MiMedx (MDXG) stock is collapsing, down nearly 61%, after announcing an organizational realignment program – or what the laymen call a mass firing. The biotech is still trying to get back in line after being caught up in legal troubles in March when federal investigators filed an official complaint accusing MiMedx of engaging in “channel-stuffing,” which is a scheme to inappropriately recognize revenue that has not yet been realized, failing to disclose financial ties to physicians (a policy required by law), as well as lacking internal controls over financial reporting and trading shares at an artificially inflated price, which caused class members to suffer losses and damages.
It does seem MiMedx could use some realignment. This, to Chief Executive Officer David Coles, means laying off 240 full-time employees, or 24% of its workforce. Half of those who bear the brunt of this act are salesforce personnel. Management says it expects to begin saving money in the first quarter of 2019.
“Today’s announcement is difficult as it affects many of our colleagues. I’d like to thank all of our employees for their contributions to our Company and their support of our mission. We are confident these organizational changes will both better align our cost structure with our near-term revenue expectations and allow us to operate more efficiently and effectively. By tackling the cost structure now, we believe we are better able to position MiMedx to capitalize on the market opportunities presented by our products and pipeline and, hence, preserve and drive long-term shareholder value,” CEO Coles said.
MiMedx focuses on regenerative biologics, which utilizes human placental tissue and uses it as a transplant to improve health and growth. Company representatives are currently dedicating itself to its long-term strategic plan, which includes a sharp focus on traditional wound care. Currently, the company is adjusting to changes in the wound care market, which is undergoing changes in regulations that apply to human cells and tissues in addition to the elimination of health insurance coverage for certain tissue products.