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Natus Medical Inc. (BABY - Snapshot Report), a manufacturer of multiple health care product lines, recently announced that it took over Embla Systems LLC, a leading player in the R&D, production and sale of devices used to diagnose sleep apnea.

Embla reported sales of about $30 million for the fiscal year ended December 31, 2010. Natus purchased Embla’s outstanding shares for $16.1 million, in cash, excluding the direct costs for taking over the company.  

In fact, Embla is the biggest company in the globe dedicated to sleep diagnostics (home sleep testing and polysomnography or “PSG”). It provides an array of sleep diagnostic solutions such as three cutting-edge PSG solutions, namely REMbrandt, RemLogic and Sandman, Embletta home sleep testing devices as well as the Enterprise Sleep Business Management Systems. Embla’s range of solutions improves the operations of sleep labs.

Natus forecasts that the takeover will be accretive to its earnings per share in 2012, contributing 8 cents to adjusted earnings per share. Adjusted earnings per share does not include potential restructuring and extraordinary expenses connected with the acquisition as well as amortization of intangible assets acquired by the company.         

According to Natus, the takeover of Embla reinforces its pivotal role in diagnostic neurology offerings. Natus now assumes the leading position in the global sleep diagnostic market with yearly sales of almost $35 million. Furthermore, the company is also well placed in overseas markets, since 40% of erstwhile Embla’s sales originated outside the U.S.

Globally, over 100 million individuals are estimated to suffer from obstructive sleep apnea. Due to a lack of awareness, more than 80% of the cases go undiagnosed. Sleep apnea is a sleep disorder marked by unnatural gaps in breathing.

The disorder may be of three types: obstructive, central and complex/mixed sleep apnea forming 84%, 0.4% and 15% of incidence, respectively. Studies have revealed that about 1 in 15 Americans is afflicted by at least a moderate form of this disorder.

Headquartered in Denver, Colorado, Embla Systems embarked on the development of devices to detect sleep apnea in the mid 1990s. Since then, it has developed a series of products that help sleep labs diagnose the condition. The company is a market leader in devices, in overseas markets, for conducting sleep studies at the patient’s residence.        

Natus Medical sells healthcare offerings utilized in the detection, screening, treatment and tracking of frequently occurring medical problems in such areas as neurological dysfunction, sleep disorders, neonatal medical problems and hearing impairment. The company competes with Johnson & Johnson (JNJ - Analyst Report) among others.

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