SAN CARLOS, Calif., Feb 19, 2003 (BUSINESS WIRE) -- Natus Medical Incorporated (Nasdaq:BABY) today announced financial results for the three and 12 months ended December 31, 2002.
Revenues for the fourth quarter of 2002 were $7.7 million, slightly higher compared with revenues of $7.5 million for the fourth quarter of 2001. Fourth quarter 2002 revenues from ALGO(R) disposable supplies of $4.7 million increased by $60,000 from the fourth quarter of 2001. Fourth quarter 2002 revenues from ALGO screening equipment of $2.6 million decreased by $52,000 from the fourth quarter of 2001.

Revenues for the fourth quarter of 2002 from U.S. operations were $5.9 million, down from $6.1 million reported for the fourth quarter of 2001. Revenues from international operations increased by 21% to $1.7 million, compared with $1.4 million reported for the fourth quarter of 2001, due primarily to higher disposable sales. Natus' gross margin for the fourth quarter of 2002 was 48.6%, compared with 56.5% for the fourth quarter of 2001. The gross margin decrease reflects a one-time writedown of excess inventory on hand of $450,000, primarily related to the CO-Stat(R) End Tidal Breath Analyzer. Offsetting this increase, is a decrease of $231,000 in the warranty reserve to reflect recent warranty cost experience. Excluding the writedown, fourth quarter 2002 gross margin would have been 54.5%. Total operating expenses were $6.0 million for the fourth quarter of 2002, compared with $5.8 million for the fourth quarter of 2001. The increase in operating costs is primarily due to an increase of $347,000 for estimated local tax expense.

The net loss available to common stockholders for the fourth quarter of 2002 was $2.1 million, or $0.13 per share, compared with a net loss available to common stockholders of $1.3 million, or $0.08 per share, for the fourth quarter of 2001. Excluding adjustments to reserves, the fourth quarter 2002 net loss would have been $1.3 million, or $0.08 per share.

For the year ended December 31, 2002, revenues of $27.0 million decreased slightly from revenues of $27.4 million reported for the year ended December 31, 2001. Total operating expenses were $23.5 million for 2002, compared with $21.4 million for 2001. The Company reported a full-year 2002 net loss available to common stockholders of $7.5 million, or $0.46 per share, compared with a full-year 2001 net loss available to common stockholders of $4.6 million, or $0.62 per share.

As of December 31, 2002, Natus had cash, cash equivalents and short-term investments of $44.9 million, stockholders' equity of $54.7 million and working capital of $50.9 million.

Natus' domestic cumulative installations of ALGO Newborn Hearing Screening system units, net of trade ins, increased during the quarter by 101 to 2,892 units on December 31, 2002, while its international cumulative installations, net of trade ins, increased by 75 to 1,463 units.

"During the fourth quarter, we achieved record quarterly revenues while implementing expense reduction measures aimed at aligning our costs with revenues," said Tim Johnson, president and chief executive officer of Natus. "During the fourth quarter, we reduced payroll and fringe benefits by approximately $600,000 on a sequential quarter basis. We are confident that we now have costs under control.

"In the current year, we plan to concentrate on increasing ALGO sales in international markets, where we see the greatest growth opportunity, while taking actions to maintain our domestic newborn hearing screening leadership position," explained Mr. Johnson. "Additionally, we are continuing our global launch of the neoBLUE LED phototherapy light for the treatment of newborn jaundice. We believe the neoBLUE offers advantages over competing phototherapy devices currently on the market.

"We are also investigating potential acquisition opportunities and continuing to invest in research and development to expand our presence in the neonatal medical market and assist us in capitalizing on our strong domestic and developing international channels," added Mr. Johnson. The Company reiterated its financial guidance of targeting profitability by mid-2003.

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