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Here's Why Natus Medical Is Having a Bad Day

By Cory Renauer – Updated Apr 19, 2019 at 10:12AM

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The company's softer-than-expected outlook wasn't what investors wanted to see.

What happened

Shares of Natus Medical (NTUS), a leading manufacturer of medical devices for newborn care providers, fell 16.1% during early-morning trading after issuing guidance for 2019 that was below expectations. The stock was down 15.2% as of 11:13 a.m. EST on Wednesday.

So what 

When Natus Medical announced fourth-quarter earnings this morning, the headline results were mixed. Revenue rose $5.2 million further than consensus forecasts were predicting, to $141.0 million. On the bottom line, adjusted earnings that reached $0.43 per share missed expectations by $0.06 per share.

Guy in a suit drawing a downward sloping chart.

Image source: Getty Images.

The earnings miss upset investors, but not half as much as the management's softer-than-expected outlook for 2019. Investors were expecting adjusted earnings to rise from $1.42 per share in 2018 to $1.64 per share in 2019. Instead, Natus thinks adjusted earnings could fall into a range between $1.12 per share and $1.49 per share this year.

Check out the latest Natus earnings call transcript.

Now what

During the third quarter, Natus launched the Otoscan machine, a digital scanning device that maps out an infant's inner ear in order to produce new hearing aids that should fit perfectly. Natus invested heavily to install Otoscan units, and it appears to be working as hoped. During the fourth quarter, Natus placed 120 more Otoscan devices, bringing the total to 180 in the field.

Now probably isn't the time to start a long position, but it isn't time to jump ship, either. Looking into next year, Otoscan and recently launched products in the neurology and newborn care segments could allow Natus to return to growth.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Natus Medical. The Motley Fool has a disclosure policy.

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