Masimo Settles with Respironics

Masimo Corporation (MASI - Analyst Report) recently settled its pending litigation with Respironics, Inc., under which both parties will dismiss all claims and counterclaims in California Superior Court. The lawsuit was related to breach of contract, breach of covenant of the agreement entered between these parties in January 2006.

Masimo Corporation develops, manufactures and markets a family of non-invasive blood monitoring systems that consists of a monitor, circuit board and sensors. The systems are primarily used to monitor blood oxygen saturation levels and protect against hypoxemia and hyperoxemia.

Hypoxemia, low blood-oxygen levels, can result in brain damage and death. Hyperoxemia, high-blood oxygen levels, can result in permanent eye-damage and blindness.

The company's patented Signal Extraction Technology (SET) provides the ability to measure various components of blood through motion and low perfusion pulse oximetry. This addresses the primary limitations of conventional pulse oximetry.

Pulse oximetry is the non-invasive measurement of the oxygen saturation level of arterial blood, or the blood that delivers oxygen to the body's tissues. The primary limitation in conventional pulse oximetry is called 'motion artifact,' an inability to measure through motion.

Patient movements often result in false alarms related to the change in oxygen saturation levels. Additionally, conventional pulse oximetry is unable to distinguish between oxygenated hemoglobins and dyshemoglobins.

Masimo is a market leader in the pulse oximetry monitoring equipment market industry. The company's closest competitors are Haemonetics Corporation (HAE - Analyst Report) and Becton, Dickinson and Company (BDX - Analyst Report). During fiscal 2008, the company captured five additional points of market share, bringing their total to 43.5%.

The company has successfully defended its intellectual property and continues forging new relationships with OEMs. The company gives much importance to its research and development activities, resulting in continued new product launches and advancements.

With its razor/razor blade model, strong expansion in its installed unit base will continue translating into future sales growth. As a result, margin growth has followed. Our recent report has a 'Hold' rating for Masimo.