In a bid to optimize its resources and maximize long-term growth potential SurModics Inc. (SRDX) announced that it will trim its work-force by 9%. The move is expected to result in annual savings of approximately $1.7 million to $2.0 million.
Moreover, the organizational restructuring is expected to result in a one-time restructuring charge of approximately $1.1 to $1.4 million in the final quarter of fiscal 2011 (ending September 30, 2011) for Surmodics. The company also announced that it will close its facility at Maryland. This facility will now operate out of Surmodics’ headquarters in Eden Prairie, Minnesota.
We note that this is not the first time that SurModics, a provider of surface modification and drug delivery technologies to the healthcare industry, has reorganized its business.
In October 2010, the company trimmed its work-force by 13% and made certain changes to its organizational structure to reduce cost and utilize its resources in a better manner. Surmodics had reduced its workforce in March 2010 as well.
Following the October 2010 restructuring, the company operates through three business units: Medical Devices, Pharmaceuticals and In Vitro Diagnostics. In December 2010, SurModics announced that it is looking at options regarding the Pharmaceuticals business, including its potential sale to focus extensively on the Medical Device and In Vitro Diagnostics units.
Surmodics also brought about a change at its helm in December 2010 by appointing Gary R. Maharaj as its President and Chief Executive Officer. Maharaj is the former President and CEO of Arizant Inc., which was sold to 3M Co. (MMM) in October 2010.
Our Recommendation
We prefer to remain on the sidelines until these efforts of SurModics, which are aimed at streamlining operations and increasing efficiencies, start showing results. Consequently we have a long-term Neutral recommendation on the stock. SurModics carries a Zacks #3 Rank (Hold rating) in the short run.
3M CO (MMM): Free Stock Analysis Report
SURMODICS (SRDX): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment