Masimo Corporation ( MASI - Analyst Report ) , a leader in non-invasive monitoring technology, recently revealed that Libya is the first nation to start utilizing the Masimo Pronto-7 to check prospective blood donors for poor hemoglobin count at large blood collection centers. The Pronto-7 is a hemoglobin monitoring device which is both non-invasive and held by hand.

The Pronto-7 fits into the palm of a hand and provides a ready mechanism for monitoring hemoglobin, perfusion index, pulse rate and SpO2 in less than 60 seconds. The Pronto-7 does not rely on needles or lab tests.

People in the Middle East frequently donate blood prior to surgery in the family or among friends. Thus far, before the adoption of Pronto-7, blood collection centers in Libya would rely on invasive withdrawals of blood to test donors for anemia. According to a minister in the Libyan government, the country’s adoption of Pronto-7 is an example of its commitment to quality health care.

Masimo is a market leader in the pulse oximetry monitoring equipment industry. The company’s prospects are encouraging, given the sizeable global market opportunity, adoption of pulse oximetry in non-critical areas of the hospital and growing barriers to entry due to additional non-invasive parameters.

While Masimo’s patented SET offering remains its mainstay, the rainbow measurements represent another growth driver in hospital care. However, the company’s reliance on third-party providers like OEMs for a part of its business and customer concentration raises concern. Additionally, we remain concerned about Masimo’s reliance on group purchasing organizations for the sale of its pulse oximetry products to hospitals in the domestic market.

Shipments have been growing at a steady rate fueled by new contracts. However, the renewal of the royalty agreement with Covidien ( COV - Analyst Report ) provides little or no benefit due to lower rates.

We also note Covidien’s effort to expand its oximetry and monitoring products portfolio. In late 2012, the company won U.S. Food and Drug Administration (FDA) 510(k) approval as well as European Economic Area (EEA) CE Mark clearance for its Nellcor Bedside Respiratory Patient Monitoring system.

Masimo carries a Zacks Rank #4, which translates into a short-term Sell rating. Cantel Medical Corp. ( CMN - Snapshot Report ) and Cyberonics Inc. ( CYBX - Analyst Report ) are Zacks Rank #1 (Strong Buy) stocks, which are expected to do well.