UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0154833
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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NTUS
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The Nasdaq Stock Market LLC
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(The Nasdaq Global Select Market)
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Large Accelerated Filer
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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Emerging growth company
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 7.
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ITEM 7A.
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ITEM 16.
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Electroencephalography — Equipment, supplies and services used to monitor and visually display the electrical activity generated by the brain and other key physiological signals for both diagnosis and monitoring of neurological disorders in the hospital, research laboratory, clinician office and patient’s home.
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Electromyography — Equipment and supplies used to measure electrical activity in nerves, muscles, and critical pathways includes EMG, nerve conduction and evoked potential functionality.
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Polysomnography — Equipment and supplies used to measure a variety of respiratory and physiologic functions to assist in the diagnosis and monitoring of sleep disorders, such as insomnia and obstructive sleep apnea.
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Intraoperative monitoring — Equipment and supplies used to monitor the functional integrity of certain neural structures (i.e. nerves, spinal cord and parts of the brain) during surgery. The goal of IOM is to provide real time guidance to the surgeon and anesthesiologist, which will reduce the risk to the patient during surgery.
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Intracranial pressure monitoring — Equipment and catheters used to monitor pressure in the cranium/brain and catheters to drain cerebrospinal fluid from the brain to aid in hydrocephalus and traumatic brain injury cases.
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Cranial access kits — Convenient, pre-packaged sterile sets containing all necessary components for entry into the cranium, to monitor intracranial pressure and provide temporary drainage of CSF.
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Shunts and Dural grafts — Shunts are used to manage the drainage of cerebrospinal fluid from the brain to maintain appropriate levels of CSF when treating hydrocephalus. Dural grafts are used in procedures to repair or substitute a patient's dura mater which surrounds the brain.
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NeuroWorks; NicoletOne. Our EEG Systems include a broad range of products, from software licenses and ambulatory monitoring systems to advanced laboratory systems with multiple capabilities for EEG, ICU monitoring,
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Stellate/Gotman Spike and Seizure; GridView; NicoletOne Trends. Our proprietary spike and seizure detection algorithm detects, summarizes, and reports EEG events that save health-care professionals time by increasing the speed and accuracy of interpretation. GridView is a tool that allows the clinician to correlate EEG patterns with electrode contacts on a 3D view of the patient brain using magnetic resonance (“MR”) or computed tomography (“CT”) images, thus enabling the visualization and annotation of the brain surface and internal structures involved in the diagnosis of epilepsy. NicoletOne Trends provides a comprehensive set of EEG analysis algorithms that are used to generate compressed trends of large amounts of data to assist in the clinical evaluation and data review process.
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Proprietary Signal Amplifiers. Our proprietary signal amplifiers function as the interface between the patient and the computer. The headbox connects electrodes attached to the patient’s head to our EEG monitoring systems.
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Nicolet Cortical Stimulator. This product is our proprietary device that provides cortical stimulation to the brain during functional brain mapping either before or during surgery to help the surgeon protect the eloquent parts of the brain (parts of the brain that control speech, motor and sensory functionality). The device can be used as a standalone unit or with the fully integrated NicoletOne or NeuroWorks software that supports control of the device from the software, automated mapping and comprehensive report generation.
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Supplies. We also manufacture and market a full line of proprietary EEG electrodes and other supplies used in the electroencephalography field.
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Dantec Keypoint. The Dantec Keypoint G-4 and Focus EMG and EP family of products features amplifiers, stimulators, and strong signal quality. The Keypoint G4 is used for advanced neurodiagnostic applications such as single fiber EMG, visual and auditory evoked potentials, and in routine nerve conduction studies. The Keypoint Focus system is also available in a portable laptop configuration.
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Dantec Clavis. The Dantec Clavis device is a hand-held EMG stimulation device that provides muscle and nerve localization information to assist with medication and botox injections. In conjunction with the Bo-ject or Myoject hypodermic needle and electrodes, physicians can better localize the site of the injection.
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Nicolet EDX family. A hardware platform of amplifiers, base control units, stimulators and hand-held probes that are sold with Nicolet brand proprietary software. These mid- to high-end systems have full functionality, strong signal quality, and flexibility. They include EMG, NCS, EP’s, IOM and advanced data analysis features.
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Nicolet VikingQuest. An EMG system for the mid-range market. The device runs on our proprietary software.
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Natus UltraPro. This is an entry level product with add on capabilities that offers high quality data collection using the Dantec Keypoint amplifiers and the proprietary Natus EMG/EP software.
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Supplies. We also manufacture and market a full line of proprietary EMG needles and other supplies used in the electrodiagnostic field.
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Embla REMlogic, Sandman; and Xltek SleepWorks. Our diagnostic PSG systems capture and store all data digitally. The systems enable users to specify rules and personal preferences to be used during analysis, summarizing the results graphically and incorporating them in detailed reports.
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Proprietary Amplifiers. Our data acquisition systems incorporate recent developments in superior amplifiers for sleep analysis. Our amplifiers are used in both hospitals and stand-alone clinics. In addition to exceptional signal quality, headboxes include various tools such as built-in oximeters and controls to allow the user to start and stop a study or perform electrode impedance testing either at the patient’s bedside or from the monitoring room.
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Supplies. We also market a broad line of supplies, disposable products and accessories for the PSG laboratory including the XactTrace respiratory monitoring belts.
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Xltek Protektor. The Protektor system is an IOM system that provides medical professionals with all information necessary to make immediate and critical surgical decisions. The system combines flexibility with multi-modality allowing full coverage of IOM techniques. The Protektor comes in 16 or 32 channel options.
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Nicolet EDX. These combo systems are used in IOM applications where a smaller number of channels is sufficient. This approach is primarily followed in international markets that utilize the integrated system approach that allows for the use of the system in EMG clinical applications as well as in IOM applications.
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Camino ICP Monitor. The Camino ICP Monitor is a compact, portable device that provides tools for continuously determining and monitoring intracranial pressure and intracranial temperature. It has a touch screen interface, physiological alarms, and can output data to either a patient bedside monitor or to remote media types via a USB drive. These systems are used in the intensive care unit (ICU) environment.
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Camino Catheters. Camino catheters use either fiber optic or strain gauge technology to measure either pressure and temperature or just pressure. Camino catheters measure their respective values at the tip of the catheter, which eliminates the need for a fluid-filled system that uses an external transducer to measure pressure. The Camino Flex Ventricular Intracranial Pressure Monitoring Kit has a catheter that allows both the measurement of ICP and CSF drainage.
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Cranial Access Kits. Cranial Access Kits are convenient procedural kits that include all the instrumentation and items needed to access the subarachnoid space or the lateral ventricles of the brain. The kit is intended to be used with an external drainage and monitoring system in selected patients to reduce intracranial pressure, to provide temporary drainage of CSF, and to monitor ICP. The kit is a convenient, pre-packaged sterile set containing all necessary components for entry into the cranium and is available with or without drugs and with a variety of drill bits and instrumentation.
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DURAFORM. DURAFORM Dural Graft Implant is an absorbable collagen matrix to provide a soft, conforming, and easy to use dural substitute. This product is used in the operating room to provide repair of the dura mater and promote dural healing.
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Shunts. Shunts are used in the operating room to provide solutions for hydrocephalus or brain trauma. Shunts are used to manage the drainage of cerebrospinal fluid from the brain to maintain appropriate levels of CSF when treating hydrocephalus.
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Newborn Hearing Screening — Products used to screen hearing in newborns.
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Diagnostic Hearing Assessment — Products used to screen for or diagnose hearing loss, or to identify abnormalities affecting the peripheral and central auditory nervous systems in patients of all ages.
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Jaundice Management — Products used to treat jaundice, the single largest cause for hospital readmission of newborns in the U.S.
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Newborn Brain Injury — Products used to diagnose the severity of brain injury, monitor the effectiveness of drug therapies, detect seizure activity and monitor general neurological status.
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Eye Imaging — Systems and products used in the advanced science and practice of neonatal and pediatric retinal imaging.
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Essentials — Products used in the everyday operation of neonatal intensive care unit (“NICU”) and well-baby nursery department within the hospital environment.
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NICVIEW — Live streaming video for families with babies in the NICU that enables family members and approved friends to see the new baby, 24/7, from anywhere in the world - from any Internet connected device, within a secured environment.
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ALGO 5 and 3i Newborn Hearing Screeners. These Automated Auditory Brainstem Responses (“AABR”) devices deliver thousands of soft audible clicks to the newborn’s ears through sound cables and disposable earphones connected to the instrument. Each click elicits an identifiable brain wave, which is detected by disposable electrodes placed on the head of the child and analyzed by the screening device. These devices use our proprietary AABR signal detection algorithm.
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ABaer Newborn Hearing Screener. The ABaer, which is a PC-based newborn hearing screening device, offers a combination of AABR, OAE, and diagnostic ABR technologies in one system.
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Echo-Screen. Our hand-held Echo-Screen products provide a choice or combination of proprietary ABR and OAE technologies that can also be used for children through adults. The Echo-Screen III device is a compact, multi-modality handheld hearing screener that is tightly integrated with audible Lite Hearing Screening Data Management.
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ABR Screening Supply Kits. Each ABR screen is carried out with single-use earphones and electrodes, which are alcohol and latex-free. The adhesives used in these supply products are specially formulated for use on the sensitive skin of newborns. To meet the needs of our customers we offer a variety of packaging options. Echo-Screen and ABaer offer the choice of either an earphone or use of ear tips for perform ABR screening.
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OAE Supply Products. Each OAE screen is carried out with single-use ear tips that are supplied in a variety of sizes and packaging options.
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neoBLUE Product Family. This product line consists of our neoBLUE Overhead, neoBLUE Mini, neoBLUE Cozy, neoBLUE Compact and neoBLUE blanket devices, which utilize light emitting diodes (“LEDs”) to generate a high-intensity, narrow spectrum of blue light that is clinically proven to be most effective in the treatment of newborn jaundice. Our neoBLUE phototherapy devices emit significantly less ultraviolet light and heat than conventional phototherapy devices, reducing the risk of skin damage and dehydration for infants undergoing treatment. Because of the high intensity of these lights, the treatment time associated with phototherapy is reduced.
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Olympic Brainz Monitor. The Olympic Brainz Monitor is our latest generation Cerebral Function Monitor. The device can be used in single-channel, two-channel or three-channel modes to continuously monitor and record brain activity.
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RetCam 3. Full-featured imaging system with a range of interchangeable lenses, Fluorescein Angiography module option.
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RetCam Shuttle. Laptop-based system with a smaller cart and dual wheel casters for improved transportability.
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RetCam Portable. Laptop-based version in a case for maximum portability.
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Year Ended December 31,
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2019
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2018
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2017
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Domestic revenue
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59.0
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%
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56.7
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%
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54.1
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%
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Year Ended December 31,
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2019
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2018
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2017
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International revenue
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41.0
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%
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43.3
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%
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45.9
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%
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Year Ended December 31,
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2019
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2018
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2017
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Direct purchases by GPO members
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18.7
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%
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13.3
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%
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14.5
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%
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•
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The clinical performance of our products including the level of specificity, sensitivity, and reliability of the product;
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Time required to obtain results with the product, such as to test for or treat a clinical condition;
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Relative ease of use of the product;
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Our level of expertise in these fields which produces the depth and breadth of the products features;
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Quality of customer support for the product;
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Frequency of product updates;
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Extent of third-party reimbursement of the cost of the product or procedure;
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Extent to which the products conform to standard of care guidelines; and
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Price of the product.
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Clearance via Section 510(k); or
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Premarket approval via Section 515 if the FDA has determined that the medical device in question poses a greater risk of injury.
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FDA quality system regulations which require manufacturers to create, implement, and follow design, testing, control, documentation, and other quality assurance procedures;
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Medical device reporting regulations, which require that manufacturers report to the FDA certain types of adverse and other events involving their products; and
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FDA general prohibitions against promoting products for unapproved uses.
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Issuance of a Form 483 citation;
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Fines, injunctions, and civil penalties;
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Recall or seizure of our products;
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Issuance of public notices or warnings;
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Imposition of operating restrictions, partial suspension, or total shutdown of production;
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Refusal of our requests for 510(k) clearance or pre-market approval of new products;
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Withdrawal of 510(k) clearance or pre-market approval already granted; or
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Criminal prosecution.
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Name
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Age
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Position(s)
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Jonathan A. Kennedy
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49
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President and Chief Executive Officer
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B. Drew Davies
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54
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Executive Vice President and Chief Financial Officer
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D. Christopher Chung, M.D.
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56
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Vice President of Quality, Regulatory Affairs and Chief Medical Officer
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Austin F. Noll, III
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53
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Executive Vice President and Chief Commercial Officer
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•
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Publication of clinical study results that demonstrate a lack of efficacy or cost-effectiveness of our products;
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Changing governmental and physician group guidelines;
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Actual or perceived performance, quality, price, and total cost of ownership deficiencies of our products relative to other competitive products;
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Our ability to maintain and enhance our existing relationships and to form new relationships with leading physicians, physician organizations, hospitals, state laboratory personnel, and third-party payors;
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Changes in federal, state and third-party payor reimbursement policies for our products; and
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Repeal of laws requiring universal newborn hearing screening and metabolic screening.
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Impact of possible recessions in economies outside the United States;
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Political and economic instability, including instability related to war and terrorist attacks and to political and diplomatic matters such as Brexit;
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Adverse changes in tariffs and trade protection measures;
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Difficulty in obtaining and maintaining foreign regulatory approval and complying with foreign regulations, including the EU Medical Device Regulation;
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An outbreak of a contagious disease, such as COVID-19, which may cause us or our distributors, vendors and/or customers to temporarily suspend our or their respective operations in the affected city or country;
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Contractual provisions governed by foreign law, such as local law rights to sales commissions by terminated distributors;
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Decreased healthcare spending by foreign governments that would reduce international demand for our products;
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Strengthening of the U.S. dollar relative to foreign currencies that could make our products less competitive because approximately half of our international sales are denominated in U.S. dollars;
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Changes in capital and exchange controls affecting international trade;
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Greater difficulty in accounts receivable collection and longer collection periods;
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Difficulties of staffing and managing foreign operations;
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Reduced protection for intellectual property rights in some countries and potentially conflicting intellectual property rights of third parties under the laws of various foreign jurisdictions;
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Attitudes by clinicians, and cost reimbursement policies, towards use of disposable supplies that are potentially unfavorable to our business;
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Complying with U.S. regulations that apply to international operations, including trade laws, the U.S. Foreign Corrupt Practices Act, and anti-boycott laws, as well as international laws such as the U.K. Bribery Act;
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Loss of business through government tenders that are held annually in many cases; and
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Potentially negative consequences from changes in tax laws, including legislative changes concerning taxation of income earned outside of the United States.
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Clearance via Section 510(k) of the Food, Drug, and Cosmetics Act of 1938, as amended; or
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Premarket approval via Section 515 of the Food, Drug, and Cosmetics Act if the FDA has determined that the medical device in question poses a greater risk of injury.
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Fines, injunctions and civil penalties;
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•
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Recall or seizure of our products;
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•
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Issuance of public notices or warnings;
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Imposition of operating restrictions, partial suspension, or total shutdown of production;
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Refusal of our requests for Section 510(k) clearance or premarket approval of new products;
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Withdrawal of Section 510(k) clearance or premarket approvals already granted;
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Criminal prosecution;
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Domestic regulation of our products and manufacturing operations, other than that which is administered by the FDA, includes the Environmental Protection Act, the Occupational Safety and Health Act, and state and local counterparts to these Acts; or
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Result in costly litigation and damage awards;
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Divert our management’s attention and resources;
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Cause product shipment delays or suspensions; or
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Require us to seek to enter into royalty or licensing agreements.
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general economic, industry and market conditions;
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actions by institutional or other large stockholders;
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the depth and liquidity of the market for our common stock;
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volume and timing of orders for our products;
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developments generally affecting medical device companies;
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the announcement of new products or product enhancements by us or our competitors;
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changes in earnings estimates or recommendations by securities analysts;
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investor perceptions of us and our business, including changes in market valuations of medical device companies; and
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our results of operations and financial performance.
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•
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62,400 square feet in Gort, Ireland, utilized substantially for manufacturing;
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44,900 square feet in Oakville, Ontario, Canada, primarily utilized for research and development and technical support; and
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6,400 square feet in Old Woking, England, utilized substantially for research and development.
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•
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124,000 square feet in Middleton, Wisconsin, pursuant to a lease that expires in April 2024, that is primarily utilized for manufacturing, technical support, customer service, marketing and research and development;
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65,000 square feet in Seattle, Washington, pursuant to a lease that expires in December 2020, that is utilized substantially for manufacturing;
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52,000 square feet in Taastrup, Denmark, pursuant to a lease with the option to terminate with six months-notice beginning January 2022, that is utilized for manufacturing, research and development, marketing and sales, and general and administrative;
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37,200 square feet in San Diego, California, pursuant to a lease that expires in June 2022, that is utilized substantially for manufacturing;
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•
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25,100 square feet in Schaumburg, Illinois, pursuant to a lease that expires in November 2026, that is utilized substantially for marketing and sales; and
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23,800 square feet in Quebec, Canada, pursuant to a lease that expires in December 2024, that is utilized substantially for manufacturing.
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High
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Low
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||||
Fiscal Year Ended December 31, 2019:
|
|
|
|
||||
Fourth Quarter
|
$
|
34.89
|
|
|
$
|
29.67
|
|
Third Quarter
|
32.85
|
|
|
22.25
|
|
||
Second Quarter
|
27.90
|
|
|
23.54
|
|
||
First Quarter
|
34.63
|
|
|
24.88
|
|
||
Fiscal Year Ended December 31, 2018:
|
|
|
|
||||
Fourth Quarter
|
$
|
36.85
|
|
|
$
|
27.69
|
|
Third Quarter
|
37.90
|
|
|
31.05
|
|
||
Second Quarter
|
37.95
|
|
|
31.10
|
|
||
First Quarter
|
39.25
|
|
|
28.00
|
|
|
|
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||
Natus Medical Inc.
|
|
Return %
|
|
|
|
33.32
|
|
|
(27.58
|
)
|
|
9.77
|
|
|
(10.92
|
)
|
|
(3.06
|
)
|
|
|
|
Cum $
|
|
100.00
|
|
|
133.32
|
|
|
96.56
|
|
|
105.99
|
|
|
94.42
|
|
|
91.53
|
|
NASDAQ Composite-Total Returns
|
|
Return %
|
|
|
|
6.96
|
|
|
8.87
|
|
|
29.64
|
|
|
(2.84
|
)
|
|
36.69
|
|
|
|
|
Cum $
|
|
100.00
|
|
|
106.96
|
|
|
116.45
|
|
|
150.96
|
|
|
146.67
|
|
|
200.49
|
|
S&P 500 Health Care Equipment Index
|
|
Return %
|
|
|
|
5.97
|
|
|
6.48
|
|
|
30.90
|
|
|
16.24
|
|
|
29.32
|
|
|
|
|
Cum $
|
|
100.00
|
|
|
105.97
|
|
|
112.85
|
|
|
147.71
|
|
|
171.70
|
|
|
222.04
|
|
|
December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, and short-term investments
|
$
|
63,297
|
|
|
$
|
56,373
|
|
|
$
|
88,950
|
|
|
$
|
247,750
|
|
|
$
|
82,469
|
|
Working capital
|
126,928
|
|
|
152,329
|
|
|
213,491
|
|
|
325,858
|
|
|
164,248
|
|
|||||
Total assets
|
622,527
|
|
|
638,140
|
|
|
709,919
|
|
|
649,012
|
|
|
479,496
|
|
|||||
Long-term debt (including current portion) and short-term borrowings
|
54,665
|
|
|
104,474
|
|
|
154,283
|
|
|
140,000
|
|
|
—
|
|
|||||
Total stockholders’ equity
|
416,123
|
|
|
398,444
|
|
|
422,097
|
|
|
417,374
|
|
|
390,710
|
|
(a)
|
Results of operations and financial position of the businesses we have acquired are included from their acquisition dates as follows: GND and NICVIEW in January 2015, Monarch in November 2015, NeuroQuest in March 2016, RetCam in July 2016, Otometrics in January 2017, and Integra asset acquisition in October 2017.
|
(b)
|
Results of operations and financial position of the businesses we have divested or exited are not included from their exited dates as follows: GND and Neurocom in January 2019, and Medix in April 2019.
|
|
Percent of Revenue
Years Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenue
|
39.7
|
%
|
|
41.1
|
%
|
|
42.6
|
%
|
Intangibles amortization
|
1.4
|
%
|
|
1.7
|
%
|
|
1.3
|
%
|
Gross profit
|
58.9
|
%
|
|
57.3
|
%
|
|
56.1
|
%
|
Operating expenses:
|
|
|
|
|
|
|||
Marketing and selling
|
26.1
|
%
|
|
25.7
|
%
|
|
25.2
|
%
|
Research and development
|
11.9
|
%
|
|
11.6
|
%
|
|
10.3
|
%
|
General and administrative
|
12.0
|
%
|
|
13.3
|
%
|
|
14.9
|
%
|
Intangibles amortization
|
3.1
|
%
|
|
4.3
|
%
|
|
3.8
|
%
|
Restructuring
|
9.0
|
%
|
|
7.0
|
%
|
|
0.2
|
%
|
Total operating expenses
|
62.1
|
%
|
|
61.9
|
%
|
|
54.4
|
%
|
Income (loss) from operations
|
(3.2
|
)%
|
|
(4.6
|
)%
|
|
1.7
|
%
|
Other expense, net
|
(1.1
|
)%
|
|
(1.5
|
)%
|
|
(0.7
|
)%
|
Income (loss) before provision (benefit) for income tax
|
(4.3
|
)%
|
|
(6.1
|
)%
|
|
1.0
|
%
|
Provision (benefit) for income tax expense
|
(1.1
|
)%
|
|
(1.8
|
)%
|
|
5.1
|
%
|
Net loss
|
(3.2
|
)%
|
|
(4.3
|
)%
|
|
(4.1
|
)%
|
|
Years ended December 31,
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Neuro
|
|
|
|
|
|
|||||
Devices and Systems
|
$
|
220,306
|
|
|
$
|
200,762
|
|
|
10
|
%
|
Supplies
|
66,059
|
|
|
67,025
|
|
|
(1
|
)%
|
||
Services
|
871
|
|
|
12,000
|
|
|
(93
|
)%
|
||
Total Neuro Revenue
|
287,236
|
|
|
279,787
|
|
|
3
|
%
|
||
Newborn Care
|
|
|
|
|
|
|||||
Devices and Systems
|
53,465
|
|
|
72,807
|
|
|
(27
|
)%
|
||
Supplies
|
38,264
|
|
|
40,669
|
|
|
(6
|
)%
|
||
Services
|
19,183
|
|
|
20,396
|
|
|
(6
|
)%
|
||
Total Newborn Care Revenue
|
110,912
|
|
|
133,872
|
|
|
(17
|
)%
|
||
Hearing & Balance
|
|
|
|
|
|
|||||
Devices and Systems
|
$
|
92,050
|
|
|
$
|
110,597
|
|
|
(17
|
)%
|
Supplies
|
4,977
|
|
|
6,635
|
|
|
(25
|
)%
|
||
Services
|
—
|
|
|
—
|
|
|
—
|
%
|
||
Total Hearing & Balance Revenue
|
97,027
|
|
|
117,232
|
|
|
(17
|
)%
|
||
Total Revenue
|
$
|
495,175
|
|
|
$
|
530,891
|
|
|
(7
|
)%
|
|
Years ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
495,175
|
|
|
$
|
530,891
|
|
Cost of revenue
|
196,551
|
|
|
217,952
|
|
||
Intangibles amortization
|
6,916
|
|
|
8,924
|
|
||
Gross profit
|
291,708
|
|
|
304,015
|
|
||
Gross profit percentage
|
58.9
|
%
|
|
57.3
|
%
|
|
Years ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Marketing and selling
|
$
|
129,109
|
|
|
$
|
136,680
|
|
Percentage of revenue
|
26.1
|
%
|
|
25.7
|
%
|
||
Research and development
|
$
|
58,733
|
|
|
$
|
61,482
|
|
Percentage of revenue
|
11.9
|
%
|
|
11.6
|
%
|
||
General and administrative
|
$
|
59,649
|
|
|
$
|
70,599
|
|
Percentage of revenue
|
12.0
|
%
|
|
13.3
|
%
|
||
Intangibles amortization
|
$
|
15,144
|
|
|
$
|
22,585
|
|
Percentage of revenue
|
3.1
|
%
|
|
4.3
|
%
|
||
Restructuring
|
$
|
44,739
|
|
|
$
|
37,231
|
|
Percentage of revenue
|
9.0
|
%
|
|
7.0
|
%
|
|
Years ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|||||
Neuro
|
|
|
|
|
|
|||||
Devices and Systems
|
$
|
200,762
|
|
|
$
|
171,315
|
|
|
17
|
%
|
Supplies
|
67,025
|
|
|
59,955
|
|
|
12
|
%
|
||
Services
|
12,000
|
|
|
11,886
|
|
|
1
|
%
|
||
Total Neuro Revenue
|
279,787
|
|
|
243,156
|
|
|
15
|
%
|
||
Newborn Care
|
|
|
|
|
|
|||||
Devices and Systems
|
72,807
|
|
|
89,027
|
|
|
(18
|
)%
|
||
Supplies
|
40,669
|
|
|
43,928
|
|
|
(7
|
)%
|
||
Services
|
20,396
|
|
|
22,325
|
|
|
(9
|
)%
|
||
Total Newborn Care Revenue
|
133,872
|
|
|
155,280
|
|
|
(14
|
)%
|
||
Hearing & Balance
|
|
|
|
|
|
|||||
Devices and Systems
|
110,597
|
|
|
75,466
|
|
|
47
|
%
|
||
Supplies
|
6,635
|
|
|
27,068
|
|
|
(75
|
)%
|
||
Services
|
—
|
|
|
—
|
|
|
—
|
%
|
||
Total Hearing & Balance Revenue
|
117,232
|
|
|
102,534
|
|
|
14
|
%
|
||
Total Revenue
|
$
|
530,891
|
|
|
$
|
500,970
|
|
|
6
|
%
|
|
Years ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenue
|
$
|
530,891
|
|
|
$
|
500,970
|
|
Cost of revenue
|
217,952
|
|
|
213,376
|
|
||
Intangibles amortization
|
8,924
|
|
|
6,380
|
|
||
Gross profit
|
304,015
|
|
|
281,214
|
|
||
Gross profit percentage
|
57.3
|
%
|
|
56.1
|
%
|
|
Years ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Marketing and selling
|
$
|
136,680
|
|
|
$
|
126,166
|
|
Percentage of revenue
|
25.7
|
%
|
|
25.2
|
%
|
||
Research and development
|
$
|
61,482
|
|
|
$
|
51,822
|
|
Percentage of revenue
|
11.6
|
%
|
|
10.3
|
%
|
||
General and administrative
|
$
|
70,599
|
|
|
$
|
74,424
|
|
Percentage of revenue
|
13.3
|
%
|
|
14.9
|
%
|
||
Intangibles Amortization
|
$
|
22,585
|
|
|
$
|
19,171
|
|
Percentage of revenue
|
4.3
|
%
|
|
3.8
|
%
|
||
Restructuring
|
$
|
37,231
|
|
|
$
|
914
|
|
Percentage of revenue
|
7.0
|
%
|
|
0.2
|
%
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||
Cash, cash equivalents, and investments
|
$
|
63,297
|
|
|
$
|
56,373
|
|
|
$
|
88,950
|
|
Debt
|
54,665
|
|
|
104,474
|
|
|
154,283
|
|
|||
Working capital
|
126,928
|
|
|
152,329
|
|
|
213,491
|
|
|
Year Ended
|
||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||
Net cash provided by operating activities
|
$
|
60,060
|
|
|
$
|
33,020
|
|
|
$
|
19,726
|
|
Net cash used in investing activities
|
(5,339
|
)
|
|
(8,389
|
)
|
|
(160,935
|
)
|
|||
Net cash provided by (used in) financing activities
|
(48,532
|
)
|
|
(49,512
|
)
|
|
5,826
|
|
•
|
Amount and timing of revenue;
|
•
|
Extent to which our existing and new products gain market acceptance;
|
•
|
Extent to which we make acquisitions;
|
•
|
Cost and timing of product development efforts and the success of these development efforts;
|
•
|
Cost and timing of marketing and selling activities; and
|
•
|
Availability of borrowings under line of credit arrangements and the availability of other means of financing.
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Unconditional purchase obligations
|
$
|
44,955
|
|
|
$
|
44,955
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bank debt
|
55,000
|
|
|
—
|
|
|
55,000
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments
|
2,390
|
|
|
1,907
|
|
|
483
|
|
|
—
|
|
|
—
|
|
|||||
Repatriation tax
|
9,113
|
|
|
797
|
|
|
1,751
|
|
|
3,830
|
|
|
2,735
|
|
|||||
Total
|
$
|
111,458
|
|
|
$
|
47,659
|
|
|
$
|
57,234
|
|
|
$
|
3,830
|
|
|
$
|
2,735
|
|
|
Quarters Ended
|
||||||||||||||||||||||||||||||
|
December 31, 2019
|
|
September 30, 2019 (1)
|
|
June 30, 2019 (1)
|
|
March 31, 2019 (1)
|
|
December 31, 2018
|
|
September 30, 2018
|
|
June 30, 2018
|
|
March 31, 2018
|
||||||||||||||||
|
(in thousands, except per amounts)
|
||||||||||||||||||||||||||||||
Revenue
|
$
|
131,416
|
|
|
$
|
123,463
|
|
|
$
|
125,539
|
|
|
$
|
114,757
|
|
|
$
|
140,991
|
|
|
$
|
130,638
|
|
|
$
|
130,653
|
|
|
$
|
128,609
|
|
Cost of revenue (a)
|
49,259
|
|
|
48,389
|
|
|
52,393
|
|
|
46,510
|
|
|
58,103
|
|
|
51,583
|
|
|
52,897
|
|
|
55,369
|
|
||||||||
Intangibles amortization
|
1,679
|
|
|
1,736
|
|
|
1,746
|
|
|
1,756
|
|
|
2,689
|
|
|
1,930
|
|
|
2,717
|
|
|
1,587
|
|
||||||||
Gross profit
|
80,478
|
|
|
73,338
|
|
|
71,400
|
|
|
66,491
|
|
|
80,199
|
|
|
77,125
|
|
|
75,039
|
|
|
71,653
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Marketing and selling (b)
|
32,268
|
|
|
30,787
|
|
|
32,324
|
|
|
33,729
|
|
|
34,206
|
|
|
33,200
|
|
|
33,401
|
|
|
35,872
|
|
||||||||
Research and development (c)
|
17,567
|
|
|
14,447
|
|
|
13,324
|
|
|
13,394
|
|
|
15,296
|
|
|
15,127
|
|
|
15,616
|
|
|
15,443
|
|
||||||||
General and administrative (d)
|
15,261
|
|
|
15,394
|
|
|
12,690
|
|
|
16,306
|
|
|
13,632
|
|
|
15,799
|
|
|
23,721
|
|
|
17,448
|
|
||||||||
Intangibles amortization
|
3,844
|
|
|
3,751
|
|
|
3,763
|
|
|
3,786
|
|
|
9,151
|
|
|
4,477
|
|
|
4,151
|
|
|
4,806
|
|
||||||||
Restructuring
|
3,592
|
|
|
1,106
|
|
|
2,668
|
|
|
37,372
|
|
|
23,049
|
|
|
11,432
|
|
|
1,938
|
|
|
812
|
|
||||||||
Total operating expenses
|
72,532
|
|
|
65,485
|
|
|
64,769
|
|
|
104,587
|
|
|
95,334
|
|
|
80,035
|
|
|
78,827
|
|
|
74,381
|
|
||||||||
Income (loss) from operations
|
7,946
|
|
|
7,853
|
|
|
6,631
|
|
|
(38,096
|
)
|
|
(15,135
|
)
|
|
(2,910
|
)
|
|
(3,788
|
)
|
|
(2,728
|
)
|
||||||||
Other income (expense), net
|
(670
|
)
|
|
(1,609
|
)
|
|
(1,200
|
)
|
|
(2,112
|
)
|
|
(2,754
|
)
|
|
(726
|
)
|
|
(2,398
|
)
|
|
(1,821
|
)
|
||||||||
Income (loss) before provision for (benefit from) income tax
|
7,276
|
|
|
6,244
|
|
|
5,431
|
|
|
(40,208
|
)
|
|
(17,889
|
)
|
|
(3,636
|
)
|
|
(6,186
|
)
|
|
(4,549
|
)
|
||||||||
Provision for (benefit from) income tax (e)
|
4,266
|
|
|
(1,987
|
)
|
|
1,944
|
|
|
(9,809
|
)
|
|
(6,256
|
)
|
|
1,940
|
|
|
(3,609
|
)
|
|
(1,401
|
)
|
||||||||
Net income (loss)
|
$
|
3,010
|
|
|
$
|
8,231
|
|
|
$
|
3,487
|
|
|
$
|
(30,399
|
)
|
|
$
|
(11,633
|
)
|
|
$
|
(5,576
|
)
|
|
$
|
(2,577
|
)
|
|
$
|
(3,148
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.24
|
|
|
$
|
0.10
|
|
|
$
|
(0.91
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
Diluted
|
$
|
0.09
|
|
|
$
|
0.24
|
|
|
$
|
0.10
|
|
|
$
|
(0.91
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
Weighted average shares used in the calculation of net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
33,691
|
|
|
33,655
|
|
|
33,639
|
|
|
33,590
|
|
|
33,495
|
|
|
33,321
|
|
|
32,859
|
|
|
32,760
|
|
||||||||
Diluted
|
33,829
|
|
|
33,738
|
|
|
33,690
|
|
|
33,590
|
|
|
33,495
|
|
|
33,321
|
|
|
32,859
|
|
|
32,760
|
|
(a)
|
Cost of revenue increased $0.1 million and $0.2 million for the quarters ended March 31, 2019 and June 30, 2019, respectively. Cost of revenue decreased $0.3 million for the quarter ended September 30, 2019.
|
(b)
|
Marketing and selling expense increased $0.1 million for the quarter ended June 30, 2019 and decreased $0.1 million for the quarter ended September 30, 2019.
|
(c)
|
Research and development expense increased $0.3 million, $0.6 million, and $0.3 million for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019 respectively.
|
(d)
|
General and administrative expense increased $0.3 million for the quarter ended September 30, 2019.
|
(e)
|
Provision for income tax decreased by $0.1 million, $0.2 million, and $6 thousand for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019, respectively.
|
Plan Category
|
|
Number of Securities
to be Issued upon
Exercise of
Outstanding
Options, Warrants,
Awards and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants,
Awards and Rights
|
|
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation Plans
(excluding securities
reflected in the first column)
|
||||
Equity compensation plans approved by security holders
|
|
247,029
|
|
|
$
|
35.31
|
|
|
2,764,603
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
247,029
|
|
|
35.31
|
|
|
2,764,603
|
|
|
Balance at
Beginning of Period |
|
Additions
Charged to Expense |
|
Deductions
|
|
Balance
at End of Period |
||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
6,960
|
|
|
$
|
1,584
|
|
|
$
|
(1,160
|
)
|
|
$
|
7,384
|
|
Valuation allowance
|
637
|
|
|
—
|
|
|
(31
|
)
|
|
606
|
|
||||
Warranty reserve
|
9,391
|
|
|
3,949
|
|
|
(6,936
|
)
|
|
6,404
|
|
||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
8,978
|
|
|
$
|
6,423
|
|
|
$
|
(8,441
|
)
|
|
$
|
6,960
|
|
Valuation allowance
|
5,862
|
|
|
—
|
|
|
(5,225
|
)
|
|
637
|
|
||||
Warranty reserve
|
10,995
|
|
|
4,487
|
|
|
(6,091
|
)
|
|
9,391
|
|
||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
4,182
|
|
|
$
|
10,017
|
|
|
$
|
(5,221
|
)
|
|
$
|
8,978
|
|
Valuation allowance
|
3,706
|
|
|
2,156
|
|
|
—
|
|
|
5,862
|
|
||||
Warranty reserve
|
10,670
|
|
|
5,370
|
|
|
(5,045
|
)
|
|
10,995
|
|
|
|
|
|
Incorporated By Reference
|
|||||||
Exhibit No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit No.
|
|
File No.
|
|
File Date
|
|
3.1
|
|
Natus Medical Incorporated Restated Certificate of Incorporation, as filed with the Delaware Secretary of State as of July 25, 2001
|
|
S-1
|
|
3.1.1
|
|
|
333-44138
|
|
8/18/2000
|
3.2
|
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of State as of September 12, 2012
|
|
8-K
|
|
3.1
|
|
|
000-33001
|
|
9/13/2012
|
3.3
|
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of State as of June 5, 2019
|
|
8-K
|
|
3.1
|
|
|
000-33001
|
|
6/7/2019
|
3.4
|
|
Second Amended and Restated Bylaws of Natus Medical Incorporated
|
|
8-K
|
|
3.1
|
|
|
000-33001
|
|
12/16/2019
|
4.1
|
|
Specimen stock certificate for shares of common stock, par value $0.001 per share
|
|
S-1/A
|
|
4.1
|
|
|
333-44138
|
|
2/9/2001
|
4.2
|
|
Natus Medical Incorporated Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock
|
|
8-A
|
|
3.1.2
|
|
|
000-33001
|
|
9/6/2002
|
4.3
|
|
Description of Common Stock
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Form of Indemnification Agreement between Natus Medical Incorporated and each of its directors and officers
|
|
S-1
|
|
10.1
|
|
|
333-44138
|
|
8/18/2000
|
10.1.1*
|
|
2018 Equity Incentive Plan
|
|
8-K
|
|
10.1
|
|
|
000-33001
|
|
12/18/2018
|
10.1.2*
|
|
Form of Stock Option Awards Agreement under the 2018 Equity Incentive Plan
|
|
8-K
|
|
10.1.1
|
|
|
000-33001
|
|
12/18/2018
|
10.1.3*
|
|
Form of Restricted Stock Award Agreement under the 2018 Equity Incentive Plan
|
|
8-K
|
|
10.1.2
|
|
|
000-33001
|
|
12/18/2018
|
10.1.4
|
|
Form of Restricted Stock Unit Agreement under the 2018 Equity Incentive Plan
|
|
8-K
|
|
10.1.3
|
|
|
000-33001
|
|
12/18/2018
|
10.1.5*
|
|
Form of Performance Stock Unit Agreement under the 2018 Equity Incentive Plan
|
|
8-K
|
|
10.1.4
|
|
|
000-33001
|
|
12/18/2018
|
10.2*
|
|
Natus Medical Incorporated Amended and Restated 2000 Stock Awards Plan
|
|
8-K
|
|
10.1
|
|
|
000-33001
|
|
1/4/2006
|
10.2.1*
|
|
Form of Option Agreement under the Amended and Restated 2000 Stock Awards Plan
|
|
S-1
|
|
10.3.1
|
|
|
333-44138
|
|
8/18/2000
|
10.2.2*
|
|
Form of Restricted Stock Purchase Agreement under the Amended and Restated 2000 Stock Awards Plan
|
|
10-Q
|
|
10.2
|
|
|
000-33001
|
|
8/9/2006
|
10.2.3*
|
|
Form of Restricted Stock Unit Agreement under the Amended and Restated 2000 Stock Awards Plan
|
|
10-K
|
|
10.2.3
|
|
|
000-33001
|
|
3/14/2008
|
10.3*
|
|
Natus Medical Incorporated 2000 Director Option Plan
|
|
10-Q
|
|
10.02
|
|
|
000-33001
|
|
5/9/2008
|
10.3.1*
|
|
Form of Option Agreement under the 2000 Director Option Plan
|
|
S-1
|
|
10.4.1
|
|
|
333-44138
|
|
8/18/2000
|
10.4*
|
|
Natus Medical Incorporated 2000 Supplemental Stock Option Plan
|
|
S-1
|
|
10.15
|
|
|
333-44138
|
|
2/9/2001
|
10.4.1*
|
|
Form of Option Agreement for 2000 Supplemental Stock Option Plan
|
|
S-1
|
|
10.15.1
|
|
|
333-44138
|
|
2/9/2001
|
10.5*
|
|
Natus Medical Incorporated 2000 Employee Stock Purchase Plan and form of subscription agreement thereunder
|
|
8-K
|
|
10.2
|
|
|
000-33001
|
|
1/4/2006
|
10.6*
|
|
[Amended] 2011 Stock Awards Plan
|
|
14-A
|
|
—
|
|
|
000-33001
|
|
4/20/2011
|
|
|
|
|
Incorporated By Reference
|
|||||||
Exhibit No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit No.
|
|
File No.
|
|
File Date
|
|
10.6.1*
|
|
Form of Stock Option Award Agreement under the [Amended] 2011 Stock Plan
|
|
10-Q
|
|
10.1
|
|
|
000-33001
|
|
11/7/2011
|
10.6.2*
|
|
Form of Restricted Stock Award Purchase Agreement
|
|
10-Q
|
|
10.2
|
|
|
000-33001
|
|
11/7/2011
|
10.6.3*
|
|
Form of Restricted Stock Unit Agreement
|
|
10-Q
|
|
10.3
|
|
|
000-33001
|
|
11/7/2011
|
10.7*
|
|
2011 Employee Stock Purchase Plan
|
|
14-A
|
|
—
|
|
|
000-33001
|
|
4/20/2011
|
10.7.1*
|
|
2011 Employee Stock Purchase Plan Subscription Agreement
|
|
14-A
|
|
—
|
|
|
000-33001
|
|
4/20/2011
|
10.8*
|
|
Form of Employment Agreement between Natus Medical Incorporated and each of its executive officers other than its Chief Executive Officer and Chief Financial Officer
|
|
10-K
|
|
10.10
|
|
|
000-33001
|
|
3/10/2009
|
10.8.1*
|
|
Form of Amendment to Employment Agreement between Natus Medical Incorporated and each of its executive officers other than its Chief Executive Officer and Chief Financial Officer
|
|
10-K
|
|
|
|
000-33001
|
|
3/16/2015
|
|
10.9*
|
|
Amended employment agreement between Natus Medical Incorporated and its Chief Executive Officer, James B. Hawkins dated April 19, 2013
|
|
8-K
|
|
99.1
|
|
|
000-33001
|
|
4/22/2013
|
10.10*
|
|
Terms of Resignation between Natus Medical Incorporated and James B. Hawkins dated July 11, 2018
|
|
10-Q
|
|
10.16
|
|
|
000-33001
|
|
8/8/2018
|
10.11
|
|
Credit Agreement between Natus Medical Incorporated and CitiBank, NA dated October 9, 2015
|
|
8-K
|
|
10.1
|
|
|
000-33001
|
|
10/9/2015
|
10.12
|
|
Agreement For the Acquisition of Medical Devices between Medix ICSA and the Ministry of Health of the Republic of Venezuela dated October 15, 2015
|
|
10-Q
|
|
|
|
000-33001
|
|
2/29/2016
|
|
10.13
|
|
Amendment to Agreement For the Acquisition of Medical Devices between Medix ICSA and the Ministry of Health of the Republic of Venezuela dated October 15, 2015
|
|
10-Q
|
|
10.2
|
|
|
000-33001
|
|
11/3/2016
|
10.14
|
|
Credit Agreement, dated September 23, 2016, between the Company, JP Morgan Chase Bank, N.A. and Citibank, N.A.
|
|
10-Q
|
|
10.1
|
|
|
000-33001
|
|
11/3/2016
|
10.15
|
|
Master Purchase Agreement, dated September 25, 2016, between GN Hearing A/S, GN Nord A/S and the Company
|
|
10-Q
|
|
10.3
|
|
|
000-33001
|
|
11/3/2016
|
10.16*
|
|
Forms of Employment Agreement between Natus Medical Incorporated and Jonathan A. Kennedy dated August 24, 2018
|
|
8-K
|
|
99.1
|
|
|
000-33001
|
|
8/29/2018
|
10.17*
|
|
Form of Employment Agreement between Natus Medical Incorporated and Drew Davies dated October 1, 2018
|
|
10-Q
|
|
10.18
|
|
|
000-33001
|
|
11/8/2018
|
21.1
|
|
Significant Subsidiaries of the Registrant
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
24.1
|
|
Power of Attorney (included on signature page)
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated By Reference
|
||||||
Exhibit No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit No.
|
|
File No.
|
|
File Date
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
101
|
|
The following financial information from Natus Medical Incorporated Annual Report on Form 10-K for the fiscal year ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018, (ii) Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017 (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, (v) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017, and (vi) the Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
104
|
|
The cover page of the Annual Report on Form 10-K formatted in Inline XBRL (included in Exhibit 101).
|
|
|
|
|
|
|
|
|
|
|
|
NATUS MEDICAL INCORPORATED
|
||
|
|
|
By
|
|
/s/ JONATHAN A. KENNEDY
|
|
|
Jonathan A. Kennedy
President and Chief Executive Officer
|
|
|
|
By
|
|
/s/ B. DREW DAVIES
|
|
|
B. Drew Davies
Executive Vice President and Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/ JONATHAN A. KENNEDY
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
March 2, 2020
|
(Jonathan A. Kennedy)
|
|
|
|
|
/S/ B. DREW DAVIES
|
|
Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
March 2, 2020
|
(B. Drew Davies)
|
|
|
|
|
/S/ BARBARA R. PAUL
|
|
Chairperson of the Board of Directors
|
|
March 2, 2020
|
(Barbara R. Paul)
|
|
|
|
|
/S/ LISA W. HEINE
|
|
Director
|
|
March 2, 2020
|
(Lisa W. Heine)
|
|
|
|
|
/S/ JOSHUA H. LEVINE
|
|
Director
|
|
March 2, 2020
|
(Joshua H. Levine)
|
|
|
|
|
/S/ KENNETH E. LUDLUM
|
|
Director
|
|
March 2, 2020
|
(Kenneth E. Ludlum)
|
|
|
|
|
/S/ ALICE D. SCHROEDER
|
|
Director
|
|
March 2, 2020
|
(Alice D. Schroeder)
|
|
|
|
|
/S/ THOMAS J. SULLIVAN
|
|
Director
|
|
March 2, 2020
|
(Thomas J. Sullivan)
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
63,297
|
|
|
$
|
56,373
|
|
Accounts receivable, net of allowance for doubtful accounts of $7,384 and $6,960
|
115,889
|
|
|
127,041
|
|
||
Inventories
|
71,368
|
|
|
79,736
|
|
||
Prepaid expenses and other current assets
|
19,195
|
|
|
22,625
|
|
||
Total current assets
|
269,749
|
|
|
285,775
|
|
||
Property and equipment, net
|
24,702
|
|
|
22,913
|
|
||
Operating lease right-of-use assets
|
15,046
|
|
|
—
|
|
||
Intangible assets, net
|
114,799
|
|
|
139,453
|
|
||
Goodwill
|
146,367
|
|
|
147,644
|
|
||
Deferred income tax
|
30,355
|
|
|
22,639
|
|
||
Other assets
|
21,509
|
|
|
19,716
|
|
||
Total assets
|
$
|
622,527
|
|
|
$
|
638,140
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
27,253
|
|
|
$
|
28,805
|
|
Current portion of long-term debt
|
35,000
|
|
|
35,000
|
|
||
Current portion of operating lease liabilities
|
5,871
|
|
|
—
|
|
||
Accrued liabilities
|
54,451
|
|
|
52,568
|
|
||
Deferred revenue
|
20,246
|
|
|
17,073
|
|
||
Total current liabilities
|
142,821
|
|
|
133,446
|
|
||
Long-term liabilities:
|
|
|
|
||||
Other liabilities
|
17,616
|
|
|
19,845
|
|
||
Long-term debt
|
19,665
|
|
|
69,474
|
|
||
Operating lease liabilities
|
12,051
|
|
|
—
|
|
||
Deferred income tax
|
14,251
|
|
|
16,931
|
|
||
Total liabilities
|
206,404
|
|
|
239,696
|
|
||
Commitments and contingencies (Note 21)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value; 120,000,000 shares authorized; shares issued and outstanding 34,148,700 in 2019 and 33,804,379 in 2018
|
344,476
|
|
|
334,215
|
|
||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding in 2019 and in 2018
|
—
|
|
|
—
|
|
||
Retained earnings
|
87,922
|
|
|
102,261
|
|
||
Accumulated other comprehensive loss
|
(16,275
|
)
|
|
(38,032
|
)
|
||
Total stockholders’ equity
|
416,123
|
|
|
398,444
|
|
||
Total liabilities and stockholders’ equity
|
$
|
622,527
|
|
|
$
|
638,140
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
495,175
|
|
|
$
|
530,891
|
|
|
$
|
500,970
|
|
Cost of revenue
|
196,551
|
|
|
217,952
|
|
|
213,376
|
|
|||
Intangibles amortization
|
6,916
|
|
|
8,924
|
|
|
6,380
|
|
|||
Gross profit
|
291,708
|
|
|
304,015
|
|
|
281,214
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing and selling
|
129,109
|
|
|
136,680
|
|
|
126,166
|
|
|||
Research and development
|
58,733
|
|
|
61,482
|
|
|
51,822
|
|
|||
General and administrative
|
59,649
|
|
|
70,599
|
|
|
74,424
|
|
|||
Intangibles amortization
|
15,144
|
|
|
22,585
|
|
|
19,171
|
|
|||
Restructuring
|
44,739
|
|
|
37,231
|
|
|
914
|
|
|||
Total operating expenses
|
307,374
|
|
|
328,577
|
|
|
272,497
|
|
|||
Income (loss) from operations
|
(15,666
|
)
|
|
(24,562
|
)
|
|
8,717
|
|
|||
Other expense, net
|
(5,591
|
)
|
|
(7,698
|
)
|
|
(3,567
|
)
|
|||
Income (loss) before provision (benefit) for income tax
|
(21,257
|
)
|
|
(32,260
|
)
|
|
5,150
|
|
|||
Provision (benefit) for income tax
|
(5,586
|
)
|
|
(9,325
|
)
|
|
25,443
|
|
|||
Net loss
|
$
|
(15,671
|
)
|
|
$
|
(22,935
|
)
|
|
$
|
(20,293
|
)
|
Net loss per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.47
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.62
|
)
|
Diluted
|
$
|
(0.47
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.62
|
)
|
Weighted average shares used in the calculation of net loss per share:
|
|
|
|
|
|
||||||
Basic
|
33,696
|
|
|
33,111
|
|
|
32,564
|
|
|||
Diluted
|
33,696
|
|
|
33,111
|
|
|
32,564
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
(15,671
|
)
|
|
(22,935
|
)
|
|
(20,293
|
)
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized losses on available-for-sale investments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(45
|
)
|
Foreign currency translation adjustment
|
(1,576
|
)
|
|
(14,360
|
)
|
|
21,470
|
|
|||
Interest rate swap designated as a cash flow hedge
|
(180
|
)
|
|
(77
|
)
|
|
—
|
|
|||
Reclassification of stranded tax effects upon adoption of ASU 2018-02
|
(1,332
|
)
|
|
—
|
|
|
—
|
|
|||
Reclassification of deferred foreign currency related adjustments related to the sale of Medix (See FN 23)
|
24,845
|
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive income (loss)
|
21,757
|
|
|
(14,437
|
)
|
|
21,425
|
|
|||
Comprehensive income (loss)
|
$
|
6,086
|
|
|
$
|
(37,372
|
)
|
|
$
|
1,132
|
|
|
Common Stock
|
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|
Stockholders’
Equity |
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balances, December 31, 2016
|
32,920,246
|
|
|
$
|
312,986
|
|
|
$
|
149,408
|
|
|
$
|
(45,020
|
)
|
|
$
|
417,374
|
|
Vesting of restricted stock units
|
35,929
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net issuance of restricted stock awards
|
249,366
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Employee stock purchase plan
|
48,470
|
|
|
1,581
|
|
|
—
|
|
|
—
|
|
|
1,581
|
|
||||
Stock-based compensation expense
|
—
|
|
|
9,445
|
|
|
—
|
|
|
—
|
|
|
9,445
|
|
||||
Repurchase of company stock
|
(60,800
|
)
|
|
(2,268
|
)
|
|
—
|
|
|
—
|
|
|
(2,268
|
)
|
||||
Taxes paid related to net share settlement of equity awards
|
(193,212
|
)
|
|
(7,052
|
)
|
|
—
|
|
|
—
|
|
|
(7,052
|
)
|
||||
Exercise of stock options
|
134,102
|
|
|
1,885
|
|
|
—
|
|
|
—
|
|
|
1,885
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
21,425
|
|
|
21,425
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(20,293
|
)
|
|
—
|
|
|
(20,293
|
)
|
||||
Balances, December 31, 2017
|
33,134,101
|
|
|
$
|
316,577
|
|
|
$
|
129,115
|
|
|
$
|
(23,595
|
)
|
|
$
|
422,097
|
|
Cumulative-effect adjustment for ASU 2016-16
|
—
|
|
|
—
|
|
|
(3,919
|
)
|
|
—
|
|
|
(3,919
|
)
|
||||
Vesting of restricted stock units
|
266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net issuance of restricted stock awards
|
272,941
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Employee stock purchase plan
|
63,649
|
|
|
1,700
|
|
|
—
|
|
|
—
|
|
|
1,700
|
|
||||
Stock-based compensation expense
|
—
|
|
|
17,003
|
|
|
—
|
|
|
—
|
|
|
17,003
|
|
||||
Repurchase of company stock
|
(173,545
|
)
|
|
(5,630
|
)
|
|
—
|
|
|
—
|
|
|
(5,630
|
)
|
||||
Taxes paid related to net share settlement of equity awards
|
(160,700
|
)
|
|
(5,183
|
)
|
|
—
|
|
|
—
|
|
|
(5,183
|
)
|
||||
Exercise of stock options
|
667,667
|
|
|
9,748
|
|
|
—
|
|
|
—
|
|
|
9,748
|
|
||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,437
|
)
|
|
(14,437
|
)
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(22,935
|
)
|
|
—
|
|
|
(22,935
|
)
|
||||
Balances, December 31, 2018
|
33,804,379
|
|
|
$
|
334,215
|
|
|
$
|
102,261
|
|
|
$
|
(38,032
|
)
|
|
$
|
398,444
|
|
Reclassification of stranded tax effects for ASU 2018-02
|
|
|
|
|
1,332
|
|
|
(1,332
|
)
|
|
—
|
|
||||||
Vesting of restricted stock units
|
42,130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net issuance of restricted stock awards
|
175,833
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Employee stock purchase plan
|
53,839
|
|
|
1,354
|
|
|
—
|
|
|
—
|
|
|
1,354
|
|
||||
Stock-based compensation expense
|
—
|
|
|
8,315
|
|
|
—
|
|
|
—
|
|
|
8,315
|
|
||||
Taxes paid related to net share settlement of equity awards
|
(51,784
|
)
|
|
(1,689
|
)
|
|
—
|
|
|
—
|
|
|
(1,689
|
)
|
||||
Exercise of stock options
|
124,303
|
|
|
2,281
|
|
|
—
|
|
|
—
|
|
|
2,281
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
23,089
|
|
|
23,089
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(15,671
|
)
|
|
—
|
|
|
(15,671
|
)
|
||||
Balances, December 31, 2019
|
34,148,700
|
|
|
$
|
344,476
|
|
|
$
|
87,922
|
|
|
$
|
(16,275
|
)
|
|
$
|
416,123
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(15,671
|
)
|
|
$
|
(22,935
|
)
|
|
$
|
(20,293
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Provision for losses on accounts receivable
|
1,584
|
|
|
6,909
|
|
|
10,017
|
|
|||
Depreciation and amortization
|
30,722
|
|
|
33,863
|
|
|
30,098
|
|
|||
(Gain) loss on disposal of property and equipment
|
449
|
|
|
746
|
|
|
(21
|
)
|
|||
Impairment of intangible assets
|
—
|
|
|
8,192
|
|
|
1,674
|
|
|||
Impairment charge for sale of entity
|
24,571
|
|
|
—
|
|
|
—
|
|
|||
Goodwill impairment charge
|
—
|
|
|
14,846
|
|
|
—
|
|
|||
Warranty reserve
|
2,886
|
|
|
2,168
|
|
|
5,370
|
|
|||
Stock-based compensation
|
8,352
|
|
|
17,051
|
|
|
9,445
|
|
|||
Deferred taxes
|
(5,364
|
)
|
|
(13,714
|
)
|
|
4,032
|
|
|||
Changes in operating assets and liabilities, net of assets and liabilities acquired in acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
9,817
|
|
|
(5,199
|
)
|
|
(30,473
|
)
|
|||
Inventories
|
7,185
|
|
|
(7,443
|
)
|
|
7,581
|
|
|||
Other assets
|
(2,486
|
)
|
|
(5,118
|
)
|
|
5,492
|
|
|||
Accounts payable
|
(1,367
|
)
|
|
4,105
|
|
|
(1,385
|
)
|
|||
Accrued liabilities
|
(4,010
|
)
|
|
(2,527
|
)
|
|
5,421
|
|
|||
Deferred revenue
|
3,392
|
|
|
2,076
|
|
|
(7,232
|
)
|
|||
Net cash provided by operating activities
|
60,060
|
|
|
33,020
|
|
|
19,726
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
151
|
|
|
(190,888
|
)
|
|||
Acquisition of property and equipment
|
(5,326
|
)
|
|
(7,875
|
)
|
|
(4,066
|
)
|
|||
Acquisition of intangible assets
|
(13
|
)
|
|
(665
|
)
|
|
—
|
|
|||
Sales of short-term investments
|
—
|
|
|
—
|
|
|
34,019
|
|
|||
Net cash used in investing activities
|
(5,339
|
)
|
|
(8,389
|
)
|
|
(160,935
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from stock option exercises and ESPP
|
3,635
|
|
|
11,448
|
|
|
3,466
|
|
|||
Principal payments of financing lease liability
|
(478
|
)
|
|
—
|
|
|
—
|
|
|||
Repurchase of company stock
|
—
|
|
|
(5,630
|
)
|
|
(2,268
|
)
|
|||
Taxes paid related to net share settlement of equity awards
|
(1,689
|
)
|
|
(5,183
|
)
|
|
(7,052
|
)
|
|||
Proceeds from long-term borrowings
|
—
|
|
|
—
|
|
|
60,000
|
|
|||
Deferred debt issuance costs
|
—
|
|
|
—
|
|
|
(354
|
)
|
|||
Contingent consideration earn-out
|
—
|
|
|
(147
|
)
|
|
(2,966
|
)
|
|||
Payments on borrowings
|
(50,000
|
)
|
|
(50,000
|
)
|
|
(45,000
|
)
|
|||
Net cash provided by (used in) financing activities
|
(48,532
|
)
|
|
(49,512
|
)
|
|
5,826
|
|
|||
Exchange rate effect on cash and cash equivalents
|
735
|
|
|
(7,696
|
)
|
|
10,782
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
6,924
|
|
|
(32,577
|
)
|
|
(124,601
|
)
|
|||
Cash and cash equivalents, beginning of year
|
56,373
|
|
|
88,950
|
|
|
213,551
|
|
|||
Cash and cash equivalents, end of year
|
$
|
63,297
|
|
|
$
|
56,373
|
|
|
$
|
88,950
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
4,580
|
|
|
$
|
6,169
|
|
|
$
|
4,464
|
|
Cash paid for income taxes
|
$
|
6,445
|
|
|
$
|
9,247
|
|
|
$
|
5,740
|
|
Non-cash investing activities:
|
|
|
|
|
|
||||||
Property and equipment included in accounts payable
|
$
|
69
|
|
|
$
|
167
|
|
|
$
|
148
|
|
Inventory transferred to property and equipment
|
$
|
300
|
|
|
$
|
1,211
|
|
|
$
|
1,006
|
|
Unbilled AR, December 31, 2018
|
$
|
3,012
|
|
Additions
|
354
|
|
|
Transferred to Trade Receivable
|
(699
|
)
|
|
Unbilled AR, December 31, 2019
|
$
|
2,667
|
|
Deferred Revenue, December 31, 2018
|
$
|
21,410
|
|
Additions
|
19,465
|
|
|
Revenue Recognized
|
(16,067
|
)
|
|
Deferred Revenue, December 31, 2019
|
$
|
24,808
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Raw materials and subassemblies
|
$
|
37,259
|
|
|
$
|
31,459
|
|
Work in process
|
1,780
|
|
|
2,424
|
|
||
Finished goods
|
50,521
|
|
|
63,932
|
|
||
Total Inventories
|
89,560
|
|
|
97,815
|
|
||
Less: Non-current Inventories
|
(18,192
|
)
|
|
(18,079
|
)
|
||
Inventories
|
$
|
71,368
|
|
|
$
|
79,736
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Land
|
$
|
1,719
|
|
|
$
|
1,828
|
|
Buildings
|
6,943
|
|
|
7,036
|
|
||
Leasehold improvements
|
8,664
|
|
|
4,649
|
|
||
Finance lease right-of-use assets
|
2,377
|
|
|
—
|
|
||
Office furniture and equipment
|
22,819
|
|
|
23,487
|
|
||
Computer software and hardware
|
12,610
|
|
|
12,803
|
|
||
Demonstration and loaned equipment
|
11,621
|
|
|
12,843
|
|
||
|
66,753
|
|
|
62,646
|
|
||
Accumulated depreciation
|
(42,051
|
)
|
|
(39,733
|
)
|
||
Total
|
$
|
24,702
|
|
|
$
|
22,913
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accumulated
Impairment |
|
Accumulated
Amortization |
|
Net Book
Value |
|
Gross
Carrying Amount |
|
Accumulated
Impairment |
|
Accumulated
Amortization |
|
Net Book
Value |
||||||||||||||
Technology
|
$
|
108,400
|
|
|
(6,035
|
)
|
|
$
|
(55,408
|
)
|
|
$
|
46,957
|
|
|
$
|
111,198
|
|
|
(6,768
|
)
|
|
$
|
(50,046
|
)
|
|
$
|
54,384
|
|
Customer related
|
90,351
|
|
|
(50
|
)
|
|
(40,527
|
)
|
|
49,774
|
|
|
99,440
|
|
|
(1,961
|
)
|
|
(38,574
|
)
|
|
58,905
|
|
||||||
Trade names
|
45,874
|
|
|
(3,237
|
)
|
|
(25,355
|
)
|
|
17,282
|
|
|
47,217
|
|
|
(4,397
|
)
|
|
(19,250
|
)
|
|
23,570
|
|
||||||
Internally developed software
|
13,281
|
|
|
—
|
|
|
(12,606
|
)
|
|
675
|
|
|
16,264
|
|
|
—
|
|
|
(14,164
|
)
|
|
2,100
|
|
||||||
Patents
|
2,692
|
|
|
(133
|
)
|
|
(2,559
|
)
|
|
—
|
|
|
2,718
|
|
|
(133
|
)
|
|
(2,524
|
)
|
|
61
|
|
||||||
Service Agreements
|
1,190
|
|
|
—
|
|
|
(1,079
|
)
|
|
111
|
|
|
1,190
|
|
|
—
|
|
|
(757
|
)
|
|
433
|
|
||||||
Total Definite-lived intangible assets
|
261,788
|
|
|
(9,455
|
)
|
|
(137,534
|
)
|
|
114,799
|
|
|
278,027
|
|
|
(13,259
|
)
|
|
(125,315
|
)
|
|
139,453
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Technology
|
$
|
6,906
|
|
|
$
|
14,100
|
|
|
$
|
7,705
|
|
Customer related
|
8,662
|
|
|
12,244
|
|
|
10,945
|
|
|||
Trade names
|
6,111
|
|
|
6,736
|
|
|
6,479
|
|
|||
Internally developed software
|
1,438
|
|
|
2,123
|
|
|
2,117
|
|
|||
Patents
|
60
|
|
|
84
|
|
|
244
|
|
|||
Service Agreements
|
322
|
|
|
757
|
|
|
—
|
|
|||
Total amortization
|
$
|
23,499
|
|
|
$
|
36,044
|
|
|
$
|
27,490
|
|
2020
|
$
|
21,616
|
|
2021
|
20,724
|
|
|
2022
|
17,329
|
|
|
2023
|
16,375
|
|
|
2024
|
14,483
|
|
|
Thereafter
|
24,272
|
|
|
Total expected amortization expense
|
$
|
114,799
|
|
As of December 31, 2017
|
$
|
172,998
|
|
Purchase Accounting Adjustments
|
(7,324
|
)
|
|
Impairment charge
|
(14,846
|
)
|
|
Foreign currency translation
|
(3,184
|
)
|
|
As of December 31, 2018
|
$
|
147,644
|
|
Foreign currency translation
|
(1,277
|
)
|
|
As of December 31, 2019
|
$
|
146,367
|
|
|
Year Ended
December 31, |
||
|
2019
|
||
Operating lease cost
|
$
|
6,823
|
|
Finance lease cost:
|
|
||
Amortization of right-of-use assets (principal payments)
|
466
|
|
|
Interest on lease liabilities
|
58
|
|
|
Short-term lease cost
|
51
|
|
|
Variable lease cost
|
2,836
|
|
|
Sublease income
|
(179
|
)
|
|
Total lease cost
|
$
|
10,055
|
|
|
December 31, 2019
|
||
Operating Leases
|
|
||
Operating lease right-of-use assets
|
$
|
15,046
|
|
|
|
||
Current portion of operating lease liabilities
|
$
|
5,871
|
|
Operating lease liabilities
|
12,051
|
|
|
Total operating lease liabilities
|
$
|
17,922
|
|
|
|
||
Finance Leases
|
|
||
Property and equipment, gross
|
$
|
2,377
|
|
Accumulated amortization
|
(1,418
|
)
|
|
Property and equipment, net
|
$
|
959
|
|
|
|
||
Accrued liabilities
|
$
|
390
|
|
Other liabilities
|
599
|
|
|
Total finance lease liabilities
|
$
|
989
|
|
|
|
||
Weighted Average Remaining Lease Term
|
|
||
Operating leases
|
3.75 years
|
|
|
Finance leases
|
2.92 years
|
|
|
Weighted Average Discount Rate
|
|
||
Operating leases
|
5.3
|
%
|
|
Finance leases
|
5.1
|
%
|
Year ending December 31,
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
$
|
6,788
|
|
|
$
|
401
|
|
2021
|
5,302
|
|
|
346
|
|
||
2022
|
3,657
|
|
|
176
|
|
||
2023
|
2,498
|
|
|
97
|
|
||
2024
|
1,277
|
|
|
5
|
|
||
Thereafter
|
842
|
|
|
—
|
|
||
Total lease payments
|
20,364
|
|
|
1,025
|
|
||
Less imputed interest
|
(2,442
|
)
|
|
(36
|
)
|
||
Total
|
$
|
17,922
|
|
|
$
|
989
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Compensation and related benefits
|
$
|
26,991
|
|
|
$
|
24,891
|
|
Warranty reserve
|
6,404
|
|
|
9,391
|
|
||
Accrued federal, state, and local taxes
|
11,156
|
|
|
8,285
|
|
||
Accrued amounts due to customers
|
3,008
|
|
|
5,507
|
|
||
Accrued professional fees
|
2,083
|
|
|
1,820
|
|
||
Accrued selling expenses
|
507
|
|
|
246
|
|
||
Self-funded insurance expense
|
950
|
|
|
—
|
|
||
Accrued travel
|
224
|
|
|
201
|
|
||
Deferred rent
|
—
|
|
|
205
|
|
||
Other
|
3,128
|
|
|
2,022
|
|
||
Total
|
$
|
54,451
|
|
|
$
|
52,568
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Long-term taxes payable
|
$
|
12,330
|
|
|
$
|
15,425
|
|
Non-current deferred revenue
|
4,563
|
|
|
4,338
|
|
||
Finance lease liabilities
|
599
|
|
|
—
|
|
||
Other
|
124
|
|
|
82
|
|
||
Total
|
$
|
17,616
|
|
|
$
|
19,845
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Revolving credit facility
|
$
|
55,000
|
|
|
$
|
105,000
|
|
Debt issuance costs
|
(335
|
)
|
|
(526
|
)
|
||
Less: current portion of long-term debt
|
35,000
|
|
|
35,000
|
|
||
Total long-term debt
|
$
|
19,665
|
|
|
$
|
69,474
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
2019
|
$
|
—
|
|
|
$
|
—
|
|
2020
|
—
|
|
|
—
|
|
||
2021
|
55,000
|
|
|
105,000
|
|
||
Thereafter
|
—
|
|
|
—
|
|
||
Total
|
$
|
55,000
|
|
|
$
|
105,000
|
|
Hedged Item
|
Current Notional Amount
|
Designation Date
|
Effective Date
|
Termination Date
|
Fixed Interest Rate
|
Floating Rate
|
Estimated Fair Value
|
||||
1-month USD LIBOR loan
|
$
|
40,000
|
|
May 31, 2018
|
June 1, 2018
|
September 23, 2021
|
2.611%
|
1-month USD LIBOR
|
$
|
313
|
|
Total interest rate derivatives designated as cash flow hedge
|
$
|
40,000
|
|
|
|
|
|
|
$
|
313
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
$
|
(15,671
|
)
|
|
$
|
(22,935
|
)
|
|
$
|
(20,293
|
)
|
Weighted average common shares
|
33,696
|
|
|
33,111
|
|
|
32,564
|
|
|||
Dilutive effect of stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted Shares
|
33,696
|
|
|
33,111
|
|
|
32,564
|
|
|||
Basic loss per share
|
$
|
(0.47
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.62
|
)
|
Diluted loss per share
|
$
|
(0.47
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.62
|
)
|
Shares excluded from calculation of diluted EPS
|
104
|
|
|
343
|
|
|
565
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenue
|
$
|
264
|
|
|
$
|
218
|
|
|
$
|
232
|
|
Marketing and selling
|
800
|
|
|
801
|
|
|
540
|
|
|||
Research and development
|
1,024
|
|
|
1,039
|
|
|
1,332
|
|
|||
General and administrative
|
6,227
|
|
|
14,945
|
|
|
7,341
|
|
|||
Total expense
|
$
|
8,315
|
|
|
$
|
17,003
|
|
|
$
|
9,445
|
|
•
|
Incentive stock options to employees;
|
•
|
Non-statutory stock options to employees, directors and consultants;
|
•
|
Restricted stock awards and restricted stock units;
|
•
|
Market stock units;
|
•
|
Stock bonuses; and
|
•
|
Stock appreciation rights.
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
|
|||
Outstanding, December 31, 2018 (127,453 shares exercisable at a weighted average exercise price of $18.22 per share)
|
201,542
|
|
|
$
|
24.48
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Exercised
|
(124,303
|
)
|
|
$
|
18.35
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Expired
|
(3,150
|
)
|
|
$
|
13.35
|
|
Outstanding, December 31, 2019 (18,531 shares exercisable at a weighted average exercise price of $35.25 per share)
|
74,089
|
|
|
$
|
35.25
|
|
|
December 31,
|
||
|
2018
|
||
Weighted-average fair value of options granted
|
$
|
11.03
|
|
Expected life in years
|
4.0
|
|
|
Risk-free interest rate
|
2.7
|
%
|
|
Expected volatility
|
35
|
%
|
|
Dividend yield
|
None
|
|
Shares
|
|
Weighted
Average
Grant
Date Fair
Value
|
|||
Unvested at December 31, 2018
|
293,588
|
|
|
$
|
37.04
|
|
Granted
|
197,333
|
|
|
$
|
31.53
|
|
Vested
|
(129,659
|
)
|
|
$
|
36.46
|
|
Forfeited
|
(21,500
|
)
|
|
$
|
35.76
|
|
Unvested at December 31, 2019
|
339,762
|
|
|
$
|
34.14
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest income
|
$
|
250
|
|
|
$
|
334
|
|
|
$
|
425
|
|
Interest expense
|
(4,941
|
)
|
|
(6,794
|
)
|
|
(5,081
|
)
|
|||
Foreign currency gain (loss)
|
(765
|
)
|
|
(800
|
)
|
|
1,013
|
|
|||
Other
|
(135
|
)
|
|
(438
|
)
|
|
76
|
|
|||
Total other expense, net
|
$
|
(5,591
|
)
|
|
$
|
(7,698
|
)
|
|
$
|
(3,567
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
$
|
(22,851
|
)
|
|
$
|
(54,370
|
)
|
|
$
|
(18,059
|
)
|
Foreign
|
1,594
|
|
|
22,110
|
|
|
23,209
|
|
|||
Income (loss) before provision for income tax
|
$
|
(21,257
|
)
|
|
$
|
(32,260
|
)
|
|
$
|
5,150
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
(948
|
)
|
|
$
|
(1,872
|
)
|
|
$
|
10,110
|
|
U.S. State and local
|
561
|
|
|
(59
|
)
|
|
1,079
|
|
|||
Non-U.S.
|
8,386
|
|
|
5,732
|
|
|
12,764
|
|
|||
Total current tax expense
|
7,999
|
|
|
3,801
|
|
|
23,953
|
|
|||
Deferred
|
|
|
|
|
|
||||||
U.S. Federal
|
(7,491
|
)
|
|
(8,248
|
)
|
|
6,345
|
|
|||
U.S. State and local
|
(816
|
)
|
|
(1,751
|
)
|
|
(1,333
|
)
|
|||
Non-U.S.
|
(5,278
|
)
|
|
(3,127
|
)
|
|
(3,522
|
)
|
|||
Total deferred tax expense (benefit)
|
(13,585
|
)
|
|
(13,126
|
)
|
|
1,490
|
|
|||
Total income tax expense (benefit)
|
$
|
(5,586
|
)
|
|
$
|
(9,325
|
)
|
|
$
|
25,443
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
3,035
|
|
|
$
|
3,192
|
|
Credit carryforwards
|
2,415
|
|
|
2,882
|
|
||
Accruals deductible in different periods
|
23,672
|
|
|
15,197
|
|
||
Employee benefits
|
1,554
|
|
|
1,262
|
|
||
Operating leases
|
4,643
|
|
|
—
|
|
||
Total deferred tax assets
|
35,319
|
|
|
22,533
|
|
||
Valuation allowance
|
(606
|
)
|
|
(637
|
)
|
||
Total net deferred tax assets
|
$
|
34,713
|
|
|
$
|
21,896
|
|
Deferred tax liabilities:
|
|
||||||
Basis difference in fixed and intangible assets
|
(13,850
|
)
|
|
(15,687
|
)
|
||
Operating leases
|
(3,959
|
)
|
|
—
|
|
||
Foreign earnings to be repatriated
|
(800
|
)
|
|
(500
|
)
|
||
Total deferred tax liabilities
|
(18,609
|
)
|
|
(16,187
|
)
|
||
Total net deferred tax assets
|
$
|
16,104
|
|
|
$
|
5,709
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Federal statutory tax expense
|
$
|
(4,464
|
)
|
|
$
|
(6,775
|
)
|
|
$
|
1,802
|
|
State tax expense
|
(300
|
)
|
|
(1,160
|
)
|
|
(318
|
)
|
|||
Foreign taxes at rates less than U.S. rates
|
(2,205
|
)
|
|
(1,071
|
)
|
|
(3,101
|
)
|
|||
Deferred charges on sales of U.S. intellectual property
|
—
|
|
|
—
|
|
|
980
|
|
|||
Equity compensation
|
824
|
|
|
519
|
|
|
606
|
|
|||
Tax credits
|
(1,428
|
)
|
|
(2,021
|
)
|
|
(1,498
|
)
|
|||
Uncertain tax position
|
2,910
|
|
|
1,311
|
|
|
2,048
|
|
|||
Lapse of statute
|
(3,961
|
)
|
|
(1,214
|
)
|
|
(1,521
|
)
|
|||
Change of valuation allowance on foreign tax credit
|
—
|
|
|
—
|
|
|
314
|
|
|||
Earnout adjustment
|
—
|
|
|
—
|
|
|
(190
|
)
|
|||
Repatriation tax net of foreign tax credits
|
172
|
|
|
—
|
|
|
16,564
|
|
|||
Net deferred tax asset re-measurement
|
—
|
|
|
—
|
|
|
3,883
|
|
|||
Tax audits
|
—
|
|
|
658
|
|
|
726
|
|
|||
Withholding taxes
|
1,107
|
|
|
1,185
|
|
|
2,880
|
|
|||
Global intangible low-taxed income net of foreign tax credits
|
1,601
|
|
|
2,326
|
|
|
—
|
|
|||
Return to provision
|
560
|
|
|
(1,417
|
)
|
|
711
|
|
|||
AMT on acquisition
|
—
|
|
|
—
|
|
|
621
|
|
|||
SAB 118 adjustments
|
—
|
|
|
(2,676
|
)
|
|
—
|
|
|||
Other
|
(402
|
)
|
|
1,010
|
|
|
936
|
|
|||
Total expense (benefit)
|
$
|
(5,586
|
)
|
|
$
|
(9,325
|
)
|
|
$
|
25,443
|
|
Balance at January 1, 2017
|
$
|
5,898
|
|
Increases for tax positions related to prior years
|
747
|
|
|
Increases for tax positions related to the current year
|
1,712
|
|
|
Lapse of statutes of limitations
|
(1,393
|
)
|
|
Foreign exchange difference
|
53
|
|
|
Balance at January 1, 2018
|
$
|
7,017
|
|
Increases for tax positions related to prior years
|
526
|
|
|
Increases for tax positions related to the current year
|
699
|
|
|
Lapse of statutes of limitations
|
(965
|
)
|
|
Foreign exchange difference
|
(50
|
)
|
|
Balance at January 1, 2019
|
$
|
7,227
|
|
Decreases for tax positions related to prior years
|
(48
|
)
|
|
Increases for tax positions related to the current year
|
495
|
|
|
Lapse of statutes of limitations
|
(3,763
|
)
|
|
Foreign exchange difference
|
6
|
|
|
Balance at December 31, 2019
|
$
|
3,917
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Consolidated Revenue:
|
|
||||||||||
United States
|
$
|
292,400
|
|
|
$
|
300,860
|
|
|
$
|
270,860
|
|
Foreign countries
|
202,775
|
|
|
230,031
|
|
|
230,110
|
|
|||
|
$
|
495,175
|
|
|
$
|
530,891
|
|
|
$
|
500,970
|
|
Revenue by End Market:
|
|
||||||||||
Neuro
|
|
||||||||||
Devices and Systems
|
$
|
220,306
|
|
|
$
|
200,762
|
|
|
$
|
171,315
|
|
Supplies
|
66,059
|
|
|
67,025
|
|
|
59,955
|
|
|||
Services
|
871
|
|
|
12,000
|
|
|
11,886
|
|
|||
Total Neuro Revenue
|
$
|
287,236
|
|
|
$
|
279,787
|
|
|
$
|
243,156
|
|
Newborn Care
|
|
||||||||||
Devices and Systems
|
$
|
53,465
|
|
|
$
|
72,807
|
|
|
$
|
89,027
|
|
Supplies
|
38,264
|
|
|
40,669
|
|
|
43,928
|
|
|||
Services
|
19,183
|
|
|
20,396
|
|
|
22,325
|
|
|||
Total Newborn Care Revenue
|
$
|
110,912
|
|
|
$
|
133,872
|
|
|
$
|
155,280
|
|
Hearing & Balance
|
|
||||||||||
Devices and Systems
|
$
|
92,050
|
|
|
$
|
110,597
|
|
|
$
|
75,466
|
|
Supplies
|
4,977
|
|
|
6,635
|
|
|
27,068
|
|
|||
Services
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Hearing & Balance Revenue
|
$
|
97,027
|
|
|
$
|
117,232
|
|
|
$
|
102,534
|
|
Total Revenue
|
$
|
495,175
|
|
|
$
|
530,891
|
|
|
$
|
500,970
|
|
|
Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property and equipment, net:
|
|
|
|
||||
United States
|
$
|
11,868
|
|
|
$
|
10,019
|
|
Ireland
|
5,732
|
|
|
5,083
|
|
||
Canada
|
4,140
|
|
|
4,504
|
|
||
Denmark
|
1,799
|
|
|
1,371
|
|
||
Argentina
|
—
|
|
|
999
|
|
||
Other foreign countries
|
1,163
|
|
|
937
|
|
||
|
$
|
24,702
|
|
|
$
|
22,913
|
|
|
December 31, 2018
|
|
Additions
|
|
Payments
|
|
Adjustments
|
|
December 31, 2019
|
||||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loan receivable
|
$
|
—
|
|
|
$
|
2,200
|
|
|
$
|
—
|
|
|
$
|
(294
|
)
|
|
$
|
1,906
|
|
Total
|
$
|
—
|
|
|
$
|
2,200
|
|
|
$
|
—
|
|
|
$
|
(294
|
)
|
|
$
|
1,906
|
|
|
December 31, 2018
|
|
Additions
|
|
Payments
|
|
Adjustments
|
|
December 31, 2019
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Rate Swap
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
236
|
|
|
$
|
313
|
|
Total
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
236
|
|
|
$
|
313
|
|
|
|
|
|
Incorporated By Reference
|
|||||||
Exhibit No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit No.
|
|
File No.
|
|
File Date
|
|
|
|
S-1
|
|
3.1.1
|
|
|
333-44138
|
|
8/18/2000
|
||
|
|
8-K
|
|
3.1
|
|
|
000-33001
|
|
9/13/2012
|
||
|
|
8-K
|
|
3.1
|
|
|
000-33001
|
|
6/7/2019
|
||
|
|
8-K
|
|
3.1
|
|
|
000-33001
|
|
12/16/2019
|
||
|
|
S-1/A
|
|
4.1
|
|
|
333-44138
|
|
2/9/2001
|
||
|
|
8-A
|
|
3.1.2
|
|
|
000-33001
|
|
9/6/2002
|
||
|
|
|
|
|
|
|
|
|
|||
|
|
S-1
|
|
10.1
|
|
|
333-44138
|
|
8/18/2000
|
||
|
|
8-K
|
|
10.1
|
|
|
000-33001
|
|
12/18/2018
|
||
|
|
8-K
|
|
10.1.1
|
|
|
000-33001
|
|
12/18/2018
|
||
|
|
8-K
|
|
10.1.2
|
|
|
000-33001
|
|
12/18/2018
|
||
|
|
8-K
|
|
10.1.3
|
|
|
000-33001
|
|
12/18/2018
|
||
|
|
8-K
|
|
10.1.4
|
|
|
000-33001
|
|
12/18/2018
|
||
10.2*
|
|
|
8-K
|
|
10.1
|
|
|
000-33001
|
|
1/4/2006
|
|
|
|
S-1
|
|
10.3.1
|
|
|
333-44138
|
|
8/18/2000
|
||
|
|
10-Q
|
|
10.2
|
|
|
000-33001
|
|
8/9/2006
|
||
|
|
10-K
|
|
10.2.3
|
|
|
000-33001
|
|
3/14/2008
|
||
10.3*
|
|
|
10-Q
|
|
10.02
|
|
|
000-33001
|
|
5/9/2008
|
|
|
|
S-1
|
|
10.4.1
|
|
|
333-44138
|
|
8/18/2000
|
||
10.4*
|
|
|
S-1
|
|
10.15
|
|
|
333-44138
|
|
2/9/2001
|
|
|
|
S-1
|
|
10.15.1
|
|
|
333-44138
|
|
2/9/2001
|
|
|
|
|
Incorporated By Reference
|
Exhibit No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit No.
|
|
File No.
|
|
File Date
|
|
10.5*
|
|
|
8-K
|
|
10.2
|
|
|
000-33001
|
|
1/4/2006
|
|
10.6*
|
|
|
14-A
|
|
—
|
|
|
000-33001
|
|
4/20/2011
|
|
|
|
10-Q
|
|
10.1
|
|
|
000-33001
|
|
11/7/2011
|
||
|
|
10-Q
|
|
10.2
|
|
|
000-33001
|
|
11/7/2011
|
||
|
|
10-Q
|
|
10.3
|
|
|
000-33001
|
|
11/7/2011
|
||
10.7*
|
|
|
14-A
|
|
—
|
|
|
000-33001
|
|
4/20/2011
|
|
|
|
14-A
|
|
—
|
|
|
000-33001
|
|
4/20/2011
|
||
10.8*
|
|
|
10-K
|
|
10.10
|
|
|
000-33001
|
|
3/10/2009
|
|
|
|
10-K
|
|
|
|
000-33001
|
|
3/16/2015
|
|||
10.9*
|
|
|
8-K
|
|
99.1
|
|
|
000-33001
|
|
4/22/2013
|
|
|
|
10-Q
|
|
10.16
|
|
|
000-33001
|
|
8/8/2018
|
||
|
|
8-K
|
|
10.1
|
|
|
000-33001
|
|
10/9/2015
|
||
|
|
10-Q
|
|
|
|
000-33001
|
|
2/29/2016
|
|||
|
|
10-Q
|
|
10.2
|
|
|
000-33001
|
|
11/3/2016
|
||
|
|
10-Q
|
|
10.1
|
|
|
000-33001
|
|
11/3/2016
|
||
|
|
10-Q
|
|
10.3
|
|
|
000-33001
|
|
11/3/2016
|
||
|
|
8-K
|
|
99.1
|
|
|
000-33001
|
|
8/29/2018
|
||
|
|
10-Q
|
|
10.18
|
|
|
000-33001
|
|
11/8/2018
|
||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated By Reference
|
||||||
Exhibit No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit No.
|
|
File No.
|
|
File Date
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
101
|
|
The following financial information from Natus Medical Incorporated Annual Report on Form 10-K for the fiscal year ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018, (ii) Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017 (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, (v) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017, and (vi) the Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
104
|
|
The cover page of the Annual Report on Form 10-K formatted in Inline XBRL (included in Exhibit 101).
|
|
|
|
|
|
|
|
|
•
|
Prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
Upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
At or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock which is not owned by the interested stockholder.
|
|
|
|
|
|
|
|
Date:
|
March 2, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jonathan A. Kennedy
|
|
|
|
|
|
|
Jonathan A. Kennedy
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date:
|
March 2, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ B. Drew Davies
|
|
|
|
|
|
|
B. Drew Davies
|
|
|
|
|
|
|
Executive Vice President
|
|
|
|
|
|
|
and Chief Financial Officer
|
|
|
/s/ Jonathan A. Kennedy
|
|
Print Name: Jonathan A. Kennedy
|
|
Title: President and Chief Executive Officer
|
|
Date:
|
March 2, 2020
|
|
|
/s/ B. Drew Davies
|
|
Print Name: B. Drew Davies
|
|
Title: Executive Vice President and Chief Financial Officer
|
|
Date:
|
March 2, 2020
|