Masimo Beats Zacks Estimate

Masimo Corporation (MASI) reported third quarter fiscal 2009 results. Earnings per share were 22 cents, beating the Zacks Consensus Estimate of 21 cents. However, earnings were flat year over year. 

Total revenues in the reported quarter increased roughly 12% year over year to $87.4 million. Product revenues increased 14% year over year to $75.1 million. Royalty revenues increased roughly 2% year over year to $12.3 million. Growth in product revenue can be attributed to higher demand for Masimo SET and Masimo Rainbow SET monitors. 

Masimo SET revenues increased approximately 10% year over year to $69.1 million as a result of an expansion in the company’s client base of hospitals. Masimo Rainbow SET revenues doubled year over year to $6.0 million. Growth can be primarily attributed to strong demand for Rainbow licensed parameters, especially SpCO and SpHb, and higher sale of Rainbow consumables. 

Gross margin in the reported quarter declined 10 basis points (bps) year over year to 71.2%. Selling, general and administrative expenses as a percentage of sales increased 100 bps year over year to 38.3%. Research and development expenses as a percentage of sales increased 120 bps year over year to 8.9%. 

Higher operating expenses were primarily responsible for lower operating and net margins. Operating margin declined 240 bps year over year to 23.8%. Net margin declined 180 bps year over year to 14.9%. 

Masimo ended the quarter with cash and cash equivalents of $174.7 million, an increase of roughly 19% year-to-date. Cash flow from operations was approximately $18.6 million. 

Masimo Corporation develops, manufactures and markets a family of non-invasive blood monitoring systems that consist 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. 

Masimo is a leader in the pulse oximetry monitoring equipment market. The company's closest competitors are Haemonetics Corporation (HAE) and Becton, Dickinson and Company (BDX).

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