Natus Comments on FDA Recall

SAN CARLOS, Calif.--(BUSINESS WIRE)--Natus Medical Incorporated (Nasdaq:BABY) today released a statement regarding the issuance by the Food & Drug Administration (the “FDA”) of a recall notice for the Company’s Olympic Cool-Cap.

The recall addresses a situation where the Cool-Cap screen freezes and interrupts patient cooling. Natus had previously communicated the problem to customers in May 2012 by issuing a Class II Recall notice, which is the FDA’s mid-level health hazard classification. Customers are able to recover from the screen freeze failure by simply rebooting the Cool-Cap system. Cooling treatment can continue in a safe manner with the Cool-Cap system as originally intended.

The Company has provided recall information to the FDA as required in a timely manner since this problem originated. Today’s announcement indicates that the FDA has re-classified this action as a Class I Recall which is the highest relative degree of health hazard classification for a product recall. As a result of this reclassification, Natus will be sending follow up Safety Notice letters to all customers reminding them how to recognize this screen freeze condition and how to recover from it. Separately, an unreliable power supply module is being replaced on an ongoing basis in effected units.

The costs of the measures described above are not expected to be material, including costs yet to be incurred, and were previously accrued as an expense in the Company’s financial results for the nine months ended September 30, 2012.

The recall does not prevent the Company from continuing to market and sell the Cool-Cap, nor does it prevent clinicians from using the device. Revenue from the Cool-Cap represents less than one percent of the Company’s consolidated revenue.

The Company received premarket approval (“PMA”) from the FDA to market the Olympic Cool-Cap in December 2006. The Cool-Cap system, which is the only FDA-approved device for the treatment of hypoxic ischemic encephalopathy (“HIE”) in term newborns, provides selective head cooling to prevent or reduce the severity of neurologic injury associated with HIE.

About Natus Medical

Natus is a leading provider of healthcare products used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and balance and mobility disorders. Product offerings include computerized neurodiagnostic systems for audiology, neurology, polysomnography, and neonatology, as well as newborn care products such as hearing screening systems, phototherapy devices for the treatment of newborn jaundice, head-cooling products for the treatment of brain injury in newborns, incubators to control the newborn's environment, and software systems for managing and tracking disorders and diseases for public health laboratories.

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, particularly statements regarding the expectations, beliefs, plans, intentions and strategies of Natus. These forward-looking statements include, but are not limited to, statements regarding the expectation that the cost of measures to address the recall will not be material. Future events or Natus' future financial performance or results involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by the forward-looking statements. Natus disclaims any obligation to update information contained in any forward looking statement.

More information about potential risk factors that could affect the business and financial results of Natus is included in Natus' annual report on Form 10-K for the year ended December 31, 2011, and its quarterly reports on Form 10-Q, and in other reports filed from time to time by Natus with the U.S. Securities and Exchange Commission.

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