Exhibit 99.1
Natus Medical Reports Record Third Quarter Revenue and Earnings;
Company Provides 2006 Earnings Guidance
SAN CARLOS, Calif.--(BUSINESS WIRE)--Oct. 26, 2005--Natus Medical
Incorporated (Nasdaq:BABY) today announced financial results for the
three and nine months ended September 30, 2005.
The Company reported record third-quarter revenue of $10.6 million
for the three months ended September 30, 2005, an increase of $1.6
million or 17% from $9.0 million reported in the comparable period of
the previous year. The Company reported record third-quarter net
income of $1.5 million or $0.08 per diluted share for the 2005 period,
compared with net income of $147,000 or $0.01 per share for the
comparable period in 2004.
For the first nine months of 2005, revenue increased 17% to $30.4
million, from $26.0 million reported in the comparable period in 2004.
Net income for the nine months ended September 30, 2005 was $3.7
million or $0.20 per diluted share, compared to a loss of $3.9
million, or ($0.23) loss per share reported in 2004.
Gross margin improved to 65.4% for the three months ended
September 30, 2005, compared with 57.1% for the third quarter of 2004.
The gross margin for the 2005 period was favorably impacted by
reductions in materials costs and by a higher margin contributed by
the Company's Fischer-Zoth subsidiary that was acquired on September
28, 2004.
For the three months ended September 30, 2005 operating expenses
increased approximately 19% to $5.6 million, compared with $4.7
million for the third quarter of 2004. Costs associated with the
operations of the Company's Fischer-Zoth subsidiary and ongoing costs
of complying with the Sarbanes-Oxley Act contributed to an approximate
$1.4 million increase in operating costs. The increase was partially
offset by $550,000 for acquired in-process research and development
recorded in the third quarter of 2004 that did not recur in 2005.
Taken together, these factors led to an approximate $880,000 increase
in operating expenses in the 2005 period.
As of September 30, 2005, the Company reported cash, cash
equivalents and short-term investments of $41.8 million, representing
an increase of approximately $6.1 million from the corresponding
amount at December 31, 2004. Additionally, the Company reported
stockholders' equity of $56.8 million and working capital of $45.6
million as of September 30, 2005.
"We are extremely pleased with our results for the third quarter,"
said Jim Hawkins, President and Chief Executive Officer of Natus
Medical. "The acquisition of Fischer-Zoth contributed to our improved
gross profit on a quarter-over-quarter basis, and much of the increase
in our operating expenses was related to their operations. We are also
pleased that our operating margin was consistent with our plan."
"2005 continues to be a great year for Natus as we have shown
consistent growth, improving gross profits, and increased
profitability. Even with these excellent results, we can't help but
look ahead to 2006 anticipating the acquisition of Bio-logic Systems.
We believe this acquisition will allow Natus to expand into new
markets and strengthen our presence in existing markets, while
achieving synergies that should result in increased earnings," Hawkins
added.
Financial Guidance
The Company updated financial guidance for 2005. The Company
expects to report earnings per diluted share of $0.31 to $0.32 on
revenue of $42.2 to $42.5 million in 2005. This compares to a loss per
share of $0.17 on revenue of $36.5 million reported last year. Natus
had previously said it expected to earn $0.30 to $0.33 per diluted
share in 2005 on revenue of $41.6 to $43.0 million.
For 2006, the Company expects to report diluted earnings per share
of $0.48 to $0.50 on revenue of $78 to $80 million. These expected
results assume the Company completes its acquisition of Bio-logic
Systems in early January 2006. Additionally, the Company expects that
its effective tax rate will rise to 15% in 2006. The estimates of
earnings per share do not include any one-time charges associated with
the acquisition of Bio-logic Systems or the impact of expensing
employee stock options. The Company is continuing to evaluate the
impact of expensing employee stock options, which it will be required
to do under Financial Accounting Standards Board Statement No. 123R,
"Share-Based Payment" beginning with its first quarterly period in
2006.
Conference Call
Natus has scheduled an investor conference call to discuss this
announcement beginning at 11:00 a.m. Eastern Time today. Individuals
interested in listening to the conference call may do so by dialing
(800) 638-5439 for domestic callers, or (617) 614-3945 for
international callers, and entering reservation code 43201867. A
telephone replay will be available for 48 hours following the
conclusion of the call by dialing (888) 286-8010 for domestic callers,
or (617) 801-6888 for international callers, and entering reservation
code 94594612.
The conference call also will be available real-time via the
Internet at http://investor.natus.com, and a recording of the call
will be available on the Company's Web site for 90 days following the
completion of the call.
About Natus Medical
Natus develops, manufactures, and markets products for the
detection, treatment, monitoring, and tracking of common disorders in
newborns and children. Natus products are marketed under
well-recognized brand names such as ALGO(R), Neometrics(TM),
Echo-Screen(R), and neoBLUE(R). Headquartered in San Carlos,
California, Natus markets and sells its products worldwide through a
direct sales force in the U.S. and the U.K., and through distributors
in over 80 other countries. Additional information about Natus Medical
can be found at www.natus.com.
This press release contains forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995, particularly
statements regarding the expectations, beliefs, plans, intentions and
strategies of Natus. These forward-looking statements include, but are
not limited to, statements regarding anticipated revenue and
profitability for the full-year 2005 as well as for the fourth quarter
of 2005, anticipated revenue and profitability for the full-year 2006,
and expectations regarding future expansion into new markets and
increased earnings resulting from the acquisition of Bio-logic
Systems. These statements relate to future events or Natus' future
financial performance or results, and involve known and unknown risks,
uncertainties and other factors that may cause actual results, levels
of activity, performance, or achievements to differ materially from
those expressed or implied by the forward-looking statements.
Forward-looking statements are only predictions and the actual events
or results may differ materially. Natus cannot provide any assurance
that its future results or the results implied by the forward-looking
statements will meet expectations. Our future results could differ
materially due to a number of factors, including the effects of
competition, the demand for our products and services, our ability to
expand our sales in international markets, our ability to maintain
current sales levels in a mature domestic market, our ability to
control costs, and risks associated with bringing new products to
market and integrating acquired businesses. Natus disclaims any
obligation to update information contained in any forward-looking
statement.
More information about potential risk factors that could affect
the business and financial results of Natus is included in Natus'
annual report on Form 10-K for the year ended December 31, 2004, and
its quarterly reports on Form 10-Q, and in other reports filed from
time to time by Natus with the U.S. Securities and Exchange
Commission.
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30, December 31,
2005 2004
ASSETS
Current assets:
Cash and equivalents $ 28,167 $ 16,239
Short-term investments 13,647 19,504
Accounts receivable, net of allowance
for doubtful accounts of $ 449 in
2005 and $472 in 2004 5,879 6,640
Inventories 3,888 4,347
Prepaid expenses and other current assets 465 625
Total current assets 52,046 47,355
Property and equipment, net 2,293 2,503
Goodwill, intangibles, and other assets 8,868 9,399
Total assets $ 63,207 $ 59,257
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 1,676 $ 1,947
Accrued liabilities 4,415 4,303
Deferred revenues 317 279
Total liabilities 6,408 6,529
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value,
120,000,000 shares authorized; shares
issued and outstanding: 17,309,099 in
2005 and 17,140,339 in 2004 90,133 89,373
Accumulated deficit (33,213) (36,902)
Accumulated other comprehensive income (121) 257
Total stockholders' equity 56,799 52,728
Total liabilities and
stockholders' equity $ 63,207 $ 59,257
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September September September September
2005 2004 2005 2004
Revenue $ 10,551 $ 9,011 $ 30,422 $ 25,980
Cost of revenue 3,645 3,864 11,435 11,370
Gross profit 6,906 5,147 18,987 14,610
Operating expenses:
Marketing and selling 2,916 2,318 8,355 8,399
Research and development 1,162 670 3,233 2,648
General and administrative 1,521 1,180 4,071 5,204
Restructuring cost - - - 776
Acquired IPR&D - 550 - 550
Total operating expenses 5,599 4,718 15,659 17,577
Income (loss) from operations 1,307 429 3,328 (2,967)
Other income/(expense):
Interest income 314 117 750 313
Interest expense - - - (3)
Other income, net 5 (29) 37 (130)
Total other
income/(expense) 319 88 787 180
Income (loss) before
provision for income tax 1,626 517 4,115 (2,787)
Provision for income tax 111 65 426 66
Income (loss) from continuing
operations 1,515 452 3,689 (2,853)
Discontinued operations - (305) - (1,072)
Net income (loss) $ 1,515 $ 147 $ 3,689 $ (3,925)
Earnings (loss) per share:
Basic:
Continuing operations $ 0.09 $ 0.03 $ 0.21 $ (0.17)
Discontinued operations $ - $ (0.02) $ - $ (0.06)
Net income (loss) $ 0.09 $ 0.01 $ 0.21 $ (0.23)
Diluted:
Continuing operations $ 0.08 $ 0.03 $ 0.20 $ (0.17)
Discontinued operations $ - $ (0.02) $ - $ (0.06)
Net income (loss) $ 0.08 $ 0.01 $ 0.20 $ (0.23)
Weighted-average shares used
to compute
Basic earnings per share 17,292 17,011 17,224 16,740
Diluted earnings per share 18,877 17,899 18,574 16,740
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF TOTAL OPERATING EXPENSE CALCULATION EXCLUDING IPR&D
(in thousands)
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2005 2004 2005 2004
Total operating expenses $ 5,599 $ 4,718 $ 15,659 $17,577
NON-GAAP ADJUSTMENT:
Exclude acquired in-process
research and development - 550 - 550
Pro-forma operating expenses
excluding acquired in-
process research and
development $ 5,599 $ 4,168 $ 15,659 $17,027
CONTACT: Natus Medical Incorporated
Steven J. Murphy, 650-802-0400
InvestorRelations@Natus.com