Natus Acquires Embla Systems

Natus Medical Incorporated (Nasdaq:BABY) today 9/16/2011 announced that it has acquired Embla Systems LLC, a leader in the development, manufacturing, and sales of devices used in the diagnosis of apnea. Embla is the largest company in the world focused solely on diagnostics ( or PSG and ). The company offers a wide spectrum of innovative sleep diagnostic solutions including Embletta sleep testing devices and three leading PSG platforms: Sandman, REMbrandt, and RemLogic, and Enterprise Sleep Business Management Systems. This breadth of product offerings provides a unique set of tools to help optimize the efficiency of sleep labs.

Natus acquired all outstanding shares of Embla capital stock for $16.1 million in cash, exclusive of direct costs of the acquisition. Embla reported revenue of approximately $30 million for its fiscal year ended December 31, 2010.

Natus expects the acquisition will be accretive to earnings in 2012, adding $0.08 to non-GAAP earnings per share for the year. The non-GAAP results will exclude amortization of acquired intangible assets and potential restructuring and other one-time charges related to the acquisition.

“The Embla acquisition affirms our leadership position in diagnostic neurology products,” said Jim Hawkins, Chief Executive Officer of Natus. “With this acquisition, Natus will now hold the number one position in the worldwide sleep diagnostic market with annual revenue approaching $35 million.”

“Additionally, with approximately 40% of Embla’s revenue coming from international markets, this acquisition positions Natus as the leader in sleep diagnostics outside the United States,” added Hawkins. “More than 100 million people worldwide are suspected to have obstructive . Because of lack of awareness among both patients and physicians more than 80% of those affected remain undiagnosed.”

Natus funded the acquisition through available cash. The purchase price is subject to adjustment based on net working capital as of the purchase date.

Sleep Apnea

Sleep apnea is a sleep disorder characterized by abnormal pauses in breathing or instances of abnormally low breathing during sleep. There are three forms of sleep apnea: central (CSA), obstructive (OSA), and complex or mixed sleep apnea (i.e., a combination of central and obstructive) constituting 0.4%, 84% and 15% of cases respectively. Studies have shown that as many as one in every 15 Americans is affected by at least moderate sleep apnea. One study showed that in middle-age as many as 9% of women and 24% of men were affected, undiagnosed, and untreated. Conditions linked to obstructive sleep apnea include coronary artery disease, congestive heart failure, hypertension, pulmonary hypertension, stroke, and clinical depression, as well as other illnesses including asthma, chronic obstructive pulmonary disease, and diabetes mellitus.

About Embla

Embla Systems began development of medical devices for the detection of sleep apnea beginning in the mid 1990′s. The company has consistently developed innovative products to assist sleep labs in the diagnosis of the condition. In international markets the company is a leader in devices used for sleep studies performed in the patient’s home. With headquarters in Denver, Colorado, the company also has facilities near Buffalo, New York; Ottawa, Ontario, Canada; the Netherlands; and Germany.

Additional information about Embla can be found at http://www.embla.com.

Additional information about Natus Medical can be found at www.natus.com.

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