Natus plans to increase newborn hearing testing outside the U.S.

By Jennifer Lanning Drey

Eugene, Ore., June 14 - Natus Medical, Inc. plans to increase usage of its newborn hearing screening technology in foreign countries and underdeveloped markets, according to Jim Hawkins, president and chief executive officer of the company.

The company currently provides a disposable test that is used in 80% of hearing screenings performed on babies in the United States, said Hawkins, speaking at the Pacific Growth Equities 2006 Life Sciences Growth Conference on Wednesday.

"There are a lot of countries that have yet to take this on or are just starting," he said.

Those countries, which include Japan, Australia, France and Belgium, provide an opportunity to increase usage of Natus' products, Hawkins said.

"Once they start these programs, it's really quite predictable that it's only going to go one way - that they are going to do more tests because the population just demands it," he said.

Natus' technology that is typically used in foreign countries costs $1 per baby and detects about 97% of hearing problems, Hawkins said.

The company earns $8 per baby from the technology used in the United States and discovers almost 100% of hearing problems in newborns, he said.

As hearing-screening programs become more established in foreign countries, the 3% failure rate is likely to become unacceptable, he said.

In underdeveloped countries, less than 1% of babies are currently tested for hearing problems, and through government funding and other forms of aid, those countries are also likely to provide profitable markets, Hawkins said.

Newborn hearing screenings account for about 50% of Natus' revenues in the United States.

High-growth mode

Natus has been in a high-growth mode for the past few years, according to Hawkins.

The company's model for future growth involves coupling strong product developments with acquisitions, he said.

Natus announced the acquisition of Bio-Logic System Corp. earlier this year that allowed Natus to supplement its screening technology with diagnostic hearing products created by Bio-Logic.

The acquisition also created opportunities for Natus in market areas including EEG monitoring for neurology and sleep diagnostics, Hawkins said.

Natus is currently working to advance new hearing loss detection testing that pediatricians can use to screen for hearing loss in infants, toddlers and pre-school age children, he said.

The company has partnered with Welch Allyn Inc. to deliver the product.

Natus, a developer and marketer of products for the detection, treatment and tracking of common disorders in newborns and children, has headquarters in San Carlos, Calif.

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