PLEASANTON, Calif., July 30, 2020 (GLOBE NEWSWIRE) — Natus Medical Incorporated (NASDAQ:NTUS) (the “Company” or “Natus”), a leading provider of medical device solutions focused on the diagnosis and treatment of central nervous and sensory system disorders for patients of all ages, today announced financial results for the three and six months ended June 30, 2020.For the second quarter ended June 30, 2020, the Company reported revenue of $84.8 million, a decrease of 32.4% compared to $125.5 million reported for the second quarter 2019. GAAP gross margin was 47.8% during the second quarter of 2020 compared to 56.9% in the second quarter 2019. GAAP net loss was $8.9 million, or $0.26 per share, compared with GAAP net income of $3.5 million, or $0.10 per diluted share in the second quarter 2019.Non-GAAP loss per share was $0.13 for the second quarter 2020, compared to earnings per diluted share of $0.32 in the second quarter 2019. Non-GAAP net loss was $4.4 million in the second quarter 2020 compared to net income of $10.6 million in the second quarter 2019. Non-GAAP gross margin was 51.5% in the second quarter 2020 compared to 59.1% reported for the second quarter of 2019.For the six months ended June 30, 2020, the Company reported revenue of $194.2 million, a decrease of 19.2% compared to $240.3 million reported for the same period in 2019. GAAP gross margin was 53.2% vs. 57.4% reported for the same period in 2019. GAAP net loss was $12.5 million, or $0.37 per share, compared with GAAP net loss of $26.9 million, or $0.80 per share in the same period in 2019.Non-GAAP loss per share was $0.09 for the first six months in 2020, compared to earnings per diluted share of $0.39 in the same period in 2019. The Company reported non-GAAP net loss of $3.1 million for the six months ended June 30, 2020, compared to the prior year’s non-GAAP net income of $13.3 million. Non-GAAP gross margin was 55.8% in 2020 vs. 59.3% reported for the same period in 2019.COVID-19 Operational ImpactsBeginning in March of this year, Natus implemented safeguards in its facilities to protect its team members. These measures included social distancing practices, the ability to work from home and other safety procedures consistent with specific regulatory requirements and guidance from health authorities. As an essential supplier of healthcare products and services, all of Natus’s manufacturing, engineering and customer support functions remain fully operational and continue to support customers with vital supplies, service and equipment. Our Company has adapted quickly and efficiently to this new environment and we will continue to operate in this manner until the global pandemic subsides.Natus made investments in inventory during the second quarter to help mitigate any potential supply chain disruptions. Going into the third quarter, supply appears to be stable, which could allow for the reduction of inventory levels in future quarters. The Company has also taken actions to reduce costs, including reducing travel, tradeshows, employee and certain discretionary expenses. Natus will continue to prioritize investment spending to allow for continued innovation in its products and services, which is a key element of its strategy for profitable growth in the years ahead.“As expected, we saw significant impact from COVID-19 during the second quarter, with revenue declining 32.4% compared to the second quarter of 2019. Our Neuro end market was impacted by the decline in spending at many hospitals and Hearing & Balance revenue declined due to the reduced activity in audiologist’s offices and retail hearing centers. Our Newborn Care business performed well during the quarter increasing 1% compared to the second quarter last year as births continued at normal rates and we benefited from the release of our NICVIEW II NICU video streaming product,” said Jonathan Kennedy, President and Chief Executive Officer of Natus.“Looking ahead to the third quarter, we expect Neuro and Hearing & Balance revenues to remain below pre-pandemic levels, but to improve compared to the second quarter. We expect Newborn Care to remain closer to historical levels. We see our customers adapting to the COVID environment with elective procedures resuming, which we believe will result in increased capital spending, improving our business over the remainder of 2020,” Mr. Kennedy continued.Financial GuidanceAlthough we see our revenues and margins improving compared to the second quarter for the remainder of 2020, a significant amount of uncertainty still exists as a result of the COVID-19 pandemic. With this in mind, the Company will not provide detailed guidance at this time.Use of Non-GAAP Financial MeasuresThe Company presents in this release its non-GAAP net income and loss, non-GAAP earnings per diluted share and loss per share, non-GAAP gross margin and non-GAAP operating margin results which exclude amortization expense associated with certain acquisition-related intangibles, restructuring charges, certain discrete items, direct costs of acquisitions, and the related tax effects. A reconciliation between non-GAAP and GAAP financial measures is included in this press release.The Company believes that the presentation of results excluding these charges or gains provides meaningful supplemental information to both management and investors that is indicative of the Company’s core operating results and better reflects the ongoing economics of the Company’s operations. The Company believes these non-GAAP financial measures facilitate comparison of operating results across reporting periods.Specifically, the Company excludes the following charges, gains, and their related tax effects in the calculation of non-GAAP net income, non-GAAP earnings per diluted share and non-GAAP operating profit: 1) Non-cash amortization expense associated with certain acquisition-related intangibles. The charges reflect an estimate of the cost of acquired intangible assets over their estimated useful lives. 2) Restructuring and other non-recurring charges. The Company has over time completed multiple acquisitions of other companies and businesses. Following an acquisition, the Company will, as it determines appropriate, initiate restructuring events to eliminate redundant costs. Restructuring expenses, which are excluded in the non-GAAP items, are exclusively related to permanent reductions in our workforce and redundant facility closures. Other non-recurring costs are associated with the transition of the executive management team. These costs can include stock compensation from accelerated vesting of stock, severance payouts and related payroll expenses. 3) Certain discrete items. These items represent significant infrequent charges or gains that management believes should be viewed outside of normal operating results, and each significant discrete transaction is evaluated to determine whether it should be excluded from non-GAAP reporting. These items are specifically identified when they occur. 4) Direct costs of acquisitions. These are direct acquisition-related costs that occur when the Company makes an acquisition, such as professional fees, due diligence costs, and earn-out adjustments.The Company applies GAAP methodologies in computing its non-GAAP tax provision by determining the annual expected effective tax rate after taking into account items excluded for non-GAAP financial reporting purposes. The Company’s non-GAAP tax expense and its non-GAAP effective tax rate are generally higher than its GAAP tax expense and GAAP effective tax rate because the income subject to taxes would be higher due to the effect of the expenses excluded from non-GAAP financial reporting. The nature of each quarterly discrete transaction will be evaluated to determine whether it should be excluded from non-GAAP reporting.The Company’s management uses these non-GAAP financial measures in assessing the Company’s performance and when planning, forecasting, and analyzing future periods and the Company believes that investors also benefit from being able to refer to these non-GAAP financial measures along with the GAAP operating results. These 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 CallNatus has scheduled a conference call to discuss this announcement beginning at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) today, July 30, 2020. Individuals interested in listening to the conference call may do so by dialing 1-844-634-1441 for domestic callers, or 1-508-637-5658 for international callers, and entering reservation code 1467486. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 1-855-859-2056 for domestic callers, or 1-404-537-3406 for international callers, and entering reservation code 1467486. 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 IncorporatedNatus is a leading provider of medical device solutions focused on the diagnosis and treatment of central nervous and sensory system disorders for patients of all ages.Additional information about Natus Medical can be found at www.natus.com.Forward-Looking StatementsThis press release contains forward-looking statements, which are generally statements that are not historical facts. Forward-looking statements can be identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”, “will”, “outlook” and similar expressions. Forward-looking statements are based on management’s current plans, estimates, assumptions and projections, and speak only as of the date they are made. These statements relate to current estimates and assumptions of our management as of the date of this press release 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. The Company’s future results could differ materially due to a number of factors, including the business, social and economic impact of the COVID-19 pandemic on the Company’s business and results of operations, the ability of the Company to realize the anticipated benefits from its new structure or from its consolidation strategy, effects of competition, the Company’s ability to successfully integrate and achieve its profitability goals from recent acquisitions, the demand for Natus products and services, the impact of adverse global economic conditions and changing governmental regulations, including foreign exchange rate changes, on the Company’s target markets, the Company’s ability to expand its sales in international markets, the Company’s ability to maintain current sales levels in a mature domestic market, the Company’s ability to control costs, risks associated with bringing new products to market, and the Company’s ability to fulfill product orders on a timely basis, as well as those factors identified under the heading Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Quarterly Report on Form 10-Q for the period ended March 31, 2020. Natus disclaims any obligation to update information contained in any forward looking statement, except as required by law.Natus Medical Incorporated
Drew Davies
Executive Vice President and Chief Financial Officer
(925) 223-6700
InvestorRelations@Natus.com
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