Masimo Adds to Patient Monitoring Business with Phasein Purchase

Masimo, a provider of non-invasive monitoring technologies completed the acquisition of Stockholm, Sweden-based Phasein AB. Phasein is a developer and manufacturer of ultra-compact mainstream and sidestream capnography, multi-gas analyzers, and handheld solutions for capnometry—the monitoring of the concentration or partial pressure of carbon dioxide (CO2) in the respiratory gases.

Phasein will complement Masimo’s patient monitoring portfolio of products raging from OEM solutions for external “plug-in-and-measure” gas analyzers and integrated modules to handheld devices. With Phasein’s technology, Masimo now has the capability to monitor CO2, nitrous oxide (N2O), oxygen (O2), and anesthetic agents in hospital environments such as operating rooms, procedural sedations and intensive care units, according to company officials.

“We are confident that the best technology always wins if clinicians are given the choice,” said Joe Kiani, Masimo chairman and CEO. “Phasein has developed leading-edge infrared multispectral technologies for measuring respiratory gases. In our assessment, Phasein has the most accurate gas measurements, the widest array of measurements, and the technology most suited for easy and flexible integration in both Masimo and OEM products. Phasein’s impressive list of OEM customers and innovative technology portfolio for monitoring CO2, N2O, O2, and anesthetic agents is a perfect addition to Masimo’s mission to take noninvasive patient monitoring to new sites and applications. We see multigas measurements as a half-billion dollar global market opportunity and are proud to welcome the Phasein team to the Masimo team.”

Phasein CEO Robert Zyzanski will remain in his position.

“Masimo’s pursuit of innovation for the betterment of patient care is bar none,” Zyzanski said. “The opportunity to become part of Masimo is yet another validation of our advanced capnography and gas monitoring technologies. We look forward to continuing to develop industry-leading solutions with our new colleagues, as we strive to leverage the synergies of our complementary technologies to improve patient outcomes and reduce the cost of care worldwide.”

The deal was valued at approximately $30.4 million, which Masimo paid in cash. No other terms were disclosed.

The deal has had an impact on Masimo’s estimated 2012 financial results, which is disclosed in its second quarter earnings report. Masimo now expects total revenue of approximately $494 million, including $466 million in product revenue and $28 million in royalty revenue. This compares to prior guidance of $458 million in product revenue and $28 million in royalty revenue. As a result of the acquisition, Masimo estimates a $0.04 dilutive impact on its previous 2012 earnings per share guidance of approximately $1.15. In addition, Masimo is also updating its guidance for the remainder of 2012 to reflect slightly lower product gross profit margin expectations, a slightly higher effective tax rate and the inclusion of first half 2012 foreign exchange losses. The impact of these revisions to guidance is offset by the $0.03 tax benefit the company recognized in the second quarter of 2012. As a result of the acquisition and the other assumptions noted above, the company now expects 2012 generally accepted accounting principles earnings per share to be approximately $1.11, compared to prior guidance of approximately $1.15.

Masimo was founded in 1989 in Kiani’s garage. Now based in Irvine, Calif., the company produces non-invasive patient monitoring technologies that include medical devices and an array of sensors.