UPDATED: FDA slaps Class I on Natus Medical's cooling cap recall

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Natus Medical ($BABY) is recalling its Olympic Cool Cap System, designed to prevent neurologic injury in infants, and the FDA has assigned its most serious designation to the effort.

The Cool Cap is used for infants with hypoxic-ischemic encephalopathy, in which the brain is deprived of proper oxygen levels. The cooling cap is meant to stave off brain damage, but Natus' device is prone to a screen malfunction that can make it seem like the tech is working when it's not, risking adverse events including death, according to the FDA.

Natus informed its customers of the problem back in May and, separately, is in the process of replacing faulty power supply units in affected devices, according to the company. Now that the FDA has given the recall a Class I label, Natus is sending out another round of notices to customers to remind them of the screen problem, the company said in a statement.

In the meantime, the FDA is asking patients and physicians to report adverse events through its online MedWatch system.

Natus has long specialized in devices for newborn care, but it is branching out into neurology, splitting up its natal and neuro businesses and spending $58 million on CareFusion's ($CFN) Nicolet neurodiagnostic unit. Last quarter, Natus took a $1.9 million loss, but revenue jumped 57% to $80.7 million from the same period in 2011, and CEO Jim Hawkins said the company is on track to reach its long-term goal of closing $500 million in annual sales.

- here's the FDA notice
- read Natus' release

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Editor's note: This story was updated to reflect comments on the recall released by Natus on Wednesday afternoon.