2012 Masimo Annual Report

The Root of Our Inspiration

Letter from the Chairman & CEODelivering on Our Mission and Guiding PrinciplesFor this year’s annual report, we selected a cover image that perfectly symbolizes our core mission. The imageshows someone who cares, holding a patient who needs to be cared for. This interaction is the root of ourinspiration—the healing connection between patients and their caring caregivers. From the very beginning, wehave sought to revolutionize noninvasive monitoring so that patients can be better assessed and cared for bythose who care. From that vision, 24 years ago, came our mission—‘improving patient outcomes and reducingcost of care by taking noninvasive monitoring to new sites and applications’. Along with our mission, weestablished 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 careAt 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. Forsolving the measure-through motion and low perfusion pulse oximetry problem that had stumped the industry, we got great recognitionfrom the scientific, clinical, and business communities. And for finding a way to measure carbon monoxide, methemoglobin, hemoglobinnoninvasively, and acoustically measure respiration rate, we received more recognition and accolades. We have not stopped. We continueto launch more breakthrough noninvasive measurements, monitors, and systems, but we also always strive to give our customers andpartners the most caring sales and service team. In the process, we have grown double-digits since our first year of sales and, in 2012, weonce again delivered record revenue despite a challenging global economy and rapidly evolving healthcare market.Reinforcing Our RootsMuch has changed since I foundedMasimo in my home in 1989. But aftermore than two decades of technicalinnovation, broad clinical impact, andsolid growth, our roots remain thesame. They have just gotten strongerand broader. From the outset, Masimoresolved to be different from any othercompany. We didn’t just set out to createbreakthrough technologies; we alsowanted to improve patient lives moresignificantly than any other company.And, by the way we conducted ourselves,we hoped to improve the way businessis done. By standing and striving fortruth, while relentlessly pursuing ourmission and adhering to our guidingprinciples, we have continued to focus onsolving “unsolvable” problems, protectingIn the process, we have cultivated anenterprise in which approximately 3,000talented people deliver on their promisesin an environment where fascination,accomplishment, and fun can thrive.Proving We Mean ItThe pages of this annual report are fullof innovations that are testamentsWe didn’t just set out to createbreakthrough technologies; we alsowanted to improve patient lives moresignificantly than any other company.to everything we originally set out toaccomplish. It has been said that the truetest of character is what you do when noone else is looking. While less noticeablemany other things that happened alongMasimo’s journey that also stand asproud examples of the promises wemade to ourselves 24 years ago.When we discovered our Rad-9 ® product(acquired in 2002 from one of ourOEMs) could visually but not audiblyalarm if a sensor failed, we proactivelyissued a recall for the device to ensurethe highest level of patient safety inthe midst of our IPO roadshow in 2007.Months later, the FDA stated it didn’trequire a recall as the behavior metindustry standards. When no otherpulse oximetry company put a speakerbackup in their devices to ensure thatpatient alarms would be heard, even inthe rarest cases of a speaker failing, welooked beyond product costs and did itJoe KianiChairman & CEOpatients, and innovating for the future.than our innovations, there have beenfor all of our bedside monitors anyway.2

When other companies refused to providetheir pulse oximeters for use in homecare because of the potential liabilitiesvis-à-vis high-risk patients and a litigiousenvironment, we decided to make ourproducts available because we knewthey provided the best and sometimesonly solution possible for patient care.When we won the antitrust lawsuitagainst one of our competitors, wekept fighting for a final ruling so our casecould help other companies avoid whatwe experienced—instead of focusing on apossibly large settlement. And when thefinal rulings were in, rather than bankingthe legal proceeds, we used a significantportion of those funds to set up theMasimo Foundation for Ethics, Innovation,and Competition in Healthcare.In our quest for solutions to theindustry’s most vexing technical andclinical problems, we are constantlyreminded that it takes more thanengineering prowess, clinical knowhow,and ingenuity to succeed. Ittakes courage, strength, and anuncompromising commitment to ourcore values—ethics, innovation, andfair play. If that means standing upfor our rights and our beliefs so thatothers may benefit from our stand,then that is what we do. And if it meanschallenging unfair Group PurchasingOrganization practices with entrenchedinterests, so that medical products areevaluated on their individual clinicaland cost merits, that is what we do.Seeding a PatientSafety MovementThe Masimo Foundation has nowextended its mission even further,founding the first annual Patient Safety,Science & Technology Summit, whichwas held in January 2013. The SummitThe excitement generated at theJanuary 2013 Summit has quicklybecome a “movement,” which isnow focused on connecting people,connecting ideas, and connectingtechnologies so that patients don’tdie from preventable causes.was created to confront large problemswith actionable ideas and innovationsthat can transform the process ofcare and dramatically improve patientsafety—one solution, one hospital,and one patient at a time, to help usmeet the inaugural Summit’s goalof ZERO preventable patient deathsby 2020. The excitement generatedat the January 2013 Summit hasquickly become a “movement,” whichis now focused on connecting people,connecting ideas, and connectingtechnologies so that patients don’t diefrom preventable causes. The inauguralSummit attracted former PresidentBill Clinton, 300 leading clinicians,technologists, patient advocates, andother healthcare stakeholders to focuson specific patient safety challengesthat could eliminate needless deathsand injuries due to failure to rescue,medication errors, and transfusionoveruse, as well as neonatal careadvancements with congenital heartdisease screening and optimal oxygentargeting. The inaugural Summit also,for the first time in history, brought 8medical technology companies togetherwith Masimo in pledging to makemedical device data open and availableto whomever needs it to improve patientsafety. Cercacor, Cerner, Dräger, GEHealthcare Systems, Smiths Medical,Sonosite, Surgicount, and ZOLL eachpublicly announced commitments toshare the data for which their productsare purchased, for the sake of patients.In addition to these companies, cliniciansand hospitals have also made publiccommitments to take decisive actionto improve patient safety and be heldaccountable on those commitments.Continuing InnovationMasimo’s innovation engine hasfueled many industry firsts, whichhave significantly improved patientcare and reduced costs. Masimo SET ®overcame the technological limitationsof conventional pulse oximetry, makingit more accurate during the challengingconditions of patient motion andlow perfusion. This invention hasmade pulse oximetry a clinicallyuseful tool and, for the first timesince pulse oximetry was introducedin the 1970s, it has been shown inclinical studies to improve patientoutcomes. Masimo SET ® has nowbeen shown to help clinicians reduceretinopathy of prematurity, detectcongenital heart disease in newborns,reduce medical errors in critical care,wean patients from the ventilatorfaster, and save lives and costs in thecare of post-surgical patients on thegeneral floor. Approximately 10 yearsafter the introduction of MasimoSET ® , our rainbow ® platform hasushered in noninvasive and continuousmeasurements that previously requiredinvasive procedures, allowing cliniciansto make earlier and better decisionsto care for patients in ways they neverthought possible.As one example, our noninvasive andcontinuous total hemoglobin (SpHb ® )monitoring has been shown to helpclinicians reduce the number of riskyand costly blood transfusions in surgicalpatients, speed up blood transfusionfor those who need it, and in multiplecases has demonstrated its lifesavingpotential to help clinicians detect occultbleeding. Our rainbow ® technologyhas also been shown to help cliniciansassess fluid responsiveness, improvefluid management, identify changes inbreathing, and assess carbon monoxidelevels for faster therapy for those withCO poisoning. With growing clinicalIn 2013, we intend to re-writethe rules for monitoring andconnectivity with the launchof Root.evidence and customer advocacy, moreand more OEM partners are includingrainbow ® technology in their products,including the leading multiparametermonitoring companies throughout theworld. The list now includes 3F, Atom,Dräger, Edwards Life Sciences, FukudaDenshi, GE, GS Corpuls, HamiltonMedical, Philips, Physio-Control, Saadat,Schiller, Welch Allyn, ZOLL, and Zondan.In 2012, we introduced SpfO2, thefirst true fractional noninvasive oxygensaturation monitor, along with therainbow SuperSensor, which allowsfor simultaneous measurement ofSpO2, SpCO ® , SpMet ® , and SpHb ® .The new SpfO2 measurement allowsmore precise arterial oxygenationassessment in patients with elevateddyshemoglobins—common throughouthospital and pre-hospital settings—as compared to functional oxygensaturation (SpO2). As a result, SpfO2should enable earlier interventions andmore timely therapeutic decisions.In 2012, we also revolutionized theRadical-7 ® by making it rainbow- ® andclinician-centric with touchscreenand embedded Wi-Fi technology.While we are proud of our pasttechnological accomplishments, weintend to continue to introduce new,innovative products. In 2013, we intendto re-write the rules for monitoringand connectivity with the launch ofRoot. Root is a powerful new patientmonitoring and connectivity platformthat integrates our full suite of rainbow ®measurements with multiple additionalparameters in an integrated, cliniciancentricplatform. Our approach isdesigned to unleash innovation in patientmonitoring via third-party developmentof new measurements. With a dock forthe Radical-7, an instantly interpretable493.21,088,000405.4439.032.528.3464.9855,000979,000349.149.049.0356.4406.5307.1Installed Base(estimated units)*392,000507,000625,000724,000Revenues(millions of dollars)224.368.8256.356.1200.247.5259.6300.1214,000296,000107.9155.54,00016,00038,00062,000100,000150,0001.76.714.420.940.646.769.41998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20092010201120121998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009201020112012* Excludes Handheld DevicesProduct RevenuesRoyalty Revenues4 5

display, and a networking/connectivitygateway, Root integrates multiplestreams of data and simplifies patientcare workflows, empowering caregivers tomake quicker patient assessments, earlierinterventions, and better clinical decisionsthroughout the continuum of care.Improving Care and Lowering CostHospitals around the world continue tosee significant advantages provided bySET ® Measure-through Motion and LowPerfusion pulse oximetry. We shipped146,400 instruments and boards in 2012,increasing our estimated worldwideinstalled base of SET ® and rainbow ®instruments to 1,088,000. Weestimate that over 100 million peoplearound the world each year are bettercared for with our break-through, lifesaving,and life-improving technologies.We believe we will see increased growthin our installed base as more clinicianschoose the rainbow ® platform. Theimprovements in the process of carehave resulted in real cost savings tohospitals using Masimo technologies.In total, we estimate that US hospitalsalone could save over $5 billion whentheir clinicians use Masimo technologiesto their fullest potential.Expanding to New MarketsMasimo SET ® has allowed pulseoximetry to succeed in markets whereconventional pulse oximetry had failed—including home and long-term acute carefacilities. Our rainbow ® measurementshave also allowed us to increase ourimpact beyond the hospital, from helpingemergency personnel detect carbonmonoxide poisoning at the scene of afire to enabling noninvasive hemoglobinspot-check testing in the physician’soffice. And as more caregivers gainaccess to our products, we know thatmore lives will be improved and saved.This year, we also entered the animalhealth market, offering a variety ofdifferentiated solutions to domestic andlarge animal veterinarians, with the sameappreciative feedback that we receivedwhen we introduced our solutions tothe “people care” community. We alsolaunched our first-ever monitoring devicefor the promising consumer health andwellness market—iSpO2. We expectboth these new markets to grow in2013 and beyond.Expanding Our Technology BaseIn 2012, we made two important strategicacquisitions. Spire Semiconductor (nowMasimo Semiconductor) makes advancedlight emitting diode (LED) and othercomponent-level technologies—bothfor Masimo’s own noninvasive sensors,as well as for other applications in thebiomedical, telecommunications, andIn total, we estimate that UShospitals alone could save over$5 billion when their cliniciansuse Masimo technologies totheir fullest potential.consumer products markets. We are veryexcited about the potential for harnessingand advancing Masimo Semiconductor’smyriad optoelectronic technologies aspart of Masimo’s product, technology, andmarket expansion strategy.Our second 2012 acquisition, Phasein,was an innovative developer andmarketer of ultra-compact mainstreamand sidestream capnography, multigasanalyzers, and handheld capnometrysolutions. The acquisition of Phasein’smultigas technologies complementsMasimo’s breakthrough innovations forpatient monitoring with a portfolio ofproducts ranging from OEM solutionsfor external “plug-in-and-measure” gasanalyzers and integrated modules tohandheld capnometers. With multiplemeasurements delivered through eithermainstream or sidestream options,Masimo customers can now benefit fromend-tidal CO2, N2O, O2, and anestheticagent monitoring in a variety of care areas,including operating rooms, proceduralsedation, and intensive care units.Performing in aChallenging ClimateBy helping clinicians improve the qualityand efficiency of patient care, wedelivered another year of record revenuesin a global economy that continuesto be challenged. Our total revenuesgrew to $493.2 million, while productrevenues rose 14% to $464.9 million andrainbow ® revenues rose to $40.3 million.Net income was $62.3 million or $1.07per diluted share, compared to $1.05 inthe prior year. Our 2012 earnings werereduced by $0.06 per share due to theacquisitions of Spire Semiconductorand Phasein. We anticipate that ourcore business in Masimo SET ® pulseoximetry will continue to grow steadilywhile our new products—especiallyrainbow ® Pulse CO-Oximetry andrainbow Acoustic Monitoring—willincreasingly contribute to our growthas more OEM partners offer and morehospitals adopt rainbow ® technologies.Looking to the Future,Inspired by Our RootsFrom the launch of SET ® in 1996 to thelaunch of rainbow ® technology in 2005 toour 2007 IPO—one of the most successfulhealthcare IPOs of the year—we havealways pushed ourselves to performbetter while remaining committed tothe root of our inspiration—the healinginteraction between caring caregivers andtheir patients. Today, we renew our pledgemade in 1989—to impact patient lives in away that no company has done before andto continue to improve the way businessis practiced in our industry.Joe KianiChairman & CEO6 7

Root : At the Root ofTransforming CareFrom the company’s inception, the rootof our inspiration has been unwavering—patients, their families, and their caregivers.This inspiration is evident every time we have set outto solve a previously “unsolvable” problem, in everynew measurement we have created, and in every newsoftware, hardware, or systems innovation we havedeveloped. We have done all of these things for oneoverriding reason—to enable clinicians to get to the rootof better care for their patients. In honor of this ongoingquest, we are proud to introduce the newest addition toMasimo’s product portfolio—Root.Breakthrough Measurements.Breakout Connectivity. Brilliant Display.“ Root integrates rainbow ®measurements so at anymoment I can see what Iwant to see and how I wantto see it—a great advantageto the anesthesiologist in adata-rich operating room.Root makes it easy to useSpHb and PVI together tooptimize transfusions andfluid management.”Root is a powerful new patient monitoringand connectivity platform that integrates ourbreakthrough rainbow ® and SET ® measurementswith multiple additional parameters—includingSedLine ® brain function monitoring and Phaseincapnography and gas monitoring*—in anintegrated, clinician-centric platform.Root includes a dock for the Radical-7 handheldmonitor, an instantly interpretable display, andmultiple networking/connectivity options. Rootintegrates multiple streams of data and simplifiespatient care workflows, empowering caregivers tohelp make quicker patient assessments, earlierinterventions, and better clinical decisionsthroughout the continuum of care.* Root is CE Marked.Dr. Keith RuskinProfessor of Anesthesiology at Yale-NewHaven Hospital in New Haven, CT8 9

The Root of Root Instantly Interpretable, High-visibility DisplayWith the Radical-7 handheld in its dock, Root enablesinstant interpretation of Masimo’s breakthroughnoninvasive measurements. The brilliant, high-resolution,adaptive display is designed to aid clinicians rapidassessment of patient status in three distinct ways:> “Trend” view in which each measurementvalue is displayed alongside its graphical trend> “Analog” view for quick assessmentthrough gauges showing measurementvalues in relation to alarm ranges> When docked with Root, the Radical-7’s screencan transform into an alarm status visualizer,with a three-dimensional, anatomical image thatassociates device measurements with alarm status.Intuitive Touchscreen Navigation for Easy andAdaptable Use in Any Hospital EnvironmentWith a simple tap, swipe, or drag-and-drop, screenviews and parameter sizing can be customized tosuit any hospital environment, workflow, clinicianpreference, or patient-specific need. This allowsRoot to be adaptively used across a wide variety ofcare areas with disparate clinical and operationalrequirements—from the operating room to theintensive care unit to the general floor.The alarm visualizer associates devicemeasurements with alarm status and iscolor coded to indicate no alarms (green),approaching alarm (yellow), and alarmstate (red). (Color emphasis added).10 11

Flexible Measurement Expansion inRoot with Masimo Open ConnectWith 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 MeasurementsAlarm IndicatorIris ConnectorsHi-Fi SpeakerRoot offers expanded measurementcapability through software upgradesand Masimo Open Connect (MOC-9)modules. SedLine ® brain functionmonitoring is the first measurementto utilize MOC-9, offering the exclusiveability to measure 4 simultaneous EEGchannels to help clinicians assess thehypnotic state or depth of sedation.Additional MOC-9 measurements areplanned with Phasein sidestream andmainstream capnography and gasanalyzers. And that is just the start. Weanticipate a whole new ecosystem ofthird-party measurements to grow fromRoot—expanding its capability into newareas of patient monitoring.Designed to StimulateThird-party InnovationMOC-9 is designed to enable thirdpartydevelopment of additionalmeasurements. Market barriers anddevelopment costs often keep small,innovative companies from deliveringproducts to the clinicians and patientswho need them most. With Root,Masimo is providing an open invitationto other companies, from small to large,to develop and commercialize theirinnovations and deliver them to marketvia the Root platform.Nurse CallConnectorEthernet PortMOC-9Power Entry ModuleUSB Ports12 13

Root with Brain Function MonitoringFeaturing 4 simultaneous channels of high-quality EEG data, SedLine ® provides continuousinformation about both sides of the brain and provides information about a patient’s responseto anesthesia.The Root of Better DataPatients respond differently to anesthetics, which can meanover- or under-administration during surgery and conscioussedation procedures. SedLine technology measures brainfunction on a continuous basis and provides informationabout a patient’s response to anesthesia. SedLine enablesmonitoring of both sides of the brain simultaneously. TheDensity Spectral Array (DSA) provides immediate detectionof asymmetrical activity.Facilitating Individualized TitrationSedLine enables individualized titration of sedation andfaster emergence, while offering reliable monitoring duringchallenging conditions such as electrocautery. Use of SedLineand its Patient State Index (PSI) has been shown to helpclinicians manage patients to significantly faster emergencefrom anesthesia and recovery. 1“ SedLine gives me a better idea of where I stand at each phase ofanesthesia. The PSI number helps guide me to make subtlechanges in my anesthetic appropriate for the patient’s heart rateand blood pressure, and thus arrive at the end where I want to be.”David Drover, MDStanford University HospitalStanford, CA1Drover DR et al. Anesthesiology. 2002;97:82-89.Root with SedLine Brain Function Monitoring is CE Marked.14 15

Capnography and Gas Monitoring Adds EvenMore to the Patient Safety EquationChanges in expired respiratory gas can be an early indicator of anadverse respiratory event. Hypoventilation, hyperventilation, airwayobstruction, and other potentially life-threatening conditions can be rapidlydetected with capnography—enabling clinicians to intervene as early aspossible. Capnography and gas monitoring also provide insight into theeffectiveness of the anesthesia breathing circuit, aiding clinicians inmaintaining proper gas concentrations and ventilation levels.Our new Phasein capnography and gas monitoring solutions complement our breakthrough noninvasiveportfolio with innovative, multispectral technologies for measuring respiratory gases. The solutions rangefrom integrated OEM solutions to external “plug-in and measure” gas analyzers to handheld devices. Withmultiple measurements delivered through either mainstream or sidestream options, Masimo customerscan now benefit from end-tidal CO2, FiCO2, RR, N2O, O2, and anesthetic agent monitoring in a range ofhospital environments—from the operating room to intensive care to the general floor.Nomoline—No Moisture Sampling LineNomoline fluid protection technology eliminatescommon problems associated with conventionalsidestream gas analysis. Incorporating a specialpolymer and a hydrophobic bacterial filter, theNomoline allows water in the sampling line toevaporate into the surrounding air, while leavingoxygen, carbon dioxide, and anesthetic gasesunaffected. Specially designed for low-flowapplications and functional in any orientation,Nomoline technology can be used in any clinicalapplication for all types of patients from neonates toadults. Nomoline is designed to extend the productlife in single-use applications, such as high humidityenvironments. Nomoline’s innovative design alsoallows multi-patient use as a resposable solution.Single-patient-use cannulaand Nomoline adapter.Single-patient-use cannulaand multi-patient-useNomoline adapter.IRMA—A Complete Monitor in a ProbeDesigned with the latest advancements in miniaturized componentsand microprocessor technology, the IRMA mainstream analyzer weighsless than 1 ounce and fits in the palm of your hand. This versatile,complete mainstream capnography and gas monitoring systemcan be utilized with adult, pediatric, or infant patients.ISA—Ultimate Performance in a Sidestream AnalyzerEnabled by state-of-the-art Phasein spectrometer technology that utilizes nine differentwavelengths of light and powerful signal processing algorithms, ISA provides the clinician withprecise capnography and gas measurements with crisp waveforms that help depict the clinicalsituation for adults and neonates, from the operating room to the general floor. ISA sidestreamanalyzers are available as standalone or easy-to-integrate OEM modules.ISA OR+> EtCO2> RR> N2O> O2> Anesthetic AgentIdentificationISA AX+> EtCO2> RR> N2O> Anesthetic AgentIdentificationISA CO2> EtCO2> FiCO2> RRRoot with Capnography is CE Marked.16 17

Integrating Measurements toEnable Meaningful Use of HealthInformation TechnologyToday’s challenging hospital environment subjects clinicians toincreasing mountains of information with expanding documentationrequirements. Masimo’s innovation simplifies and automates thisprocess, streamlining workflow and improving patient safety byempowering clinicians to focus on patients rather than technology.Third-partyDeviceThrough Iris, Root is designedto provide built-in integrationto multiple standalone devices.Examples include:> IV pumps> Ventilators> Beds> Other patient monitorsIris IconKeeping Clinicians and Patients ConnectedNew standards for hospitals require meaningful use of the electronic health record (EHR)by charting changes in vital signs as well as documentation of interventions. Masimoenables automatic recording and transmission of key data into the EHR so clinicians spendtheir time caring for patients, not recording data. Masimo’s pulse oximeters also featurea built-in wireless radio for communication through a hospital’s wireless network—withseamless integration to the EHR. Patient SafetyNet* incorporates the Masimo AdaptiveConnectivity Engine (ACE), which enables two-way, HL7-based connectivity to the EHR.ACE significantly reduces the time and complexity to integrate and validate custom HL7implementations, and demonstrates Masimo’s commitment to innovation that automatespatient care with open, scalable, and standards-based connectivity architecture.Iris Integration PlatformDespite huge advances in medical technology, the lack of device communication andintegration creates risks to patient safety in hospitals around the world. Existingapproaches for device interoperability require separate hardware, software, and/ornetwork infrastructure, which can clutter the patient room, burden IT management,and increase the complexity and cost of care.RootPatient SafetyNetApplianceWireless 802.11or WiredConnectionRoot with Iris offers a built-in connectivity gateway that can integratemultiple standalone devices such as IV pumps, ventilators, beds,and other patient monitors. Iris allows device information tobe remotely viewed with Patient SafetyNet, transmittedthrough notification systems or to electronic healthrecord (EHR) systems to facilitate better patient careand meaningful use, and eventually displayed on Rootat the point of care to facilitate decision support. Deviceconnectivity with Iris is designed to leverage existingnetwork infrastructures and reduce costs while enhancingworkflows and decision support to improve patient safety,whether the clinician is at the bedside, down the hall, oracross the globe.*The use of the trademarks PATIENT SAFETYNET and PSN isunder license from University Health System Consortium.Connectivity to ElectronicHealth Record & CentralMonitoring StationsPatient SafetyNetViewDevice IconsNotifications18 19

A Radical Departure from Traditional MonitoringBreakthrough flexibility to meet clinician and patient needs.Over 100 Different Sensor and Cable Combinationsfor Either Single- or Multi-patient UseMasimo rainbow ® sensors measure SpO2, PR, PI, PVI, RRp*, SpfO2*, SpHb, SpOC, SpMet, SpCO.rainbow ® ReSposable R2-25sensor systemrainbow ® R25-Lrainbow ® R25Masimo SET ® sensors measure SpO2, PR, PI, PVI, RRp.The Radical-7 leverages Masimo’s breakthrough noninvasivemeasurements with a radical departure from traditionalmonitoring for breakthrough functionality designed toautomate the process of care and enable clinicians toinstantly adapt to changing monitoring needs in individualpatients and care areas.The intuitive touchscren operation allows for exceptionallyeasy operation to change displayed parameters, waveforms,or trends on the fly never losing track of vital signs. Inaddition, easy customization allows clinicians quick accessto alarms and system settings enabling instant changes inalarm settings with a simple gesture.M-LNCS Blue ®M-LNCS E1M-LNCS Trauma> Breakthrough measurements> Instantly adaptable functionality> Intuitive touchscreen operation> Easy customization> Flexible clinical applications> Integrated wireless connectivityM-LNCS AdtxM-LNCS NeoM-LNCS DBIM-LNCS DCIM-LNCS ReSposable S-ROS 3UReSposable S-DOS 25Instantly Adaptable FunctionalityM-LNCS TF-1M-LNCS TC-1Three-in-one capability allows the Radical-7 to be used as:Standalone device for bedside monitoringMultiparameter monitoring interface via SatShare ® , allowing hospitalsto seamlessly implement rainbow ® measurement capabilitiesDetachable, battery-operated,wireless handheld or wearabledevice to facilitate untetheredmonitoring during transportand ambulationThe Radical-7 handheldmonitor docks comfortablyin Root providing an instantlyinterpretable display, andmultiple networking/connectivity options* RRp and SpfO2 are CE Marked20 21

Supporting Clinicians in Reducing®Blood Transfusions with SpHbWith the rainbow ® measurement platform includingnoninvasive total hemoglobin (SpHb), Masimotechnologies aid some of the most common, costly,and critical decisions made in healthcare.Risks and Costs of Red Blood Cell Transfusions“ Deciding to transfuse basedon a single static measurementmore often results in patientsreceiving unnecessarytransfusions with increasedrisks, costs, and the depletion ofan already scarce blood supply.New medical technologiesand devices that continuouslymonitor hemoglobin, oxygen,and perfusion will becomeessential for transfusions.”Dr. Aryeh ShanderChief, Department of Anesthesiology,Pain Management and Hyperbaric Medicine,Icahn School of Medicine at Mount Sinai,Mount Sinai Hospital, New YorkRed blood cell (RBC) transfusion is one of the most frequent proceduresperformed in US hospitals, with one in ten inpatients receiving oneor more blood units. 1 While blood loss during surgery is a known riskfactor, RBC transfusion overuse can increase patient risk and cost ofcare. Meta-analysis of pooled results from multiple observational studies,each of which adjusts for risks between patients, shows that patientsreceiving RBC transfusions have an 88% higher mortality, 69% higherinfection rate, and 250% higher rate of acute respiratory distresssyndrome (ARDS). 2 Multiple randomized controlled trials indicate thatrestrictive transfusion practices—those in which significantly lowerhemoglobin triggers are used to determine need for transfusion—aresafe. 3 In addition, the cost of each RBC unit is estimated between$522 and $1,183 per unit, without including morbidity-associatedcosts. 4 Beyond the cost of transfusion, each RBC unit transfusedis associated with increased cost of care and transfusions thatoccur at higher hemoglobin levels increase the cost of care morethan those given at lower hemoglobin levels. 5With the growing recognition of the need to reduce transfusions,noninvasive and continuous hemoglobin (SpHb) can be a key toolto help overcome the limitations of existing approaches.Risk-adjusted analysis of multiple observationalstudies has shown that RBC transfusions areassociated with 88% higher mortality, 69% higherinfection rate, and 250% higher rate of ARDS. 21AHRQ. 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. 2012Apr 18;4:CD002042. 4 Shander A et al. Transfusion. 2010;50(4):753-765.5Murphy GJ et al. Circulation. 2007;116:2544-2552.22 23

The Overuse of RBC TransfusionsStable Dropping RisingThe Growing Recognition of theNeed to Reduce TransfusionsAmerican Medical Association andThe Joint Commission also recentlybe delayed in the period between blooddraw and laboratory analysis. This timeMany transfusions are unnecessary. Asystematic, expert review of 494 studiesfor positive impact on health outcomeshowed that 59% of RBC transfusionsare “inappropriate.” 1 Given the risksand costs of RBC transfusions, thereis a growing recognition of the need toimplement strategies to reduce RBCtransfusions. The Joint Commission hasintroduced Patient Blood ManagementMeasures that encourage hospitals toevaluate appropriateness of transfusionsas a continuous quality indicator. 2 Theidentified RBC transfusions as oneof the top five overused proceduresin medicine, defining overuse as“circumstances where the likelihoodof benefit is negligible or zero, and thepatient is exposed to the risk of harm.” 3Limitations with ExistingApproaches to AssessTransfusion NeedHemoglobin levels are used as a primaryindicator for RBC transfusion, butlaboratory measurements are onlyavailable intermittently and results cangap of information can lead to suboptimaltransfusion decisions. 4The most universally availableinformation about whether atransfusion is needed during surgeryis estimated blood loss, which is oftenoverstated. Visible blood and fluid lossappears to tell one how much blood hasbeen lost, but in a recent study at DukeUniversity, anesthesiologists estimatedblood loss at 40% more than it actuallywas. 5 The implication is that the needfor transfusion may appear to exist,when in fact it does not.SpHbSpHbLab HemoglobinContinuous hemoglobin trending between invasive blood sampling provides a real-time indication of whether hemoglobin is stablewhen it may appear to be dropping, rising when it may not appear to be rising, or dropping when it appears to be stable.How SpHb Monitoring Helpswith Transfusion DecisionsMasimo’s solution provides hemoglobinboth noninvasively and continuously.The noninvasive aspect makes thetechnology easy to apply to the patient,and the continuous aspect assists inbetter decision making. While SpHbmonitoring is not intended to replaceTimeblood draws, it identifies significantchanges in hemoglobin and lack ofsignificant changes in hemoglobinbetween invasive blood sampling andlaboratory analysis. 6Continuous hemoglobin meansclinicians can determine the directionaltrend of hemoglobin—whether itis stable, rising, or falling. This canhelp avoid unnecessary transfusionswhen the SpHb trend is stable andthe clinician may otherwise perceivehemoglobin is dropping, or when theSpHb trend is rising and the clinicianmay otherwise perceive it is notrising fast enough. Inside and outsidethe operating room, a dropping SpHbtrend may also allow clinicians toidentify internal bleeding and permitearlier interventions.Appropriate Use of Transfusion12%29%59%Inappropriate Uncertain AppropriateThe American Medical Associationand The Joint Commission alsorecently identified RBC transfusionsas one of the top five overusedprocedures in medicine, definingoveruse as “circumstanceswhere the likelihood of benefit isnegligible or zero, and the patientis exposed to the risk of harm.” 3494 studies were evaluated by an expert panel in a systematic methodto assess appropriateness of RBC transfusion, revealing a significantopportunity to reduce unnecessary transfusions. 11Shander 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. 2006Apr;130(4):474-9. 5 Hill SJ et al. ASA. 2011 (abstract). 6 Frasca D et al. Crit Care Med. 39(10); 2011; 2277-2282.24 25

SpHb helps clinicians reduce transfusionfrequency in lower blood loss surgery 1Frequency of Intraoperative Blood Transfusions5%4%3%2%1%0%4.5%Standard Care Group0.6%*SpHb GroupRandomized controlled trial in 327 orthopedic patients.* p=0.03 vs Standard Care Group87%Reduction in BloodTransfusion FrequencySpHb helps clinicians reduce the amountof blood transfused in higher blood loss surgery 2Average RBC Units Transfused Per Patient0.92.51.92Average RBC Units1.5Reduced Per Patient10.50Standard Care GroupProspective cohort study in 106 neurosurgery patients.**p

Risk and Cost ofUndetected Bleeding“ Masimo SpHb helped preventa potentially life-threateningevent. I am now using it for allmy major craniofacial proceduresand can’t see doing a surgerywithout it.”Jeffrey Fearon, MDPhysician for 8-year-old girl who had just completedcraniofacial surgery in which SpHb signaled undetectedbleeding through a dramatic drop in hemoglobin over a5-minute period.In addition to assisting with transfusion management,continuous SpHb can also help clinicians inside and outsidethe operating room monitor and detect internal bleeding.Bleeding affects up to 35% of patients in surgery, intensivecare, and obstetric care areas. 1 Bleeding is considereda significant risk factor for patients, and late detectionfurther increases risk and cost. 2 Surveys show that themajority of US hospitals have multiple patients peryear with serious injury or death due to late detectionof bleeding. 3Post-partum HemorrhageEvery 90 seconds around the world, a woman diesfrom complications related to pregnancy or childbirth. 4For every woman who dies, 30 more suffer injuries ordisabilities. 5 Bleeding in obstetric patients, knownas post-partum hemorrhage, affects 3% of mothersgiving birth in the US. 6 Worldwide, it is the #1cause of maternal mortality. 7 The Joint Commissionhas issued a sentinel event alert on post-partumhemorrhage, calling on hospitals to develop specificprotocols to systematically detect bleeding toallow earlier intervention. 8 Unfortunately, previousefforts have failed to make significant progress.Limitations of Current Approachesto Detect BleedingA significant number of injuries or deaths due tobleeding are preventable. Prevention requiresidentifying that a patient has experiencedsignificant bleeding and then intervening tostop the bleeding and improve the patient’scondition. Identifying bleeding is challengingbecause even during surgery and childbirth,clinical estimation of blood loss is inaccurateand changes in standard vital signs canoccur long after the bleeding has begun. Lowhemoglobin identifies bleeding over 90% ofthe time, but is only assessed intermittentlyand requires a blood draw and laboratoryanalysis. 9 In some parts of the world,laboratory testing is simply not available.Potential for Earlier Identification of Falling Hemoglobin Values8.07.06.0Standinglab order10 11 12 13 14 15 16 17 18 19HoursNoninvasive and Continuous HemoglobinMonitoring to Detect BleedingBy measuring hemoglobin continuously, clinicians can becomeaware of real-time drops in hemoglobin that are indicative ofbleeding. Identification of low or falling hemoglobin levels allowsinterventions that may prevent preventable death and disability.“ In cases of severe hemorrhaging during and after childbirth,SpHb has enabled us to immediately identify and continuouslyassess blood loss severity to better manage internal bleeding,prevent overloading of fluid, and decrease maternal death.”Madhava Karunarathna, MDOB/GYN, Balangoda Hospital, Sri LankatHB Lab TestMasimo SpHb (Unblinded)Blood Transfusion InitiatedLab tHb ordered earlydue to decliningSpHb valuesPatient transported toOR for splenectomy1Hebert 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 Mortalityin 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):312-5.28 29

Accuracy of Noninvasive and Continuous HemoglobinMonitoring Compared to Common Invasive MethodologiesWhile hemoglobin is one of the mostcommon laboratory tests performed,most clinicians are unaware of variationthat should be expected when comparinghemoglobin measurements–both withinand between various device models.This is because clinicians do not typicallymeasure hemoglobin more than oncein the same patient at the same time.Variation is induced by physiology, bloodsampling technique, device methodology,and individual device calibration. 1The results of an independent studyconducted in a surgical intensive careunit illustrate the variation that can beexpected between hemoglobin devicemethods. A total of 471 hemoglobinmeasurements were evaluated from 62patients. Noninvasive and continuoushemoglobin (SpHb), a satellite laboratoryCO-Oximeter (Siemens RapidPoint 405),and a point-of-care device (HemoCue301) were all compared to referencehemoglobin from the central laboratoryhematology analyzer (Sysmex XT2000i).In this study, the absolute accuracy andtrending accuracy of SpHb was similar tothe two widely used invasive methodswhen all three methods were comparedto the central laboratory hemoglobinanalyzer, both in single measurementcomparisons as well as trendedmeasurement comparisons. Only SpHbprovides hemoglobin noninvasively andcontinuously—ideal for indicating realtimevisibility to hemoglobin changes,or lack of changes, in between invasiveblood sampling and laboratory analysis.The Radical-7 enabled with rainbow ® technology allows noninvasive and continuous monitoring of blood constituents.Single Hemoglobin Measurement Comparison Between ThreeDevices and the Central Laboratory Hematology Analyzer 2Trended Hemoglobin Measurement Comparison Between ThreeDevices and the Central Laboratory Hematology Analyzer 218SpHb18CO-Oximeter18HemoCue8SpHb8CO-Oximeter8HemoCueSpHb (g/dL)1614121086Bias + Standard Deviation = 0.0 + 1.0 g/dL44 6 8 10 12 14 16 18Hematology Analyzer tHb (g/dL)CO-Oximeter Hb (g/dL)16161414121210108866Bias + Standard Deviation = 0.9 + 0.6 g/dLBias + Standard Deviation = 0.3 + 1.3 g/dL444 6 8 10 12 14 16 18 4 6 8 10 12 14 16 18HemoCue Hb (g/dL)Hematology Analyzer tHb (g/dL)Hematology Analyzer tHb (g/dL)Difference in Consecutive HemoglobinValues (SpHb) (g/dL)6420-2-4-6-8-8 -6 -4 -2 0 2 4 6 8Difference in Consecutive HemoglobinValues (tHb) (g/dL)Difference in Consecutive HemoglobinValues (HbABG) (g/dL)6420-2-4-6-8-8 -6 -4 -2 0 2 4 6 8Difference in Consecutive HemoglobinValues (tHb) (g/dL)Difference in Consecutive HemoglobinValues (HbCAP) (g/dL)6420-2-4-6-8-8 -6 -4 -2 0 2 4 6 8Difference in Consecutive HemoglobinValues (tHb) (g/dL)1.0 g/dL (A RMS ) 1.1 g/dL (A RMS ) 1.3 g/dL (A RMS )R=0.64 R=0.60 R=0.391Berkow L. J Clin Monit Comput. 2013 Mar 26. 2 Frasca D et al. Crit Care Med. 2011 Oct;39(10):2277-82.30 31

Quick and Painless Hemoglobin AssessmentThe 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 SettingsHemoglobin is one of the most commonly ordered tests inboth hospital and non-hospital settings because it is criticalto assessing anemia. However, traditional lab testing involvesdelayed results.The Pronto-7 represents a breakthrough solution for measuringhemoglobin quickly in under a minute—without needles,time-consuming laboratory analysis, or the risk of bloodcontamination or hazardous medical waste.The palm-sized Pronto-7—approximately 5” x 3” x 1” andweighing just 11 ounces—puts the power of noninvasivehemoglobin spot-check testing into any clinician’s hands inalmost any environment, including hospitals, clinics, blooddonation centers,* and emergency medical services.Operation is easy and intuitive with the Pronto-7’s touchscreeninterface. Embedded 802.11 b/g and Bluetooth capabilityenable wireless printing or emailing of test results, as well astransmission to EHR systems. In addition, new tests can bedownloaded directly to the device via WiFi.The newest features are designed to improve calibration andmotion support for measuring SpO2 and SpHb. New parametersinclude hematocrit (SpHct) and Pleth Variability Index (PVI).In addition, the new Active Pulse Sensor** generates a pulsatilesignal for more robust measurements—especially in patientswith low perfusion.The Active Pulse Sensor vibrates toinduce a pulsatile signal for morerobust measurements.*** Use in blood donation settings is CE Marked. ** Pronto-7 with Active Pulse and other features are under development.33

Fluid Responder DetectionSensitivity (%)100908070605040302010Masimo PVI has been shown to help cliniciansassess fluid responsiveness as reliably as newinvasive parameters, and better than traditionalinvasive parameters. 2Operating Room 210 20 30 40 50 60 70 80 90 100100 - Specificity (%)Fluid Non-Responders DetectionPleth Variability Index (PVI)Arterial Pulse Pressure Variation (PPV)Cardiac Index (CI)Pulmonary Capillary Wedge Pressure (PCWP)Central Venous Pressure (CVP)Aiding Clinician Assessmentof Fluid Responsivenessand Fluid Managementwith PVI ®Pleth Variability Index (PVI)Arterial Pulse Pressure Variation (PVV)Cardiac Index (CI)Pulmonary Capillary Wedge Pressure (PCWP)Central Venous Pressure (CVP)Fluid administration is one of the mostcommon hospital interventions. Althoughit is critical to improving patient statusand enabling end organ preservation,unnecessary fluid administration isassociated with increased morbidityand mortality. 1Assessing Fluid ResponsivenessAiding Clinicians in Reducing Patient RiskA recent randomized controlled trial showed that compared tostandard care without PVI, clinicians using PVI PEEP were ableto improve fluid management and as a result, reduce patient risk—as evidenced by lower lactate levels. 8 By helping clinicians maintainappropriate fluid and oxygen levels in the blood, important organsmay be protected.Lactate Levels (mMol L -1 )2.521.510.5***PVI GroupControl GroupThis observational study evaluated 25 surgical patients before andafter volume expansion, with fluid responders (sensitivity) defined asa cardiac index increase of >15% and fluid non-responders (specificity)defined as a cardiac index increase of

®Signal Extraction Technology:Where “Solving theUnsolvable” StartedTwenty-four years ago, two young engineers askedthemselves why pulse oximetry wouldn’t work duringpatient motion and low perfusion—and by doingso, set a new course that created a revolution inpatient monitoring.Overcoming the Limitations of Conventional Pulse OximetrySince its inception, pulse oximetry was plagued by unreliability whenit was needed most—during patient motion and low perfusion. Theindustry 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, andan inability to obtain data on the most critical patients.Conventional pulse oximetry works under the assumption that bylooking at only the pulse and normalizing the pulsating signal overthe non-pulsating signal, oxygen saturation (SpO2) can be measuredwithout calibration. Although this was a big step forward in theevolution of pulse oximetry, it has one major flaw—it assumesthe only pulsating component is arterial blood. Unfortunately forconventional pulse oximetry, venous blood moves every timethe patient moves or breathes. This causes conventional pulseoximeters 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 ResearchTo date, more than 100 independent and objective studies haveshown that Masimo SET ® outperforms all other pulse oximetrytechnologies, providing clinicians with unmatched sensitivityand specificity to make critical patient care decisions.37

Unleashing Breakthrough PerformanceR/IRWhen Joe Kiani and Mohamed Diablooked at the same pulse oximetrysignal differently than anyone hadbefore, they created new possibilities. Byemploying advanced signal processingtechniques—including parallel enginesand adaptive filters—they believedthey could find the true arterial signalthat would allow accurate monitoringof arterial oxygen saturation and pulserate, even during the most challengingconditions. Signal Extraction Technology,or Masimo SET ® , assumes that both thearterial and venous blood can moveand uses parallel signal processingengines—DST ® , FST ® , SST, and MST—to separate the arterial signal fromsources of noise (including the venoussignal) to measure SpO2 and pulse rateaccurately, even during motion.After six years of dedicated and focusedresearch and development, MasimoSET ® debuted in 1995 at the Society forTechnology in Anesthesia and won theprestigious Excellence in TechnologyInnovation Award. Thereafter, skepticalclinicians around the world soughtactively to compare Masimo SET ® tothe best pulse oximetry technologiesother companies had to offer. But instudy after study, the breakthroughsignal processing of Masimo SET ®consistently resulted in significantlyfewer false alarms and improvedtrue alarm detection.With Masimo SET ® , clincical studieshave shown false alarms can be reducedby over 95%, while true alarm detectionwas shown to be over 97%—even duringthe challenging conditions of motion andlow perfusion. 1“ Conventional pulse oximeters area fair-weather friend. Masimo SET ®is a foul-weather friend.”Jeremy Swan, MDFormer Chairman of Masimo’s Scientific Advisory Board and ChairmanEmeritus Cedars-Sinai Medical Center’s Division of CardiologyR/IR(Conventional Pulse Oximetry)DIGITIZED, FILTERED, AND NORMALIZEDDST ® FST ® SSTAdaptive FilterAdaptive FilterEVALUATION AND ANALYSISPOST PROCESSORMasimo SET DST 97%0 50% 66% 97% 100%SpO2%MSTConventional pulse oximetry uses the standard red over infraredalgorithm to provide SpO2, while Masimo SET ® uses thatconventional algorithm but has added four other algorithmsthat all run in parallel. These algorithms allow the distinctionbetween arterial and venous signal during motion and lowperfusion by identifying and isolating the non-arterial andvenous noise SpO2s (left peak shown in blue) from the truearterial SpO2 components (right peak shown in red) in thesignal. The plot peak on the right is then chosen as the SpO2value, since the physiologically higher SpO2 value within themeasuring site will be arterial signal.True Alarm Performance During Motion and Low Perfusion*43%Nellcor N-6003%Masimo SET ®Missed True AlarmsSensitivity97%False Alarm Performance During Motion and Low Perfusion*28%Nellcor N-6005%Masimo SET ®False AlarmsSpecificity95%* In this hospital-based study, investigators measured SpO2 in 10 subjects during motion and low perfusion conditions and calculated thefalse alarm rate during 120 full oxygenation events (specificity) and true alarm rate during 40 de-oxygenated events (sensitivity). 11Shah N., Ragaswamy H.B., Govindugari K., Estanol L. J Clin Anesth. 2012 Aug;24(5):385-91.38 39

True Alarm DetectionSensitivity (%)Performance During Motionand Low Perfusion 11009080706050403020Industry-leading PulseOximetry SolutionMasimo SET ® is the world’s leading pulseoximetry technology, proven by bothindependent and objective research andthe real-world success of our customersand partners.The Choice of Clinicians in the World’sLeading HospitalsIntegrated in More Industry-leading Products Than AnyOther Pulse Oximetry TechnologyEach company manufacturing multiparameter patient monitorschooses which pulse oximetry solution to offer in its products.Today, Masimo SET ® is integrated in more industry-leading productsthan any other pulse oximetry technology—available in more than100 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 enhancingthe capabilities of their monitoring solutions by integrating ourrainbow ® technology.Dräger ® with rainbow ®1010 20 30 40 50 60 70 80 90 100False Alarm Rate100 - Specificity (%)Because of its unmatched reliability during challengingconditions of motion and low perfusion, clinicians atthousands of hospitals around the world count onMasimo SET ® every day to help them care for patients.And while many leading hospitals have alreadyintegrated Masimo SET ® pulse oximetry technology,more are converting every day.Welch Allyn ® with rainbow ®Physio-Contro ®with rainbow ®These hospitals and clinicians trust Masimo SET ®Philips 24CPhilips CMS-BDatex-Ohmeda 3740Nellcor N-395Datex-Ohmeda AS-3Datex-Ohmeda 3800Datex-Ohmeda 3900Nellcor N-200to help them deliver the most effective andefficient patient care possible. With fewer falsealarms, 1 clinicians can focus on the patients whoneed the most attention. With more trustworthymeasurements, clinicians can more tightlycontrol oxygenation levels. And with moretimely detection of true events, clinicians canintervene earlier for better patient outcomesand improved patient safety.ZOLL ® with rainbow ®GE ® with Masimo SET ®Philips ® with Masimo SET ®Philips CMSNellcor N-295GE 8000Novametrix MARSNellcor NPB-190Nellcor NPB-180Novametrix 520ASpacelabs 90308Nonin 8600BCI 3304Criticare 5040A total of 70 volunteers weretested with motorized handmotions. Each motion wasstudied during both room airbreathing and hypoxemia.Pulse oximeters on thestationary hand were used toprovide control measurementsfor comparison. Sensitivity wasdefined as ability to detect atrue SpO2 90%.MS-2040Very low power SET ®OEM BoardMS-2013Low power SET ®OEM BoardMX-5Low power rainbow ®OEM Board1Barker SJ. Anesth Analg. 2002 Oct;95(4):967-72.40 41

Helping Improve Outcomes on the GeneralFloor with Masimo Patient SafetyNet In August 2012, The Joint Commission Sentinel Event Alert on the safe use of opioids inhospitals recommended implementation of better dosing along with continuous oxygenationand ventilation monitoring (instead of spot checks) in post-surgical patients. 1 PatientSafetyNet * —combined with Masimo SET ® pulse oximetry and rainbow Acoustic Monitoringor standard capnography—offers a clinically proven, cost-effective approach to continuous postoperativemonitoring with high nursing satisfaction and patient compliance.Reducing Rescues and ICU TransfersFor many years, clinicians haveunderstood the risks of not continuouslymonitoring patients on the general floor.However, excessive false alarms dueto patient motion made improving thesafety of these patients an elusive goal.In the last decade, Masimo SET ® has beenshown in multiple studies to improvethe process of care in neonates andpediatric patients due to its MeasurethroughMotion and Low Perfusionperformance. However, a landmark studyin 2010 showed that Masimo SET ® alsoimproves clinical outcomes in adults.After implementing Masimo SET ® andPatient SafetyNet remote monitoringand wireless notification systemin a post-surgical floor where onlyintermittent spot-checking was usedbefore, Dartmouth-Hitchcock MedicalCenter reduced rapid response activationsby 65% and ICU transfers by 48%, 2 andsaved $1.48 million annually. In addition,there were zero brain-damaged patientsover a 5-year period. 3Just as pulse oximetry has becomea standard of care in the OR, PACU,and ICU, we now believe that MeasurethroughMotion and Low Perfusionpulse oximetry will become a standardof care on the general floor. With Masimotechnologies on the general floor,clinicians can be confident their patientsare being watched even when theyaren’t at the bedside, while families canbe assured their loved ones are receivingmaximum protection.Proven Cost-effectivenessWhen translated into financial impact,the Dartmouth-Hitchcock study showedthat implementing Masimo SET ® andPatient SafetyNet to more safely monitorpost-surgical patients could also havea significant impact on the hospital’sbottom line by increasing ICU bedavailability and reducing costs associatedwith emergency rescue events. 3 Withboth the clinical and financial rationalenow in place, hospitals are increasinglyimplementing general floor monitoringwith Masimo technologies.Halo Index* Enables Assessment of Patient StatusHalo Index is a new indicator for cumulative trendingassessment of the global patient status. Physiologicdeterioration often occurs long before a patient crisis andmanifests through subtle and often undetected changes inmultiple physiologic parameters. Masimo designed Halo Indexto mimic the systematic approach that expert clinicians usein assessing patient physiologic deterioration—analyzingthe patient history and extracting key vital sign parametercharacteristics to assess global patient status. Halo Indexcurrently uses available Masimo parameters but is scalableto include additional information from the patient datarepository. Each parameter’s significance is weighted andcombined into the Halo Index, a single displayed number witha range from 0 to 100 that provides a cumulative trendingassessment of global patient status. Increases in Halo Indexsuggest physiologic deterioration and may indicate a need forclinicians to more closely assess the patient.Patient SafetyNet candisplay actual parametervalues (below) or colorcodedalarm states(left), which allows morepatients to be viewedsimultaneously on screen.0Patients Suffered Brain Damageor Died Over a 5-year Period †65%Reduction in RapidResponse Team Activations48%$1.48Reduction in ICU TransfersMillion in Annual Cost SavingsIn this example, Halo Index indicates a declining patient condition while displaying parametertrends and their contribution (the size of the bubbles below the parameter) to the Halo Index.*42Significant 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.* Halo Index is CE Marked. Not available in the US.1The Joint Commission Sentinel Event Alert. 2012;49. 2 Taenzer AH et al. Anesthesiology. 2010;112(2):282-287.3Taenzer AH et al. Anesthesia Patient Safety Foundation Newsletter. Spring-Summer 2012.43

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 physicianapproaches and highlights his or her patients for easy viewing.The level of information required can change dramatically byclinician and care area, but medical devices historically functionin a static manner with the same parameters, waveforms, andtrends displayed the same way. While Masimo measurementsand display flexibility continue to expand, this doesn’t meanthat all clinicians need to see all of the information in thesame way. MyView* technology—featured in Masimo PatientSafetyNet—is being expanded to allow wireless sensing ofthe device, clinician, patient, and care area to provide theparameters, waveforms, and trends that clinicians want to seeand what their patients and family see. While a physician maywant to see all parameters and waveforms, a medical assistantmay only want to see Halo Index* or a few parameters andno waveforms. If no clinician is in the room, the patient andfamily may be best served with no specific device information,but rather a visual indicator with a green, yellow, or red colorindicating device alarm status.* CE Marked.** This feature is under development.With the use of a presencetag, upon approach, theinformation displayed onRoot will change based onclinician-set preferences.When no clinicians are inthe room, the clinician mayselect a device display thatis entirely green, yellow,or red—depending on thealarm status. This eliminatesa common distraction forthe patient and family whilelimiting unnecessary concernsor questions for caregivers.When the clinicianre-enters the room,MyView recognizes theclinician and displays themeasurements that interestthe particular clinician.**Clinician-centric view with the use ofa presence tag or smart phone allowscaregivers to see the customizedinformation most important to themupon approach to a patient.*45

Protect More Patients by Monitoring EveryBreath 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 measurementsderived from sound.Protecting More Patients by Monitoring Every BreathContinuous monitoring of respiration rate is especiallyimportant for post-surgical patients receiving patientcontrolledanalgesia for pain management. Conscioussedation can induce respiratory depression and placepatients at considerable risk of serious injury or death. TheAnesthesia Patient Safety Foundation (APSF) and The JointCommission recommend continuous oxygenation andventilation monitoring in all patients receiving opioid-basedpain medications. 1 However, current methods for respirationrate monitoring are limited by patient tolerance. While weoffer the best-in-class capnography solution, we believerainbow Acoustic Monitoring is better suited forpost-surgical monitoring and conscious sedation.Masimo’s rainbow Acoustic Monitoring now providesnoninvasive and continuous respiration rate that has beenshown to be accurate, easy to use, and enhances patientcompliance. 2 Acoustic Respiration Rate (RRa) may helpclinicians reliably and continuously assess breathing—facilitating earlier detection of respiratory compromise andpatient distress—offering a breakthrough in patient safety forpost-surgical patients on the general floor and for proceduresrequiring conscious sedation.Allowing More Patients to Be Monitored,More Safely than Ever BeforeWhen rainbow Acoustic Monitoring is used in conjunctionwith rainbow ® Pulse CO-Oximetry and the Patient SafetyNetsystem, clinicians can follow key indicators of oxygenationwith industry-leading Masimo SpO2; ventilation withbreakthrough acoustic respiration rate (RRa); circulationwith Masimo Measure-through Motion pulserate (PR); and hemoglobin levelswith Masimo’s continuous andnoninvasive hemoglobin(SpHb)—enabling cliniciansto monitor more patients,more safely thanever before.rainbow Acoustic Monitoring noninvasively and continuously measures respiration rate usingan innovative adhesive sensor with an integrated acoustic transducer that is easily and comfortablyapplied to the patient’s neck.Ability to Detect Respiratory Pause 3Oridion Capnostream SARA v4.5Respiration Rate MethodMasimo rainbow Acoustic Monitoring v7804Sensitivity(respiratory pause detected whenactual 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, MDChief of the Department of Anesthesiology and Pain Management,Baylor University Medical Center, Dallas, TX1Stoelting 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.0b013e318290c798.46 47

Helping Screen for Congenital Heart Diseaseand Reduce Eye Damage and BlindnessFrom the very beginning, infants and children have been the focus of our researchdevelopment. As a result, Masimo leads the industry in solutions designed exclusivelyfor these most vulnerable patients.CCHD Detection Screening with Masimo SET ®2N = 39,821 babies Physical Exam Alone Physical Exam + Masimo SET ® Pulse Oximetry Screening 2Sensitivity for CCHD Detection 63% 83%Enabling Critical Congenital Heart Disease ScreeningThe breakthrough performance of Masimo SET ® is often mostappreciated by the clinicians caring for fragile newborns. Upto 30% of all congenital heart disease (CHD) deaths occurringin the first year of life are unrecognized at the time of hospitaldischarge after birth. Masimo SET ® pulse oximetry has beenshown to reliably assist clinicians in the screening for criticalcongenital heart disease (CCHD), 1, 2 spurring the US Secretaryof Health and Human Services to add Measure-throughMotion and Low Perfusion pulse oximetry to the recommendedUniform Screening Panel for newborns. 3 Masimo SET ® pulseoximeters and sensors meet the recommended criteriafor newborn screening, were exclusively used in the twostudies that were the basis for the CCHD workgroup decision torecommend newborn screening, and were the first to receiveFDA 510(k) clearance with labeling for CCHD screening.Helping Clinicians Reduce Retinopathy of PrematurityPremature infants requiring neonatal intensive care needenough oxygen to preserve vital organ function, but too muchoxygen can cause severe eye damage from retinopathy ofprematurity (ROP). Masimo SET ® is the only pulse oximetryproven to help clinicians dramatically reduce ROP. 4Empowering Care for Cyanotic PatientsIn cyanotic infants, Masimo SET ® with the Blue ® Sensor is theonly pulse oximeter proven accurate—enabling accuratemaintenance of targeted oxygen saturation levels. 5 And forvery low birth weight babies, only the Masimo NeoPt-500Sensors are designed for both size and performance in infantsas small as 500 grams.Real-time Newborn Monitoring and AssessmentWhen each second matters during newborn resuscitation, theMasimo Newborn Sensor ensures the fastest response time atthe highest sensitivity—allowing clinicians to focus on real-timepatient management instead of the device. In addition, MasimoSET ® is increasingly being used to supplement the standardAPGAR score to more reliably assess general newborn health.Specificity for CCHD Detection 98% 99.8%SpO2 screening was conducted on 39,821 newborn babies, preductally (palm of right hand) and postductally (either foot) before routine physicalexamination. The baby was considered to be screening positive if: 1) either preductal or postductal SpO2 measurement was

Helping Protect Patients from Hidden Dangers with SpMet ®Monitoring for unintended consequences of drugs commonlygiven in hospitals and during certain procedures.Addressing the Risk of Dangerous Drug ReactionsMany drugs commonly used in hospitals—such as lidocaine,benzocaine, dapsone, and nitrates—cause a dangerousreaction known as acquired methemoglobinemia thatreduces the delivery of oxygen to the tissues. Whilemethemoglobinemia can occur in all care areas and patients,it is often unrecognized and undiagnosed. If not detected andtreated immediately, it can result in avoidable injury or death.Enabling Quick Treatment with SpMetMasimo noninvasive methemoglobin (SpMet) helps cliniciansassess for methemoglobinemia, facilitating earlier detectionand immediate treatment to reduce patient risk—especiallyin care areas where drugs that cause methemoglobinemia areused most often, such as procedure labs and the operatingroom. This enables them to quickly adjust exposure to thedangerous drug and initiate potentially life-saving treatment.Prevalence of MethemoglobinemiaNumber ofMethemoglobinemia CasesPatient Age Care Areas FatalitiesMedications 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.138(2.5 cases per hospital per month)4 daysto 86 yearsSurgery, intensive care, outpatient clinics, pediatrics,emergency department, cardiac cath labResults from a retrospective study at two Johns Hopkins Hospitals over a 28-month period,using laboratory CO-Oximeter results, and patient electronic medical records. 11 fatality3 near fatalities“Acquired methemoglobinemia isfairly common and causes morbidityand mortality in both the inpatientand outpatient settings. Acquiredmethemoglobinemia is oftenunrecognized and thus untreated.”Rachel Ash-Bernal, MDand other researchers at Johns-Hopkins HospitalBaltimore, MD“Masimo SpMet helpsdetect methemoglobinemia,allowing clinicians toaccurately diagnose and treatthis life-threatening condition.”Mark Macknet, MDAssistant Professor of Anesthesiology,Loma Linda UniversityLoma Linda, CA1Ash-Bernal RA et al. Medicine. 2004;83:265-273.50 51

Helping Detect Carbon MonoxidePoisoning with SpCO ®A Deadly Poison Revealed with SpCOCarbon monoxide (CO) poisoning is the most common cause of poisoningin industrialized countries, but is often misdiagnosed because itssymptoms are similar to the flu, and moderate poisoning is possible withno symptoms at all. Our first rainbow ® measurement was noninvasivecarboxyhemoglobin (SpCO), helping clinicians assess CO levels in theblood, facilitating earlier detection and treatment of CO poisoning.A recent study examined data from the Undersea Hyperbaric MedicineSociety’s CO poisoning surveillance system (supported by the Centersfor Disease Control) and found that patients who were initially measuredusing Pulse CO-Oximetry had an almost one-hour reduction in time fromthe end of CO exposure to treatment. 1Saving Lives Every DayIn emergency medical services, SpCO is helping protect both victimsand first responders from the dangers of CO poisoning. SpCO helpsparamedics and emergency medical technicians to detect COpoisoning—enabling prompt treatment and removal of those exposedto deadly CO in homes, hotels, and places of work.“Any firefighter exposed toCO poisoning or presentingwith... symptoms at anincident where CO ispresent should be assessedfor CO poisoning.”National Fire Protection Association1584 Fire Rehab StandardsSpCO is also helping firefighters reduce the risk of CO poisoning thatthey face every day. Just one severe CO poisoning nearly doublesthe risk of premature death, and consistent CO exposure may causelong-term heart and brain damage. 2,3 When even mild levels of COare circulating in the blood, the heart and brain are robbed of criticaloxygen. This can cause mental confusion that leads to poor decisionmaking and also increases the risk of heart disease or stroke—twoconditions already accounting for nearly 50% of on-duty firefighterdeaths. 4 These factors are why industry-leading organizationshave lined up to support CO education, and the National Fire“Protection Association (NFPA) introduced a new fire rehabilitationstandard—NFPA 1584—that supports on-scene CO assessmentof firefighters.We believe that all 50-plus people inthe hotel would have been dead atdawn if it were not for this lifesavingintervention from Masimo.”Skip Kirkwood, MS, JD, EMT-PChief, EMS Division, Wake County Dept. of Emergency ServicesRaleigh, NC1Hampson 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

Immediate Capnography at Your FingertipsEMMA (Emergency Mainstream Analyzer)Capnographs measure carbon dioxide (CO2) concentrations inexpired gases. They are used during anesthesia, emergencycare, and intensive care—where capnography is often used asa substitute for blood gas measurement or to monitor theperformance of assisted ventilation. EMMA is a compact,portable, lightweight mainstream capnograph that requiresvirtually no warm-up time with full accuracy in 15 seconds.The continuous capnogram allows for confirmation andcontinuous monitoring of endotracheal tube placement,enables clinicians to assess the depth and effectivenessof compressions, and allows clinicians to recognize return ofspontaneous circulation (ROSC). 1 Its primary use is short-termmonitoring of end-tidal CO2 and respiration rate in adults,pediatric, and infant patients.“ Monitoring respiratory rate and end-tidalcarbon dioxide in the positive-pressureventilated patient represents the greatestopportunity to avoid harm and improveclinical outcomes in all of resuscitation.”EMMA fits onto a breathing circuit, facilitating CPR.Daniel Davis, MDProfessor of Clinical Emergency MedicineDirector, Center for Resuscitation ScienceUCSD Emergency MedicineSan Diego, CA1Neumar RW et al. Circulation. 2010;122:S729-S767.54 55

Expanding Impact Outsideof the HospitalIndustry-leading Masimo SET ® is increasinglybeing used to enhance the quality of patientcare outside of the hospital.“Masimo technology has raisedthe bar in the quality of carethat can be delivered in a postacutesetting—the right thingto do for patient safety.”Gene Gantt, RRTLinde Respiratory Support ServicesA New Level of Care in the HomeFor pediatric patients requiring continuous monitoring at home,Masimo SET ® offers the best pulse oximetry monitoring for parentscaring for special needs children—dramatically reducing falsealarms during motion and low perfusion that can complicate analready difficult situation.Adding a Safety Net in Post-acute CareAs hospital costs rise, more patients are receiving care in longtermacute care and skilled nursing facilities. A major challengein these facilities is weaning patients off ventilator care, whichcan put patients at increased risk of adverse events. Post-acutecare facilities integrating Masimo SET ® bedside pulse oximetersand Patient SafetyNet remote monitoring and notificationsystems have experienced considerable reduction in rapidresponse activations as well as emergency “transfer outs.”Reliable Sleep Lab MonitoringDuring sleep lab monitoring, conventional pulse oximetry failsto provide the fidelity and accuracy required to help cliniciansdetect clinically relevant physiologic events. Masimo SET ®technology is integrated in leading sleep lab monitoringsystems, enabling clinicians and patients to benefit from itsunmatched reliability in this challenging environment.“The sensitivity and motion artifactrejection characteristics of thenon-Masimo SET ® pulse oximeterswe tested were not adequate for apediatric sleep laboratory setting.”Bob Brouillette, MDMontreal Children’s HospitalMontreal, Canada56

The Future of Healthcare Is at HandWe are witnessing an exciting convergence ofmedical device and mobile device technology thatpromises to transform healthcare positively.Our iSpO2 device is the world’s first pulse oximeter for iOS andAndroid mobile platforms.iSpO2 combines a Masimo “board-in-cable”, reusable ordisposable sensor, and an application running on a smartphone or tablet device. It features Masimo’s proven MeasurethroughMotion and Low Perfusion pulse oximetry—SpO2,pulse rate, and perfusion index. Masimo iSpO2 also allowsboth consumers* and healthcare providers** to trendmeasurements and email trend data.“Just tried this newmobile iSpO2 appfor blood oxygenationsaturation. Love it!”Dr. Eric TopolDirector of the Scripps TranslationalScience InstituteLa Jolla, California* For sports and aviation use only in the US.** CE Marked.“ This pulse oximeter is without adoubt the best one available forthe consumer market. Masimouses impressive digital signalprocessing combined withproprietary LED technology.If you need a serious pulseoximeter, this is the one to get.”Kirk Shelley MD, PhDProfessor of AnesthesiologyYale UniversityNew Haven, CT58 59

Advancing Pulse OximetryMasimo’s newest innovations demonstrate thatour commitment to pulse oximetry technologyhas never been stronger.First Ever Noninvasive Fractional SpO2 MeasurementUntil now, pulse oximeters could only measure and displayfunctional oxygen saturation (SpO2). So, when patients hadelevated carboxyhemoglobin (from carbon monoxide poisoning)and/or elevated methemoglobin (negative reaction to morethan 30 common drugs used in hospitals, like caines, nitrates,and Dapsone), the displayed functional oxygen saturationoverestimated the actual oxygen saturation value.The new SpfO2 measurementallows more precise arterialoxygenation assessmentin patients with elevateddyshemoglobins, ascompared to functionaloxygen saturation (SpO2).In 2012, we introduced SpfO2*—the first truly fractional,noninvasive oxygen saturation monitor—along with therainbow ® SuperSensor* which allows for simultaneousmeasurement of SpO2, SpCO, SpMet, and SpHb. Thenew SpfO2 measurement allows more precise arterialoxygenation assessment in patients with elevateddyshemoglobins—common throughout the hospitaland pre-hospital settings—as compared to functionaloxygen saturation (SpO2). As a result, SpfO2 shouldenable earlier interventions and more timely therapeuticdecisions. For example, in a patient who is a smoker withan SpO2 of 97%, carboxyhemoglobin level of 12%, andmethemoglobin of 1%, if SpfO2 were available, it would bedisplayed at 84%. It is well accepted that clinicians wouldfrequently make different diagnostic and therapeuticdecisions at an oxygenation of 84% versus 97%.The rainbow ® SuperSensor also elevates the utilityof noninvasive and continuous oxygen content(SpOC) monitoring. Since we introduced rainbow ®Pulse CO-Oximetry, clinicians have been leveragingnoninvasive and continuous hemoglobin (SpHb) andfunctional oxygen saturation (SpO2) for real-timeoxygen content monitoring (SpOC). Now, with theadvent of fractional, noninvasive oxygen saturation(SpfO2), SpOC becomes an even more accurateindicator of patient oxygenation—especially inrapidly changing clinical situations.Utilizing more than seven wavelengths of light and breakthrough signal processing, Masimo rainbow ® PulseCO-Oximeters can measure and display oxygen content (SpOC), along with its components, hemoglobin andfractional arterial oxygen saturation (SpfO2).* CE Marked.60 61

Addressing the Number One TechnologyHazard in Hospitals Today—AlarmsProviding Earlier Notification ofPotential Risk with Advanced AlarmsCore Technology AdvantagesThe Joint Commission, the ECRI Institute, the Anesthesia Patient Safety Foundationand numerous other leading industry bodies have repeatedly cited alarm fatigue amongthe most pressing patient safety hazards. 1-3 Conventional approaches to alarmmanagement were developed mainly to address the problems of conventionalpulse oximetry’s inability to measure through motion. Fixed alarm thresholdsand delays sometimes reduce non-actionable alarms, but with potentially delayednotification of significant events. Masimo SET ® broke through past barriers andreduced false alarms by over 95%. In an area like the ICU where up to 90% of all alarmsused to be false, Masimo has helped reduce the false alarm incidence to just 5%. 4While standard SpO2 and pulse rate alarms can sometimesprovide a signal of deteriorating patient conditions, Masimo’sadvanced 3D alarms give you another dimension of advancednotification of parameter conditions that may precede clinicallysignificant events.> 3D Desat Index Alarm helps clinicians detect multipletransient desaturation events that may identify patientsat risk for respiratory failure. 5• Low SpO2 alarm limits are typically set too low to spot multipletransient desats that could indicate increased patient risk. 3Ddesat index alarm signals after five desaturations below 93%over a period of 60 minutes or less (Figure 2).> 3D Perfusion Index Alarm helps clinicians quickly detectcritical changes in peripheral perfusion. 6, 7• Changes in peripheral perfusion can reflect significantunderlying cardiovascular changes. 3D Perfusion Index Alarmnotifies clinicians when there is a 25% change in PerfusionIndex (PI) within a period of 60 minutes or less (Figure 3).Automated, Patient-centric Approach with Adaptive Threshold Alarm*100%With false alarm problems largely solved with Masimo SET ® , Masimo’s AdaptiveThreshold Alarm was designed to help clinicians manage the frequency of alarms,improving on the limited alarm paradigms of the past to notify clinicians whensignificant changes in physiology have occurred. Adaptive Threshold Alarm helpsclinicians reduce alarms and reduces the time required to set patient-specific alarmsby automatically adjusting the audible alarm to the patient’s baseline (Figure 1).Desat IndexAlarm Limit 93%SpO21345* CE Marked.Low SpO2Alarm Limit 90%2Alarm sounds after five desaturations below93% over a period of 60 minutes or fewer1009896Time (in minutes)Figure 2. 3D Desat Index Alarm Example20 40 60 80SpO2949290881.00.9PI Baseline determined by the Radical-7868482• • • • ••••100 150 200 250 300Time in MinutesPerfusion Index0.80.70.6PI Delta % Change = 25(within a 1 hour period)Time (1 Hour)Alarm triggered1BaselineSpO2Fixed Threshold Alarm Event•Adaptive Threshold Alarm EventAdaptive ThresholdFixed ThresholdFigure 3. 3D PI Delta Alarm ExampleFigure 1. Alarm frequency of fixed threshold alarm and Adaptive Threshold Alarm, both with 10-second delay.1The 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 Safetyand Improved Clinician EfficiencyMasimo has implemented a new technology called X-Cal inits sensors, cables, and monitors to enhance patient safetyand improve clinician efficiency. All Masimo componentswork together as an integrated system to measure throughchallenging conditions including motion and low perfusion.When all components are fully functioning, the system worksas intended. In contrast, when any of these system componentsis compromised, erroneous measurements can occur.X-Cal is designed to address three common factors that canimpact measurement accuracy and patient safety due toreliability risks associated with:1) Imitation Masimo sensors and cables2) Cables and sensors used far beyond their expected life3) Third-party reprocessed pulse oximetry sensorsX-Cal ComponentsMasimo SET ® Measure-through Motion and Low Perfusionpulse oximetry has three system components:1) The sensor that connects to the patient2) The patient cable that connects the sensor to the Masimocircuit board in the monitor3) The Masimo circuit board (SET ® SpO2 or rainbow ® PulseCO-Oximetry) installed in a multiparameter patientmonitor or Masimo Pulse Oximeter ®1 Sensor 2 Cable3MonitorPoor Quality and Performance of ImitationMasimo Sensors and CablesMultiple third-party manufacturers have attempted to copyor imitate Masimo sensors and cables. Imitation cablesand sensors (also known as “knockoffs”, “copy-cat”, “pirated”products, etc.) use components without the same design,manufacturing process, or quality controls as Masimoand as such, do not meet Masimo quality or performancespecifications. This becomes particularly problematic inchallenging conditions. With X-cal, when an imitation sensoror cable connects to an X-Cal enabled monitor, a message isdisplayed to replace the sensor or cable.Reliability Risks Associated with Cables and SensorsWhen Used Beyond Their Expected LifeEventually, all cables and sensors wear out and fail, and it iswidely accepted that the longer any brand of cable or sensoris in service, the more likely that it will reach that point offailure. Masimo is aware of situations in which the monitorhas displayed false saturation values because of cable orsensor malfunction or failure. Often, hospital personnel arenot aware of the age of a particular cable and the failure isonly discovered during active patient monitoring. To avoidthese situations and as a matter of policy, some hospitalsreplace their cables before their expected life is exhausted.It is also important to note that as cables and sensorsbecome worn, they may also cause intermittent problemswith measurement accuracy which lead to false alarms ormask true alarming events such as hypoxemia. Damagedcomponents that lead to intermittent performance issuescan cause care inefficiencies and frustration such as repeatedreturns of the patient cable with intermittent faults toBiomedical Engineering, or repeated, inconclusive biomedicaltesting and investigation.X-Cal provides an automatic method to detect when cablesand 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 timetroubleshooting faulty/nuisance alarms and even less timeinvestigating, testing, and replacing faulty patient cables.Poor Quality and Performance of Third-PartyReprocessed Pulse Oximetry SensorsCustomers often assume third-party reprocessed sensorsfunction to the same specification as Masimo sensors. Thisis not the case. Masimo testing of third-party reprocessedsensors identified a variety of performance issues includingbiological debris, functional defects, risk of component failure,and adhesive properties that are likely to cause discomfortwith infants and neonates.Third-party reprocessing alters single-patient-use sensors fromtheir original form and function, which may have an adverseeffect on the consistency and accuracy of oxygen saturation andpulse rate measurements. Because third party reprocessors donot understand the intricacies of Masimo products, they do nothave controls to evaluate the extent of sensor use or conditionof components prior to reprocessing previously used sensors.Consequently, third-party reprocessed sensors often havedamage to both optical and electrical components.X-Cal does not prevent the use of reprocessed sensors butdoes provide an automatic method to detect when reprocessedsensors have been used far beyond their expected life.Poor Performance of Third-party Reprocessed Sensors91%Light TransmissionFailed to meet Masimo specificationsfor light transmission.3xSensor Adhesion Pull ForceTesting of Infant and Neonatal versions of thirdpartyreprocessed sensors showed that almostthree times the pull force was required to removethe sensor compared to Masimo Infant andNeonatal sensors.How X-Cal WorksX-Cal is seamlessly integrated into Masimo sensors, cablesand circuit boards and is provided at no additional costto end users. X-Cal can detect imitation cables andsensors and measures the active patient monitoringtime of each cable and sensor. Monitors equipped withX-Cal enabled circuit boards will not function withimitation cables and sensors and will display a messageto replace cables and sensors that have been usedbeyond their useful life.Furthermore, the indication to change a sensor orcable only occurs outside of active patient monitoringto avoid disruption to clinical practice. For example, ifthe end of a single-patient-use sensor’s expected lifeis reached while actively monitoring a patient, thesensor will continue to operate until monitoring withthat sensor is stopped. At the next reapplication ofthe same sensor, the monitor will display a messageto advise the clinician to replace the sensor.9%Electrical Noise ImmunityFailed to meet Masimo specificationsfor electrical noise immunity testing.79%Visible DefectsVisual quality inspection revealed that 79% of thirdpartysensors had visible defects, which would notmeet Masimo’s acceptance criteria. Six percent hadsome form of biological debris including hair, skin,and red and yellow stains from bodily fluids.Patient MonitororMasimo OximeterMasimo ran multiple tests on sensors produced by a third-party reprocessor to evaluate the performanceon three important sensor characteristics: light transmission, electrical noise immunity, and sensor adhesion.64 65

Green Designed In 34% 90%Masimo offers products to help hospitals meet environmental objectives while reducing costs.Sustainability Without Sacrificing Safetyand PerformanceHospitals are facing more pressure than ever to reduce costsand implement green initiatives while maintaining infectioncontrol practices that protect patients and staff from the risksof cross-contamination. Disposable pulse oximetry sensorshave historically offered the best performance, greatestease of use, and most comfort—but they do generate morewaste. Reprocessing sensors may appear to reduce wasteand the per-sensor price, but third-party reprocessed sensorsdo not offer the same performance or quality as new sensorsand are labor-intensive. In addition, reprocessing itselfrequires additional manufacturing and transportation,which negatively impacts the environment. Reusable sensorsmay offer low environmental impact, but do not offer the sameperformance, comfort, or reduction of cross-contamination riskas disposable sensors.Multiple Options to Reduce Waste and CostMasimo LNOP ® Sensors were the first green single-use sensorsto work accurately through motion and low perfusion. Inaddition, our reprocessed sensors are the only reprocessedsensors guaranteed to provide new sensor performancebecause we replace every emitter and detector. For hospitalsseeking the best in performance, waste and carbon footprintreduction, and cost-effectiveness, our new ReSposableSensor line offers a revolutionary combination of benefits—equivalent to 100% recycling at the point of care with a realreduction in the carbon footprint.Reusable + Disposable = ReSposableOur ReSposable Sensor system was created after more thanten years of research and development, incorporating feedbackfrom hundreds of clinicians on what they wanted most in asensor—less waste, more value, and superior performance. TheReSposable system combines the best features of our LNOP,LNCS ® , M-LNCS, and rainbow ® sensors into an innovativedesign that features a reusable optical sensor (ROS) foruse over multiple patients and a disposable optical sensor(DOS) for single-patient use. The revolutionary ReSposablesensor system offers the performance and comfort of asingle-use disposable sensor with the cost-effectivenessand environmental advantages of a reusable sensor.New DisposableSensorsMix of New + ReprocessedSensorsUp to 41% Lower Carbon Footprintthan New Disposable Sensors vs 43%Higher Carbon Footprint with a Mix ofNew and Reprocessed Sensors**ReSposableSensorsNew DisposableSensorsUp to 90% Less Waste than NewDisposable Sensors and 34% Less thana Mix of New and Reprocessed Sensors*43%Mix of New + ReprocessedSensors41%ReSposableSensors* Waste calculated by sensor weight for 40% reprocessed sensors with a mix of 80% Adult and Pediatric sensors, 20% Neo and Infant sensors. Carbon footprintcomparisons calculated by lbs. CO2 emissions with same reprocess mix as waste. ** Carbon footprint calculations validated by Carbonfund.org in November, 2011.Universal ReSposable SpO2 Sensor SystemTwo-piece design includes a reusable sensor and a disposable sensor“Butterfly-stylesensor” in two sizes14 Pin Connector20 Pin Connector“L-style sensor” inthree sizes withadhesive or SofTouchreplaceable wrapsCustom Style ConnectorChoose Your Reusable Optical Sensor (S-ROS) Based on Your DeviceChoose Your Single-Patient-Use Disposable Optical Sensor (S-DOS) Based on Your Patient66 67

Innovations for Increased PatientComfort and Expanded ApplicationsEnhancing Comfort During Long-term Monitoringwith Cabled SensorsIn the past, single-use pulse oximeter sensors with integratedwiring have been limited in their comfort and flexibility by thesize of the emitter and detector. After an intense developmenteffort, Masimo’s new SpO2 sensor components are much thinnerthan ever before—increasing patient comfort by increasingsensor flexibility and reducing bulk while maintaining theMasimo SET ® performance that clinicians expect.Smaller Boards that Consume Less Power forExpanded ApplicationsMasimo’s technology board innovation has continued withreduced size (as small as 1.8” x 1.2” x 0.5”) and power consumption(less than 45 mW), allowing Masimo SET ® performance to beintegrated where it was not previously feasible, inside multiplenew OEM products with the MS-2040 board or externally as partof the patient cable with uSpO2 ® and iSpO2.Relative size of new detector (left) and emitter (right)Internal integration withMS-2040 and MS-2040dsor external integration withSelect OEM PartnersiSpO2 or uSpO2 ® uSpO2 ®iSpO2MS-2040dsMS-204068 69

Technologies and ProductsTechnologies and ParametersMonitorsSensorsCircuit BoardsMeasure-through Motion andLow Perfusion pulse oximetry andfluid responsiveness monitoringMS-2011MS-2013> Functional Oxygen Saturation (SpO2)> Pulse Rate (PR)> Perfusion Index (PI)> Pleth Variability Index (PVI ® )> Respiration Rate from Pleth (RRp)*rainbow ® PulseCO-OximetryNoninvasive blood constituent monitoringRootComplete rainbow ® Pulse CO-Oximetry andrainbow Acoustic Monitoring, upgradeable,color touchscreen display, standard wirelessradio, MyView, expandable measurementswith MOC-9, and connectivity with IrisRadical-7 ®Complete rainbow ® Pulse CO-Oximetry and rainbow AcousticMonitoring, upgradeable, colortouchscreen display, standardwireless radio, MyViewRadical ®Masimo SET ® ,MonochromeLCD displayMasimo SET ® SensorsSpO2, PR, PI, PVI ® , RRpMS-2040MX-5External Measurement Technologies> Total Hemoglobin (SpHb ® )> Carboxyhemoglobin (SpCO ® )> Methemoglobin (SpMet ® )> Oxygen Content (SpOC ® )> Fractional Oxygen Saturation (SpfO2)*> Plus all Masimo SET ® measurementsrainbow AcousticMonitoringNoninvasive respiratorymonitoringRad-8 ®Masimo SET ® , LED displayRad-87Complete rainbow ® Pulse CO-Oximetry andrainbow Acoustic Monitoring, upgradeable,LED display, optional wireless radiorainbow ® Acoustic SensorRRaIRMAISACapnography and Capnography andGas MonitoringGas MonitoringCannulas and AdaptersSedLine ®Brain FunctionMonitoring> Acoustic Respiration Rate (RRa)SedLine ® BrainFunction MonitoringNoninvasive depthof sedation monitoring> Patient State Index (PSI)Pronto-7 ®rainbow ® 4D with SpHb spot-checkwith wireless communicationEMMA CapnometerPortable mainstreamcapnometerEMMA CapnographPortable mainstreamcapnographrainbow ® SET SensorsSpHb ® , SpOC ® , SpCO ® , SpOC, SpfO2,SpMet ® , SpO2, PR, PI, PVI ® , RRpCannulaNomolinePatient SafetyNet SystemAdapterPhasein Capnographyand Gas Monitoring> End-tidal Carbon Dioxide (EtCO2)> Fractional Concentration ofInspired Carbon Dioxide (FiCO2)> Respiration Rate (RR)> Nitrous Oxide (N2O)> Oxygen (O2)> Anesthetic Agent Identification (Agent ID)Pronto ®rainbow ® withSpHb spot-checkRad-57rainbow ®Pulse CO-OximetryRad-5viSpO2SedLine ® SensorMasimo SET ® The sensors above are just some of the over 100different sensors that Masimo offers. * CE markedPSI ®Masimo SET ® 71Remote 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 server70

National and International Awards for ExcellenceFinancial PerformanceConsolidated Balance Sheets (in thousands)1995 STA Excellence in Technology Innovationfor Measure-through Motion and LowPerfusion Pulse Oximetry2008 Outstanding GrowthDecember 29, 2012 December 31, 20112000 SCCM Technology Excellence 2008 Outstanding Medical Device Company2000 Outstanding Medical Device Company 2008 Best in Class2001 Innovative Product and TechnologyAmerican Association for Respiratory Care2008 AARC Zenith Award2001 Distinguished Leadership 2009 Best in Class2001 Excellence in LeadershipAmerican Association for Respiratory Care2009 AARC Zenith Award2001 Medical Design Excellence 2009 Patient Monitoring CEO of the Year2003 New Standard of Care2003 Technology of the Year inPatient Monitoring2003 Platform ABBY for Innovationsin Healthcare2005 Innovative Product and Technology2006 STA Application of Technology forNoninvasive Methemoglobin andCarboxyhemoglobin Monitoring2006 Medical Design Excellence2007 STA Excellence in Technology Innovation forNoninvasive Total Hemoglobin Monitoring2007 Groundbreaking Innovation ofrainbow ® SET Technology2007 Patient Monitoring TechnologyLeadership of the Year2007 Brand Development Strategy Leadership2008 Excellence in Medical TechnologyAmerican Association for Respiratory Care2011 WINNER2009 Masimo SET and the Patient SafetyNetSystem help Dartmouth-Hitchcock MedicalCenter win the 4 th Annual Health DevicesAchievement Award2010 GHX Respiratory Product Best-in-Class Award2010 AARC Zenith Award2011 iF Product Design Award for the Pronto-72011 Medical Design Excellence —Gold for the Pronto-72011 TechAmerica High-Tech Innovationfor the Pronto-72012 Gold “Stevie” Award for Best NewHealth Product for the Pronto-72012 Ernst & Young National Entrepreneur of theYear—2012 Life Sciences Award Winner2013 STA Best Clinical Application ofTechnology Award for SpHb2013 JEMS Hot Product Award forEMMA and iSpO2ASSETSCurrent assetsCash and cash equivalents. $71,554 $129,882Accounts receivable, net of allowance for doubtful accounts . 67,911 57,013Royalties receivable. 7,130 7,102Inventories. 47,358 45,944Prepaid expenses. 6,507 6,424Prepaid income taxes. 2,080 2,986Deferred tax assets. 12,911 11,576Other current assets. 3,896 2,008Total current assets . 219,347 262,935Deferred cost of goods sold. 52,103 51,679Property and equipment, net. 23,924 15,239Intangible assets, net. 27,363 11,393Goodwill . 22,824 448Deferred tax assets. 22,363 16,766Other assets. 8,022 7,644Total assets . $375,946 $366,104Liabilities and equityCurrent liabilitiesAccounts payable. $27,033 $27,302Accrued compensation . 25,021 19,717Accrued liabilities. 16,648 12,297Income taxes payable . 1,504 570Deferred revenue. 19,278 16,019Current portion of capital lease obligations. 55 48Total current liabilities. 89,539 75,953Deferred revenue. 576 984Capital lease obligations, less current portion. 60 74Other liabilities. 10,103 9,427Total liabilities . 100,278 86,438EquityMasimo Corporation stockholders’ equity:Common stock . 57 58Treasury stock . (63,664) (37,396)Additional paid-in capital 258,783 243,528Accumulated other comprehensive income. 3,542 1,274Retained earnings . 74,361 69,364Total Masimo Corporation stockholders’ equity. 273,079 276,828Noncontrolling interest . 2,589 2,838Total equity . 275,668 279,666Total liabilities and equity. $375,946 $366,10472 73

Financial PerformanceConsolidated Statements of Income (in thousands, except per share information)Consolidated Statements of Cash Flows (in thousands)Year ended:December 29, 2012 December 31, 2011Year ended:December 29, 2012 December 31, 2011Revenue:Product. $464,928 $406,487Royalty . 28,305 32,501Total revenue. 493,233 438,988Cost of goods sold. 166,982 144,854Gross profit . 326,251 294,134Operating expenses:Selling, general and administrative. 193,948 169,205Research and development 47,077 38,412Total operating expenses. 241,025 207,617Operating income . 85,226 86,517Non-operating income (expense). (1,405) 14Income before provision for income taxes 83,821 86,531Provision for income taxes. 21,883 22,478Net income including noncontrolling interest . 61,938 64,053Net (income) loss attributable to noncontrolling interest. 334 (353)Net income attributable to Masimo Corporation stockholders. $62,272 $63,700Net income per share attributable to Masimo Corporation stockholders:Basic $1.08 $1.07Diluted. $1.07 $1.05Weighted average shares used in per share calculations:Basic 57,445 59,659Diluted. 58,374 60,845Cash dividend declared per share. $1.00 –––Cash flows from operating activities:Net income including noncontrolling interest . $61,938 $64,053Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:Depreciation and amortization 9,369 7,342Share-based compensation. 14,097 13,676Provision for doubtful accounts. 231 231Provision for obsolete inventory. 1,063 2,130Provision for warranty costs. 2,489 2,592Benefit from deferred income taxes (6,806) (3,217)Income tax benefit from exercise of stock options granted prior to January 1, 2006. 338 1,650Excess tax deficit (benefit) from share-based compensation arrangements. 748 (67)Realized foreign exchange gain on forward contracts. (586) –––Changes in operating assets and liabilities:Increase in accounts receivable. (10,130) (7,549)(Increase) decrease in royalties receivable (28) 4,898Increase in inventories . (524) (3,046)Increase in deferred cost of goods sold (409) (4,526)(Increase) decrease in prepaid expenses 186 (1,874)Decrease in prepaid income taxes 1,255 366Increase in other assets (2,193) (1,502)Increase (decrease) in accounts payable (1,726) 5,159Increase (decrease) in accrued compensation . 4,827 (1,333)Increase (decrease) in accrued liabilities 450 (77)Increase (decrease) in income taxes payable. 198 (89)Increase (decrease) in deferred revenue. 2,850 (921)Increase (decrease) in other liabilities . (2,203) 1,061Net cash provided by operating activities 75,434 78,957Note: The Consolidated Balance Sheets,Consolidated Statements of Income, andConsolidated Statements of Cash Flowsare derived from our Audited ConsolidatedFinancial Statements as published in ourForm 10-K filed with the Securities andExchange Commission on February 15, 2013.Cash flows from investing activities:Purchases of property and equipment. (10,828) (5,057)Increase in intangible assets. (3,664) (2,451)Cash paid for acquisitions, net of cash acquired. (37,399) –––Net cash used in investing activities . (51,891) (7,508)Cash flows from financing activities:Repayments on capital lease obligations. (26) (50)Proceeds from issuance of common stock. 1,642 5,943Excess tax (deficit) benefit from share-based compensation arrangements. (748) 67Dividends paid . (57,275) –––Repurchases of common stock . (26,268) (36,187)Short swing profit recovery. ––– 73Net proceeds from settlement of forward contracts. 586 –––Net cash used in financing activities . (82,089) (30,154)Effect of foreign currency exchange rates on cash . 218 282Net increase (decrease) in cash and cash equivalents . (58,328) 41,577Cash and cash equivalents at beginning of period . 129,882 88,305Cash and cash equivalents at end of period . $71,554 $129,88274 75

HeadquartersMasimo Corporate Headquarters40 ParkerIrvine, CA 92618USATel: 949 297 7000International Operations CenterMasimo INTERNATIONAL SARLPuits-Godet 102000 NeuchâtelSwitzerlandTel: +41 327201111Masimo’s Global ReachMasimo is committed to improving patientcare globally, with approximately 3,000talented people worldwide and operationsin North America, Europe, Latin America,the Middle East, Asia, and Australia.Country OfficesMasimo Asia Pacific572A Serangoon RdSingapore 218187SingaporeTel: +65 63924085Masimo AustraliaABN 71 124 372 701Suite 3, Bldg. 749 Frenchs Forest RdFrenchs Forest, NSW 2086AustraliaTel: +61 294523763Masimo AustriaMeldemannstr. 181200 WienAustriaTel: +43 (0) 1 533 73 61Masimo Canada4901 Levy StSaint-Laurent,QC H4R 2P9CanadaTel: 888 336 0043Masimo ChinaRoom 502, Suite ETriumph Tower Bldg. 6170 Beiyuan Road,Beijing 100101ChinaTel: +86 1058236155Masimo FranceEspace Européen d’EcullyBAT G15 Chemin du Saquin69130 EcullyFranceTel: +33 0472 179370Masimo GermanyNiederlassungDeutschlandLindberghstr 1182178 PuchheimGermanyTel: +49 89800658990Masimo INDIA70/2 Miller’s RoadMiller’s Boulevard, 2nd FloorBangalore 560052Karnataka State,IndiaTel: + 1 800 425 MASIMOMasimo ItalyVia Filzi 3320124 MilanoItalyTel: +39 0245076308Masimo JapanSumitomo FudosanKorakuen Bldg. 17F1-4-1, Koishikawa, Bunkyo-kuTokyo 112-0002JapanTel: +81 338685201Masimo latin america/Masimo MEXICOFlorencia 57 Piso 3Col. Juárez06600 México, D.F.MéxicoTel: +5255 5242 5807Masimo Middle EastOffices 505-508,Manhal CenterManhal Square, JubaihaAmman, JordanTel: +962 7 9701 1135Masimo NetherlandsHart van Brabantlaan12-14-165038 JL TilburgNetherlandsTel: +31 135832479Masimo SpainRonda de Poniente12 2F28760 Tres CantosMadridSpainTel: +34 918049734Masimo TurkeyMustafa Kemal Mah. 2125. SokKolbay Is Mrk C Blok No:6/10SogutozuAnkaraTurkeyTel: +90 312 219 54 38Masimo UKUnit Q, LoddonBusiness Centre Roentgen RdBasingstoke. Hants.RG24 8NGUnited KingdomTel: +44 01256479988Masimo semiconductor25 Sagamore Park RoadHudson, NH 03051USATel: 603 595 8900Masimo Sweden ABSvärdvägen 15,182 33 DanderydSwedenTel: +46 8 544 98 150HeadquartersInternationalOperationalCenterRegionalOfficesManufacturingCenterOEMPartnersDistributorsMasimoSemiconductorMasimoSweden AB76 77

Forward-looking StatementsRegulatory NoticeAll statements other than statements of historical facts included in thisdocument that address activities, events or developments that we expect,believe or anticipate will or may occur in the future are forward-lookingstatements. These statements include but are not limited to statementsabout: our business generally; expectations regarding our ability to design anddeliver innovative new noninvasive technologies; demand for our technologies;estimates regarding potential cost savings through using our technologies;and expectations regarding the growth of our installed base of drivers. Theseforward-looking statements are based on management’s current expectationsand beliefs and are subject to uncertainties and factors, all of which aredifficult to predict and many of which are beyond our control and could causeactual results to differ materially and adversely from those described in theforward-looking statements. These risks include, but are not limited to, thoserelated to: our dependence on Masimo SET and Masimo rainbow SET productsand technologies for substantially all of our revenue; any failure in protectingour intellectual property exposure to competitors’ assertions of intellectualproperty claims; the highly competitive nature of the markets in which we sellour products and technologies; any failure to continue developing innovativeproducts and technologies; the lack of acceptance of any of our current orfuture products and technologies; obtaining regulatory approval of our currentand future products and technologies; the risk that the implementation of ourinternational realignment will not continue to produce anticipated operationaland financial benefits, including a continued lower effective tax rate; the lossof our customers; the failure to retain and recruit senior management; productliability claims exposure; a failure to obtain expected returns from the amount ofintangible assets we have recorded; the maintenance of our brand; the impactof the decline in the worldwide credit markets on us and our customers; theamount and type of equity awards that we may grant to employees and serviceproviders in the future; and other factors discussed in the “Risk Factors” sectionof our most recent periodic reports filed with the Securities and ExchangeCommission (“SEC”), including our most recent Annual Report on Form 10-K andQuarterly Report Form 10-Q, all of which you may obtain for free on the SEC’swebsite at www.sec.gov. Although we believe that the expectations reflectedin our forward-looking statements are reasonable, we do not know whether ourexpectations will prove correct. You are cautioned not to place undue relianceon 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 donot undertake any obligation to update, amend or clarify these forward-lookingstatements, whether as a result of new information, future events or otherwise,except as may be required under applicable securities laws.NOTE REGARDING THIS ANNUAL REPORT: Please note that this annual reportdoes not constitute the Company’s “annual report to security holders” forpurposes of the requirements of the SEC. For a copy of the Company’s annualreport to security holders required under Rule 14a-3 of Regulation 14A of theSecurities Exchange Act of 1934, as amended, please refer to the Company’sAnnual Report on Form 10-K for the fiscal year ended December 31, 2012, whichyou may obtain for free on the SEC’s website at www.sec.gov.Some of the products featured in this Annual Report are currently or planned tobe marketed worldwide by Masimo. Not all products or features profiled in thisreport have US FDA 510(k) or other regulatory agencies’ clearances (such as EU,Canada, Japan, etc.) at the time of printing. As of July 2013, products/featuresthat have not been FDA 510(k) cleared for sales and marketing in the US includeSpfO2, SpvO2, RRp, iSpO2 Rx, Active Pulse, the SuperSensor, MyView, HaloIndex, Root with all of the described functions, and Adaptive Threshold Alarm.Submissions for some of these products or features either have been filed or areplanned to be filed in other regulated markets.Senior Management TeamJoe KianiChief Executive OfficerMatthew AnaconeVice President, US AcuteCare SalesJon ColemanPresident, Worldwide Sales,Professional Services andMedical AffairsMark de RaadExecutive Vice President& Chief Financial OfficerRick FishelPresident, WorldwideOEM Business &Corporate DevelopmentPaul JansenExecutive Vice President,Marketing & ClinicalDevelopmentBoard of DirectorsJoe KianiChairman of the Board of DirectorsSteven Barker, MD, PhDDirectorEdward CahillDirectorRobert Coleman, PhDDirectorSanford FitchDirectorYongsam LeeExecutive Vice President,Operations and ChiefInformation OfficerTetsuro ManiwaPresident,Masimo JapanTom McClenahanExecutive Vice President,General CounselAnand SampathExecutive Vice President,EngineeringStacey TaggartPresident, Europe,Middle East & AfricaRobert ZyzanskiPresident,Masimo SwedenJack LasersohnDirector78

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 ProbeOff 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, rainbow4D, 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 bytaking 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 usedunder 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.6498-7688C-0813