Natus Medical Incorporated (NTUS) Misses Q1 EPS by 18c, Revenues Miss

Natus Medical Incorporated (NASDAQ: NTUS) reported Q1 EPS of $0.04, $0.18 worse than the analyst estimate of $0.22. Revenue for the quarter came in at $109.4 million versus the consensus estimate of $115 million.

Response to COVID-19 and Business Conditions

“Healthcare providers and patients continue to depend on our products and services every day. Our team members and partners are working tirelessly to maintain our supply chain and deliver our products and services, and I sincerely thank them for their steadfast commitment,” said Jonathan Kennedy, President and Chief Executive Officer of Natus. “The health and welfare of our employees, our customers and our partners remain our top priority.”

Operational Impacts

Natus has implemented safeguards in its facilities to protect team members, including social distancing practices, work from home and other measures consistent with specific regulatory requirements and guidance from health authorities. As an essential supplier of healthcare products and services, all of Natus's manufacturing, engineering and customer support functions remain fully operational and will continue to support customers with vital supplies, service and equipment. Natus has made strategic investments in inventory to help mitigate potential supply chain disruptions, and the Company has taken actions to reduce costs, including reducing travel and discretionary expenses. Natus will continue to prioritize spending to allow continued investment in products and services that are key elements of its strategy for profitable growth in the years ahead.

“Despite seeing significant impact from COVID-19 during the first quarter, our Neuro end market continued to perform well, growing 4.7% versus the same period last year. Our Newborn Care and Hearing & Balance end markets declined during the quarter due to a world-wide softening of demand. While this brought our total revenues to $109.4 million, less than we originally expected, we still maintained strong operating cash flow of $17.4 million,” Mr. Kennedy continued. “In addition to the cash flow generated from our business, we also drew an additional $60 million on our credit line as a precaution to ensure we have the necessary capital to continue to reliably serve our customers during an extended period of uncertainty.”

“Looking ahead, we expect each of our end markets to experience significant decreases in demand as a result of shelter in place orders and the resultant decline in economic activity. In 2019, we completed a restructuring of the Company and strengthened our balance sheet by generating over $60 million in cash from operations and paying down $55 million in debt. These actions, in addition to implementing further cost control measures, have put us in a strong financial position and have positioned us well to succeed through this historically challenging time.”

Financial Guidance

Natus’s financial results for the remainder of 2020 will be impacted by continued global economic uncertainty due to the COVID-19 pandemic. As such, the Company withdrew its earnings guidance on April 6, 2020 and is not providing a financial outlook for 2020 at this time.

For earnings history and earnings-related data on Natus Medical Incorporated (NTUS) click here.

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