Surmodics (Nasdaq: SRDX) announced a restructuring that includes cutting 13% of the workforce at the Eden Prairie, Minnesota-based IVD tech developer.
In its most recent annual report, Surmodics listed a headcount of 447, which means the layoff could involve nearly 60 workers. The cost-reduction plan will save roughly $10 million to $11 million in cash for the remainder of the company’s fiscal year that ends Sept. 30, 2023, according to the company.
The move comes just weeks after the company revealed that the FDA had indicated that its Surveil drug-coated balloon was not approvable. Surmodics yesterday evening also reduced its full-year revenue guidance.
“We remain focused on making progress with respect to our regulatory strategy for the SurVeil DCB and are preparing to engage with the FDA to evaluate the appropriate path forward,” Surmodics CEO Gary Maharaj said in a news release.
“In light of this development, we have implemented a spending reduction plan to preserve capital and more closely align our capital allocation priorities with our strategic objectives, which includes a restructuring to reduce our workforce by approximately 13% and additional cost-saving measures.”
SRDX shares were down slightly to $30.09 apiece by midday trading today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up more than 12%.
Surmodics is also reducing its 2023 revenue guidance
In addition to the Surveil setback, the company also experienced widening losses in its most recent quarter, even as revenue increased 8% year-over-year.
Surmodics lost $7.8 million, or 56¢ per share, off of $14.2 million in revenue for the quarter ended Dec. 31, 2022. For the same quarter a year ago, it lost $2.8 million, or 20¢ per share, off of $12.3 million in revenue.
Adjusted to exclude one-time items, Surmodics had EPS of 50¢. The result was 14¢ ahead of the expectations of Wall Street analysts, who expected a loss of 64¢ per share. Revenue also beat The Street.
Surmodics now expects fiscal year 2023 total revenue in the range of $102 million to $106 million, representing 2% to 6% growth. The previous guidance was for $103 million to $107 million in revenue.
The company’s losses, however, will be better than previously predicted. Surmodics now expects an adjusted loss per share of $2.09 to $1.69 versus the previously projected adjusted loss per share of $2.54 to $2.14.
Said Maharaj: “We will continue to make progress with respect to our regulatory strategy for the SurVeil DCB, while advancing the initial commercialization of our Sublime radial and Pounce arterial thrombectomy platforms and driving revenue and cash flow growth from our Medical Device performance coating offerings and In Vitro Diagnostics business.”