8-K

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) November 1, 2007

Natus Medical Incorporated

(Exact name of registrant as specified in its charter)

Delaware	000-33001	77-0154833
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1501 Industrial Road, San Carlos, California 94070

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (650) 802-0400

Not applicable

(Former name or former address, if changed since last report)

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 8.01 Other Events.

On November 1, 2007, Natus Medical Incorporated (the “Company”) is issuing a press release and holding a conference call regarding its financial results for the third quarter of fiscal 2007 ended September 30, 2007 and other financial information. The press release discloses that the Company has received a warning letter from the FDA related to the Company’s Olympic Medical manufacturing facility in Seattle, Washington. A copy of the FDA warning letter is furnished as Exhibit 99.1 to this Form 8-K.

The information in this Form 8-K 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, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(d) Exhibits.

Exhibit No.	Description
99.1	Copy of FDA warning letter dated October 12, 2007.

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
Date: November 1, 2007	By:	/s/ Steven J. Murphy
		Steven J. Murphy
		Vice President Finance and Chief Financial Officer

Index to Exhibits

Exhibit No.	Description
99.1	Copy of FDA warning letter dated October 12, 2007.

EX-99.1

Exhibit 99.1

October 12, 2007

VIA CERTIFIED MAIL

RETURN RECEIPT REQUESTED

In reply refer to Warning Letter SEA 08-02

[Redacted]

Olympic Medical Corporation

5900 1^st Avenue South

Seattle, Washington 98108-3248

WARNING LETTER

Dear [Redacted]

During an inspection of your firm located in Seattle, Washington on April 10, 2007 through April 20, 2007, an investigator from the United States Food and Drug Administration (FDA) determined that your firm manufactures the Cool Cap System and Bili-Bassinet. Under section 201 (h) of the Federal Food, Drug, and Cosmetic Act (the Act), 21 U.S.C. 321 (h), these products are devices because they are intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, or are intended to affect the structure or any function of the body.

This inspection revealed that these devices are adulterated within the meaning of section 501 (h) of the Act (21 U.S.C. § 351 (h)), in that the methods used in, or the facilities or controls used for, their manufacture, packing, storage, or installation are not in conformity with the Current Good Manufacturing Practice (CGMP) requirements of the Quality System (QS) regulation found at Title 21, Code of Federal Regulations (C.F.R.), Part 820. We received a response from you, dated May 23, 2007, concerning our investigator’s observations noted on the Form FDA 483, List of Inspectional Observations that was issued to your firm at the end of the inspection. We address this response below, in relation to each of the noted violations. These violations include, but are not limited to, the following:

[Redacted]

Olympic Medical Corporation, Seattle, WA

Re: Warning Letter SEA 08-02

Page 2

1. Failure to establish and maintain procedures for verifying the device design to confirm that the design output meets the design input requirements, and failure to document the results of the design verification, including identification of the design, method(s), the date, and the individual(s) performing the verification, in the design history file, as required by 21 CFR 820.30(f). For example:

a. A measurement of the thickness of the two material layers of two clinical caps and two commercial caps found that the thickness of the patient-side layer for both clinical caps was thicker than specified.

b. The Bili-Bassinet 581 E-154 Verification Test Procedure (VTP) does not specify if the mattress is in the horizontal position during the test, and testing was not performed at the various angles the mattress can be set at.

Your response dated May 23, 2007, addresses these violations. With regard to the noted differences in the material thickness of the clinical caps, your response appears to be adequate. You provided a copy of SOP E-103, Design Review Checklist, Rev F, which was revised to require the identification of components requiring verification. This was accomplished through use of a checklist to verify the completion of all appropriate component specification verifications. You have also provided Test Procedure # AT 401447, Acceptance Test-401477 Water Cap Heat Transfer, which verified that the 0.008” material performs as well or better than the 0.010” material. Initial test results indicate that the heat transfer of caps made with the 0.008” material is equal to or better than caps made with the 0.010.” material. Complete test results were to be made available to the FDA by May 30, 2007. This change will be reported during the PMA Annual Report due in December 2007. The test results will be verified during the next inspection.

The portion of your response addressing verification testing of the Bili-Bassinet is not adequate. You provided a copy of SOP E-115, Verification Test Procedure, Revision I, dated May 18, 2007, which included a newly-developed Verification Test Procedure Checklist to assist in identifying all product operating configurations and modes for inclusion in all future VTPs. You also provided a copy of 581154 VTP Addendum, Bili-Bassinet Mattress Temperature, Rev -, which updated the verification test procedure to test and identify the maximum Bili-Bassinet mattress surface temperature under normal and single fault conditions. However, 581154 VTP Addendum does not include a conclusion and many values on the tables are blank.

[Redacted]

Olympic Medical Corporation, Seattle, WA

Re: Warning Letter SEA 08-02

Page 3

2. Failure to identify the action(s) needed to correct and prevent recurrence of non-conforming product and other quality problems, as required by 21 CFR 820.100(a)(3). For example, Cooling Units 1017, 1018, 1022, and 1023 were not checked for possible over-torquing of the heat sink assembly screws or possible Peltier module damage after the firm encountered a failure during the testing of Cooling Unit 1020. Additionally, the firm determined that the 2^nd Pilot Run Cooling Units did not need to be checked for possible over-torquing because they had been assembled with an accurate torque wrench. However, no record was present to identify what torque wrench was used during assembly. Cooling Units 1008 and 1025, which contain the cooling module originally included in Cooling Unit 1013, were or have been available to be checked prior to shipment to customers, but were not checked. In addition, five (5) other cooling units that were distributed before the out of calibration torque wrench was discovered may have over-torqued heat sink screws and also have not been checked. In-house testing indicated that screw deformation starts at 52 to 55 in-lb, and that cooling units that were checked in-house had torque values up to 58 in-lb.

Your response to this violation is not adequate. You indicated that the necessary rework and verification on the out of spec Cooling Units has been performed and that your firm has made multiple changes to the torque wrenches, which include changing the type, calibration period, and documentation. The corrective and preventive actions directly related to the torque wrenches are considered adequate. However, your response is specific to the issue of torque wrenches and does not address how similar issues would be prevented or detected in the future.

3. Failure to implement and record changes in methods and procedures needed to correct and prevent identified quality problems, as required by 21 CFR 820.100(a)(5). For example, the firm’s work-order MO 65039 did not have the revised stepped torque method indicated in the work order.

Your response to this violation appears to be adequate. Your firm has revised document MFG 107, Word Order Packets, Revision T, dated May 16, 2007, to include a “Stop Work” instruction to ensure changes in assembly processes are initiated and documented in a timely manner. Your firm also indicated that training has been completed on this updated procedure.

4. Failure to establish and maintain procedures for receiving, reviewing, and evaluating complaints, as required by 21 CFR 820.198(a). For example, the following reports of alleged or observed performance deficiencies were not entered into the complaint file:

[Redacted]

Olympic Medical Corporation, Seattle, WA

Re: Warning Letter SEA 08-02

Page 4

a. During patient treatment the Cool Cap system with Cooling Unit 1022 gave a system calibration error alarm and then shut down treatment, as designed.

b. Cool Cap system with Cooling Unit 1008 would not fill with water during set-up.

c. Cool Cap system with Cooling Unit 1023 was sent to replace the Cool Cap system with Cooling Unit 1008. Attempted set-up of the Cool Cap system with Cooling Unit 1023 resulted in a power cycling problem during testing. The customer reportedly diagnosed the problem as a bad crimp on an electrical connecter and fixed it.

Your response to this violation is not adequate. You provided a copy of CORP 114, Product Complaints, Rev A, to demonstrate that your existing procedure adequately defines what a product complaint is consistent with 21 CFR Part 820; however, your procedure does not include any time frames regarding complaints. You also indicated that your firm has completed training to re-enforce the definition of a customer complaint. Your response states that a review of all Customer Service calls for 2006 and 2007 YTD will be completed by May 30, 2007, to “assure that all customer complaints have been captured correctly and processed per the complaint handling procedure.” The adequacy of your efforts to address the noted violation by reviewing customer service calls for 2006 and 2007 YTD cannot be determined until such time as FDA has an opportunity to examine the results of the review.

5. Failure to establish and maintain procedures to control product that does not conform to specified requirements, as required by 21 CFR 820.90(a). For example, an email dated 03/14/07 reported that Cooling Unit 1020 failed production testing. Cooling Unit 1020 was replaced with Cooling Unit 1019 and sent to MRB for investigation. An inspection of the paperwork relating to Cooling Unit 1020 noted that the Non-Conforming Parts form was not filled out until April 11, 2007, even though the unit was reported as being defective on March 14, 2007. Additionally, Non-Conforming Parts form No. 7482, dated March 20, 2007, was written up for cooling module assemblies 1021, 1028, and 1036 for defective Peltier modules and torque not per drawing. Cooling module assembly 1036 was found in the engineering area with no paperwork identifying it as non-conforming material.

[Redacted]

Olympic Medical Corporation, Seattle, WA

Re: Warning Letter SEA 08-02

Page 5

Your response to this violation is not adequate. You state that you have initiated training on the procedures governing the tagging of material and included a memo to the internal audit checklist; however, no explanation was provided as to why the firm’s Non-conforming Material Handling and Disposition procedure was not followed. Additionally, your procedure did not include a timeframe for documenting nonconforming product.

6. Failure to establish and maintain procedures for rework, to include retesting and reevaluation of the nonconforming product after rework, to ensure that the product meets its current approved specifications, as required by 21 CFR 820.90(b)(2). For example, Non-Conforming Parts form No. 7482 lists cooling modules 1021, 1028, and 1036. Cooling modules 1021 and 1028 were to be reworked as part of work order MO 65126; however, there was no specific documentation in work order MO 65126 that the rework activity was performed.

Your response to this violation is not adequate. You stated that the practice of using the “Planner Notes” page to initiate rework/repair on an open Work Order has been discontinued and that as a preventive action work orders will be audited as part of your firm’s internal audit program; however, you have not provided evidence of the auditing of work orders.

7. Failure to establish and maintain procedures to ensure that the device design is correctly translated into production specifications, as required by 21 CFR 820.30(h). For example, a tolerance stack of the heat sink screw assembly shown in Drawing 401293, Rev E, Cooling Module Assembly, indicates that Item 38 (8-32 x 1.25” socket cap screw) is too long for the assembly. Manufacturing Deviation 1709, against drawing 401293, Rev E, was released on February 26, 2007, which changed the length of part 38 from 1.25” to 1.12” to correct the interference problem. However, a tolerance stack of the heat sink screw assembly using the 1.12” screw shows the shorter screw is also too long in a worst case condition. Manufacturing Deviation 1709 was revised on March 19, 2007, to change the screw length to 1.00.”

Your response to this violation appears to be adequate. You provided a copy of SOP E-134, New Product Production Documentation Verification, dated 05/17/07, which was modified to add controls to ensure documentation is reviewed relative to prototype construction prior to release. Samples of training records on the new procedures were supplied. The effective implementation of this corrective action will be verified during the next inspection.

8. Failure to document all activities required under the Corrective and Preventative Action subsystem and their results, as required by 21 CFR 820.100(b). For

[Redacted]

Olympic Medical Corporation, Seattle, WA

Re: Warning Letter SEA 08-02

Page 6

example, your firm initiated four Corrective and Preventive Action (CAPA) Requests for the heat sink assembly screw over-torque issue. The issues were identified on March 16, 2007; however, the four Corrective Action Requests were not initiated until March 23, 2007, which was after many CAPA activities had been completed.

Your response to this violation appears to be adequate. You indicate that your firm has revised SOP CORP 106, Corrective and Preventive Actions, Rev J, dated May 16, 2007, to allow the documentation of a preliminary investigation prior to the generation of a CAPA document. You have also provided samples of the training records on the new document; however, your CAPA procedure needs to be further modified to include a timeframe for when Corrective Action Requests are to be initiated.

A follow up inspection will be required to assure that the corrections made by your firm are adequate.

You should take prompt action to correct the violation(s) addressed in this letter. Failure to promptly correct these violation(s) may result in regulatory action being initiated by the Food and Drug Administration without further notice. These actions include, but are not limited to, seizure, injunction, and/or civil money penalties. Also, federal agencies are advised of the issuance of all Warning Letters about devices so that they may take this information into account when considering the award of contracts. Additionally, premarket approval application’s for Class III devices to which the Quality System regulation deviations are reasonably related will not be approved until the violations have been corrected. Requests for Certificates to Foreign Governments will not be granted until the violations related to the subject devices have been corrected.

Please notify this office in writing within fifteen (15) working days from the date you receive this letter of the specific steps you have taken to correct the noted violations; including an explanation of how you plan to prevent these violation(s), or similar violation(s), from occurring again. Include documentation of the corrective action you have taken. If your planned corrections will occur over time, please include a timetable for implementation of those corrections. If corrective action cannot be completed within 15 working days, state the reason for the delay and the time within which the corrections will be completed.

Your response should be sent to: [Redacted]. If you have any questions about the content of this letter please contact:[Redacted]

[Redacted]

Olympic Medical Corporation, Seattle, WA

Re: Warning Letter SEA 08-02

Page 7

Finally, you should know that this letter is not intended to be an all-inclusive list of the violation(s) at your facility. It is your responsibility to ensure compliance with applicable laws and regulations administered by FDA. The specific violation(s) noted in this letter and in the Inspectional Observations, Form FDA 483 (FDA 483), issued at the closeout of the inspection may be symptomatic of serious problems in your firm’s manufacturing and quality assurance systems. You should investigate and determine the causes of the violation(s), and take prompt actions to correct the violation(s) and to bring your products into compliance.

Sincerely yours,

[Redacted]