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, 2019.
Key Results During the
Quarter
- Achieved organic revenue growth after divestitures of 5%
- Reduced inventory by $2.5 million during the quarter
- Reduced days sales outstanding by 11 days year over year
- Generated $17.6 million in operating cash flow
- Reduced debt by $20.0 million
For the second quarter ended June 30, 2019,
the Company reported revenue of $125.5 million, a decrease of 4.0%
compared to $130.7 million reported for the second quarter 2018.
GAAP gross profit margin was 57.1% during the second quarter of
2019 compared to 57.4% in the second quarter 2018. GAAP net income
was $4.2 million, or $0.12 per diluted share, compared with GAAP
net loss of $2.6 million, or $0.08 per share in the second quarter
2018.
Non-GAAP earnings per diluted share was $0.34
for the second quarter 2019, compared to $0.35 in the second
quarter 2018. Non-GAAP net income was $11.3 million for the second
quarter 2019 compared to the prior year's second quarter non-GAAP
net income of $11.6 million. Non-GAAP gross profit margin was 59.3%
in the second quarter 2019 compared to 62.1% reported for the
second quarter of 2018.
For the six months ended June 30, 2019, the
Company reported revenue of $240.3 million, a decrease of 7.3%
compared to $259.3 million reported for the same period in 2018.
GAAP gross profit margin was 57.5% vs. 56.6% reported for the same
period in 2018. GAAP net loss was $25.8 million, or $0.77 per
share, compared with GAAP net loss of $5.7 million, or $0.17 per
share in the same period in 2018.
Non-GAAP earnings per diluted share was $0.43
for the first six months in 2019, compared to $0.59 in the same
period in 2018. The Company reported non-GAAP net income of $14.4
million for the six months ended June 30, 2019, compared to
the prior year's non-GAAP net income of $19.6 million.
“Second quarter results exceeded the high end of our
expectations. Revenue from our neuro end market, grew 7% adjusted
for the divested GND business. Sales of our Otoscan digital ear
scanner and hearing aid fitting products drove growth in our
audiology market. Sales of our Neoblue® phototherapy devices and
Algo® hearing screening devices and supplies grew within newborn
care market,” said Jonathan Kennedy, President and Chief Executive
Officer of Natus. “Completing the divestitures of GND, Neurocom®
and Medix in the first half of the year, enhances our ability to
grow our core businesses, drive operational efficiency and increase
cash flows.”
“Our One Natus initiatives are progressing according to plan,
allowing us to now look forward beyond the reorganization. Natus
has a rich portfolio of solutions focused on the diagnosis and
treatment of central nervous and sensory system disorders for
patients of all ages. With our customer focused organization and
strategic direction now in place, we are in a solid position to
expand and grow within our markets.” Kennedy continued. “Today, we
also announced the change of our ticker symbol to NTUS, better
reflecting the identity and diversity of our business.”
Financial Guidance
For the third quarter of 2019, the Company's
revenue guidance is expected to be between $122.0 million and
$126.0 million and non-GAAP earnings per share guidance is expected
to be between $0.32 and $0.39.
For the full year 2019, the Company narrowed its
expected revenue guidance to be between $492.0 million and $500.0
million from $489.0 million to $505.0 million and non-GAAP expected
earnings per share guidance to be between $1.19 and $1.32 from
$1.17 to $1.44.
The Company's non-GAAP earnings per share
guidance excludes charges for amortization expense associated with
intangible assets from prior acquisitions, certain other expenses,
and related tax effects, which the Company expects to be
approximately $4.9 million and $49.8 million for the third quarter
2019 and full year, respectively, and which the Company expects
will reduce GAAP earnings per share by approximately $0.13 and
$1.45 for the respective periods.
Use of Non-GAAP Financial
Measures
The Company presents in this release its
non-GAAP net income, non-GAAP earnings 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 share and non-GAAP
operating expense: 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 Call
Natus 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 25, 2019. 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 1776809. 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 1776809. 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 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 Statements
This 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 forward-looking statements include, without limitation,
statements regarding creating a more efficient operating model,
creating a stronger and more profitable company, enhancing focus on
operational excellence, positioning the company for growth and
driving long-term value for stakeholders. 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 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, 2018. Natus disclaims any obligation to update
information contained in any forward looking statement, except as
required by law.
Natus Medical IncorporatedDrew DaviesExecutive
Vice President and Chief Financial Officer(925)
223-6700InvestorRelations@Natus.com
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
Revenue |
$ |
125,539 |
|
|
$ |
130,653 |
|
|
$ |
240,296 |
|
|
$ |
259,261 |
|
Cost of revenue |
52,164 |
|
|
52,897 |
|
|
98,534 |
|
|
108,266 |
|
Intangibles amortization |
1,746 |
|
|
2,717 |
|
|
3,502 |
|
|
4,305 |
|
Gross profit |
71,629 |
|
|
75,039 |
|
|
138,260 |
|
|
146,690 |
|
Gross profit margin |
57.1 |
% |
|
57.4 |
% |
|
57.5 |
% |
|
56.6 |
% |
Operating expenses: |
|
|
|
|
|
|
|
Marketing and selling |
32,236 |
|
|
33,401 |
|
|
65,966 |
|
|
69,273 |
|
Research and development |
12,769 |
|
|
15,616 |
|
|
25,827 |
|
|
31,059 |
|
General and administrative |
12,691 |
|
|
23,721 |
|
|
28,995 |
|
|
41,169 |
|
Intangibles amortization |
3,763 |
|
|
4,151 |
|
|
7,549 |
|
|
8,957 |
|
Restructuring |
2,668 |
|
|
1,938 |
|
|
40,040 |
|
|
2,750 |
|
Total operating expenses |
64,127 |
|
|
78,827 |
|
|
168,377 |
|
|
153,208 |
|
Income (loss) from
operations |
7,502 |
|
|
(3,788 |
) |
|
(30,117 |
) |
|
(6,518 |
) |
Interest expense |
(1,388 |
) |
|
(1,647 |
) |
|
(2,894 |
) |
|
(3,596 |
) |
Other income (expense) |
188 |
|
|
(751 |
) |
|
(418 |
) |
|
(622 |
) |
Income (loss) before tax |
6,302 |
|
|
(6,186 |
) |
|
(33,429 |
) |
|
(10,736 |
) |
Provision for income tax
expense (benefit) |
2,114 |
|
|
(3,609 |
) |
|
(7,616 |
) |
|
(5,009 |
) |
Net income (loss) |
$ |
4,188 |
|
|
$ |
(2,577 |
) |
|
$ |
(25,813 |
) |
|
$ |
(5,727 |
) |
Earnings (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.12 |
|
|
$ |
(0.08 |
) |
|
$ |
(0.77 |
) |
|
$ |
(0.17 |
) |
Diluted |
$ |
0.12 |
|
|
$ |
(0.08 |
) |
|
$ |
(0.77 |
) |
|
$ |
(0.17 |
) |
Weighted-average shares: |
|
|
|
|
|
|
|
Basic |
33,639 |
|
|
32,859 |
|
|
33,630 |
|
|
32,809 |
|
Diluted |
33,690 |
|
|
32,859 |
|
|
33,630 |
|
|
32,809 |
|
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) |
(in thousands) |
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
2019 |
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and investments |
$ |
52,009 |
|
|
$ |
53,423 |
|
|
$ |
56,373 |
|
Accounts receivable |
106,934 |
|
|
110,900 |
|
|
127,041 |
|
Inventories |
78,275 |
|
|
82,866 |
|
|
79,736 |
|
Other current assets |
28,022 |
|
|
26,793 |
|
|
22,625 |
|
Total current assets |
265,240 |
|
|
273,982 |
|
|
285,775 |
|
|
|
|
|
|
|
Property and equipment |
26,547 |
|
|
26,280 |
|
|
22,913 |
|
Operating lease right-of-use assets |
17,217 |
|
|
18,982 |
|
|
— |
|
Goodwill and intangible assets |
274,725 |
|
|
279,595 |
|
|
287,097 |
|
Deferred income tax |
19,187 |
|
|
19,165 |
|
|
22,639 |
|
Other assets |
25,084 |
|
|
20,559 |
|
|
19,716 |
|
Total assets |
$ |
628,000 |
|
|
$ |
638,563 |
|
|
$ |
638,140 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
25,235 |
|
|
$ |
25,103 |
|
|
$ |
28,805 |
|
Current portion of long-term debt |
35,000 |
|
|
35,000 |
|
|
35,000 |
|
Accrued liabilities |
51,605 |
|
|
51,157 |
|
|
52,568 |
|
Deferred revenue |
19,861 |
|
|
19,017 |
|
|
17,073 |
|
Current portion of operating
lease liabilities |
5,960 |
|
|
6,251 |
|
|
— |
|
Liabilities and accrued
impairment held for sale |
— |
|
|
24,786 |
|
|
— |
|
Total current liabilities |
137,661 |
|
|
161,314 |
|
|
133,446 |
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
Long-term debt |
44,570 |
|
|
64,522 |
|
|
69,474 |
|
Deferred income tax |
8,649 |
|
|
8,467 |
|
|
16,931 |
|
Operating lease liabilities |
14,326 |
|
|
15,234 |
|
|
— |
|
Other long-term liabilities |
21,237 |
|
|
21,325 |
|
|
19,845 |
|
Total liabilities |
226,443 |
|
|
270,862 |
|
|
239,696 |
|
Total stockholders’
equity |
401,557 |
|
|
367,701 |
|
|
398,444 |
|
Total liabilities and
stockholders’ equity |
$ |
628,000 |
|
|
$ |
638,563 |
|
|
$ |
638,140 |
|
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) |
|
(in thousands) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
Operating activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
4,188 |
|
|
$ |
(2,577 |
) |
|
$ |
(25,813 |
) |
|
$ |
(5,727 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
Provision for losses on accounts receivable |
360 |
|
|
3,171 |
|
|
960 |
|
|
4,089 |
|
Depreciation and amortization |
7,716 |
|
|
8,779 |
|
|
15,427 |
|
|
16,694 |
|
(Gain) loss on disposal of property and equipment |
303 |
|
|
108 |
|
|
482 |
|
|
160 |
|
Warranty reserve |
1,323 |
|
|
2,100 |
|
|
1,677 |
|
|
975 |
|
Share-based compensation |
1,908 |
|
|
3,270 |
|
|
4,462 |
|
|
5,632 |
|
Impairment of intangible assets held for sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
Impairment charge for held for sale assets |
— |
|
|
— |
|
|
24,571 |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
3,615 |
|
|
4,306 |
|
|
19,170 |
|
|
2,064 |
|
Inventories |
2,141 |
|
|
(5,368 |
) |
|
(2,475 |
) |
|
(2,483 |
) |
Prepaid expenses and other assets |
(3,357 |
) |
|
(9,753 |
) |
|
(11,060 |
) |
|
(15,141 |
) |
Accounts payable |
(81 |
) |
|
258 |
|
|
(3,517 |
) |
|
(364 |
) |
Accrued liabilities |
(1,301 |
) |
|
95 |
|
|
(2,620 |
) |
|
3,414 |
|
Deferred revenue |
757 |
|
|
373 |
|
|
2,739 |
|
|
1,687 |
|
Deferred income tax |
(18 |
) |
|
239 |
|
|
44 |
|
|
326 |
|
Net cash provided by operating activities |
17,554 |
|
|
5,001 |
|
|
24,047 |
|
|
11,326 |
|
Investing activities: |
|
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired |
— |
|
|
151 |
|
|
— |
|
|
151 |
|
Purchases of property and equipment |
(458 |
) |
|
(914 |
) |
|
(2,919 |
) |
|
(3,387 |
) |
Purchase of intangible assets |
(13 |
) |
|
(298 |
) |
|
(13 |
) |
|
(298 |
) |
Net cash used in investing activities |
(471 |
) |
|
(1,061 |
) |
|
(2,932 |
) |
|
(3,534 |
) |
Financing activities: |
|
|
|
|
|
|
|
Proceeds from stock option exercises and ESPP |
1,406 |
|
|
4,515 |
|
|
1,674 |
|
|
5,092 |
|
Repurchase of common stock |
— |
|
|
(894 |
) |
|
— |
|
|
(5,630 |
) |
Taxes paid related to settlement of equity awards |
(6 |
) |
|
(307 |
) |
|
(1,573 |
) |
|
(326 |
) |
Principal payments of financing lease liability |
(100 |
) |
|
— |
|
|
(265 |
) |
|
— |
|
Contingent consideration earn-out |
— |
|
|
— |
|
|
— |
|
|
(147 |
) |
Payments on borrowings |
(20,000 |
) |
|
(10,000 |
) |
|
(25,000 |
) |
|
(35,000 |
) |
Net cash used in financing activities |
(18,700 |
) |
|
(6,686 |
) |
|
(25,164 |
) |
|
(36,011 |
) |
Exchange rate changes effect on
cash and cash equivalents |
203 |
|
|
(6,817 |
) |
|
(315 |
) |
|
(5,823 |
) |
Net decrease in cash and cash
equivalents |
(1,414 |
) |
|
(9,563 |
) |
|
(4,364 |
) |
|
(34,042 |
) |
Cash and cash equivalents,
beginning of period |
53,423 |
|
|
64,471 |
|
|
56,373 |
|
|
88,950 |
|
Cash and cash equivalents, end of
period |
$ |
52,009 |
|
|
$ |
54,908 |
|
|
$ |
52,009 |
|
|
$ |
54,908 |
|
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
GAAP based
results: |
|
|
|
|
|
|
|
Income (loss) before provision for income tax |
$ |
6,302 |
|
|
$ |
(6,186 |
) |
|
$ |
(33,429 |
) |
|
$ |
(10,736 |
) |
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
Intangibles amortization
(COGS) |
1,746 |
|
|
2,717 |
|
|
3,502 |
|
|
4,305 |
|
Recall accrual and remediation
efforts (COGS) |
322 |
|
|
2,305 |
|
|
67 |
|
|
2,573 |
|
Restructuring and other
non-recurring costs (COGS) |
738 |
|
|
27 |
|
|
989 |
|
|
27 |
|
Direct costs of acquisitions
(COGS) |
40 |
|
|
1,072 |
|
|
123 |
|
|
3,480 |
|
Intangibles amortization
(OPEX) |
3,763 |
|
|
4,151 |
|
|
7,549 |
|
|
8,957 |
|
Direct costs of acquisitions
(M&S) |
15 |
|
|
387 |
|
|
33 |
|
|
409 |
|
Recall accrual and remediation
efforts (R&D) |
— |
|
|
1,741 |
|
|
— |
|
|
3,587 |
|
Direct costs of acquisitions
(R&D) |
46 |
|
|
138 |
|
|
91 |
|
|
184 |
|
Restructuring and other
non-recurring costs (OPEX) |
2,594 |
|
|
4,239 |
|
|
40,258 |
|
|
5,206 |
|
Direct costs of acquisitions
(G&A) |
90 |
|
|
789 |
|
|
134 |
|
|
3,180 |
|
Restructuring and other
non-recurring costs (OI&E) |
— |
|
|
(2 |
) |
|
— |
|
|
366 |
|
Extraordinary annual meeting
expenses |
— |
|
|
2,214 |
|
|
— |
|
|
2,214 |
|
Litigation (OPEX) |
10 |
|
|
754 |
|
|
697 |
|
|
996 |
|
Non-GAAP income before
provision for income tax |
15,666 |
|
|
14,346 |
|
|
20,014 |
|
|
24,748 |
|
|
|
|
|
|
|
|
|
Income tax expense, as
adjusted |
$ |
4,350 |
|
|
$ |
2,755 |
|
|
$ |
5,591 |
|
|
$ |
5,130 |
|
|
|
|
|
|
|
|
|
Non-GAAP net
income |
$ |
11,316 |
|
|
$ |
11,591 |
|
|
$ |
14,423 |
|
|
$ |
19,618 |
|
Non-GAAP earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.34 |
|
|
$ |
0.35 |
|
|
$ |
0.43 |
|
|
$ |
0.60 |
|
Diluted |
$ |
0.34 |
|
|
$ |
0.35 |
|
|
$ |
0.43 |
|
|
$ |
0.59 |
|
|
|
|
|
|
|
|
|
Weighted-average shares used
to compute |
|
|
|
|
|
|
|
Basic non-GAAP earnings per share |
33,639 |
|
|
32,859 |
|
|
33,630 |
|
|
32,809 |
|
Diluted non-GAAP earnings per share |
33,690 |
|
|
33,241 |
|
|
33,733 |
|
|
33,196 |
|
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
GAAP Gross Profit |
$ |
71,629 |
|
|
$ |
75,039 |
|
|
$ |
138,260 |
|
|
$ |
146,690 |
|
Amortization of
intangibles |
1,746 |
|
|
2,717 |
|
|
3,502 |
|
|
4,305 |
|
Direct cost of
acquisitions |
40 |
|
|
1,072 |
|
|
123 |
|
|
3,480 |
|
Recall accrual and remediation
efforts |
322 |
|
|
2,305 |
|
|
67 |
|
|
2,573 |
|
Restructuring and other
non-recurring costs |
738 |
|
|
27 |
|
|
989 |
|
|
27 |
|
Non-GAAP Gross Profit |
$ |
74,475 |
|
|
$ |
81,160 |
|
|
$ |
142,941 |
|
|
$ |
157,075 |
|
Non-GAAP Gross
Margin |
59.3 |
% |
|
62.1 |
% |
|
59.5 |
% |
|
60.6 |
% |
|
|
|
|
|
|
|
|
GAAP Operating Income
(Loss) |
$ |
7,502 |
|
|
$ |
(3,788 |
) |
|
$ |
(30,117 |
) |
|
$ |
(6,518 |
) |
Amortization of
intangibles |
5,509 |
|
|
6,868 |
|
|
11,051 |
|
|
13,262 |
|
Recall accrual and remediation
efforts |
322 |
|
|
4,046 |
|
|
67 |
|
|
6,160 |
|
Litigation |
10 |
|
|
754 |
|
|
697 |
|
|
996 |
|
Restructuring and other
non-recurring costs |
3,332 |
|
|
4,266 |
|
|
41,247 |
|
|
5,233 |
|
Direct cost of
acquisitions |
191 |
|
|
2,386 |
|
|
381 |
|
|
7,253 |
|
Extraordinary annual meeting
expenses |
— |
|
|
2,214 |
|
|
— |
|
|
2,214 |
|
Non-GAAP Operating Profit |
$ |
16,866 |
|
|
$ |
16,746 |
|
|
$ |
23,326 |
|
|
$ |
28,600 |
|
Non-GAAP Operating
Margin |
13.4 |
% |
|
12.8 |
% |
|
9.7 |
% |
|
11.0 |
% |
|
|
|
|
|
|
|
|
GAAP Income Tax Benefit
(Expense) |
$ |
2,114 |
|
|
$ |
(3,609 |
) |
|
$ |
(7,616 |
) |
|
$ |
(5,009 |
) |
Effect of accumulated change
of pretax income |
2,662 |
|
|
7,072 |
|
|
5,707 |
|
|
10,791 |
|
Effect of change in annual
expected tax rate |
(503 |
) |
|
(1,531 |
) |
|
(606 |
) |
|
(1,584 |
) |
Repatriation tax
adjustment |
— |
|
|
(88 |
) |
|
(177 |
) |
|
101 |
|
Stock-based compensation
adjustment |
— |
|
|
911 |
|
|
— |
|
|
831 |
|
Restructuring expenses |
77 |
|
|
— |
|
|
8,283 |
|
|
— |
|
Non-GAAP Income Tax
Expense |
$ |
4,350 |
|
|
$ |
2,755 |
|
|
$ |
5,591 |
|
|
$ |
5,130 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
|
|
September 30, 2019 |
|
December 31, 2019 |
|
|
|
|
GAAP EPS Guidance |
$0.19 - $0.26 |
|
($0.26) - ($0.13) |
|
|
|
|
Amortization of
intangibles |
0.17 |
|
0.66 |
|
|
|
|
Restructuring and other
non-recurring costs |
0.01 |
|
1.24 |
|
|
|
|
Litigation |
— |
|
0.02 |
|
|
|
|
Direct cost of
acquisitions |
— |
|
0.01 |
|
|
|
|
Tax effect |
(0.05) |
|
(0.48) |
|
|
|
|
Non-GAAP EPS Guidance |
$0.32 - $0.39 |
|
$1.19 - $1.32 |
|
|
|
|
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
GROSS MARGIN BY END MARKETS (unaudited) |
(in thousands) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
Neuro: |
|
|
|
|
|
|
|
Revenue |
$ |
71,598 |
|
|
$ |
70,375 |
|
|
$ |
133,988 |
|
|
$ |
136,244 |
|
Cost of revenue |
27,906 |
|
|
26,381 |
|
|
50,579 |
|
|
54,232 |
|
Intangibles amortization |
940 |
|
|
1,814 |
|
|
1,882 |
|
|
2,464 |
|
Gross profit |
$ |
42,752 |
|
|
$ |
42,180 |
|
|
$ |
81,527 |
|
|
$ |
79,548 |
|
Gross profit margin |
59.7 |
% |
|
59.9 |
% |
|
60.8 |
% |
|
58.4 |
% |
|
|
|
|
|
|
|
|
Newborn
care: |
|
|
|
|
|
|
|
Revenue |
$ |
26,563 |
|
|
$ |
30,573 |
|
|
$ |
56,099 |
|
|
$ |
64,477 |
|
Cost of revenue |
11,424 |
|
|
13,644 |
|
|
23,822 |
|
|
26,135 |
|
Intangibles amortization |
64 |
|
|
119 |
|
|
129 |
|
|
239 |
|
Gross profit |
$ |
15,075 |
|
|
$ |
16,810 |
|
|
$ |
32,148 |
|
|
$ |
38,103 |
|
Gross profit margin |
56.8 |
% |
|
55.0 |
% |
|
57.3 |
% |
|
59.1 |
% |
|
|
|
|
|
|
|
|
Audiology: |
|
|
|
|
|
|
|
Revenue |
$ |
27,378 |
|
|
$ |
29,705 |
|
|
$ |
50,209 |
|
|
$ |
58,540 |
|
Cost of revenue |
12,834 |
|
|
12,872 |
|
|
24,133 |
|
|
27,899 |
|
Intangibles amortization |
742 |
|
|
784 |
|
|
1,491 |
|
|
1,602 |
|
Gross profit |
$ |
13,802 |
|
|
$ |
16,049 |
|
|
$ |
24,585 |
|
|
$ |
29,039 |
|
Gross profit margin |
50.4 |
% |
|
54.0 |
% |
|
49.0 |
% |
|
49.6 |
% |
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
Revenue |
$ |
125,539 |
|
|
$ |
130,653 |
|
|
$ |
240,296 |
|
|
$ |
259,261 |
|
Cost of revenue |
52,164 |
|
|
52,897 |
|
|
98,534 |
|
|
108,266 |
|
Intangibles amortization |
1,746 |
|
|
2,717 |
|
|
3,502 |
|
|
4,305 |
|
Gross profit |
$ |
71,629 |
|
|
$ |
75,039 |
|
|
$ |
138,260 |
|
|
$ |
146,690 |
|
Gross profit margin |
57.1 |
% |
|
57.4 |
% |
|
57.5 |
% |
|
56.6 |
% |
|
|
|
|
|
|
|
|
Note: The revenue and gross margin for our
AccuScreen® newborn hearing screening product has been reclassified
from Audiology to Newborn Care for both the current and prior
periods. |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP GROSS MARGIN BY END MARKETS
(unaudited) |
(in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
Neuro: |
|
|
|
|
|
|
|
GAAP Gross Profit |
$ |
42,752 |
|
|
$ |
42,180 |
|
|
$ |
81,527 |
|
|
$ |
79,548 |
|
Amortization of
intangibles |
940 |
|
|
1,814 |
|
|
1,882 |
|
|
2,464 |
|
Acquisition charges |
40 |
|
|
1,022 |
|
|
123 |
|
|
3,430 |
|
Non-GAAP Gross Profit |
$ |
43,732 |
|
|
$ |
45,016 |
|
|
$ |
83,532 |
|
|
$ |
85,442 |
|
Non-GAAP Gross
Margin |
61.1 |
% |
|
64.0 |
% |
|
62.3 |
% |
|
62.7 |
% |
|
|
|
|
|
|
|
|
Newborn
care: |
|
|
|
|
|
|
|
GAAP Gross Profit |
$ |
15,075 |
|
|
$ |
16,810 |
|
|
$ |
32,148 |
|
|
$ |
38,103 |
|
Amortization of
intangibles |
64 |
|
|
119 |
|
|
129 |
|
|
239 |
|
Recall accrual and remediation
efforts |
(316 |
) |
|
2,305 |
|
|
(571 |
) |
|
2,573 |
|
Restructuring and other
non-recurring costs |
738 |
|
|
2 |
|
|
814 |
|
|
2 |
|
Non-GAAP Gross Profit |
$ |
15,561 |
|
|
$ |
19,236 |
|
|
$ |
32,520 |
|
|
$ |
40,917 |
|
Non-GAAP Gross
Margin |
58.6 |
% |
|
62.9 |
% |
|
58.0 |
% |
|
63.5 |
% |
|
|
|
|
|
|
|
|
Audiology: |
|
|
|
|
|
|
|
GAAP Gross Profit |
$ |
13,802 |
|
|
$ |
16,049 |
|
|
$ |
24,585 |
|
|
$ |
29,039 |
|
Amortization of
intangibles |
742 |
|
|
784 |
|
|
1,491 |
|
|
1,602 |
|
Acquisition charges |
— |
|
|
50 |
|
|
— |
|
|
50 |
|
Recall accrual and remediation
efforts |
638 |
|
|
— |
|
|
638 |
|
|
— |
|
Restructuring and other
non-recurring costs |
— |
|
|
25 |
|
|
175 |
|
|
25 |
|
Non-GAAP Gross Profit |
$ |
15,182 |
|
|
$ |
16,908 |
|
|
$ |
26,889 |
|
|
$ |
30,716 |
|
Non-GAAP Gross
Margin |
55.5 |
% |
|
56.9 |
% |
|
53.6 |
% |
|
52.5 |
% |
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
GAAP Gross Profit |
$ |
71,629 |
|
|
$ |
75,039 |
|
|
$ |
138,260 |
|
|
$ |
146,690 |
|
Amortization of
intangibles |
1,746 |
|
|
2,717 |
|
|
3,502 |
|
|
4,305 |
|
Acquisition charges |
40 |
|
|
1,072 |
|
|
123 |
|
|
3,480 |
|
Recall accrual and remediation
efforts |
322 |
|
|
2,305 |
|
|
67 |
|
|
2,573 |
|
Restructuring and other
non-recurring costs |
738 |
|
|
27 |
|
|
989 |
|
|
27 |
|
Non-GAAP Gross Profit |
$ |
74,475 |
|
|
$ |
81,160 |
|
|
$ |
142,941 |
|
|
$ |
157,075 |
|
Non-GAAP Gross
Margin |
59.3 |
% |
|
62.1 |
% |
|
59.5 |
% |
|
60.6 |
% |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
GEOGRAPHIC REVENUE (unaudited) |
(in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
Consolidated
Revenue: |
|
|
|
|
|
|
|
United States |
$ |
73,531 |
|
|
$ |
75,467 |
|
|
$ |
139,598 |
|
|
$ |
144,154 |
|
International |
52,008 |
|
|
55,186 |
|
|
100,698 |
|
|
115,107 |
|
Totals |
$ |
125,539 |
|
|
$ |
130,653 |
|
|
$ |
240,296 |
|
|
$ |
259,261 |
|
|
|
|
|
|
|
|
|
United States |
59 |
% |
|
58 |
% |
|
58 |
% |
|
56 |
% |
International |
41 |
% |
|
42 |
% |
|
42 |
% |
|
44 |
% |
Totals |
100 |
% |
|
100 |
% |
|
100 |
% |
|
100 |
% |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES |
REVENUE AFTER EXITED PRODUCTS (unaudited) |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
Year Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
|
December 31, 2018 |
|
December 31, 2017 |
Revenue |
$ |
125.5 |
|
|
$ |
130.7 |
|
|
$ |
240.3 |
|
|
$ |
259.3 |
|
|
$ |
530.9 |
|
|
$ |
501.0 |
|
Newborn care |
(1.4 |
) |
|
(4.1 |
) |
|
(3.7 |
) |
|
(10.2 |
) |
|
(20.6 |
) |
|
(35.0 |
) |
Neuro |
(0.1 |
) |
|
(4.4 |
) |
|
(1.0 |
) |
|
(7.7 |
) |
|
(14.3 |
) |
|
(14.6 |
) |
Audiology |
— |
|
|
(1.8 |
) |
|
— |
|
|
(8.3 |
) |
|
(7.9 |
) |
|
(6.9 |
) |
Impact of ship holds |
2.8 |
|
|
— |
|
|
6.6 |
|
|
— |
|
|
|
|
— |
|
Revenue after exited products/ship holds |
$ |
126.8 |
|
|
$ |
120.4 |
|
|
$ |
242.2 |
|
|
$ |
233.1 |
|
|
$ |
488.1 |
|
|
$ |
444.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Newborn care, Neuro, and Audiology include
exited businesses (GND, Neurocom, Medix) and other end of sales
products. |
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