Masimo’s Kiani: Signs Of Pandemic Receding

Masimo Corp., which sells wireless patient monitoring devices to hundreds of hospitals worldwide, is spotting a light at the end of the pandemic tunnel.

“We are happy to see signs of the pandemic receding in most states in the U.S. and in many countries with the successful development and deployment of vaccines, and expect hospital census to eventually return to pre-COVID levels,” Chief Executive Joe Kiani said last week in a statement announcing the Irvine-based company’s first-quarter results.

The results “illustrate the resiliency of our customers and our business,” said Kiani, who founded the company in 1989. “Following a year in 2020 where we achieved over 20% revenue growth and shipped over two times the usual number of drivers due to the rise of the COVID pandemic, we delivered double-digit revenue growth and driver shipments that exceeded expectations in the first quarter.”

$1.2B Expectations

Devices from the company (Nasdaq: MASI) have been flying off the shelves in the past year as hospitals embraced the ability for its staff to wirelessly monitor the blood and oxygen levels of COVID patients. Revenue in 2020 climbed 22% to $1.14 billion.

Masimo’s stock jumped even more, 50% since the start of 2020, giving it a market cap of $13 billion as of last week. It is now Orange County’s fourth largest public company.
Sales won’t grow as much this year. Masimo updated its 2021 forecast to predict a 5.4% revenue increase to $1.2 billion.  

Masimo reported first-quarter sales of $299 million, up 11% from a year ago, topping the average analyst estimate of $296 million. The company recorded adjusted net income of $52.1 million, or 90 cents per share, topping consensus estimates for 87 cents a share.

Masimo shipped about 66,000 technology boards and instruments in its first quarter this year, compared to 72,100 in the first quarter of 2020.
 
Separately, the company won a $17.5 million contract to supply the U.S. military and federal civilian agencies with anesthesia systems, bedside monitoring, central monitoring and vital sign monitoring.
 
The five-year contract is effective between 2021 and 2026, with one five-year option for renewal.

Key Areas to Watch

Last month, Masimo gave a presentation at a conference hosted by the research firm Needham, which highlighted key areas to watch:

– Automation uptick. Masimo tripled its automation customers from 25 hospitals to 75 hospitals in 2020. The unit, which offers hardware and software subscriptions in the range of $1,000 to $5,000 per bed per year, is expected to gain traction in 2021.

– Opioid management. The company anticipates federal clearance of its opioid patient monitoring device later this year. A successful product rollout will also depend on receiving Medicare coverage, as about 40% of opioid users are on Medicare, the company said.

– Monitor utilization. Masimo indicated its monitors will be utilized by hospitals at a lower rate, in part because monitors placed in 2020 were lower cost models that did not include other measurements such as ECG that are required in the operating room or ICU.