Shares of Irvine medical device maker Masimo Corp. rose Monday after it said it extended a royalty deal with a longtime rival.
The device maker’s shares closed up 9% Monday with a market value of $1.8 billion.
Masimo will receive a royalty of 7.75% from Covidien Ltd. on pulse oximeters, which monitor the amount of oxygen in patients’ bloodstreams, for three years starting on March 15.
The new deal amended a lawsuit settlement that was reached in 2006.
Masimo and Covidien, which has a tax-friendly headquarters in Ireland and operates from Massachusetts, have been rivals for many years and have traded patent lawsuits.
Some analysts had expressed mild concerns over the fate of Massimo’s royalty revenue, which was set to expire at the end of the current quarter.
Matt Dolan of Newport Beach-based Roth Capital Partners LLC, called the extension “a positive development for Masimo” and said that the company could reinvest as much as 50% of its royalty revenue into its business in 2011.
Masimo is set to talk more about the agreement when it releases its financial results on Feb. 15.
