Natus Medical Incorporated (NASDAQ:BABY) today announced that it has acquired Medix, a leader in the development, manufacturing, and sales of devices for newborn care in Latin America. Medix, based in Argentina, manufactures incubators for use in hospital nurseries and neonatal intensive care units, transport incubators for use in ambulances and other emergency vehicles, infant warmers, and LED based phototherapy devices.
“We are also pleased to report that with the acquisition of Medix, we expect to substantially achieve two of our long-standing corporate goals: exiting 2010 with a revenue run rate of $250 million and generating approximately 50% of our revenue from international markets”
Natus acquired all outstanding shares of Medix capital stock for $14 million in cash, exclusive of direct costs of the acquisition, with the potential for additional purchase consideration if certain revenue targets are met in 2011 and 2012. Natus expects the acquisition will be accretive to earnings in the first quarter of 2011, exclusive of potential restructuring and other one-time charges. Medix expects to record approximately $26 million of revenue for its fiscal year ending October 31, 2010.
"The Medix acquisition affirms our leadership position in newborn care products sold into the hospital," said Jim Hawkins, President and Chief Executive Officer of Natus. "Expanding into the incubator and infant warmer markets enlarges our footprint in both the nursery and neonatal intensive care units of hospitals around the globe."
"In addition, this acquisition positions Natus as a leader in newborn care in the growing Latin America marketplace. We believe this acquisition will allow us an efficient entry into the Brazilian market, which represents the seventh largest economy in the world," added Hawkins. "Having this presence in South America will assist Natus in other markets in the region as well. We plan to retain the Medix executive team, as they have demonstrated the ability to effectively manage the business, maintaining both growth and profitability."
"We plan to leverage our worldwide sales and distribution organization, as Medix currently generates less than ten percent of its revenue from outside of South America. We believe the Medix product lines are ideal for many markets around the world. In addition, because many of their products have current FDA clearance, we may bring their products into the US market through our direct sales force," said Hawkins.
"We are also pleased to report that with the acquisition of Medix, we expect to substantially achieve two of our long-standing corporate goals: exiting 2010 with a revenue run rate of $250 million and generating approximately 50% of our revenue from international markets," noted Hawkins.
Natus funded the acquisition through available cash.
Third Quarter 2010 Revenue Results and Updated 2010 Revenue Guidance
Natus also released preliminary third quarter 2010 revenue results and updated its revenue guidance for the full year 2010, giving effect to the Medix acquisition.
For the third quarter ended September 30, 2010, Natus expects to report revenue of approximately $53.4 million. The Company had earlier said it expected revenue to be approximately $54 million for the period.
"We had expected the receipt of several large orders in the last weeks of the third quarter," added Hawkins. "Although those orders were delayed, we expect to receive them during the fourth quarter. In noting this, we are reiterating our previously announced annual revenue guidance for 2010, exclusive of the contribution of Medix."
For the full year 2010, the Company now expects to report revenue of approximately $217 million, including the contribution of Medix in the fourth quarter. The Company had earlier said it expected 2010 revenue would be approximately $211 million.
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