NEW YORK (GenomeWeb News) – Luminex said after the close of the market Wednesday that it will undertake a restructuring that will result in an undisclosed number of employees being laid off and its Brisbane, Australia office being closed.
The Austin, Texas-based molecular diagnostics developer said that the restructuring will focus on its newborn screening group within its Assay and Related Products segment. In total, the firm expects to reduce its workforce by approximately 5 percent. It currently employs nearly 700 people.
On a conference call held Thursday morning, Luminex President and CEO Patrick Balthrop said that the firm would reallocate some of its resources as it looks to focus on its molecular diagnostics business. He said the actions would improve profitability and provide Luminex with additional financial flexibility.
Luminex’s newborn screening products include a molecular cystic fibrosis assay and punching systems, as well as its NeoPlex System and NeoPlex 4 assay for identifying analytes that may be indicators of congenital hypothyroidism, congenital hyperplasia, and cystic fibrosis. The firm has been readying the assay for a submission to the US Food and Drug Administration later this year.
Balthrop said on the call that Luminex will spin off the NeoPlex business. He said the firm has been in discussions with several potential partners to acquire the newborn screening business. Those talks are in the early stages, and he wouldn't comment on potential acquirers.
However, he did say that candidate firms could include current partners, and “there are many that fit the criteria of having a broader public health portfolio.”
Balthrop also acknowledged that the regulatory process for NeoPlex has been "burdensome."
The actions announced Wednesday are expected to result in annualized cost savings of $5 million to $6 million, of which $3.5 million to $4 million will come from savings to SG&A and the remainder from R&D.
“On an ongoing basis, we review our strategic priorities, market position, and allocation of resources,” Balthrop said in a statement. “These changes reflect an increased focus on our growth initiatives” and the firm’s commitment to its molecular diagnostics and partnership franchises, he added.
Luminex expects to incur costs of $4.5 million to $5 million related to the closure of the Brisbane office, $1.5 million to $2 million to write down its newborn screening assets and inventory, and $1 million in severance and employee separation costs. It expects to record half of the restructuring charges in the quarter ending Sept. 30, and the remainder spread over the following two quarters.
The firm reaffirmed its FY 2013 revenue guidance of between $220 million and $230 million, which it also provided last week during its second quarter conference call. However, the firm has noted that the reimbursement environment for certain molecular diagnostic tests could have an impact on its performance, "as considered in the lower end of this revenue range."
In Thursday morning trade on the Nasdaq, shares of Luminex were down 2 percent at $20.63.