As a global technology company, we have done something people didn't think was possible—save and improve lives with monitoring solutions. That is because our pulse oximeters work accurately and reliably during motion, during low perfusion, on all skin tones, and even under intense light and electromagnetic interference. When I founded Masimo 34 years ago, I witnessed other companies take poorly performing pulse oximeters, ones that suffered from too many false alarms and missed true alarms, and simply focus on making them prettier, or smaller, or reducing their power consumption, without attempting to make the technology really work. We did. We invented SET^® pulse oximetry. By doing so, Masimo made a pulse oximeter that has been proven to make a clinical difference. We have helped substantially reduce the incidence of blindness in the neonatal intensive care unit due to retinopathy of prematurity and helped detect critical congenital heart disease in newborns, saving parents from the trauma of a newborn dying at home from an undiagnosed heart defect. We have helped save the lives of patients at risk of opioid-induced respiratory depression after surgery. In recent years, we have also helped save lives by monitoring COVID-19 patients reliably at home, helping clinicians intervene sooner and reducing hospital admissions.

Over the next 10 years, we intend to continuously work to improve even more lives with a series of revolutionary new products and services, such as the Masimo W1^™ advanced heaIth tracking watch, the Freedom^™ premium consumer smartwatch with complementary sleep and fitness band, Denon^® earbuds with Adaptive Acoustic Technology^™ (AAT^™), and Stork^™, a hospital-quality baby monitor. With these breakthrough solutions and others, we are confident that we will not just survive, but thrive, and simultaneously generate more value for our stockholders and broader base of stakeholders, including the customers who depend on our products and the communities in which we operate.

Solving the "Unsolvable"

Masimo has also solved numerous other problems for hospitals that had long been perceived as unsolvable, by devising continuous, noninvasive ways of monitoring parameters and biomarkers such as hemoglobin (SpHb^®), carboxyhemoglobin (SpCO^®), methemoglobin (SpMet^®), pleth variability index (PVi^®), oxygen reserve index (ORi^™†) and hydration index (Hi^™‡). Some of these technologies have already been shown to improve patient outcomes: the integration of SpHb and PVi into a vascular filling algorithm, for example, was shown to reduce patients' mortality by 33% thirty days after surgery and 29% ninety days after surgery.¹

Even with all of these achievements, we refuse to rest and remain focused on finding ways to further improve our technology. Our foundational SET^® pulse oximetry, which broke new ground when it was originally launched in 1996 for its reliability and accuracy, is today wireless and wearable too. Powered by SET^®, our tetherless Radius PPG^® sensors and next-generation RD sensors are now helping improve the lives of new generations of patients and the clinicians who care for them.

As our work with our overburdened clinical collaborators increasingly brings us face to face with the communication challenges that are endemic in healthcare facilities, we have developed hospital automation solutions to further facilitate connectivity across the continuum of care, such as the Root^® patient monitoring hub, Iris^® and iSirona^™ connectivity solutions, UniView^® and UniView :60^™ intelligent displays, Halo ION^® and Sepsis Index (Si^™) early warning solutions, Centroid^® patient position sensor, and Replica^® remote monitoring mobile application.

With Masimo Opioid Halo^™, which was granted a "De Novo" clearance by the FDA earlier this year, we hope to provide a critical new resource to assist communities in addressing the opioid epidemic that is killingmore than 80,000 people a year in the U.S. alone.² We are also assisting our institutional customers in caring for their patients at home after discharge from the hospital with a suite of telehealth solutions that grew out of Masimo SafetyNet^®, the first in a revolutionary new continuous telemonitoring product category. Masimo SafetyNet was first deployed en masse during the pandemic, and is now the platform driving hospital-to-home innovations like Masimo W1.^§

Enhancing Care Cohesion

We have also become increasingly aware of opportunities to solve another seemingly insurmountable problem—the lack of care cohesion and its impact on patient safety. With our new Masimo Consumer Health^™ solutions, we are working to overcome this challenge by allowing the monitoring of patients by hospitals while they are at home and automating access to health data when hospital care is needed, facilitating baseline comparisons and enabling clinicians to make more informed care decisions. Patients can be sent home sooner, using Masimo technologies to receive improved step-down care from the comfort of their home, avoiding longer stays in a hospital and the accompanying increased risk of exposure to harmful viruses and bacteria, not to mention the sinking and demoralizing psychological impact of prolonged confinement in an institutional setting.

In 2022, I spent time in the hospital and saw firsthand the value our technologies bring to patient care. While we will double down on our hospital efforts, we will also expand our focus on technologies in the home. Home care was a necessary step in my recovery, and thanks to products like Masimo W1 and Radius T^°®, I was able to have my step-down care at home. This should be the case for everyone. I also witnessed how my clinicians worried about not knowing my baseline physiological data. In the future, Masimo W1 will empower them with this data seamlessly and automatically.

We know our responsibility here. What Masimo does next, we will do not only because we can, but because we must. If we don't do it, it may never happen.

A Persistent Start-up Spirit

To accomplish this, we brought in the consumer expertise and skills of the teams at Bowers & Wilkins^®, Denon^®, Marantz^®, and Polk Audio^®—their sales, marketing, and custom installation teams, their engineers, their technologies, and their distribution channels. While we believe that the one-third of the world suffering from chronic disease is particularly in need of our health and healthcare-related solutions, we are dedicated to making products for everyone, such as Freedom and our sleep and fitness band. For these advanced wearables and hearables—solutions whose capabilities are derived from sound waves and breakthrough audio engineering—are not only complementary but key to the other's success. We believe that wearables and hearables represent meaningful opportunities for Masimo to significantly enhance its earnings power over time. With its technologies and talents, Masimo is well-positioned to seize these opportunities, and we have established Masimo Consumer Health as an internal "start up" to spearhead the development of wearable and hearable technology. Our immensely skilled team will give Masimo Consumer Health the best chance of success without exposing it to concerns about expense not accounted for by revenue.

In 2023, we are planning to not only launch Freedom‖, our Freedom sleep and fitness band‖, and Stork^¶, but also to augment four million HEOS^® home audio devices with Masimo secure health hub capabilities, helping people better manage their overall health and wellness.

Masimo Consumer Health is not our first start up. Our first start up—Masimo itself—I created on my own, thirty-four years ago, with nothing more than a vision and a $40,000 loan on my condominium. Since our founding, we have successfully overcome the odds to accomplish everything we set out to do, and so much more. I have no doubt that we will overcome the obstacles and achieve our dream of improving the health of every individual through revolutionary solutions for the home and in hospitals.

In 1996, after seven years of research and development, we launched Masimo SET^® and we faced a competitor in hospitals who controlled the major patient monitoring companies' pulse oximeters and held exclusive contracts with Group Purchasing Organizations, representing over 90% of U.S. hospitals. They tried to stop us, but we persevered. Today, we are the world leader in hospital pulse oximetry, monitoring over 200 million patients a year.³ As we move further into the consumer health space, we face another formidable competitor in the form of Apple, who seemingly believes that "efficient infringement" of others' intellectual property is a legitimate business strategy, that locking up distribution channels is its right, and that poaching Masimo's engineers is just part of the game—a tough game, with no rules. But, Masimo W1's performance advantage over the Apple Watch^® is greater than the performance advantage that distinguished our pulse oximeters from conventional hospital pulse oximeters back in 1996. We have also shown our willingness to fight for our rights and have already prevailed in proving that Apple infringed on one of our pulse oximeter patents by importing and selling watches with light-based pulse oximetry functionality and components. The International Trade Commission is currently considering whether to implement an import ban on these Apple Watches. We are confident that, through our vigorous efforts to defend our intellectual property rights, we will demonstrate not only is it unethical and illegal to use other companies' intellectual property, but that companies that do so also expose themselves to the risk of costly litigation and penalties that will destroy value for their stockholders.

A Legacy of Disruptive Innovation

Look at our revenues and earnings since the commercial release of our first product in 1996. While we generally have been able to maintain steady growth since our founding, our stock price has not increased linearly. Nevertheless, even with all the ups and downs, our stock price has increased by almost 1000% since our IPO. We are optimistic about the future, because we have the best people I have ever worked with, we have a hard-earned, excellent reputation for innovation and quality, and we have a commercial reach in healthcare and consumer care that we could have only dreamed about back in 1996, let alone 1989. With revolutionary products and parameters like Masimo W1, Stork, Freedom, Hi, Si, SpHb, ORi, Opioid Halo, and so many more, we are well-positioned to not only fulfill the vision and mission we set out with 34 years ago, but to usher in 22^nd century healthcare by completing the circle: hospital to home to hospital—a holistic care ecosystem that will be timely, precise, efficient, effective, safer and easier. Welcome to the 22^nd century!

Thank you for your continued support of Masimo and I hope you will be able to join us for our Annual Meeting.

Together in health,
Joe Kiani
Founder, Chairman & CEO