Natus Boosts Sleep Diagnostics Portfolio

Talk about dream partners.

Natus Medical Inc. has purchased privately held Embla Systems LLC to expand its sleep diagnostics product portfolio and solidify its international footprint in the sector. Natus executives expect the $16.1 million all-cash deal to add 8 cents per share to the company’s 2012 adjusted earnings.

Denver, Colo.-based Embla manufactures devices used to diagnose sleep apnea, a disorder characterized by pauses in breathing or abnormally low breathing during sleep. There are three types of sleep apnea, with obstructive (OSA) being the most common and perhaps the most hazardous to a person’s health: Those with OSA stop breathing repeatedly throughout their sleep cycles, up to hundreds of times per night (or day) and often for a minute or longer, according to the American Sleep Apnea Association in Washington, D.C. In most cases, the sleeper is unaware of the interruptions in breathing because they do not cause him to awaken. Left untreated, sleep apnea can have life-threatening consequences, leading to high blood pressure, heart disease, stroke, diabetes, depression and automobile accidents (caused by falling asleep while driving). The National Commission on Sleep Disorders Research estimates roughly 38,000 cardiovascular deaths each year are related to sleep apnea.

Last year, Embla reported annual revenue of $30 million. About 40 percent of that total came from international customers—a figure that most likely impacted Natus’s decision to purchase the firm. Another influencing factor in the deal was the sheer number of people with the condition; the National Commission on Sleep Disorders Research claims that 6 million Americans suffer from moderate to severe sleep apnea, while Natus leaders say more than 100 million people worldwide are afflicted with the disorder.

“With approximately 40 percent of Embla’s revenue coming from international markets, this acquisition positions Natus as the leader in sleep diagnostics outside the United States,” Natus CEO Jim Hawkins said. “Because of a lack of awareness among both patients and physicians, more than 80 percent of those affected remain undiagnosed.”

Headquartered in San Carlos, Calif., Natus Medical manufactures products used for the screening, detection, treatment, monitoring and tracking of common ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders and mobility disorders. Its sleep diagnostic tools are marketed under the Schwarzer product brand.