Masimo
Annual Report 2012

Plain-text annual report

The Root of Our Inspiration Letter from the Chairman & CEO Delivering on Our Mission and Guiding Principles For this year’s annual report, we selected a cover image that perfectly symbolizes our core mission. The image shows someone who cares, holding a patient who needs to be cared for. This interaction is the root of our inspiration—the healing connection between patients and their caring caregivers. From the very beginning, we have sought to revolutionize noninvasive monitoring so that patients can be better assessed and cared for by those who care. From that vision, 24 years ago, came our mission—‘improving patient outcomes and reducing cost of care by taking noninvasive monitoring to new sites and applications’. Along with our mission, we established a strong and simple set of guiding principles that stay with us today: > 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 > Make each day as fun as possible > Do what is best for patient care At that same time, and with a gifted group of engineers, we also set on a bold course to innovate in ways that no one had done before. For solving the measure-through motion and low perfusion pulse oximetry problem that had stumped the industry, we got great recognition from the scientific, clinical, and business communities. And for finding a way to measure carbon monoxide, methemoglobin, hemoglobin noninvasively, and acoustically measure respiration rate, we received more recognition and accolades. We have not stopped. We continue to launch more breakthrough noninvasive measurements, monitors, and systems, but we also always strive to give our customers and partners the most caring sales and service team. In the process, we have grown double-digits since our first year of sales and, in 2012, we once again delivered record revenue despite a challenging global economy and rapidly evolving healthcare market. Reinforcing Our Roots In the process, we have cultivated an many other things that happened along Much has changed since I founded Masimo in my home in 1989. But after more than two decades of technical innovation, broad clinical impact, and solid growth, our roots remain the same. They have just gotten stronger and broader. From the outset, Masimo resolved to be different from any other company. We didn’t just set out to create breakthrough technologies; we also wanted to improve patient lives more significantly than any other company. And, by the way we conducted ourselves, we hoped to improve the way business is done. By standing and striving for enterprise in which approximately 3,000 Masimo’s journey that also stand as talented people deliver on their promises proud examples of the promises we in an environment where fascination, accomplishment, and fun can thrive. made to ourselves 24 years ago. Proving We Mean It When we discovered our Rad-9® product (acquired in 2002 from one of our The pages of this annual report are full OEMs) could visually but not audibly of innovations that are testaments alarm if a sensor failed, we proactively We didn’t just set out to create breakthrough technologies; we also wanted to improve patient lives more significantly than any other company. issued a recall for the device to ensure the highest level of patient safety in the midst of our IPO roadshow in 2007. Months later, the FDA stated it didn’t require a recall as the behavior met industry standards. When no other pulse oximetry company put a speaker backup in their devices to ensure that patient alarms would be heard, even in truth, while relentlessly pursuing our to everything we originally set out to mission and adhering to our guiding accomplish. It has been said that the true principles, we have continued to focus on test of character is what you do when no the rarest cases of a speaker failing, we solving “unsolvable” problems, protecting one else is looking. While less noticeable looked beyond product costs and did it patients, and innovating for the future. than our innovations, there have been for all of our bedside monitors anyway. 2 Joe Kiani Chairman & CEO When other companies refused to provide evaluated on their individual clinical from preventable causes. The inaugural overcame the technological limitations for those who need it, and in multiple for simultaneous measurement of their pulse oximeters for use in home and cost merits, that is what we do. Summit attracted former President of conventional pulse oximetry, making cases has demonstrated its lifesaving SpO2, SpCO®, SpMet®, and SpHb®. care because of the potential liabilities vis-à-vis high-risk patients and a litigious environment, we decided to make our products available because we knew they provided the best and sometimes only solution possible for patient care. When we won the antitrust lawsuit against one of our competitors, we kept fighting for a final ruling so our case could help other companies avoid what we experienced—instead of focusing on a possibly large settlement. And when the final rulings were in, rather than banking the legal proceeds, we used a significant portion of those funds to set up the Masimo Foundation for Ethics, Innovation, Seeding a Patient Safety Movement The Masimo Foundation has now extended its mission even further, founding the first annual Patient Safety, Science & Technology Summit, which was held in January 2013. The Summit The excitement generated at the January 2013 Summit has quickly become a “movement,” which is now focused on connecting people, connecting ideas, and connecting Bill Clinton, 300 leading clinicians, technologists, patient advocates, and other healthcare stakeholders to focus on specific patient safety challenges that could eliminate needless deaths and injuries due to failure to rescue, medication errors, and transfusion overuse, as well as neonatal care advancements with congenital heart disease screening and optimal oxygen targeting. The inaugural Summit also, for the first time in history, brought 8 medical technology companies together with Masimo in pledging to make medical device data open and available to whomever needs it to improve patient and Competition in Healthcare. technologies so that patients don’t safety. Cercacor, Cerner, Dräger, GE In our quest for solutions to the industry’s most vexing technical and clinical problems, we are constantly reminded that it takes more than engineering prowess, clinical know- how, and ingenuity to succeed. It takes courage, strength, and an die from preventable causes. Healthcare Systems, Smiths Medical, Sonosite, Surgicount, and ZOLL each publicly announced commitments to was created to confront large problems share the data for which their products with actionable ideas and innovations are purchased, for the sake of patients. that can transform the process of In addition to these companies, clinicians care and dramatically improve patient and hospitals have also made public safety—one solution, one hospital, commitments to take decisive action uncompromising commitment to our and one patient at a time, to help us core values—ethics, innovation, and meet the inaugural Summit’s goal fair play. If that means standing up of ZERO preventable patient deaths to improve patient safety and be held accountable on those commitments. for our rights and our beliefs so that by 2020. The excitement generated Continuing Innovation others may benefit from our stand, at the January 2013 Summit has then that is what we do. And if it means quickly become a “movement,” which challenging unfair Group Purchasing is now focused on connecting people, Organization practices with entrenched connecting ideas, and connecting interests, so that medical products are technologies so that patients don’t die Masimo’s innovation engine has fueled many industry firsts, which have significantly improved patient care and reduced costs. Masimo SET® 1,088,000 979,000 855,000 724,000 625,000 Installed Base (estimated units)* 4,000 16,000 38,000 100,000 62,000 214,000 150,000 507,000 392,000 296,000 it more accurate during the challenging potential to help clinicians detect occult The new SpfO2 measurement allows conditions of patient motion and bleeding. Our rainbow® technology more precise arterial oxygenation low perfusion. This invention has has also been shown to help clinicians assessment in patients with elevated made pulse oximetry a clinically assess fluid responsiveness, improve dyshemoglobins—common throughout useful tool and, for the first time fluid management, identify changes in hospital and pre-hospital settings— since pulse oximetry was introduced breathing, and assess carbon monoxide as compared to functional oxygen in the 1970s, it has been shown in levels for faster therapy for those with saturation (SpO2). As a result, SpfO2 clinical studies to improve patient CO poisoning. With growing clinical should enable earlier interventions and outcomes. Masimo SET® has now been shown to help clinicians reduce retinopathy of prematurity, detect In 2013, we intend to re-write congenital heart disease in newborns, the rules for monitoring and reduce medical errors in critical care, wean patients from the ventilator faster, and save lives and costs in the care of post-surgical patients on the general floor. Approximately 10 years after the introduction of Masimo SET®, our rainbow® platform has ushered in noninvasive and continuous measurements that previously required invasive procedures, allowing clinicians to make earlier and better decisions to care for patients in ways they never thought possible. As one example, our noninvasive and continuous total hemoglobin (SpHb®) monitoring has been shown to help clinicians reduce the number of risky and costly blood transfusions in surgical patients, speed up blood transfusion connectivity with the launch of Root™. evidence and customer advocacy, more and more OEM partners are including rainbow® technology in their products, including the leading multiparameter monitoring companies throughout the world. The list now includes 3F, Atom, Dräger, Edwards Life Sciences, Fukuda Denshi, GE, GS Corpuls, Hamilton Medical, Philips, Physio-Control, Saadat, Schiller, Welch Allyn, ZOLL, and Zondan. In 2012, we introduced SpfO2™, the first true fractional noninvasive oxygen saturation monitor, along with the rainbow SuperSensor™, which allows more timely therapeutic decisions. In 2012, we also revolutionized the Radical-7® by making it rainbow-® and clinician-centric with touchscreen and embedded Wi-Fi technology. While we are proud of our past technological accomplishments, we intend to continue to introduce new, innovative products. In 2013, we intend to re-write the rules for monitoring and connectivity with the launch of Root™. Root is a powerful new patient monitoring and connectivity platform that integrates our full suite of rainbow® measurements with multiple additional parameters in an integrated, clinician- centric platform. Our approach is designed to unleash innovation in patient monitoring via third-party development of new measurements. With a dock for the Radical-7, an instantly interpretable 493.2 28.3 464.9 439.0 32.5 406.5 405.4 49.0 356.4 349.1 49.0 300.1 307.1 47.5 259.6 Revenues (millions of dollars) 1.7 6.7 14.4 20.9 40.6 46.7 256.3 56.1 200.2 224.3 68.8 155.5 107.9 69.4 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * Excludes Handheld Devices 4 Product Revenues Royalty Revenues 5 display, and a networking/connectivity appreciative feedback that we received including operating rooms, procedural gateway, Root integrates multiple when we introduced our solutions to sedation, and intensive care units. streams of data and simplifies patient the “people care” community. We also care workflows, empowering caregivers to launched our first-ever monitoring device make quicker patient assessments, earlier for the promising consumer health and interventions, and better clinical decisions wellness market—iSpO2™. We expect throughout the continuum of care. both these new markets to grow in Improving Care and Lowering Cost Hospitals around the world continue to 2013 and beyond. Expanding Our Technology Base Performing in a Challenging Climate By helping clinicians improve the quality and efficiency of patient care, we delivered another year of record revenues in a global economy that continues to be challenged. Our total revenues see significant advantages provided by In 2012, we made two important strategic grew to $493.2 million, while product SET® Measure-through Motion and Low acquisitions. Spire Semiconductor (now revenues rose 14% to $464.9 million and Perfusion™ pulse oximetry. We shipped Masimo Semiconductor) makes advanced rainbow® revenues rose to $40.3 million. 146,400 instruments and boards in 2012, light emitting diode (LED) and other Net income was $62.3 million or $1.07 increasing our estimated worldwide installed base of SET® and rainbow® instruments to 1,088,000. We estimate that over 100 million people around the world each year are better cared for with our break-through, life- saving, and life-improving technologies. We believe we will see increased growth in our installed base as more clinicians component-level technologies—both per diluted share, compared to $1.05 in for Masimo’s own noninvasive sensors, the prior year. Our 2012 earnings were as well as for other applications in the reduced by $0.06 per share due to the biomedical, telecommunications, and acquisitions of Spire Semiconductor In total, we estimate that US hospitals alone could save over and Phasein. We anticipate that our core business in Masimo SET® pulse oximetry will continue to grow steadily while our new products—especially $5 billion when their clinicians rainbow® Pulse CO-Oximetry™ and choose the rainbow® platform. The use Masimo technologies to improvements in the process of care have resulted in real cost savings to hospitals using Masimo technologies. their fullest potential. rainbow Acoustic Monitoring™—will increasingly contribute to our growth as more OEM partners offer and more hospitals adopt rainbow® technologies. In total, we estimate that US hospitals consumer products markets. We are very alone could save over $5 billion when excited about the potential for harnessing their clinicians use Masimo technologies and advancing Masimo Semiconductor’s Looking to the Future, Inspired by Our Roots to their fullest potential. Expanding to New Markets Masimo SET® has allowed pulse oximetry to succeed in markets where conventional pulse oximetry had failed— including home and long-term acute care facilities. Our rainbow® measurements have also allowed us to increase our impact beyond the hospital, from helping emergency personnel detect carbon monoxide poisoning at the scene of a fire to enabling noninvasive hemoglobin spot-check testing in the physician’s office. And as more caregivers gain access to our products, we know that more lives will be improved and saved. myriad optoelectronic technologies as part of Masimo’s product, technology, and market expansion strategy. Our second 2012 acquisition, Phasein, was an innovative developer and marketer of ultra-compact mainstream and sidestream capnography, multigas analyzers, and handheld capnometry solutions. The acquisition of Phasein’s multigas technologies complements From the launch of SET® in 1996 to the launch of rainbow® technology in 2005 to our 2007 IPO—one of the most successful healthcare IPOs of the year—we have always pushed ourselves to perform better while remaining committed to the root of our inspiration—the healing interaction between caring caregivers and their patients. Today, we renew our pledge made in 1989—to impact patient lives in a way that no company has done before and Masimo’s breakthrough innovations for to continue to improve the way business patient monitoring with a portfolio of is practiced in our industry. products ranging from OEM solutions for external “plug-in-and-measure” gas analyzers and integrated modules to handheld capnometers. With multiple measurements delivered through either This year, we also entered the animal mainstream or sidestream options, health market, offering a variety of Masimo customers can now benefit from differentiated solutions to domestic and end-tidal CO2, N2O, O2, and anesthetic large animal veterinarians, with the same agent monitoring in a variety of care areas, Joe Kiani Chairman & CEO 6 7 Root™: At the Root of Transforming Care From the company’s inception, the root of our inspiration has been unwavering— patients, their families, and their caregivers. This inspiration is evident every time we have set out to solve a previously “unsolvable” problem, in every new measurement we have created, and in every new software, hardware, or systems innovation we have developed. We have done all of these things for one overriding reason—to enable clinicians to get to the root of better care for their patients. In honor of this ongoing quest, we are proud to introduce the newest addition to Masimo’s product portfolio—Root™. Breakthrough Measurements. Breakout Connectivity. Brilliant Display. Root is a powerful new patient monitoring and connectivity platform that integrates our breakthrough rainbow® and SET® measurements with multiple additional parameters—including SedLine® brain function monitoring and Phasein™ capnography and gas monitoring*—in an integrated, clinician-centric platform. Root includes a dock for the Radical-7 handheld monitor, an instantly interpretable display, and multiple networking/connectivity options. Root integrates multiple streams of data and simplifies patient care workflows, empowering caregivers to help make quicker patient assessments, earlier interventions, and better clinical decisions throughout the continuum of care. * Root is CE Marked. “ Root integrates rainbow® measurements so at any moment I can see what I want to see and how I want to see it—a great advantage to the anesthesiologist in a data-rich operating room. Root makes it easy to use SpHb and PVI together to optimize transfusions and fluid management.” Dr. Keith Ruskin Professor of Anesthesiology at Yale-New Haven Hospital in New Haven, CT 8 9 The Root of Root™ Instantly Interpretable, High-visibility Display With the Radical-7 handheld in its dock, Root enables instant interpretation of Masimo’s breakthrough noninvasive measurements. The brilliant, high-resolution, adaptive display is designed to aid clinicians rapid assessment of patient status in three distinct ways: > “Trend” view in which each measurement value is displayed alongside its graphical trend > “Analog” view for quick assessment through gauges showing measurement values in relation to alarm ranges > When docked with Root, the Radical-7’s screen can transform into an alarm status visualizer, with a three-dimensional, anatomical image that associates device measurements with alarm status. Intuitive Touchscreen Navigation for Easy and Adaptable Use in Any Hospital Environment With a simple tap, swipe, or drag-and-drop, screen views and parameter sizing can be customized to suit any hospital environment, workflow, clinician preference, or patient-specific need. This allows Root to be adaptively used across a wide variety of care areas with disparate clinical and operational requirements—from the operating room to the intensive care unit to the general floor. 10 11 The alarm visualizer associates device measurements with alarm status and is color coded to indicate no alarms (green), approaching alarm (yellow), and alarm state (red). (Color emphasis added). Flexible Measurement Expansion in Root with Masimo Open Connect With Root, Masimo is providing an open invitation to other companies, from small to large, to develop and commercialize their innovations and deliver them via the Root platform. Expanding Masimo Measurements Alarm Indicator Iris™ Connectors Hi-Fi Speaker Root offers expanded measurement capability through software upgrades and Masimo Open Connect (MOC-9™) modules. SedLine® brain function monitoring is the first measurement to utilize MOC-9, offering the exclusive ability to measure 4 simultaneous EEG channels to help clinicians assess the hypnotic state or depth of sedation. Additional MOC-9 measurements are planned with Phasein sidestream and mainstream capnography and gas analyzers. And that is just the start. We anticipate a whole new ecosystem of third-party measurements to grow from Root—expanding its capability into new areas of patient monitoring. Designed to Stimulate Third-party Innovation MOC-9 is designed to enable third- party development of additional measurements. Market barriers and development costs often keep small, innovative companies from delivering products to the clinicians and patients who need them most. With Root, Masimo is providing an open invitation to other companies, from small to large, to develop and commercialize their innovations and deliver them to market via the Root platform. Nurse Call Connector Ethernet Port MOC-9™ Power Entry Module USB Ports 12 13 Root™ with Brain Function Monitoring Featuring 4 simultaneous channels of high-quality EEG data, SedLine® provides continuous information about both sides of the brain and provides information about a patient’s response to anesthesia. The Root of Better Data Facilitating Individualized Titration Patients respond differently to anesthetics, which can mean SedLine enables individualized titration of sedation and over- or under-administration during surgery and conscious faster emergence, while offering reliable monitoring during sedation procedures. SedLine technology measures brain challenging conditions such as electrocautery. Use of SedLine function on a continuous basis and provides information and its Patient State Index (PSI™) has been shown to help about a patient’s response to anesthesia. SedLine enables clinicians manage patients to significantly faster emergence monitoring of both sides of the brain simultaneously. The from anesthesia and recovery.1 Density Spectral Array (DSA™) provides immediate detection of asymmetrical activity. 14 15 “ SedLine gives me a better idea of where I stand at each phase of anesthesia. The PSI number helps guide me to make subtle changes in my anesthetic appropriate for the patient’s heart rate and blood pressure, and thus arrive at the end where I want to be.” David Drover, MD Stanford University Hospital Stanford, CA 1 Drover DR et al. Anesthesiology. 2002;97:82-89. Root with SedLine Brain Function Monitoring is CE Marked. Capnography and Gas Monitoring Adds Even More to the Patient Safety Equation Changes in expired respiratory gas can be an early indicator of an adverse respiratory event. Hypoventilation, hyperventilation, airway obstruction, and other potentially life-threatening conditions can be rapidly detected with capnography—enabling clinicians to intervene as early as possible. Capnography and gas monitoring also provide insight into the effectiveness of the anesthesia breathing circuit, aiding clinicians in maintaining proper gas concentrations and ventilation levels. Our new Phasein™ capnography and gas monitoring solutions complement our breakthrough noninvasive portfolio with innovative, multispectral technologies for measuring respiratory gases. The solutions range from integrated OEM solutions to external “plug-in and measure” gas analyzers to handheld devices. With multiple measurements delivered through either mainstream or sidestream options, Masimo customers can now benefit from end-tidal CO2, FiCO2, RR, N2O, O2, and anesthetic agent monitoring in a range of hospital environments—from the operating room to intensive care to the general floor. IRMA™—A Complete Monitor in a Probe Designed with the latest advancements in miniaturized components and microprocessor technology, the IRMA mainstream analyzer weighs less than 1 ounce and fits in the palm of your hand. This versatile, complete mainstream capnography and gas monitoring system can be utilized with adult, pediatric, or infant patients. ISA™—Ultimate Performance in a Sidestream Analyzer Enabled by state-of-the-art Phasein spectrometer technology that utilizes nine different wavelengths of light and powerful signal processing algorithms, ISA provides the clinician with precise capnography and gas measurements with crisp waveforms that help depict the clinical situation for adults and neonates, from the operating room to the general floor. ISA sidestream analyzers are available as standalone or easy-to-integrate OEM modules. Nomoline™—No Moisture Sampling Line Nomoline fluid protection technology eliminates common problems associated with conventional sidestream gas analysis. Incorporating a special polymer and a hydrophobic bacterial filter, the Nomoline allows water in the sampling line to evaporate into the surrounding air, while leaving oxygen, carbon dioxide, and anesthetic gases unaffected. Specially designed for low-flow applications and functional in any orientation, Nomoline technology can be used in any clinical application for all types of patients from neonates to adults. Nomoline is designed to extend the product life in single-use applications, such as high humidity environments. Nomoline’s innovative design also allows multi-patient use as a resposable solution. Single-patient-use cannula and Nomoline adapter. Single-patient-use cannula and multi-patient-use Nomoline adapter. ISA OR+ ISA AX+ > EtCO2 > RR > N2O > O2 > Anesthetic Agent Identification > EtCO2 > RR > N2O > Anesthetic Agent Identification ISA CO2 > EtCO2 > FiCO2 > RR Root with Capnography is CE Marked. 16 17 Integrating Measurements to Enable Meaningful Use of Health Information Technology Today’s challenging hospital environment subjects clinicians to increasing mountains of information with expanding documentation requirements. Masimo’s innovation simplifies and automates this process, streamlining workflow and improving patient safety by empowering clinicians to focus on patients rather than technology. Keeping Clinicians and Patients Connected New standards for hospitals require meaningful use of the electronic health record (EHR) by charting changes in vital signs as well as documentation of interventions. Masimo enables automatic recording and transmission of key data into the EHR so clinicians spend their time caring for patients, not recording data. Masimo’s pulse oximeters also feature a built-in wireless radio for communication through a hospital’s wireless network—with seamless integration to the EHR. Patient SafetyNet* incorporates the Masimo Adaptive Connectivity Engine™ (ACE), which enables two-way, HL7-based connectivity to the EHR. ACE significantly reduces the time and complexity to integrate and validate custom HL7 implementations, and demonstrates Masimo’s commitment to innovation that automates patient care with open, scalable, and standards-based connectivity architecture. Iris™ Integration Platform Despite huge advances in medical technology, the lack of device communication and integration creates risks to patient safety in hospitals around the world. Existing approaches for device interoperability require separate hardware, software, and/or network infrastructure, which can clutter the patient room, burden IT management, and increase the complexity and cost of care. Root with Iris offers a built-in connectivity gateway that can integrate multiple standalone devices such as IV pumps, ventilators, beds, and other patient monitors. Iris allows device information to be remotely viewed with Patient SafetyNet™, transmitted through notification systems or to electronic health record (EHR) systems to facilitate better patient care and meaningful use, and eventually displayed on Root at the point of care to facilitate decision support. Device connectivity with Iris is designed to leverage existing network infrastructures and reduce costs while enhancing workflows and decision support to improve patient safety, whether the clinician is at the bedside, down the hall, or across the globe. *The use of the trademarks PATIENT SAFETYNET and PSN is under license from University Health System Consortium. Through Iris™, Root is designed to provide built-in integration to multiple standalone devices. Examples include: > IV pumps > Ventilators > Beds > Other patient monitors Third-party Device Iris Icon Wireless 802.11 or Wired Connection Root Patient SafetyNet Appliance Connectivity to Electronic Health Record & Central Monitoring Stations Notifications Patient SafetyNet View Device Icons 18 19 A Radical Departure from Traditional Monitoring Breakthrough flexibility to meet clinician and patient needs. Over 100 Different Sensor and Cable Combinations for Either Single- or Multi-patient Use Masimo rainbow® sensors measure SpO2, PR, PI, PVI, RRp*, SpfO2*, SpHb, SpOC, SpMet, SpCO. The Radical-7 leverages Masimo’s breakthrough noninvasive The intuitive touchscren operation allows for exceptionally measurements with a radical departure from traditional easy operation to change displayed parameters, waveforms, monitoring for breakthrough functionality designed to or trends on the fly never losing track of vital signs. In automate the process of care and enable clinicians to addition, easy customization allows clinicians quick access instantly adapt to changing monitoring needs in individual to alarms and system settings enabling instant changes in patients and care areas. alarm settings with a simple gesture. > Breakthrough measurements > Instantly adaptable functionality > Intuitive touchscreen operation > Easy customization > Flexible clinical applications > Integrated wireless connectivity Instantly Adaptable Functionality Three-in-one capability allows the Radical-7 to be used as: rainbow® R25-L rainbow® ReSposable R2-25 sensor system rainbow® R25 Masimo SET® sensors measure SpO2, PR, PI, PVI, RRp. M-LNCS Blue® M-LNCS E1™ M-LNCS Trauma M-LNCS Adtx M-LNCS Neo M-LNCS DBI M-LNCS DCI M-LNCS ReSposable S-ROS 3U ReSposable S-DOS 25 M-LNCS TF-1 M-LNCS TC-1 Standalone device for bedside monitoring Multiparameter monitoring interface via SatShare®, allowing hospitals to seamlessly implement rainbow® measurement capabilities 20 * RRp and SpfO2 are CE Marked Detachable, battery-operated, wireless handheld or wearable device to facilitate untethered monitoring during transport and ambulation The Radical-7 handheld monitor docks comfortably in Root providing an instantly interpretable display, and multiple networking/ connectivity options 21 Supporting Clinicians in Reducing Blood Transfusions with SpHb® With the rainbow® measurement platform including noninvasive total hemoglobin (SpHb), Masimo technologies aid some of the most common, costly, and critical decisions made in healthcare. Risks and Costs of Red Blood Cell Transfusions Red blood cell (RBC) transfusion is one of the most frequent procedures performed in US hospitals, with one in ten inpatients receiving one or more blood units.1 While blood loss during surgery is a known risk factor, RBC transfusion overuse can increase patient risk and cost of care. Meta-analysis of pooled results from multiple observational studies, each of which adjusts for risks between patients, shows that patients receiving RBC transfusions have an 88% higher mortality, 69% higher infection rate, and 250% higher rate of acute respiratory distress syndrome (ARDS).2 Multiple randomized controlled trials indicate that restrictive transfusion practices—those in which significantly lower hemoglobin triggers are used to determine need for transfusion—are safe.3 In addition, the cost of each RBC unit is estimated between $522 and $1,183 per unit, without including morbidity-associated costs.4 Beyond the cost of transfusion, each RBC unit transfused is associated with increased cost of care and transfusions that occur at higher hemoglobin levels increase the cost of care more than those given at lower hemoglobin levels.5 With the growing recognition of the need to reduce transfusions, noninvasive and continuous hemoglobin (SpHb) can be a key tool to help overcome the limitations of existing approaches. Risk-adjusted analysis of multiple observational studies has shown that RBC transfusions are associated with 88% higher mortality, 69% higher infection rate, and 250% higher rate of ARDS.2 1 AHRQ. Inpatient Sample. 1997-2007. 2 Marik PE et al. Crit Care Med. 2008;36(9):2667-74. 3 Carson et al. Cochrane Database Syst Rev. 2012 Apr 18;4:CD002042. 4 Shander A et al. Transfusion. 2010;50(4):753-765. 5 Murphy GJ et al. Circulation. 2007;116:2544-2552. 23 “ Deciding to transfuse based on a single static measurement more often results in patients receiving unnecessary transfusions with increased risks, costs, and the depletion of an already scarce blood supply. New medical technologies and devices that continuously monitor hemoglobin, oxygen, and perfusion will become essential for transfusions.” Dr. Aryeh Shander Chief, Department of Anesthesiology, Pain Management and Hyperbaric Medicine, Icahn School of Medicine at Mount Sinai, Mount Sinai Hospital, New York 22 The Overuse of RBC Transfusions The Growing Recognition of the Need to Reduce Transfusions American Medical Association and be delayed in the period between blood The Joint Commission also recently draw and laboratory analysis. This time Many transfusions are unnecessary. A systematic, expert review of 494 studies for positive impact on health outcome showed that 59% of RBC transfusions are “inappropriate.”1 Given the risks and costs of RBC transfusions, there is a growing recognition of the need to implement strategies to reduce RBC transfusions. The Joint Commission has introduced Patient Blood Management Measures that encourage hospitals to identified RBC transfusions as one gap of information can lead to sub- of the top five overused procedures optimal transfusion decisions.4 in medicine, defining overuse as “circumstances where the likelihood of benefit is negligible or zero, and the patient is exposed to the risk of harm.”3 Limitations with Existing Approaches to Assess Transfusion Need The most universally available information about whether a transfusion is needed during surgery is estimated blood loss, which is often overstated. Visible blood and fluid loss appears to tell one how much blood has been lost, but in a recent study at Duke University, anesthesiologists estimated Hemoglobin levels are used as a primary blood loss at 40% more than it actually evaluate appropriateness of transfusions indicator for RBC transfusion, but was.5 The implication is that the need as a continuous quality indicator.2 The laboratory measurements are only for transfusion may appear to exist, available intermittently and results can when in fact it does not. Appropriate Use of Transfusion 12% 59% 29% Inappropriate Uncertain Appropriate 494 studies were evaluated by an expert panel in a systematic method to assess appropriateness of RBC transfusion, revealing a significant opportunity to reduce unnecessary transfusions.1 24 The American Medical Association and The Joint Commission also recently identified RBC transfusions as one of the top five overused procedures in medicine, defining overuse as “circumstances where the likelihood of benefit is negligible or zero, and the patient is exposed to the risk of harm.”3 Stable Dropping Rising b H p S SpHb Lab Hemoglobin Continuous hemoglobin trending between invasive blood sampling provides a real-time indication of whether hemoglobin is stable when it may appear to be dropping, rising when it may not appear to be rising, or dropping when it appears to be stable. Time How SpHb Monitoring Helps with Transfusion Decisions Masimo’s solution provides hemoglobin both noninvasively and continuously. The noninvasive aspect makes the technology easy to apply to the patient, and the continuous aspect assists in better decision making. While SpHb monitoring is not intended to replace blood draws, it identifies significant when the SpHb trend is stable and changes in hemoglobin and lack of the clinician may otherwise perceive significant changes in hemoglobin hemoglobin is dropping, or when the between invasive blood sampling and SpHb trend is rising and the clinician laboratory analysis.6 Continuous hemoglobin means clinicians can determine the directional trend of hemoglobin—whether it is stable, rising, or falling. This can help avoid unnecessary transfusions may otherwise perceive it is not rising fast enough. Inside and outside the operating room, a dropping SpHb trend may also allow clinicians to identify internal bleeding and permit earlier interventions. 1 Shander et al. TransMed Rev. 2011. 232-246. 2 Joint Commission Perspectives. The Joint Commission Continues to Study Overuse Issues. Volume 32, Number 5, 2012: 4-8(5). 3 http://www.jointcommission.org/patient_blood_management_performance_measures_project/ 4 Friedman MT et al. Arch Pathol Lab Med. 2006 Apr;130(4):474-9. 5 Hill SJ et al. ASA. 2011 (abstract). 6 Frasca D et al. Crit Care Med. 39(10); 2011; 2277-2282. 25 SpHb helps clinicians reduce transfusion frequency in lower blood loss surgery1 4.5% 87% Reduction in Blood Transfusion Frequency 0.6%* s n o i s u f s n a r T d o o B e v i t a r e p o a r t n I l f o y c n e u q e r F 5% 4% 3% 2% 1% 0% Standard Care Group SpHb Group Randomized controlled trial in 327 orthopedic patients. * p=0.03 vs Standard Care Group SpHb helps clinicians reduce the amount of blood transfused in higher blood loss surgery2 1.9 0.9 Average RBC Units Reduced Per Patient 1.0** t n e i t a P r e P d e s u f s n a r T s t i n U C B R e g a r e v A 2.5 2 1.5 1 0.5 0 Standard Care Group SpHb Group Prospective cohort study in 106 neurosurgery patients. **p<0.001 vs Standard Care Group SpHb also helps clinicians decrease the time to transfusion, when a transfusion is truly indicated2 ) n m i ( d e h s i l b a t s E d e e N r e t f A t r a t S n o i s u f s n a r T o t e m T i 50 40 30 20 10 0 50.2 41 Minute Reduction in Time to Transfuse 9.2** Standard Care Group SpHb Group Prospective cohort study in 106 neurosurgery patients. ** p<0.001 vs Standard Care Group Reducing Blood Transfusions and Costs Clinical Evidence that SpHb Monitoring Helps Reduce Transfusions There are now two studies showing that SpHb monitoring helps clinicians reduce RBC transfusions. SpHb monitoring has been shown in a randomized controlled trial in lower blood loss surgery (orthopedic surgery) to reduce the frequency of intraoperative blood transfusions by 87% (from 4.5% to 0.6%) and the average number of RBC units transfused by 90% (from 0.1 to 0.01 units per patient).1 SpHb monitoring has also been shown in a prospective cohort study in higher blood loss surgery (neurosurgery) to reduce the percent of patients receiving three or more RBC units from 73% to 32% and reduce the average number of RBC units transfused by 47% (from 1.9 to 1.0 units per patient).2 In this study, the researchers also showed that patients who needed RBC units received them sooner by 41 minutes on average. Projected Cost Savings from SpHb Monitoring to Reduce Transfusions To project the potential savings from SpHb monitoring, the range of published cost estimates for RBC transfusions ($522 to $1,183) can be multiplied by the expected reduction in RBC transfusions per patient.3 In lower blood loss surgery, the 0.09 lower RBC units per patient with SpHb monitoring is projected to reduce RBC costs by $47 to $106 per patient monitored.1 In higher blood loss surgery, the 0.90 lower RBC units per patient with SpHb monitoring is projected to reduce RBC costs by $470 to $1,065 per patient monitored.2 These estimates do not take into account the expense of SpHb monitors or sensors, or the other costs associated with over transfusion or delayed care. Potential Blood Cost Savings Per Patient with SpHb Monitoring3 Range of RBC Transfusion Cost Estimates Lower Blood Loss Surgery1 Higher Blood Loss Surgery2 $522 $47 $470 $1,183 $106 $1,065 1 Ehrenfeld JM et al. ASA. 2010. LB05. (abstract) 2 Awada W.F.N., Maher F. Proceeding of the Society for Technology in Anesthesia Annual Meeting, 2013: p 51. 3 Shander et al. Transfusion. 2010;50(4):753-765. 27 Risk and Cost of Undetected Bleeding In addition to assisting with transfusion management, continuous SpHb can also help clinicians inside and outside the operating room monitor and detect internal bleeding. Bleeding affects up to 35% of patients in surgery, intensive care, and obstetric care areas.1 Bleeding is considered a significant risk factor for patients, and late detection further increases risk and cost.2 Surveys show that the majority of US hospitals have multiple patients per year with serious injury or death due to late detection of bleeding.3 Post-partum Hemorrhage Every 90 seconds around the world, a woman dies from complications related to pregnancy or childbirth.4 For every woman who dies, 30 more suffer injuries or disabilities.5 Bleeding in obstetric patients, known as post-partum hemorrhage, affects 3% of mothers giving birth in the US.6 Worldwide, it is the #1 cause of maternal mortality.7 The Joint Commission has issued a sentinel event alert on post-partum hemorrhage, calling on hospitals to develop specific protocols to systematically detect bleeding to allow earlier intervention.8 Unfortunately, previous efforts have failed to make significant progress. Limitations of Current Approaches to Detect Bleeding A significant number of injuries or deaths due to bleeding are preventable. Prevention requires identifying that a patient has experienced significant bleeding and then intervening to stop the bleeding and improve the patient’s condition. Identifying bleeding is challenging because even during surgery and childbirth, clinical estimation of blood loss is inaccurate and changes in standard vital signs can occur long after the bleeding has begun. Low hemoglobin identifies bleeding over 90% of the time, but is only assessed intermittently and requires a blood draw and laboratory analysis.9 In some parts of the world, laboratory testing is simply not available. “ Masimo SpHb helped prevent a potentially life-threatening event. I am now using it for all my major craniofacial procedures and can’t see doing a surgery without it.” Jeffrey Fearon, MD Physician for 8-year-old girl who had just completed craniofacial surgery in which SpHb signaled undetected bleeding through a dramatic drop in hemoglobin over a 5-minute period. 28 Potential for Earlier Identification of Falling Hemoglobin Values 8.0 7.0 6.0 Standing lab order tHB Lab Test Masimo SpHb (Unblinded) Blood Transfusion Initiated Lab tHb ordered early due to declining SpHb values Patient transported to OR for splenectomy 10 11 12 13 14 15 16 17 18 19 Hours Noninvasive and Continuous Hemoglobin Monitoring to Detect Bleeding By measuring hemoglobin continuously, clinicians can become aware of real-time drops in hemoglobin that are indicative of bleeding. Identification of low or falling hemoglobin levels allows interventions that may prevent preventable death and disability. “ In cases of severe hemorrhaging during and after childbirth, SpHb has enabled us to immediately identify and continuously assess blood loss severity to better manage internal bleeding, prevent overloading of fluid, and decrease maternal death.” Madhava Karunarathna, MD OB/GYN, Balangoda Hospital, Sri Lanka 1 Hebert PC. Crit Care. 1999: 3(2):57-63. 2 Herwaldt LA. Infect Control Hosp Epidemiol. 2003; 24(1):44-50. 3 HRA Research of Hospital Executive. 2012. 4 Maternal Mortality in 2005: WHO, UNICEF, UNFPA and the World Bank. 5 UNICEF Statistic, 2003. 6 Bateman BT et al. Anesth Analg May 2010 110:1368-1373. 7 Khan KS et al. WHO. 2006. 367:1066-1074. 8 The Joint Commission, “Sentinel Event Alert: Preventing Maternal Death” Issue 44, January 26, 2010. 9 Bruns B et al. J Trauma. 2007; 63(2):312-5. 29 Accuracy of Noninvasive and Continuous Hemoglobin Monitoring Compared to Common Invasive Methodologies While hemoglobin is one of the most expected between hemoglobin device analyzer, both in single measurement common laboratory tests performed, methods. A total of 471 hemoglobin comparisons as well as trended most clinicians are unaware of variation measurements were evaluated from 62 measurement comparisons. Only SpHb that should be expected when comparing patients. Noninvasive and continuous provides hemoglobin noninvasively and hemoglobin measurements–both within hemoglobin (SpHb), a satellite laboratory continuously—ideal for indicating real- and between various device models. CO-Oximeter (Siemens RapidPoint 405), time visibility to hemoglobin changes, This is because clinicians do not typically and a point-of-care device (HemoCue or lack of changes, in between invasive measure hemoglobin more than once 301) were all compared to reference blood sampling and laboratory analysis. in the same patient at the same time. hemoglobin from the central laboratory Variation is induced by physiology, blood hematology analyzer (Sysmex XT2000i). sampling technique, device methodology, and individual device calibration.1 In this study, the absolute accuracy and trending accuracy of SpHb was similar to The results of an independent study the two widely used invasive methods conducted in a surgical intensive care when all three methods were compared unit illustrate the variation that can be to the central laboratory hemoglobin The Radical-7 enabled with rainbow® technology allows noninvasive and continuous monitoring of blood constituents. Single Hemoglobin Measurement Comparison Between Three Devices and the Central Laboratory Hematology Analyzer2 Trended Hemoglobin Measurement Comparison Between Three Devices and the Central Laboratory Hematology Analyzer2 SpHb CO-Oximeter HemoCue SpHb CO-Oximeter HemoCue ) L d / g ( b H p S 18 16 14 12 10 8 6 4 30 ) L d / g ( b H r e t e m i x O - O C 18 16 14 12 10 8 6 4 ) L d / g ( b H e u C o m e H 18 16 14 12 10 8 6 4 Bias + Standard Deviation = 0.9 + 0.6 g/dL Bias + Standard Deviation = 0.0 + 1.0 g/dL l i n b o g o m e H e v i t u c e s n o C n Bias + Standard Deviation = 0.3 + 1.3 g/dL i e c n e r e f f i D 4 6 8 10 12 14 16 18 4 6 8 10 12 14 16 18 4 6 8 10 12 14 16 18 Hematology Analyzer tHb (g/dL) Hematology Analyzer tHb (g/dL) Hematology Analyzer tHb (g/dL) ) L d / g ( ) b H p S ( s e u l a V 8 6 4 2 0 -2 -4 -6 -8 l i n b o g o m e H e v i t u c e s n o C n i e c n e r e f f i D ) L d / g ( ) G B A b H ( s e u l a V 8 6 4 2 0 -2 -4 -6 -8 l i n b o g o m e H e v i t u c e s n o C n i e c n e r e f f i D ) L d / g ( ) P A C b H ( s e u l a V 8 6 4 2 0 -2 -4 -6 -8 -8 -6 -4 -2 0 2 4 6 8 -8 -6 -4 -2 0 2 4 6 8 -8 -6 -4 -2 0 2 4 6 8 Difference in Consecutive Hemoglobin Values (tHb) (g/dL) Difference in Consecutive Hemoglobin Values (tHb) (g/dL) Difference in Consecutive Hemoglobin Values (tHb) (g/dL) 1.0 g/dL (ARMS) 1.1 g/dL (ARMS) 1.3 g/dL (ARMS) R=0.64 R=0.60 R=0.39 1 Berkow L. J Clin Monit Comput. 2013 Mar 26. 2 Frasca D et al. Crit Care Med. 2011 Oct;39(10):2277-82. 31 Quick and Painless Hemoglobin Assessment The Pronto-7® is designed specifically for noninvasive total hemoglobin (SpHb) spot-check testing, along with SpO2, pulse rate, and perfusion index. A Revolutionary Device for a Variety of Clinical Settings almost any environment, including hospitals, clinics, blood Hemoglobin is one of the most commonly ordered tests in both hospital and non-hospital settings because it is critical to assessing anemia. However, traditional lab testing involves delayed results. The Pronto-7 represents a breakthrough solution for measuring hemoglobin quickly in under a minute—without needles, time-consuming laboratory analysis, or the risk of blood contamination or hazardous medical waste. The palm-sized Pronto-7—approximately 5” x 3” x 1” and weighing just 11 ounces—puts the power of noninvasive hemoglobin spot-check testing into any clinician’s hands in donation centers,* and emergency medical services. Operation is easy and intuitive with the Pronto-7’s touchscreen interface. Embedded 802.11 b/g and Bluetooth capability enable wireless printing or emailing of test results, as well as transmission to EHR systems. In addition, new tests can be downloaded directly to the device via WiFi. The newest features are designed to improve calibration and motion support for measuring SpO2 and SpHb. New parameters include hematocrit (SpHct) and Pleth Variability Index (PVI). In addition, the new Active Pulse Sensor** generates a pulsatile signal for more robust measurements—especially in patients with low perfusion. The Active Pulse Sensor vibrates to induce a pulsatile signal for more robust measurements.** * Use in blood donation settings is CE Marked. ** Pronto-7 with Active Pulse and other features are under development. 33 Operating Room2 Pleth Variability Index (PVI) Aiding Clinician Assessment of Fluid Responsiveness and Fluid Management with PVI® Arterial Pulse Pressure Variation (PVV) Cardiac Index (CI) Pulmonary Capillary Wedge Pressure (PCWP) Central Venous Pressure (CVP) Fluid administration is one of the most common hospital interventions. Although it is critical to improving patient status and enabling end organ preservation, unnecessary fluid administration is associated with increased morbidity and mortality.1 Pleth Variability Index (PVI) Arterial Pulse Pressure Variation (PPV) Cardiac Index (CI) Pulmonary Capillary Wedge Pressure (PCWP) Central Venous Pressure (CVP) 10 20 30 40 50 60 70 80 90 100 100 - Specificity (%) Fluid Non-Responders Detection This observational study evaluated 25 surgical patients before and after volume expansion, with fluid responders (sensitivity) defined as a cardiac index increase of >15% and fluid non-responders (specificity) defined as a cardiac index increase of <15%. Intensive Care Unit4 Pleth Variability Index (PVI) Central Venous Pressure (CVP) Stroke Volume Variation (SVV) 0.0 0.2 0.4 0.6 0.8 1.0 1-Specificity This study has shown PVI to be an effective alternative indicator for accurate, noninvasive, and continuous fluid responsiveness in mechanically ventilated patients undergoing major surgery. Assessing Fluid Responsiveness Masimo continuous and noninvasive Pleth Variability Index (PVI) has been shown in multiple studies to help clinicians assess fluid responsiveness in adult and pediatric surgical and intensive care patients under mechanical ventilation.2-6 PVI has also been shown to help assess which patients will become hemodynamically unstable with the addition of Positive End Expiratory Pressure (PEEP), which may allow clinicians to more carefully select ventilator settings and monitor effects more closely.7 “ With Masimo PVI, I can predict when my patients will benefit from fluid administration—and when it might harm them.” Maxime Cannesson, MD University of California, Irvine, CA 100 90 80 70 60 50 40 30 20 10 n o i t c e t e D r e d n o p s e R d u l F i ) % ( y t i v i t i s n e S y t i v i t i s n e S 1.0 0.8 0.6 0.4 0.2 0.0 34 Aiding Clinicians in Reducing Patient Risk A recent randomized controlled trial showed that compared to standard care without PVI, clinicians using PVI PEEP were able to improve fluid management and as a result, reduce patient risk— as evidenced by lower lactate levels.8 By helping clinicians maintain appropriate fluid and oxygen levels in the blood, important organs may be protected. 2.5 2 1.5 1 0.5 0 ) 1 - L l o M m ( s l e v e L e t a t c a L * * * PVI Group Control Group Start of the Intraoperative Surgery At 24 h At 48 h This randomized study of 82 abdominal surgery patients found that PVI-based, goal-directed fluid management reduced the volume of intraoperative fluid infused and reduced intraoperative and postoperative lactate levels.8 Inclusion in Fluid Management Guidelines The positive and expanding evidence for PVI has led to its inclusion in guidelines and best practices for fluid management. In 2012, the United Kingdom’s National Health Service (NHS) included PVI in its Intra Operative Fluid Management Pack, which serves as a guide for hospitals implementing fluid responsiveness monitoring to improve patient outcomes.9 In 2013, the French Society for Anaesthesia and Intensive Care (SFAR) added PVI to its guidelines for optimal hemodynamic management of surgical patients.10 The other dynamic monitoring technologies that have been shown to help clinicians assess fluid responsiveness and improve fluid management are invasive, complex, and/or costly. In contrast, PVI is noninvasive, easy to use, and has no incremental procedural cost because pulse oximetry monitoring is already performed on all surgical and intensive care patients. PVI monitoring should be considered in all mechanically ventilated patients in which an invasive arterial line or more complex or costly monitoring technologies may not be justified. 1 Bundgaard-Nielsen M et al. Acta Anaesthesiol Scand. 2007; 51(3):331-40 2 Cannesson M et al. Br J Anaesth. 2008;101(2):200-6. 3 Loupec T et al. Crit Care Med. 2011;39(2). 4 Zimmermann M et al. Eur J Anaesthesiol. 2010 Jun;27(6):555-61. 5 Fu Q et al. Biosci Trends. 2012 Feb;6(1):38-43. 6 Byon HJ et al. J Anaesth. 2013 Apr;110(4):586-91. 7 Desebbe O et al. Anesth Analg 2010;110:792–798. 8 Forget P et al. Anesth Analg. 2010;111(4):910-4. 9 http://www.ntac.nhs.uk/NewsAndEvents/ IOFM_Technology_Adoption_Pack_Published.aspx 10 Vallet B et al. Strategy for perioperative vascular filling - Guidelines for perioperative haemodynamic optimization. French Society of Anaesthesia and Intensive Care (SFAR). 2013. 35 Masimo PVI has been shown to help clinicians assess fluid responsiveness as reliably as new invasive parameters, and better than traditional invasive parameters.2 Signal Extraction Technology®: Where “Solving the Unsolvable” Started Twenty-four years ago, two young engineers asked themselves why pulse oximetry wouldn’t work during patient motion and low perfusion—and by doing so, set a new course that created a revolution in patient monitoring. Overcoming the Limitations of Conventional Pulse Oximetry Since its inception, pulse oximetry was plagued by unreliability when it was needed most—during patient motion and low perfusion. The industry had given up and considered the problem “unsolvable.” Clinicians were forced to live with the results —excessive false alarms, delayed notification due to long averaging times, inaccurate data, and an inability to obtain data on the most critical patients. Conventional pulse oximetry works under the assumption that by looking at only the pulse and normalizing the pulsating signal over the non-pulsating signal, oxygen saturation (SpO2) can be measured without calibration. Although this was a big step forward in the evolution of pulse oximetry, it has one major flaw—it assumes the only pulsating component is arterial blood. Unfortunately for conventional pulse oximetry, venous blood moves every time the patient moves or breathes. This causes conventional pulse oximeters to display false low or high SpO2 and pulse rates— resulting in false alarms as high as 90% in ICUs and recovery rooms. Validated by Independent and Objective Research To date, more than 100 independent and objective studies have shown that Masimo SET® outperforms all other pulse oximetry technologies, providing clinicians with unmatched sensitivity and specificity to make critical patient care decisions. 37 Unleashing Breakthrough Performance When Joe Kiani and Mohamed Diab After six years of dedicated and focused signal processing of Masimo SET® looked at the same pulse oximetry research and development, Masimo consistently resulted in significantly signal differently than anyone had SET® debuted in 1995 at the Society for fewer false alarms and improved before, they created new possibilities. By Technology in Anesthesia and won the true alarm detection. employing advanced signal processing prestigious Excellence in Technology techniques—including parallel engines Innovation Award. Thereafter, skeptical and adaptive filters—they believed clinicians around the world sought they could find the true arterial signal actively to compare Masimo SET® to that would allow accurate monitoring the best pulse oximetry technologies of arterial oxygen saturation and pulse other companies had to offer. But in With Masimo SET®, clincical studies have shown false alarms can be reduced by over 95%, while true alarm detection was shown to be over 97%—even during the challenging conditions of motion and rate, even during the most challenging study after study, the breakthrough low perfusion.1 conditions. Signal Extraction Technology, or Masimo SET®, assumes that both the arterial and venous blood can move and uses parallel signal processing engines—DST®, FST®, SST™, and MST™ —to separate the arterial signal from sources of noise (including the venous signal) to measure SpO2 and pulse rate accurately, even during motion. “ Conventional pulse oximeters are a fair-weather friend. Masimo SET® is a foul-weather friend.” Jeremy Swan, MD Former Chairman of Masimo’s Scientific Advisory Board and Chairman Emeritus Cedars-Sinai Medical Center’s Division of Cardiology True Alarm Performance During Motion and Low Perfusion* 43% Nellcor N-600 3% Masimo SET® Missed True Alarms SenSitivity 97% * In this hospital-based study, investigators measured SpO2 in 10 subjects during motion and low perfusion conditions and calculated the false alarm rate during 120 full oxygenation events (specificity) and true alarm rate during 40 de-oxygenated events (sensitivity).1 R/IR DIGITIZED, FILTERED, AND NORMALIZED R/IR DST® FST® (Conventional Pulse Oximetry) Adaptive Filter SST™ Adaptive Filter MST™ EVALUATION AND ANALYSIS POST PROCESSOR Masimo SET DST 97% 0 50% 66% SpO2% 97% 100% Conventional pulse oximetry uses the standard red over infrared algorithm to provide SpO2, while Masimo SET® uses that conventional algorithm but has added four other algorithms that all run in parallel. These algorithms allow the distinction between arterial and venous signal during motion and low perfusion by identifying and isolating the non-arterial and venous noise SpO2s (left peak shown in blue) from the true arterial SpO2 components (right peak shown in red) in the signal. The plot peak on the right is then chosen as the SpO2 value, since the physiologically higher SpO2 value within the measuring site will be arterial signal. False Alarm Performance During Motion and Low Perfusion* 28% Nellcor N-600 5% Masimo SET® False Alarms SpeCiFiCity 95% 1 Shah N., Ragaswamy H.B., Govindugari K., Estanol L. J Clin Anesth. 2012 Aug;24(5):385-91. 38 39 Industry-leading Pulse Oximetry Solution Masimo SET® is the world’s leading pulse oximetry technology, proven by both independent and objective research and the real-world success of our customers and partners. The Choice of Clinicians in the World’s Leading Hospitals Because of its unmatched reliability during challenging conditions of motion and low perfusion, clinicians at thousands of hospitals around the world count on Masimo SET® every day to help them care for patients. And while many leading hospitals have already integrated Masimo SET® pulse oximetry technology, more are converting every day. These hospitals and clinicians trust Masimo SET® to help them deliver the most effective and efficient patient care possible. With fewer false alarms,1 clinicians can focus on the patients who need the most attention. With more trustworthy measurements, clinicians can more tightly control oxygenation levels. And with more timely detection of true events, clinicians can intervene earlier for better patient outcomes and improved patient safety. Performance During Motion and Low Perfusion1 100 90 80 70 60 50 40 30 20 10 n o i t c e t e D m r a l A e u r T ) % ( y t i v i t i s n e S 10 20 30 40 50 60 70 80 90 100 False Alarm Rate 100 - Specificity (%) Philips 24C Philips CMS-B Datex-Ohmeda 3740 Nellcor N-395 Datex-Ohmeda AS-3 Datex-Ohmeda 3800 Datex-Ohmeda 3900 Nellcor N-200 Philips CMS Nellcor N-295 GE 8000 Novametrix MARS Nellcor NPB-190 Nellcor NPB-180 Novametrix 520A Spacelabs 90308 Nonin 8600 BCI 3304 Criticare 5040 A total of 70 volunteers were tested with motorized hand motions. Each motion was studied during both room air breathing and hypoxemia. Pulse oximeters on the stationary hand were used to provide control measurements for comparison. Sensitivity was defined as ability to detect a true SpO2 <90%. Specificity was defined as the ability to detect a true SpO2 >90%. Integrated in More Industry-leading Products Than Any Other Pulse Oximetry Technology Each company manufacturing multiparameter patient monitors chooses which pulse oximetry solution to offer in its products. Today, Masimo SET® is integrated in more industry-leading products than any other pulse oximetry technology—available in more than 100 OEM monitors from 50 leading brands. In many of these monitors, Masimo SET® is the only pulse oximetry technology provided. In addition, more and more of our OEM partners are enhancing the capabilities of their monitoring solutions by integrating our rainbow® technology. Dräger® with rainbow® Welch Allyn® with rainbow® Physio-Contro® with rainbow® ZOLL® with rainbow® GE® with Masimo SET® Philips® with Masimo SET® MS-2040™ Very low power SET® OEM Board MS-2013™ Low power SET® OEM Board MX-5™ Low power rainbow® OEM Board 1 Barker SJ. Anesth Analg. 2002 Oct;95(4):967-72. 40 41 Helping Improve Outcomes on the General Floor with Masimo Patient SafetyNet™ In August 2012, The Joint Commission Sentinel Event Alert on the safe use of opioids in hospitals recommended implementation of better dosing along with continuous oxygenation and ventilation monitoring (instead of spot checks) in post-surgical patients.1 Patient SafetyNet™*—combined with Masimo SET® pulse oximetry and rainbow Acoustic Monitoring™ or standard capnography—offers a clinically proven, cost-effective approach to continuous post- operative monitoring with high nursing satisfaction and patient compliance. Reducing Rescues and ICU Transfers in a post-surgical floor where only be assured their loved ones are receiving intermittent spot-checking was used maximum protection. before, Dartmouth-Hitchcock Medical Center reduced rapid response activations Proven Cost-effectiveness For many years, clinicians have understood the risks of not continuously monitoring patients on the general floor. However, excessive false alarms due to patient motion made improving the safety of these patients an elusive goal. In the last decade, Masimo SET® has been shown in multiple studies to improve the process of care in neonates and by 65% and ICU transfers by 48%,2 and saved $1.48 million annually. In addition, there were zero brain-damaged patients over a 5-year period.3 Just as pulse oximetry has become a standard of care in the OR, PACU, pediatric patients due to its Measure- and ICU, we now believe that Measure- through Motion and Low Perfusion through Motion and Low Perfusion performance. However, a landmark study pulse oximetry will become a standard in 2010 showed that Masimo SET® also of care on the general floor. With Masimo improves clinical outcomes in adults. technologies on the general floor, After implementing Masimo SET® and clinicians can be confident their patients Patient SafetyNet remote monitoring are being watched even when they and wireless notification system aren’t at the bedside, while families can When translated into financial impact, the Dartmouth-Hitchcock study showed that implementing Masimo SET® and Patient SafetyNet to more safely monitor post-surgical patients could also have a significant impact on the hospital’s bottom line by increasing ICU bed availability and reducing costs associated with emergency rescue events.3 With both the clinical and financial rationale now in place, hospitals are increasingly implementing general floor monitoring with Masimo technologies. Halo Index™* Enables Assessment of Patient Status to include additional information from the patient data Halo Index is a new indicator for cumulative trending assessment of the global patient status. Physiologic deterioration often occurs long before a patient crisis and manifests through subtle and often undetected changes in multiple physiologic parameters. Masimo designed Halo Index to mimic the systematic approach that expert clinicians use in assessing patient physiologic deterioration—analyzing the patient history and extracting key vital sign parameter characteristics to assess global patient status. Halo Index currently uses available Masimo parameters but is scalable repository. Each parameter’s significance is weighted and combined into the Halo Index, a single displayed number with a range from 0 to 100 that provides a cumulative trending assessment of global patient status. Increases in Halo Index suggest physiologic deterioration and may indicate a need for clinicians to more closely assess the patient. Patient SafetyNet can display actual parameter values (below) or color- coded alarm states (left), which allows more patients to be viewed simultaneously on screen. 0 Patients Suffered Brain Damage or Died Over a 5-year Period† 48% Reduction in ICU Transfers 65% Reduction in Rapid Response Team Activations $1.48 Million in Annual Cost Savings Significant reductions in rapid response team activations and ICU transfers were observed in an 11-month evaluation of Patient SafetyNet on a post-surgical unit. Rescue events decreased 65%, from 3.4 to 1.2 per 1,000 patient discharges, and ICU transfers decreased 48%, from 5.6 to 2.9 per 1,000 patient days after implementation. The financial impact resulted in annual opportunity cost savings of $1.48 million. Results drove expansion of the use of Patient SafetyNet to other care areas.2, 3 † Since expansion, no patients suffered irreversible, severe brain damage or died as a result of respiratory depression from opioids over a 5-year period. * The use of the trademarks PATIENT SAFETYNET and PSN is under license from University Health System Consortium. In this example, Halo Index indicates a declining patient condition while displaying parameter trends and their contribution (the size of the bubbles below the parameter) to the Halo Index.* * Halo Index is CE Marked. Not available in the US. 1 The Joint Commission Sentinel Event Alert. 2012;49. 2 Taenzer AH et al. Anesthesiology. 2010;112(2):282-287. 3 Taenzer AH et al. Anesthesia Patient Safety Foundation Newsletter. Spring-Summer 2012. 42 43 Clinician-centric Monitoring with MyView™ Empowering Clinicians to See What They Want, When They Want to See It. MyView in Patient SafetyNet automatically senses when the physician approaches and highlights his or her patients for easy viewing. The level of information required can change dramatically by clinician and care area, but medical devices historically function in a static manner with the same parameters, waveforms, and trends displayed the same way. While Masimo measurements and display flexibility continue to expand, this doesn’t mean that all clinicians need to see all of the information in the same way. MyView* technology—featured in Masimo Patient SafetyNet—is being expanded to allow wireless sensing of the device, clinician, patient, and care area to provide the parameters, waveforms, and trends that clinicians want to see and what their patients and family see. While a physician may want to see all parameters and waveforms, a medical assistant may only want to see Halo Index* or a few parameters and no waveforms. If no clinician is in the room, the patient and family may be best served with no specific device information, but rather a visual indicator with a green, yellow, or red color indicating device alarm status. * CE Marked. ** This feature is under development. When the clinician re-enters the room, MyView recognizes the clinician and displays the measurements that interest the particular clinician.** When no clinicians are in the room, the clinician may select a device display that is entirely green, yellow, or red—depending on the alarm status. This eliminates a common distraction for the patient and family while limiting unnecessary concerns or questions for caregivers. With the use of a presence tag, upon approach, the information displayed on Root will change based on clinician-set preferences. Clinician-centric view with the use of a presence tag or smart phone allows caregivers to see the customized information most important to them upon approach to a patient.* 45 Protect More Patients by Monitoring Every Breath with rainbow Acoustic Monitoring™ To expand the rainbow® platform’s promise of breakthrough noninvasive measurements, we have grown beyond our optically based technologies to include clinical measurements derived from sound. Protecting More Patients by Monitoring Every Breath patient distress—offering a breakthrough in patient safety for Continuous monitoring of respiration rate is especially important for post-surgical patients receiving patient- controlled analgesia for pain management. Conscious sedation can induce respiratory depression and place patients at considerable risk of serious injury or death. The post-surgical patients on the general floor and for procedures requiring conscious sedation. Allowing More Patients to Be Monitored, More Safely than Ever Before Anesthesia Patient Safety Foundation (APSF) and The Joint When rainbow Acoustic Monitoring™ is used in conjunction Commission recommend continuous oxygenation and with rainbow® Pulse CO-Oximetry and the Patient SafetyNet ventilation monitoring in all patients receiving opioid-based system, clinicians can follow key indicators of oxygenation pain medications.1 However, current methods for respiration with industry-leading Masimo SpO2; ventilation with rate monitoring are limited by patient tolerance. While we breakthrough acoustic respiration rate (RRa); circulation offer the best-in-class capnography solution, we believe with Masimo Measure-through Motion pulse rainbow Acoustic Monitoring™ is better suited for post-surgical monitoring and conscious sedation. rate (PR); and hemoglobin levels with Masimo’s continuous and Masimo’s rainbow Acoustic Monitoring™ now provides noninvasive and continuous respiration rate that has been shown to be accurate, easy to use, and enhances patient compliance.2 Acoustic Respiration Rate (RRa™) may help clinicians reliably and continuously assess breathing— facilitating earlier detection of respiratory compromise and noninvasive hemoglobin (SpHb)—enabling clinicians to monitor more patients, more safely than ever before. rainbow Acoustic Monitoring™ noninvasively and continuously measures respiration rate using an innovative adhesive sensor with an integrated acoustic transducer that is easily and comfortably applied to the patient’s neck. Ability to Detect Respiratory Pause3 RESPIRATION RATE METHOD Oridion Capnostream SARA v4.5 Masimo rainbow Acoustic Monitoring™ v7804 Sensitivity (respiratory pause detected when actual respiratory pause occurs) 62% 81% Retrospective analysis of 34 PACU subjects. Reference respiration rate determined by expert observer. A total of 21 episodes of respiratory pause were identified, defined as 30 seconds with no breathing activity. “ Our research shows RRa has greater accuracy, precision, and sensitivity to pauses in ventilation than capnometry.” Michael Ramsay, MD Chief of the Department of Anesthesiology and Pain Management, Baylor University Medical Center, Dallas, TX 46 1 Stoelting RK et al. APSF Newsletter. 2011. (www.apsf.org) 2 Macknet MR et al. Anesthesiology. 2007; 107:A84. (abstract) 3 Ramsay M.A. et al. Anesth Analg. 2013;DOI: 10.1213/ANE.0b013e318290c798. 47 Helping Screen for Congenital Heart Disease and Reduce Eye Damage and Blindness From the very beginning, infants and children have been the focus of our research development. As a result, Masimo leads the industry in solutions designed exclusively for these most vulnerable patients. Enabling Critical Congenital Heart Disease Screening oxygen can cause severe eye damage from retinopathy of The breakthrough performance of Masimo SET® is often most appreciated by the clinicians caring for fragile newborns. Up to 30% of all congenital heart disease (CHD) deaths occurring in the first year of life are unrecognized at the time of hospital prematurity (ROP). Masimo SET® is the only pulse oximetry proven to help clinicians dramatically reduce ROP.4 Empowering Care for Cyanotic Patients discharge after birth. Masimo SET® pulse oximetry has been In cyanotic infants, Masimo SET® with the Blue® Sensor is the shown to reliably assist clinicians in the screening for critical only pulse oximeter proven accurate—enabling accurate congenital heart disease (CCHD),1, 2 spurring the US Secretary maintenance of targeted oxygen saturation levels.5 And for of Health and Human Services to add Measure-through very low birth weight babies, only the Masimo NeoPt-500™ Motion and Low Perfusion pulse oximetry to the recommended Sensors are designed for both size and performance in infants Uniform Screening Panel for newborns.3 Masimo SET® pulse as small as 500 grams. oximeters and sensors meet the recommended criteria for newborn screening, were exclusively used in the two studies that were the basis for the CCHD workgroup decision to recommend newborn screening, and were the first to receive FDA 510(k) clearance with labeling for CCHD screening. Helping Clinicians Reduce Retinopathy of Prematurity Real-time Newborn Monitoring and Assessment When each second matters during newborn resuscitation, the Masimo Newborn Sensor ensures the fastest response time at the highest sensitivity—allowing clinicians to focus on real-time patient management instead of the device. In addition, Masimo SET® is increasingly being used to supplement the standard Premature infants requiring neonatal intensive care need APGAR score to more reliably assess general newborn health. enough oxygen to preserve vital organ function, but too much CCHD Detection Screening with Masimo SET®2 N = 39,821 babies Physical Exam Alone Physical Exam + Masimo SET® Pulse Oximetry Screening2 Sensitivity for CCHD Detection Specificity for CCHD Detection 63% 98% 83% 99.8% SpO2 screening was conducted on 39,821 newborn babies, preductally (palm of right hand) and postductally (either foot) before routine physical examination. The baby was considered to be screening positive if: 1) either preductal or postductal SpO2 measurement was <90%; 2) if in three repeat measurements, both preductal and postductal SpO2 were <95%, or the difference between the two measurements was >3%. Reduction of ROP with Masimo SET®4 Severe Retinopathy of Prematurity (ROP) Rate Center A B Period 1 (pre-policy change) Period 2 (post-policy change) Period 3 (post-policy change) 12% with Nellcor 5% with Masimo 4% with Masimo 13% with Nellcor 13% with Nellcor 6% with Masimo In period one, the baseline rate for severe ROP in two centers, both using Nellcor pulse oximetry, is established. In period two, the oxygen targeting policies, caregivers, and patient characteristics were the same at both centers, but only Center A switched to Masimo SET®, which led to a significant reduction in ROP (from 12% to 5%). In period three, Center B switched to Masimo SET® and experienced a reduction in ROP from period two (from 13% to 6%). 1 Ewer AK et al. Lancet. 2011 Aug 27;378(9793):785-94. 2 de-Wahl Granelli AD et al. BMJ. 2009;338. 3 Secretary of Health & Human Services letter to the Secretary’s Advisory Committee on Heritable Disorders in Newborns and Children (SACHDNC); dated September 21, 2011. 4 Castillo A et al. Acta Paediatr. 2011 Feb;100(2):188-92. 5 Cox PN et al. Anesthesiology. 2007;107:A1540. (abstract) 48 49 Helping Protect Patients from Hidden Dangers with SpMet® Monitoring for unintended consequences of drugs commonly given in hospitals and during certain procedures. Addressing the Risk of Dangerous Drug Reactions Many drugs commonly used in hospitals—such as lidocaine, benzocaine, dapsone, and nitrates—cause a dangerous reaction known as acquired methemoglobinemia that reduces the delivery of oxygen to the tissues. While methemoglobinemia can occur in all care areas and patients, it is often unrecognized and undiagnosed. If not detected and treated immediately, it can result in avoidable injury or death. Medications Known to Cause Methemoglobinemia: Benzocaine, Cetacaine, Chloroquine, Dapsone, EMLA topical, Flutamide, Lidocaine, Metoclopramide, Nitrates, Nitric oxide, Nitroglycerin, Nitroprusside, Nitrous oxide, Phenazopyridine (Pyridium), Prilocaine, Primaquine, Riluzole, Silver nitrate, Sodium nitrate, Sulfonamides. “ Acquired methemoglobinemia is fairly common and causes morbidity and mortality in both the inpatient and outpatient settings. Acquired methemoglobinemia is often unrecognized and thus untreated.” Rachel Ash-Bernal, MD and other researchers at Johns-Hopkins Hospital Baltimore, MD Enabling Quick Treatment with SpMet Masimo noninvasive methemoglobin (SpMet) helps clinicians assess for methemoglobinemia, facilitating earlier detection and immediate treatment to reduce patient risk—especially in care areas where drugs that cause methemoglobinemia are used most often, such as procedure labs and the operating room. This enables them to quickly adjust exposure to the dangerous drug and initiate potentially life-saving treatment. Prevalence of Methemoglobinemia Number of Methemoglobinemia Cases Patient Age Care Areas Fatalities 138 (2.5 cases per hospital per month) 4 days to 86 years Surgery, intensive care, outpatient clinics, pediatrics, emergency department, cardiac cath lab 1 fatality 3 near fatalities Results from a retrospective study at two Johns Hopkins Hospitals over a 28-month period, using laboratory CO-Oximeter results, and patient electronic medical records.1 “ Masimo SpMet helps detect methemoglobinemia, allowing clinicians to accurately diagnose and treat this life-threatening condition.” Mark Macknet, MD Assistant Professor of Anesthesiology, Loma Linda University Loma Linda, CA 1 Ash-Bernal RA et al. Medicine. 2004;83:265-273. 50 51 Helping Detect Carbon Monoxide Poisoning with SpCO® A Deadly Poison Revealed with SpCO Carbon monoxide (CO) poisoning is the most common cause of poisoning in industrialized countries, but is often misdiagnosed because its symptoms are similar to the flu, and moderate poisoning is possible with no symptoms at all. Our first rainbow® measurement was noninvasive carboxyhemoglobin (SpCO), helping clinicians assess CO levels in the blood, facilitating earlier detection and treatment of CO poisoning. A recent study examined data from the Undersea Hyperbaric Medicine Society’s CO poisoning surveillance system (supported by the Centers for Disease Control) and found that patients who were initially measured using Pulse CO-Oximetry had an almost one-hour reduction in time from the end of CO exposure to treatment.1 Saving Lives Every Day In emergency medical services, SpCO is helping protect both victims and first responders from the dangers of CO poisoning. SpCO helps paramedics and emergency medical technicians to detect CO poisoning—enabling prompt treatment and removal of those exposed to deadly CO in homes, hotels, and places of work. SpCO is also helping firefighters reduce the risk of CO poisoning that they face every day. Just one severe CO poisoning nearly doubles the risk of premature death, and consistent CO exposure may cause long-term heart and brain damage.2,3 When even mild levels of CO are circulating in the blood, the heart and brain are robbed of critical oxygen. This can cause mental confusion that leads to poor decision making and also increases the risk of heart disease or stroke—two conditions already accounting for nearly 50% of on-duty firefighter deaths.4 These factors are why industry-leading organizations have lined up to support CO education, and the National Fire Protection Association (NFPA) introduced a new fire rehabilitation standard—NFPA 1584—that supports on-scene CO assessment of firefighters. “ We believe that all 50-plus people in the hotel would have been dead at dawn if it were not for this lifesaving intervention from Masimo.” Skip Kirkwood, MS, JD, eMt-p Chief, EMS Division, Wake County Dept. of Emergency Services Raleigh, NC 1 Hampson NB. J Emerg Med. 2012 May 23. 2 Hampson NB et al. Crit Care Med. 2009; 37(6): 1941-47. 3 Bledsoe BE. JEMS. 32:54-59, 2007. 4 Bledsoe BE. FireRescue Magazine. September 2005. 53 “ Any firefighter exposed to CO poisoning or presenting with... symptoms at an incident where CO is present should be assessed for CO poisoning.” national Fire protection Association 1584 Fire Rehab Standards Immediate Capnography at Your Fingertips EMMA™ (Emergency Mainstream Analyzer) Capnographs measure carbon dioxide (CO2) concentrations in expired gases. They are used during anesthesia, emergency care, and intensive care—where capnography is often used as a substitute for blood gas measurement or to monitor the performance of assisted ventilation. EMMA is a compact, portable, lightweight mainstream capnograph that requires virtually no warm-up time with full accuracy in 15 seconds. The continuous capnogram allows for confirmation and continuous monitoring of endotracheal tube placement, enables clinicians to assess the depth and effectiveness of compressions, and allows clinicians to recognize return of spontaneous circulation (ROSC).1 Its primary use is short-term monitoring of end-tidal CO2 and respiration rate in adults, pediatric, and infant patients. “ Monitoring respiratory rate and end-tidal carbon dioxide in the positive-pressure ventilated patient represents the greatest opportunity to avoid harm and improve clinical outcomes in all of resuscitation.” Daniel Davis, MD Professor of Clinical Emergency Medicine Director, Center for Resuscitation Science UCSD Emergency Medicine San Diego, CA EMMA fits onto a breathing circuit, facilitating CPR. 1 Neumar RW et al. Circulation. 2010;122:S729-S767. 54 55 “ Masimo technology has raised the bar in the quality of care that can be delivered in a post- acute setting—the right thing to do for patient safety.” Gene Gantt, RRt Linde Respiratory Support Services Expanding Impact Outside of the Hospital Industry-leading Masimo SET® is increasingly being used to enhance the quality of patient care outside of the hospital. A New Level of Care in the Home For pediatric patients requiring continuous monitoring at home, Masimo SET® offers the best pulse oximetry monitoring for parents caring for special needs children—dramatically reducing false alarms during motion and low perfusion that can complicate an already difficult situation. Adding a Safety Net in Post-acute Care As hospital costs rise, more patients are receiving care in long- term acute care and skilled nursing facilities. A major challenge in these facilities is weaning patients off ventilator care, which can put patients at increased risk of adverse events. Post-acute care facilities integrating Masimo SET® bedside pulse oximeters and Patient SafetyNet remote monitoring and notification systems have experienced considerable reduction in rapid response activations as well as emergency “transfer outs.” Reliable Sleep Lab Monitoring During sleep lab monitoring, conventional pulse oximetry fails to provide the fidelity and accuracy required to help clinicians detect clinically relevant physiologic events. Masimo SET® technology is integrated in leading sleep lab monitoring systems, enabling clinicians and patients to benefit from its unmatched reliability in this challenging environment. “ The sensitivity and motion artifact rejection characteristics of the non-Masimo SET® pulse oximeters we tested were not adequate for a pediatric sleep laboratory setting.” Bob Brouillette, MD Montreal Children’s Hospital Montreal, Canada 56 The Future of Healthcare Is at Hand We are witnessing an exciting convergence of medical device and mobile device technology that promises to transform healthcare positively. Our iSpO2™ device is the world’s first pulse oximeter for iOS and Android mobile platforms. iSpO2 combines a Masimo “board-in-cable”, reusable or disposable sensor, and an application running on a smart phone or tablet device. It features Masimo’s proven Measure- through Motion and Low Perfusion pulse oximetry—SpO2, pulse rate, and perfusion index. Masimo iSpO2 also allows both consumers* and healthcare providers** to trend measurements and email trend data. * For sports and aviation use only in the US. ** CE Marked. “ Just tried this new mobile iSpO2 app for blood oxygenation saturation. Love it!” Dr. eric topol Director of the Scripps Translational Science Institute La Jolla, California “ This pulse oximeter is without a doubt the best one available for the consumer market. Masimo uses impressive digital signal processing combined with proprietary LED technology. If you need a serious pulse oximeter, this is the one to get.” Kirk Shelley MD, phD Professor of Anesthesiology Yale University New Haven, CT 58 59 Advancing Pulse Oximetry Masimo’s newest innovations demonstrate that our commitment to pulse oximetry technology has never been stronger. First Ever Noninvasive Fractional SpO2 Measurement Until now, pulse oximeters could only measure and display functional oxygen saturation (SpO2). So, when patients had elevated carboxyhemoglobin (from carbon monoxide poisoning) and/or elevated methemoglobin (negative reaction to more than 30 common drugs used in hospitals, like caines, nitrates, and Dapsone), the displayed functional oxygen saturation overestimated the actual oxygen saturation value. In 2012, we introduced SpfO2™*—the first truly fractional, noninvasive oxygen saturation monitor—along with the rainbow® SuperSensor™* which allows for simultaneous measurement of SpO2, SpCO, SpMet, and SpHb. The new SpfO2 measurement allows more precise arterial oxygenation assessment in patients with elevated dyshemoglobins—common throughout the hospital and pre-hospital settings—as compared to functional oxygen saturation (SpO2). As a result, SpfO2 should enable earlier interventions and more timely therapeutic decisions. For example, in a patient who is a smoker with an SpO2 of 97%, carboxyhemoglobin level of 12%, and methemoglobin of 1%, if SpfO2 were available, it would be displayed at 84%. It is well accepted that clinicians would frequently make different diagnostic and therapeutic decisions at an oxygenation of 84% versus 97%. The rainbow® SuperSensor also elevates the utility of noninvasive and continuous oxygen content (SpOC™) monitoring. Since we introduced rainbow® Pulse CO-Oximetry, clinicians have been leveraging noninvasive and continuous hemoglobin (SpHb) and functional oxygen saturation (SpO2) for real-time oxygen content monitoring (SpOC). Now, with the advent of fractional, noninvasive oxygen saturation (SpfO2), SpOC becomes an even more accurate indicator of patient oxygenation—especially in rapidly changing clinical situations. * CE Marked. The new SpfO2 measurement allows more precise arterial oxygenation assessment in patients with elevated dyshemoglobins, as compared to functional oxygen saturation (SpO2). Utilizing more than seven wavelengths of light and breakthrough signal processing, Masimo rainbow® Pulse CO-Oximeters can measure and display oxygen content (SpOC), along with its components, hemoglobin and fractional arterial oxygen saturation (SpfO2). 60 61 Addressing the Number One Technology Hazard in Hospitals Today—Alarms Providing Earlier Notification of Potential Risk with Advanced Alarms Core Technology Advantages The Joint Commission, the ECRI Institute, the Anesthesia Patient Safety Foundation and numerous other leading industry bodies have repeatedly cited alarm fatigue among the most pressing patient safety hazards.1-3 Conventional approaches to alarm management were developed mainly to address the problems of conventional pulse oximetry’s inability to measure through motion. Fixed alarm thresholds and delays sometimes reduce non-actionable alarms, but with potentially delayed notification of significant events. Masimo SET® broke through past barriers and reduced false alarms by over 95%. In an area like the ICU where up to 90% of all alarms used to be false, Masimo has helped reduce the false alarm incidence to just 5%.4 Automated, Patient-centric Approach with Adaptive Threshold Alarm™* With false alarm problems largely solved with Masimo SET®, Masimo’s Adaptive Threshold Alarm was designed to help clinicians manage the frequency of alarms, improving on the limited alarm paradigms of the past to notify clinicians when significant changes in physiology have occurred. Adaptive Threshold Alarm helps clinicians reduce alarms and reduces the time required to set patient-specific alarms by automatically adjusting the audible alarm to the patient’s baseline (Figure 1). * CE Marked. 100 98 96 94 92 90 88 86 84 82 2 O p S • • 100 • • 150 200 250 Time in Minutes •••• 300 Baseline SpO2 • Fixed Threshold Alarm Event Adaptive Threshold Adaptive Threshold Alarm Event Fixed Threshold Figure 1. Alarm frequency of fixed threshold alarm and Adaptive Threshold Alarm, both with 10-second delay. While standard SpO2 and pulse rate alarms can sometimes • Low SpO2 alarm limits are typically set too low to spot multiple provide a signal of deteriorating patient conditions, Masimo’s transient desats that could indicate increased patient risk. 3D advanced 3D alarms give you another dimension of advanced desat index alarm signals after five desaturations below 93% notification of parameter conditions that may precede clinically over a period of 60 minutes or less (Figure 2). significant events. > 3D Desat Index Alarm™ helps clinicians detect multiple > 3D Perfusion Index Alarm™ helps clinicians quickly detect critical changes in peripheral perfusion.6, 7 transient desaturation events that may identify patients • Changes in peripheral perfusion can reflect significant at risk for respiratory failure.5 100% Desat Index Alarm Limit 93% 1 2 O p S Low SpO2 Alarm Limit 90% 2 underlying cardiovascular changes. 3D Perfusion Index Alarm notifies clinicians when there is a 25% change in Perfusion Index (PI) within a period of 60 minutes or less (Figure 3). 4 3 5 Alarm sounds after five desaturations below 93% over a period of 60 minutes or fewer Time (in minutes) 20 40 60 80 Figure 2. 3D Desat Index Alarm Example 1.0 0.9 0.8 0.7 0.6 x e d n I n o i s u f r e P PI Baseline determined by the Radical-7 PI Delta % Change = 25 (within a 1 hour period) Alarm triggered Time (1 Hour) Figure 3. 3D PI Delta Alarm Example 1 1 The Joint Commission Sentinel Event Alert. 2012;49. 2 ECRI Institute. 2012. 3 Stoelting RK et al. APSF. 2011. 4 Shah N et al. J Clin Anesthesiology. 2012. 5 Wong MW et al. J Trauma Inj Infect Crit Care. 2004; 56(2):356-362. 6 De Felice et al. Pediatr Crit Care Med. 2008;(9)2:203-208 7 Ginasar et al. Acta Anaesthesiol Scand. 2009; 53:1018-1026. * CE Marked. 62 63 X-Cal™ Technology for Enhanced Patient Safety and Improved Clinician Efficiency Masimo has implemented a new technology called X-Cal in its sensors, cables, and monitors to enhance patient safety and improve clinician efficiency. All Masimo components work together as an integrated system to measure through challenging conditions including motion and low perfusion. When all components are fully functioning, the system works as intended. In contrast, when any of these system components is compromised, erroneous measurements can occur. X-Cal is designed to address three common factors that can impact measurement accuracy and patient safety due to reliability risks associated with: 1) Imitation Masimo sensors and cables 2) Cables and sensors used far beyond their expected life 3) Third-party reprocessed pulse oximetry sensors X-Cal Components Masimo SET® Measure-through Motion and Low Perfusion pulse oximetry has three system components: 1) The sensor that connects to the patient Poor Quality and Performance of Imitation Masimo Sensors and Cables Multiple third-party manufacturers have attempted to copy or imitate Masimo sensors and cables. Imitation cables and sensors (also known as “knockoffs”, “copy-cat”, “pirated” products, etc.) use components without the same design, manufacturing process, or quality controls as Masimo and as such, do not meet Masimo quality or performance specifications. This becomes particularly problematic in challenging conditions. With X-cal, when an imitation sensor or cable connects to an X-Cal enabled monitor, a message is displayed to replace the sensor or cable. Reliability Risks Associated with Cables and Sensors When Used Beyond Their Expected Life Eventually, all cables and sensors wear out and fail, and it is widely accepted that the longer any brand of cable or sensor is in service, the more likely that it will reach that point of failure. Masimo is aware of situations in which the monitor has displayed false saturation values because of cable or sensor malfunction or failure. Often, hospital personnel are not aware of the age of a particular cable and the failure is 2) The patient cable that connects the sensor to the Masimo only discovered during active patient monitoring. To avoid circuit board in the monitor 3) The Masimo circuit board (SET® SpO2 or rainbow® Pulse CO-Oximetry) installed in a multiparameter patient monitor or Masimo Pulse Oximeter® these situations and as a matter of policy, some hospitals replace their cables before their expected life is exhausted. It is also important to note that as cables and sensors become worn, they may also cause intermittent problems with measurement accuracy which lead to false alarms or 1 Sensor 2 Cable mask true alarming events such as hypoxemia. Damaged components that lead to intermittent performance issues can cause care inefficiencies and frustration such as repeated returns of the patient cable with intermittent faults to Biomedical Engineering, or repeated, inconclusive biomedical testing and investigation. X-Cal provides an automatic method to detect when cables and sensors have been used far beyond their expected life, allowing the aging inventory to be replaced. With X-Cal, biomedical engineers are expected to spend less time troubleshooting faulty/nuisance alarms and even less time investigating, testing, and replacing faulty patient cables. 3 Monitor Patient Monitor or Masimo Oximeter 64 Poor Quality and Performance of Third-Party Reprocessed Pulse Oximetry Sensors Customers often assume third-party reprocessed sensors function to the same specification as Masimo sensors. This is not the case. Masimo testing of third-party reprocessed sensors identified a variety of performance issues including biological debris, functional defects, risk of component failure, and adhesive properties that are likely to cause discomfort with infants and neonates. Third-party reprocessing alters single-patient-use sensors from their original form and function, which may have an adverse effect on the consistency and accuracy of oxygen saturation and pulse rate measurements. Because third party reprocessors do not understand the intricacies of Masimo products, they do not have controls to evaluate the extent of sensor use or condition of components prior to reprocessing previously used sensors. Consequently, third-party reprocessed sensors often have damage to both optical and electrical components. X-Cal does not prevent the use of reprocessed sensors but does provide an automatic method to detect when reprocessed sensors have been used far beyond their expected life. Poor Performance of Third-party Reprocessed Sensors How X-Cal Works X-Cal is seamlessly integrated into Masimo sensors, cables and circuit boards and is provided at no additional cost to end users. X-Cal can detect imitation cables and sensors and measures the active patient monitoring time of each cable and sensor. Monitors equipped with X-Cal enabled circuit boards will not function with imitation cables and sensors and will display a message to replace cables and sensors that have been used beyond their useful life. Furthermore, the indication to change a sensor or cable only occurs outside of active patient monitoring to avoid disruption to clinical practice. For example, if the end of a single-patient-use sensor’s expected life is reached while actively monitoring a patient, the sensor will continue to operate until monitoring with that sensor is stopped. At the next reapplication of the same sensor, the monitor will display a message to advise the clinician to replace the sensor. 91% Light Transmission Failed to meet Masimo specifications for light transmission. 3x Sensor Adhesion Pull Force 9% Electrical Noise Immunity Failed to meet Masimo specifications for electrical noise immunity testing. 79% Visible Defects Testing of Infant and Neonatal versions of third- party reprocessed sensors showed that almost three times the pull force was required to remove the sensor compared to Masimo Infant and Neonatal sensors. Visual quality inspection revealed that 79% of third- party sensors had visible defects, which would not meet Masimo’s acceptance criteria. Six percent had some form of biological debris including hair, skin, and red and yellow stains from bodily fluids. Masimo ran multiple tests on sensors produced by a third-party reprocessor to evaluate the performance on three important sensor characteristics: light transmission, electrical noise immunity, and sensor adhesion. 65 Green Designed In™ 34% 90% Masimo offers products to help hospitals meet environmental objectives while reducing costs. Sustainability Without Sacrificing Safety and Performance Hospitals are facing more pressure than ever to reduce costs and implement green initiatives while maintaining infection control practices that protect patients and staff from the risks of cross-contamination. Disposable pulse oximetry sensors have historically offered the best performance, greatest ease of use, and most comfort—but they do generate more addition, our reprocessed sensors are the only reprocessed sensors guaranteed to provide new sensor performance because we replace every emitter and detector. For hospitals seeking the best in performance, waste and carbon footprint reduction, and cost-effectiveness, our new ReSposable™ Sensor line offers a revolutionary combination of benefits— equivalent to 100% recycling at the point of care with a real reduction in the carbon footprint. waste. Reprocessing sensors may appear to reduce waste Reusable + Disposable = ReSposable™ and the per-sensor price, but third-party reprocessed sensors do not offer the same performance or quality as new sensors and are labor-intensive. In addition, reprocessing itself requires additional manufacturing and transportation, which negatively impacts the environment. Reusable sensors may offer low environmental impact, but do not offer the same performance, comfort, or reduction of cross-contamination risk as disposable sensors. Multiple Options to Reduce Waste and Cost Our ReSposable Sensor system was created after more than ten years of research and development, incorporating feedback from hundreds of clinicians on what they wanted most in a sensor—less waste, more value, and superior performance. The ReSposable system combines the best features of our LNOP, LNCS®, M-LNCS™, and rainbow® sensors into an innovative design that features a reusable optical sensor (ROS™) for use over multiple patients and a disposable optical sensor (DOS™) for single-patient use. The revolutionary ReSposable sensor system offers the performance and comfort of a Masimo LNOP® Sensors were the first green single-use sensors single-use disposable sensor with the cost-effectiveness to work accurately through motion and low perfusion. In and environmental advantages of a reusable sensor. Universal ReSposable™ SpO2 Sensor System Two-piece design includes a reusable sensor and a disposable sensor 14 Pin Connector 20 Pin Connector Custom Style Connector New Disposable Sensors Mix of New + Reprocessed Sensors ReSposable™ Sensors Up to 90% Less Waste than New Disposable Sensors and 34% Less than a Mix of New and Reprocessed Sensors* 43% 41% Up to 41% Lower Carbon Footprint than New Disposable Sensors vs 43% Higher Carbon Footprint with a Mix of New and Reprocessed Sensors** New Disposable Sensors Mix of New + Reprocessed Sensors ReSposable Sensors * Waste calculated by sensor weight for 40% reprocessed sensors with a mix of 80% Adult and Pediatric sensors, 20% Neo and Infant sensors. Carbon footprint comparisons calculated by lbs. CO2 emissions with same reprocess mix as waste. ** Carbon footprint calculations validated by Carbonfund.org in November, 2011. “Butterfly-style sensor” in two sizes “L-style sensor” in three sizes with adhesive or SofTouch replaceable wraps 67 Choose Your Reusable Optical Sensor (S-ROS™) Based on Your Device Choose Your Single-Patient-Use Disposable Optical Sensor (S-DOS™) Based on Your Patient 66 Innovations for Increased Patient Comfort and Expanded Applications Enhancing Comfort During Long-term Monitoring with Cabled Sensors Smaller Boards that Consume Less Power for Expanded Applications In the past, single-use pulse oximeter sensors with integrated Masimo’s technology board innovation has continued with wiring have been limited in their comfort and flexibility by the reduced size (as small as 1.8” x 1.2” x 0.5”) and power consumption size of the emitter and detector. After an intense development (less than 45 mW), allowing Masimo SET® performance to be effort, Masimo’s new SpO2 sensor components are much thinner integrated where it was not previously feasible, inside multiple than ever before—increasing patient comfort by increasing new OEM products with the MS-2040 board or externally as part sensor flexibility and reducing bulk while maintaining the of the patient cable with uSpO2® and iSpO2™. Masimo SET® performance that clinicians expect. Internal integration with MS-2040 and MS-2040ds or external integration with iSpO2™ or uSpO2® Select OeM partners Relative size of new detector (left) and emitter (right) iSpO2™ MS-2040ds MS-2040 uSpO2® 68 69 Technologies and Products Technologies and Parameters Monitors Sensors Circuit Boards Measure-through Motion and Low Perfusion pulse oximetry and fluid responsiveness monitoring > Functional Oxygen Saturation (SpO2) > Pulse Rate (PR) > Perfusion Index (PI) > Pleth Variability Index (PVI®) > Respiration Rate from Pleth (RRp)* rainbow® Pulse CO-Oximetry Noninvasive blood constituent monitoring > Total Hemoglobin (SpHb®) > Carboxyhemoglobin (SpCO®) > Methemoglobin (SpMet®) > Oxygen Content (SpOC®) > Fractional Oxygen Saturation (SpfO2™)* > Plus all Masimo SET® measurements rainbow Acoustic Monitoring™ Noninvasive respiratory monitoring > Acoustic Respiration Rate (RRa™) SedLine® Brain Function Monitoring Noninvasive depth of sedation monitoring > Patient State Index (PSI™) Phasein™ Capnography and Gas Monitoring > End-tidal Carbon Dioxide (EtCO2) > Fractional Concentration of Inspired Carbon Dioxide (FiCO2) > Respiration Rate (RR) > Nitrous Oxide (N2O) > Oxygen (O2) > Anesthetic Agent Identification (Agent ID) 70 Root™ Complete rainbow® Pulse CO-Oximetry and rainbow Acoustic Monitoring™, upgradeable, Radical-7® Complete rainbow® Pulse CO- Oximetry and rainbow Acoustic Radical® Masimo SET®, Monochrome color touchscreen display, standard wireless Monitoring™, upgradeable, color LCD display radio, MyView™, expandable measurements touchscreen display, standard with MOC-9™, and connectivity with Iris™ wireless radio, MyView™ Rad-8® Masimo SET®, LED display Rad-87™ Complete rainbow® Pulse CO-Oximetry and rainbow Acoustic Monitoring™, upgradeable, LED display, optional wireless radio Pronto-7® rainbow® 4D with SpHb spot-check with wireless communication EMMA™ Capnometer Portable mainstream EMMA™ Capnograph Portable mainstream capnometer capnograph Masimo SET® Sensors SpO2, PR, PI, PVI®, RRp rainbow® Acoustic Sensor RRa™ MS-2011 MS-2013 MS-2040 MX-5 External Measurement Technologies IRMA™ Capnography and ISA™ Capnography and Gas Monitoring Gas Monitoring SedLine® Brain Function Monitoring Cannulas and Adapters rainbow® SET Sensors SpHb®, SpOC®, SpCO®, SpOC™, SpfO2™, SpMet®, SpO2, PR, PI, PVI®, RRp Patient SafetyNet™ System Cannula Nomoline™ Adapter Pronto® rainbow® with SpHb spot-check Rad-57™ rainbow® Pulse CO-Oximetry Rad-5v™ Masimo SET® iSpO2™ Masimo SET® SedLine® Sensor PSI® The sensors above are just some of the over 100 different sensors that Masimo offers. * CE marked Remote monitoring and notification system > Direct alarms to nurse via pager > HL7 interface to hospital EHR > MyView for clinician-centric monitoring > Monitor up to 200 patients on a single server 71 National and International Awards for Excellence Financial Performance Consolidated Balance Sheets (in thousands) 1995 STA Excellence in Technology Innovation for Measure-through Motion and Low Perfusion Pulse Oximetry 2008 Outstanding Growth 2000 SCCM Technology Excellence 2008 Outstanding Medical Device Company 2000 Outstanding Medical Device Company 2008 Best in Class 2001 Innovative Product and Technology 2008 AARC Zenith Award American Association for Respiratory Care 2001 Distinguished Leadership 2009 Best in Class 2001 Excellence in Leadership 2009 AARC Zenith Award American Association for Respiratory Care 2001 Medical Design Excellence 2009 Patient Monitoring CEO of the Year 2003 New Standard of Care 2003 Technology of the Year in Patient Monitoring 2009 Masimo SET and the Patient SafetyNet System help Dartmouth-Hitchcock Medical Center win the 4th Annual Health Devices Achievement Award 2003 Platform ABBY for Innovations 2010 GHX Respiratory Product Best-in- in Healthcare Class Award 2005 Innovative Product and Technology 2010 AARC Zenith Award American Association for Respiratory Care 2006 STA Application of Technology for Noninvasive Methemoglobin and Carboxyhemoglobin Monitoring 2006 Medical Design Excellence 2011 iF Product Design Award for the Pronto-7 2011 Medical Design Excellence — 2011 WINNER Gold for the Pronto-7 2007 STA Excellence in Technology Innovation for 2011 TechAmerica High-Tech Innovation Noninvasive Total Hemoglobin Monitoring for the Pronto-7 2007 Groundbreaking Innovation of rainbow® SET Technology 2007 Patient Monitoring Technology Leadership of the Year 2007 Brand Development Strategy Leadership 2008 Excellence in Medical Technology 2012 Gold “Stevie” Award for Best New Health Product for the Pronto-7 2012 Ernst & Young National Entrepreneur of the Year—2012 Life Sciences Award Winner 2013 STA Best Clinical Application of Technology Award for SpHb 2013 JEMS Hot Product Award for EMMA and iSpO2 December 29, 2012 December 31, 2011 ASSETS Current assets Cash and cash equivalents $71,554 $129,882 Accounts receivable, net of allowance for doubtful accounts Royalties receivable Inventories Prepaid expenses Prepaid income taxes Deferred tax assets Other current assets 67,911 7,130 47,358 6,507 2,080 12,911 3,896 57,013 7,102 45,944 6,424 2,986 11,576 2,008 Total current assets 219,347 262,935 Deferred cost of goods sold Property and equipment, net Intangible assets, net Goodwill Deferred tax assets Other assets 52,103 23,924 27,363 22,824 22,363 8,022 51,679 15,239 11,393 448 16,766 7,644 Total assets $375,946 $366,104 LIABILITIES AND EQUITY Current liabilities Accounts payable $27,033 $27,302 Accrued compensation Accrued liabilities Income taxes payable Deferred revenue Current portion of capital lease obligations Total current liabilities Deferred revenue Capital lease obligations, less current portion 25,021 16,648 1,504 19,278 55 89,539 576 60 Other liabilities 10,103 Total liabilities 100,278 Equity Masimo Corporation stockholders’ equity: Common stock Treasury stock Additional paid-in capital Accumulated other comprehensive income Retained earnings 57 (63,664) 258,783 3,542 74,361 Total Masimo Corporation stockholders’ equity 273,079 Noncontrolling interest 2,589 Total equity 275,668 Total liabilities and equity $375,946 19,717 12,297 570 16,019 48 75,953 984 74 9,427 86,438 58 (37,396) 243,528 1,274 69,364 276,828 2,838 279,666 $366,104 72 73 Financial Performance Consolidated Statements of Income (in thousands, except per share information) Consolidated Statements of Cash Flows (in thousands) Year ended: December 29, 2012 December 31, 2011 Year ended: December 29, 2012 December 31, 2011 Revenue: CASH FLOWS FROM OPERATING ACTIVITIES: Product $464,928 Royalty 28,305 Total revenue 493,233 Cost of goods sold Gross profit 166,982 326,251 Operating expenses: Selling, general and administrative 193,948 Research and development Total operating expenses Operating income Non-operating income (expense) Income before provision for income taxes Provision for income taxes Net income including noncontrolling interest Net (income) loss attributable to noncontrolling interest 47,077 241,025 85,226 (1,405) 83,821 21,883 61,938 334 Net income attributable to Masimo Corporation stockholders $62,272 Net income per share attributable to Masimo Corporation stockholders: Basic Diluted Weighted average shares used in per share calculations: Basic Diluted Cash dividend declared per share $1 08 $1 07 57,445 58,374 $1 00 $406,487 32,501 438,988 144,854 294,134 169,205 38,412 207,617 86,517 14 86,531 22,478 64,053 (353) $63,700 $1 07 $1 05 59,659 60,845 ––– 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 February 15, 2013. Net income including noncontrolling interest $61,938 $64,053 Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: Depreciation and amortization Share-based compensation Provision for doubtful accounts Provision for obsolete inventory Provision for warranty costs Benefit from deferred income taxes Income tax benefit from exercise of stock options granted prior to January 1, 2006 Excess tax deficit (benefit) from share-based compensation arrangements Realized foreign exchange gain on forward contracts Changes in operating assets and liabilities: 9,369 14,097 231 1,063 2,489 (6,806) 338 748 (586) Increase in accounts receivable (10,130) (Increase) decrease in royalties receivable Increase in inventories Increase in deferred cost of goods sold (Increase) decrease in prepaid expenses Decrease in prepaid income taxes Increase in other assets Increase (decrease) in accounts payable Increase (decrease) in accrued compensation Increase (decrease) in accrued liabilities Increase (decrease) in income taxes payable Increase (decrease) in deferred revenue Increase (decrease) in other liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment Increase in intangible assets Cash paid for acquisitions, net of cash acquired Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Repayments on capital lease obligations Proceeds from issuance of common stock Excess tax (deficit) benefit from share-based compensation arrangements Dividends paid Repurchases of common stock Short swing profit recovery Net proceeds from settlement of forward contracts Net cash used in financing activities Effect of foreign currency exchange rates on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (28) (524) (409) 186 1,255 (2,193) (1,726) 4,827 450 198 2,850 (2,203) 75,434 (10,828) (3,664) (37,399) (51,891) (26) 1,642 (748) (57,275) (26,268) ––– 586 (82,089) 218 (58,328) 129,882 $71,554 7,342 13,676 231 2,130 2,592 (3,217) 1,650 (67) ––– (7,549) 4,898 (3,046) (4,526) (1,874) 366 (1,502) 5,159 (1,333) (77) (89) (921) 1,061 78,957 (5,057) (2,451) ––– (7,508) (50) 5,943 67 ––– (36,187) 73 ––– (30,154) 282 41,577 88,305 $129,882 74 75 HeADquARteRS MASiMO CORpORAte HeADquARteRS 40 Parker Irvine, CA 92618 USA Tel: 949 297 7000 inteRnAtiOnAl OpeRAtiOnS CenteR MASIMO INTERNATIONAL SARL Puits-Godet 10 2000 Neuchâtel Switzerland Tel: +41 327201111 COuntRy OFFiCeS MASIMO ASIA PACIFIC 572A Serangoon Rd Singapore 218187 Singapore Tel: +65 63924085 MASIMO AUSTRIA Meldemannstr 18 1200 Wien Austria Tel: +43 (0) 1 533 73 61 MASIMO CHINA Room 502, Suite E Triumph Tower Bldg 6 170 Beiyuan Road, Beijing 100101 China Tel: +86 1058236155 MASIMO INDIA 70/2 Miller’s Road Miller’s Boulevard, 2nd Floor Bangalore 560052 Karnataka State, India Tel: + 1 800 425 MASIMO MASIMO LATIN AMERICA/ MASIMO MEXICO Florencia 57 Piso 3 Col Juárez 06600 México, D F México Tel: +5255 5242 5807 MASIMO AUSTRALIA ABN 71 124 372 701 Suite 3, Bldg 7 49 Frenchs Forest Rd Frenchs Forest, NSW 2086 Australia Tel: +61 294523763 MASIMO CANADA 4901 Levy St Saint-Laurent, QC H4R 2P9 Canada Tel: 888 336 0043 MASIMO FRANCE Espace Européen d’Ecully BAT G 15 Chemin du Saquin 69130 Ecully France Tel: +33 0472 179370 MASIMO ITALY Via Filzi 33 20124 Milano Italy Tel: +39 0245076308 MASIMO MIDDLE EAST Offices 505-508, Manhal Center Manhal Square, Jubaiha Amman, Jordan Tel: +962 7 9701 1135 Masimo’s Global Reach Masimo is committed to improving patient care globally, with approximately 3,000 talented people worldwide and operations in North America, Europe, Latin America, the Middle East, Asia, and Australia. MASIMO GERMANY Niederlassung Deutschland Lindberghstr 11 82178 Puchheim Germany Tel: +49 89800658990 MASIMO JAPAN Sumitomo Fudosan Korakuen Bldg 17F 1-4-1, Koishikawa, Bunkyo-ku Tokyo 112-0002 Japan Tel: +81 338685201 MASIMO NETHERLANDS Hart van Brabantlaan 12-14-16 5038 JL Tilburg Netherlands Tel: +31 135832479 MASIMO SPAIN Ronda de Poniente 12 2F 28760 Tres Cantos Madrid Spain Tel: +34 918049734 MASIMO TURKEY Mustafa Kemal Mah 2125 Sok Kolbay Is Mrk C Blok No:6/10 Sogutozu Ankara Turkey Tel: +90 312 219 54 38 MASIMO UK Unit Q, Loddon Business Centre Roentgen Rd Basingstoke Hants RG24 8NG United Kingdom Tel: +44 01256479988 MASIMO SEMICONDUCTOR 25 Sagamore Park Road Hudson, NH 03051 USA Tel: 603 595 8900 MASIMO SWEDEN AB Svärdvägen 15, 182 33 Danderyd Sweden Tel: +46 8 544 98 150 Headquarters International Operational Center Regional Offices Manufacturing Center OEM Partners Distributors Masimo Semiconductor Masimo Sweden AB 76 77 Forward-looking Statements Regulatory Notice All statements other than statements of historical facts included in this Some of the products featured in this Annual Report are currently or planned to document that address activities, events or developments that we expect, be marketed worldwide by Masimo. Not all products or features profiled in this believe or anticipate will or may occur in the future are forward-looking report have US FDA 510(k) or other regulatory agencies’ clearances (such as EU, statements. These statements include but are not limited to statements Canada, Japan, etc.) at the time of printing. As of July 2013, products/features about: our business generally; expectations regarding our ability to design and that have not been FDA 510(k) cleared for sales and marketing in the US include deliver innovative new noninvasive technologies; demand for our technologies; SpfO2, SpvO2, RRp, iSpO2 Rx, Active Pulse, the SuperSensor, MyView, Halo estimates regarding potential cost savings through using our technologies; Index, Root with all of the described functions, and Adaptive Threshold Alarm. and expectations regarding the growth of our installed base of drivers. These Submissions for some of these products or features either have been filed or are forward-looking statements are based on management’s current expectations planned to be filed in other regulated markets. and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to: our dependence on Masimo SET and Masimo rainbow SET products and technologies for substantially all of our revenue; any failure in protecting our intellectual property exposure to competitors’ assertions of intellectual property claims; the highly competitive nature of the markets in which we sell our products and technologies; any failure to continue developing innovative products and technologies; the lack of acceptance of any of our current or future products and technologies; obtaining regulatory approval of our current and future products and technologies; the risk that the implementation of our international realignment will not continue to produce anticipated operational and financial benefits, including a continued lower effective tax rate; the loss of our customers; the failure to retain and recruit senior management; product liability claims exposure; a failure to obtain expected returns from the amount of intangible assets we have recorded; the maintenance of our brand; the impact of the decline in the worldwide credit markets on us and our customers; the amount and type of equity awards that we may grant to employees and service providers in the future; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), including our most recent Annual Report on Form 10-K and Quarterly Report Form 10-Q, all of which you may obtain for free on the SEC’s website at www.sec.gov. 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, even if subsequently made available by us on our website or otherwise. We do Senior Management Team Yongsam Lee Executive Vice President, Operations and Chief Information Officer Tetsuro Maniwa President, Masimo Japan Tom McClenahan Executive Vice President, General Counsel Anand Sampath Executive Vice President, Engineering Stacey Taggart President, Europe, Middle East & Africa Robert Zyzanski President, Masimo Sweden Joe Kiani Chief Executive Officer Matthew Anacone Vice President, US Acute Care Sales Jon Coleman President, Worldwide Sales, Professional Services and Medical Affairs Mark de Raad Executive Vice President & Chief Financial Officer Rick Fishel President, Worldwide OEM Business & Corporate Development Paul Jansen Executive Vice President, Marketing & Clinical Development Board of Directors not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, Joe Kiani Chairman of the Board of Directors except as may be required under applicable 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 SEC. For a copy of the Company’s annual Edward Cahill Director 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 Robert Coleman, PhD Director Steven Barker, MD, PhD Director Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which you may obtain for free on the SEC’s website at www.sec.gov. Sanford Fitch Director Jack Lasersohn Director 78 Masimo • 40 Parker • Irvine, CA 92618 • Tel: 949 297 7000 • www.masimo.com © 2013 Masimo Corporation Masimo, SET, rainbow, rainbow Acoustic Monitoring, RRa, RAM, SpHb, SpCO, SpMet, SpOC, PVI, Adaptive Connectivity Engine, Adaptive Threshold Alarm, Adaptive Probe Off Detection, APOD, Green Designed In, Measure-through Motion and Low Perfusion Pulse Oximetry, Pulse CO-Oximetry, Signal Extraction Technology, Signal IQ, Masimo Patient SafetyNet, Root, Radical, Radical-7, Rad-87, Rad-57, Pronto, Pronto-7, Rad-8, Rad-5, Rad-5v, Rad-9, Blue, M-LNCS, LNCS, LNOP, Max, NeoPT-500, Newborn, MS-1, MX-1, MX-3, DST, SST, FST, MST, RAS, DOS, ROS, rainbow 4D, ReSposable, SatShare, SmarTone, FastSat, FastStart, SofTouch, Halo Index, SedLine, MyView, X-Cal, uSpO2, PSI, Phasein, IRMA, ISA, Nomoline, Improve patient outcomes and reduce the cost of care by taking noninvasive monitoring to new sites and new applications, and Closer to the Heart are trademarks, registered trademarks, or service marks of Masimo Corporation All rights reserved Apple, iPhone, iPad, iPod, and iPod touch are registered trademarks of Apple Inc registered in the U S and other countries IOS is a trademark or registered trademark of Cisco in the U S and other countries and is used under license Android is a trademark of Google Inc All other products, logos, or company names mentioned herein may be trademarks and/or registered trademarks of their respective companies 3 1 8 0 - C 8 8 6 7 - 8 9 4 6 

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