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Masimo Reports First Quarter 2010 Financial Results

05/04/2010

IRVINE, Calif., May 4, 2010 /PRNewswire via COMTEX/ --Q1 2010 Highlights:

  • Total revenues rose 15.5% to $98.8 million, compared to the first quarter 2009
  • Product revenues rose 15.3% to $85.9 million, compared to the first quarter 2009
  • Shipments of Masimo SET and Masimo Rainbow SET units rose 34% to 37,100 units, compared to the first quarter 2009
  • Rainbow revenues rose 71.3% to $5.3 million, compared to the first quarter 2009
  • GAAP EPS of $0.44 included a $0.20 net gain related to antitrust lawsuit victory. Adjusted EPS of $0.24, compared to $0.22 in the first quarter of 2009

Masimo (Nasdaq: MASI), the inventor of Pulse CO-Oximetry and Measure-Through Motion and Low Perfusion pulse oximetry, today announced its financial results for the first quarter of 2010.

Masimo's total revenues for the first quarter were $98.8 million, up 15.5% from $85.5 million for the first quarter of 2009. Masimo's first quarter product revenues rose 15.3% to $85.9 million, compared to $74.5 million for the first quarter of 2009. Revenues from Masimo Rainbow SET products rose 71.3% to $5.3 million in the first quarter, compared to $3.1 million for the first quarter of 2009.

Net income for the first quarter was $26.7 million, or $0.44 per diluted share, including the after-tax impact of $30.1 million in proceeds from the antitrust lawsuit victory against Covidien, partially offset by $10.9 million in related, incremental one-time SG&A expenses. Excluding this net one-time pre-tax gain of $19.2 million, net income for the first quarter was $14.3 million, or $0.24 per diluted share, compared to net income of $13.0 million, or $0.22 per diluted share, in the first quarter of 2009.

During the first quarter, the company shipped 37,100 Masimo SET pulse oximetry and Masimo Rainbow SET Pulse CO-Oximetry units, excluding handheld units, compared to 27,700 in the same period last year. Masimo estimates its worldwide installed base as of April 3, 2010 to be approximately 757,000 units, up 16% from approximately 651,000 for the same period last year.

Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, "Masimo's mission is to improve patient outcomes and reduce the cost of care by taking noninvasive monitoring to new sites and new applications. Toward this mission, we made solid progress through double-digit growth in our core Masimo SET pulse oximetry and a 71% increase in sales of Masimo Rainbow Pulse CO-Oximetry, which includes the first-ever continuous and noninvasive hemoglobin measurement. The 34% year-over-year growth in unit shipments of Masimo SET and Masimo Rainbow monitors and OEM boards reflects strong sales to OEMs and growing demand for both our Rainbow platform, and Patient SafetyNet system for the general floor."

As of April 3, 2010, cash, cash equivalents and short-term investments totaled $112.1 million, compared to $189.0 million as of January 2, 2010. The decline is due to the March 31, 2010 dividend payment of $117.5 million, partially offset by operating cash flow and the net proceeds from the antitrust lawsuit.

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 code for both dial-in numbers is 69324525. A live webcast 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 webcast, the call will be available on Masimo's website through June 4, 2010. In addition, a telephonic replay of the call will be available through May 18, 2010. The replay dial-in numbers are (800) 642-1687 for domestic callers and +1 (706) 645-9291 for international callers. Please use reservation code 69324525.

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(R), 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(R) Pulse CO-Oximetry(TM), allowing noninvasive and continuous monitoring of blood constituents that previously required invasive procedures, including total hemoglobin (SpHb(R)), oxygen content (SpOC(TM)), carboxyhemoglobin (SpCO(R)), methemoglobin (SpMet(R)), and PVI(R), in addition to SpO2, pulse rate, and perfusion index (PI). In 2009, Masimo introduced Masimo Rainbow SET(R) Acoustic Monitoring(TM), the first-ever noninvasive and continuous monitoring of acoustic respiration rate (RRa(TM)). Masimo's Rainbow platform offers a breakthrough in patient safety by helping clinicians detect life-threatening conditions and helping guide treatment options. 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

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. 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, will not produce the 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 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:                      Media Contact:
    Sheree Aronson                         Dana Banks
    Vice President, Investor Relations     Manager, Public Relations
    Masimo Corporation                     Masimo Corporation
    (949) 297-7043                         (949) 297-7348
    saronson@masimo.com                    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, SpOC, SpCO, SpMet, PVI, Radical-7, Rad-87, Rad-57,Rad-9, Rad-8, Rad-5, Pulse CO-Oximetry and Pulse CO-Oximeter are trademarks or registered trademarks of Masimo Corporation.

                              MASIMO CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                          (unaudited, in thousands)


                                                                 January
                                                     April 3,       2,
                                                          2010       2010
                                                          ----       ----
      ASSETS
      Current assets
           Cash and cash equivalents                   $36,153   $132,054
           Short-term investments                       75,986     56,989
           Accounts receivable, net of allowance
            for doubtful accounts                       46,038     38,897
           Royalties receivable                         12,000     11,500
           Inventories                                  33,699     31,559
           Prepaid expenses                              4,057      5,447
           Deferred tax assets                          11,586     11,585
           Other current assets                          1,550      1,357
                                                         -----      -----
                Total current assets                   221,069    289,388
      Deferred cost of goods sold                       30,026     28,163
      Property and equipment, net                       12,302     11,682
      Deferred tax assets                               11,520     11,500
      Intangible assets, net                             9,780      9,829
      Other assets                                       6,577      5,783
                                                         -----      -----
                Total assets                          $291,274   $356,345
                                                      ========   ========

      LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities
           Accounts payable                            $20,949    $16,716
           Accrued compensation                         15,061     17,793
           Accrued liabilities                           9,614      9,754
           Income taxes payable                         10,498        477
           Deferred revenue                             17,261     14,641
           Current portion of capital lease
            obligation                                      61         60
                                                           ---        ---
                  Total current liabilities             73,444     59,441
      Deferred revenue                                   2,079        270
      Capital lease obligation, less
       current portion                                     155        171
      Other liabilities                                  7,076      6,775
                                                         -----      -----
                Total liabilities                       82,754     66,657

      Stockholders' equity
           Common stock                                     59         58
           Treasury stock                               (1,209)    (1,209)
           Additional paid-in capital                  205,782    195,690
           Accumulated other comprehensive
            income                                         127         63
           Retained earnings                             3,316     94,112
                                                         -----     ------
                Total Masimo Corporation
                 stockholders' equity                  208,075    288,714
                Noncontrolling interests                   445        974
                                                           ---        ---
                Total stockholders' equity             208,520    289,688
                                                       -------    -------

                Total liabilities and stockholders'
                 equity                               $291,274   $356,345
                                                      ========   ========



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


                                                         Three Months Ended
                                                         ------------------
                                                      April 3,    April 4,
                                                           2010        2009
                                                           ----        ----
      Revenue:
             Product                                    $85,866     $74,497
             Royalty                                     12,899      10,995
                                                         ------      ------
      Total revenue                                      98,765      85,492
      Cost of goods sold                                 29,228      24,745
                                                         ------      ------
      Gross profit                                       69,537      60,747
      Operating expenses:
             Research and development                     9,410       7,767
             Selling, general and administrative         49,311      32,880
             Antitrust litigation expense (proceeds)    (29,968)         14
                                                        -------         ---
      Total operating expenses                           28,753      40,661
                                                         ------      ------
      Operating income                                   40,784      20,086
      Non-operating expense                                (347)       (287)
                                                           ----        ----
      Income before provision for income taxes           40,437      19,799
      Provision for income taxes                         14,273       6,535
                                                         ------       -----
      Net income including noncontrolling interests      26,164      13,264
      Net (income) loss attributable to the
       noncontrolling interests                             546        (243)
                                                            ---        ----
      Net income attributable to Masimo Corporation     $26,710     $13,021
                                                        =======     =======

      Net income per share attributable to Masimo
       Corporation stockholders:
             Basic                                        $0.46       $0.23
                                                          =====       =====
             Diluted                                      $0.44       $0.22
                                                          =====       =====

      Cash dividend declared per share                    $2.00          $-
                                                          =====         ===



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


                                                           Three Months Ended
                                                           ------------------
                                                          April 3,   April 4,
                                                            2010       2009
                                                         ---------  ---------
    Cash flows from operating activities:
         Net income including noncontrolling
          interests                                        $26,164    $13,264
         Adjustments to reconcile net income
          including noncontrolling interests to
          net cash provided by operating
          activities:
            Depreciation and amortization                    1,577      1,508
            Share-based compensation                         2,818      2,640
            Provision for doubtful accounts                    233        199
            Provision for obsolete inventory                   249        127
            Provision for warranty costs                       619        495
            Income tax benefit from exercise of
             stock options granted prior to January
             1, 2006                                           555        435
            Excess tax benefit from share-based
             payment arrangements                           (1,383)       (65)
            Changes in operating assets and
             liabilities:
                Increase in accounts receivable             (7,375)    (5,467)
                (Increase) decrease in royalties
                 receivable                                   (500)       547
                Increase in inventories                     (2,388)    (2,585)
                Increase in deferred cost of goods sold     (1,902)      (253)
                Decrease in prepaid expense                  1,375      1,065
                Increase in other assets                    (1,013)      (940)
                Increase in accounts payable                 4,256         71
                Decrease in accrued compensation            (2,646)    (2,349)
                Increase (decrease) in accrued
                 liabilities                                  (724)       342
                Increase (decrease) in income taxes
                 payable                                    11,401     (6,130)
                Increase in deferred revenue                 4,429      2,678
                Increase in other liabilities                  313        137
                                                                --         --
    Net cash provided by operating
     activities                                             36,058      5,719
                                                            ------      -----

    Cash flows from investing activities:
         Purchase of short-term investments                (75,986)         -
         Proceeds from sale and maturities of
          short-term investments                            56,989          -
         Purchases of property and equipment                (1,885)      (676)
         Increase in intangible assets                        (264)      (340)
         Decrease in restricted cash                             -         21
                                                                --         --
    Net cash used in investing activities                  (21,146)      (995)
                                                           -------       ----

    Cash flows from financing activities:
         Repayments on long-term debt                          (15)       (79)
         Proceeds from issuance of common stock              5,354        739
         Excess tax benefit from share-based
          payment arrangements                               1,383         65
         Dividends paid                                  (117,506)          -
                                                          --------         --
    Net cash provided by (used in)
     financing activities                                (110,784)        725
    Effect of foreign currency exchange
     rates on cash                                             (29)      (112)
                                                               ---       ----
    Net increase (decrease) in cash and
     cash equivalents                                      (95,901)     5,337
    Cash and cash equivalents at beginning
     of period                                             132,054    146,910
                                                           -------    -------
    Cash and cash equivalents at end of
     period                                                $36,153   $152,247
                                                           =======   ========



SOURCE Masimo Corporation

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