With that, I'll pass the call to Joe Kiani.Joe E. Kiani Good afternoon, and thank you for joining us for Masimo's quarterly review update. Before I get started with our comments on the quarter, I wanted to share with you the importance of today's date, which is the 23rd anniversary of our incorporation. From our very humble beginnings in 1989, I believe we have truly revolutionized pulse oximetry, making it a clinically useful tool and a foul-weather friend and, in so doing, provided the best technology in the world to both our hospital customers and the patients they serve. Of course, we remain focused on expanding the pulse oximetry business, as well as continuing to push for new equally revolutionary rainbow parameters. We still have much to accomplish, but we are proud on what we have delivered over the past 23 years. So if we sound chipper this afternoon, this is part of the reason. In Q1 2012, we achieved 11% growth in product revenue compared to Q1 2011. We have double-digit growth in both our direct U.S. acute care and international business coupled with a 14% rise in worldwide rainbow sales. We shipped 33,300 new Masimo SET and Masimo rainbow SET Pulse Oximeters and Pulse CO-Oximeters in the quarter and now estimate our worldwide installed base for the first time ever to be just over 1 million units, representing 13% year-over-year growth and obviously achieving a significant Masimo milestone. Other major developments include: the debut of our rainbow and clinician-centric Radical-7 bedside device, which we sometimes call the 2012 Radical-7; the addition of GE, the world's second largest patient monitor provider, to the ranks of OEM partners, converting the Masimo rainbow SET; the acquisition of the assets of Spire Semiconductor, a foundry for custom LEDs and photodetectors; the completion of our 3 million share buyback program; a regulatory clearance and commercial launch of Pronto-7 in the U.S. and China and South Korea; and the introduction of novel health care initiatives called "Better Care," designed to demonstrate SpHb's clinicals and cost-saving benefits to hospitals. In a few minutes, I'll talk more about how each of these is advancing our growth strategy. But first, Mark will review the first quarter financial performance. Mark?
Mark P. de RaadThank you, Joe, and good afternoon, everyone. Masimo's first quarter 2012 total revenue rose 6% to $119 million versus $113 million in the year-ago period. We achieved this growth despite a 39% decline in royalty revenue from $11.5 million to $7 million, reflecting the reduction in the Covidien royalty rate from 13% to 7.75% effective March 15, 2011. First quarter product revenue rose 11% to $112.2 million as recent installed base growth translated into higher consumable sales to hospitals. A rise in Pronto-7 and consumable sales drove rainbow sales higher, up 14% in the first quarter to $8.5 million. In addition, the March 12 acquisition of the assets of Spire Semiconductor, now known as Masimo Semiconductor, added approximately $300,000 to product revenue in the quarter. Our worldwide end-user or direct business, which includes sales through just-in-time distributors, grew 12% in the quarter to $95.9 million versus $85.3 million one year ago. In total, our direct business represented 85% of product revenue versus 84% in the year-ago quarter. First quarter 2012 OEM sales were virtually unchanged at $16.3 million from -- excuse me, from $16.2 million in the same prior last year period. By geography, total U.S. product revenue rose 12% to $80.8 million in the first quarter compared to $72.4 million in the first quarter of 2011. This growth reflects primarily strong U.S. care sensor sales, coupled with U.S. OEM sales increases and higher sales to physician offices following our Q1 launch of Pronto-7. Product revenue outside the U.S. totaled $31.5 million, up 8% compared to the first quarter last year. Excluding OEM revenue, our direct o-U.S. product revenue grew 15%, with higher sales in both Europe and Asia. This growth was offset by a 15% decline in our o-U.S. OEM business. International product revenue represented approximately 28% of total product revenue in the first quarter versus 29% in the year-ago period. Foreign currency exchange rates had virtually no impact to international revenue totals in the year-over-year period. Read the rest of this transcript for free on seekingalpha.com