Natus Medical Announces Fourth Quarter 2021 Financial Results

PLEASANTON, Calif., Feb. 24, 2022 (GLOBE NEWSWIRE) -- Natus Medical Incorporated (NASDAQ:NTUS) (the “Company” or “Natus”), a leading provider of medical device solutions to screen, diagnose, and treat disorders affecting the brain, neural pathways, and eight sensory nervous systems, today announced financial results for the three months and full year ended December 31, 2021.

For the fourth quarter ended December 31, 2021, the Company reported revenue of $128.7 million, an increase of 8.4% compared to $118.7 million reported for the fourth quarter 2020. GAAP gross margin was 56.8% during the fourth quarter of 2021 compared to 55.3% in the fourth quarter 2020. GAAP net income was $1.7 million, or $0.05 earnings per diluted share, compared with GAAP net income of $5.2 million, or $0.15 earnings per diluted share in the fourth quarter 2020.

Non-GAAP gross margin was 59.3% in the fourth quarter 2021 compared to 58.1% reported for the fourth quarter of 2020. Non-GAAP earnings per diluted share was $0.47 for the fourth quarter 2021, compared to $0.39 in the fourth quarter 2020. Non-GAAP net income was $16.2 million in the fourth quarter 2021 compared to $13.1 million in the fourth quarter 2020.

For the full year ended December 31, 2021, the Company reported revenue of $473.4 million, an increase of 13.9% compared to $415.7 million reported for the same period in 2020. GAAP gross margin was 57.8% vs. 52.1% reported for the same period in 2020. GAAP net income was $13.2 million, or $0.39 earnings per diluted share, compared with GAAP net loss of $16.6 million, or $0.49 per share in the same period in 2020.

Non-GAAP gross margin was 60.0% in 2021 vs. 56.6% reported for the same period in 2020. Non-GAAP earnings per diluted share was $1.20 for the full year ended December 31, 2021, compared to $0.39 in the same period in 2020. The Company reported non-GAAP net income of $40.8 million for the full year ended December 31, 2021, compared to prior year’s non-GAAP net income of $13.1 million.

“I would like to thank our Natus Teammates for their efforts to deliver growth in both revenue and income in the fourth quarter despite challenges from both Covid and supply chain related constraints,” said Thomas J. Sullivan, President and Chief Executive Officer of Natus. “Throughout the year we focused on ensuring our products were available to clinicians and despite incurring over $1.7 million in higher costs in the fourth quarter alone, our non-GAAP earnings per share increased more than 200%.”

Mr. Sullivan continued, “I would like to congratulate Dr. Christopher Chung, Natus Vice President of Quality, Regulatory Affairs and Chief Medical Officer, who has informed me of his decision to retire in April after a twenty-two-year career at the company. Dr. Chung is a valued leader at Natus and I am pleased that he will continue to support our Team in a consultative role as our Chief Medical Officer through the end of the year. I wish Chris and his family the best in this next phase of his life.”

“As a result of a strategic review of our markets, Natus will realign its portfolio and commercial infrastructure to focus on the clinical areas of the Brain, Neural Pathways, and eight Sensory Nervous Systems.” “We believe a focus on higher value markets will position us for increased growth while also enabling us to reduce complexity to improve our execution and long-term margin expansion,” concluded Mr. Sullivan.

Financial Guidance

In the first quarter of 2022, Natus will realign its commercial organization on the clinical focus areas of Brain, Neural Pathways, and eight Sensory Nervous Systems. The Company will transition to a matrix infrastructure of non-commercial resources in support of innovation and entrepreneurial growth in each clinical focus area in the coming months while reviewing its cost structure. As a result of these changes, the Company is only providing annual guidance at this point which excludes the impact of any acquisitions or divestitures.

For the full year 2022, the Company’s revenue is expected to be between $491.0 million and $499.0 million and non-GAAP earnings per share is expected to be between $1.36 and $1.49. 2022 guidance assumes an incremental $16.0 million of extraordinary costs associated with acquiring semiconductors and other components outside of our normal supply chain due to their constrained availability. Additional unforeseen constraints could further impact our profitability. While these extraordinary costs negatively impact profitability in the near term, a return to more normal supply chain conditions could positively impact profitability in the future. At this time, we do not anticipate semiconductor and component constraints to impact revenue.

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 effect, which the Company expects to be approximately $15.6 million for the year 2022, which the Company expects will reduce GAAP earnings per share by approximately $0.46.

Use of Non-GAAP Financial Measures

The Company presents in this release its non-GAAP net income, non-GAAP earnings per diluted 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 Call

Natus has scheduled a conference call to discuss this announcement beginning at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time) tomorrow, February 25, 2022. 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 6682846. 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 6682846. 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. A companion Investor Presentation will be posted to the Company’s Web site at 7:00 a.m. Eastern Time tomorrow, February, 25, 2022.

About Natus Medical Incorporated

Natus delivers innovative and trusted solutions to screen, diagnose, and treat disorders affecting the brain, neural pathways, and eight sensory nervous systems to advance the standard of care and improve patient outcomes and quality of life. The Company offers hardware, advanced software and algorithms, and consumables that provide stimulus, acquire and monitor physiological signals, and capture the body’s response. With sales in over 100 countries, Natus is the clear worldwide leader in neurodiagnostics, pediatric retinal imaging, and infant hearing screening, as well as a leading company in hearing assessment, hearing instrument fitting, balance, and intracranial pressure monitoring.

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 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 supply chain delays and constraints, 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 strategic alignment, the Company’s ability to successfully pursue, acquire and integrate 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, 2020, Quarterly Report on Form 10-Q for the periods ended March 31, 2021, June 30, 2021, September 30, 2021. 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