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Covidien, Massimo extend royalty deal for 3 years

Mon, 01/31/2011 - 5:45am
The Associated Press

Medical device and drug maker Covidien PLC said Monday it extended a royalty agreement with medical technology company Masimo Corp. for its pulse oximetry products — devices that monitor oxygen in the bloodstream — sold in the United States.

Covidien, which is based in Ireland, will pay Masimo, of Irvine, Calif., a royalty of 7.75 percent for three years beginning March 15. The deal amends a settlement agreement initially reached in 2006.

Pulse oximeters are sensors that monitor oxygen in the bloodstream. Instead of drawing blood, oximeters are placed on the ear or fingertip.

Masimo said it may re-invest about 50 percent of the incremental royalty revenue into its business this year, and it will discuss the impact of the agreement when it releases 2010 financial results Feb. 15.

Covidien shares rose 12 cents to $47.20 in morning trading Monday.

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