Luminex will cut its workforce by approximately 5% and close its Brisbane, Australia office under a restructuring plan focused on its Assay and Related Products (ARP) segment's Newborn Screening Group.
The developer of molecular diagnostics did not specify how many staffers would lose their jobs in the restructuring—the number would appear to be about 35, since the most recent figures show a total workforce of 700 employees.
"While we never take decisions that affect the composition of our workforce lightly, we strongly believe that this reallocation of resources and related adjustments will make our company stronger and deliver value to our shareholders in the short term and the long term,” Patrick J. Balthrop, Luminex’s president and CEO, said in a statement. “These changes reflect an increased focus on our growth initiatives and our ongoing strong commitment to a leadership position in molecular diagnostics and our partnership franchises.”
In neonatal screening, Luminex’s offerings include the NeoPlex4® assay, which can simultaneously test T4, hTSH, 17-OHP, and IRT—four potential indicators of congenital hypothyroidism, congenital adrenal hyperplasia, and cystic fibrosis. NeoPlex4 uses the NeoPlex® system, a sample-processing instrument capable of generating approximately 3,000 results per day.
The restructuring came nine days after Luminex warned that its 2013 revenue would fall “in the lower end of” its projected range between $220 million and $230 million, while maintaining its guidance range to investors. In reporting its second-quarter results to investors, the company blamed a drop in use of molecular assays to unresolved issues with reimbursement for some tests included in the new molecular diagnostic code system established Jan. 1 by the Centers for Medicare and Medicaid Services.
“While the situation remains fluid, we believe it is prudent to adjust our expectations for the second half of 2013 to account for this headwind,” Luminex stated at the time, adding: “We expect a challenging reimbursement environment in the near term for select molecular diagnostic tests that could weigh on overall corporate performance.”
Luminex said it will incur between $7 million and $8 million in charges related to the restructuring. About half of the charge is expected to be expensed in the quarter ending Sept. 30, with the rest set to be expensed in the quarters ending Dec. 31, 2013 and March 31, 2014. The company said that it expects about $1.1 million of the total charge to be reflected as cash expenditures, most of which is expected to be paid out in the quarters ending Sept. 30 and Dec. 31.
The company added that it will realize $5 million to $6 million in annual savings from the cutbacks—$3.5 million to $4 million in the selling (general and administrative) category, and $1.5 million to $2 million in R&D.