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Sequenom Reducing Head Count by 75 to Reduce Costs

NEW YORK (GenomeWeb News) – Sequenom said in a regulatory filing after the close of the market on Monday that it is reducing its workforce by about 75 employees as part of a reorganization.

The majority of employees being laid off were notified on Monday and all affected employees will be notified by Aug. 23, the company said in its document filed with the US Securities and Exchange Commission.

As a result of the reorganization, the San Diego-based firm said that it expects compensation-related expenses in future operating expenses to be reduced by about $10 million on an annualized basis. It includes voluntary and involuntary terminations that have occurred since July 1, it said.

The company had not disclosed any prior terminations.

The reorganization is part of an overall cost reduction effort, the benefits of which are expected to become apparent in the fourth quarter, Sequenom said.

It added that it expects to record $1.2 million in severance-related expenses during the third quarter.

In late July, the company reported a 91 percent increase in revenues for its second quarter, but missed the average Wall Street estimate on both the top and bottom lines. Since then, Sequenom's stock has taken a beating and at the close of the market on Monday, shares of the company were down 38 percent at $2.91, compared to $4.69 before it announced its second quarter earnings.

The company blamed the softer-than-expected results on a change in molecular diagnostic billing and payment codes that delayed receipt of payments on testing services that had been provided, and on a conference call following the release of the results Sequenom Chairman and CEO Harry Hixson said that the firm would take actions to reduce costs "and improve our overall financial performance."

At the time, he mentioned possibly curtailing "services for which there is no current reimbursement available," but made no mention of reducing head count.

According to Sequenom's website, it employs more than 550 people.

In Tuesday morning trade on the Nasdaq, shares of Sequenom were down nearly 3 percent at $2.84.