NEW YORK (GenomeWeb News) – Celera today released preliminary revenue results for the second quarter of 2009, which it expects to be down between 2 percent and 7 percent from its Q2 2008 revenues. In light of these results, the company announced that it is immediately implementing a restructuring program.
The company expects to report Q2 revenues of between $40 million and $42 million in 2009 — down from $42.8 million in Q2 of 2008.The decreased revenue reportedly stems from reductions in Celera's Lab Service business, which is conducted by Berkeley HeartLab, combined with mid-single digit percentage growth in its products business and declining licensing revenue in the corporate segment.
The company cited broad economic pressures, lost business resulting from efforts to collect aged receivables, and reimbursement denial on some legacy BHL tests by certain payors as contributing factors in the lower than anticipated sample volume that has affected Lab Services revenues. It also noted that reimbursement rates were down this quarter over both Q2 2008 and Q1 2009.
Meanwhile, Celera pointed to completion of payments by one licensee and reduced royalty revenue from another licensee as the reason for reduced corporate segment revenue.
The company's immediate restructuring program will eliminate roughly 13 percent of its workforce — about 80 full-time positions across the country. It also plans to reduce and redeploy resources at BHL, where the focus will shift to a disease-management model focusing on web and telephone support.
This restructuring move is expected to lead to a charge in the third quarter of this year. Celera said it also expects to face significant charges in Q2 2009 for bad debt expense and impairment of goodwill and intangible assets. Given the significant drop in revenue expected in Q2, the company said it is withdrawing its 2009 guidance.
"We believe these restructuring actions allow us to optimize our organization to best take advantage of future opportunities for growth while addressing current business conditions and reducing costs," Celera CEO Kathy Ordoñez said in a statement, noting that the company plans to increase resources for supporting its genetic tests.
Celera plans to release its full Q2 2009 financials on Aug. 6.
In early Thursday trade on the Nasdaq, Celera's shares were down around 28 percent at $5.60.