Delaware | 77-0154833 | |
(State or other jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Exhibit No. | Description | |
99.1 | Press release dated February 7, 2018 describing the Company's results for its fourth quarter ended December 31, 2017 and other financial information. |
NATUS MEDICAL INCORPORATED (Registrant) | ||||||
Dated: February 7, 2018 | By: | /s/ Jonathan A. Kennedy | ||||
Executive Vice President and Chief Financial Officer |
• | Reports record fourth quarter revenue of $131.4 million and full year revenue of $501.0 million |
• | Reports fourth quarter GAAP earnings (loss) per share of $(0.22) and non-GAAP of $0.42 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||
Revenue | $ | 131,440 | $ | 107,699 | $ | 500,970 | $ | 381,892 | |||||||
Cost of revenue | 54,761 | 42,090 | 213,376 | 144,632 | |||||||||||
Intangibles amortization | 2,590 | 510 | 6,380 | 2,327 | |||||||||||
Gross profit | 74,089 | 65,099 | 281,214 | 234,933 | |||||||||||
Gross profit margin | 56.4 | % | 60.4 | % | 56.1 | % | 61.5 | % | |||||||
Operating expenses: | |||||||||||||||
Marketing and selling | 31,060 | 23,255 | 126,166 | 84,834 | |||||||||||
Research and development | 13,724 | 10,847 | 51,822 | 33,443 | |||||||||||
General and administrative | 16,923 | 13,652 | 74,424 | 50,877 | |||||||||||
Intangibles amortization | 7,330 | 2,243 | 19,171 | 8,983 | |||||||||||
Restructuring | 1 | 221 | 914 | 1,536 | |||||||||||
Total operating expenses | 69,038 | 50,218 | 272,497 | 179,673 | |||||||||||
Income from operations | 5,051 | 14,881 | 8,717 | 55,260 | |||||||||||
Interest expense | (1,783 | ) | (114 | ) | (5,069 | ) | (419 | ) | |||||||
Other income/(expense), net | (516 | ) | 168 | 1,502 | 62 | ||||||||||
Income before tax | 2,752 | 14,935 | 5,150 | 54,903 | |||||||||||
Provision for income tax expense | 9,846 | 4,704 | 25,443 | 12,309 | |||||||||||
Net (loss) income | $ | (7,094 | ) | $ | 10,231 | $ | (20,293 | ) | $ | 42,594 | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | (0.22 | ) | $ | 0.32 | $ | (0.62 | ) | $ | 1.31 | |||||
Diluted | $ | (0.22 | ) | $ | 0.31 | $ | (0.62 | ) | $ | 1.29 | |||||
Weighted-average shares: | |||||||||||||||
Basic | 32,648 | 32,405 | 32,564 | 32,460 | |||||||||||
Diluted | 32,648 | 33,009 | 32,564 | 33,056 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | |||||||||||
(in thousands) | |||||||||||
December 31, | September 30, | December 31, | |||||||||
2017 | 2017 | 2016 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and investments | $ | 88,950 | $ | 132,405 | $ | 247,570 | |||||
Accounts receivable, net | 126,809 | 116,666 | 86,638 | ||||||||
Inventories | 71,529 | 69,322 | 49,587 | ||||||||
Other current assets | 18,340 | 22,605 | 22,004 | ||||||||
Total current assets | 305,628 | 340,998 | 405,799 | ||||||||
Property and equipment, net | 22,071 | 20,677 | 17,333 | ||||||||
Goodwill and intangible assets | 345,580 | 321,454 | 190,277 | ||||||||
Deferred income tax | 10,709 | 2,204 | 14,915 | ||||||||
Other assets | 25,931 | 18,952 | 20,688 | ||||||||
Total assets | $ | 709,919 | $ | 704,285 | $ | 649,012 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 25,242 | $ | 17,961 | $ | 18,700 | |||||
Accrued liabilities | 51,738 | 48,281 | 37,895 | ||||||||
Deferred revenue | 15,157 | 14,691 | 23,346 | ||||||||
Total current liabilities | 92,137 | 80,933 | 79,941 | ||||||||
Long-term liabilities: | |||||||||||
Long-term debt, net | 154,283 | 154,235 | 140,000 | ||||||||
Deferred income tax | 19,407 | 34,835 | 3,684 | ||||||||
Other long-term liabilities | 21,995 | 9,263 | 8,013 | ||||||||
Total liabilities | 287,822 | 279,266 | 231,638 | ||||||||
Total stockholders’ equity | 422,097 | 425,019 | 417,374 | ||||||||
Total liabilities and stockholders’ equity | $ | 709,919 | $ | 704,285 | $ | 649,012 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |||||||
(in thousands) | |||||||
Quarter Ended | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Operating activities: | |||||||
Net income (loss) | $ | (7,094 | ) | $ | 10,232 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Provision for losses on accounts receivable | 1,313 | 183 | |||||
Depreciation and amortization | 9,239 | 4,059 | |||||
Impairment of intangible assets | 1,674 | — | |||||
Loss on disposal of property and equipment | (35 | ) | (8 | ) | |||
Warranty reserve | (3,036 | ) | (339 | ) | |||
Share-based compensation | 2,222 | 2,051 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (16,813 | ) | 424 | ||||
Inventories | 915 | (1,315 | ) | ||||
Prepaid expenses and other assets | 4,096 | 1,874 | |||||
Accounts payable | 8,145 | 1,097 | |||||
Accrued liabilities | 17,057 | (479 | ) | ||||
Deferred revenue | 658 | (11,115 | ) | ||||
Deferred income tax | (12,738 | ) | (2,480 | ) | |||
Net cash provided by operating activities | 5,603 | 4,184 | |||||
Investing activities: | |||||||
Acquisition of businesses, net of cash acquired | (48,421 | ) | — | ||||
Purchases of property and equipment | (1,317 | ) | (1,010 | ) | |||
Purchase of intangible assets | — | — | |||||
Sale of short-term investments | — | (8,590 | ) | ||||
Net cash used in investing activities | (49,738 | ) | (9,600 | ) | |||
Financing activities: | |||||||
Proceeds from stock option exercises and Employee Stock Purchase Program purchases | 1,219 | 1,080 | |||||
Repurchase of common stock | — | (1,032 | ) | ||||
Taxes paid related to net share settlement of equity awards | (3,367 | ) | (170 | ) | |||
Contingent consideration earn-out | (20 | ) | — | ||||
Proceeds from borrowings | — | 140,000 | |||||
Net cash provided by (used in) financing activities | (2,168 | ) | 139,878 | ||||
Exchange rate changes effect on cash and cash equivalents | 2,848 | (1,985 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (43,455 | ) | 132,477 | ||||
Cash and cash equivalents, beginning of period | 132,405 | 81,073 | |||||
Cash and cash equivalents, end of period | $ | 88,950 | $ | 213,550 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||||||||||
RECONCILIATION OF NON-GAAP ADJUSTMENTS (unaudited) | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||
GAAP based results: | |||||||||||||||
Income before provision for income tax | $ | 2,752 | $ | 14,935 | $ | 5,150 | $ | 54,903 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Intangibles Amortization - Cost of revenue | 2,590 | 510 | 6,380 | 2,327 | |||||||||||
Intangibles Amortization - Operating expense | 7,330 | 2,242 | 19,171 | 8,983 | |||||||||||
Recall Accrual and Remediation Efforts (COGS) | (437 | ) | — | 3,507 | 267 | ||||||||||
Recall Accrual and Remediation Efforts (R&D) | 1,066 | 2,462 | 7,637 | 2,462 | |||||||||||
Restructuring | 1 | 221 | 914 | 1,536 | |||||||||||
Litigation | — | — | 1,642 | — | |||||||||||
Direct costs of acquisitions (COGS) | 3,145 | 460 | 7,590 | 460 | |||||||||||
Direct costs of acquisitions (M&S) | 467 | (19 | ) | 129 | (3,429 | ) | |||||||||
Direct costs of acquisitions (G&A) | 1,813 | 1,523 | 4,183 | 1,902 | |||||||||||
Direct costs of acquisitions (R&D) | 100 | — | 125 | — | |||||||||||
Direct costs of acquisitions (OI&E) | — | 38 | 48 | 149 | |||||||||||
Peloton Collection Reserve | — | — | 4,058 | — | |||||||||||
Discontinued product line charges (COGS) | — | — | 1,684 | — | |||||||||||
Discontinued product line charges (G&A) | — | — | 429 | — | |||||||||||
Non-GAAP income before provision for income tax | 18,827 | 22,372 | 62,647 | 69,560 | |||||||||||
Income tax expense, as adjusted | $ | 4,866 | $ | 5,596 | $ | 14,537 | $ | 16,095 | |||||||
Non-GAAP net income | $ | 13,961 | $ | 16,776 | $ | 48,110 | $ | 53,465 | |||||||
Non-GAAP earnings per share: | |||||||||||||||
Basic | $ | 0.43 | $ | 0.52 | $ | 1.48 | $ | 1.65 | |||||||
Diluted | $ | 0.42 | $ | 0.51 | $ | 1.45 | $ | 1.62 | |||||||
Weighted-average shares used to compute | |||||||||||||||
Basic non-GAAP earnings per share | 32,648 | 32,405 | 32,564 | 32,460 | |||||||||||
Diluted non-GAAP earnings per share | 33,225 | 33,009 | 33,129 | 33,056 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||||||
RECONCILIATION OF NON-GAAP ADJUSTMENTS (unaudited) | |||||||||||
(in thousands, except per share amounts) | |||||||||||
Quarter Ended | Year Ended | ||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||
GAAP Gross Profit | 74,089 | 65,099 | 281,214 | 234,933 | |||||||
Amortization of intangibles | 2,590 | 510 | 6,380 | 2,327 | |||||||
Acquisition charges | 3,145 | 460 | 7,590 | 460 | |||||||
Recall accrual and remediation efforts | (437 | ) | — | 3,507 | 267 | ||||||
Discontinued product line charges | — | — | 1,684 | — | |||||||
Non-GAAP Gross Profit | 79,387 | 66,069 | 300,375 | 237,987 | |||||||
Non-GAAP Gross Margin | 60.4 | % | 61.3 | % | 60.0 | % | 62.3 | % | |||
GAAP Operating Profit | 5,051 | 14,881 | 8,717 | 55,260 | |||||||
Amortization of intangibles | 9,920 | 2,752 | 25,551 | 11,310 | |||||||
Recall accrual and remediation efforts | 629 | 2,462 | 11,144 | 2,729 | |||||||
Litigation | — | — | 1,642 | — | |||||||
Restructuring and acquisition charges | 5,526 | 2,185 | 12,941 | 469 | |||||||
Peloton collection reserve | — | — | 4,058 | — | |||||||
Discontinued product line charges | — | — | 2,113 | — | |||||||
Non-GAAP Operating Profit | 21,126 | 22,280 | 66,166 | 69,768 | |||||||
Non-GAAP Operating Margin | 16.1 | % | 20.7 | % | 13.2 | % | 18.3 | % | |||
GAAP Provision for income tax expense (benefit) | 9,846 | 4,704 | 25,443 | 12,309 | |||||||
Effect of accumulated change of pretax income | 8,244 | 1,023 | 13,343 | 3,286 | |||||||
Effect of change in annual expected tax rate | (514 | ) | (1,231 | ) | (988 | ) | (50 | ) | |||
Tax audit reserve | (1,263 | ) | 7 | (1,263 | ) | (543 | ) | ||||
Release of historical tax asset valuation | 10,755 | — | — | — | |||||||
Repatriation tax and tax asset re-measurement | (22,188 | ) | — | (22,188 | ) | — | |||||
Effect on acquisition cost | (14 | ) | 1,093 | 190 | 1,093 | ||||||
Non-GAAP Income tax expense, as adjusted | 4,866 | 5,596 | 14,537 | 16,095 | |||||||
Quarter Ended | Year Ended | ||||||||||
March 31, 2018 | December 31, 2018 | ||||||||||
GAAP EPS Guidance | $0.02 - $0.03 | $0.89 - $0.94 | |||||||||
Amortization of Intangibles | 0.21 | 0.82 | |||||||||
Direct cost of acquisitions | 0.05 | 0.08 | |||||||||
Tax effect | (0.05) | (0.19) | |||||||||
Non-GAAP EPS Guidance | $0.23 - $0.24 | $1.60 - $1.65 |
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end