In an effort to improve its cost structure and conserve cash, Minrad International said it would layoff 35 percent of its workforce, or some 50 jobs. The layoffs come after a dismal third quarter. Despite revenue growth, the company’s net loss widened to $10.8 million, double last year’s third quarter loss.
Starting in May, Minrad successfully implemented a growth strategy to support its core international anesthetic business. All program and discretionary spending was redirected to this business unit. Says Dave DiGiacinto, Minrad’s President and COO, “The demand for our core anesthetic business continued to grow in the third quarter of 2008, especially in international markets. This was evidenced by our international shipments, which were up 271% over the third quarter, 2007.”
Even with heightened demand, the lack of liquidity plagued Minrad. Last quarter, the company was unable to secure the raw materials needed to manufacture sevoflurane. As a result, Minrad was incapable of shipping $2.5 million worth of the $11.4 million in international orders.
The company says it will align its entire organization to support the growth of its international anesthetic business. However, DiGiacinto admits that, “[The reorganization] will not solve our current and serious lack of liquidity. Our most pressing business priority is to secure funds to operate our business.”
In May 2008, Barclays Capital facilitated a $40 million round of debt financing. Minrad says it has been managing its cash flow diligently, but given its current stage of growth, it will be extremely difficult to operate the business beyond 2008 without access to new financing or other strategic alternatives. Barclays continues to act as a strategic advisor.
Minrad will hold an investor conference call on Tuesday, November 25th to discuss current business conditions.
