Natus Medical Incorporated

Source: Healthcare Digital

Date :07/08/2007 18:57:50

With the stock ticker symbol of BABY, Natus Medical is focused on helping newborns enter the world happy and healthy

Written and produced by James Buchanan & Thomas Venturo

Headquartered in San Carlos, Calif., Natus Medical Incorporated and its family of companies are manufacturers of advanced neurodiagnostic systems for audiology, neonatology, neurology, and polysomnography.

The company also produces newborn care products that include hearing screening systems, phototherapy lights, newborn head-cooling devices, and software for managing and tracking newborn metabolic screening results.

Further, the company also sells and distributes medical devices used for the screening, detection, treatment, monitoring, and tracking of ailments such as hearing impairment, neurological dysfunction, epilepsy, sleep disorders and newborn care.

The company manufactures its products under a number of brand names. For example, newborn hearing screening brands include ALGO, ABaer, AuDX, and Echo-Screen hearing screeners. Diagnostic hearing assessment brands include Navigator Pro, Scout Sport, and HINT PRO.

With its many products, Natus provides clinicians with ongoing field support, clinical consultation and educational tools designed to help its customers better utilize its products.

Founded in 1979, the company has more than 360 employees, and reported revenues in 2006 of $89.9 million. In fact, the company has grown in the last few years through a rather aggressive acquisitions strategy.

In a posting published on March 16, 2007,

(www.fool.com/investing/general/2007/03/16/natus-medical-vs-under-armour-natus-medical.aspx)

Motley Fool writer Tim Hanson writes, “With Natus Medical, you’re getting a $330 million health-care equipment company that’s fast becoming the main provider of treatment and screening products for newborns. Recent acquisitions have helped the company expand its line to encompass everything from hearing tests to jaundice treatments to oxygen delivery hoods.”

He goes on to add, “In other words, Natus Medical is the very definition of a small company with dominant positioning in a profitable niche.”

And according to a May 21, 2007, posting on SmartMoney.com

(http://www.smartmoney.com/undertheradar/index.cfm?story=20070521) Natus Medical now holds an 80 percent market share in infant hearing screening and diagnostics.

In the article, writer Dan Burrows says, “Natus is seen having a very respectable organic growth rate, standing at anywhere from 10 percent to 15 percent a year. Of course that’s not what makes the company a potentially hot growth stock. For that, you look to management and its long-term acquisition strategy.”

Beginning in 2003, Natus started to acquire a number of companies to increase its product portfolio and resources. These acquisitions include: Neometrics Inc., July 2003; Fischer-Zoth, September 2004; Bio-logic Systems Corp., January 2006; Deltamed, September 2006; and Olympic Medical Corp., October 2006.

Bio-logic Systems Corp. was founded in 1979, and is a manufacturer and distributor of hearing screening and diagnostics, neurodiagnostic and sleep diagnostic systems and supplies.

Olympic Medical Corp. is a manufacturer of products to treat and diagnose newborn brain injury, manage jaundice in newborns, and provide general care to newborns.

Deptamed is a European manufacturer of medical devices used to detect neurological dysfunction, epilepsy, and sleep disorders.

Fischer-Zoth develops and manufactures products for the detection and diagnosis of hearing disorders.

Neometrics produces case management and reporting tools for metabolic screening, hearing screening, and environmental testing.

As if to underline all that has been written and said about the company as of late, Natus announced on August 2, 2007, that it had set a record for its second quarter financial results with revenues of $28.3 million.

This represents a 42 percent increase over the previous year.

“As we previously reported, we increased spending for infrastructure in the first quarter,” said Jim Hawkins, president and CEO of Natus, in a press release. “In the second quarter of this year, our general and administrative expenses have come down to more normal levels. Our higher level of spending on R&D initiatives has continued into the second quarter, most notably for our hearing and EEG product lines, but we expect that our expenditures for these projects should be winding down in the fourth quarter.”

“In transitioning production of the Olympic Cool-Cap from clinical units to commercial units, we updated many of its components,” Hawkins continued. “Because of its Class III device status, these component updates must receive FDA pre-market approval.

Consequently, in June we put a hold on shipments of Cool-Cap units. While this delay impacted shipments, it did not have an adverse impact on orders. We held up approximately $500,000 of Cool-Cap shipments in the second quarter because of this issue. We will resume shipments of the Cool-Cap upon FDA approval of the new components, which we anticipate happening in the third quarter.”

The company also seeks out and participates in strategic partnerships with companies such as Welch Allyn, Fisher & Paykel Healthcare, Northwestern University Auditory Neuroscience Laboratory, and the Special Olympics Healthy Hearing program.

For its work, Natus has been recognized with the Medical Design Excellence Award in 2007 by Canon Communications and Project of the Year 2005 by the Project Management Institute in May of 2006.

The company’s customers include hospitals, clinics, laboratories, physicians, nurses, audiologists, and government agencies. Further, Natus sells its products via a direct sales force primarily in the U.S. and through distributors worldwide.