It can't really do anything about the birth rates, and the warning letter should be resolved next year, which leaves increasing margins at Peloton as the most critical factor investors should be watching. Natus hit a triple whammy of lower birth rates, an ongoing warning letter that's reducing revenue and increasing costs, and a lower reimbursement for Peloton. Kennedy noted: "We have to look at the overall profitability of that business and when it makes sense to pursue a service model or pursue a hardware-and-supplies model, and that's going to be in the hospital by hospital case." Looking forward In hospitals where there aren't enough births, or reimbursement isn't high enough to produce a profit by offering outsourcing to the hospitals, Natus has the ability to switch back to just selling its hearing screener and make money from disposables. So that will expand basically our offering and increase our margin there. To combat that, we've just introduced, this last quarter, a new service where we're going to screen the babies, but then also there's an additional test that we do that we'll charge the hospital for just a flat fee per baby. Management has a plan to increase margins at Peloton by adding additional services that hospitals might want to outsource, explained Jonathan Kennedy, Natus Medical's CFO, EVP, and general manager of newborn care: Is this your business Customize this page.
The lower profitability was caused by continued costs to deal with the FDA warning letter at its facility in Seattle, which Natus Medical hopes to be resolved next year. Natus Medical Inc (650) 802-6601 Visit Website Map & Directions 1501 Industrial Rd San Carlos, CA 94070 Write a Review.Management blamed the lack of revenue growth from the legacy business on lower birth rates and lower reimbursement for hearing screening done by Peloton, its hearing-services business.Otometrics is on its way to achieving a 10% adjusted operating profit margin this year with a goal of expanding that to 20% next year. Management noted that it was the first time that Otometrics was profitable in the first quarter, so it's headed in the right direction under its new leadership.The new segment, which sells hearing-diagnostic, hearing-aid fitting, and balance-assessment products, was "slightly" profitable, so it didn't contribute much to the earnings line. The revenue growth came from Otometrics, which became part of Natus Medical in the beginning of January.What happened with Natus Medical this quarter?
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