Masimo Corp. not only delivered on its promise for a 10-year growth plan since its 2007 initial public offering, Chief Executive Joe Kiani said the company is expanding patient safety efforts with its noninvasive patient-monitoring products.
Shares of the Irvine-based medical device maker sit at $67.54 per share, up more than 50% compared with a year ago. The company has a market cap of about $3.4 billion.
“It’s hard to make it a sustainable business in a public company,” Kiani said. “The company went public in 2007. We told them we have a 10-year plan. They couldn’t believe it. They said, ‘Joe couldn’t keep his cost down, he keeps spending [on R&D]…’ We were able to build an infrastructure and pipeline, and make money.”
Masimo’s third-quarter revenue, including royalties, was up almost 10% to $167.6 million year-over-year, and it appears to be on pace to top last year’s sales of $630 million.
The trend is expected to continue for some time, according to Kiani, our Business Person of the Year in the healthcare sector.
“We have robust revenue growth [for another] 10 years ahead of us,” he said.
Kiani led the company to several significant wins last year, including:
Concluding multiyear litigation with competitor Royal Philips.
Adding Medtronic plc to patient-safety efforts.
Releasing positive study data on Masimo monitoring technologies.
Launching consumer products in Apple stores.
Resolutions
Masimo first butted heads with Amsterdam-based Philips in 2009 when it accused it of infringing 10 patents related to the technology used in its pulse oximeters, which use red and infrared light to measure the level of oxygen in a patient’s bloodstream.
Insufficient oxygen levels can lead to serious, even fatal, complications. Sensors are attached to a patient’s fingers or feet. Masimo’s version improves on conventional pulse oximeters using technology that separates the arterial signal from noise, such as venous bleeding, to better measure oxygen saturation and pulse rate accurately.
Masimo was awarded $466.7 million in 2014 after Philips Electronics North America Corp. was found to have infringed on two patents for measuring blood oxygen levels. Philips appealed.
The most recent patent settlement, which came in November, ended all pending lawsuits between the companies. Masimo received a $300 million cash payment. The companies also entered into a multiyear business partnership, integrating marketing and sales of Masimo’s noninvasive sensor devices in North America, as well as certain markets in Asia and Europe. Philips will integrate Masimo’s technologies into some of its monitors.
Masimo also concluded long-running litigation with Dublin-based Medtronic with a settlement.
Medtronic, under the terms of the agreement, will continue to pay Masimo a royalty of 7.75% of sales of Medtronic’s current pulse oximetry products sold in the U.S. through October 2018.
Kiani joked that he’s still in disbelief that his “arch rivals” are now Masimo’s partners.
He added that Medtronic has joined his efforts to promote patient safety. The Patient Safety Movement Foundation, which he founded in 2013, focuses on reducing the number of preventable patient deaths in hospitals to zero by 2020. The addition of Medtronic brings the number of participating medical technology companies to 63, up about 43% over 2015.
Good Results
Kiani said the past year also has included the release of a “landmark study” on noninvasive measurement of hemoglobin concentration in the blood based on data compiled by one of France’s university hospitals.
Hopital Dupuytren, part of the Centre Hospitalier Universitaire in Limoges, France, looked into two sets of patients totaling 18,867, over two 11-month periods to determine the effectiveness of Masimo’s noninvasive monitoring technology.
The study demonstrated that continuous monitoring of hemoglobin levels and fluid responsiveness, such as anesthesia and normal saline, resulted in a 30% and 25% reduction in mortality at 30 days and 90 days, respectively.
Kiani said it was the first time a study showed that “our technologies has such a big impact on mortality.”
Consumers, Kids
He said he’s excited about the rise of wearable consumer health monitors that can provide people with personalized health data, potentially driving changes in diagnosis and intervention.
“I really think five to 10 years from now, everything will be different about what is happening to [our] loved ones in hospitals, [as well as] how we diagnose, how we see care delivered,” he said.
Masimo rolled out MightySat in September. The consumer-oriented device—a fingertip pulse oximeter designed for general wellness, including health applications in sports, fitness and relaxation management—is being sold for about $300 at Apple.com and at about 100 Apple stores in the U.S. and Canada.
Apple also carries Cercacor Laboratories Inc.’s Ember Sport Premium. The Irvine-based company, founded by Kiani, who serves as its chief executive, has developed a noninvasive device targeting endurance athletes and trainers to assess performance. Seven measurements are available, using such parameters as blood flow strength, oxygen level, body hydration and breath.
Future expansion will continue to put patient safety and wellness front and center. Kiani is particularly passionate about developing noninvasive blood glucose monitoring for children with Type 1 Diabetes.
“So many diabetic patients suffer from invasive testing. Especially children with Type 1 Diabetes, which are dear to my heart, [these children] don’t understand why they are being poked.”
The gold standard for determining total hemoglobin currently requires puncturing the skin to attain blood samples.
“We have so much to be thankful for, and we got amazing things in 2017,” Kiani said. “The important thing is we are still having fun doing it.”
He’s scheduled to host the Patient Safety Movement’s annual summit in February at the Laguna Cliffs Marriott Resort and Spa in Dana Point.
