Dive Brief:

• Masimo said it received Food and Drug Administration approval for its Stork baby monitor for purchase without a prescription. The over-the-counter system offers the same pulse oximetry technology as Masimo devices used in hospitals, the company said Monday.
• The at-home version continuously monitors oxygen saturation, pulse rate and skin temperature in babies up to 18 months of age and notifies caregivers with an alarm if readings fall outside of preset ranges. The sensors are embedded in a wearable boot.
• Masimo previously disclosed it is exploring a potential spinoff of its consumer business into a separate company that is expected to include the Stork baby monitor, Freedom smartwatch and consumer audio products.

Dive Insight:

The FDA clearance positions Masimo to compete with Owlet in the OTC market for pulse oximetry devices to monitor babies at home.

Owlet launched its Dream Sock baby monitor in January, a couple of months after gaining FDA de novo clearance for the system. Before that, Owlet received FDA clearance for a prescription-only baby sock called BabySat that monitors oxygen saturation and pulse rate. 

Masimo also sells a prescription version of its Stork device that obtained FDA clearance in December.

Owlet was forced to withdraw an earlier baby monitoring sock marketed as a medical-grade pulse oximeter and sold over the counter after the FDA determined the product was a medical device that required clearance or approval and issued a warning letter to the company.

Now, Masimo is bringing its Stork device to the OTC market. BTIG analyst Marie Thibault wrote in a Monday investor report that the company previously pegged the market opportunity for the device at about $500 million, which represents the premium segment within a $1.5 billion baby monitoring market.

“We remain bullish on Stork since we believe this represents an adjacent market opportunity that is closest to [Masimo’s] strengths in healthcare technology,” Thibault said.

In a 2022 policy statement, its latest on the subject, the American Academy of Pediatrics said home cardiorespiratory monitors should not be used to reduce the risk of sudden infant death syndrome.

Masimo said the Stork system is indicated for spot-checking and continuous monitoring and can be used to supplement a parent’s decision to seek additional guidance for a child’s care. FDA-cleared OTC Stork bundles will be available for purchase online and at retailers this summer, the company said, and new alarm features for the device will be provided to existing customers in a software update.

In March, Masimo revealed it was evaluating a plan to separate consumer health and audio from its professional healthcare business, about two years after acquiring the audio brands from Sound United in a $1 billion deal.

Masimo, led by founder and CEO Joe Kiani, also faces a second proxy challenge from activist investor Politan Capital, which is aiming to gain two more seats on the company’s board. Kiani expects to remain chairman and CEO of Masimo and to be named chairman of the new consumer company in the event of a spinoff.