Natus Medical Incorporated
Q1 2021 Earnings Call Transcript

Published: 9 May 2021

[Operator:]

Good afternoon, everyone, and thank you for joining us today to review our results for the First Quarter of 2021. On the call today from Natus is Jonathan Kennedy, Natus President and Chief Executive Officer, and Drew Davies, Natus Executive Vice President and Chief Financial Officer. Jonathan will begin today with a business overview of the first quarter 2021.l Then Drew will discuss the first quarter financial performance. Finally, Drew will return the call to Jonathan for closing remarks. Today's call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements include management's beliefs and expectations about our future results. Our actual results may differ materially from these forward-looking statements. A description of relevant risks and uncertainties pertaining to our business, please see today's press release and our periodic annual reports filed with the SEC.

[Jonathan Kennedy:]

Thank you, Michelle. Good afternoon, everyone. During our call today, we will discuss our first quarter 2021 financial results as well as our current business trends. Today, we reported the results for the first quarter of 2021. Revenue for the quarter was $114.9 million and non-GAAP earnings per share was $0.16. Revenue was higher than expected, while our earnings per share was in line with our expectations. Our revenues in the first quarter of 2021 grew 5% compared to the first quarter of 2020, which was impacted by the pandemic late in that quarter. Our neuro, newborn care and hearing & balance end markets, all experienced growth compared to the first quarter of 2020. Our non-GAAP earnings per share grew 317% compared to the first quarter of 2020 on very similar revenues, as a result of the operating expense improvements that we have delivered over the last two years. We are optimistic in the pace of our revenue recovery in 2021 compared to 2020. We continue to believe our efforts to reduce our cost structure and investment in new products will drive long-term revenue growth and profitability. We see strong customer interest in our newly released Retcam Envision, ALGO 7i newborn hearing screener and our Otoscan digital ear scanner, which continues to build momentum in the market. In a few minutes, Drew will discuss more financial details, but first, I'd like to provide some additional commentary on the quarter in each of our end markets. Natus is a global leader in neuro-diagnostic equipment solutions. Our products and services are used by the majority of hospitals and neurologists worldwide. We have the most comprehensive line of neuro-diagnostic equipment offered by any global manufacturer today, offering a full line of EEG, EMG and PSG solutions. Overall, our neuro business increased by 6% year-over-year during the first quarter, with growth and recovery in all major product areas. And as another point of reference, our Q1 neuro revenue was 11% higher than the first quarter of 2019.

[Drew Davies:]

Thank you, Jonathan. As Jonathan stated, we reported first quarter 2021 revenue of $114.9 million, a 5.1% increase from the first quarter of 2020. Revenue increased in each of our end markets, neuro, newborn and hearing & balance compared to the same quarter last year. Keep in mind, we did see a slowdown at the end of the first quarter of 2020 related to the pandemic. Total revenue in the first quarter of 2021 was also slightly higher than Q1 2019 revenue. As a result of the improvements we've made over the last two years in our cost structure, our non-GAAP EPS, earnings per share, increased 100% or $0.08 per share compared to Q1 of 2019. Revenue from our Neuro end market was $69.1 million or 60% of total revenue during the first quarter of 2021 compared to $65.4 million or 60% of total revenue during the same quarter last year. Revenue from our Neuro end market increased 5.7% compared to the same quarter last year, led by our UltraPro EMG devices. Revenue from our newborn care end market increased 7% to $25.9 million or 23% of total revenue during the first quarter of 2021 compared to $24.2 million or 22% of total revenue during the same quarter last year. The increase was primarily attributable to sales of our NICVIEW streaming devices. Revenue from our hearing & balance end market was $19.9 million or 17% of total revenue during the first quarter of 2021 compared to $19.8 million or 18% of total revenue during the same quarter last year. Hearing assessment and balance devices sales increased during the quarter and were offset by the exit of the sound room business. In total, revenue from devices and systems contributed approximately 75% of revenue in the first quarter of 2021 compared to 72% in the 2020 period. Revenue from supplies and services was 25% of total revenue in the first quarter of 2021 compared to 28% in the 2020 period. Revenue from domestic sales was approximately 59% of total revenue and 41% from international in the first quarter of 2021 compared to 62% and 38%, respectively for the same period last year. On a non-GAAP basis, our gross margin increased 40 basis points in the first quarter of 2021 to 59.6% compared to 59.2% in the first quarter of 2021. The increase in gross margin was mainly attributable to the leverage on the increase in revenues during the quarter. And gross margin - GAAP gross margin increased 50 basis points to 57.9% in the first quarter of 2021 compared to 57.4% in the same period last year.

[Jonathan Kennedy:]

Thank you, Drew. I'd like to thank all of our employees, partners and customers for their outstanding efforts and partnerships throughout the quarter. And thank you, everyone, for joining the call today. Have a good afternoon.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.

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