Shares in Natus Medical (NSDQ:BABY), which said today that it agreed to put up $145 million for GN Store Nord‘s (CPH:GN) otometrics hearing and balance diagnostics business, plunged today after Natus cut its 3rd-quarter guidance due to a voluntary shipment hold at its Seattle facility.
Pleasanton, Calif.-based Natus said it plans to fund the GN Otometrics buyout with a $150 million credit revolver from JP Morgan Chase and Citibank, plus offshore cash. The deal is expected to close by the end of 2016.
“Otometrics has several leading brands and has introduced many industry firsts,” president & CEO Jim Hawkins said in prepared remarks. “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 said it now expects 3rd-quarter sales of $89 million to $91 million, down from prior guidance of $97 million to $98 million, due mostly to the shipment hold in Seattle and partly to softer international demand. The shipping hold is in place while the company “remediates deficiencies in its engineering and manufacturing quality processes,” Natus said, noting that the problems are not safety-related. Shipment is expected to resume during the 4th quarter and early next year.
“We are committed to bringing our Seattle design and manufacturing systems up to required regulatory standards and we have placed a voluntary ship hold on certain products that are produced in Seattle,” Hawkins said. “While we continue to take orders, we will not ship affected products until we have completed the remediation process,” Mr. Hawkins continued.
BABY shares were down -11.1% to $39.10 apiece today in early trading.