This article has been updated from an earlier version to include stock price and details.
NEW YORK, Nov. 10 (GenomeWeb News) - Shares in Genaissance were down more than 8 percent, or $.16, at $1.83 in early-afternoon Nasdaq trading today, one day after the company said it has laid of 10 percent of its workforce in an attempt to reach break even from operations.
The news comes three weeks after Genaissance said contract delays forced it to lower by around 20 percent its year-end revenue expectations, to between $20 million and $21 million from $25 million. Typically, investors react positively after a company takes aggressive steps, such as lay offs, to counteract expected revenue or earnings shortfalls.
Wall Street yawned at the news yesterday when the company announced the lay-offs, which include 21 staffers; shares in Genaisaance closed at $1.99, unchanged from their close one day earlier.
Today's stock decline also comes one day after the New Haven, Conn.-based pharmacogenomics company posted a 115-percent increase in third-quarter revenue, to $5.6 million from $2.6 million year over year. The increase was "primarily" the result of Genaissance's acquisition of Lark Technologies, which closed in April. Without the acquisition, third-quarter revenue would have increased 37 percent to $3.2 million, according to the company.
"This has been a challenging period for Genaissance," Kevin Rakin, president and CEO, said in a statement today. He said the staff reductions will "better position us to meet our goal of breakeven from operations by the end of 2005."
The downsizing, a "majority" of which was in R&D, will save the company around $2 million per year beginning in 2005, a company spokesperson told GenomeWeb News yesterday. Genaissance expects to book a $400,000 one-time charge for the lay-offs in the fourth quarter, the company said in the statement.
Receipts from licenses and research in the quarter ended Sept. 30 increased 47 percent to $2.8 million from $1.9 million, while revenue from lab services jumped 345 percent to $2.8 million from $625,000, the company said.
Genaissance said it spent around $4.7 million on R&D, a 13-percent decline from its R&D outlays during the same period one year ago. As a result, net loss remained flat at $5.9 million, or $.20 per share.
The company said it had around $6.9 million in cash, equivalents, and marketable securities, and an additional $5 million in working capital as of Sept. 30.