April 10, 2016 – Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) has been investigating Natus Medical Incorporated (“Natus” or the "Company") (Nasdaq: BABY). Investors who purchased Natus securities between October 15, 2015 and April 1, 2016 may be affected.
On October 15, 2015 Natus disclosed that it, “through Medix I.C.S.A (“Medix”), a subsidiary of the Company based in Buenos Aires, Argentina, entered into a supply agreement (the “Supply Agreement”) with the Ministry of Health of Venezuela (“Ministry of Health”) to provide medical equipment, supplies and services over a three-year period, including certain third party products. Under the terms of the Supply Agreement, products and services will be delivered pursuant to prepayments made by the Ministry of Health. Prepayments totaling approximately $69 million are expected by the first quarter of 2016…”.
On this news, the Company’s stock increased approximately 9%, to close at $44.20.
Between October 28, 2015 and January 4, 2016, James B. Hawkins, the Company’s CEO, sold 213,446 shares of Natus common stock for net proceeds of approximately $8.5 million. Between October 27, 2015 and January 4, 2016, James B. Kennedy, the Company’s CFO, sold 32,851 shares of Natus common stock for net proceed of approximately $1 million.
On January 11, 2016, the Company disclosed its financial guidance for the first quarter and full year 2016, and “updated” its fourth quarter revenue:
The Company expects to report revenue of approximately $100.0 million for the fourth quarter of 2015, compared to prior guidance of $102.0 million to $105.0 million and full year 2015 revenue of $375.9 million compared to prior guidance of $378.0 million to $381.0 million. The guidance provided by the Company in October for the fourth quarter of 2015 included expected revenue of approximately $4 million under the new Venezuelan Ministry of Health contract. The Company was not able to ship product on the anticipated schedule because the prepayment under the contract was delayed. The Company believes the delay was most likely due to a combination of important national elections that occurred in Argentina in November and Venezuela in December, Argentina’s currency devaluation in December as well as national Christmas holidays. The Company now expects to receive prepayment and begin shipments in the first quarter of 2016. The first quarter 2016 guidance includes $5 million of revenue from Venezuela and $60 million of revenue for the full year guidance.
On this news, the Company’s stock declined approximately 11%.
On January 27, 2015, the Company disclosed it financial results for the quarter and year ended December 31, 2015. Among other things, Hawkins stated that “the revenue shortfall in the quarter versus our guidance was due to a delay in our Venezuela order…”.
On this news, the Company’s stock declined approximately 7%.
On February 29, 2016, the Company filed its annual report for the year ended December 31, 2015 with the SEC on Form 10-K. The 10-K stated, among other things, that:
In October 2015 we announced a contract between our Argentinian subsidiary, Medix I.C.S.A, and the Ministry of Health of Venezuela under which our subsidiary would deliver products and services, including third party products, over a three year period pursuant to prepayments received from the Venezuelan Ministry of Health. Following the announcement of this contract, there have been elections in both Venezuela and Argentina leading to significant political changes in those countries. Further, it is reported that Venezuela is experiencing a highly inflationary economy and recessionary economic conditions. These developments may impact the likelihood of the Venezuelan Ministry of Health’s following through with orders under the agreement, and Medix has not yet received any prepayments under the agreement and no products or services have been shipped or provided. If, for these or any other reasons, the Venezuelan Ministry of Health does not make the required prepayments to initiate deliveries under the Medix agreement, we will not receive any benefit from it.
Then, on April 4, 2016, the Company disclosed its preliminary revenue for the quarter ended March 31, 2016, in which the Company disclosed that “[r]evenue for the first quarter of 2016 is expected to be approximately $87.5 million versus previous guidance of $91.5 million to $92.5 million, excluding revenue from the Venezuela Ministry of Health contract. “Pushouts of key orders in both our international and domestic markets led to weaker than expected revenue late in the first quarter,” said Jim Hawkins, President and Chief Executive Officer of the Company.
On this news, the Company’s stock declined from a closing price on April 1, 2016 of $39.64 per share, to close at $31.84 per share, a decline of approximately 20%.
If you purchased Natus securities and would like to discuss our investigation, please contact us by e-mailing
or by calling 800-290-1952.
Attorneys: Laurence D. King, Jeffrey P. Campisi