Masimo Corp. (MASI, Financial) filed Quarterly Report for the period ended 2010-07-03.
Masimo Corp. has a market cap of $1.41 billion; its shares were traded at around $24.02 with a P/E ratio of 26.4 and P/S ratio of 4.1. MASI is in the portfolios of Ron Baron of Baron Funds, Bruce Kovner of Caxton Associates.
Of the total $30.8 million retained, we intend to spend approximately $15.0 million on one-time marketing initiatives, including the establishment of the Masimo Foundation, expanded clinical research and other direct marketing related activities focused on expanding market awareness of our new products. As of July 3, 2010, we have spent a total of $12.3 million, including $10.3 million to establish and fund the Masimo Foundation and $2.0 million for various one-time grants, expanded clinical research activities and various one-time marketing activities.
Product revenues increased $18.0 million, or 25.6%, to $88.0 million in the three months ended July 3, 2010 from $70.0 million in the three months ended July 4, 2009. This increase was primarily due to higher consumable sales resulting from an increase in our installed base of circuit boards and pulse oximeters which we estimate totaled 789,000 units at July 3, 2010 up from 675,000 units at July 4, 2009. Contributing to the increase in our product revenue was our Rainbow technology product revenues which increased $2.7 million, or 59.5%, to $7.2 million in the three months ended July 3, 2010 from $4.5 million in the three months ended July 4, 2009. Revenue generated through our direct and distribution sales channels increased $10.6 million, or 18.5%, to $68.1 million for the three months ended July 3, 2010 compared to $57.5 million for the three months ended July 4, 2009. During the three months ended July 3, 2010 revenues from our OEM channel increased $7.4 million, or 58.1%, to $19.9 million from $12.5 million in the three months ended July 4, 2009.
Cost of Goods Sold. Cost of goods sold increased $6.2 million to $29.8 million in the three months ended July 3, 2010 from $23.6 million in the three months ended July 4, 2009. Our total gross margin decreased to 70.2% for the three months ended July 3, 2010 from 71.8% for the three months ended July 4, 2009. Excluding royalties, product gross margin decreased by 0.2% to 66.1% for the three months ended July 3, 2010 from 66.3% for the three months ended July 4, 2009. This decrease was primarily due to an increased mix of OEM revenues which, in general, carry lower gross margins. We incurred $1.3 million and $1.0 million in Masimo Labs royalty expenses for the three months ended July 3, 2010 and July 4, 2009, respectively, which have been eliminated in our condensed consolidated financial results for the periods presented. Had these royalty expenses not been eliminated, our reported product gross profit margin would have been 64.7% and 64.9% for the three months ended July 3, 2010 and July 4, 2009, respectively.
Research and Development. Research and development expenses increased $1.8 million, or 24.8%, to $9.1 million for the three months ended July 3, 2010 from $7.3 million for the three months ended July 4, 2009. The increase was primarily due to $934,000 in additional engineering supplies and new project costs related to new product development during the three months ended July 3, 2010, compared to July 4, 2009. In addition, payroll and payroll related costs increased by $900,000 due to the increased research and development staffing levels. Included in these total research and development expenses are $634,000 and $743,000 of engineering expenses incurred by our variable interest entities for the three months ended July 3, 2010 and July 4, 2009, respectively.
Selling, General and Administrative. Selling, general and administrative expenses increased $8.2 million, or 25.1%, to $41.0 million for the three months ended July 3, 2010 from $32.8 million for the three months ended July 4, 2009. The increase was primarily due to a $5.2 million increase in payroll and related costs associated with increased staffing levels. In addition, we incurred $1.4 million in various one-time grants and marketing initiatives related to our plans to reinvest a portion of the January 2010 anti-trust settlement payment. In addition, expenses related to customer training increased $447,000 during the three months ended July 3, 2010. Included in these total selling, general and administrative expenses are $784,000 and $257,000 of direct expenses incurred by our variable interest entities for the three months ended July 3, 2010 and July 4, 2009, respectively.
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Masimo Corp. has a market cap of $1.41 billion; its shares were traded at around $24.02 with a P/E ratio of 26.4 and P/S ratio of 4.1. MASI is in the portfolios of Ron Baron of Baron Funds, Bruce Kovner of Caxton Associates.
Highlight of Business Operations:
On January 11, 2010, we completed negotiations to resolve the merits of our antitrust litigation with Covidien and, as a result, we retained $30.1 million from a payment from Covidien following the Ninth Circuit Court of Appeals October 2009 affirmance of a Federal District Court decision that Tyco Healthcare, now Covidien violated the antitrust laws through anticompetitive business practices related to the sale of its pulse oximetry products. The judgment against Covidien for the antitrust violations was for $43.5 million; however, the total payment, after reimbursement for legal fees, costs and interest was $59.0 million. Subsequently, on July 2, 2010, we received an additional $1.3 million payment from Covidien that related to our appeal attorneys fees and related expenses. Of this amount, we retained $769,000 with the remainder paid to our attorneys.Of the total $30.8 million retained, we intend to spend approximately $15.0 million on one-time marketing initiatives, including the establishment of the Masimo Foundation, expanded clinical research and other direct marketing related activities focused on expanding market awareness of our new products. As of July 3, 2010, we have spent a total of $12.3 million, including $10.3 million to establish and fund the Masimo Foundation and $2.0 million for various one-time grants, expanded clinical research activities and various one-time marketing activities.
Product revenues increased $18.0 million, or 25.6%, to $88.0 million in the three months ended July 3, 2010 from $70.0 million in the three months ended July 4, 2009. This increase was primarily due to higher consumable sales resulting from an increase in our installed base of circuit boards and pulse oximeters which we estimate totaled 789,000 units at July 3, 2010 up from 675,000 units at July 4, 2009. Contributing to the increase in our product revenue was our Rainbow technology product revenues which increased $2.7 million, or 59.5%, to $7.2 million in the three months ended July 3, 2010 from $4.5 million in the three months ended July 4, 2009. Revenue generated through our direct and distribution sales channels increased $10.6 million, or 18.5%, to $68.1 million for the three months ended July 3, 2010 compared to $57.5 million for the three months ended July 4, 2009. During the three months ended July 3, 2010 revenues from our OEM channel increased $7.4 million, or 58.1%, to $19.9 million from $12.5 million in the three months ended July 4, 2009.
Cost of Goods Sold. Cost of goods sold increased $6.2 million to $29.8 million in the three months ended July 3, 2010 from $23.6 million in the three months ended July 4, 2009. Our total gross margin decreased to 70.2% for the three months ended July 3, 2010 from 71.8% for the three months ended July 4, 2009. Excluding royalties, product gross margin decreased by 0.2% to 66.1% for the three months ended July 3, 2010 from 66.3% for the three months ended July 4, 2009. This decrease was primarily due to an increased mix of OEM revenues which, in general, carry lower gross margins. We incurred $1.3 million and $1.0 million in Masimo Labs royalty expenses for the three months ended July 3, 2010 and July 4, 2009, respectively, which have been eliminated in our condensed consolidated financial results for the periods presented. Had these royalty expenses not been eliminated, our reported product gross profit margin would have been 64.7% and 64.9% for the three months ended July 3, 2010 and July 4, 2009, respectively.
Research and Development. Research and development expenses increased $1.8 million, or 24.8%, to $9.1 million for the three months ended July 3, 2010 from $7.3 million for the three months ended July 4, 2009. The increase was primarily due to $934,000 in additional engineering supplies and new project costs related to new product development during the three months ended July 3, 2010, compared to July 4, 2009. In addition, payroll and payroll related costs increased by $900,000 due to the increased research and development staffing levels. Included in these total research and development expenses are $634,000 and $743,000 of engineering expenses incurred by our variable interest entities for the three months ended July 3, 2010 and July 4, 2009, respectively.
Selling, General and Administrative. Selling, general and administrative expenses increased $8.2 million, or 25.1%, to $41.0 million for the three months ended July 3, 2010 from $32.8 million for the three months ended July 4, 2009. The increase was primarily due to a $5.2 million increase in payroll and related costs associated with increased staffing levels. In addition, we incurred $1.4 million in various one-time grants and marketing initiatives related to our plans to reinvest a portion of the January 2010 anti-trust settlement payment. In addition, expenses related to customer training increased $447,000 during the three months ended July 3, 2010. Included in these total selling, general and administrative expenses are $784,000 and $257,000 of direct expenses incurred by our variable interest entities for the three months ended July 3, 2010 and July 4, 2009, respectively.
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