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Irvine's Masimo Plans to Go Public, Hoping to Raise Up to $69 Million

Market: Maker of patient monitors hasn't divulged target price or how many shares it will offer.

September 14, 2000|MARC BALLON | TIMES STAFF WRITER

Masimo Corp., an Irvine maker of noninvasive patient monitoring systems, said it will seek to raise as much as $69 million in an initial public stock offering.

The company plans to use the proceeds to purchase equipment, boost sales and marketing and to make acquisitions, according to a document filed Tuesday with the Securities and Exchange Commission.

Masimo did not disclose a target price or the number of shares it will offer.

More than 30 patient-monitoring companies around the world have licensed Masimo's products. The company's technology measures pulse rates and oxygen levels in the blood. It holds 59 patents and has an additional 103 pending.

The company recently raised $10 million in a private offering to finance increased production of its latest product, a hand-held pulse-and-blood monitor called Radical, the company said in its filing.

Masimo has picked a good time to go public, said Tom Madden of IPO Monitor, which tracks such offerings. "The IPO market seems to be heating up," he said. "Some of the skittishness we saw after the April correction seems to be disappearing."

Reflecting the demand for new issues, 42 IPOs are scheduled for a 12-day period ending Sept. 25, Madden said. By contrast, not a single company went public in the first 12 days this month, he said.

Tom Taulli, a stock analyst with Internet.com, a Connecticut data firm, said it's difficult to predict how Masimo will fare since so few medical device companies have gone public recently.

"It's really got to stand on its own two feet," he said. Masimo's "not going to be able to ride a wave like wireless or fiber optics, which are hot sectors."

Masimo's last attempt to go public faltered. Four years ago, the company hoped to raise $30 million in an IPO but ran into a cooling market for biomedical and other health care stocks.

The company has lost $58.5 million since its founding in 1989. Sales jumped 91% to $5.3 million for the first six months this year, but the company lost about $6.7 million during the period.

Masimo expects to incur additional losses for at least the next year as it increases spending on research and development and marketing and improves manufacturing capabilities, according to the filing.

The company filed a patent infringement suit in October against Mallinckrodt Inc. and its subsidiary, Nellcor Puritan Bennett Inc., over technology that measures pulse rates and oxygen levels in the blood.

Mallinckrodt, the largest maker of respiratory monitoring equipment, counter-sued a month later, accusing Masimo of infringing on three patents. The case is pending.

In its SEC filing, Masimo said the loss of one of its major customers could hammer the bottom line. The company's three biggest clients, all under long-term contract, accounted for 51% of its sales last year.

Masimo executives declined to comment, citing the "quiet period" required by the SEC when such filings are made.

Deutsche Banc Alex, Brown, Chase H & Q and U.S. Bancorp Piper Jaffray are the underwriters. Masimo would trade on the Nasdaq market under the symbol MSMO.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Masimo Corp.

Business: Medical technology company

Headquarters: Irvine

Employees: Employs 143, 125 in Irvine

Founded: 1989

Chief executive: Joe E. Kiani, 36

Profits: $13.2-million loss in 1999

Revenue/sales: $6.7 million in 1999

Source: Masimo Corp.

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