Masimo Corp. Chief Executive Joe Kiani sees an opportunity to boost revenue while helping America resolve two of its biggest health problems.
Hospitals that are monitoring the respiratory systems of patients who might be affected by the notorious coronavirus are contacting Masimo (Nasdaq: MASI).
“That’s becoming a boost to our revenue—just about every country is reaching out to us,” Kiani told the Business Journal during an interview in the Irvine headquarters of the patient monitoring technology maker.
“I don’t think the coronavirus will be the end of all, but it will cause surges in hospitals, which will need additional equipment, additional monitors to take care of the additional people showing up.”
Masimo is also on the verge of getting federal fast-track approval for a device that may help reduce the opioid epidemic by sending alerts of a possible overdose at home.
Masimo has adapted a noninvasive monitoring device that it typically sells to hospitals and plans to market for around $150 to $200 each to consumers using opioids at home.
Kiani estimated that in 2017 about 200 million prescriptions were issued that caused an estimated 20,000 deaths and another 50,000 died from illicit usage.
The industry could generate “$10 billion a year from prescription [drug users],” Kiani said. Sales could also come from opioid users without prescriptions.
$1B Goal
These are just two of the many areas that the multifaceted Kiani is working on.
Last week, he was scheduled to step down as the founding chairman of the Patient Safety Movement Foundation that he began to promote the prevention of accidental deaths in hospitals. Last week’s event in Huntington Beach, which was to be keynoted by longtime supporter, former President Bill Clinton, was canceled due to concerns about the coronavirus (see story, page 1).
Kiani is active in Democratic politics, and has hosted fundraisers for Democrat presidential hopeful Joe Biden.
He has alleged patent infringement in a lawsuit against the world’s largest company by market cap, Apple Inc.
Perhaps the most significant corporate achievement for Kiani is that his company is projecting it will top $1 billion in sales this year.
“It feels great. I never imagined it would be a billion-dollar company when I started Masimo,” he said. “It’s been 31 years and it’s not like it happened overnight.”
Since he started the company in 1989 in a Mission Viejo garage, there are now about 2 million of his company’s devices that annually help monitor as many as 200 million patients.
Thousand-Year Slump
Kiani was 9 years old when his parents emigrated from Iran in 1974.
“I’m extremely proud to be from Iran,” he said. “It has a 5,000-year old history. Most of it’s good. It’s been in a slump for about a thousand years.”
Kiani, who knew only three English words when he arrived, quickly adapted and graduated with engineering degrees from San Diego State University.
He saw an opportunity to make key body measurements without needles by building a device that uses infrared light waves to illuminate the blood.
“I thought it was a cool idea to shine light through a finger to measure oxygen,” he said.
Kiani kept it going with the help of equity from his home and about $80,000 in investments from friends and relatives.
“If they held their shares, it’d be like 2,000 times their money back,” Kiani noted.
His company eventually acquired the name Masimo, which is a combination of his given name Massi along with co-founder Mohamed Diab, who is a senior research scientist at the company.
Tech Competitors
Its core business is to measure through motion and low perfusion arterial blood oxygen saturation and pulse rate monitoring, known as Masimo SET pulse oximetry. It’s expanded over the years to noninvasive monitoring of the brain, lungs and other areas.
To date, Masimo has been issued 685 patents, including more than 100 with Kiani’s name, and has 393 pending applications worldwide. He’s successfully sued competitors such as Royal Philips Electronic NV and Covidien Ltd.
Masimo’s principal competitor is Medtronic PLC, which bought Covidien. However, Masimo’s annual report filed last month said it faces new competition from companies typically not in the medical device industry: Alphabet, Samsung and Apple.
“Apple released a watch that has our technology in it,” Kiani said. “They unfortunately recruited about 10 of our key employees.”
In a January lawsuit, Masimo accused Apple of violating 10 patents for its Series 4 and 5 watches. Kiani predicted the lawsuit will last years.
5,000+ Employees
The company now employs more than 5,000, with expansion continuing in Irvine where the company owns four buildings. It also has facilities in New Hampshire, Mexico and Sweden.
The company, which went public at $17 a share in 2007, last month approached $185, flirting with a $10 billion market cap.
Like the market in general, its shares have dropped in recent weeks. As of press time, its shares hovered near $175.
The company on Feb. 19 forecast sales to climb 10.5% to $1.03 billion. Kiani knows Wall Street likes revenue to top 15% growth.
“I personally like 20% (revenue growth) and think anything less than that is not good,” he said.
“Our internal plans are greater than that (10.5% forecast), but the lesson I’ve learned after being public 14 years is that you are better if you under promise.”
Masimo Shuts Down Hollywood
Masimo Corp.’s headquarters was a movie star until CEO Joe Kiani ended its career in Hollywood.
The building’s entrance at 52 Discovery in Irvine has a glass rotunda, a distinctive feature that served as the site of Tony Stark’s headquarters in the 2008 film Iron Man, as well as in scenes for films like Transformers and Dodgeball.
In 2014, Masimo bought the building for $56 million from Nikken Inc., a Japanese nutritional product maker.
“So many movies were made here, and we let a few happen,” Kiani recalled.
It was Dwayne Johnson, aka The Rock, making his HBO show Ballers that caused Kiani to call an end to Hollywood dreams.
“What made me stop was one time I was on a business trip and The Rock was here filming something for ‘Ballers,’” Kiani recalled.
“My team usually doesn’t get starstruck, but I couldn’t get anyone on the phone. They were all checking out the Rock.
“I said ‘no more.’”
Combating Opioid Deaths With Monitoring Systems
Joe Kiani says that when people use opioids to alleviate pain, they may be oblivious to a huge drawback.
“When people take an opioid and take a nap, they forget to breathe and they unfortunately die with a smile on their face. They don’t wake up,” he said.
About two years ago, the Food and Drug Administration asked Masimo Corp. to develop a product to fight the opioid crisis. After the FDA examined 300 products, it chose eight for “breakthrough status,” including Masimo’s device for home monitoring.
In his office, Kiani demonstrated how a clamp on the finger is connected to a wristband where it can interact with wireless devices such as cellphones.
When the device detects a decline in oxygen saturation, an indicator of respiratory distress, it sends alerts to the patient’s emergency contact list. If no one responds, the app will summon an ambulance for emergency response.
The device opens the opportunity for patients to leave out-patient recovery faster and under safer conditions with less risk of accidental overdose.
“I’m passionate about it,” Kiani said. “I want to help people. I want to use my engineering skills to help save lives.”
