Natus Medical To Buy GN Otometrics Unit For $145 Mln; Cuts Q3 Revenue Outlook

(RTTNews) - Natus Medical Inc. (BABY) said that it has entered into a definitive agreement with GN Store Nord A/S (GN.CO) by which Natus will acquire the GN Otometrics business from GN Store Nord in an all cash transaction for $145 million.

With annual revenue of approximately $110 million, Otometrics is a manufacturer of hearing diagnostics and balance assessment equipment, disposables & software, currently being sold in over 86 countries.

"Otometrics has several leading brands and has introduced many industry firsts," said Jim Hawkins, President and Chief Executive Officer of Natus. "With the addition of Otometrics, we anticipate Natus revenue in 2017 will reach $500 million, a major milestone for the company. We expect Otometrics to be accretive to our 2017 earnings with a non-GAAP contribution operating margin goal for the year of 10% and a 2018 goal of 20%."

Natus also said that it has entered into a $150 million revolving credit agreement with JP Morgan Chase, N.A. and Citibank, N.A. Natus will use offshore cash and proceeds from this credit line to fund the acquisition.

The transaction is expected to close by the end of 2016.

Natus updated its third quarter 2016 revenue guidance to $89 million to $91 million compared to previous guidance of $97 million to $98 million. A majority of the expected shortfall is due to a voluntary ship hold the Company placed on certain products produced in its Seattle facility. The remaining shortfall is primarily due to lower demand in the international markets. The ship hold is not related to any product safety issue.

The Company expects to resume shipments of these products during the fourth quarter 2016 and the first quarter of 2017.