Natus Medical Releases 2008 Financial Guidance

Natus Medical Incorporated (Nasdaq:BABY) today announced financial guidance for the full year and first quarter of 2008. All per share amounts are on a diluted basis.

For the full year 2008 the Company expects to report revenue of approximately $160 million and earnings per share of $0.68 to $0.70.

For the first quarter ending March 31, 2008, the Company expects revenue to range from $34.5 to $36.0 million and earnings per share to range from $0.09 to $0.10. This compares to revenue of $27.1 million and earnings per share of $0.07 reported in the first quarter of 2007.

The Company also announced that for the full year 2008 it expects to record approximately $6.7 million of depreciation and amortization expense, and approximately $3.3 million of share-based compensation expense. The Company’s guidance is based on an effective tax rate of 40%.

On November 29, 2007, Natus completed its acquisition of Excel-Tech Ltd. (“Xltek”), based in Oakville, Ontario, Canada. Natus completed the acquisition by way of a statutory plan of arrangement in Canada under which Natus acquired all of the outstanding common shares of Xltek at a cash price of C$3.25 per share. The transaction is valued at approximately USD $63.5 million. In addition to available cash on hand, Natus financed $35 million of the purchase price through new senior term and revolving credit facilities with Wells Fargo Bank N.A.

In connection with the completion of the acquisition, the Company has initiated a reorganization that will result in a reduction of staff. The reorganization is expected to result in an annualized operating cost reduction of the combined companies of approximately $4.0 million. Natus has also determined to deemphasize certain low margin Xltek supply products. These factors are reflected in the Company’s 2008 annual revenue and earnings guidance.

Jim Hawkins, President and Chief Executive Officer of Natus stated, “We have endeavored to be conservative in projecting our revenue and profitability for 2008 in light of the uncertain outlook for the U.S. economy next year.”

“We are very satisfied with the progress we have shown at Natus from 2004 when we reported revenue of $36.5 million and a net loss of $2.4 million, compared to our 2008 guidance of approximately $160 million in revenue and income before tax of approximately $28 million,” Hawkins added.

“We continue to drive toward our goal of growing revenue to a $250 million annual run rate by the end of 2008, which we believe, if achieved, would position us to report earnings of more than $1.00 per share in 2009,” said Hawkins. “As we have previously stated, this is our goal and not guidance, but I believe it is important to communicate to our shareholders what we are trying to accomplish both short and long term at Natus Medical. We look to continue to achieve these goals through a combination of internal growth and accretive acquisitions.”

The Company’s guidance for 2008 excludes the impact of non-recurring acquisition related costs, including charges for in-process research and development, and restructuring charges.

Conference Call

Natus management will host an investment-community conference call on December 18, 2007 beginning at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to discuss the 2008 outlook and to answer questions.

Individuals interested in listening to the conference call may do so by dialing (866) 770-7146 for domestic callers, or (617) 213-8068 for international callers, and entering reservation code 50385058. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (888) 286-8010 for domestic callers, or (617) 801-6888 for international callers, and entering reservation code 34274045.

The conference call also will be available real-time via the Internet at http://investor.natus.com, and a recording of the call will be available on the Company’s Web site for 90 days following the completion of the call.

About Natus Medical Incorporated

Natus is a leading provider of healthcare products used for the screening, detection, treatment, monitoring and tracking of common medical ailments such as hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and newborn care. 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, and software systems for managing and tracking disorders and diseases for public health laboratories.

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

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 anticipated revenue, profitability, and tax rates for the full year and first quarter of 2008, the annualized costs savings from our reorganization, and potential profitability for 2009. These statements relate to future events or Natus’ future financial performance or results, and 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. Forward-looking statements are only predictions and the actual events or results may differ materially. Natus cannot provide any assurance that its future results or the results implied by the forward-looking statements will meet expectations. Our future results could differ materially due to a number of factors, including the effects of competition, challenges incurred in integrating acquired companies, the demand for our products and services, our ability to expand our sales in international markets, our ability to maintain current sales levels in a mature domestic market, our ability to control costs, and risks associated with bringing new products to market and integrating acquired businesses. 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, 2006, 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.