Exhibit 99.1
Natus Medical Announces 2007 First Quarter Financial Results
-- Company Reports Record First Quarter Revenue and Earnings
-- Increases 2007 Revenue Guidance
SAN CARLOS, Calif.--(BUSINESS WIRE)--May 3, 2007--Natus Medical
Incorporated (Nasdaq:BABY) today announced financial results for the
three months ended March 31, 2007.
For the first quarter ended March 31, 2007, Natus reported revenue
of $27.1 million, representing a 40% increase from $19.4 million in
the comparable quarter of the previous year. The Company reported net
income of $1.5 million, or $0.07 per diluted share, for the first
quarter of 2007, compared with a net loss of $4.7 million, or a loss
of $(0.25) per share, for the first quarter of 2006.
The results for the first quarter of 2006 included a charge for
in-process research and development associated with the acquisition of
Bio-logic Systems Corp. in January 2006. Excluding this charge,
non-GAAP earnings were $1.2 million, or $0.06 per diluted share. The
results for 2007 reflect increases in net income and earnings per
share of 24% and 17%, respectively, compared to the 2006 non-GAAP
results.
During 2006 the Company completed the acquisitions of Bio-logic
Systems in January, Deltamed in September, and Olympic Medical in
October. The acquisitions of Deltamed and Olympic contributed to the
revenue growth in the first quarter 2007.
As of March 31, 2007 the Company had cash, cash equivalents, and
short-term investments of $16.8 million, stockholders' equity of
approximately $103 million, working capital of approximately $34
million, and no long-term debt.
Jim Hawkins, President and Chief Executive Officer of the Company,
said, "I am very pleased with our results for the first quarter of
2007. We achieved outstanding results at Olympic Medical, along with
solid year over year revenue results in our core Natus lines. With the
integration of Olympic substantially complete, I believe we are well
positioned for continued revenue and earnings growth throughout the
remainder of 2007."
"As the quarter progressed, the strength in our top-line growth
gave us the confidence to invest additional resources towards building
infrastructure to support our long term growth plans," added Hawkins.
"As anticipated, our first quarter overhead expenses ran at a higher
rate than normal."
"We are clearly pleased with the results for Olympic, including
the Olympic CFM brain monitor and Cool-Cap head-cooling system, and
the strong performance of our core brands. With the transition to our
direct selling approach for the Olympic product lines now complete,
and the favorable revenue results for the quarter, we are increasing
our revenue guidance for 2007," said Hawkins. "We are maintaining our
earnings guidance for the year, as it is our intent to continue
building infrastructure to achieve our aggressive growth targets for
2008 and 2009."
2007 Guidance
Natus increased its revenue guidance for the full year 2007. For
the full year 2007, the Company now expects revenue to range from
$117.5 million to $119.0 million and earnings per share to range from
$0.49 to $0.52. The Company had previously said revenue would range
from $115 million to $117 million.
Natus also increased its previously announced revenue guidance for
the second quarter of 2007. For the second quarter 2007, the Company
expects revenue to range from $28.0 million to $28.5 million and
earnings per share to range from $0.10 to $0.11. This compares to
revenue of $20.0 million and earnings per share of $0.07 reported in
the second quarter 2006. The Company had previously said revenue would
range from $27.5 million to $28.0 million.
For the third quarter 2007, the Company expects revenue to range
from $29.5 million to $30.0 million and earnings per share to range
from $0.13 to $0.14. This compares to revenue of $21.8 million and
earnings per share of $0.09 reported in the third quarter 2006.
The Company expects that it will utilize tax net operating loss
carryforwards to significantly reduce its taxable income in 2007, such
that it will pay taxes at a rate of only 12% to 15% for the year.
The Company's 2007 guidance is on a GAAP basis, including the
impact of expensing employee equity-based compensation, however it
does not include the impact of any one-time acquisition or
restructuring related charges that may be incurred in 2007. All
earnings per share amounts are on a diluted basis.
Use of Non-GAAP Financial Measures
In addition to disclosing financial results calculated in
accordance with GAAP, this release contains non-GAAP financial
measures that exclude the effects of costs associated with the January
5, 2006 acquisition of Bio-logic Systems Corp. The Company believes
that the presentation of results excluding this acquisition-related
charge provides meaningful supplemental information to both management
and investors that is indicative of the Company's core operating
results. The Company also believes the in-process research and
development charge is not indicative of resources devoted to ongoing
research and development efforts. Therefore, the Company believes the
non-GAAP financial measures facilitate comparison of operating results
across reporting periods. A reconciliation between the Company's
results of operations on a GAAP and non-GAAP basis for the periods
reported is included as part of the condensed consolidated statements
of operations at the end of the Company's financial results release.
The Company believes that both management and investors benefit
from referring to these non-GAAP financial measures in assessing the
Company's performance and when planning, forecasting, and analyzing
future periods. The non-GAAP financial measures also facilitate
management's internal comparisons to the Company's historical
performance. The non-GAAP financial measures disclosed by the Company
should not be considered a substitute for or superior to financial
measures calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated.
Conference Call
Natus has scheduled an investment-community conference call to
discuss this announcement beginning at 11:00 a.m. Eastern Time today
(8:00 a.m. Pacific Time). Individuals interested in listening to the
conference call may do so by dialing (866) 277-1184 for domestic
callers, or (617) 597-5360 for international callers, and entering
reservation code 93291375. 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 89050786.
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 Incorporated
Natus is a leading provider of healthcare products used for the
screening, detection, treatment, monitoring and tracking of common
medical ailments such as hearing impairment, neurological dysfunction,
epilepsy, sleep disorders, and newborn care. Product offerings include
computerized neurodiagnostic systems for audiology, neurology,
polysomnography, and neonatology, as well as newborn care products
such as hearing screening systems, phototherapy devices for the
treatment of newborn jaundice, head-cooling products for the treatment
of brain injury in newborns, and software systems for managing and
tracking disorders and diseases for public health laboratories.
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 future revenue, expenses, cash
tax rates, and earnings growth, and anticipated revenue and
profitability for the second quarter, third quarter, and full year
2007. 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, 2006, 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 STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
March March
2007 2006
--------- ---------
Revenue $ 27,050 $ 19,383
Cost of revenue 10,175 7,294
--------- ---------
Gross profit 16,875 12,089
--------- ---------
Operating expenses:
Marketing and selling 6,496 5,161
Research and development 3,824 2,490
General and administrative 4,108 2,155
Acquired IPR&D - 5,900
--------- ---------
Total operating expenses 14,428 15,706
--------- ---------
Income from operations 2,447 (3,617)
-------- --------
Other income/(expense):
Interest income 186 169
Interest expense - (165)
Other income, net 55 (117)
--------- ---------
Total other income/(expense) 241 (113)
--------- ---------
Income before provision for income tax 2,688 (3,730)
Provision for income tax 1,169 949
--------- ---------
Net income (loss) $ 1,519 $ (4,679)
========= =========
Earnings (loss) per share:
Basic $ 0.07 $ (0.25)
Diluted $ 0.07 $ (0.25)
Weighted-average shares used to compute
Basic earnings per share 21,466 18,485
Diluted earnings per share 22,734 18,485
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED)
(in thousands)
Three Months Ended
March March
2007 2006
--------- ---------
GAAP based results:
Net Income (loss) $ 1,519 $ (4,679)
Non-GAAP adjustments:
Acquired in-process research and development
(see note) - 5,900 (a)
Non-GAAP net income $ 1,519 $ 1,221
========= =========
Earnings per share:
Basic $ 0.07 $ 0.07
Diluted $ 0.07 $ 0.06
Weighted-average shares used to compute
Basic earnings per share 21,466 18,485
Diluted earnings per share 22,734 20,239
(a) Charges for acquired in-process research and development expense
of $5,900 related to the acquisition of Bio-logic Systems Corp. on
January 5, 2006. Management believes that excluding this charges
facilitates comparisons of Natus' core operating results across
multiple reporting periods. Since the IPR&D charge is not expected to
be tax deductible, reversal of this charge has no impact on the tax
provision.
CONTACT: Natus Medical Incorporated
Steven J. Murphy, 650-802-0400
Chief Financial Officer
InvestorRelations@Natus.com