Natus Medical Inc.
) reported fourth-quarter 2013 adjusted earnings per share (EPS)
of 37 cents, surpassing the Zacks Consensus Estimate of 32 cents
by 15.6%. The fourth-quarter earnings also steered ahead of the
prior-year quarter figure of 29 cents by 27.6%.
For full year 2013, net earnings were $22.9 million or 74 cents
per share, as against $3.9 million or 13 cents per share in the
On a reported basis, Natus Medical posted net income of $9.1
million or 29 cents per share against $5.0 million or 17 cents
per share in the fourth-quarter of 2012.
Revenue in Details
Revenues marginally fell 0.2% to $90.6 million in the quarter,
but marginally ahead of the Zacks Consensus Estimate of $90
million. However, revenues amounting to $2.2 million, related to
sale proceeds from one-time shipment of proprietary product to
) as part of the Nicolet acquisition, were included in
fourth-quarter 2012 results. For full year 2013, revenues were
$344.1 million, reflecting a growth of 17.7% from the prior year.
On a geographic basis, international revenues accounted for 43%
of total revenue and were higher than expected in the quarter, on
the back of robust growth recorded from the Pacific Rim region,
supported by improving sales in the European market. On the other
hand, domestic business accounted for 57% of total revenue
showing signs of stabilization.
Revenues from the Neurology product line rose marginally by 0.8%
to $59.8 million from $59.3 million in the prior-year quarter.
The Neurology product line consists of products for diagnostic
electroencephalography (EEG), electromyography (EMG), diagnostic
sleep analysis or polysomnography (PSG), intraoperative
monitoring (IOM) and transcranial doppler ultrasound technology.
Revenues in this segment represented 66% of the total revenue in
the quarter against 65% in the comparable year-ago period.
Revenues from Newborn Care went down 2.2% to $30.8 million in the
quarter. Natus Medical derived 34% of its fourth-quarter revenues
from Newborn Care that comprises of products for newborn care
including hearing screening, brain injury, thermoregulation,
jaundice management, and various disposable products, as well as
products for diagnostic hearing assessment for children through
adult populations and products to diagnose and assist in treating
balance and mobility disorders.
Natus Medical's adjusted gross margin was 59.2% in the reported
quarter, up 200 basis points (bps) year over year. The increase
can be attributed to lower cost of revenue in the reported
Adjusted research and development (R&D) expenses were down
1.18% to $8.36 million, while adjusted marketing and selling
expenses rose 1.11% to $23.3 million, for the quarter
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Adjusted operating margin was 19.1%, reflecting a rise of 580 bps
from the year-ago quarter. The improvement was driven by lower
labor cost and increased operating leverage and efficiencies due
to effective execution of acquisition strategy.
Natus Medical exited the quarter with cash and cash equivalents
of $56.1million compared with $23.0 million at the end of 2012.
Total debt (current and long term) stood at $38.0 million as of
Dec 31, 2013, compared with 32.8 million as of Dec 31, 2012.
Following an impressive fourth-quarter performance, Natus Medical
provided both its revenue and EPS outlook for full year 2014. The
company expects revenues to vary in the range of $345 million to
$350 million. Natus Medical anticipates EPS in the range of $1.14
to $1.18, reflecting an increase from the company's previous
guidance of $1.12 to $1.16. These compared favorably with the
2014 Zacks Consensus Estimate of $348 for revenues and $1.18 for
Natus Medical also provided its guidance for the first quarter of
2014. The company expects revenues of $82 million to $86 million
and EPS of 21 to 24 cents in the quarter. The Zacks Consensus
Estimate for the quarter is pegged at $83 million for revenues
and 25 cents for EPS.
Natus Medical delivered an impressive performance in the fourth
quarter on the back of its strong domestic and international
We are encouraged by the company's growth strategies as it
intends to expand its business through organic growth. At the
same time, Natus Medical seeks to achieve its operating
objectives through increased focus on earnings and healthy cash
The consistent focus to drive the top line and eventually occupy
a leading position in both Newborn Care and Neurology products
market reinforces investors' confidence in the future growth
potential of Natus Medical.
Currently, Natus Medical carries a Zacks Rank #2 (Buy). Other
well-placed stocks that are worth a look in the medical
instruments industry include
) carrying a Zacks Rank #1 (Strong Buy), and
Echo Therapeutics, In
) with a Zacks Rank #2.