Natus Medical Inc. Reports Operating Results (10-Q)
Natus Medical Inc. has a market cap of $406.1 million; its shares were traded at around $14.26 with a P/E ratio of 26.9 and P/S ratio of 2.4. BABY is in the portfolios of David Nierenberg of D3 Family of Funds, David Nierenberg of D3 Family of Funds, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Our revenue increased 41% to $52.7 million in the second quarter ended June 30, 2010, compared to $37.3 million in the comparable quarter of the previous year. Net income increased 33% to $3.1 million or $0.11 per diluted share, for the second quarter of 2010, compared with net income of $2.3 million, or $0.08 per diluted share, for the second quarter of 2009. The increase in revenue in the second quarter of 2010 was attributable to both our acquisitions of Alpine Biomed and Hawaii Medical totaling $8.8 million; in addition, revenue from our existing product lines increased 18% in the 2010 period, including a significant increase in revenue from our diagnostic neurology and newborn hearing screening devices.
Our revenue increased 41%, or $15.4 million, to $52.7 million for the three month period ended June 30, 2010 compared to $37.3 million in the comparable 2009 period. Revenue of Alpine Biomed and Hawaii Medical contributed to $8.8 million of the increase, while revenue from our newborn care products other than from Hawaii Medical increased by $1.6 million to $9.2 million, and revenue from our neurology products other than from Alpine Biomed increased $8.2 million to $24.8 million.
Revenue from supplies and services increased 24%, or $3.8 million, to $19.6 million in the second quarter of 2010 compared to $15.8 million in the same period in 2009. In the 2010 second quarter, revenue from hearing screening and neurology supplies increased by $3.8 million and revenue from newborn care supplies increased by $1.0 million offset by a $1.0 million decrease in service fee revenue. Revenue from supplies and services was 37% of total revenue in the three months ended June 30, 2010 compared to 42% of total revenue for the second quarter of 2009.
General and administrative expenses increased $7.9 million, or 74%, to $18.7 million in the six months ended June 30, 2010 compared to $10.8 million in the same period in 2009. The operations of Alpine Biomed contributed to $2.9 million of the increase. We also recorded a restructuring charge of $2.8 million as well as $475,000 of related restructuring costs in the first six months of 2010 for which there was no comparable cost in 2009. Other general and administrative expenses exclusive of those associated with Alpine Biomed were $1.7 million higher in the 2010 first half compared to the same period in 2009, which resulted primarily from increased payroll, related benefit costs, and outside consulting services.
As of June 30, 2010, we had cash, cash equivalents, and short-term investments of $39.9 million, stockholders equity of $248.9 million, and working capital of $83.1 million, compared with cash, cash equivalents, and short-term investments of $33.5 million, stockholders equity of $243.2 million, and working capital of $75.0 million as of December 31, 2009.
Cash provided by operations decreased by $7.2 million for the six months ended June 30, 2010 to $6.7 million, compared to $13.9 million for the same period in 2009. The sum of our net income and certain non-cash expense items, such as reserves, depreciation and amortization, and share based compensation was approximately $9.0 million in the 2010 period, compared to $11.3 million in 2009. In addition, in the 2010 period we paid approximately $2.6 million of severance benefits associated with a reorganization plan we adopted in January 2010 for which there was no similar expenditure in 2009. The overall impact of changes in certain operating assets and liabilities on total operating cash flows resulted in a cash outflow of $2.3 million in 2010 compared with a cash inflow of $2.6 million in 2009. In particular, our cash flow from operations in the first six months of 2010 was affected by a $4.2 million decrease in accounts payable and accrued expenses coupled with a $3.1 million increase in inventories.
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