Masimo Posts Positive Clinical Results; Earnings Call and Results Scheduled

The American Society of Anesthesiologists Annual Meeting, held in San Francisco, CA, presented the benefits for Masimo Rainbow Acoustic Monitoring (RAM) and Pleth Variability Index (PVI). 

Acoustic Respiration Rate (RRA^TM) is a measurement that captures and analyzes the trends of a person’s breathing, increasing the rate of respiratory problem detection juxtaposed with effective patient pain management. In conjunction with Masimo’s revolutionary Signal Extraction Technology (SET), the RAM device noninvasively monitored respiration rate by comfortably sitting on the neck of the patient. The measures are continuously captured for better detection of irregularities in ones breathing capabilities. Three clinical studies were performed thoroughly at three different locations – Stanford University Medical School, Loma Linda University Medical Center, and Tokyo Women’s Medical University – all of which proved RAM to be more effective than its competitors, including Covidiens Capnostream. Results seemed to be quite uniform, with a similar trend of high accuracy of respiratory problem detection and lower probabilities of errors.

PVI, a continuous measurement which assesses fluid status and administration in a patient, also proved to be quite beneficial. It is critical to a patient’s health, as poor fluid levels or inconsistent flow of fluid inflow on a patient undergoing surgery yield increased problems. Because it is noninvasive, the costs for hospitals and private clinics are much lower than some of the invasive counterparts. It concerns the relationship balance of airway pressure and fluid levels pumped into vessels. It can help predict and prevent cardiac failure and hypovolemia, a state of shock that induces decreased blood volume pumped into the body from shock of blood loss or sickness. The Study at the University of California Irvine Medical Center evaluated the reliability of fluid optimization, concluding that “Goal-oriented fluid optimization based on respiratory variation in the pulse oximeter waveform is feasible, and may help to standardize intraoperative fluid management”. 

Masimo will report 3Q2013 earnings after market close next Wednesday, October 30, 2013. I am estimating revenue increasing 12.4% to $133.9MM, vs. $119.1MM last year, largely in-line with street consensus of $132.5MM. EPS is expected to increase 13.9% to $0.27 vs. $0.24 last year, a bit higher than Street consensus of $0.26. My price target stands at $31.00, but is subject to potential revaluation due to both increased positive scientific and financials results.