Masimo Gains a Hospital Client - Analyst Blog

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Masimo Corporation ( MASI ), 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 & World Report.  

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 accretive.

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 upon its OEM partners for sales. Our Neutral recommendation is supported by a short-term Zacks #3 Rank (Hold).


 
COVIDIEN PLC (COV): Free Stock Analysis Report
 
MASIMO CORP (MASI): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: COV , MASI

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