SAN CARLOS, Calif.--(BUSINESS WIRE)--May 6, 2003--Natus Medical Incorporated (Nasdaq: BABY) today announced financial results for the three months ended March 31, 2003.

Revenue for the first quarter of 2003 increased 10% to $6.7 million, compared with revenue of $6.1 million for the first quarter of 2002. First quarter 2003 revenue from ALGO(R) disposable supplies increased $181,000 to $4.5 million, and revenue from ALGO screening equipment increased $327,000 to $1.8 million, both compared with the first quarter of 2002.

Revenue for the first quarter of 2003 from U.S. operations was $4.8 million, down 5% from $5.1 million reported for the first quarter of 2002. Revenue from international operations increased by 90% to $1.8 million, compared with $959,000 reported for the first quarter of 2002, due primarily to higher screening equipment sales. Gross margin improved to 62.3% in the first quarter of 2003, compared with 58.6% in the first quarter of 2002. Total operating expenses declined 6% to $5.2 million for the first quarter of 2003, compared with $5.6 million for the first quarter of 2002.

The net loss available to common stockholders for the first quarter of 2003 was $917,000, or $0.06 per share, compared with a net loss available to common stockholders of $1.8 million, or $0.11 per share, for the first quarter of 2002.

As of March 31, 2003, Natus had cash, cash equivalents and short-term investments of $43.5 million, stockholders' equity of $53.8 million and working capital of $50.4 million.

The Company's domestic cumulative installations of ALGO Newborn Hearing Screening system units, net of trade ins, increased during the quarter by 24 to 2,916 units on March 31, 2003, while its international cumulative installations, net of trade ins, increased by 133 to 1,596 units.

"We are pleased to report record first quarter revenue and improved gross margin resulting in a 17% increase in gross profit, while simultaneously reducing operating expenses due to cost restructuring measures implemented in the third quarter of 2002," said Tim Johnson, president and chief executive officer of Natus. "We continue to target reaching profitability by mid-2003."

The Company's first quarter 2003 operating expenses decreased by approximately $352,000, compared with the first quarter 2002 and by approximately $726,000, compared with the third quarter of 2002. Natus further reported that it expects additional reductions in operating expenses related to actions taken specifically in regard to its international operations.

"With better cost controls in place, we can devote our attention to maintaining our domestic newborn hearing screening leadership position, driving growth with new product offerings and to increasing ALGO sales in international markets," explained Mr. Johnson.

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