), a leader in non-invasive monitoring technology for patient care,
recently revealed that Phoenix Children's Hospital had converted to
Masimo SET pulse oximetry products. The hospital is rated among the
top 50 children's hospitals in four specialties by U.S. News &
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Phoenix Children's Hospital believes that it has acquired the
latest pulse oximetry equipment which can accurately gauge
indicators even when there is motion or low perfusion. Masimo's
equipment is superior to competitors' offerings and offers greater
precision under beyond-normal situations.
The two parties have entered into a five year contract under which
Masimo will supply its pulse oximetry equipment including Radical-7
Pulse Co-Oximeter and Rad-87 pulse oximeter. The hospital intends
to replace the Masimo Rainbow know-how to be able to less
intrusively measure total hemoglobin (SpHb).
Phoenix Children's Hospital is the sole licensed children's
hospital in Arizona. It dispenses quality care in more than 40
specialties. The hospital is undergoing a significant expansion to
meet the growing population needs in the area.
Earlier, in the second quarter of 2012, Masimo completed the
strategic acquisition of PHASEIN AB of Sweden. The purchase price
was $30 million. PHASEIN is a provider of sidestream and mainstream
capnography offerings. It had sales of about $10 million.
This acquisition provides the company with another set of
measurable variables using its know-how. It is expected that
earnings per share will be neutral in 2013 and subsequently turn
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
) provides little or no benefit due to lower rates. Further,
competition is intense and Masimo partly depends upon its OEM
partners for sales. Our Neutral recommendation is supported by a
short-term Zacks #3 Rank (Hold).