MiMedx Announces Restructuring and Layoffs
MiMedx (MDXG) announced yesterday that they plan to implement a broad-based organizational realignment, cost reduction and efficiency program to better ensure the company's cost structure is appropriate given its revenue expectations.
"We regret that the tough decisions being made as a result of the realignment program are affecting team members across the organization," said Charles E. Evans, Chairman of the Board. "We do believe MiMedx is making significant progress on numerous, critical fronts. In particular, the Company has established an independent compliance function, assessed and improved sales and other business practices, is advancing the financial restatement process, continues to remediate the internal control environment, and is developing a long-range strategic plan."
What to Know:
- MiMedx is reducing their workforce by approximately 240 full-time employees, or 24% of its total workforce, of which about half are salesforce personnel. The cost reductions also include various non-employee expenses.
- As a result of this realignment program, management expects the Company to realize material, annualized cost savings beginning in the first quarter of 2019.
- In the near term, MiMedx will be focus on its traditional wound care business, further developing their product pipeline, and continuing to pursue FDA approval for micronized dehydrated human amnion/chorion membrane (dHACM) to treat certain musculoskeletal pain indications as MiMedx transitions to a biopharmaceutical company.
- As previously announced, MiMedx is restating its financial statements and stated they are unable to estimate the expected completion date at this time.
- The Audit Committee's independent investigation is still ongoing, and there may be other actions taken based, at least in part, on information from the investigation. MiMedx continues to incur significant legal and accounting-related expenses related to, among other things, the Audit Committee's independent investigation and other legal matters, the Company's work to prepare its restated financial statements and the implementation of improved business controls.
- As previously disclosed, the Compensation Committee and the Board determined that the separations of the Company's former CEO, COO, CFO and Corporate Controller should be treated as "for cause" and that these former executive officers had engaged in, among other things, conduct detrimental to the business or reputation of the Company. The departures of these former executives have enabled the Company to progress in the preparation of its financial statements.
- While MiMedx is currently searching for a CEO, the company mentioned it has been challenging considering the ongoing investigations of MiMedx business practices and the financial restatement process has presented a practical issue with respect to candidates having sufficient information to evaluate the Company's financial situation and overall business.
"Today's announcement is a continuation of management's efforts to position the business for long-term success by focusing on our wound care business, where our clinical studies best support patient outcomes and for which reimbursement policy has traditionally been more stable," said David Coles, Interim Chief Executive Officer. "Recent business trends and our internal analysis have led us to simplify and streamline our organizational structure, and reduce costs in order to improve profitability and liquidity."
You can read what MiMedx employees have to say on their company forum.
What are MiMedx dHACM Products?