With that, I'll pass the call to Joe Kiani.Joe E. Kiani Thank you, Sheree. Good afternoon, and thank you for joining us for Masimo's quarterly review and update. We finished 2011 with fourth quarter product revenue up 12%, including a strong 17% rise in our direct business. This performance was driven primarily by strong double digit sales growth in both our U.S. acute care channel and our international business, as well as a 16% increase in rainbow sales. We shipped 34,400 new drivers in the quarter, excluding handheld devices, bringing our worldwide installed base to 979,000 at year end, up nearly 15% versus 2010. Underscoring our belief and optimism in Masimo's growth potential in 2012 and beyond, we also repurchased approximately 1.8 million shares of our common stock in the fourth quarter as part of the stock repurchase program we implemented in 2011. And 2012 got off to a strong start with FDA clearance and full U.S. commercial release of Pronto-7, our palm-sized handheld device designed for quick and easy noninvasive spot checking of Total Hemoglobin SpO2, pulse rate and perfusion index. The Pronto-7 is now available to clinicians in much of the world, and our sales efforts are in full swing. I'll talk more about our future prospects in a few minutes, but first Mark will review our recent financial performance and provide you our 2012 guidance. Mark? Mark P. de Raad Thank you, Joe, and good afternoon, everybody. Masimo's fourth quarter 2011 total revenue rose 6% to $112.3 million versus $105.6 million in the year ago period. We achieved this growth despite a 35% decline in royalty revenue from $11.8 million to $7.6 million, reflecting the change in the Covidien royalty rate from 13% to 7.75% effective March 15, 2011. Fourth quarter product revenue rose 12% to $104.7 million due primarily to accelerated growth in our acute care channel as installed base expansion translated into increased sensor sales to hospital customers. Encouragingly, rainbow sales rebounded in the quarter rising 16% versus one year ago to $9.8 million on higher instrument and consumable sales.
Our worldwide end-user or direct business, which include sales through just-in-time distributors, grew 17% in the quarter to $90.2 million versus $77.4 million one year ago. In total, our direct business represented 86% of product revenue versus 83% in the year ago quarter.Fourth quarter 2011 OEM sales were down 12% to $14.5 million from $16.4 million in the same period last year due to both lower board and sensor revenues. By geography, total U.S. product revenue rose 9% to $72.9 million in the fourth quarter compared to $66.8 million last year, as double-digit growth in U.S. acute care sales was partially offset by lower U.S. alternate care and U.S. OEM sales. Product revenue outside the U.S. totaled $31.8 million up 18% compared to the fourth quarter last year. Every major international direct sales region contributed to the growth, which was primarily offset by a 20% decline in international OEM sales. Excluding OEM revenue, our direct OUS product revenue grew 29%. International product revenue represented approximately 30% of total product revenue in the fourth quarter versus 29% in the year-ago period. Favorable year-over-year currency exchange rates added approximately $580,000 to fourth quarter international revenue totals. Fourth quarter gross profit margin was 63% compared to 66.5% one year ago. During the fourth quarter, we were required to write down previously capitalized deferred costs related to one specific contract. Without that impact, our Q4 product gross margins would've been approximately 64%, a bit higher than we had originally projected in our updated full year guidance we provided in our October earnings call. The remaining year-over-year product gross margin declines were due to the result of expected higher total deferred cost amortization expenses, as well as the initial Q4 2011 cost impact of our X-Cal technology introduction, which we noted in our October earnings call, and a slightly less favorable product mix versus the same prior-year period. Read the rest of this transcript for free on seekingalpha.com