UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April
23, 2014
Natus Medical Incorporated
(Exact
name of registrant as specified in its charter)
000-33001
(Commission File Number)
Delaware | 77-0154833 | |
(State or other jurisdiction |
(I.R.S. Employer |
|
of Incorporation) |
Identification No.) |
1501 Industrial Road
San Carlos, CA 94070
(Address
of principal executive offices)
650-802-0400
(Registrant’s telephone number, including area
code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ 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. |
On April 23, 2014, Natus Medical Incorporated (the “Company”) is issuing a press release and holding a conference call regarding its financial results for the third quarter ended March 31, 2014 and other financial information. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. | Description | |
99.1 | Press release dated April 23, 2014 describing the Company’s results for its third quarter ended March 31, 2014 and other financial information. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATUS MEDICAL INCORPORATED |
|||
(Registrant) |
|||
Dated: |
April 23, 2014 |
By: |
/s/ Jonathan A. Kennedy |
Senior Vice President and Chief Financial Officer |
Exhibit Index
Exhibit No. |
Description |
|
99.1 |
Press release dated April 23, 2014 describing the Company’s results for its third quarter ended March 31, 2014 and other financial information. |
Exhibit 99.1
Natus Medical Announces First Quarter 2014 Financial Results
SAN CARLOS, Calif.--(BUSINESS WIRE)--April 23, 2014--Natus Medical Incorporated (NASDAQ: BABY) today announced financial results for the three months ended March 31, 2014.
For the first quarter ended March 31, 2014, the Company reported revenue of $85.6 million, compared to $85.8 million in the first quarter of the previous year. Net income was $6.3 million, or $0.19 per diluted share, compared with net income of $3.4 million, or $0.11 per diluted share, in the first quarter of 2013.
The Company reported record first quarter non-GAAP earnings per share of $0.26 per diluted share, up 73% from the $0.15 per diluted share reported for the first quarter of 2013.
The Company’s cash and cash equivalents increased $3.5 million to $59.6 million during the quarter and total debt was reduced by $5.1 million.
“I am very pleased with our first quarter performance. Our record earnings exceeded our EPS guidance, while revenues came in at the top of our guidance range,” said Jim Hawkins, President and Chief Executive Officer of the Company. “Both Newborn Care and Neurology performed well in all geographies. Our non-GAAP operating margin increased to 14%, up from 8% last year. We continue to make progress toward our upwardly revised long-term full year non-GAAP operating margin goal of 20%. To help achieve this goal, we are focused on organic revenue growth which is reflected in our second quarter guidance.”
“In the first quarter we launched a new business initiative, Hearing Screening as a Service. Natus now offers newborn hearing screening tests to hospitals as an alternative to purchasing equipment and disposables. We look to convert many of our existing Algo customers to this new service model, as well as attracting new customers to Natus. We are very excited about this opportunity, and are off to an encouraging start.”
Financial Guidance
The Company provided revenue and earnings guidance for the second quarter and increased its non-GAAP EPS guidance for the full year 2014.
For the second quarter of 2014, the Company expects revenue of $83 million to $86 million and non-GAAP earnings per share of $0.24 to $0.27.
The Company updated its non-GAAP earnings guidance for the full year 2014 and now expects to report non-GAAP earnings per share of $1.18 to $1.21, an increase from previous guidance of $1.14 to $1.18. Full year 2014 revenue guidance remained unchanged at $345 million to $350 million.
The Company's non-GAAP earnings guidance excludes amortization of acquisition related intangibles, acquisition related charges, restructuring charges, and their related tax effects. Non-GAAP earnings guidance includes the impact of expensing employee share based compensation. All non-GAAP earnings per share amounts are on a diluted basis.
Use of Non-GAAP Financial Measures
The Company's non-GAAP results exclude amortization expense associated with certain acquisition-related intangibles, restructuring charges, direct costs of acquisitions and the related tax effects. A reconciliation between non-GAAP and GAAP financial measures is included on page 6 of this press release.
The Company believes that the presentation of results excluding these charges provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results. Therefore, the Company believes these non-GAAP financial measures facilitate comparison of operating results across reporting periods.
The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning, forecasting, and analyzing future periods. 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 an investment-community conference call to discuss this announcement beginning at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) today, April 23, 2014. Individuals interested in listening to the conference call may do so by dialing 1-877-415-3181 for domestic callers, or 1-857-244-7324 for international callers, and entering reservation code 37738667. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 1-888-286-8010 for domestic callers, or 1-617-801-6888 for international callers, and entering reservation code 63910123.
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.
About Natus Medical Incorporated
Natus is a leading provider of healthcare products used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and balance and mobility disorders.
Additional information about Natus Medical can be found at www.natus.com.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, particularly statements regarding the expectations, beliefs, plans, intentions and strategies of Natus. These forward-looking statements include statements regarding our long term goal of driving non-GAAP operating margins to 20%, revenue and non-GAAP profitability in the second quarter and full year 2014. These statements relate to estimates and assumptions regarding future events including Natus' future financial performance, 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. Our future results could differ materially due to a number of factors, including the effects of competition, the demand for our products and services, the impact of adverse global economic conditions on our target markets, our ability to expand our sales in international markets, our ability to maintain current sales levels in a mature domestic market, our ability to control costs, risks associated with bringing new products to market and integrating acquired businesses, and our ability to fulfill product orders on a timely basis. Natus disclaims any obligation to update information contained in any forward looking statement.
More information about potential risk factors that could affect the business and financial results of Natus is included in Natus' annual report on Form 10-K for the year ended December 31, 2013, and its quarterly reports on Form 10-Q, and in other reports filed from time to time by Natus with the U.S. Securities and Exchange Commission.
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | ||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
(in thousands, except per share amounts) | ||||||||||
Quarter Ended | ||||||||||
Mar. 31, | Mar. 31, | |||||||||
2014 | 2013 | |||||||||
Revenue | $ | 85,624 | $ | 85,834 | ||||||
Cost of revenue | 35,733 | 36,601 | ||||||||
Gross profit | 49,891 | 49,233 | ||||||||
58.3 | % | 57.4 | % | |||||||
Operating expenses: | ||||||||||
Marketing and selling | 21,422 | 22,196 | ||||||||
Research and development | 7,508 | 8,212 | ||||||||
General and administrative | 12,280 | 13,966 | ||||||||
Total operating expenses | 41,210 | 44,374 | ||||||||
Income from operations | 8,681 | 4,859 | ||||||||
Other income/(expense), net | 312 | (334 | ) | |||||||
Income before tax | 8,993 | 4,525 | ||||||||
Provision for income tax expense | 2,742 | 1,083 | ||||||||
Net income | $ | 6,251 | $ | 3,442 | ||||||
Earnings per share: | ||||||||||
Basic | $ | 0.20 | $ | 0.12 | ||||||
Diluted | $ | 0.19 | $ | 0.11 | ||||||
Weighted-average shares: | ||||||||||
Basic | 31,062 | 29,570 | ||||||||
Diluted | 32,185 | 30,319 | ||||||||
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED) | ||||||||||
(in thousands, except per share amounts) | ||||||||||
Quarter Ended | ||||||||||
Mar. 31, | Mar. 31, | |||||||||
2014 | 2013 | |||||||||
GAAP based results: | ||||||||||
Income before provision for income tax | $ | 8,993 | $ | 4,525 | ||||||
Non-GAAP adjustments: | ||||||||||
Amortization of acquired intangibles: | ||||||||||
Cost of revenue | 1,045 | 774 | ||||||||
Marketing and selling | 788 | 651 | ||||||||
Research and development | 344 | 313 | ||||||||
Intangible Asset Impairment Charges (M&S) | - | - | ||||||||
Restructuring charges (G&A) | 635 | (387 | ) | |||||||
Direct costs of acquisitions (G&A) | 195 | 767 | ||||||||
Accelerate ERP system depreciation (G&A) | - | - | ||||||||
Backlog FMV Adjustments (Marketing & Sales) | - | - | ||||||||
Inventory FMV adjustment (COGS) | - | - | ||||||||
Non-GAAP income before provision for income tax |
12,000 | 6,643 | ||||||||
Income tax expense, as adjusted | 3,713 | 2,088 | ||||||||
Non-GAAP net income | $ | 8,287 | $ | 4,555 | ||||||
Non-GAAP earnings per share: | ||||||||||
Basic | $ | 0.27 | $ | 0.15 | ||||||
Diluted | $ | 0.26 | $ | 0.15 | ||||||
Weighted-average shares used to compute |
||||||||||
Basic non-GAAP earnings per share | 31,062 | 29,570 | ||||||||
Diluted non-GAAP earnings per share | 32,185 | 30,319 | ||||||||
GAAP Gross profit | 49,891 | 49,233 | ||||||||
Amortization of intangibles | 1,045 | 774 | ||||||||
Backlog FMV adjustment | - | - | ||||||||
Non-GAAP Gross Profit | 50,936 | 50,007 | ||||||||
Non-GAAP Gross Margin | 59.5 | % | 58.3 | % | ||||||
GAAP Operating profit | 8,681 | 4,859 | ||||||||
Amortization of intangibles | 2,177 | 1,738 | ||||||||
Restructuring and other charges | 830 | 380 | ||||||||
Non-GAAP Operating profit | 11,688 | 6,977 | ||||||||
Non-GAAP Operating margin | 13.7 | % | 8.1 | % | ||||||
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||||
(in thousands) | ||||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
ASSETS | Q1-14 | Q1-13 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 59,589 | $ | 24,354 | ||||
Accounts receivable, net | 79,933 | 93,005 | ||||||
Inventories | 35,455 | 38,028 | ||||||
Other Current Assets | 23,273 | 14,471 | ||||||
Total current assets | 198,250 | 169,858 | ||||||
Property and equipment, net | 21,530 | 25,994 | ||||||
Goodwill and Intangible assets | 199,070 | 202,251 | ||||||
Other assets | 10,441 | 9,681 | ||||||
Total assets | $ | 429,291 | $ | 407,784 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 26,057 | $ | 29,249 | ||||
Short Term Borrowings | - | 33,300 | ||||||
Current debt | 10,437 | 8,522 | ||||||
Accrued liabilities | 25,750 | 27,590 | ||||||
Deferred revenue | 11,775 | 14,064 | ||||||
Total current liabilities | 74,019 | 112,725 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net | 22,500 | 10,892 | ||||||
Other long-term liabilities | 12,955 | 11,235 | ||||||
Total liabilities | 109,474 | 134,852 | ||||||
Total stockholders’ equity | 319,817 | 272,932 | ||||||
Total liabilities and stockholders’ equity | $ | 429,291 | $ | 407,784 | ||||
CONTACT:
Natus Medical Incorporated
Jonathan A. Kennedy,
650-802-0400
Sr. Vice President and Chief Financial Officer
InvestorRelations@Natus.com