Masimo Corporation (MASI), a leader in non-invasive monitoring know-how for patient care, recently reported that the Shriners Hospitals for Children, Honolulu, where hundreds of orthopedic operations on children are performed each year, is utilizing its cutting edge medical know-how to non-invasively monitor patient blood cells during operations. This latest know-how from Masimo does not use needles to let surgeons know whether a patient is bleeding internally and allows doctors to start blood transfusion at an early stage.
Masimo SpHb is a component of the Masimo Rainbow SET Pulse Co-Oximetry, a cutting edge know-how that permits hospitals to non-invasively monitor physiological parameters and blood components. These include total hemoglobin (“SpHb”), pleth variability index (“PVI”), among others. Masimo Rainbow SET, the oximetry standard of care at hospitals across the globe, ensures real-time outcomes that allow technicians to quickly find and treat potentially dangerous conditions.
As per estimates from the National Institutes of Health (“NIH”), about 5 million patients are beneficiaries of blood transfusions every year in the U.S. and over 50% of heart surgery patients require one or more transfusions of red blood cells.
While transfusions replace blood which has been lost during operations, they may also be the cause of adverse complications. Blood transfusions are beneficial only when they are administered in the correct dosage, at the correct time and on the correct patient. SpHb from Masimo permits practitioners to correctly monitor changes in hemoglobin, on a real-time basis.
Shriners Hospitals for Children, Honolulu is a provider of the latest pediatric orthopedic facilities for children residing in the Pacific Basin. Over 28,000 children have benefited from orthopedic attention at this facility since 1923. Shriners Hospitals located in the U.S., Mexico and Canada provide medical attention to children with orthopedic problems, spinal injuries, burns and lip and palate problems.
Masimo’s SET offering may help it become a dominant global player in the pulse oximetry market. The addition of non-invasive parameters is expected to act as a long-term barrier to entry and drive substantial growth. The expanded pulse oximetry utilization into non-critical care areas of hospital represents another growth driver. Shipments have been growing at a steady rate fueled by new contracts. Moreover, recurring revenues from sale of consumables are increasing.
On the negative side, a weak macro environment raises concern and competition remains intense. Moreover, Masimo partly depends upon its Original Equipment Manufacturers (“OEM”) partners for a part of its sales. In conclusion, its valuation, which already factors in its robust growth prospects, offers limited upside potential at this time.
The renewal of the royalty agreement with Covidien (COV) provides impetus albeit at lower rates. Masimo announced, on June 15, 2011, a non-exclusive, long-term agreement with Philips (PHG), under which Philips will utilize Masimo’s Rainbow SET know-how. Masimo anticipates that it will launch future joint development efforts. Subsequently, Philips products will integrate Masimo’s Rainbow SET technology. Our Neutral rating on Masimo is backed by a short-term Zacks #3 Rank (Hold).
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