22        $0.18     $0.43        $0.32
                                  =======      =======   =======      =======

    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 4,     June 28,   July 4,    June 28,
                                     2009         2008      2009        2008
                                     ----         ----      ----        ----
     Cost of goods sold               $97          $75      $171         $104
     Research and development         620          607     1,233        1,019
     Selling, general and
      administrative               $2,116       $1,487    $4,069       $2,624


                           MASIMO CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands)
                                (unaudited)

                                                        Six Months Ended
                                                      --------------------
                                                      July 4,     June 28,
                                                       2009        2008
                                                      -------     --------
     Cash flows from operating activities:
       Net income including noncontrolling
        interest                                      $26,515      $19,392
       Adjustments to reconcile net income
        including noncontrolling interest to net
        cash provided by operating activities:
         Depreciation and amortization                  3,063        2,738
         Share based compensation                       5,473        3,747
         Loss on disposal of property and
          equipment                                         5            -
         Provision for (reversal of) doubtful
          accounts                                        370          (19)
         Provision for obsolete inventory                 527        1,807
         Provision for warranty costs                     981          675
         Income tax benefit from exercise of stock
          options                                         820        8,655
         Excess tax benefit from share based
          payment arrangements                           (152)      (1,029)
         Changes in operating assets and
          liabilities:
           Increase in accounts receivable             (8,295)      (2,263)
           Decrease in royalties receivable               269        2,491
           Increase in inventories                     (2,994)      (7,863)
           Increase in deferred cost of goods sold       (497)      (1,467)
           (Increase) decrease in prepaid expense      (2,148)          69
           (Increase) decrease in other assets           (250)         459
           Increase (decrease) in accounts payable     (1,869)       2,136
           Increase (decrease) in accrued
            compensation                               (2,000)         557
           Decrease in accrued liabilities               (192)      (1,852)
           Increase (decrease) in income taxes
            payable                                   (10,403)       1,026
           Increase in deferred revenue                 1,493        5,029
           Increase in other liabilities                  416           37
                                                      -------     --------
     Net cash provided by operating activities         11,132       34,325
                                                      -------     --------
     Cash flows from investing activities:
       Purchases of property and equipment             (1,987)      (3,035)
       Increase in intangible assets                     (743)      (1,521)
       Increase in restricted cash                        (15)           -
                                                      -------     --------
     Net cash used in investing activities             (2,745)      (4,556)

     Cash flows from financing activities:
       Repayments on long-term debt                      (255)     (30,126)
       Proceeds from issuance of common stock           1,415        5,702
       Excess tax benefit from share based
        payment arrangements                              152        1,029
                                                      -------     --------
     Net cash provided by (used in) financing
      activities                                        1,312      (23,395)
     Effect of foreign currency exchange rates
      on cash                                             (43)        (204)
                                                      -------     --------
     Net increase in cash and cash equivalents          9,656        6,170
     Cash and cash equivalents at beginning of
      period                                          146,910       96,733
                                                      -------     --------
     Cash and cash equivalents at end of
      period                                         $156,566     $102,903
                                                     ========     ========

SOURCE Masimo Corporation


http://www.masimo.com

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