- Record third quarter non-GAAP earnings per share of
$0.39
- Achieves third quarter 20% non-GAAP operating
margin
- Announces $232.5 million equipment and supply
contract
- Increases revenue and earnings guidance for fiscal year
2015
Natus Medical Incorporated (NASDAQ:BABY) today
announced financial results for the three months ended September
30, 2015.
For the third quarter ended September 30, 2015, the Company
reported revenue of $94.6 million, an increase of 5.2% compared to
$89.9 million reported for the third quarter 2014. On a constant
currency basis, revenue would have increased 6.7% to $95.9 million.
GAAP net income was $10.9 million, or $0.33 per diluted share,
compared with GAAP net income of $7.8 million, or $0.24 per diluted
share in the third quarter 2014.
The Company reported non-GAAP net income of $12.9 million for
the third quarter ended September 30, 2015, an increase of 21.7%
over the prior year of $10.6 million. Non-GAAP earnings per diluted
share increased 18.1% to $0.39 for the third quarter 2015, compared
to $0.33 in the third quarter 2014.
For the nine months ended September 30, 2015, the Company
reported revenue of $275.9 million, an increase of 5.4% compared to
$261.8 million reported for the same period in 2014. On a constant
currency basis, year-to-date revenue would have increased 7.1% to
$280.5 million. GAAP net income was $29.4 million, or $0.89 per
diluted share, compared with net income of $22.0 million, or $0.68
per diluted share in the third quarter of 2014.
The Company reported non-GAAP net income of $34.4 million for
the nine months ended September 30, 2015, an increase of 23.7% over
the prior year of $27.8 million. Non-GAAP earnings per diluted
share increased 20.9% to $1.04 for the third quarter 2015 from
$0.86 per diluted share reported for the same period in the
previous year.
Excluding share repurchases, cash and cash equivalents increased
by $15.5 million to $82.2 million during the quarter. The Company
repurchased $6.5 million of its stock during the third quarter.
"I am very pleased with our third quarter results as we reported
record revenues and earnings. We also exceeded both our revenue and
earnings guidance. I am also pleased that we were able to deliver
revenue growth of 5.2% results despite a $1.3 million negative
currency effect on revenue during the quarter," said Jim Hawkins,
President and Chief Executive Officer of the Company.
"I am most satisfied that we achieved a 20% non-GAAP operating
profit margin during the quarter and am now confident that we will
exceed our full year non-GAAP operating margin goal of 18%. We
are increasingly confident that we can achieve and potentially
exceed our long term operating margin goal of 20% in 2016." Mr.
Hawkins continued. "Both our Neurodiagnostic and Newborn Care
businesses performed well in the quarter led again by outstanding
performance in our domestic markets. Our new service business
initiatives, Peloton, GND and NicView continue to report strong
results. In addition to our record performance during the
quarter, we recently secured a $232.5 million, three-year agreement
between our Argentina subsidiary, Medix, and the Venezuelan
Ministry of Health. This agreement will provide over fifty
hospitals with a broad range of obstetric and neonatal devices,
supplies and services including more than $50 million of Medix and
Natus equipment and supplies." said Hawkins.
Financial Guidance
The Company provided revenue and earnings guidance for the
fourth quarter and increased its revenue and earnings guidance for
the full year 2015.
For the fourth quarter of 2015, the Company increased its
revenue guidance to $102.0 million to $105.0 million and guided
non-GAAP earnings per share of $0.47 to $0.49.
Full year 2015 earnings guidance was increased with expected
non-GAAP earnings per share of $1.51 to $1.53. Full year 2015
revenue guidance also increased to $378 million to $381 million
compared to previous guidance of $376 million to $378 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, certain discreet tax 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 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, October 21, 2015. Individuals
interested in listening to the conference call may do so by dialing
1-800-510-0146 for domestic callers, or 1-617-614-3449 for
international callers, and entering reservation code 80435628. 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 23210688.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 and services
used for the screening, detection, treatment, monitoring and
tracking of common medical ailments in neurological dysfunction,
epilepsy, sleep disorders, newborn care, hearing impairment 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 goals of
revenue growth and improved margins, revenue and non‑GAAP
profitability for the fourth quarter and full year 2015. These
statements relate to estimates and assumptions regarding future
events including Natus' future financial performance. These
statements 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, negative effects of currency exchange rates,
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,
2014 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 STATEMENT OF OPERATIONS |
(in thousands, except
per share amounts) |
|
|
|
|
|
|
Quarter
Ended |
Year to
Date |
|
September 30,
2015 |
September 30,
2014 |
September 30,
2015 |
September 30,
2014 |
Revenue |
$ 94,583 |
$ 89,876 |
$ 275,915 |
$ 261,824 |
Cost of revenue |
35,520 |
33,180 |
104,468 |
102,659 |
Intangibles amortization |
683 |
1,054 |
2,048 |
2,257 |
Gross profit |
58,380 |
55,642 |
169,399 |
156,908 |
Gross profit margin |
61.7% |
61.9% |
61.4% |
59.9% |
Operating expenses: |
|
|
|
|
Marketing and selling |
22,495 |
20,123 |
65,345 |
62,814 |
Research and development |
7,700 |
7,462 |
21,866 |
22,272 |
General and administrative |
10,031 |
12,746 |
33,239 |
34,543 |
Intangibles amortization |
2,036 |
(408) |
5,165 |
1,374 |
Restructuring |
42 |
2,848 |
358 |
3,701 |
Total operating expenses |
42,304 |
42,771 |
125,973 |
124,704 |
Income from operations |
16,076 |
12,871 |
43,426 |
32,204 |
Other income/(expense), net |
7 |
(1,441) |
(1,202) |
(334) |
Income before tax |
16,083 |
11,430 |
42,224 |
31,870 |
Provision for income tax expense |
5,151 |
3,607 |
12,842 |
9,830 |
Net income |
$ 10,932 |
$ 7,823 |
$ 29,382 |
$ 22,040 |
Earnings per share: |
|
|
|
|
Basic |
$ 0.34 |
$ 0.25 |
$ 0.91 |
$ 0.70 |
Diluted |
$ 0.33 |
$ 0.24 |
$ 0.89 |
$ 0.68 |
Weighted-average shares: |
|
|
|
|
Basic |
32,432 |
31,584 |
32,279 |
31,358 |
Diluted |
33,253 |
32,615 |
33,194 |
32,426 |
|
NATUS MEDICAL
INCORPORATED AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) |
(in
thousands) |
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2015 |
2015 |
2014 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 82,201 |
$ 73,238 |
$ 66,558 |
Accounts receivable, net |
88,905 |
83,341 |
82,277 |
Inventories |
46,108 |
44,873 |
40,051 |
Other current assets |
30,309 |
26,909 |
28,919 |
Total current assets |
247,523 |
228,361 |
217,805 |
|
|
|
|
Property and equipment,
net |
17,976 |
18,351 |
17,923 |
Goodwill and intangible
assets |
195,588 |
198,785 |
189,077 |
Other assets |
8,795 |
8,361 |
10,016 |
Total assets |
$ 469,882 |
$ 453,858 |
$ 434,821 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 24,199 |
$ 19,270 |
$ 21,371 |
Accrued liabilities |
39,193 |
35,988 |
36,024 |
Deferred revenue |
10,191 |
11,112 |
11,745 |
Total current liabilities |
73,583 |
66,370 |
69,140 |
|
|
|
|
Long-term liabilities: |
|
|
|
Other long-term
liabilities |
15,538 |
13,722 |
12,966 |
Total liabilities |
89,121 |
80,092 |
82,106 |
Total stockholders' equity |
380,761 |
373,766 |
352,715 |
Total liabilities and stockholders'
equity |
$ 469,882 |
$ 453,858 |
$ 434,821 |
|
NATUS MEDICAL
INCORPORATED AND SUBSIDIARIES |
RECONCILIATION OF
NON-GAAP ADJUSTMENTS (UNAUDITED) |
(in thousands, except
per share amounts) |
|
|
|
|
|
|
Quarter
Ended |
Year to
Date |
|
September 30,
2015 |
September 30,
2014 |
September 30,
2015 |
September 30,
2014 |
GAAP based results: |
|
|
|
|
Income before provision for income
tax |
$ 16,083 |
$ 11,430 |
$ 42,224 |
$ 31,870 |
|
|
|
|
|
Restatement adjustment |
— |
(111) |
— |
(457) |
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
Amortization of intangibles: |
|
|
|
|
Cost of revenue |
683 |
1,055 |
2,048 |
2,256 |
Marketing and selling |
1,709 |
(260) |
4,131 |
497 |
Research and development |
327 |
592 |
1,034 |
1,615 |
|
|
|
|
|
Restructuring charges (G&A) |
42 |
2,847 |
358 |
3,701 |
Direct costs of acquisitions (G&A) |
— |
— |
— |
339 |
Non-GAAP income before provision for income
tax |
18,844 |
15,553 |
49,795 |
39,821 |
|
|
|
|
|
Income tax expense, as adjusted |
5,898 |
4,946 |
15,418 |
11,995 |
|
|
|
|
|
Non-GAAP net income |
$ 12,946 |
$ 10,607 |
$ 34,377 |
$ 27,826 |
Non-GAAP earnings per
share: |
|
|
|
|
Basic |
$ 0.40 |
$ 0.34 |
$ 1.06 |
$ 0.89 |
Diluted |
$ 0.39 |
$ 0.33 |
$ 1.04 |
$ 0.86 |
|
|
|
|
|
Weighted-average shares used to
compute |
|
|
|
|
Basic non-GAAP earnings per
share |
32,432 |
31,584 |
32,279 |
31,358 |
Diluted non-GAAP earnings per
share |
33,253 |
32,615 |
33,194 |
32,426 |
|
|
|
|
|
GAAP Gross profit |
$ 58,380 |
$ 55,642 |
$ 169,399 |
$ 156,908 |
Restatement adjustment |
— |
(111) |
— |
(457) |
Amortization of intangibles |
683 |
1,055 |
2,048 |
2,256 |
Non-GAAP Gross Profit |
$ 59,063 |
$ 56,586 |
$ 171,447 |
$ 158,707 |
Non-GAAP Gross Margin |
62.4% |
63.0% |
62.1% |
60.6% |
|
|
|
|
|
GAAP Operating profit |
$ 16,076 |
$ 12,871 |
$ 43,426 |
$ 32,204 |
Restatement adjustment |
— |
(111) |
— |
(457) |
Amortization of intangibles |
2,719 |
1,387 |
7,213 |
4,368 |
Restructuring and other charges |
42 |
2,847 |
358 |
4,040 |
Non-GAAP Operating profit |
$ 18,837 |
$ 16,994 |
$ 50,997 |
$ 40,155 |
Non-GAAP Operating
margin |
19.9% |
18.9% |
18.5% |
15.3% |
CONTACT: Natus Medical Incorporated
Jonathan A. Kennedy
Sr. Vice President and Chief Financial Officer
(925) 223-6700
InvestorRelations@Natus.com
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