IPO sun shines on Irvine

Two venture-backed companies from Irvine, Calif., launched IPOs last week amid a market downturn fueled by fears of an escalating credit crunch following the subprime mortgage meltdown.

Masimo Corp. (Nasdaq: MASI) a provider of pulse monitoring technology raised $200 million, and HireRight Inc. (Nasdaq: HIRE), an employment screening service, raised $66 million, in offerings that drew a mixed reception from investors.

Shares of Irvine-based Masimo surged in the company’s Wednesday debut. The stock priced at $17 a share, in the middle of its proposed range, and rose 23% to close at $20.90, before dipping some in Thursday trading.

The offering delivered some long-awaited returns for venture backers, who invested about $78 million in the company since 1992. Top venture stakeholders include Invesco Private Capital (which owned 4.4 million shares before the offering), Moore Capital Management (2.9 million shares), DSV Partners (2.8 million shares), and Franklin Templeton Group (2.7 million shares).

Masimo makes pulse oximetry monitoring products, which measure the oxygen saturation level of a patient’s arterial blood. The 15-year-old company first turned a profit in 2005. It posted product revenue of $45 million and a profit of $9 million in the first quarter of the year.

HireRight drew a chillier welcome in its Thursday market debut. Shares of the Irvine-based provider of online employee background checks and recruiting services priced at $15, the low end of its anticipated price range. The stock dipped another 2% in first-day trading amid a down day for the overall markets.

The offering stands to deliver decent returns for the venture backers who invested $27 million in the company since 1996. Mellon Ventures, now part of Navigation Capital Partners, is HireRight’s largest venture stakeholder, with 2.4 million shares, or 28% of the total. Other significant shareholders include DCM ( 1.9 million shares); Split Rock Partners (1.7 million shares); Baird Venture Partners (583,000 shares) and Hewitt Associates (554,000 shares).

The IPO comes as HireRight sales are rising. The company reported a profit of $1.2 million on revenue of $16 million in the first three months of the year. It earned $1.4 million on $13 million in revenue in the same period last year, but has since increased spending on sales and marketing. —Joanna Glasner