Update to Natus Medical First Quarter 2019 Financial Results
May 06 2019 - 4:30PM
Natus Medical Incorporated (NASDAQ: BABY) (the
“Company” or “Natus”), a leading provider of medical devices and
services, today announced an update to its previously announced
financial results for the three months ended March 31, 2019.
After the release of its financial results on April 25th, the
Company identified non-cash currency translation adjustments and
related tax effects that should have been accounted for in
connection with the impairment charge for the divestiture of Medix.
The additional impairment was identified through the Company's
internal reconciliation process and resulted in an additional
non-cash restructuring charge of $5.2 million, net of tax, related
to deferred currency translation adjustments, for the three months
ended March 31, 2019, resulting in a net loss of $30.0 million for
the quarter (compared to $24.8 million previously reported) or
$0.89 per share (compared to $0.74 per share previously reported).
There was no impact to non-GAAP net income for the quarter. The
financial statements within today's press release include the
impact of this update, which will also be reflected in our Form
10-Q for the first quarter ending March 31, 2019. The Company also
reclassified the assets and liabilities of Medix to held for sale
on the balance sheet, which did not impact earnings per share.
Use of Non-GAAP Financial
Measures
The Company presents in this release its
non-GAAP net income, non-GAAP earnings per 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 share and non-GAAP
operating expense: 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.
About Natus Medical
Incorporated
Natus is a leading provider of neurology,
newborn care, and hearing and balance assessment healthcare
products and services used for the screening, treatment and
monitoring of common medical conditions in newborn care, hearing,
balance impairment, neurological dysfunction, and sleep
disorders.
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 forward-looking statements include, without limitation,
statements regarding creating a more efficient operating model,
creating a stronger and more profitable company, enhancing focus on
operational excellence, positioning the company for growth and
driving long-term value for stakeholders. 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 the ability of the Company to realize
the anticipated benefits from its new structure or from its
consolidation strategy, effects of competition, the Company's
ability to successfully integrate and achieve its profitability
goals from recent 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, 2018. Natus disclaims any obligation to update
information contained in any forward looking statement, except as
required by law.
Natus Medical IncorporatedDrew DaviesExecutive
Vice President and Chief Financial Officer(925)
223-6700InvestorRelations@Natus.com
NATUS MEDICAL INCORPORATED AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited) |
(in thousands, except per share
amounts) |
|
|
|
|
|
Quarter Ended |
|
March 31, 2019 |
|
March 31, 2018 |
Revenue |
$ |
114,757 |
|
|
$ |
128,609 |
|
Cost of revenue |
46,370 |
|
|
55,369 |
|
Intangibles
amortization |
1,756 |
|
|
1,587 |
|
Gross
profit |
66,631 |
|
|
71,653 |
|
Gross profit
margin |
58.1 |
% |
|
55.7 |
% |
Operating
expenses: |
|
|
|
Marketing
and selling |
33,729 |
|
|
35,872 |
|
Research
and development |
13,058 |
|
|
15,443 |
|
General
and administrative |
16,305 |
|
|
17,448 |
|
Intangibles amortization |
3,786 |
|
|
4,806 |
|
Restructuring |
37,372 |
|
|
812 |
|
Total operating expenses |
104,250 |
|
|
74,381 |
|
Income (loss) from
operations |
(37,619 |
) |
|
(2,728 |
) |
Interest expense |
(1,506 |
) |
|
(1,949 |
) |
Other income
(expense) |
(606 |
) |
|
128 |
|
Income (loss) before
tax |
(39,731 |
) |
|
(4,549 |
) |
Provision for income
tax expense (benefit) |
(9,730 |
) |
|
(1,401 |
) |
Net loss |
$ |
(30,001 |
) |
|
$ |
(3,148 |
) |
Loss per share: |
|
|
|
Basic |
$ |
(0.89 |
) |
|
$ |
(0.10 |
) |
Diluted |
$ |
(0.89 |
) |
|
$ |
(0.10 |
) |
Weighted-average
shares: |
|
|
|
Basic |
33,590 |
|
|
32,760 |
|
Diluted |
33,590 |
|
|
32,760 |
|
|
NATUS MEDICAL INCORPORATED AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) |
(in thousands) |
|
|
|
|
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and
investments |
$ |
53,423 |
|
|
$ |
56,373 |
|
Accounts
receivable |
110,900 |
|
|
127,041 |
|
Inventories |
82,866 |
|
|
79,736 |
|
Other
current assets |
26,793 |
|
|
22,625 |
|
Total current
assets |
273,982 |
|
|
285,775 |
|
|
|
|
|
Property
and equipment |
26,280 |
|
|
22,913 |
|
Current
portion of operating lease right-of-use assets |
18,982 |
|
|
— |
|
Goodwill
and intangible assets |
279,595 |
|
|
287,097 |
|
Deferred
income tax |
19,165 |
|
|
22,639 |
|
Other
assets |
20,559 |
|
|
19,716 |
|
Total assets |
$ |
638,563 |
|
|
$ |
638,140 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
25,103 |
|
|
$ |
28,805 |
|
Short-term debt |
35,000 |
|
|
35,000 |
|
Accrued
liabilities |
51,157 |
|
|
52,568 |
|
Deferred
revenue |
19,017 |
|
|
17,073 |
|
Current portion of
operating lease liabilities |
6,251 |
|
|
— |
|
Liabilities and accrued
impairment held for sale |
24,786 |
|
|
— |
|
Total current
liabilities |
161,314 |
|
|
133,446 |
|
|
|
|
|
Long-term
liabilities: |
|
|
|
Long-term
debt |
64,522 |
|
|
69,474 |
|
Deferred
income tax |
8,467 |
|
|
16,931 |
|
Operating
lease liabilities |
15,234 |
|
|
— |
|
Other
long-term liabilities |
21,325 |
|
|
19,845 |
|
Total liabilities |
270,862 |
|
|
239,696 |
|
Total stockholders’
equity |
367,701 |
|
|
398,444 |
|
Total liabilities and
stockholders’ equity |
$ |
638,563 |
|
|
$ |
638,140 |
|
|
NATUS MEDICAL INCORPORATED AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) |
(in thousands) |
|
|
|
|
|
Quarter Ended |
|
March 31, 2019 |
|
March 31, 2018 |
Operating activities: |
|
|
|
Net loss |
$ |
(30,001 |
) |
|
$ |
(3,148 |
) |
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities: |
|
|
|
Provision for losses on accounts
receivable |
600 |
|
|
918 |
|
Depreciation and amortization |
7,711 |
|
|
7,915 |
|
(Gain) loss on disposal of property
and equipment |
179 |
|
|
52 |
|
Warranty reserve |
354 |
|
|
(1,125 |
) |
Share-based compensation |
2,554 |
|
|
2,362 |
|
Impairment charge on held for sale
entity |
24,571 |
|
|
— |
|
Changes in operating assets and
liabilities: |
|
|
|
Accounts receivable |
15,555 |
|
|
(2,242 |
) |
Inventories |
(4,616 |
) |
|
2,885 |
|
Prepaid expenses and other
assets |
(7,703 |
) |
|
(5,390 |
) |
Accounts payable |
(3,436 |
) |
|
(622 |
) |
Accrued liabilities |
(1,319 |
) |
|
3,319 |
|
Deferred revenue |
1,982 |
|
|
1,314 |
|
Deferred income tax |
62 |
|
|
87 |
|
Net cash provided by (used in)
operating activities |
6,493 |
|
|
6,325 |
|
Investing activities: |
|
|
|
Purchases of property and
equipment |
(2,461 |
) |
|
(2,473 |
) |
Net cash
used in investing activities |
(2,461 |
) |
|
(2,473 |
) |
Financing activities: |
|
|
|
Proceeds from stock option
exercises and ESPP |
268 |
|
|
577 |
|
Repurchase of common stock |
— |
|
|
(4,736 |
) |
Taxes paid related to settlement of
equity awards |
(1,567 |
) |
|
(19 |
) |
Principal payments of financing
lease liability |
(165 |
) |
|
— |
|
Contingent consideration
earn-out |
— |
|
|
(147 |
) |
Payments on borrowings |
(5,000 |
) |
|
(25,000 |
) |
Net cash
used in financing activities |
(6,464 |
) |
|
(29,325 |
) |
Exchange rate changes
effect on cash and cash equivalents |
(518 |
) |
|
994 |
|
Net decrease in cash and
cash equivalents |
(2,950 |
) |
|
(24,479 |
) |
Cash and cash equivalents,
beginning of period |
56,373 |
|
|
88,950 |
|
Cash and cash equivalents,
end of period |
$ |
53,423 |
|
|
$ |
64,471 |
|
|
NATUS MEDICAL INCORPORATED AND
SUBSIDIARIES |
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(unaudited) |
(in thousands, except per share
amounts) |
|
|
|
|
|
Quarter Ended |
|
March 31, 2019 |
|
March 31, 2018 |
GAAP based
results: |
|
|
|
Loss before
provision for income tax |
$ |
(39,731 |
) |
|
$ |
(4,549 |
) |
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
Intangibles
amortization (COGS) |
1,756 |
|
|
1,587 |
|
Recall accrual and
remediation efforts (COGS) |
(255 |
) |
|
268 |
|
Restructuring and other
non-recurring costs (COGS) |
251 |
|
|
— |
|
Direct costs of
acquisitions (COGS) |
83 |
|
|
2,408 |
|
Intangibles
amortization (OPEX) |
3,786 |
|
|
4,806 |
|
Direct costs of
acquisitions (M&S) |
17 |
|
|
22 |
|
Recall accrual and
remediation efforts (R&D) |
— |
|
|
1,846 |
|
Direct costs of
acquisitions (R&D) |
46 |
|
|
46 |
|
Restructuring and other
non-recurring costs (OPEX) |
37,664 |
|
|
967 |
|
Direct costs of
acquisitions (G&A) |
45 |
|
|
2,391 |
|
Restructuring and other
non-recurring costs (OI&E) |
— |
|
|
368 |
|
Litigation (OPEX) |
687 |
|
|
242 |
|
Non-GAAP income before
provision for income tax |
4,349 |
|
|
10,402 |
|
|
|
|
|
Income tax expense, as
adjusted |
$ |
1,241 |
|
|
$ |
2,375 |
|
|
|
|
|
Non-GAAP net
income |
$ |
3,108 |
|
|
$ |
8,027 |
|
Non-GAAP earnings per
share: |
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.25 |
|
Diluted |
$ |
0.09 |
|
|
$ |
0.24 |
|
|
|
|
|
Weighted-average shares used to
compute |
|
|
|
Basic non-GAAP earnings per
share |
33,590 |
|
|
32,760 |
|
Diluted non-GAAP earnings per
share |
33,709 |
|
|
33,149 |
|
|
NATUS MEDICAL INCORPORATED AND
SUBSIDIARIES |
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(unaudited) |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
Quarter Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
GAAP Gross Profit |
|
$ |
66,631 |
|
|
$ |
71,653 |
|
Amortization of
intangibles |
|
1,756 |
|
|
1,587 |
|
Direct cost of
acquisitions |
|
83 |
|
|
2,408 |
|
Recall accrual and
remediation efforts |
|
(255 |
) |
|
268 |
|
Restructuring and other
non-recurring costs |
|
251 |
|
|
— |
|
Non-GAAP Gross
Profit |
|
$ |
68,466 |
|
|
$ |
75,916 |
|
Non-GAAP Gross
Margin |
|
59.7 |
% |
|
59.0 |
% |
|
|
|
|
|
GAAP Operating
Loss |
|
$ |
(37,619 |
) |
|
$ |
(2,728 |
) |
Amortization of
intangibles |
|
5,542 |
|
|
6,393 |
|
Recall accrual and
remediation efforts |
|
(255 |
) |
|
2,114 |
|
Litigation |
|
687 |
|
|
242 |
|
Restructuring and other
non-recurring costs |
|
37,915 |
|
|
967 |
|
Direct cost of
acquisitions |
|
191 |
|
|
4,867 |
|
Non-GAAP Operating
Profit |
|
$ |
6,461 |
|
|
$ |
11,855 |
|
Non-GAAP
Operating Margin |
|
5.6 |
% |
|
9.2 |
% |
|
|
|
|
|
GAAP Income tax
benefit |
|
$ |
(9,730 |
) |
|
$ |
(1,401 |
) |
Effect of accumulated
change of pretax income |
|
3,044 |
|
|
3,721 |
|
Effect of change in
annual expected tax rate |
|
(102 |
) |
|
(53 |
) |
Repatriation tax
adjustment |
|
(177 |
) |
|
188 |
|
Stock-based
compensation adjustment |
|
— |
|
|
(80 |
) |
Restructuring
expenses |
|
8,206 |
|
|
— |
|
Non-GAAP Income tax
expense |
|
$ |
1,241 |
|
|
$ |
2,375 |
|
|
|
|
|
|
|
|
Quarter Ended |
|
Year Ended |
|
|
June 30, 2019 |
|
December 31, 2019 |
GAAP EPS Guidance |
|
$0.10 -$0.17 |
|
($0.25) - $0.02 |
Amortization of
Intangibles |
|
0.18 |
|
0.68 |
Restructuring and other
non-recurring costs |
|
0.01 |
|
1.16 |
Litigation |
|
— |
|
0.02 |
Direct cost of
acquisitions |
|
0.01 |
|
0.01 |
Tax effect |
|
(0.05) |
|
(0.45) |
Non-GAAP EPS
Guidance |
|
$0.25 - $0.32 |
|
$1.17 - $1.44 |
PishPosh (NASDAQ:BABY)
Historical Stock Chart
From Aug 2024 to Sep 2024
PishPosh (NASDAQ:BABY)
Historical Stock Chart
From Sep 2023 to Sep 2024