Natus Medical is among the many small medtech firms that have been hit hard by skyrocketing supply chain costs.
The Middleton, WI-based medical device company is now getting scooped up by ArchiMed, a European private equity (PE) firm, in a deal valued at about $1.2 billion (or $33.50 a share). Natus makes devices designed to screen, diagnose, and treat disorders affecting the brain, neural pathways, and sensory nervous systems.
Last November Natus emphasized supply chain challenges during its fourth-quarter 2021 earnings call. Then, in December, the company hired a new CEO, Tom Sullivan, who was charged with steering Natus through a strategic realignment.
Jayson Bedford, an equity research analyst at Raymond James, said the timing of the ArichiMed-Natus deal came as a bit of a surprise given the recent CEO change and the beginning of the strategic realignment.
Bedford noted in a report published Monday that Natus has struggled to generate consistent top-line growth, despite a steady cash flow. Sullivan had started an ambitious plan to re-position Natus and communicated a desire to accelerate revenue growth to the 5% to 6% range, the analyst reported.
In terms of broader medtech trends, Bedford said he is reluctant to read too much into this deal given that Natus is viewed as a bit of a "one off," with virtually no direct public competitors.
"That said, it is nice to see that PE is taking more of an interest in the group," Bedford wrote.
Natus canceled its first-quarter earnings call in light of the pending ArchiMed deal, but noted in a press release Monday that it was hit with $3.4 million of "extraordinary" supply chain costs associated with buying semiconductors in the first quarter. Still, the company reported preliminary first-quarter revenue of $119.8 million, up 4.3% year-over-year.
Shares of Natus Medical shot up to nearly 29% ($7.52) in trading Monday as of publication time. The offer represents a 28.6% premium to Thursday's closing price of $26.05.
The acquisition is slated to close in the third quarter but Natus will have a 30-day go-shop period (through May 17) in which it can solicit competing bids. Bedford said he does not expect another buyer to emerge.