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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 000-33001
 
NATUS MEDICAL INCORPORATED
(Exact name of registrant as specified in its charter)
 
 
Delaware 77-0154833
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
6701 Koll Center Parkway, Suite 120, Pleasanton, CA 94566
(Address of principal executive offices) (Zip Code)
(925) 223-6700
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareNTUSThe Nasdaq Stock Market LLC
(The Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” or an “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large Accelerated Filer   Accelerated Filer 
Non-accelerated Filer 
  
  Smaller reporting company 
  Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of issued and outstanding shares of the registrant’s Common Stock, $0.001 par value, as of July 30, 2021 was 34,130,686.


Table of Contents
NATUS MEDICAL INCORPORATED
TABLE OF CONTENTS
Page No.

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Table of Contents
PART I.    FINANCIAL INFORMATION
Item 1.    Financial Statements
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share amounts)
June 30, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$62,494 $82,082 
Accounts receivable, net of allowance for doubtful accounts of $6,130 in 2021 and $6,213 in 2020
92,793 93,133 
Inventories68,350 75,650 
Prepaid expenses and other current assets22,062 20,837 
Total current assets245,699 271,702 
Property and equipment, net23,552 24,516 
Operating lease right-of-use assets10,946 11,669 
Intangible assets, net80,054 92,741 
Goodwill150,482 151,299 
Deferred income tax26,349 27,563 
Other assets19,136 20,904 
Total assets$556,218 $600,394 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$26,892 $23,429 
Current portion of long-term debt 50,000 
Accrued liabilities45,253 44,236 
Deferred revenue24,465 21,308 
Current portion of operating lease liabilities5,853 6,779 
Total current liabilities102,463 145,752 
Other liabilities17,829 18,451 
Operating lease liabilities8,061 8,959 
Long-term debt, net of current portion 5,840 
Deferred income tax10,038 10,298 
Total liabilities138,391 189,300 
Stockholders’ equity:
Common stock, $0.001 par value, 120,000,000 shares authorized; shares issued and outstanding 34,132,106 in 2021 and 33,911,703 in 2020
347,818 342,828 
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding in 2021 and 2020
  
Retained earnings77,169 71,309 
Accumulated other comprehensive loss(7,160)(3,043)
Total stockholders’ equity417,827 411,094 
Total liabilities and stockholders’ equity$556,218 $600,394 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Revenue$115,978 $84,780 $230,904 $194,163 
Cost of revenue47,843 42,573 94,531 87,506 
Intangibles amortization1,734 1,654 3,485 3,322 
Gross profit66,401 40,553 132,888 103,335 
Operating expenses:
Marketing and selling29,488 22,802 58,459 53,532 
Research and development14,249 14,336 28,289 31,905 
General and administrative12,610 11,187 27,462 24,368 
Intangibles amortization3,919 3,644 7,816 7,305 
Restructuring121 621 327 1,492 
Total operating expenses60,387 52,590 122,353 118,602 
Income (loss) from operations6,014 (12,037)10,535 (15,267)
Other expense, net(651)(757)(2,307)(2,251)
Income (loss) before provision for (benefit from) income tax5,363 (12,794)8,228 (17,518)
Provision for (benefit from) income taxes1,899 (3,891)2,368 (5,018)
Net income (loss)$3,464 $(8,903)$5,860 $(12,500)
Net income (loss) per share:
Basic$0.10 $(0.26)$0.17 $(0.37)
Diluted$0.10 $(0.26)$0.17 $(0.37)
Weighted average shares used in the calculation of net income (loss) per share:
Basic33,637 33,827 33,628 33,624 
Diluted33,871 33,827 33,845 33,624 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Table of Contents
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands, except per share amounts)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Net income (loss)$3,464 $(8,903)$5,860 $(12,500)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment2,167 3,116 (4,327)(902)
Interest rate swap designated as a cash flow hedge142 65 210 (110)
Other comprehensive income (loss), net of tax2,309 3,181 (4,117)(1,012)
Comprehensive income (loss)5,773 (5,722)1,743 (13,512)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Table of Contents
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
(in thousands, except per share amounts)
 Common StockRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Stockholders’
Equity
 SharesAmount
Balances, December 31, 202033,911,703 $342,828 $71,309 $(3,043)$411,094 
Vesting of restricted stock units19,650 — — — — 
Net issuance of restricted stock awards222,899 — — — — 
Stock-based compensation expense— 3,018 — — 3,018 
Taxes paid related to net share settlement of equity awards(57,357)(1,150)— — (1,150)
Other comprehensive loss— — — (6,426)(6,426)
Net income— — 2,396 — 2,396 
Balances, March 31, 202134,096,895 $344,696 $73,705 $(9,469)$408,932 
Net issuance of restricted stock awards10,573 — — — — 
Employee stock purchase plan28,158 612 — — 612 
Stock-based compensation expense— 2,604 — — 2,604 
Taxes paid related to net share settlement of equity awards(3,520)(94)— — (94)
Other comprehensive income— — — 2,309 2,309 
Net loss— — 3,464 — 3,464 
Balances, June 30, 202134,132,106 $347,818 $77,169 $(7,160)$417,827 

 Common StockRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Stockholders’
Equity
 SharesAmount
Balances, December 31, 201934,148,700 $344,476 $87,922 $(16,275)$416,123 
Vesting of restricted stock units14,033 — — — — 
Net issuance of restricted stock awards162,212 — — — — 
Stock-based compensation expense— 2,198 — — 2,198 
Repurchase of company stock(465,117)(10,495)— — (10,495)
Taxes paid related to net share settlement of equity awards(57,695)(1,883)— — (1,883)
Other comprehensive loss— — — (4,193)(4,193)
Net loss— — (3,597)— (3,597)
Balances, March 31, 202033,802,133 $334,296 $84,325 $(20,468)$398,153 
Net issuance of restricted stock awards40,483 — — — — 
Employee stock purchase plan30,955 658 — — 658 
Stock-based compensation expense— 2,427 — — 2,427 
Taxes paid related to net share settlement of equity awards(1,848)(43)— — (43)
Other comprehensive income— — — 3,181 3,181 
Net income— — (8,903)— (8,903)
Balances, June 30, 202033,871,723 $337,338 $75,422 $(17,287)$395,473 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Table of Contents
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 Six Months Ended
June 30,
 20212020
Operating activities:
Net income (loss)$5,860 $(12,500)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for losses on accounts receivable287 948 
Depreciation and amortization14,450 13,677 
Loss on disposal of property and equipment9 22 
Warranty reserve1,014 1,280 
Share-based compensation5,622 4,664 
Loss on commencement of sales-type leases3 1,095 
Loss on equity method investment265  
Changes in operating assets and liabilities:
Accounts receivable2,203 27,248 
Inventories7,034 (11,194)
Prepaid expenses and other assets(796)(4,066)
Accounts payable3,614 4,324 
Accrued liabilities(19)(16,343)
Deferred revenue3,444 302 
Deferred income tax1,106 155 
Net cash provided by operating activities44,096 9,612 
Investing activities:
Purchase of property and equipment(1,967)(6,927)
Purchase of equity method investments(1,000) 
Net cash used in investing activities(2,967)(6,927)
Financing activities:
Proceeds from stock option exercises and Employee Stock Purchase Program purchases612 658 
Repurchase of common stock (10,495)
Taxes paid related to net share settlement of equity awards(1,244)(1,926)
Principal payments of financing lease liability(216)(242)
Proceeds from borrowings 60,000 
Payments on borrowings(57,000)(28,000)
Net cash provided by (used in) financing activities(57,848)19,995 
Exchange rate changes effect on cash and cash equivalents(2,869)(1,099)
Net increase (decrease) in cash and cash equivalents(19,588)21,581 
Cash and cash equivalents, beginning of period82,082 63,297 
Cash and cash equivalents, end of period$62,494 $84,878 
Supplemental disclosure of cash flow information:
Cash paid for interest$860 $1,561 
Cash paid for income taxes$1,671 $4,667 
Non-cash investing activities:
Property and equipment included in accounts payable$35 $(13)
Inventory transferred to property and equipment$588 $525 
Transfer of leased assets to sales-type leases$13 $2,365 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1 - Basis of Presentation and Significant Accounting Policies
The accompanying interim condensed consolidated financial statements of Natus Medical Incorporated (“we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Except where noted below within Note 1, the accounting policies followed in the preparation of the interim condensed consolidated financial statements are consistent in all material respects with those presented in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Interim financial reports are prepared in accordance with the rules and regulations of the Securities and Exchange Commission; accordingly, the reports do not include all of the information and notes required by GAAP for annual financial statements. The interim financial information is unaudited, and reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods presented. We have made certain reclassifications to the prior period to conform to current period presentation. The consolidated balance sheet as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying condensed consolidated financial statements include our accounts and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Impact of COVID-19 on Our Financial Statements
On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. Since that time, we established what we believe are the necessary protocols to operate safely in our manufacturing facilities, virtually engage with customers and suppliers and work remotely when possible. Our businesses continue to recover as sales in our Neuro and Newborn Care business have returned to pre-pandemic levels. Sales for our Hearing & Balance business, which are more concentrated in Europe have partially recovered, but remain below pre-pandemic levels.
Various government programs have been established to provide financial relief for businesses affected by COVID-19 including the Canada Emergency Wage Subsidy ("CEWS") and Canada Emergency Rent Subsidy ("CERS") 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 six months ended June 30, 2021 we recognized reductions of $0.4 million in cost of sales, $1.3 million in marketing and selling expense, and $1.2 million in 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.
We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of COVID-19 using information that is reasonably available to us at this time. The accounting estimates and other matters we assessed include, but were not limited to, our allowance for doubtful accounts, inventory and warranty reserves, stock-based compensation, goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While based on our current assessment of these estimates there was not a material impact to our consolidated financial statements as of and for the three and six months ended June 30, 2021, as additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the
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duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our consolidated financial statements in future reporting periods.

Recently Adopted Accounting Pronouncements
None.

2 - Revenue
    Unbilled accounts receivable (“AR”) for the periods presented primarily represent the difference between revenue recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Deferred revenue for the periods presented primarily relates to extended service contracts, installation, and training, for which the service fees are billed in advance. The associated deferred revenue is generally recognized ratably over the extended service period or when installation and training are complete.
The following table summarizes the changes in the unbilled AR and deferred revenue balances for the six months ended June 30, 2021 (in thousands):
Unbilled AR, December 31, 2020$1,925 
Additions62 
Transferred to trade receivable(61)
Unbilled AR, June 30, 2021$1,926 
Deferred revenue, December 31, 2020$25,723 
Additions17,144 
Revenue recognized(13,723)
Deferred revenue, June 30, 2021$29,144 

    At June 30, 2021, the short-term portion of deferred revenue of $24.4 million and the long-term portion of $4.7 million are included in deferred revenue and other long-term liabilities, respectively, in the consolidated balance sheet. As of June 30, 2021, we expect to recognize revenue associated with deferred revenue of approximately $15.9 million in 2021, $10.1 million in 2022, $1.7 million in 2023, $1.0 million in 2024, and $0.4 million thereafter.

3 - Earnings Per Share
The components of basic and diluted EPS, and shares excluded from the calculation of diluted loss per share because the effect would have been anti-dilutive, are as follows (in thousands, except per share amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Net income (loss)$3,464 $(8,903)$5,860 $(12,500)
Weighted average common shares33,637 33,827 33,628 33,624 
Dilutive effect of stock based awards234  217  
Diluted shares33,871 33,827 33,845 33,624 
Basic earnings (loss) per share$0.10 $(0.26)$0.17 $(0.37)
Diluted earnings (loss) per share$0.10 $(0.26)$0.17 $(0.37)
Shares excluded from calculation of diluted EPS 28  70 

4 - Allowance for Doubtful Accounts

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We estimate the lifetime allowance for doubtful, potentially uncollectible, accounts receivable upon their inception based on historical collection experience within the markets in which we operate, customer-specific information such as bankruptcy filings or customer liquidity problems, current conditions, and reasonable and supportable forecasts about the future.
Our allowance for doubtful accounts is presented as a reduction to accounts receivable on our consolidated balance sheet. When all internal efforts have been exhausted to collect the receivable, it is written off and relieved from the reserve.
The details of activity in allowance for doubtful accounts are as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Balance, beginning of period$6,085 $7,292 $6,213 $7,384 
Additions charged to expense186 426 287 948 
Write-offs charged against allowance(141)(179)(370)(793)
Balance, end of period$6,130 $7,539 $6,130 $7,539 

5 - Inventories
Inventories consist of the following (in thousands):
June 30, 2021December 31, 2020
Raw materials and subassemblies$19,341 $22,583 
Work in process1,841 2,294 
Finished goods60,362 65,695 
Total inventories81,544 90,572 
Less: Non-current inventories(13,194)(14,922)
Inventories, current$68,350 $75,650 
As of June 30, 2021 and December 31, 2020, we have classified $13.2 million and $14.9 million, respectively, of inventories as other assets. This inventory consists primarily of service components used to repair products held by customers pursuant to warranty obligations and extended service contracts, including service components for products we no longer sell, inventory purchased for lifetime buys, and inventory that is turning over at a slow rate. We believe these inventories will be utilized for their intended purpose.

6 – Intangible Assets
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The following table summarizes the components of gross and net intangible asset balances (in thousands):
 June 30, 2021December 31, 2020
 Gross
Carrying
Amount
Accumulated
Impairment
Accumulated
Amortization
Net Book
Value
Gross
Carrying
Amount
Accumulated
Impairment
Accumulated
Amortization
Net Book
Value
Intangible assets with definite lives:
Technology$110,953 $(12,464)$(67,156)$31,333 $112,138 $(12,480)$(64,203)$35,455 
Customer related93,174 (50)(55,258)37,866 94,526 (50)(51,247)43,229 
Trade names46,682 (3,619)(34,646)8,417 47,058 (3,677)(31,890)11,491 
Internally developed software13,281  (12,937)344 13,281  (12,845)436 
Patents2,767 (133)(2,634) 2,810 (133)(2,677) 
Service agreements1,190  (1,139)51 1,190  (1,119)71 
Definite-lived intangible assets$268,047 $(16,266)$(173,770)$78,011 $271,003 $(16,340)$(163,981)$90,682 
Intangible assets with indefinite lives:
Intellectual Property$2,043 $ $— $2,043 $2,059 $ $— $2,059 
Total intangible assets$270,090 $(16,266)$(173,770)$80,054 $273,062 $(16,340)$(163,981)$92,741 

Finite-lived intangible assets are amortized over their weighted average lives, which are 14 years for technology, 10 years for customer related intangibles, 7 years for trade names, 6 years for internally developed software, 13 years for patents, 2 years for service agreements and 11 years weighted average in total.
Internally developed software consists of $11.1 million relating to costs incurred for development of internal use computer software and $2.2 million for development of software to be sold.
Amortization expense related to intangible assets with definite lives was as follows (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Technology$1,778 $1,698 $3,573 $3,410 
Customer related2,376 2,123 4,736 4,264 
Trade names1,489 1,467 2,972 2,933 
Internally developed software42 69 92 137 
Service agreements$10 $10 20 20 
Total amortization$5,695 $5,367 $11,393 $10,764 

The amortization expense amounts shown above include internally developed software not held for sale of $24 thousand and $48 thousand for the three and six months ended June 30, 2021, respectively, which is recorded within our income statement as a general and administrative operating expense. The amortization expense amounts shown above include internally developed software held for sale of $18 thousand and $44 thousand for the three and six months ended June 30, 2021, respectively, which is recorded within our income statement as cost of goods sold.
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Expected amortization expense related to definite-lived amortizable intangible assets is as follows (in thousands):
Six months ending December 31, 2021$10,741 
202218,089 
202315,317 
202413,361 
202512,744 
20262,428 
Thereafter5,331 
Total expected amortization expense$78,011 

7 – Goodwill
The carrying amount of goodwill and the changes in the balance are as follows (in thousands):
December 31, 2020$151,299 
Foreign currency translation(817)
June 30, 2021$150,482 

8 - Property and Equipment, net
Property and equipment, net consist of the following (in thousands):
June 30, 2021December 31, 2020
Land$1,788 $1,792 
Buildings7,235 7,365 
Leasehold improvements7,443 8,050 
Finance lease right-of-use assets2,526 2,555 
Equipment and furniture20,756 22,148 
Computer software and hardware10,941 10,246 
Demonstration and loaned equipment3,649 3,086 
54,338 55,242 
Accumulated depreciation(30,786)(30,726)
Total$23,552 $24,516 
Depreciation expense of property and equipment was approximately $1.5 million and $3.0 million for the three and six months ended June 30, 2021 and approximately $1.6 million and $3.2 million for the three and six months ended June 30, 2020.

9 - Reserve for Product Warranties
We provide a warranty for products that is generally one year in length. In some cases, regulations may require us to provide repair or remediation beyond the typical warranty period. If any of the products contain defects, we may incur additional repair and remediation costs. Service, repair and calibration services are provided by a combination of our owned facilities and vendors on a contract basis.
We accrue estimated product warranty costs at the time of sale based on historical experience. A warranty reserve is included in accrued liabilities for the expected future costs of servicing products. Additions to the reserve are based on management’s best estimate of probable liability. We consider a combination of factors including material and labor costs, regulatory requirements, and other judgments in determining the amount of the reserve. The reserve is reduced as costs are incurred to honor existing warranty and regulatory obligations.
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As of June 30, 2021, we have accrued $4.8 million for product related warranties. Our estimate of these costs is primarily based upon the number of units outstanding that may require repair and costs associated with shipping.
The details of activity in the warranty reserve are as follows (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Balance, beginning of period$4,796 $5,837 $5,195 $6,404 
Additions charged to expense673 575 1,014 1,280 
Utilizations(667)(729)(1,407)(2,001)
Balance, end of period$4,802 $5,683 $4,802 $5,683 

Our estimate of future product warranty costs may vary from actual product warranty costs, and any variance from estimates could impact our cost of sales, operating profits and results of operations.

10 - Share-Based Compensation
As of June 30, 2021, we have one active share-based compensation plan, the 2021 Equity Incentive Plan.
The terms of all awards granted during the six months ended June 30, 2021 and the methods for determining grant-date fair value of the awards are consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Details of share-based compensation expense are as follows (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Cost of revenue$101 $75 $201 $149 
Marketing and selling526 480 1,166 949 
Research and development358 269 713 523 
General and administrative1,619 1,604 3,542 3,004 
Total$2,604 $2,428 $5,622 $4,625 

As of June 30, 2021, unrecognized compensation expense related to the unvested portion of stock options and other stock awards was approximately $17.9 million, which is expected to be recognized over a weighted average period of 2.4 years.

11 - Other Income (Expense), net
Other income (expense), net consists of (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Interest income$2 $8 $4 $32 
Interest expense(556)(976)(1,322)(1,693)
Foreign currency loss11 217 (720)(584)
Other expense(108)(6)(269)(6)
Total other (expense), net$(651)$(757)$(2,307)$(2,251)

12 - Income Taxes
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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 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.

13 - Debt and Credit Arrangements
    We have a Credit Agreement with JP Morgan Chase Bank ("JP Morgan"), Citibank, NA (“Citibank”), and Wells Fargo Bank, National Association (“Wells Fargo”). During the third quarter of 2020 we amended the terms of the Credit Agreement to extend the maturity date of the original agreement, reduce the aggregate value of the revolving 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, 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. We have no other significant credit facilities. As of June 30, 2021, no amounts were outstanding under the Credit Agreement.
    In addition to the customary restrictive covenants listed above, the Credit Agreement also contains financial covenants that require us to maintain a certain leverage ratio and fixed charge coverage ratio, each as defined in the Credit Agreement:
Leverage Ratio, as defined, to be no higher than 3.25 to 1.00.
Interest Coverage Ratio, as defined, to be at least 1.75 to 1.00 at all times.
    Pursuant to the terms of the Credit Agreement, the outstanding principal balance will bear interest at either (a) a fluctuating rate per annum equal to the Applicable Rate, as defined in the Credit Agreement, depending on our leverage ratio plus the higher of (i) the federal funds rate plus one-half of one percent per annum; (ii) the prime rate in effect on such a day; and (iii) the LIBOR rate plus one percent, or (b) a fluctuating rate per annum of LIBOR Rate plus the Applicable Rate, which ranges between 2.25% to 3.50%. The Credit Agreement matures on September 25, 2023, at which time all principal amounts outstanding under the Credit Agreement will be due and payable.
As of June 30, 2021, we have discontinued our interest rate swap derivative. Since there are no amounts outstanding under our Credit Agreement and the termination date of the hedge is less than one quarter away with no current plans to draw, we have concluded that the cash flow hedge is not probable of occurring and discontinued the
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hedge relationship. Upon the discontinuation of the hedge relationship, we have reclassified the unrealized gains or losses recorded in accumulated other comprehensive income (“AOCI”) to earnings.

14 - Segment, Customer and Geographic Information
We operate in one reportable segment in which we provide medical device solutions focused on the diagnosis and treatment of central nervous and sensory system disorders for patients of all ages.
End-user customer base includes hospitals, clinics, laboratories, physicians, audiologists, and governmental agencies. Most of our international sales are to distributors who resell products to end users or sub-distributors.
The following tables present revenue by end market and geographic region and long-lived asset information by geographic region. Revenue is based on the destination of the shipments and long-lived assets are based on the physical location of the assets (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Consolidated Revenue:
United States$70,737 $51,175 $138,508 $119,513 
International45,241 33,605 92,396 74,650 
Total$115,978 $84,780 $230,904 $194,163 
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Revenue by End Market:
Neuro Products
Devices and Systems$53,945 $33,175 $107,472 $82,603 
Supplies16,509 10,373 32,224 26,296 
Total Neuro Revenue70,454 43,548 139,696 108,899 
Newborn Care Products
Devices and Systems14,117 13,899 27,715 25,023 
Supplies8,184 8,933 16,586 18,624 
Services4,046 4,085 7,810 7,502 
Total Newborn Care Revenue26,347 26,917 52,111 51,149