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MDS' Q3 Revenues Drop 4 Percent as Mass Spec Shipments Decline

NEW YORK (GenomeWeb News) – MDS today reported that its third-quarter revenues fell 4 percent year over year and the firm swung to a loss from a profit on restructuring charges.
 
The Toronto-based firm brought in total revenues of $321 million for the three-month period ended July 31, compared to revenues of $333 million in the comparable period of 2007.
 
Sales for the firm’s MDS Analytical Technologies segment declined 9 percent to $104 million from $114 million due to lower shipments of mass spectrometers to its joint venture partner, Applied Biosystems. MDS said that despite this decrease in shipments, end-user revenue from mass specs grew 5 percent.
 
The MDS Pharma Services segment had 1 percent revenue growth to $145 million from $143 million year over year. Foreign exchange rates contributed $6 million to that segment’s revenue. MDS is in the process of restructuring the Pharma Services segment, which includes reducing headcount and closing several offices. As part of that effort, the unit took $8 million in restructuring charges during the quarter, and MDS anticipates a further $6 million to $8 million of such charges during the fourth quarter.
 
MDS said in July that it planned to lay off 210 employees in a restructuring effort aimed at improving profitability in its MDS Pharma Services and MDS Analytical Technologies business units.
 
MDS Nordion’s revenue fell 5 percent to $72 million from $76 million.
 
MDS reported a net loss of $10 million, or $.08 per share, for the third quarter, compared to a profit of $7 million, or $.05 per share, for Q3 of 2007. This year’s results include an $11 million asset impairment charge and a $10 million restructuring charge. Last year’s results included a restructuring charge of $3 million.
 
The firm’s R&D expenses declined 5 percent to $19 million from $20 million year over year, and its SG&A costs also fell 5 percent to $63 million from $66 million.
 
MDS finished the quarter with $130 million in cash and cash equivalents.
 
MDS said that as a result of “slower than expected ramp up of revenue at MDS Pharma Services, related to the delay in the start of certain customer studies,” it has lowered its 2008 revenue guidance to a range of between $1.33 billion and $1.35 billion compared to its earlier forecast of between $1.35 billion and $1.4 billion.
 

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