What happened

Healthcare product specialist Natus Medical (NASDAQ:NTUS) trailed the market last month, falling 19% compared to a 6% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

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The drop left shareholders' returns well below the market's since early 2015, but the stock remains in solidly positive territory over wider time frames, including the past 5-year and 10-year periods.

So what

January's decline was powered by a warning, issued early in the month, that sales were tracking below management's expectations. On Jan. 8, CEO Jim Hawkins and his team said fiscal fourth-quarter revenue would be between $131 million and $132 million, compared to their late-October guidance range of between $145 million and $147 million. Executives blamed weakness in Natus Medical's neurodiagnostic and optometric units for the shortfall, in addition to challenges associated with the rollout of a new IT system .

Clinical scientists examining a petri dish under a microscope.

Image source: Getty Images.

Now what

Hawkins and his team forecast a challenging year ahead, with sales growth likely slowing to an 8% pace from 31% in 2017. Management is excited about prospects for its new digital ear scanning technology called otoscan, but while the costs for that launch will impact profits in 2018, revenue likely won't be lifted until at least the second half of the year.

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