Robbins Geller Rudman & Dowd LLP Updates Investors Regarding Class Action Suit Against Natus Medical Incorporated

SAN DIEGO, March 14, 2017

If you wish to serve as lead plaintiff in this case, you must move the Court no later than 60 days from January 30, 2017, or by March 31, 2017.  Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.  If you would like to discuss this case or your options, please contact plaintiff's counsel, David C. Walton of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at davew@rgrdlaw.com.  If you are a member of this class, you can view a copy of the complaint as filed at http://www.rgrdlaw.com/cases/natus/. 

The complaint alleges that Natus and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing false and misleading statements and/or failing to disclose adverse information regarding the Company's business and prospects, including, among other things, that: (i) the Venezuelan government had failed to make tens of millions of dollars in prepayments to Natus, which were required to have been paid beginning in October 2015; (ii) Natus had no means to effectively enforce its rights under its supply contract with the Venezuelan Ministry of Health ("Supply Contract"), as Venezuela was the exclusive forum for dispute resolution; (iii) Natus's receipt of revenues pursuant to the Supply Contract was contingent on the outcome of Venezuelan elections; and (iv) as a result of the foregoing, Natus was not on track to achieve the increased guidance provided by defendants and such guidance lacked a reasonable basis. 

On January 11, 2016, Natus revealed that it expected to fall short of its fourth quarter and fiscal year 2015 guidance and disclosed that "[t]he guidance provided by the Company in October for the fourth quarter of 2015 included expected revenue of approximately $4 million under the new Venezuelan Ministry of Health contract," but "[t]he Company was not able to ship product on the anticipated schedule because the prepayment under the contract was delayed."  On this revelation, the price of Natus common stock declined almost $5 per share, or 11%.

One month later, on February 29, 2016, Natus filed its Annual Report on Form 10-K for fiscal year 2015 with the SEC, which disclosed that elections in Venezuela and Argentina and Venezuela's "highly inflationary economy and recessionary economic conditions" "may impact the likelihood of the Venezuelan Ministry of Health's following through with orders under the agreement, and [Natus's Argentinian subsidiary] ha[d] not yet received any prepayments under the agreement and no products or services ha[d] been shipped or provided."  The Company attached a copy of the Supply Contract to the 10-K, which disclosed that $69 million in prepayments had been due by the end of 2015 and not the first quarter of 2016, as defendants had represented, and revealed that the Supply Contract was governed solely by Venezuelan law, meaning the Venezuelan government could unilaterally renege on all aspects of the agreement.

Then, on April 4, 2016, Natus issued a press release pre-announcing its preliminary first quarter 2016 results.  The release disclosed that revenue would be below the Company's previous guidance and that Natus did not have "'any revenue associated with the Venezuela Ministry of Health contract as [it] did not receive any prepayments during the quarter.'"  On this news, the price of Natus stock declined $7.80 per share, or nearly 20%, to close at $31.84 per share on April 4, 2016.