Looks like the BABY has gotten over some of its growing pains.
There's more growth to come as the company rolls out its ALGO 5 newborn hearing screener. Natus hopes that a lot of current customers will upgrade to the new model from the seven year-old technology in its ALGO 3. No word on what happened to the missing ALGO 4, though. Maybe the company's only doing odd numbers.
There are also more cost cuts to come. After acquiring XLTEK, the company split its sales force to sell to its newborn and neurology products separately. Natus expects that the move should start benefiting the company in the fourth quarter, resulting in $2.4 million in annual savings going forward.
Last month, the company announced that it was acquiring small, privately held Sonamed. Its revenue won't add much to the top line -- just $3.5 million last year -- but Natus will acquire the 10% or so market share that Sonamed had in newborn hearing screens. Natus will pay about 1.8 times Sonamed's revenue. Seems like a good deal, especially because it's about half the multiple that Natus sports, and Sonomed had better gross margin to boot.
The company raised $15.4 million in a secondary offering last month. I'd expect it to use that cash to continue its acquisition spree -- a baby's got to grow, you know.
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