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Masimo Corporation (MASI - Analyst Report), a leader in non-invasive monitoring technology, recently revealed that Uludag University Hospital, a renowned healthcare and education institution in Turkey, has acquired Masimo SpHb, a novel expertise that permits medical practitioners to continuously and non-invasively track blood hemoglobin. 

Uludag University Hospital is one of only two hospitals in Turkey with accreditation from Joint Commission International. It is now using Masimo SpHb in its surgical rooms. The hospital has a total of 880 beds. Among other benefits, the hospital is gaining from lower sensor usage and better detection ability. 

Masimo is a market leader in the pulse oximetry monitoring equipment industry. Its 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 its patented SET offering remains its mainstay, the rainbow measurements represent another growth driver in hospital care. However, Masimo relies on third-party providers like original equipment manufacturers (OEMs) for a part of its business and customer concentration raises concern. Additionally, we remain concerned about its 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 plc (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 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 (Sell). Intuitive Surgical, Inc. (ISRG - Analyst Report) and HeartWare International Inc. (HTWR - Snapshot Report) are Zacks Rank #2 (Buy) stocks, which are expected to do well.

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