Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 29, 2022 | |
Cover [Abstract] | ||
Entity Address, Address Line One | 3150 Pleasant View Road | |
Entity File Number | 000-33001 | |
Entity Incorporation, State or Country Code | DE | |
Document Transition Report | false | |
Document Quarterly Report | true | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | NTUS | |
Security Exchange Name | NASDAQ | |
Entity Small Business | false | |
Entity Registrant Name | NATUS MEDICAL INC | |
Entity Central Index Key | 0000878526 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2022 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,585,114 | |
Entity Emerging Growth Company | false | |
Entity Tax Identification Number | 77-0154833 | |
Entity Address, City or Town | Middleton | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53562 | |
City Area Code | 608 | |
Local Phone Number | 829-8500 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 84,285 | $ 75,595 |
Accounts receivable, net of allowance for doubtful accounts of $4,997 in 2022 and $5,271 in 2021 | 103,714 | 111,760 |
Inventories | 72,238 | 67,745 |
Prepaid expenses and other current assets | 26,531 | 22,191 |
Total current assets | 286,768 | 277,291 |
Property and equipment, net | 21,391 | 21,783 |
Operating lease right-of-use assets | 8,027 | 9,288 |
Intangible assets, net | 59,815 | 65,513 |
Goodwill | 148,304 | 148,657 |
Deferred income tax | 23,548 | 23,161 |
Other assets | 20,230 | 18,595 |
Total assets | 568,083 | 564,288 |
Current liabilities: | ||
Accounts payable | 34,342 | 36,405 |
Accrued liabilities | 47,185 | 48,135 |
Deferred revenue | 26,846 | 25,097 |
Current portion of operating lease liabilities | 4,482 | 4,964 |
Total current liabilities | 112,855 | 114,601 |
Liabilities, Noncurrent [Abstract] | ||
Other liabilities | 17,128 | 17,237 |
Operating lease liabilities | 5,755 | 6,567 |
Deferred income tax | 1,451 | 1,133 |
Total liabilities | 137,189 | 139,538 |
Stockholders’ equity: | ||
Common stock, $0.001 par value, 120,000,000 shares authorized; shares issued and outstanding 34,576,100 in 2022 and 34,225,682 in 2021 | 359,319 | 353,737 |
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding in 2021 and 2020 | 0 | 0 |
Retained earnings | 86,389 | 84,486 |
Accumulated other comprehensive loss | (14,814) | (13,473) |
Total stockholders’ equity | 430,894 | 424,750 |
Total liabilities and stockholders’ equity | $ 568,083 | $ 564,288 |
Consolidated Balance Sheets (un
Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 4,977 | $ 5,271 |
Common Stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common Stock, shares issued (in shares) | 34,576,100 | 34,225,682 |
Common Stock, shares outstanding (in shares) | 34,576,100 | 34,225,682 |
Preferred Stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Preferred Stock, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 119,793 | $ 114,927 |
Cost of revenue | 52,781 | 46,688 |
Intangibles amortization | 1,600 | 1,751 |
Gross profit | 65,412 | 66,488 |
Operating expenses: | ||
Marketing and selling | 29,551 | 28,971 |
Research and development | 13,224 | 14,040 |
General and administrative | 12,807 | 14,855 |
Intangibles amortization | 3,598 | 3,897 |
Restructuring | 2,051 | 205 |
Total operating expenses | 61,231 | 61,968 |
Income from operations | 4,181 | 4,520 |
Other expense, net | (807) | (1,656) |
Income before provision for income tax | 3,374 | 2,864 |
Provision for income taxes | 1,471 | 468 |
Net income | $ 1,903 | $ 2,396 |
Net income per share: | ||
Basic (dollars per share) | $ 0.06 | $ 0.07 |
Diluted (dollars per share) | $ 0.06 | $ 0.07 |
Weighted average shares used in the calculation of net income per share: | ||
Basic (in shares) | 34,119 | 33,611 |
Diluted (in shares) | 34,276 | 33,782 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 1,903 | $ 2,396 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustment | (1,341) | (6,494) |
Interest rate swap designated as a cash flow hedge | 0 | 68 |
Other comprehensive loss | (1,341) | (6,426) |
Comprehensive income (loss) | $ 562 | $ (4,030) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (unaudited) Condensed Consolidated Statement of Stockholders' Equity (unaudited) - USD ($) | Total | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning of period (shares) at Dec. 31, 2020 | 33,911,703 | |||
Beginning of period at Dec. 31, 2020 | $ 411,094,000 | $ 342,828,000 | $ 71,309,000 | $ (3,043,000) |
Vesting Of Restricted Stock Units (shares) | 19,650 | |||
Net issuance of restricted stock awards (in shares) | 222,899 | |||
Stock-based compensation expense | 3,018,000 | $ 3,018,000 | ||
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation | (57,357) | |||
Taxes paid related to net share settlement of equity awards | (1,150,000) | $ (1,150,000) | ||
Other comprehensive loss | (6,426,000) | |||
Other Comprehensive Income (Loss) Excluding Impact Of New Accounting Pronouncement | (6,426,000) | (6,426,000) | ||
Net income | 2,396,000 | 2,396,000 | ||
End of period (shares) at Mar. 31, 2021 | 34,096,895 | |||
End of period at Mar. 31, 2021 | 408,932,000 | $ 344,696,000 | 73,705,000 | (9,469,000) |
Beginning of period (shares) at Dec. 31, 2021 | 34,225,682 | |||
Beginning of period at Dec. 31, 2021 | 424,750,000 | $ 353,737,000 | 84,486,000 | (13,473,000) |
Vesting Of Restricted Stock Units (shares) | 33,794 | |||
Net issuance of restricted stock awards (in shares) | 164,760 | |||
Stock-based compensation expense | 2,619,000 | $ 2,619,000 | ||
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation | (51,482) | |||
Taxes paid related to net share settlement of equity awards | (1,228,000) | $ (1,228,000) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 203,346 | |||
Stock Issued During Period, Value, Stock Options Exercised | $ 4,191,000 | |||
Other comprehensive loss | (1,341,000) | (1,341,000) | ||
Net income | 1,903,000 | 1,903,000 | ||
End of period (shares) at Mar. 31, 2022 | 34,576,100 | |||
End of period at Mar. 31, 2022 | $ 430,894,000 | $ 359,319,000 | $ 86,389,000 | $ (14,814,000) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities: | ||
Net income | $ 1,903 | $ 2,396 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for losses on accounts receivable | 87 | 101 |
Depreciation and amortization | 6,673 | 7,257 |
Loss on disposal of property and equipment | 30 | 8 |
Warranty reserve | 1,363 | 341 |
Share-based compensation | 2,619 | 3,114 |
Loss on commencement of sales-type leases | 0 | 6 |
Loss on equity method investment | 192 | 136 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 8,803 | 4,962 |
Inventories | (6,132) | 4,139 |
Prepaid expenses and other assets | (4,752) | (4,028) |
Accounts payable | (1,957) | 1,303 |
Accrued liabilities | (1,762) | 1,172 |
Deferred revenue | 1,949 | 2,732 |
Deferred income tax | (119) | 1,064 |
Net cash provided by operating activities | 8,897 | 24,703 |
Investing activities: | ||
Purchase of property and equipment | (1,062) | (731) |
Purchase of equity method investments | (572) | 0 |
Net cash used in investing activities | (1,634) | (731) |
Financing activities: | ||
Proceeds from stock option exercises and Employee Stock Purchase Program purchases | 4,191 | 0 |
Taxes paid related to net share settlement of equity awards | (1,228) | (1,150) |
Principal payments of financing lease liability | (447) | (125) |
Payments on borrowings | 0 | (20,000) |
Net cash provided by (used in) financing activities | 2,516 | (21,275) |
Exchange rate changes effect on cash and cash equivalents | (1,089) | (4,230) |
Net increase (decrease) in cash and cash equivalents | 8,690 | (1,533) |
Cash and cash equivalents, beginning of period | 75,595 | 82,082 |
Cash and cash equivalents, end of period | 84,285 | 80,549 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 114 | 513 |
Cash paid for income taxes | 1,066 | (320) |
Non-cash investing activities: | ||
Property and equipment included in accounts payable | 32 | 39 |
Inventory transferred to property and equipment | 291 | 94 |
Transfer of leased assets to sales-type leases | $ 0 | $ 13 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies The accompanying interim condensed consolidated financial statements of Natus Medical Incorporated (“we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Except where noted below within Note 1, the accounting policies followed in the preparation of the interim condensed consolidated financial statements are consistent in all material respects with those presented in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Interim financial reports are prepared in accordance with the rules and regulations of the Securities and Exchange Commission; accordingly, the reports do not include all of the information and notes required by GAAP for annual financial statements. The interim financial information is unaudited, and reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods presented. We have made certain reclassifications to the prior period to conform to current period presentation. The consolidated balance sheet as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The accompanying condensed consolidated financial statements include our accounts and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Recently Adopted Accounting Pronouncements None. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Unbilled accounts receivable (“AR”) for the periods presented primarily represent the difference between revenue recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Deferred revenue for the periods presented primarily relates to extended service contracts, installation, and training, for which the service fees are billed in advance. The associated deferred revenue is generally recognized ratably over the extended service period or when installation and training are complete. The following table summarizes the changes in the unbilled AR and deferred revenue balances for the three months ended March 31, 2022 (in thousands): Unbilled AR, December 31, 2021 $ 252 Additions 1,535 Transferred to trade receivable (31) Unbilled AR, March 31, 2022 $ 1,756 Deferred revenue, December 31, 2021 $ 30,097 Additions 11,844 Revenue recognized (9,912) Deferred revenue, March 31, 2022 $ 32,029 At March 31, 2022, the short-term portion of deferred revenue of $26.8 million and the long-term portion of |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The components of basic and diluted EPS, and shares excluded from the calculation of diluted loss per share because the effect would have been anti-dilutive, are as follows (in thousands, except per share amounts): Three Months Ended 2022 2021 Net income $ 1,903 $ 2,396 Weighted average common shares 34,119 33,611 Dilutive effect of stock based awards 157 171 Diluted shares 34,276 33,782 Basic earnings per share $ 0.06 $ 0.07 Diluted earnings per share $ 0.06 $ 0.07 Shares excluded from calculation of diluted EPS — — |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts | 3 Months Ended |
Mar. 31, 2022 | |
Credit Loss [Abstract] | |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We estimate the lifetime allowance for doubtful, potentially uncollectible, accounts receivable upon their inception based on historical collection experience within the markets in which we operate, customer-specific information such as bankruptcy filings or customer liquidity problems, current conditions, and reasonable and supportable forecasts about the future. Our allowance for doubtful accounts is presented as a reduction to accounts receivable on our consolidated balance sheet. When all internal efforts have been exhausted to collect the receivable, it is written off and relieved from the reserve. The details of activity in allowance for doubtful accounts are as follows (in thousands): Three Months Ended 2022 2021 Balance, beginning of period $ 5,271 $ 6,213 Additions charged to expense 87 101 Write-offs charged against allowance (361) (229) Balance, end of period $ 4,997 $ 6,085 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands): March 31, 2022 December 31, 2021 Raw materials and subassemblies $ 25,092 $ 20,750 Work in process 2,739 2,825 Finished goods 59,011 57,836 Total inventories 86,842 81,411 Less: Non-current inventories (14,604) (13,666) Inventories, current $ 72,238 $ 67,745 As of March 31, 2022 and December 31, 2021, we have classified $14.6 million and $13.7 million, respectively, of inventories as other assets. This inventory consists primarily of service components used to repair products held by customers pursuant to warranty obligations and extended service contracts, including service components for products we no longer sell, inventory purchased for lifetime buys, and inventory that is turning over at a slow rate. We believe these inventories will be utilized for their intended purpose. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The following table summarizes the components of gross and net intangible asset balances (in thousands): March 31, 2022 December 31, 2021 Gross Accumulated Accumulated Net Book Gross Accumulated Accumulated Net Book Intangible assets with definite lives: Technology $ 99,288 $ (6,033) $ (67,934) $ 25,321 $ 99,920 $ (6,039) $ (66,679) $ 27,202 Customer related 89,260 (50) (58,913) 30,297 89,794 (50) (57,133) 32,611 Trade names 45,442 (3,235) (38,302) 3,905 45,593 (3,260) (36,960) 5,373 Internally developed software 13,281 — (13,010) 271 13,281 — (12,985) 296 Patents 2,688 (133) (2,555) — 2,705 (133) (2,572) — Service agreements 800 — (779) 21 800 — (769) 31 Definite-lived intangible assets $ 250,759 $ (9,451) $ (181,493) $ 59,815 $ 252,093 $ (9,482) $ (177,098) $ 65,513 Intangible assets with indefinite lives: Intellectual Property $ 1,993 $ (1,993) $ — $ — $ 2,004 $ (2,004) $ — $ — Total intangible assets $ 252,752 $ (11,444) $ (181,493) $ 59,815 $ 254,097 $ (11,486) $ (177,098) $ 65,513 Finite-lived intangible assets are amortized over their weighted average lives, which are 14 years for technology, 10 years for customer related intangibles, 7 years for trade names, 6 years for internally developed software, 13 years for patents, 2 years for service agreements and 11 years weighted average in total. Internally developed software consists of $11.1 million relating to costs incurred for development of internal use computer software and $2.2 million for development of software to be sold. Amortization expense related to intangible assets with definite lives was as follows (in thousands): Three Months Ended 2022 2021 Technology $ 1,629 $ 1,795 Customer related 2,116 2,360 Trade names 1,443 1,483 Internally developed software 24 50 Service agreements 10 10 Total amortization $ 5,222 $ 5,698 The amortization expense amounts shown above include internally developed software not held for sale of $24 thousand and $24 thousand for the three months ended March 31, 2022 and March 31, 2021, respectively, which is recorded within our income statement as a general and administrative operating expense. The amortization expense amounts shown above include internally developed software held for sale of zero and $26 thousand for the three months ended March 31, 2022 and March 31, 2021, respectively, which is recorded within our income statement as cost of goods sold. Expected amortization expense related to definite-lived amortizable intangible assets is as follows (in thousands): Nine months ending December 31, 2022 $ 12,301 2023 14,748 2024 12,866 2025 12,261 2026 2,398 2027 2,267 Thereafter 2,974 Total expected amortization expense $ 59,815 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The carrying amount of goodwill and the changes in the balance are as follows (in thousands): December 31, 2021 $ 148,657 Foreign currency translation (353) March 31, 2022 $ 148,304 |
Property and Equipment, net
Property and Equipment, net | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net consist of the following (in thousands): March 31, 2022 December 31, 2021 Land $ 1,781 $ 1,782 Buildings 7,209 7,238 Leasehold improvements 7,729 7,722 Finance lease right-of-use assets 2,037 2,356 Equipment and furniture 21,121 20,637 Computer software and hardware 11,566 11,308 Demonstration and loaned equipment 4,424 4,050 55,867 55,093 Accumulated depreciation (34,476) (33,310) Total $ 21,391 $ 21,783 Depreciation expense of property and equipment, net was approximately $1.5 million and $1.6 million for the three months ended March 31, 2022 and March 31, 2021, respectively. |
Reserve for Product Warranties
Reserve for Product Warranties | 3 Months Ended |
Mar. 31, 2022 | |
Product Warranties Disclosures [Abstract] | |
Reserve for Product Warranties | Reserve for Product Warranties We provide a warranty for products that is generally one year in length. In some cases, regulations may require us to provide repair or remediation beyond the typical warranty period. If any of the products contain defects, we may incur additional repair and remediation costs. Service, repair and calibration services are provided by a combination of our owned facilities and vendors on a contract basis. We accrue estimated product warranty costs at the time of sale based on historical experience. A warranty reserve is included in accrued liabilities for the expected future costs of servicing products. Additions to the reserve are based on management’s best estimate of probable liability. We consider a combination of factors including material and labor costs, regulatory requirements, and other judgments in determining the amount of the reserve. The reserve is reduced as costs are incurred to honor existing warranty and regulatory obligations. As of March 31, 2022, we have accrued $6.4 million for product related warranties. Our estimate of these costs is primarily based upon the number of units outstanding that may require repair and costs associated with shipping. The details of activity in the warranty reserve are as follows (in thousands): Three Months Ended 2022 2021 Balance, beginning of period $ 6,042 $ 5,195 Additions and adjustments charged to expense 1,363 341 Utilizations (958) (740) Balance, end of period $ 6,447 $ 4,796 Our estimate of future product warranty costs may vary from actual product warranty costs, and any variance from estimates could impact our cost of sales, operating profits and results of operations. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation As of March 31, 2022, we have one active share-based compensation plan, the 2021 Equity Incentive Plan. The terms of all awards granted during the three months ended March 31, 2022 and the methods for determining grant-date fair value of the awards are consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Details of share-based compensation expense are as follows (in thousands): Three Months Ended 2022 2021 Cost of revenue $ 113 $ 100 Marketing and selling 612 640 Research and development 195 355 General and administrative 1,699 1,923 Total $ 2,619 $ 3,018 As of March 31, 2022, unrecognized compensation expense related to the unvested portion of stock options and other stock awards was approximately $21.9 million, which is expected to be recognized over a weighted average period of 2.4 years. |
Other Expense, net
Other Expense, net | 3 Months Ended |
Mar. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Other Expense, net | Other Expense, net Other expense, net consists of (in thousands): Three Months Ended 2022 2021 Interest income $ 3 $ 3 Interest expense (267) (766) Foreign currency loss (307) (731) Other expense (236) (162) Total other expense, net $ (807) $ (1,656) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete events arising in each respective quarter. During each interim period, we update the estimated annual effective tax rate which is subject to significant volatility due to several factors, including our ability to accurately predict the income before provision for income taxes in multiple jurisdictions, the effects of acquisitions, the integration of those acquisitions, and changes in tax law. In circumstances where we are unable to predict income in multiple jurisdictions, the actual year to date effective tax rate may be the best estimate of the annual effective tax rate for purposes of determining the interim provision for income tax. We recorded income tax expense of $1.5 million and $0.5 million for the three months ended March 31, 2022 and March 31, 2021, respectively. The effective tax rate was 43.6% and 16.4% for the three months ended March 31, 2022 and March 31, 2021, respectively. The increase in the effective tax rate for the three months ended March 31, 2022 compared with the three months ended March 31, 2021, is primarily attributable to a tax law change in effect from January 1, 2022 that requires the capitalization of research and experimental costs under IRC Section 174 and directly increased the Company's Subpart F inclusion. The approximate impact of the change in the estimated tax rate due to all impacts from IRC Section 174 resulted in a $0.01 reduction in the GAAP earnings per share. Other significant factors impacting the current period effective tax rate included the benefit of Federal and California research and development credits, offset by global intangible low taxed income inclusions (“GILTI”) that was also impacted by IRC Section 174, and non-deductible executive compensation expenses. Factors impacting the effective rate for the three months ended March 31, 2021, include the benefit of Federal and California research and development credits, favorable discrete items for the carryback of losses, partially offset by non-deductible executive compensation expenses, and other discrete events. Under the Tax Cut and Jobs Act (the “Act”) enacted on December 22, 2017, research and experimental (“R&E”) expenditures under IRC Section 174 incurred for tax years beginning after December 31, 2021 must be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted, U.S. or foreign respectively. Although there is proposed legislation that would defer the capitalization requirement to later years, we have no assurance that IRC Section 174 will be repealed or otherwise modified. We recorded no change related to unrecognized tax benefits for the three months ended March 31, 2022. Within the next twelve months, it is possible that the uncertain tax positions may change with a range of approximately zero to $0.8 million. Our tax returns remain open to examination as follows: U.S Federal, 2018 through 2021, U.S. states, 2017 through 2021, and significant foreign jurisdictions, generally 2017 through 2021. |
Debt and Credit Arrangements
Debt and Credit Arrangements | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt and Credit Arrangements | Debt and Credit Arrangements We have a Credit Agreement with JP Morgan Chase Bank ("JP Morgan"), Citibank, NA (“Citibank”), and Wells Fargo Bank, National Association (“Wells Fargo”). During the third quarter of 2020 we amended the terms of the Credit Agreement to extend the maturity date of the original agreement, reduce the aggregate value of the revolving facility, and amend certain covenants. The amended Credit Agreement provides for an aggregate $150.0 million of secured revolving credit facility. The Credit Agreement contains covenants, including covenants relating to maintenance of books and records, financial reporting and notification, compliance with laws, maintenance of properties and insurance, and limitations on guaranties, investments, issuance of debt, lease obligations and capital expenditures, and is secured by virtually all of our assets. The Credit Agreement provides for events of default, including failure to pay any principal or interest when due, failure to perform or observe covenants, bankruptcy or insolvency events and the occurrence of the event has a material adverse effect. We have no other significant credit facilities. As of March 31, 2022, no amounts were outstanding under the Credit Agreement. In addition to the customary restrictive covenants listed above, the Credit Agreement also contains financial covenants that require us to maintain a certain leverage ratio and fixed charge coverage ratio, each as defined in the Credit Agreement: • Leverage Ratio, as defined, to be no higher than 3.25 to 1.00. • Interest Coverage Ratio, as defined, to be at least 1.75 to 1.00 at all times. |
Segment, Customer and Geographi
Segment, Customer and Geographic Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment, Customer and Geographic Information | Segment, Customer and Geographic Information We operate in one reportable segment in which we provide medical device solutions to screen, diagnose, and treat disorders affecting the brain, neural pathways, and eight sensory nervous systems. End-user customer base includes hospitals, clinics, laboratories, physicians, audiologists, and governmental agencies. Most of our international sales are to distributors who resell products to end users or sub-distributors. The following tables present revenue by end market and geographic region and long-lived asset information by geographic region. Revenue is based on the destination of the shipments and long-lived assets are based on the physical location of the assets (in thousands): Three Months Ended 2022 2021 Consolidated Revenue: United States $ 69,970 $ 67,772 International 49,823 47,155 Total $ 119,793 $ 114,927 Three Months Ended 2022 2021 Revenue by End Market: Brain Products: Devices and Systems $ 37,807 $ 37,293 Supplies 6,291 5,486 Services 7,290 5,705 Total Brain Revenue 51,388 48,484 Neural Pathway Products: Devices and Systems 9,657 8,832 Supplies 9,531 8,751 Services 204 257 Total Neural Pathways Revenue 19,392 17,840 Sensory Nervous Systems Products: Devices and Systems 23,342 21,292 Supplies 8,473 8,143 Services 5,858 6,097 Total Sensory Nervous Systems Revenue 37,673 35,532 Other Products: Devices and Systems 5,025 7,067 Supplies 2,781 2,898 Services 3,534 3,106 Total Other Revenue 11,340 13,071 Total Revenue $ 119,793 $ 114,927 March 31, 2022 December 31, 2021 Property and equipment, net: United States $ 9,635 $ 9,642 Ireland 6,131 6,223 Canada 3,546 3,594 Denmark 1,078 1,262 Other foreign countries 1,001 1,062 Total $ 21,391 $ 21,783 During the three months ended March 31, 2022 and 2021, no single customer and no country outside the United States contributed more than 10% of our consolidated revenue. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes the following three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value: Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events As previously announced, on April 17, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Prince Parent Inc., a Delaware corporation (“Parent”), and Prince Mergerco Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), providing for, among other things, the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of the Company (“Company Common Stock”) outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock held in treasury, held by Parent, Merger Sub or their respective subsidiaries or as to which appraisal rights have been perfected in accordance with the Delaware General Corporation Law, but including each share of Company Restricted Stock (as defined below)) will be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to $33.50, without interest thereon (the “Per Share Price”). Pursuant to the Merger Agreement, at the Effective Time: • except as set forth below with respect to Employee Interim Awards (as defined below), each share of Company Common Stock subject to vesting restrictions or a risk of forfeiture (“Company Restricted Stock”) outstanding as of immediately prior to the Effective Time, whether vested or unvested and whether or not granted pursuant to any of the Company’s equity plans (“Company Stock Plans”), will be cancelled and converted into and will become a right to receive an amount in cash, without interest and subject to any required tax withholding, equal to the Per Share Price; • except as set forth below with respect to Employee Interim Awards or as set forth in the CEO Retention Agreement (as defined below), each restricted stock unit in respect of shares of Company Common Stock (each, a “Company Restricted Stock Unit”) outstanding as of immediately prior to the Effective Time, whether vested or unvested and whether or not granted pursuant to any Company Stock Plan, will be cancelled and be converted into and will become a right to receive an amount in cash, without interest and subject to any required tax withholding, equal to (i) the amount of the Per Share Price; multiplied by (ii) (1) with respect to Company Restricted Stock Units that are only subject to time-vesting requirements, the total number of shares of Company Common Stock subject to such Company Restricted Stock Unit, and (2) with respect to Company Restricted Stock Units that are subject to time- and performance-vesting requirements, the total number of shares of Company Common Stock determined to be performance vested with the performance goals deemed achieved at maximum levels and with the remaining time-vesting requirements deemed satisfied; • any Company Restricted Stock and Company Restricted Stock Units granted after the date of the Merger Agreement, other than awards that may be granted to non-employee directors after the date of the Merger Agreement (such awards, “Employee Interim Awards”), that are outstanding as of immediately prior to the Effective Time, whether vested or unvested and whether or not granted pursuant to any Company Stock Plan, will be treated at the Effective Time in the manner set forth above, provided that any applicable performance goals will be deemed achieved at target levels, rather than at maximum, and the number of shares subject to such Employee Interim Awards that will vest at the Effective Time will be prorated to reflect the portion of the applicable vesting period that has elapsed from the date of grant until the Effective Time (rather than vesting in full), and the remaining unvested portion of any Employee Interim Awards will be forfeited at the Effective Time; • each option (or portion thereof) to purchase a share of Company Common Stock (a “Company Option”) that is outstanding as of immediately prior to the Effective Time, whether vested or unvested and whether or not granted pursuant to any Company Stock Plan, and that has an exercise price per share less than the Per Share Price (each, an “In-the-Money Company Option”) will be cancelled and converted into and will become a right to receive an amount in cash, without interest and subject to any required tax withholding, equal to (i) the amount of the Per Share Price (less the exercise price per share attributable to such Company Option), multiplied by (ii) the total number of shares of Company Common Stock that are issuable upon the full exercise of such Company Option; and • each Company Option that is not an In-the-Money Company Option will be cancelled without any cash payment being made in respect thereof. The consummation of the Merger (the “Closing”) is subject to certain customary closing conditions, including, but not limited to, the: (i) adoption of the Merger Agreement by the holders of a majority of the outstanding shares of Company Common Stock; (ii) expiration or termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and certain other applicable foreign antitrust laws and foreign direct investment laws of certain other jurisdictions; and (iii) absence of any law or order restraining, enjoining or otherwise prohibiting the Merger. The Merger is not subject to any financing condition. The transaction is expected to close in the third quarter of 2022, although there can be no assurance that the Merger will occur by that date, subject to customary closing conditions, including approval by the Company's stockholders and receipt of regulatory approvals. If the Merger Agreement is terminated by the Company in order for the Company to enter concurrently into an alternative acquisition agreement with respect to a Superior Proposal (as defined in the Merger Agreement), (i) prior to May 22, 2022 (the “Cut-Off Date”), the Company will be obligated to pay to Parent a one-time fee equal to $19,753,676 in cash or (ii) after the Cut-Off Date, the Company will be obligated to pay Parent a one-time fee equal to $39,507,352 in cash. The Company also expects to incur costs, expenses, and fees for professional services and other transaction costs in connection with the Merger. If the transaction closes, Natus will become a private company and Natus shares will no longer be listed on any public market. To encourage the continued retention of the Company's President and Chief Executive Officer, Thomas J. Sullivan, following the Closing, in connection with entering into the Merger Agreement, Parent required Mr. Sullivan to enter into a retention agreement, dated as of April 17, 2022, with Parent and the Company (the “CEO Retention Agreement”). Pursuant to the CEO Retention Agreement, Mr. Sullivan agreed that, notwithstanding the treatment of Company Restricted Stock Units set forth in the Merger Agreement (as described above), he would not receive payments in respect of his Company Restricted Stock Units that are market stock units (“MSUs”) based on deemed achievement of performance goals at maximum levels. Instead, Mr. Sullivan's MSUs will be deemed attained at the level of performance actually achieved through the Closing based on the Per Share Price (which is approximately 143.4% of target, in the case of MSUs granted to Mr. Sullivan in December 2021, and 139.6% of target, in the case of MSUs granted to Mr. Sullivan in January 2022), consistent with the level of return to the Company's stockholders pursuant to the Merger Agreement. The consequence to Mr. Sullivan will be a reduction by over $3.0 million in the amount of gross proceeds that he otherwise was entitled to receive and would have received in respect of his MSUs. Furthermore, pursuant to the CEO Retention Agreement, Mr. Sullivan agreed that an amount equal to $6.0 million (the “Retention Payment”) payable to him at the Effective Time in respect of his Company Restricted Stock Units would not become payable at the Effective Time and, instead, would become payable 50% on the six-month anniversary of the Closing and 50% on the one-year anniversary of the Closing, subject to his continued employment with the Company until the relevant retention date. If Mr. Sullivan's employment is terminated by the Company without cause, by Mr. Sullivan with good reason, or due to his death or disability, any then-unpaid portion of the Retention Payment shall be paid to him upon his termination (subject to, in the case of a termination by the Company without cause or by Mr. Sullivan for good reason, his execution and non-revocation of a release of claims). If Mr. Sullivan's employment terminates for any other reason prior to the relevant retention date, he will immediately forfeit all portions of the Retention Payment that relate to a future retention date. Mr. Sullivan's right to receive the Retention Payment is further subject to his continued compliance with certain restrictive covenants. At the Effective Time, all other amounts payable to Mr. Sullivan in respect of his Company Restricted Stock and Company Restricted Stock Units will become payable in accordance with the Merger Agreement, as described above. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying interim condensed consolidated financial statements of Natus Medical Incorporated (“we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Except where noted below within Note 1, the accounting policies followed in the preparation of the interim condensed consolidated financial statements are consistent in all material respects with those presented in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Interim financial reports are prepared in accordance with the rules and regulations of the Securities and Exchange Commission; accordingly, the reports do not include all of the information and notes required by GAAP for annual financial statements. The interim financial information is unaudited, and reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods presented. We have made certain reclassifications to the prior period to conform to current period presentation. The consolidated balance sheet as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The accompanying condensed consolidated financial statements include our accounts and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements None. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of contract assets and liabilities | The following table summarizes the changes in the unbilled AR and deferred revenue balances for the three months ended March 31, 2022 (in thousands): Unbilled AR, December 31, 2021 $ 252 Additions 1,535 Transferred to trade receivable (31) Unbilled AR, March 31, 2022 $ 1,756 Deferred revenue, December 31, 2021 $ 30,097 Additions 11,844 Revenue recognized (9,912) Deferred revenue, March 31, 2022 $ 32,029 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The components of basic and diluted EPS, and shares excluded from the calculation of diluted loss per share because the effect would have been anti-dilutive, are as follows (in thousands, except per share amounts): Three Months Ended 2022 2021 Net income $ 1,903 $ 2,396 Weighted average common shares 34,119 33,611 Dilutive effect of stock based awards 157 171 Diluted shares 34,276 33,782 Basic earnings per share $ 0.06 $ 0.07 Diluted earnings per share $ 0.06 $ 0.07 Shares excluded from calculation of diluted EPS — — |
Allowance for Doubtful Accoun_2
Allowance for Doubtful Accounts (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Credit Loss [Abstract] | |
Schedule of Allowance for Credit Losses | The details of activity in allowance for doubtful accounts are as follows (in thousands): Three Months Ended 2022 2021 Balance, beginning of period $ 5,271 $ 6,213 Additions charged to expense 87 101 Write-offs charged against allowance (361) (229) Balance, end of period $ 4,997 $ 6,085 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consist of the following (in thousands): March 31, 2022 December 31, 2021 Raw materials and subassemblies $ 25,092 $ 20,750 Work in process 2,739 2,825 Finished goods 59,011 57,836 Total inventories 86,842 81,411 Less: Non-current inventories (14,604) (13,666) Inventories, current $ 72,238 $ 67,745 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense related to intangible assets with definite lives | The following table summarizes the components of gross and net intangible asset balances (in thousands): March 31, 2022 December 31, 2021 Gross Accumulated Accumulated Net Book Gross Accumulated Accumulated Net Book Intangible assets with definite lives: Technology $ 99,288 $ (6,033) $ (67,934) $ 25,321 $ 99,920 $ (6,039) $ (66,679) $ 27,202 Customer related 89,260 (50) (58,913) 30,297 89,794 (50) (57,133) 32,611 Trade names 45,442 (3,235) (38,302) 3,905 45,593 (3,260) (36,960) 5,373 Internally developed software 13,281 — (13,010) 271 13,281 — (12,985) 296 Patents 2,688 (133) (2,555) — 2,705 (133) (2,572) — Service agreements 800 — (779) 21 800 — (769) 31 Definite-lived intangible assets $ 250,759 $ (9,451) $ (181,493) $ 59,815 $ 252,093 $ (9,482) $ (177,098) $ 65,513 Intangible assets with indefinite lives: Intellectual Property $ 1,993 $ (1,993) $ — $ — $ 2,004 $ (2,004) $ — $ — Total intangible assets $ 252,752 $ (11,444) $ (181,493) $ 59,815 $ 254,097 $ (11,486) $ (177,098) $ 65,513 |
Amortization expense | Amortization expense related to intangible assets with definite lives was as follows (in thousands): Three Months Ended 2022 2021 Technology $ 1,629 $ 1,795 Customer related 2,116 2,360 Trade names 1,443 1,483 Internally developed software 24 50 Service agreements 10 10 Total amortization $ 5,222 $ 5,698 |
Expected amortization expense related to amortizable intangible assets | Expected amortization expense related to definite-lived amortizable intangible assets is as follows (in thousands): Nine months ending December 31, 2022 $ 12,301 2023 14,748 2024 12,866 2025 12,261 2026 2,398 2027 2,267 Thereafter 2,974 Total expected amortization expense $ 59,815 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Carrying amount of Goodwill | The carrying amount of goodwill and the changes in the balance are as follows (in thousands): December 31, 2021 $ 148,657 Foreign currency translation (353) March 31, 2022 $ 148,304 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment net | Property and equipment, net consist of the following (in thousands): March 31, 2022 December 31, 2021 Land $ 1,781 $ 1,782 Buildings 7,209 7,238 Leasehold improvements 7,729 7,722 Finance lease right-of-use assets 2,037 2,356 Equipment and furniture 21,121 20,637 Computer software and hardware 11,566 11,308 Demonstration and loaned equipment 4,424 4,050 55,867 55,093 Accumulated depreciation (34,476) (33,310) Total $ 21,391 $ 21,783 |
Reserve for Product Warranties
Reserve for Product Warranties (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Product Warranties Disclosures [Abstract] | |
Reserve for Product Warranties | The details of activity in the warranty reserve are as follows (in thousands): Three Months Ended 2022 2021 Balance, beginning of period $ 6,042 $ 5,195 Additions and adjustments charged to expense 1,363 341 Utilizations (958) (740) Balance, end of period $ 6,447 $ 4,796 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation Expense | Details of share-based compensation expense are as follows (in thousands): Three Months Ended 2022 2021 Cost of revenue $ 113 $ 100 Marketing and selling 612 640 Research and development 195 355 General and administrative 1,699 1,923 Total $ 2,619 $ 3,018 |
Other Expense, net (Tables)
Other Expense, net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Other Expense, net | Other expense, net consists of (in thousands): Three Months Ended 2022 2021 Interest income $ 3 $ 3 Interest expense (267) (766) Foreign currency loss (307) (731) Other expense (236) (162) Total other expense, net $ (807) $ (1,656) |
Segment, Customer and Geograp_2
Segment, Customer and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Revenue and Long-lived Asset Information by Geographic Region | Revenue is based on the destination of the shipments and long-lived assets are based on the physical location of the assets (in thousands): Three Months Ended 2022 2021 Consolidated Revenue: United States $ 69,970 $ 67,772 International 49,823 47,155 Total $ 119,793 $ 114,927 Three Months Ended 2022 2021 Revenue by End Market: Brain Products: Devices and Systems $ 37,807 $ 37,293 Supplies 6,291 5,486 Services 7,290 5,705 Total Brain Revenue 51,388 48,484 Neural Pathway Products: Devices and Systems 9,657 8,832 Supplies 9,531 8,751 Services 204 257 Total Neural Pathways Revenue 19,392 17,840 Sensory Nervous Systems Products: Devices and Systems 23,342 21,292 Supplies 8,473 8,143 Services 5,858 6,097 Total Sensory Nervous Systems Revenue 37,673 35,532 Other Products: Devices and Systems 5,025 7,067 Supplies 2,781 2,898 Services 3,534 3,106 Total Other Revenue 11,340 13,071 Total Revenue $ 119,793 $ 114,927 March 31, 2022 December 31, 2021 Property and equipment, net: United States $ 9,635 $ 9,642 Ireland 6,131 6,223 Canada 3,546 3,594 Denmark 1,078 1,262 Other foreign countries 1,001 1,062 Total $ 21,391 $ 21,783 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | Mar. 31, 2022USD ($) |
Revenue from Contract with Customer [Abstract] | |
Short-term contract liability | $ 26.8 |
Long-term contract liability | 5.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 22.8 |
Expected timing of satisfaction for remaining performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 6.3 |
Expected timing of satisfaction for remaining performance obligation | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1.7 |
Expected timing of satisfaction for remaining performance obligation | 3 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 0.6 |
Expected timing of satisfaction for remaining performance obligation | 4 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 0.6 |
Expected timing of satisfaction for remaining performance obligation |
Revenue - Unbilled AR and Defer
Revenue - Unbilled AR and Deferred Revenue (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Deferred Revenue, December 31, 2018 | $ 30,097 |
Additions | 11,844 |
Revenue Recognized | (9,912) |
Deferred Revenue, March 31, 2019 | 32,029 |
Unbilled AR | |
Movement in Unbilled AR [Roll Forward] | |
Unbilled AR, December 31, 2018 | 252 |
Additions | 1,535 |
Transferred to trade receivable | (31) |
Unbilled AR, March 31, 2019 | $ 1,756 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net income | $ 1,903 | $ 2,396 |
Weighted average common shares (in shares) | 34,119 | 33,611 |
Dilutive effect of stock based awards (in shares) | 157 | 171 |
Diluted Shares (in shares) | 34,276 | 33,782 |
Basic earnings per share (dollars per share) | $ 0.06 | $ 0.07 |
Diluted earnings per share (dollars per share) | $ 0.06 | $ 0.07 |
Diluted earnings per share (in shares) | 0 | 0 |
Allowance for Doubtful Accoun_3
Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | $ 5,271 | $ 6,213 |
Additions charged to expense | 87 | 101 |
Write-offs charged against allowance | (361) | (229) |
Balance, end of period | $ 4,997 | $ 6,085 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Summary of Inventories | ||
Raw materials and subassemblies | $ 25,092 | $ 20,750 |
Work in process | 2,739 | 2,825 |
Finished goods | 59,011 | 57,836 |
Total inventories | 86,842 | 81,411 |
Less: Non-current inventories | (14,604) | (13,666) |
Inventories, current | $ 72,238 | $ 67,745 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Noncurrent inventories | $ 14,604 | $ 13,666 |
Intangible Assets - Components
Intangible Assets - Components of Gross and Net Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Intangible assets with definite lives: | ||
Gross Carrying Amount | $ 250,759 | $ 252,093 |
Accumulated Impairment | (9,451) | (9,482) |
Accumulated Amortization | (181,493) | (177,098) |
Net Book Value | 59,815 | 65,513 |
Intangible assets with indefinite lives: | ||
Gross Carrying Amount | 252,752 | 254,097 |
Accumulated Impairment | (11,444) | (11,486) |
Net Book Value | 59,815 | 65,513 |
Intellectual Property | ||
Intangible assets with indefinite lives: | ||
Gross Carrying Amount | 1,993 | 2,004 |
Impairment of Intangible Assets Indefined Lived (excluding Goodwill) | (1,993) | (2,004) |
Net Book Value | 0 | 0 |
Technology | ||
Intangible assets with definite lives: | ||
Gross Carrying Amount | 99,288 | 99,920 |
Accumulated Impairment | (6,033) | (6,039) |
Accumulated Amortization | (67,934) | (66,679) |
Net Book Value | 25,321 | 27,202 |
Customer related | ||
Intangible assets with definite lives: | ||
Gross Carrying Amount | 89,260 | 89,794 |
Accumulated Impairment | (50) | (50) |
Accumulated Amortization | (58,913) | (57,133) |
Net Book Value | 30,297 | 32,611 |
Trade names | ||
Intangible assets with definite lives: | ||
Gross Carrying Amount | 45,442 | 45,593 |
Accumulated Impairment | (3,235) | (3,260) |
Accumulated Amortization | (38,302) | (36,960) |
Net Book Value | 3,905 | 5,373 |
Internally developed software | ||
Intangible assets with definite lives: | ||
Gross Carrying Amount | 13,281 | 13,281 |
Accumulated Impairment | 0 | 0 |
Accumulated Amortization | (13,010) | (12,985) |
Net Book Value | 271 | 296 |
Patents | ||
Intangible assets with definite lives: | ||
Gross Carrying Amount | 2,688 | 2,705 |
Accumulated Impairment | (133) | (133) |
Accumulated Amortization | (2,555) | (2,572) |
Net Book Value | 0 | 0 |
Service agreements | ||
Intangible assets with definite lives: | ||
Gross Carrying Amount | 800 | 800 |
Accumulated Impairment | 0 | 0 |
Accumulated Amortization | (779) | (769) |
Net Book Value | $ 21 | $ 31 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 11 years | |
Total amortization | $ 5,222 | $ 5,698 |
Technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 14 years | |
Total amortization | $ 1,629 | 1,795 |
Customer related | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 10 years | |
Total amortization | $ 2,116 | 2,360 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 7 years | |
Total amortization | $ 1,443 | 1,483 |
Internally developed software | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 6 years | |
Costs incurred for development of internal use computer software | $ 11,100 | |
Costs incurred for development of software to be sold | 2,200 | |
Total amortization | $ 24 | 50 |
Patents | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 13 years | |
Service agreements | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 2 years | |
Total amortization | $ 10 | 10 |
General and administrative | Internally developed software | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | 24 | 24 |
Cost of sales | Internally developed software | Assets held for sale | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | $ 0 | $ 26 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | $ 5,222 | $ 5,698 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | 1,629 | 1,795 |
Customer related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | 2,116 | 2,360 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | 1,443 | 1,483 |
Internally developed software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | 24 | 50 |
Service agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization | $ 10 | $ 10 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Expected Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Expected annual amortization expense related to amortizable intangible assets | ||
Nine months ending December 31, 2022 | $ 12,301 | |
2019 | 14,748 | |
2020 | 12,866 | |
2021 | 12,261 | |
2022 | 2,398 | |
2023 | 2,267 | |
Thereafter | 2,974 | |
Net Book Value | $ 59,815 | $ 65,513 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Carrying amount of goodwill | |
44561 | $ 148,657 |
Foreign currency translation | (353) |
44651 | $ 148,304 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 55,867 | $ 55,093 | |
Finance Lease, Right-of-Use Asset | 2,037 | 2,356 | |
Accumulated depreciation | (34,476) | (33,310) | |
Total | 21,391 | 21,783 | |
Depreciation | 1,500 | $ 1,600 | |
Depreciation | 1,500 | $ 1,600 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,781 | 1,782 | |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 7,209 | 7,238 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 7,729 | 7,722 | |
Equipment and furniture | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 21,121 | 20,637 | |
Computer software and hardware | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 11,566 | 11,308 | |
Demonstration and loaned equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 4,424 | $ 4,050 |
Reserve for Product Warrantie_2
Reserve for Product Warranties - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
Product Warranties Disclosures [Abstract] | ||||
Product warranty period (in years) | 1 year | |||
Product Liability Contingency [Line Items] | ||||
Accrual of estimated costs | $ 6,447 | $ 6,042 | $ 4,796 | $ 5,195 |
Reserve for Product Warrantie_3
Reserve for Product Warranties - Schedule of Warranty Reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Reserve for Product Warranties | ||
Balance, beginning of period | $ 6,042 | $ 5,195 |
Additions and adjustments charged to expense | 1,363 | 341 |
Utilizations | (958) | (740) |
Balance, end of period | $ 6,447 | $ 4,796 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($)plan | |
Share-based Payment Arrangement [Abstract] | |
Number of active share based compensation plans | plan | 1 |
Unrecognized compensation expense related to unvested portion of stock options | $ | $ 21.9 |
Weighted average period of recognition of unrecognized compensation expense | 2 years 4 months 24 days |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 2,619 | $ 3,018 |
Cost of revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 113 | 100 |
Marketing and selling | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 612 | 640 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 195 | 355 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 1,699 | $ 1,923 |
Other Expense, net (Details)
Other Expense, net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Other expense, net | ||
Interest income | $ 3 | $ 3 |
Interest expense | (267) | (766) |
Foreign currency loss | (307) | (731) |
Other expense | (236) | (162) |
Total other expense, net | $ (807) | $ (1,656) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Provision for income taxes | $ 1,471,000 | $ 468,000 |
Effective income tax rate | 43.60% | 16.40% |
Reduction to GAAP EPS | $ 0.01 | |
Change in unrecognized tax benefits | $ 0 | |
Minimum | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Possible of uncertain tax benefit within the next twelve months | 0 | |
Maximum | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Possible of uncertain tax benefit within the next twelve months | $ 800,000 |
Debt and Credit Arrangements -
Debt and Credit Arrangements - Narrative (Details) - Citibank, National Association - Revolving Credit Facility | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Line of Credit Facility [Line Items] | |
Aggregate secured revolving credit facility | $ 150,000,000 |
Amount outstanding on the Credit Agreement | $ 0 |
Federal Funds Rate | |
Line of Credit Facility [Line Items] | |
Interest rate | 0.50% |
LIBOR rate | |
Line of Credit Facility [Line Items] | |
Interest rate | 1.00% |
Maximum | LIBOR rate | |
Line of Credit Facility [Line Items] | |
Interest rate | 350.00% |
Minimum | |
Line of Credit Facility [Line Items] | |
Leverage Ratio | 3.25 |
Interest Coverage Ratio | 1.75 |
Minimum | LIBOR rate | |
Line of Credit Facility [Line Items] | |
Interest rate | 225.00% |
Segment, Customer and Geograp_3
Segment, Customer and Geographic Information - Narrative (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
Segment Reporting [Abstract] | |
Number of reportable segments (segments) | 1 |
Segment, Customer and Geograp_4
Segment, Customer and Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Consolidated Revenue: | |||
Revenue | $ 119,793 | $ 114,927 | |
Revenue by End Market: | |||
Total Revenue | 119,793 | 114,927 | |
Property and equipment, net: | |||
Property and equipment, net | 21,391 | $ 21,783 | |
Brain Products: | |||
Revenue by End Market: | |||
Total Revenue | 51,388 | 48,484 | |
Brain Products: | Devices and Systems | |||
Revenue by End Market: | |||
Total Revenue | 37,807 | 37,293 | |
Brain Products: | Supplies | |||
Revenue by End Market: | |||
Total Revenue | 6,291 | 5,486 | |
Brain Products: | Services | |||
Revenue by End Market: | |||
Total Revenue | 7,290 | 5,705 | |
Neural Pathway Products: | |||
Revenue by End Market: | |||
Total Revenue | 19,392 | 17,840 | |
Neural Pathway Products: | Devices and Systems | |||
Revenue by End Market: | |||
Total Revenue | 9,657 | 8,832 | |
Neural Pathway Products: | Supplies | |||
Revenue by End Market: | |||
Total Revenue | 9,531 | 8,751 | |
Neural Pathway Products: | Services | |||
Revenue by End Market: | |||
Total Revenue | 204 | 257 | |
Sensory Nervous Systems Products: | |||
Revenue by End Market: | |||
Total Revenue | 37,673 | 35,532 | |
Sensory Nervous Systems Products: | Devices and Systems | |||
Revenue by End Market: | |||
Total Revenue | 23,342 | 21,292 | |
Sensory Nervous Systems Products: | Supplies | |||
Revenue by End Market: | |||
Total Revenue | 8,473 | 8,143 | |
Sensory Nervous Systems Products: | Services | |||
Revenue by End Market: | |||
Total Revenue | 5,858 | 6,097 | |
Other Products: | |||
Revenue by End Market: | |||
Total Revenue | 11,340 | 13,071 | |
Other Products: | Devices and Systems | |||
Revenue by End Market: | |||
Total Revenue | 5,025 | 7,067 | |
Other Products: | Supplies | |||
Revenue by End Market: | |||
Total Revenue | 2,781 | 2,898 | |
Other Products: | Services | |||
Revenue by End Market: | |||
Total Revenue | 3,534 | 3,106 | |
United States | |||
Consolidated Revenue: | |||
Revenue | 69,970 | 67,772 | |
Property and equipment, net: | |||
Property and equipment, net | 9,635 | 9,642 | |
International | |||
Consolidated Revenue: | |||
Revenue | 49,823 | $ 47,155 | |
Property and equipment, net: | |||
Property and equipment, net | 1,001 | 1,062 | |
Ireland | |||
Property and equipment, net: | |||
Long-Lived Assets | 6,131 | 6,223 | |
Canada | |||
Property and equipment, net: | |||
Property and equipment, net | 3,546 | 3,594 | |
Denmark | |||
Property and equipment, net: | |||
Property and equipment, net | $ 1,078 | $ 1,262 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Gain (Loss) on Disposition of Property Plant Equipment | $ (30) | $ (8) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Apr. 17, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Subsequent Event [Line Items] | |||
Common Stock, par value (dollars per share) | $ 0.001 | $ 0.001 | |
Subsequent Event | Chief Executive Officer | Market Stock Units (MSUs) | |||
Subsequent Event [Line Items] | |||
Reduction in gross proceeds to CEO | $ 3,000,000 | ||
Subsequent Event | Chief Executive Officer | Market Stock Units (MSUs) | December 2021 | |||
Subsequent Event [Line Items] | |||
MSU attained at level of performance achieved through Closing | 139.60% | ||
Subsequent Event | Chief Executive Officer | Market Stock Units (MSUs) | January 2022 | |||
Subsequent Event [Line Items] | |||
MSU attained at level of performance achieved through Closing | 143.40% | ||
Subsequent Event | Natus Medical Incorporated | Prince Parent, Inc. | |||
Subsequent Event [Line Items] | |||
Business acquisition, share price (in dollars per share) | $ 33.50 | ||
Fee paid if agreement terminated prior to cut-off date | $ 19,753,676 | ||
Fee paid if agreement terminated after cut-off date | 39,507,352 | ||
Subsequent Event | Natus Medical Incorporated | Chief Executive Officer | Prince Parent, Inc. | |||
Subsequent Event [Line Items] | |||
Retention payment | $ 6,000,000 | ||
Retention payment, percent | 50.00% | ||
Retention payment due at six-month anniversary | 6 months | ||
Retention payment due at one-year anniversary | 1 year |