Masimo
Annual Report 2008

Plain-text annual report

Powered by FascinationSM M A S M O I C O R P O R A T I O N : : 2 0 0 8 A N N U A L R E P O R T Powered by Fascination As a company that is powered by fascination and accomplishment, Masimo develops breakthrough noninvasive patient monitoring solutions that elude others—resulting in innovative technologies that solve “unsolvable” clinical problems. That’s because when you focus on fascination and open yourself up to the unbridled exploration of what could be, the results transcend what others believe is possible. From the invention and launch of the world’s first measure-through motion and low perfusion pulse oximetry technology in 1995, to the introduction of noninvasive and continuous hemoglobin monitoring in 2008, we have been continually driven to find new ways to do what is best for patient care. Our latest breakthrough technologies enabled us to achieve record results as we helped clinicians around the world provide better care for their patients Joe E. Kiani Chairman & CEO Masimo Corporation A LETTER FROM THE CHAIRMAN hemoglobin (SpHb) under a limited market is responsible for helping them identify carbon in cash, after repaying $30.4 million to virtually As we approach the two-year anniversary of release in the third quarter of 2008, immediately monoxide poisoning and save lives. eliminate all of our debt. our successful IPO, we are focusing attention generating significant interest. By early 2009, on one of our five guiding principles—thrive 50 hospitals around the world had realized In 2008, the breakthrough measure-through I am particularly proud that our accomplishments on fascination and accomplishment, not on the value of this breakthrough technology and motion and low perfusion performance of were achieved by adhering to our guiding greed and power—to showcase how this simple integrated it into their clinical practice. Masimo Rainbow SET pulse oximetry, along principles and staying focused on our long- approach to business has allowed us to solve with the Masimo Patient SafetyNet remote standing mission of “improving patient some very complex clinical and technological In addition to the excitement generated by monitoring and clinician notification system was outcomes and reducing cost of care by taking problems that others believed were unsolvable. SpHb, prior Masimo innovations continue to fuel shown to improve clinical outcomes, increase noninvasive monitoring to new sites and A YEAR OF INNOVATION AND GROWTH our growth and expand our market potential. Masimo PVI, an innovative noninvasive patient safety and reduce costs on hospital applications.” By remaining dedicated to general care floors and in post-acute care innovation and patient care, we have continually 2008 was a year of continued innovation and measurement launched in 2007, was shown facilities. growth for Masimo, beginning with the first in multiple 2008 studies to help predict fluid quarter unveiling of what we believe to be the responsiveness during surgery. world’s first noninvasive hemoglobin monitor DELIVERING RECORD RESULTS dramatically improve existing ones by making These and other milestones, built on the solid them more accurate, reliable, and clinically overcome technological challenges to develop important new noninvasive measurements and at the World Congress of Anesthesia in South Also in 2008, key standards bodies in both foundation of our gold standard pulse oximetry relevant than thought possible. Africa. Using more than seven wavelengths the U.S. and the United Kingdom established business, drove our strong financial performance of light and a single sensor, Masimo Rainbow SET technology can now measure hemoglobin guidelines to make carbon monoxide screening with Masimo Rainbow SET a standard of care in 2008—allowing us to achieve record revenues as we helped clinicians around the world provide Our innovations have not only helped health care professionals save the lives of patients— noninvasively, continuously and immediately— in fire department and emergency medical better care for their patients. Our product and the eyesight of premature infants—but have without a painful needle stick or time-consuming services (EMS) markets. Clinicians around the revenues increased nearly 30% to a record also opened up new markets for us. According to laboratory analysis. We launched noninvasive world continue to report how this technology $258.9 million and we generated $50.2 million industry analysts, our new technologies have The Masimo Product Offering: uit Boards CirCirCCuit Boards moNitors PatiENt saFEtYNEt sYstEm sENsors/CaBlEs Pulse CO-Oximetry and the leading measure-through motion and low perfusion pulse oximetry solution, available in more than 100 OEM monitors from over 50 leading brands. A complete line of bedside and handheld devices delivering Masimo SET pulse oximetry and Masimo Rainbow SET Pulse CO-Oximetry to clinicians in acute care, alternate care, and EMS/fire settings. Our innovative new wireless patient monitoring and clinician notification system, along with Rainbow Masimo SET, has been shown to help keep patients safe on general care floors. Available for either single-patient or multi-patient use, we offer more than 100 different sensor and cable combinations for virtually any clinical need. allowed us to expand our total market blood constituents and fluid volume status subsidiary in Neuchatel, Switzerland. By doing Looking ahead, we anticipate that our latest potential from $1 billion with pulse oximetry that previously required invasive procedures. In so, we believe we will be able to develop a more revolutionary noninvasive technologies will make in the critical care environments to as much both cases, our dedicated team—with a shared efficient and scalable international organization significant clinical contributions in the hands of as $4 billion by expanding adoption of passion, vision, and single-minded focus to do under one centralized management structure to caring clinicians. pulse oximetry into general care areas and what is best for patient care—went beyond what better serve our customers. adding new measurements like noninvasive others thought possible. carboxyhemoglobin (SpCO), methemoglobin PATIENT-FOCUSED INNOVATION technologies, and business model have allowed Our guiding principles, breakthrough (SpMet), fluid volume status (PVI) and This team is not confined within the walls At Masimo, we know that we are in the business us to build a solid business. At the heart of our hemoglobin (SpHb). of Masimo, but is comprised of an extended group of purists including passionate clinical of patient care. We are cognizant of our business business is a great innovation engine with a goals but remain passionate and disciplined in bright and talented team of purists eager to A COMPANY POWERED BY FASCINATION researchers, clinicians, biomedical engineers, conducting our business from the perspective of break new ground in noninvasive monitoring Every day at Masimo, our talented team of administrators, OEM partners and other the patient. We never lose sight of the fact that and do what is best for patient care. In so doing, “purists”—people who do what they do because stakeholders who love what they do and strive to what we do has an impact on patients’ lives and we will continue to expand our total market of the passion they have for their chosen field, improve patient care. As we continue to grow and as a result we continually elevate the standards opportunity and increase Masimo’s value to our not merely for financial gain—looks at the world expand, our greatest focus will be to continue to to which we hold ourselves accountable. customers, employees and shareholders. customers, employees and shareholders. customers, employees and shareholders. from a different perspective than most. Powered retain and attract Masimo purists. by a keen sense of fascination, they go above and beyond what is expected to deliver solutions to NEW MARKETS, SITES, AND APPLICATIONS what many have considered to be unsolvable Each day, all over the world, our noninvasive problems. This has led to a level of innovation blood constituent and hemodynamic monitoring and impact in noninvasive patient monitoring technologies are helping caregivers save, extend, technologies that is unmatched in the industry. and improve the lives of people of all ages, in all It all started with Masimo SET, the technology walks of life. that solved pulse oximetry’s “unsolvable” As we continue to drive global adoption of these problems of inaccurate arterial oxygen saturation and other technologies for the betterment and pulse rate measurements during motion and of patient care, we have implemented a new low perfusion. international business organization and structure to better serve and support our customers Our team built on this success with the outside the United States. In the fourth development of Masimo Rainbow SET, the first quarter of 2008, we realigned our international and only technology to noninvasively measure operations, including the establishment of a new Joe E. Kiani Chairman and CEo 567,000 470,000 377,000 292,000 213,000 150,000 600,000 500,000 400,000 300,000 200,000 100,000 104,000 0 307.1 256.3 258.9 224.3 155.1 199.7 300 250 200 150 100 50 0 107.9 69.4 46.7 38.3 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 Masimo SET Installed Base (estimated units)* * Excludes Handheld Devices Revenues (millions) Royalty Revenues Product Revenues Fascination leads to Discovery The most complex discoveries often start with a very simple question: Why? Almost twenty years ago, two young engineers asked why pulse oximetry wouldn’t work during patient motion and low perfusion—and why clinicians had to be plagued by false alarms as a result. They wondered if employing advanced signal processing technologies similar to those used in anti-submarine warfare could free clinicians from these limitations and allow pulse oximetry to become a useful tool across a broad spectrum of clinical applications. As a result of their curiosity, determination and hard work, Masimo was born and one of the most daunting challenges in noninvasive patient monitoring was solved with the introduction of Masimo SET, the world’s first measure-through motion and low perfusion pulse oximetry technology. The uninhibited exploration of ideas and a focused sense of determination can lead to unexpected discoveries. The breakthrough parallel processing algorithms and adaptive filters of Masimo SET pulse oximetry technology provide unmatched accuracy and reliability. SET Proven clinical performance leads top hospitals around the world to choose Masimo SET As the gold standard in pulse oximetry, Masimo SET is at work in the world’s most demanding clinical settings. Because of its unmatched accuracy and reliability, more than half of the top hospitals in the United States listed on the US News & World Report Honor Roll (including eight of the top ten) have adopted Masimo SET as their primary pulse oximetry platform. To provide maximum clinical flexibility, Masimo offers the largest array of sensors and multiple handheld and bedside devices in addition to being integrated into more than 100 multiparameter monitors and 50 monitoring brands. An Initial Focus on Fascination Leads to the “Gold Standard” in Pulse Oximetry—Masimo SET Clinicians around the world trust Masimo SET to help them improve outcomes, efficiency and patient safety while at the same time decreasing costs. After more than six years of determination most accurate and reliable SpO2 and pulse rate and perseverance, we debuted Masimo SET measurements. Masimo SET has reduced false measure-through motion and low perfusion alarms by more than 90% while detecting true pulse oximetry in 1995, and were rewarded for alarms more than 97% of the time, even during our efforts with the prestigious Excellence in the most challenging clinical conditions. Technology Innovation award from the Society for Technology in Anesthesia (STA). More than 100 independent and objective peer-reviewed studies have shown that Since then, Masimo SET has transformed the Masimo’s revolutionary Signal Extraction clinical landscape, using breakthrough signal- Technology outperforms all other pulse processing technologies—including parallel oximetry technologies, providing clinicians with engines and adaptive filters—to deliver the unmatched specificity and sensitivity. summary of independent and objective studies involving masimo sEt Pulse oximetry 0 20 40 60 80 100 120 FAvOR MASIMO: 118 NEUTRAL: 6 FAvOR ANOThER: 0 Detecting Congenital Heart Disease in the Tiniest Patients Congenital heart disease (CHD) in neonatal CHD2,3 and has been clinically proven to help patients is often difficult for clinicians to detect. clinicians improve CHD detection. Although some infants with CHD do not have signs or symptoms in the newborn period, they In a recent study by researchers in Sweden, will need immediate intervention because of the Masimo SET was applied to 40,000 newborns severity of their disease. and results were compared to a cohort group of 100,000 newborns who were screened without Up to 30% of all CHD deaths occurring in the any pulse oximetry.4 first year of life are unrecognized at hospital discharge after birth. Routine neonatal Researchers said, “no baby died from examination cannot detect all cases of CHD, but undiagnosed duct dependent circulation” in additional screening using echocardiography is the Masimo group, while five babies from the not feasible due to time and cost.1 cohort group died during the same period. Previous efforts at screening newborns for CHD While pulse oximetry offers a potential method with another pulse oximetry technology failed to screen newborns for CHD, only Masimo SET due to the inability to provide accurate oxygen pulse oximetry has been shown to be accurate saturation measurements during motion and and reliable enough for detection of critical low perfusion. “Screening all well babies in maternity units with Masimo SET pulse oximetry significantly improves detection of duct dependent ChD.” Dr. Anne de-Wahl Granelli, et al. The Only Logical Choice for Cyanotic Infant Monitoring Caring for cyanotic infants presents unique that creates significant challenges for challenges. This special population demands conventional pulse oximetry technologies. accurate and reliable pulse oximetry to titrate Masimo SET with the Masimo Blue Sensor is therapies and maintain target oxygen saturation the only system designed for use with cyanotic at low levels. Unfortunately, newborns with neonates, infants, and children—with validated cyanotic cardiac lesions have unique physiology accuracy in oxygen saturations as low as 60%.5 Helping Clinicians Preserve Premature Infants’ Fragile Eyesight through More Efficient Oxygen Management The fragile nature of a premature baby’s eyesight Using Masimo SET, researchers showed that makes careful management of oxygen critical ROP could be reduced from 15% to 0% on infants to avoid blindness caused by retinopathy of between 750 and 1,249 grams and from 38% to prematurity (ROP).6 10% on those weighing between 100 and 749 grams.6 Recently, another study showed that According to Vermont-Oxford Network, as many using Masimo SET in conjunction with a change as 12% of all babies in the neonatal intensive care in clinical practice to control O2 delivery helped unit (NICU) develop ROP, which is believed to be reduce ROP by 40% compared to a 0% reduction caused by an inability to sustain therapeutically in ROP with the same practice change using appropriate levels of oxygen. another pulse oximetry technology.7 1 Mellander M, et al. Failure to Diagnose Critical Heart Malformations in Newborns Before Discharge - An Increasing Problem? Acta Paediatrica 2006;95:407-13. 2 de Wahl Granelli A, et al. Screening for Duct-Dependent Congenital Heart Disease with Pulse Oximetry: A Critical Evaluation of Strategies to Maximize Sensitivity. Acta Paediatrica 2005; 94: 1590-1596. 3 Granelli AW, et al. Noninvasive Peripheral Perfusion Index as a Possible Tool for Screening for Critical Left Heart Obstruction. Acta Paediatrica 2007; 96:1455-1459. 4 de Wahl Granelli A, et al. Impact of Pulse Oximetry Screening on the Detection of Duct Dependent Congenital Heart Disease: a Swedish Prospective Screening Study in 39,821 newborns. BMJ;2009; 338;a3037. 5 Tsutumi T, et al. Clinical evaluation of accuracy of Masimo LNOP blue sensor in cyanotic infants. Critical Care Medicine 2006; 34(12): A56. 6 Chow Lily C. , et al. Can Changes in Clinical Practice Decrease the Incidence of Severe Retinopathy of Prematurity in Very Low Birth Weight Infants? Pediatric Research 2001;49(4):400A/2081 7 Castillo Armando R., et al. Clinical Practice and SpO2 Technology in the Prevention of ROP in ELBW Infants. Publication 8440.7; 2007 Pediatric Academic Societies. Discovery leads to Innovation Making a breakthrough discovery only leads to continued innovation when it changes the way you look at things. At Masimo, developing the world’s first measure-through motion and low perfusion pulse oximetry allowed us to approach the challenge of developing other noninvasive physiological measurements without being constrained by prior conceptions of what is or is not possible. In 2005, after more than 10 years of research, we launched Masimo Rainbow SET Pulse CO-Oximetry, the first and only technology to noninvasively and continuously measure blood constituents and fluid responsiveness that previously required invasive procedures and time-consuming laboratory analysis. Masimo Rainbow SET builds on the gold standard Masimo SET pulse oximetry technology to give clinicians an unprecedented level of real-time information to make more informed and timely clinical decisions. Innovation comes from looking beyond the obvious to find solutions to challenges and problems that others can’t see. With breakthrough noninvasive measurements not available from any other company, Masimo innovations provide maximum clinical impact. SpHb SpOC SpCO SpMet PVI The Innovation of Masimo Rainbow SET Allows Clinicians to See More, Do More for Their Patients Our noninvasive monitoring technologies (SpCO), methemoglobin (SpMet) and PVI in provide clinicians with valuable physiological addition to oxygen saturation, pulse rate, and data that they use to make more informed perfusion index, Rainbow SET gave clinicians clinical decisions that save lives. a more complete picture of their patients’ true physiological status. As the first and only technology to both noninvasively and continuously measure This picture became even clearer with the blood constituents and blood volume status limited market release of hemoglobin (SpHb) that previously required invasive procedures, and oxygen content (SpOC) in 2008. the launch of Masimo Rainbow SET in 2005 changed expectations of what could be Initial research shows that the availability of measured by a noninvasive sensor. reliable noninvasive hemoglobin monitoring Starting with the ability to noninvasively and clinical decisions, improve patient safety and continuously measure carboxyhemoglobin decrease costs. may allow clinicians to make earlier and better Masimo Rainbow SET gives Masimo Rainbow SET gives clinicians a more complete clinicians a more complete picture of their patients’ true picture of their patients’ true physiological status. Turning multiple wavelengths of light into breakthrough noninvasive measurements Masimo Rainbow SET technology is based on the solid foundation of Masimo SET pulse oximetry. But instead of using two wavelengths of light to determine arterial oxygen saturation levels (SpO2) like Masimo SET does, Rainbow SET uses more than seven wavelengths of light housed in a single, simple-to-apply sensor to monitor a broad spectrum of clinically-useful blood constituents. In addition to SpO2 and pulse rate, Masimo Rainbow SET provides a range of measurements including: > Total Hemoglobin (SpHb)—may help clinicians better manage blood transfusions, identify occult bleeding and detect anemia. > Oxygen Content (SpOC)—gives clinicians a more complete picture of their patients’ oxygenation status, not just their O2 saturation level. > Fluid Responsiveness (PVI)—helps clinicians noninvasively and continuously determine whether to administer fluids. > Methemoglobin (SpMet)—noninvasively and immediately diagnose, monitor, and treat patients with acquired methemoglobinemia from drugs commonly used in the hospital, such as benzocaine and dapsone. > Carboxyhemoglobin (SpCO)—allows clinicians and first responders to noninvasively and immediately diagnose, monitor, and treat carbon monoxide poisoning. These measurements provide clinicians with an enhanced level of clinical data upon which to make more informed and timely decisions. Noninvasive, Continuous and Immediate Hemoglobin Makes its Debut in 2008 The Masimo Rainbow SET technology platform Additionally, continuous monitoring of provides clinicians with access to real-time hemoglobin levels may provide clinicians trending and tracking of a patient’s total with an early warning of possible internal hemoglobin status, helping them to more hemorrhaging in the ICU, emergency, trauma quickly and efficiently identify conditions of and post-operative settings. anemia or blood loss. The availability of noninvasive and continuous When patients undergo blood transfusions, hemoglobin monitoring with the Masimo clinicians are expected to be able to use Masimo Rainbow SET platform promises to make Rainbow SET SpHb to more effectively titrate hemoglobin testing more convenient and blood and maintain hemoglobin levels within broadly available to medical personnel in both acceptable ranges. the acute and outpatient care settings. Masimo Sphb will provide clinicians with noninvasive real-time information on their patients’ hemoglobin levels for the first time ever. It is estimated that more than 400 million It is estimated that more than 400 million hemoglobin tests are done each year in the U.S. hemoglobin tests are done each year in the U.S. alone. Prior to Masimo Rainbow SET, invasive alone. Prior to Masimo Rainbow SET, invasive and time-consuming blood tests were the only and time-consuming blood tests were the only method available to determine total hemoglobin method available to determine total hemoglobin levels, providing delayed and intermittent data. levels, providing delayed and intermittent data. “Masimo Sphb is an impressive new tool that helps us to more safely guide patients in surgery through to recovery. The ability to identify an upward or downward hemoglobin trend in real time on a continual basis should be of tremendous value to us.” Ronald D. Miller, MD, Professor and Chairman of Ronald D. Miller, MD, Professor and Chairman of the Dept. of Anesthesia and Perioperative Care the Dept. of Anesthesia and Perioperative Care at the University of California, San Francisco at the University of California, San Francisco Innovation leads to Opportunity True innovation lights up the darkness in understanding, and illuminates pathways to create unexpected solutions to problems. Masimo develops new and innovative noninvasive monitoring technologies that help clinicians around the world provide better care to a wide range of patients in diverse clinical settings. Whether it is keeping a firefighter safe by noninvasively measuring the carbon monoxide levels in his blood right after he comes out of the fire, or performing a pain-free blood test on an expectant mom in a physician’s office by measuring her hemoglobin levels without drawing a drop of blood, our new technologies are making a difference in the lives of patients while creating continued opportunities for growth. With more than 260 patents issued and another 178 pending worldwide, The Wall Street Journal in 2008 said the industry impact of Masimo’s patent portfolio is “by far the highest among all medtech companies, not to mention one of the highest among all companies tracked by the Patent Board across 17 industries.” Bright ideas get attention and provide the chance to explore new and exciting opportunities. Breakthrough measurements allow Masimo to continue to bring noninvasive monitoring to new sites and new applications. SpCO SpHb New Sites and New Applications Provide Opportunities to Enhance Patient Care Masimo’s focus on fascination, and the And sometimes it is by inventing new And sometimes it is by inventing new breakthrough innovations that have resulted noninvasive measurements. Masimo Rainbow because of it, provides opportunities to SET noninvasively detects carbon monoxide positively impact patient care in new and in the blood and determines a patient’s exciting ways. hemoglobin levels without a painful needle stick or time-consuming laboratory analysis. This Sometimes it is by bringing an existing gives clinicians a chance to make more timely technology to a new care area. The sensitivity and informed decisions that impact the lives of and specificity of Masimo SET virtually patients in a wide range of clinical settings. eliminates false alarms, now making it possible to monitor patients in a hospital’s general Both are examples of Masimo’s long-standing wards, where previous attempts have failed mission of taking noninvasive monitoring to because of excessive false alarms. new sites and new applications. The ability to take noninvasive hemoglobin measurements (Sphb) with Masimo Rainbow SET provides real-time availability of one of the most frequently ordered blood measurements in the world. Making a difference in more care areas than ever before Masimo technologies are at work around the world in a diverse range of clinical settings. From our traditionally strong positions in critical care—from surgery, to post-anesthesia care, to intensive care and neonatal intensive care units—we have expanded our market presence by remaining true to our mission of bringing noninvasive monitoring to new sites and new applications. Today, you’ll find Masimo products and technologies at work throughout the hospital—including the emergency department and the general ward—and in non-hospital settings like physicians’ offices, ambulatory surgery centers, outpatient clinics, long-term acute care facilities, and home care settings, as well as fire and EMS departments. Noninvasive Carbon Monoxide Monitoring Becoming Standard of Care in Fire and Emergency Medical Services Departments As the recognition of the dangers of > National Fire Protection Association (NFPA) In addition to fire and EMS applications, leading misdiagnosing carbon monoxide poisoning in patients and firefighters grows, many leading industry groups are advocating adoption of Masimo Rainbow SET technology as a new standard of care to fight this silent killer. The organizations advocating the adoption of this life-saving technology include: > National Association of Emergency Medical Technicians (NAEMT) > International Association of Firefighters (IAFF) > National Association of EMS Educators (NAEMSE) > UK House of Commons All Party Parliamentary Gas Safety Group (APPGSG) With these recommendations, more firefighters and emergency medical professionals will gain access to our life-saving technology. The ability to noninvasively and immediately measure carbon monoxide levels in the blood helps clinicians speed treatment and save lives. medical professionals around the world are calling for the adoption of routine CO screening with Masimo Rainbow SET in the emergency departments of hospitals in order to improve detection and treatment of CO poisoning in patients who present with ambiguous flu-like symptoms that might otherwise be misdiagnosed. “Carbon monoxide is a silent killer— the ability to detect CO noninvasively with Masimo Rainbow SET provides us with significant clinical benefits that will help save lives.” Neil B. Hampson, M.D., Pulmonologist, Department of Hyperbaric Medicine, Virginia Mason Medical Center Masimo Patient SafetyNet Shown to Significantly Reduce Distress Codes, Rescue Activations and ICU Transfers A comprehensive evaluation by a team of > Accurate identification of cardiac clinicians at Dartmouth-Hitchcock Medical Center, abnormalities. covering 2,841 patients over 9,978 monitoring days, showed that the Masimo Patient SafetyNet > A 70% decrease in distress codes and system provides early warning detection of rescue activations. impending patient deterioration on the general care floor, which helped keep patients safer. > A 50% decrease in transfers Specific findings of the study showed the system to intensive care units provided: (ICU) resulting in 163 ICU days saved. > Early identification of patients with sedation or analgesia-induced respiratory depression. Masimo Provides Patient SafetyNet on General Care Floors With the Masimo Patient SafetyNet system, qualified clinicians are instantly alerted to potentially deadly changes in their patients’ condition, allowing for more timely and appropriate intervention while reducing ICU transfers. The last thing you expect when patients are clinicians and their patients can rest easier admitted to the hospital for routine procedures knowing that if an unobserved patient is is that they won’t go home due to a sentinel in trouble, accurate, actionable alarms will event—an unobserved, unexpected death. instantly be sent directly to assigned clinicians, Unfortunately, an increase in patient-controlled allowing for more timely and appropriate clinical analgesics and a reduction in direct patient intervention. observation due to lower staff-to-patient ratios make it less likely that a clinician will be there to Upgrading the Patient SafetyNet system to observe an avoidable adverse event. enable Masimo Rainbow SET noninvasive hemoglobin (SpHb) monitoring through a simple With Masimo Rainbow SET measure-through software upgrade may further improve patient motion and low perfusion pulse oximetry safety by providing clinicians with an earlier and the Masimo Patient SafetyNet remote indication of undetected internal bleeding. monitoring and clinician notification system, “The Masimo Patient SafetyNet system makes it possible to identify patient distress earlier—preventing codes and rescues—and initiate appropriate intervention more rapidly to improve patient outcomes, recoveries and clinician efficiencies. All of this contributes to a safer general care floor for our patients.” George T. Blike, M.D., Medical Director, Patient Safety, Dartmouth-Hitchcock Medical Center Products & Technology Overview masimo’s missioN masimo moNitors: PPatiatiENENtt sasaFEFEttYNEYNEtt F Foror GENE GENEralral Wards: sElECt masimo oEm PartNErs “Improving patient outcomes and reducing the cost of care by taking noninvasive monitoring to new sites and new applications.” masimo’s GuidiNG PriNCiPlEs > Remain faithful to your promises and responsibilities. > Thrive on fascination and accomplishment and not on greed and power. > Strive to make each year better than the year before both personally and for the team. Masimo Radical-7™ Color Screen Masimo Radical-7™ Color Screen Complete Masimo Rainbow SET capability, upgradable, full color auto rotational screen with SatShare and detatchable handheld unit Masimo Radical-7 Blue Screen Masimo Radical-7 Blue Screen Complete Masimo Rainbow SET capability, upgradable, monochrome blue auto rotational screen with SatShare and detatchable handheld unit > Make each day as fun as possible. > Do what is best for patient care. Masimo Rad-87™ Complete Masimo Rainbow SET capability, upgradable, bright white LED display masimo tECHNoloGiEs: Because Masimo technology is integrated into more than 100 multiparameter monitors from more than 50 different monitoring brands, we’re easy to integrate into virtually any clinical workflow—from EMS and transport to the ED, OR, ICU, step-down units and even general care floors. Some of our OEM Partners include: Masimo Patient SafetyNet™ Masimo Patient SafetyNet™ Remote monitoring and clinician notification system designed to keep patients safe on general care floors masimo sENsors: Masimo SET Sensors: Masimo SET Sensors: SpO2, Pulse Rate, Perfusion Index, PVI Masimo Rad-8® Masimo SET, LED display Masimo Rainbow SET Sensors: SpO2, Pulse Rate, Perfusion Index, PVI, SpCO, SpMet Masimo SET® Measure-through motion and low perfusion pulse oximetry. > > > > Oxygen Saturation (SpO 2) Pulse Rate (PR) Perfusion Index (PI) Fluid Responsiveness (PVI™) Masimo Rad-57™ Masimo Rainbow SET, SpCO, SpMet Masimo Rainbow SET® Noninvasive blood constituent and functional hemodynamic monitoring. > > > > > Oxygen Saturation (SpO Perfusion Index (PI), Fluid Responsiveness (PVI), plus: 2), Pulse Rate (PR) , Hemoglobin (SpHb™) Oxygen Content (SpOC™) Carboxyhemoglobin (SpCO ®) Methemoglobin (SpMet ®) Masimo Rad-5® Masimo SET Masimo Rad-5v Masimo SET Masimo Rainbow SET Sphb Sensors: SpO2, Pulse Rate, Perfusion Index, PVI, SpHb, SpOC, SpMet Masimo Facility OEM Partner Facility Distribution Partner Masimo’s Global Reach Our team of purists is committed to providing gold standard, breakthrough technologies and the best service to meet the needs of clinicians and care providers around the world. With more than 1,800 employees and contractors worldwide, Masimo has operations in North America, Europe, Latin America, Asia, and Australia. masimo CorPoratE HEadquartErs 40 Parker Irvine, CA 92618 USA masimo iNtErNatioNal sÁrl Puits-Godet 10 2000 Neuchatel Switzerland masimo asia PaCiFiC 572A Serangoon Road Singapore 218187 masimo australia PtY ltd ABN 71 124 372 701 Suite 5, Building 5 49 Frenchs Forest Rd. Frenchs Forest NSW 2086 Australia masimo CaNada ulC 5003 Levy St., Suite 100 St-Laurent, QC H4R 2N9 Canada masimo EuroPE dEutsCHlaNd ltd Niederlassung Deutschland Lindberghstraße 3 82178 Puchheim Germany masimo EuroPE EsPaña Ronda de Poniente 12 2F 28760 Tres Cantos Madrid Spain masimo EuroPE italia Filiale Italiana Piazza Duca D’Aosta 8 20124 Milano Italy masimo EuroPE uNitEd KiNGdom Unit Q, Loddon Business Centre Roentgen Road. Basingstoke. Hants. RG24 8NG United Kingdom masimo EuroPE FraNCE ltd Le Bois des Côtes II, 304 RN6 69760 Limonest France masimo JaPaN CorPoratioN World Times Bldg., 4F, 10-7, Ichiban-Cho Chiyoda-Ku, Tokyo 102-0082 Japan Financial Performance CONSOLIDATED BALANCE ShEETS (in thousands, except share information) assEts Current assets Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $1,300 and $1,370 at January 3, 2009, and December 29, 2007, respectively Royalties receivable Accounts receivable from related parties Inventories Prepaid expenses Prepaid income taxes Deferred tax assets Other current assets Total current assets Deferred cost of goods sold Property and equipment, net Deferred tax assets Restricted cash Intangible assets, net Goodwill Other assets Total assets liaBilitiEs aNd stoCKHoldErs’ EquitY Current liabilities Accounts payable Accounts payable to related parties Accrued compensation Accrued liabilities Dividends payable Income taxes payable Deferred revenue Current portion of long-term debt Current portion of long-term debt to related parties Current portion of capital lease obligation Total current liabilities Deferred revenue Long-term debt, less current portion Capital lease obligation, less current portion Other liabilities Total liabilities Commitments and contingencies Stockholders’ equity January 3, 2009 december 29, 2007 $146,910 30,715 11,375 — 27,400 3,908 872 10,511 551 232,242 28,431 12,979 8,781 577 7,410 448 2,480 $293,348 $15,914 — 15,607 5,396 170 10,862 17,233 395 — 70 65,647 213 — 157 7,940 73,957 $96,733 23,917 13,866 3,053 23,110 3,837 3,247 14,334 1,543 183,640 26,249 11,164 5,332 513 5,589 448 2,576 $235,511 $14,057 583 12,409 6,211 183 — 16,827 11,470 7 62 61,809 366 19,294 208 3,768 85,445 Preferred stock, $0.001 par value; 5,000,000 shares authorized at January 3, 2009, and December 29, 2007; 0 shares issued and outstanding at January 3, 2009, and December 29, 2007 Common stock, $0.001 par value, 100,000,000 shares authorized at January 3, 2009, and December 29, 2007, 57,326,527 and 54,692,232 shares issued and outstanding at January 3, 2009, and December 29, 2007, respectively Treasury stock, 156,240 shares at January 3, 2009, and December 29, 2007 Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity — — 57 (1,209) 179,666 (7) 40,884 219,391 $293,348 55 (1,209) 143,297 (1,034) 8,957 150,066 $235,511 Masimo Technologies Garner National and International Awards for Excellence 1995 STA Excellence in Technology Innovation 2005 Innovative Product / Technology 2000 SCCM Technology Excellence Award 2006 Application of Technology Award 2000 Outstanding Medical Device Company 2006 Medical Design Excellence Award 2001 Audie Lewis Mark of Excellence (Independent Auditors) 2007 STA Excellence in Technology Innovation 2001 Innovation Product / Technology 2007 Groundbreaking Innovation of Rainbow SET Technology 2001 Distinguished Leadership Award 2007 Patient Monitoring Technology Leadership of the Year Award 2001 Excellence in Leadership Award 2007 Brand Development Strategy Leadership Award 2001 Medical Design Excellence Award 2008 Excellence in Medical Technology 2003 New Standard of Care Award 2008 Outstanding Growth Award 2003 Technology of the Year Patient Monitoring Award 2008 Outstanding Medical Device Company Award 2003 Platform ABBY for Innovations in Healthcare 2008 Best in Class Award Financial Performance CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share information) Year ended January 3, 2009 Year ended december 29, 2007 Revenue: Product1 Royalty and license fee2 Total revenue Cost of goods sold Gross profit Operating expenses: Research and development Selling, general and administrative Antitrust litigation Total operating expenses Operating income Non-operating income (expense): Interest income Interest expense Other Total non-operating income (expense) Income before provision for income taxes Provision for income taxes Net income Accretion of preferred stock Undistributed income attributable to preferred stockholders Net income attributable to common stockholders Net income per common share: Basic Diluted Weighted-average number of common shares: Basic – Two class method Diluted – Two class method Basic – Single class method Diluted – Single class method $258,895 48,179 307,074 89,454 217,620 25,495 120,069 706 146,270 71,350 2,305 (753) (511) 1,041 72,391 40,464 31,927 — — $31,927 $0.57 $0.53 $199,684 56,602 256,286 73,606 182,680 22,960 91,234 1,537 115,731 66,949 2,361 (2,475) 1,287 1,173 68,122 25,867 42,255 (4,837) (14,339} $23,079 $0.71 $0.60 N/A N/A 56,320,712 60,190,335 16,654,586 20,732,872 54,660,216 59,829,198 1 2 Includes related party product revenue of $0, and $20,100 for the years ended January 3, 2009, and December 29, 2007, respectively. Includes related party royalty revenue of $0, and $321 for the years ended January 3, 2009, and December 29, 2007, respectively. CONSOLIDATED STATEMENTS OF CASh FLOWS (in thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Year ended January 3, 2009 Year ended december 29, 2007 $31,927 $42,255 Depreciation and amortization Share-based payment Loss on disposal of property and equipment Provision for doubtful accounts Provision for obsolete inventory Provision for warranty costs Provision for deferred income taxes Income tax benefit from exercise of stock options Excess tax benefits from share based payment arrangements Changes in operating assets and liabilities: Increase in accounts receivable (Increase) decrease in royalties receivable (Increase) decrease in accounts receivable from related parties Increase in inventories Increase in deferred cost of goods sold Increase in prepaid expenses (Increase) decrease in prepaid income taxes (Increase) decrease in other assets Increase in accounts payable Increase (decrease) in accounts payable to related parties Increase in accrued compensation Increase (decrease) in accrued liabilities Increase (decrease) in income taxes payable Increase in deferred revenue Increase in other liabilities Net cash provided by operating activities Cash flows from investing activities: Purchases of property and equipment Increase in intangible assets Increase in restricted cash Cash paid for acquisition Net cash used in investing activities Cash flows from financing activities: Proceeds from initial public offering, net of proceeds Proceeds from issuance of long-term debt Repayments on long-term debt Proceeds from issuance of common stock Excess tax benefits from share based payment arrangements Dividends paid Purchase of treasury stock Net cash provided by (used in) financing activities Effect of foreign currency exchange rates on cash Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 5,745 7,716 91 108 1,352 1,646 447 17,201 (1,889) (6,244) 2,491 3,053 (5,588) (2,232) (54) 2,376 1,163 1,847 (583) 3,121 (2,485) 12,754 111 4,104 78,178 (6,852) (2,523) (67) — (9,442) — — (30,436) 9,755 1,889 (13) — (18,805) 246 50,177 96,733 $146,910 5,263 3,892 — (25) 1,155 1,482 2,696 60 (144) (3,269) (12,577) (953) (7,021) (4,306) (1,727) (3,247) (2,210) 4,345 99 53 19 (1,110) 2,784 1,309 28,823 (5,325) (1,641) — (187) (7,153) 47,849 20,075 (10,158) 831 144 (37,350) (581) 20,810 (1,129) 41,351 55,382 $96,733 NOTE: The Consolidated Balance Sheets, Consolidated Statements of Income, and Consolidated Statements of Cash Flows are derived from our Audited Consolidated Financial Statements, as published in our Form 10-K filed with the Securities and Exchange Commission on March 4, 2009. Forward-looking Statements This document may include forward-looking statements. These statements include but are not limited to: statements regarding our goals and focus; estimates about our future market potential; our belief that we will continue to develop “breakthrough” technologies; and statements regarding expectations for total hemoglobin (SpHb). These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control, including but not limited to: risks related to obtaining regulatory approval from the U.S. Food and Drug Administration (FDA) and other regulatory agencies; dependence on our patents and proprietary rights; the development or availability of competitive products or technologies; our assumption that Masimo SET and Masimo Rainbow SET will deliver a sufficient level of clinical improvement over alternative pulse oximetry and patient-monitoring systems to allow for rapid adoption of the technology; and other factors discussed in the “Risk Factors” section of our annual report on Form 10-K for the year ended January 3, 2009, filed with the Securities and Exchange Commission (SEC) on March 4, 2009. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to update, amend, or clarify these forward-looking statements or the risk factors contained in our annual report on Form 10-K for the year ended January 3, 2009, whether as a result of new information, future events, or otherwise, except as may be required under the federal securities laws. NOTE REGARDING THIS ANNUAL REPORT: Please note that this annual report does not constitute the Company’s “annual report to security holders” for purposes of the requirements of the Securities and Exchange Commission. For a copy of the Company’s annual report to security holders required under Rule 14a-3 of Regulation 14A of the Securities Exchange Act of 1934, as amended, please refer to the Company’s annual report on Form 10-K for the fiscal year ended January 3, 2009. masimo ExECutivE maNaGEmENt tEam masimo Board oF dirECtors Joe E. Kiani Chief Executive Officer Ammar Al-Ali Chief Technical Officer Olivier Berthon President, Masimo Europe Jon Coleman President, International Mark P. de Raad Executive Vice President & Chief Financial Officer Rick Fishel President of Masimo Americas & Global OEM Business David Goodman, MD, MSE Executive Vice President, Business Development Paul Jansen Executive Vice President, Marketing Joe E. Kiani Chairman of the Board of Directors Steven J. Barker, M.D., Ph.D. Director Edward L. Cahill Director Robert Coleman, Ph.D. Director Sanford Fitch Director Jack Lasersohn Director Yongsam Lee Executive Vice President, Operations & Chief Information Officer Tetsuro Maniwa President, Masimo Japan Stephen M. Moran, Esq. General Counsel and Secretary; Executive Vice President, Human Resources Michael O’Reilly, MD, MS Executive Vice President, Medical Affairs Stephen Paul Vice President, US Hospital Sales Anand Sampath Executive Vice President, Engineering 40 Parker Irvine, CA 92618 Tel: 949.297.7000 www.masimo.com © 2009 Masimo Corporation. Masimo, SET, Rainbow SET, SpHb, SpCO, SpMet, SpOC, PVI, Signal Extraction Technology, Pulse CO-Oximetry, Patient SafetyNet, Radical-7, Rad-87, Rad-57, Rad-8, Rad-5, Rad-5v, SatShare and Powered by Fascination are trademarks, registered trademarks or servicemarks of Masimo Corporation. All rights reserved. 9 0 0 1 - C 7 9 6 5 - 9 0 9 7 

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