Masimo’s Latest Device Hits Some Hospital Resistance

A pullback in spending by hospitals is being felt at Irvine’s Masimo Corp.

The maker of patient monitors and supplies said earlier this month that it was cutting its full-year sales guidance for a new device that measures hemoglobin in a patient’s blood.

Masimo forecast sales of $16 million to $18 million for the latest device in its Rainbow line, down from a prior estimate of $23 million to $25 million.

The company cut its forecast because “the whole environment where cost cutting is en vogue does not bode as well” for new devices, among other reasons, Chief Executive Joe Kiani said.

Hospitals, which generally are immune to recessions, are reacting differently this time around. Many have cut spending for medical devices and big-ticket equipment in the wake of the economic slowdown.

Executives cite an increase in caring for patients who don’t have health insurance as well as declines in investment income from the stock market meltdown late last year.

That’s prompted hospitals to put off buying all but essential equipment. Masimo, Fullerton’s Beckman Coulter Inc. and other local medical products makers have felt the fallout.

Those whose products are essential,including Irvine heart valve maker Edwards Lifesciences Corp. and B. Braun Medical Inc. in Irvine, a unit of Germany’s B. Braun Melsungen AG that makes intravenous solutions and bags,have held up better.

Masimo makes devices that attach to a finger or toe and monitor oxygen, hemoglobin and other substances in patients.

It came out with its latest device in March. Some analysts said the market for measuring blood oxygen via hemoglobin eventually could grow to more than $1 billion yearly.

Kiani calls the company’s reduced forecast realistic.

“We feel very good about meeting the numbers we’ve given now,” he said.

One analyst, William Blair