SurModics (NASDAQ:SRDX), a drug delivery and surface modification company, announced this week that it was cutting 9 percent of its workforce, which included the departure of its CFO, and closing a plant.
It’s a major restructuring on the heels of another big cost-cutting move less than a year ago where it cut 13 percent of its employees. It also put its pharmaceuticals business up for sale in late 2010 following a proxy fight.
Given this week’s retrenchment and still unmet goal of selling the pharma business, the question is, can the company meet its guidance for fiscal 2011, which ends Sept. 30?
Back in June, when SurModics was hit with a surprising announcement from Johnson & Johnson to which it licenses polymer coating technology for J&J’s Cypher drug-eluting stents, SurModics said that it was still maintaining its fiscal 2011 guidance. Revenue on royalties from Cypher had been steadily declining amid falling Cypher sales until J&J finally made the decision to pull the plug on drug-eluting stents. SurModics’ shares sank as a result. Royalties and license fees accounts for the largest portion of overall reported revenue.
“While we are disappointed by J&J’s announcement, we have long anticipated the continuing decline of royalties from Cypher in our strategic and operating plans,” SurModics’s President and CEO Gary Maharaj responded at the time. “The company reaffirms its fiscal 2011 guidance.”
In early August, SurModics increased the guidance, saying the company now expected revenue in the range of $65 million to $68 million for the year ending Sept. 30. Earnings per share would be between 3 cents to 13 cents, a dramatic revision given the company was previously expecting a loss between 8 cents and 21 cents per share.
But on Thursday, the company wasn’t affirming the guidance. An external spokeswoman would only say that SurModics is not “updating or commenting” on the August guidance.