Natus Medical Q3 Profit Falls, But Tops Estimates; Lifts Q4, FY09 View

11/2/2009 6:17 AM ET

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(RTTNews) - Healthcare products manufacturer Natus Medical Inc. (BABY: News ) Monday reported a decline in net profit for the third quarter of fiscal 2009, reflecting one-time acquisition costs and higher operating expenses, despite an increase in revenues. However, adjusted earnings per share beat Street estimates by three cents. The company raised its outlook for the fourth quarter and full year 2009 as well as initiated a guidance for fiscal 2010.

For the third quarter, the San Carlos, California-based company's net earnings were $3.67 million or $0.13 per share compared with $4.79 million or $0.17 per share in the prior-year quarter. On an adjusted basis, net earnings fell to $3.99 million or $0.14 per share from $4.79 million or $0.17 per share last year.

Adjusted results for the quarter exclude one-time direct acquisition costs totaling $460 thousand with regard to purchases of Hawaii Medical and Alpine Biomed.

On an average, nine analysts polled by Thomson Reuters expected Natus to earn $0.11 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the period rose to $44.25 million from $41.71 million in the third quarter of fiscal 2008. Analysts' expected the company to generate revenues of $38.52 million during the quarter.

Total operating costs incurred by Natus were $21.63 million versus $18.94 million in the comparable period prior year. Marketing and selling expenses increased to $11.77 million from $9.97 million in the 2008-year period. Interest income for the quarter plunged to $40 thousand from $435 thousand in the prior year.

During the three-month period, Natus had an income tax provision of $1.57 million versus $2.71 million in the year-ago quarter.

Commenting on the results, president and chief executive officer Jim Hawkins said demand for the company's products improved among all product lines throughout the third quarter.

"We are currently working through the integration of Alpine Biomed and expect the contribution of Alpine to be accretive to our 2010 results," Hawkins added.

For the nine-month period, Natus's net income slumped to $6.79 million or $0.24 per share from $11.19 million or $0.43 per share in the 2008-year period. Adjusted net income was $7.10 million or $0.25 per share versus $11.19 million or $0.43 per share in the previous-year period. Year-to-date revenues were $114.87 million compared to $118.44 million in the same period last year.

Looking ahead, for the fourth quarter, Natus currently expects earnings to range from $0.15 to $0.16 per share, up from its prior view of $0.14 to $0.15 per share. The company expects revenues to be between $49 million and $50 million, higher than its previous expectations of $40.3 million to $41.3 million. Analysts currently expect the company to earn $0.16 per share on revenues of $49.83 million for the fourth quarter.