Editor's note: An earlier version of this article incorrectly reported that Natus had announced preliminary guidance for Q4 2015. The Motley Fool and the author regret the error.
Natus Medical (NASDAQ:BABY) is scheduled to report earnings on Wednesday before the bell. It'll likely be a bit anticlimactic, given that the medical-device maker pre-announced many of its fourth-quarter numbers so management could discuss them at the J.P. Morgan Healthcare Conference earlier this month. But the earnings conference call could still give investors a better look at what's ahead for Natus Medical.
What we know
Fourth-quarter revenue should come in around $100 million, according to management's preliminary tally of its sales. While that's a reasonable 6.4% higher than the year-ago quarter, it's slightly lower than management's previous guidance of $102 million to $105 million.
Management blamed the miss on their expectations for $4 million in sales under Natus' new contract with the Venezuelan Ministry of Health that didn't materialize. Apparently, the government never made the prepayment for the contract, so Natus Medical didn't ship any product. Fortunately, the issue seems to be worked out, so Natus has $5 million of revenue baked into its guidance for the current quarter and $60 million for the full year.
Natus Medical didn't release preliminary fourth-quarter earnings. We'll have to wait for the report to see how close the company got to its adjusted earnings guidance of $0.47 to $0.49 per share.
Management even handed out first-quarter guidance already. The company is looking for revenue of $96.5 million to $97.5 million and believes it can produce adjusted earnings of $0.34 to $0.35 per share, an increase of 10% to 13% over the first quarter of 2015. Not too shabby.
One thing to watch
Natus Medical's move into services -- particularly Peloton, its newborn hearing-screening outsourcing service, and NicView, which allows friends and families to see newborns in neonatal intensive-care units over the Internet -- seems to be working well. Natus announced that it signed up an additional 17 hospitals to use Peloton during the fourth quarter.
The big question is: What's next? The company has been a serial acquirer, after all.
Peloton was developed internally, but both NicView and another service, Global Neuro-Diagnostics, which offers brain tests, were both acquired last year. The service businesses have helped Natus increase its margins, and they should continue to grow as the services sign up more customers.
That isn't to say Natus has to buy a service company. But a company that makes medical devices that complement its own medical devices could help boost margins by giving the sales reps more products to hock.
Don't expect president and CEO James Hawkins to give too much away on its specific targets -- no sense in letting the competition know and bid up the price -- but a little more color on the types of additions the company is looking for will go a long way toward helping investors figure out Natus Medical's future path.