Masimo Corp. (MASI, Financial) filed Quarterly Report for the period ended 2012-03-31.
Masimo Corp has a market cap of $1.29 billion; its shares were traded at around $22.35 with a P/E ratio of 21.4 and P/S ratio of 3. Masimo Corp had an annual average earning growth of 6.7% over the past 5 years.
pulse oximeters which we estimate totaled 1,005,000 units at March 31, 2012, up from 890,000 units at April 2, 2011. Contributing to the increase in our product revenue was our rainbow® technology product revenues which increased $1.1 million, or 14.3%, to $8.5 million in the three months ended March 31, 2012 from $7.4 million in the three months ended April 2, 2011. Product revenue of $112.2 million of during the three months ended March 31, 2012 includes $0.3 million from the newly created Masimo Semiconductor business. Revenue generated through our direct and distribution sales channels increased $10.6 million, or 12.4%, to $95.9 million for the three months ended March 31, 2012 compared to $85.3 million for the three months ended April 2, 2011. During the three months ended March 31, 2012, revenues from our OEM channel remained unchanged at $16.3 million compared to the three months ended April 2, 2011.
Cost of Goods Sold. Cost of goods sold increased $3.7 million to $39.9 million in the three months ended March 31, 2012 from $36.2 million in the three months ended April 2, 2011. Our total gross margin decreased to 66.5% for the three months ended March 31, 2012 from 68.0% for the three months ended April 2, 2011. Excluding royalties, product gross margin remained the same at 64.4% for the three months ended March 31, 2012 as compared to the three months ended April 2, 2011. During the three months ended March 31, 2012, product gross margin was negatively impacted 0.3% by the newly created Masimo Semiconductor business. We incurred $1.3 million in Cercacor royalty expenses for both the three months ended March 31, 2012 and April 2, 2011, 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 63.3% and 63.1% for the three months ended March 31, 2012 and April 2, 2011, respectively.
Selling, General and Administrative. Selling, general and administrative expenses increased $5.0 million, or 12.1%, to $46.5 million for the three months ended March 31, 2012 from $41.5 million for the three months ended April 2, 2011. The increase was primarily due to a $3.7 million increase in payroll and related costs associated with increased staffing levels. In addition, employee training increased $1.6 million due to a worldwide sales training meeting held during the three months ended March 31, 2012, which did not occur in the three months ended April 2, 2011. In addition, trade show expenses increased $0.8 million resulting from a worldwide trade show in 2012, which is only held once every four years. These increases were partially offset by a $0.7 million reduction in legal fees, primarily due to the timing of litigation activity. Selling, general and administrative expenses of $46.5 million for the three months ended March 31, 2012, included $0.1 million from the newly created Masimo Semiconductor business. Included in total selling, general and administrative expenses are $0.6 million and $0.4 million of direct expenses incurred by our VIE for the three months ended March 31, 2012 and April 2, 2011, respectively.
Cash Flows from Operating Activities. Cash provided by operating activities was $23.2 million in the three months ended March 31, 2012. The source of cash consisted primarily of net income including noncontrolling interest of $15.8 million due to continued growth of our business and non-cash share-based compensation was $3.8 million. Additionally, income taxes payable increased $4.1 million and prepaid expenses decreased by $3.0 million due to a reduction in prepaid taxes. These sources of cash were partially offset by an increase in accounts receivable of $3.5 million resulting from higher sales, a decrease in accrued compensation of $2.2 million as a result of accrued bonus payouts in the first quarter of 2012, and a $1.9 million increase in inventory due to growth in the business.
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Masimo Corp has a market cap of $1.29 billion; its shares were traded at around $22.35 with a P/E ratio of 21.4 and P/S ratio of 3. Masimo Corp had an annual average earning growth of 6.7% over the past 5 years.
Highlight of Business Operations:
Revenue. Total revenue increased $6.2 million, or 5.5%, to $119.2 million for the three months ended March 31, 2012 from $113.0 million for the three months ended April 2, 2011. Product revenues increased $10.6 million, or 10.5%, to $112.2 million in the three months ended March 31, 2012 from $101.6 million in the three months ended April 2, 2011. This increase was primarily due to higher consumable sales resulting from an increase in our installed base of circuit boards andpulse oximeters which we estimate totaled 1,005,000 units at March 31, 2012, up from 890,000 units at April 2, 2011. Contributing to the increase in our product revenue was our rainbow® technology product revenues which increased $1.1 million, or 14.3%, to $8.5 million in the three months ended March 31, 2012 from $7.4 million in the three months ended April 2, 2011. Product revenue of $112.2 million of during the three months ended March 31, 2012 includes $0.3 million from the newly created Masimo Semiconductor business. Revenue generated through our direct and distribution sales channels increased $10.6 million, or 12.4%, to $95.9 million for the three months ended March 31, 2012 compared to $85.3 million for the three months ended April 2, 2011. During the three months ended March 31, 2012, revenues from our OEM channel remained unchanged at $16.3 million compared to the three months ended April 2, 2011.
Cost of Goods Sold. Cost of goods sold increased $3.7 million to $39.9 million in the three months ended March 31, 2012 from $36.2 million in the three months ended April 2, 2011. Our total gross margin decreased to 66.5% for the three months ended March 31, 2012 from 68.0% for the three months ended April 2, 2011. Excluding royalties, product gross margin remained the same at 64.4% for the three months ended March 31, 2012 as compared to the three months ended April 2, 2011. During the three months ended March 31, 2012, product gross margin was negatively impacted 0.3% by the newly created Masimo Semiconductor business. We incurred $1.3 million in Cercacor royalty expenses for both the three months ended March 31, 2012 and April 2, 2011, 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 63.3% and 63.1% for the three months ended March 31, 2012 and April 2, 2011, respectively.
Selling, General and Administrative. Selling, general and administrative expenses increased $5.0 million, or 12.1%, to $46.5 million for the three months ended March 31, 2012 from $41.5 million for the three months ended April 2, 2011. The increase was primarily due to a $3.7 million increase in payroll and related costs associated with increased staffing levels. In addition, employee training increased $1.6 million due to a worldwide sales training meeting held during the three months ended March 31, 2012, which did not occur in the three months ended April 2, 2011. In addition, trade show expenses increased $0.8 million resulting from a worldwide trade show in 2012, which is only held once every four years. These increases were partially offset by a $0.7 million reduction in legal fees, primarily due to the timing of litigation activity. Selling, general and administrative expenses of $46.5 million for the three months ended March 31, 2012, included $0.1 million from the newly created Masimo Semiconductor business. Included in total selling, general and administrative expenses are $0.6 million and $0.4 million of direct expenses incurred by our VIE for the three months ended March 31, 2012 and April 2, 2011, respectively.
Cash Flows from Operating Activities. Cash provided by operating activities was $23.2 million in the three months ended March 31, 2012. The source of cash consisted primarily of net income including noncontrolling interest of $15.8 million due to continued growth of our business and non-cash share-based compensation was $3.8 million. Additionally, income taxes payable increased $4.1 million and prepaid expenses decreased by $3.0 million due to a reduction in prepaid taxes. These sources of cash were partially offset by an increase in accounts receivable of $3.5 million resulting from higher sales, a decrease in accrued compensation of $2.2 million as a result of accrued bonus payouts in the first quarter of 2012, and a $1.9 million increase in inventory due to growth in the business.
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