Masimo Corporation (MASI), a leader in non-invasive monitoring technology, recently revealed that the well regarded Holland Hospital, serving the Ottawa and Allegan counties of Canada, is set to add new technical abilities that permit doctors to non-invasively and without interruption gauge blood hemoglobin by utilizing Masimo SpHb.
Masimo’s SpHb technology has proven its ability to curtail risky transfusions of blood. Simultaneously, it is able to reduce costs in the operating room.
Holland Hospital caters to the health care requirements of the greater Holland area in Canada. Its primary facility houses 189 beds and it has many secondary locations. The hospital has 2,000 employees of whom 300 are specialty or primary care doctors.
Masimo is a market leader in the pulse oximetry monitoring equipment industry. The company’s prospects are encouraging, given the sizeable global market opportunity, adoption of pulse oximetry in non-critical areas of the hospital and growing barriers to entry due to additional non-invasive parameters.
While Masimo’s patented SET offering remains its mainstay, the rainbow measurements represent another growth driver in hospital care. However, the company’s reliance on third-party providers like OEMs for a part of its business and customer concentration raises concern. Additionally, we remain concerned about Masimo’s reliance on group purchasing organizations for the sale of its pulse oximetry products to hospitals in the domestic market.
Shipments have been growing at a steady rate fueled by new contracts. However, the renewal of the royalty agreement with Covidien (COV) provides little or no benefit due to lower rates.
We also note Covidien’s effort to expand its oximetry and monitoring products portfolio. In late 2012, the company won U.S. Food and Drug Administration (:FDA) 510(k) approval as well as European Economic Area (EEA) CE Mark clearance for its Nellcor Bedside Respiratory Patient Monitoring system.
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