), a leader in non-invasive monitoring technology for patient care,
reported second quarter 2012 adjusted earnings per share of 27
cents, missing both the Zacks Consensus Estimate and the year-ago
earnings of 28 cents per share.
Adjusted earnings exclude an income tax benefit of 3 cents from
the prior year. Reported profit moved up 3.9% year over year to
$17.7 million (or 30 cents per share).
Sales for the quarter rose 12% year over year to $122.8 million,
beating the Zacks Consensus Estimate of $120 million.
Product revenues were up 12% to $115.3 million in the reported
quarter. Masimo's global end-user business (85% of product revenue)
increased 16% year over year, but revenues from Original Equipment
Manufacturer (OEM) (15% of product revenue) were down 5%. Sales of
Rainbow products increased 7% year over year to $9.7 million and
included a 48% hike in total hemoglobin (SpHb) revenues.
During the quarter, Masimo shipped about 37,300 Masimo SET pulse
oximetry and Masimo Rainbow SET pulse co-oximetry units, excluding
hand-held sets, flat year-over-year. The company's worldwide
installed base grew 12% year over year to about 1,033,000 units at
the end of the second quarter.
Gross margin fell to 66.3% from 68.7% in the year-ago quarter
due to higher cost of sales. Operating margin declined to 18.5%
from 20.2% a year ago.
The company exited the quarter with cash and cash equivalents of
$121.5 million, down 3.3% year over year.
On August 1, 2012, Masimo announced that it has taken over
PHASEIN AB, of Sweden, which is a maker of multi-gas analysers,
sidestream and mainstream capnography and capnometry offerings. The
company views multi-gas measurements as a major opportunity. Masimo
paid about $30.4 million of cash to acquire PHASEIN.
Masimo updated its guidance for 2012. The company forecasts
total sales of $494 million (earlier $486 million) comprising of
product sales of $466 million (earlier $458 million) and $28
million of royalty (earlier $28 million).
Due to the dilutive impact of the PHASEIN acquisition and
certain other assumptions, Masimo forecasts reported earnings per
share of $1.11 for 2012 compared with $1.15 earlier.
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 as well as royalty. We are currently Neutral on
the stock, supported by a short-term Zacks #3 Rank (Hold).
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