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 6%. The move is expected to result in annual savings of approximately $0.9 million to $1.1 million.
Moreover, the organizational restructuring is expected to result in a one-time restructuring charge of approximately $0.5 million (2 cents per share) in the final quarter of fiscal 2013 (ending Sep 30, 2013) for SurModics.
SurModics’ two units, Quality, Regulatory and Clinical Affairs function and Medical Device Research and Development, will start reporting directly to CEO Gary Maharaj right away. These units were previously accountable to business segment leaders. The changes are likely to provide these units with the executive focus and alignment necessary to accomplish SurModics’ strategic objectives.
Moreover, Andy LaFrence, the Vice President of finance and chief financial officer at SurModics will also supervise the Operations and Information Systems operations going forward. LaFrence joined the company in Dec 2012. The presence of LaFrence is expected to be beneficial to SurModics since he is vastly experienced in finance and capital markets.
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 Aug 2011, the company trimmed its work-force by 9%. The company slashed its work force in 2010 as well.
We are positive on the steps taken by SurModics to increase efficiencies. Moreover, the company’s initiative to sell its Pharmaceutical unit to focus on its core business is also a prudent move.
SurModics currently carries a Zacks Rank #2 (Buy). Boston Scientific Corporation (BSX) and Advaxis, Inc. (ADXS) are examples of equally attractive stocks operating in the same field as SurModics. Alere Inc. (ALR) appears to be more attractive with a Zacks Rank #1 (Strong Buy).
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