Masimo Corporation ( MASI ),
a leader in non-invasive monitoring technology for patient care,
recently received 510(k) approval from the U.S. Food and Drug
Administration (FDA) for its Masimo Signal Extraction Technology
(SET) pulse oximeters, rainbow SET Pulse CO-Oximeters, and neonatal
sensors. These devices have received specific labeling to be used
for screening of infants ailing from critical congenital heart
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About 3% of all infants die from CCHD in their first year
according to the Secretary of Health & Human Services letter to
the Secretary's Advisory Committee on Heritable Disorders in
Newborns and Children (SACHDNC). Per the Health and Human Services
(HHS), 7 to 9 out of every 1,000 babies born suffer from these
kinds of heart diseases. Some are detectable and can be treated by
measuring the blood oxygen saturation level.
FDA approval has further bolstered Masimo's foothold in the pulse
oximetry space. This is the first time the FDA has approved a
particular labeling, signifying the use of pulse oximeters along
with a physical exam to test newborns for CCHD. Recently, the state
of California made the usage of CCHD pulse oximetry screening
mandatory. Earlier, in September 2011, the HHS included pulse
oximetry CCHD screening for newborns as part of the Recommended
Uniform Screening Panel.
The Radical-7, Rad-57 and Rad-87 Pulse CO-Oximeters with Masimo
rainbow SET, and the Rad-5, Rad-5v and Rad-8 Pulse Oximeters with
Masimo SET received the 510(k) clearance. The Masimo SET pulse
oximeters and sensors had been approved earlier to measure oxygen
saturation level and pulse rate during motion and low perfusion
conditions in infants.
In addition, along with FDA clearance, Masimo also initiated the
HEART Program (Help Ensure Access to the Right Technology). The
program will voluntarily provide free Masimo SET pulse oximeters to
hospitals which cannot afford to buy it.
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.
Shipments have been growing at a steady rate fueled by new
contracts. However, the renewal of the royalty agreement with
Covidien ( COV )
provides little or no benefit due to lower rates. Further,
competition is intense and Masimo partly depends on its Orthopedic
Equipment Manufacturing (OEM) partners for sales. We currently have
a Neutral recommendation on the stock, which carries a short-term
Zacks #3 Rank (Hold rating).