Second-Quarter Revenue Rises 6.5 Percent at Natus Medical

Pleasanton, Calif.-based Natus Medical has reported second quarter earnings of $9.9 million. This constitutes a record quarter for the company that makes newborn care, neurology, sleep, hearing and balance markets.

For the quarter ended June 30, 2015, the company reported revenue of $91.9 million, an increase of 6.5 percent compared to $86.3 million reported for the second quarter 2014. On a constant currency basis, revenue increased 8 percent to $93.4 million, after adjusting for a $1.5 million foreign currency impact. Generally accepted accounting principles (GAAP) net income was $9.9 million, or 30 cents per diluted share, compared with GAAP net income of $7.5 million, or 23 cents per diluted share in the second quarter 2014.
The company reported non-GAAP net income of $11.2 million for the second quarter ended June 30, an increase of 25.8 percent over the prior year of $8.9 million. Non-GAAP earnings per diluted share were 34 cents for the second quarter 2015, compared to 28 cents in the second quarter 2014.

Cash and cash equivalents increased by $6.2 million to $73.2 million during the quarter. Natus repurchased $4.2 million of company stock during the second quarter.

“I am very pleased with our second quarter results as we achieved record revenues and earnings,” said President and CEO Jim Hawkins. “Both revenue and earnings exceeded our guidance. I am also pleased that we were able to achieve these results in the face of a $1.5 million negative currency effect on revenue during the quarter.”

“Achieving this outstanding gross margin confirms our belief that Natus can become a 65 percent gross margin business in the future,” Hawkins continued. “We continue to drive to our full year 18 percent operating profit margin goal for 2015 as well as our long term operating profit goal of 20 percent.”

The company’s neurodiagnostic and newborn care businesses performed well in the quarter led by outstanding performance in our domestic markets. Natus also had some new service business initiatives, Peloton, GND and NicView, which all reported very good revenues for the quarter. The company expanded its service franchise in the quarter, signed a five-year, $32.5 million Hearing Screening Coordination contract with California. This contract commissions Natus to work with hospitals and caregivers to monitor infant hearing screening, diagnostics and intervention activities for California to ensure that infants with hearing loss are identified and directed to treatment as soon as possible; the contract started July 1.

“We believe each of these new service initiatives continue to have substantial growth opportunities in the quarters and years ahead,” Hawkins added. “These new initiatives are the beginning of an expanded service business and they position Natus for accelerated revenue growth and record earnings in 2015.”