NATUS MEDICAL INCORPORATED Overview
The following Management Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") supplements the MD&A in our Annual Report on Form
10-K for the year ended December 31, 2020 . MD&A should be read in conjunction
with our condensed consolidated financial statements and accompanying footnotes,
the risk factors referred to in Part II, Item 1A of this report, our Annual
Report filed on Form 10-K for the year ended December 31, 2020 and the
cautionary information regarding forward-looking statements at the end of this
section.
Our Business
We are a leading provider of medical device solutions focused on the diagnosis
and treatment of central nervous and sensory system disorders for patients of
all ages.
End Markets
Our products address the below end markets:
•Neuro - Includes products and services that provide diagnostic, therapeutic and
surgical solutions in neurodiagnostics, neurocritical care and neurosurgery.
Neuro's comprehensive neurodiagnostic solutions include electroencephalography
and long-term monitoring, Intensive Care Unit monitoring, electromyography,
sleep analysis or polysomnography, and intraoperative monitoring. These
solutions enhance the diagnosis of neurological conditions such as epilepsy,
sleep disorders and neuromuscular diseases. Our neurocritical care solutions
include management of traumatic brain injury by continuous monitoring of
intracranial pressure and cerebrospinal fluid drainage, as well as cranial
access kits for entry into the cranium. Our neurosurgical solutions include
items such as valves, shunts and related treatment solutions for procedures
involving hydrocephalus.
•Newborn Care - Includes products and services for newborn care including
hearing screening, brain monitoring, eye imaging, jaundice management, and
various disposable newborn care supplies.
•Hearing & Balance - The Hearing portfolio includes products for hearing
assessment and diagnostics, and
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hearing aid fitting, including computer-based audiological, otoneurologic and
vestibular instrumentation for hearing care professionals. Our Balance portfolio
provides diagnosis and assessment of vestibular and balance disorders. These
solutions have a complete product and brand portfolio known for its
sophisticated design technology in the hearing and balance assessment markets.
Segment and Geographic Information
We operate as one operating segment and one reportable segment, which provides
healthcare products, and services focused on the diagnosis and treatment of
central nervous and sensory system disorders for patients of all ages. Financial
information is reviewed on a consolidated basis for purposes of making operating
decisions and assessing financial performance. Consolidated financial
information is accompanied by disaggregated information about revenues by end
market and geographic region. We do not assess the performance of our end
markets or geographic regions on measures of profit or loss, or asset-based
metrics. We have disclosed the revenues for each of our end markets and
geographic regions to provide the reader of the financial statements
transparency into our operations.
Information regarding our revenues and long-lived assets in the U.S. and in
countries outside the U.S. is contained in Note 14 - Segment, Customer and
Geographic Information of our condensed consolidated financial statements
included in this report and is incorporated in this section by reference.
Revenue by Product Category
We generate our revenue from sales of Devices and Systems, which are generally
non-recurring, and from related Supplies and Services, which are generally
recurring. The products that are attributable to these categories are described
in our Annual Report on Form 10-K for the year ended December 31, 2020 . Revenue
from Devices and Systems, Supplies, and Services, as a percent of total revenue
for the three and six months ended June 30, 2021 and 2020, is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Devices and Systems 75 % 71 % 75 % 72 %
Supplies 22 % 24 % 22 % 24 %
Services 3 % 5 % 3 % 4 %
Total 100 % 100 % 100 % 100 %
2021 Second Quarter Overview
Our business and operating results are driven in part by worldwide economic
conditions. Our revenue is significantly dependent on both capital spending by
hospitals in the United States and healthcare spending by ministries of health
outside the United States .
We experienced an increase in demand in the United States , Asia Pacific and
Europe , during the second quarter compared to the same period in the prior year
as recovery from the COVID-19 pandemic continues. Our consolidated revenue for
the second quarter ended June 30, 2021 was $116.0 million compared to $84.8
million in the second quarter of the previous year, an increase of $31.2
million .
Our net income was $3.5 million or $0.10 per diluted share in the three months
ended June 30, 2021 , compared with net loss of $8.9 million or $0.26 per share
in the same period in 2020. The increase in net income was the result of higher
revenue due to the recovery from impact of COVID-19, in particular for Neuro
products, partly offset by higher expenses due to increase in commissions and
travel compared to the same period last year as sales activity increased and
impact of required paid time-off in 2020 not repeating in 2021.
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COVID-19 Update
Healthcare providers and patients continue to depend on our products and
services every day. Our team members and partners are continuing to maintain our
supply chain, manufacturing and delivery of our products and services. The
health and welfare of our employees, our customers and our partners remain our
top priority as we continue our business operations.
We have implemented safeguards in our facilities to protect team members,
including social distancing practices, work from home and other measures
consistent with specific regulatory requirements and guidance from health
authorities. As an essential supplier of healthcare products and services, all
of our manufacturing, engineering and customer support functions remain fully
operational and will continue to support customers with vital supplies, service
and equipment. We will continue to prioritize spending to allow continued
investment in products and services that are key elements of our stated strategy
for profitable growth in the years ahead.
Impact to our supply chain
Many of our materials are single source and require lengthy qualification
periods. Disruptions in our supply chain could negatively impact our ability to
produce and supply our finished products. To date, we have experienced some
extended lead times and delays in receiving supplies and finished goods.
However, we have not yet experienced supply disruptions that are material enough
to change our revenue expectations. We are working closely with our suppliers to
manage orders and proactively minimize delays in the materials we require to
meet our demand.
Liquidity
In the first quarter of 2020 we drew $60.0 million on our credit line as a
precaution to ensure we have the necessary capital to continue to reliably serve
our customers during an extended period of uncertainty of which $43.0 million
was repaid by December 31, 2020 . During the third quarter of 2020 we amended our
Credit Agreement which extended the maturity date of the original agreement from
September 23, 2021 to September 25, 2023 , reduced the aggregate revolving credit
facility from $225.0 million to $150.0 million , and amended certain covenants.
During 2021, we repaid the full outstanding debt balance of $57.0 million under
our Credit Agreement and continued to maintain a strong cash position ending the
period with $62.5 million in cash.
As a result of the COVID-19 pandemic, some hospitals and clinics delayed
payments for products and services and we have worked with our customers to
arrange mutually acceptable payment terms during this uncertain time. We have
seen revenues and margins improve since the onset of the pandemic. We continue
to see our customers adapting to the COVID environment, which we believe will
result in increased capital spending and continue to improve our business in
2021. As of the date of this filing, uncertainty continues to exist concerning
the impact and duration of the COVID-19 pandemic, including the emergence of
variant strains of the virus, such as the Delta variant.
While we believe that we have sufficient liquidity to operate the Company for
the foreseeable future should negative economic conditions persist for an
extended period of time, we are evaluating additional measures we could take to
further enhance our liquidity position.
Government Grants
Various government programs have been announced to provide financial relief for
businesses affected by COVID-19 including the CEWS under the COVID-19 Economic
Response Plan in Canada . We received $2.9 million for payroll subsidies under
CEWS during the three months ended March 31, 2021 . Our policy is to account for
these subsidies in the same manner as an offset to the expense they relate to in
the period in which we are reasonably assured to receive payment. For the three
months ended March 31, 2021 we recognized reductions of $0.4 million of cost of
sales, $1.3 million of marketing and selling expense, and $1.2 million of
research and development expense in the condensed consolidated statements of
operations for these subsidies. No payroll subsidies were received or recognized
under CEWS in prior periods. As of June 30, 2021 we have collected all amounts
recorded and continue to seek additional relief as applicable.
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Impact to fair-value of intangible assets
We have reviewed the assets on our balance sheet, particularly goodwill and
significant intangible assets for indications of impairment related to COVID-19
and determined that there are no indicators of impairment at this time. The
values of these assets are particularly sensitive to our market cap and the
long-term value of their cash flows. If these conditions change significantly,
we may need to record an impairment to their value. However, any impairment
charges would not require the use of cash and are excluded from the calculation
of our debt covenants and, therefore, would not affect our ability to borrow
under our existing credit line.
Travel restrictions and use of online technology
The global Natus team is geographically diverse with multiple small locations
and hundreds of employees that typically work from home in normal circumstances.
We use the latest collaboration technology and have been able to transition to a
company-wide work from home model without major interruption. Our manufacturing,
distribution and field service operations require physical presence of certain
employees as their work requires them to handle our products. In these cases, we
have made adjustments to shift size and schedule and limited access to these
groups by non-related employees. Our field service technicians are following our
customers' requirements for distancing practices but continue to provide service
where needed.
Travel restrictions have forced most customer and external partner collaboration
to online technology. Using this technology has enabled us to continue
operations without incident. However, in-person customer engagement as well as
physical presence in laboratory settings is returning and becoming more frequent
over the course of 2021.
Application of Critical Accounting Policies
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America . In so doing, we must often
make estimates and use assumptions that can be subjective, and, consequently,
our actual results could differ from those estimates. For any given individual
estimate or assumption we make, there may also be other estimates or assumptions
that are reasonable.
We believe that the following critical accounting policies require the use of
significant estimates, assumptions, and judgments:
•Revenue recognition
•Inventory valuation
•Income Taxes
The use of different estimates, assumptions, or judgments could have a material
effect on the reported amounts of assets, liabilities, revenue, expenses, and
related disclosures as of the date of the financial statements and during the
reporting period. These critical accounting policies are described in more
detail in our Annual Report on Form 10-K for the year ended December 31, 2020 ,
under Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
The following table sets forth selected consolidated statement of operations
data as a percentage of total revenue for the periods indicated:
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Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Revenue 100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenue 41.3 % 50.2 % 40.9 % 45.1 %
Intangibles amortization 1.5 % 2.0 % 1.5 % 1.7 %
Gross profit 57.3 % 47.8 % 57.6 % 53.2 %
Operating expenses:
Marketing and selling 25.4 % 26.9 % 25.3 % 27.6 %
Research and development 12.3 % 16.9 % 12.3 % 16.4 %
General and administrative 10.9 % 13.2 % 11.9 % 12.6 %
Intangibles amortization 3.4 % 4.3 % 3.4 % 3.8 %
Restructuring 0.1 % 0.7 % 0.1 % 0.8 %
Total operating expenses 52.1 % 62.0 % 53.0 % 61.2 %
Income (loss) from operations 5.2 % (14.2) % 4.6 % (8.0) %
Other expense, net (0.6) % (0.9) % (1.0) % (1.2) %
Income (loss) before provision for income tax 4.6 % (15.1) % 3.6 % (9.2) %
Provision for (benefit from) income taxes 1.6 % (4.6) % 1.0 % (2.6) %
Net income (loss) 3.0 % (10.5) % 2.6 % (6.6) %
Revenues
The following table shows revenue by products during the three and six months
ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 Change 2021 2020 Change
Neuro Products
Devices and Systems $ 53,945 $ 33,175 63 % $ 107,472 $ 82,603 30 %
Supplies 16,509 10,373 59 % 32,224 26,296 23 %
Total Neuro Revenue 70,454 43,548 62 % 139,696 108,899 28 %
Newborn Care Products
Devices and Systems 14,117 13,899 2 % 27,715 25,023 11 %
Supplies 8,184 8,933 (8) % 16,586 18,624 (11) %
Services 4,046 4,085 (1) % 7,810 7,502 4 %
Total Newborn Care Revenue 26,347 26,917 (2) % 52,111 51,149 2 %
Hearing & Balance Products
Devices and Systems 17,782 13,599 31 % 36,540 32,159 14 %
Supplies 1,395 716 95 % 2,557 1,956 31 %
Total Hearing & Balance Revenue 19,177 14,315 34 %
39,097 34,115 15 % Total Revenue$ 115,978 $ 84,780 37 %$ 230,904 $ 194,163 19 % For the three months endedJune 30, 2021 , Neuro revenue increased by 62% compared to the same period last year driven by higher sales of devices and supplies as the business recovered from the impact of COVID-19 in 2020. For the three months endedJune 30, 2021 , Newborn Care revenue decreased by 2% compared to the same period last year due mainly to a decrease in NICVIEW device sales as the same period last year included release of backlog resulting from prior ship hold, partly offset by increased in Eye Imaging devices, Hearing Screening devices and revenue from our agreement with Pediatrix. -20- -------------------------------------------------------------------------------- Table of Contents For the three months endedJune 30, 2021 , Hearing & Balance revenue increased 34% compared to the same period last year due to device and supply sales as the business recovered from the impact of the COVID-19 pandemic in 2020. For the six months endedJune 30, 2021 , Neuro revenue increased 28% compared to the same period last year due to recovery from the impact of the COVID-19 pandemic in 2020 in both our domestic and international markets. For the six months endedJune 30, 2021 , Newborn Care revenue increased by 2% compared to the same period last year. The increase was due mainly to higher services revenue from our agreement with Pediatrix, higher Hearing Screening device sales, and higher Eye Imaging device sales, partly offset by decreases in Hearing Screening supplies and Phototherapy devices due to lower births and lower services revenue from Neometrics. For the six months endedJune 30, 2021 , Hearing & Balance revenue increased by 15% compared to the same period last year as the business recovered from the impact of the COVID-19 pandemic in 2020. Revenue from domestic sales increased to$70.7 million for the three months endedJune 30, 2021 compared to$51.2 million in the three months endedJune 30, 2020 . The increase was driven by recovery in demand, mainly for our Neuro products, following the impact of the COVID-19 pandemic in the same period last year. Revenue from international sales increased to$45.2 million for the three months endedJune 30, 2021 compared to$33.6 million for the three months endedJune 30, 2020 . The increase was driven by recovery in demand, mainly for our Neuro and Hearing & Balances products, following the impact of the COVID-19 pandemic in the same period last year. Cost of Revenue and Gross Profit Cost of revenue and gross profit consists of (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Revenue$ 115,978 $ 84,780 $ 230,904 $ 194,163 Cost of revenue 47,843 42,573 94,531 87,506 Intangibles amortization 1,734 1,654 3,485
3,322
Gross profit 66,401 40,553 132,888 103,335
Gross profit percentage 57.3 % 47.8 % 57.6
% 53.2 %
For the three and six months endedJune 30, 2021 , gross profit as a percentage of revenue increased 9.5% and 4.4% compared to the same period in the prior year, respectively. The increase was due to higher revenue resulting from recovery from the impact of the COVID-19 pandemic. Operating Costs Operating costs consist of (in thousands): -21-
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Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Marketing and selling $ 29,488 $ 22,802 $ 58,459 $ 53,532
Percentage of revenue 25.4 % 26.9 % 25.3 % 27.6 %
Research and development $ 14,249 $ 14,336 $ 28,289 $ 31,905
Percentage of revenue 12.3 % 16.9 % 12.3 % 16.4 %
General and administrative $ 12,610 $ 11,187 $ 27,462 $ 24,368
Percentage of revenue 10.9 % 13.2 % 11.9 % 12.6 %
Intangibles amortization $ 3,919 $ 3,644 $ 7,816 $ 7,305
Percentage of revenue 3.4 % 4.3 % 3.4 % 3.8 %
Restructuring $ 121 $ 621 $ 327 $ 1,492
Percentage of revenue 0.1 % 0.7 % 0.1 % 0.8 %
Marketing and Selling
Marketing and selling expenses increased for the three and six months ended
June 30, 2021 . The increase was primarily driven by higher commissions and
travel expenses resulting from increased commercial activity compared to the
same periods last year. In addition, the benefit of required paid time-off
during the three and six months ended June 30, 2020 was not repeated in the
current year.
Research and Development
Research and development expenses decreased slightly during the three and six
months ended June 30, 2021 compared to the same period in 2020. The decrease is
the result of lower project spend due to timing partly offset by the benefit of
required paid-time off during the three and six months ended June 30, 2020 was
not repeated in the current year.
General and Administrative
General and administrative expense during the three and six months ended
June 30, 2021 increased when compared to the same period in the prior year. This
increase was due to higher stock compensation and incentive compensation.
Intangibles Amortization
Intangibles amortization remained flat during the three and six months ended
June 30, 2021 as compared to the same period in 2020.
Restructuring
Restructuring expenses decreased during the three and six months ended June 30,
2021 compared to the same period in 2020. The decrease in the three and six
months ended June 30, 2021 was primarily driven by lower severance costs and
costs incurred as the result of exiting the Peloton business in 2020, which did
not recur in 2021.
Other Expense, net
Other expense, net consists of investment income, interest expense, net currency
exchange gains and losses, and other miscellaneous income and expense. For the
three months ended June 30, 2021 we reported $0.7 million of other expense
compared to $0.8 million of other expense for the same period in 2020. The
decrease in expense was driven by less interest expense offset by an equity
method investment adjustment.
Provision for (Benefit from) Income Tax
Our tax provision for interim periods is determined using an estimated annual
effective tax rate, adjusted for discrete events arising in each respective
quarter. During each interim period, we update the estimated annual
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effective tax rate which is subject to significant volatility due to several
factors, including our ability to accurately predict the income (loss) before
provision for income taxes in multiple jurisdictions, the effects of
acquisitions, the integration of those acquisitions, and changes in tax law. In
circumstances where we are unable to predict income (loss) in multiple
jurisdictions, the actual year to date effective tax rate may be the best
estimate of the annual effective tax rate for purposes of determining the
interim provision for income tax.
We recorded income tax expense of $1.9 million and $2.4 million for the three
and six months ended June 30, 2021 , respectively. The effective tax rate was
35.4% and 28.8% for the three and six months ended June 30, 2021 , respectively.
We recorded a benefit from income tax of $3.9 million and $5.0 million for the
three and six months ended June 30, 2020 , respectively. The effective tax rate
was 30.4% and 28.6% for the three and six months ended June 30, 2020 ,
respectively. The increase in the effective tax rate for the three months ended
June 30, 2021 compared with the three months ended June 30, 2020 , is primarily
attributable to changes in distribution of income among jurisdictions with
varying tax rates and recording of additional reserves for uncertain tax
positions related to a proposed audit assessment received in Denmark . Other
significant factors impacting the current period effective tax rate included
Federal and California research and development credits, non-deductible
executive compensation expenses, and other discrete events.
We recorded one change related to unrecognized tax benefits for the three months
ended June 30, 2021 related to a proposed audit assessment received in Denmark .
Within the next twelve months, it is possible that the uncertain tax positions
may change with a range of approximately zero to $0.2 million . Our tax returns
remain open to examination as follows: U.S Federal, 2017 through 2020, U.S.
states, 2016 through 2020, and significant foreign jurisdictions, generally 2016
through 2020.
Liquidity and Capital Resources
Liquidity and capital resources consist of (in thousands):
June 30, 2021 December 31, 2020
Cash and cash equivalents $ 62,494 $ 82,082
Working capital 143,236 125,950
Six Months Ended
June 30,
2021 2020
Net cash provided by operating activities $ 44,096 $ 9,612
Net cash used in investing activities (2,967)
(6,927)
Net cash provided by (used in) financing activities (57,848) 19,995
We believe that our current cash and cash equivalents and any cash generated from operations will be sufficient to meet our ongoing operating requirements for the foreseeable future. As ofJune 30, 2021 , we had cash and cash equivalents outside theU.S. in certain of our international subsidiaries of$40.7 million , primarily inCanada andIreland . We intend to permanently reinvest the cash held by our international subsidiaries except forExcel Tech Corporation andNatus Manufacturing Limited , which we intend to repatriate. A net deferred tax liability has been recorded for the potential future repatriation. If, however, a portion of permanently reinvested funds were needed for and distributed to our operations inthe United States , we would be subject to additionalU.S. income taxes and foreign withholding taxes depending on facts and circumstances at the time of distribution. The amount of taxes due would depend on the amount and manner of repatriation, as well as the country from which the funds were repatriated. We have a Credit Agreement with JP Morgan, Citibank, and Wells Fargo. During the third quarter of 2020 we amended the terms of the Credit Agreement to extend the maturity of the original agreement, reduce the aggregate value of the revolving credit facility, and amend certain covenants. The amended Credit Agreement provides for an aggregate$150.0 million of secured revolving credit facility. The Credit Agreement contains covenants, including covenants relating to maintenance of books and records, financial reporting and notification, compliance with laws, -23- -------------------------------------------------------------------------------- Table of Contents maintenance of properties and insurance, and limitations on guaranties, investments, issuance of debt, lease obligations and capital expenditures, and is secured by virtually all of our assets. The Credit Agreement provides for events of default, including failure to pay any principal or interest when due, failure to perform or observe covenants, bankruptcy or insolvency events and the occurrence of the event has a material adverse effect. The Credit Agreement matures onSeptember 25, 2023 , at which time all principal amounts outstanding under the Credit Agreement will be due and payable. We have no other significant credit facilities. As ofJune 30, 2021 , no amounts were outstanding under the Credit Agreement. During the six months endedJune 30, 2021 cash provided by operating activities of$44.1 million was the result of$5.9 million of net income, non-cash adjustments to net income of$21.7 million which was primarily driven by an adjustment for depreciation and amortization of$14.5 million , and net cash inflows of$16.6 million from changes in operating assets and liabilities primarily driven by reductions in accounts receivable and inventory. Cash used in investing activities during the period was$3.0 million consisting of$2.0 million to acquire other property and equipment and of$1.0 million for purchase of equity method investments. Cash used in financing activities during the six months endedJune 30, 2021 was$57.8 million and consisted of repayment on borrowing of$57.0 million ,$1.2 million for taxes paid related to net share settlement of equity awards,$0.2 million for principal payments of financing lease liability offset by Employee Stock Purchase Program ("ESPP") purchases of$0.6 million . During the six months endedJune 30, 2020 cash provided by operating activities of$9.6 million was the result of$12.5 million of net loss, non-cash adjustments to net loss of$21.7 million , and net cash inflows of$0.4 million from changes in operating assets and liabilities. The non-cash adjustment to net loss was primarily driven by depreciation and amortization of$13.7 million . Cash used in investing activities during the period was$6.9 million to acquire other property and equipment. Cash provided by financing activities during the six months endedJune 30, 2020 was$20.0 million and consisted of proceeds from borrowing of$60.0 million and Employee Stock Purchase Program ("ESPP") purchases of$0.7 million offset by repayment on borrowing of$28.0 million ,$10.5 million for repurchases of common stock under our share repurchase program,$1.9 million for taxes paid related to net share settlement of equity awards, and$0.2 million for principal payments of financing lease liability. Our future liquidity and capital requirements will depend on numerous factors, including the: •Extent to which we make acquisitions; •Amount and timing of revenue; •Extent to which our existing and new products gain market acceptance; •Cost and timing of product development efforts and the success of these development efforts; •Cost and timing of marketing and selling activities; and •Availability of borrowings under line of credit arrangements and the availability of other means of financing. Commitments and Contingencies In the normal course of business, we enter into obligations and commitments that require future contractual payments. The commitments result primarily from firm, non-cancellable purchase orders placed with contract vendors that manufacture some of the components used in our medical devices and related disposable supply products, as well as commitments for leased office space, and bank debt. The following table summarizes our -24-
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Table of Contents contractual obligations and commercial commitments as ofJune 30, 2021 (in thousands): Payments Due by Period Less than More than Total 1 Year 1-3 Years 3-5 Years 5 Years Unconditional purchase obligations$ 56,709 $ 52,188 $ 4,521 $ - $ - Interest payments 2,108 978 1,130 - Repatriation tax 5,677 170 3,212 2,295 - Total$ 64,494 $ 53,336 $ 8,863 $ 2,295 $ - Purchase obligations are defined as agreements to purchase goods or services that are enforceable and legally binding. Included in the purchase obligations category above are obligations related to purchase orders for inventory purchases under our standard terms and conditions and under negotiated agreements with vendors. We expect to receive consideration (products or services) for these purchase obligations. The purchase obligation amounts do not represent all anticipated purchases in the future but represent only those items for which we are contractually obligated. The table above does not include obligations under employment agreements for services rendered in the ordinary course of business. The interest payments noted above are an estimate of expected interest payments but could vary materially based on the timing of future loan draws and payments. See Note 13 to the unaudited Condensed Consolidated Financial Statements for additional discussion on our debt and credit arrangements. We are not able to reasonably estimate the timing of any potential payments for uncertain tax positions under ASC 740, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement 109. As a result, the preceding table excludes any potential future payments related to our ASC 740 liability for uncertain tax positions. See Note 18 in our Annual Report filed on Form 10-K for the year endedDecember 31, 2020 for further discussion on income taxes and repatriation tax. Recently Issued Accounting Pronouncements None. Cautionary Information Regarding Forward Looking Statements This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 aboutNatus Medical Incorporated . Forward-looking statements can be identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans," "will," "outlook" and other similar expressions. Forward-looking statements are based on management's current plans, estimates, assumptions and projections, and speak only as of the date they are made. These forward-looking statements within Item 2 include, without limitation, statements regarding the impact of COVID-19 pandemic on our business, the sufficiency of our current cash, cash equivalents and short-term investment balances, any cash generated from operations to meet our ongoing operating and capital requirements for the foreseeable future, outcomes of new product development, improved operations performance and profitability as the result of restructuring activities, and our intent to acquire additional technologies, products or businesses. Forward-looking statements are not guarantees of future performance and are subject to substantial risks and uncertainties that could cause the actual results predicted in the forward-looking statements as well as our future financial condition and results of operations to differ materially from our historical results or currently anticipated results. Investors should carefully review the information contained under the caption "Risk Factors" referred to in Part II, Item 1A of this report for a description of risks and uncertainties. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update forward-looking statements.
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