Exhibit 99.1
Natus Medical Announces Record 2007
Second Quarter Financial Results
- Company Reports Record Second Quarter Revenue and Earnings
- Updates 2007 Revenue and Earnings Guidance
SAN CARLOS, Calif.--(BUSINESS WIRE)--Aug. 2, 2007--Natus Medical
Incorporated (Nasdaq:BABY) today announced financial results for the
three and six month periods ended June 30, 2007.
For the second quarter ended June 30, 2007, Natus reported revenue
of $28.3 million, representing a 42% increase from $20.0 million in
the comparable quarter of the previous year. The Company reported net
income of $2.3 million, or $0.10 per diluted share, for the second
quarter of 2007, compared with net income of $1.4 million, or $0.07
per diluted share, for the second quarter of 2006.
For the six months ended June 30, 2007, the Company reported net
income of $3.8 million, or $0.17 per diluted share, compared to a loss
of $3.3 million, or $(0.18) per share, for the comparable period in
2006. The results for the 2006 period 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 for the six months ended June 30, 2006 were $2.6 million, or
$0.13 per diluted share. The results for the first six months of 2007
reflect increases in net income and earnings per share of 48% and 31%,
respectively, compared to the non-GAAP results in 2006.
Jim Hawkins, President and Chief Executive Officer of the Company
said, "I am pleased with our record results for the second quarter.
The quarter was led by strong growth in our worldwide hearing
screening business and the results of our most recent acquisition,
Olympic Medical.
"As we previously reported, we increased spending for
infrastructure in the first quarter. In the second quarter of this
year, our general and administrative expenses have come down to more
normal levels. Our higher level of spending on R&D initiatives has
continued into the second quarter, most notably for our hearing and
EEG product lines, but we expect that our expenditures for these
projects should be winding down in the fourth quarter."
"In transitioning production of the Olympic Cool-Cap from clinical
units to commercial units, we updated many of its components. Because
of its Class III device status, these component updates must receive
FDA pre-market approval. Consequently, in June we put a hold on
shipments of Cool-Cap units. While this delay impacted shipments, it
did not have an adverse impact on orders. We held up approximately
$500,000 of Cool-Cap shipments in the second quarter because of this
issue. We will resume shipments of the Cool-Cap upon FDA approval of
the new components, which we anticipate happening in the third
quarter," added Hawkins.
"Even with this shipping delay, we still had an excellent quarter
with record results. Through our internal product development and
acquisitions we have developed market-leading positions for a number
of our products. We remain confident in our strategy as we continue to
position the company for growth in 2008 and beyond," said Hawkins.
During 2006 the Company completed the acquisitions of Bio-logic
Systems, Deltamed, and Olympic Medical, in January, September, and
October, respectively. The acquisitions of Deltamed and Olympic
contributed to the reported revenue growth in the second quarter 2007.
As of June 30, 2007 the Company had cash and cash equivalents of
$18.3 million, stockholders' equity of $107 million, working capital
of $39 million, and no long-term debt.
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
$118.3 million to $119.3 million. The Company had previously said
revenue would range from $117.5 million to $119.0 million. The Company
reiterated its earnings per share guidance, which it expects to range
from $0.49 to $0.52 per share.
Natus also increased its previously announced revenue guidance for
the third quarter of 2007. For the third quarter of 2007, the Company
expects revenue to range from $30.0 million to $30.5 million. The
Company had previously said revenue would range from $29.5 million to
$30.0 million. The Company reiterated its earnings per share guidance,
which it expects 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 of 2006.
For the fourth quarter of 2007, the Company expects revenue to
range from $32.9 million to $33.4 million and earnings per share to
range from $0.19 to $0.21. This compares to revenue of $28.8 million
and earnings per share of $0.02 reported in the fourth quarter of
2006. The results for the 2006 period included a $3.9 million charge
for acquired in-process research and development associated with the
acquisition of Olympic Medical.
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, which the
Company expects to be approximately $2.1 million for the full year
2007. The Company's guidance does not include the impact of any
one-time acquisition or restructuring related charges. 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) 700-7101 for domestic
callers, or (617) 213-8837 for international callers, and entering
reservation code 28035577. 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 36859792.
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, earnings growth, anticipated revenue and profitability for
the third quarter, fourth quarter, and full year 2007, and the timing
for resumption of shipment of Cool-Cap units. 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, challenges
incurred in integrating acquired companies, 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 Six Months
Ended Ended
June June June June
2007 2006 2007 2006
------- ------- ------- -------
Revenue $28,260 $19,966 $55,310 $39,349
Cost of revenue 10,151 7,216 20,326 14,509
------- ------- ------- -------
Gross profit 18,109 12,750 34,984 24,840
------- ------- ------- -------
Operating expenses:
Marketing and selling 6,900 4,993 13,395 10,156
Research and development 4,372 2,459 8,196 4,949
General and administrative 3,589 2,779 7,698 4,933
Acquired IPR&D - - - 5,900
------- ------- ------- -------
Total operating expenses 14,861 10,231 29,289 25,938
------- ------- ------- -------
Income from operations 3,248 2,519 5,695 (1,098)
------- ------- ------- -------
Other income/(expense):
Interest income 184 75 370 244
Interest expense - (173) - (339)
Other income, net 50 80 105 (36)
------- ------- ------- -------
Total other income/(expense) 234 (18) 475 (131)
------- ------- ------- -------
Income before provision for income
tax 3,482 2,501 6,170 (1,229)
Provision for income tax 1,156 1,130 2,325 2,079
------- ------- ------- -------
Net income (loss) $ 2,326 $ 1,371 $ 3,845 $(3,308)
======= ======= ======= =======
Earnings (loss) per share:
Basic $ 0.11 $ 0.07 $ 0.18 $ (0.18)
Diluted $ 0.10 $ 0.07 $ 0.17 $ (0.18)
Weighted-average shares used to
compute
Basic earnings per share 21,584 18,597 21,525 18,541
Diluted earnings per share 22,830 19,923 22,783 18,541
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June June June June
2007 2006 2007 2006
--------- -------- ------- --------
GAAP based results:
Net Income (loss) $ 2,326 $ 1,371 $ 3,845 $(3,308)
Non-GAAP adjustments:
Acquired in-process research
and development (see note) - - - 5,900 (a)
--------- -------- ------- --------
Non-GAAP net income $ 2,326 $ 1,371 $ 3,845 $ 2,592
========= ======== ======= ========
Earnings per share:
Basic $ 0.11 $ 0.07 $ 0.18 $ 0.14
Diluted $ 0.10 $ 0.07 $ 0.17 $ 0.13
Weighted-average shares used
to compute
Basic earnings per share 21,584 18,597 21,525 18,541
Diluted earnings per share 22,830 19,923 22,783 19,980
(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