Surgalign™ Announces Corporate Restructuring Program to Focus on Key Growth Areas
09 Novembre 2022 - 2:30PM
Surgalign Holdings, Inc. (NASDAQ: SRGA), a global medical
technology company focused on elevating the standard of care by
driving the evolution of digital health, today announced that its
Board of Directors has approved a corporate restructuring plan
intended to help drive growth in the most valuable and profitable
parts of the Company’s business.
As part of the plan approved on November 8, 2022, Surgalign
intends to continue its brand and product rationalization programs,
which are expected to result in a greater focus on new products
brought to market over the past year and core hardware products
that hold the greatest growth prospects. Throughout the fourth
quarter of 2022 and into early 2023, the Company intends to
discontinue some of its lower performing SKUs, which will enable
the redeployment of resources across research and development and
support the commercialization of products that align with the
go-forward business strategy.
Additionally, as part of its focus to improve operational
efficiencies, the Company intends to continue ongoing efforts, as
well as initiate several new programs designed to streamline and
optimize resources and lower future working capital requirements.
This will include product rationalization, process improvements and
organizational redesign programs, which the Company expects will
result in lower non-essential spending, particularly in general and
administrative expenses and select capital expenditures. As a
result of the restructuring programs and initiatives planned, the
Company expects an estimated cash savings of approximately $30.0 to
$35.0 million compared to 2022. The Company also disclosed that its
Board of Directors has approved the exploration of further
restructuring initiatives, which include but are not limited to,
the potential paring down, selling or exiting certain aspects of
its business, both domestically and abroad.
Terry Rich, President and Chief Executive Officer of Surgalign,
stated, “We intend to take aggressive steps to realign our business
and improve our market position and value creation opportunities.
Our focus is on innovation and better serving our customers with
the products and support they need to improve patient outcomes. We
believe these programs will enable us to generate growth in areas
we are focused on, enhance gross margins and lower expenses, and
over time, improve our financial position by freeing up resources
to invest in areas we believe hold the greatest promise.
Implementation of these programs will be dependent on the outcome
of financing initiatives currently underway.”
To achieve these savings, the Company expects to incur
approximately $3.0 - $3.5 million in employee-related severance
costs and $2.5 - $3.5 million in other exit and disposal costs in
the fourth quarter of 2022 and first quarter of 2023 for a total
estimated restructuring cost of approximately $5.5 - $7.0 million.
Estimated cash savings are expected to be realized throughout 2023
and programs are anticipated to begin late in the fourth quarter of
2022 and be substantially complete in the first half of 2023. The
Company continues to evaluate and identify other areas of its
business to enhance efficiencies and improve processes, with a goal
to further lower its operating expenses and capital needs.
About Surgalign Holdings, Inc.Surgalign
Holdings, Inc. is a global medical technology company committed to
the promise of digital health to drive transformation across the
surgical landscape. Uniquely aligned and resourced to advance the
standard of care, the company is building technologies physicians
and other health providers will look to for what is truly possible
for their patients. Surgalign is focused on developing solutions
that predictably deliver superior clinical and economic outcomes.
Surgalign markets products throughout the United States and in
approximately 50 countries worldwide through an expanding network
of top independent distributors. Surgalign is headquartered in
Deerfield, IL, with commercial, innovation and design centers in
San Diego, CA, Warsaw and Poznan, Poland, and Wurmlingen, Germany.
Learn more at www.surgalign.com and connect on LinkedIn and
Twitter.
Forward Looking StatementThis press release
contains forward-looking statements based on management’s current
expectations, estimates and projections about our industry, our
management’s beliefs and certain assumptions made by our
management, and such forward-looking statements include (among
others) statements regarding anticipated future financial and
operating performance (including forecasted full-year revenue and
number of HOLO sites secured), product rationalization and expense
reduction initiatives and the results thereof, potential third
party financing and anticipated cash needs. Words such as
“anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” variations of such words and similar expressions are
intended to identify such forward-looking statements. The
forward-looking statements are not guarantees of future performance
and are based on certain assumptions including general economic
conditions, as well as those within the Company’s industry, and
numerous other factors and risks identified in the Company’s most
recent Form 10-K, 10-Q and other filings with the SEC. Our actual
results may differ materially from the anticipated results
reflected in these forward-looking statements. Important factors
that could cause actual results to differ materially from the
anticipated results reflected in these forward-looking statements
include risks and uncertainties relating to the following: (i) the
Company’s access to adequate operating cash flow, trade credit,
borrowed funds and equity capital to fund its operations and pay
its obligations as they become due, and the terms on which external
financing may be available, including the impact of adverse trends
or disruption in the global credit and equity markets; (ii) risks
relating to existing or potential litigation or regulatory actions;
(iii) the identification of control deficiencies, including
material weaknesses in internal control over financial reporting;
(iv) general worldwide economic conditions and related
uncertainties; (v) the continued impact of the COVID-19 and the
Company’s attempts at mitigation, particularly in international
markets served by the Company; (vi) the failure by the Company to
identify, develop and successfully implement its strategic
initiatives, particularly with respect to its digital surgery
strategy; (vii) the reliability of our supply chain; (viii) our
ability to meet obligations, including purchase minimums, under our
vendor and other agreements; (ix) whether or when the demand for
procedures involving our products will increase; (x) our financial
position and results, total revenue, product revenue, gross margin,
and operations; (xi) failure to realize, or unexpected costs in
seeking to realize, the expected benefits of the Holo Surgical Inc.
(“Holo Surgical”) and Inteneural Networks Inc. (“INN”)
acquisitions, including the failure of Holo Surgical’s and INN’s
products and services to be satisfactorily developed or achieve
applicable regulatory approvals or as a result of the failure to
commercialize and distribute its products; (xii) the failure to
effectively integrate Holo Surgical’s and INN’s operations with
those of the Company, including: retention of key personnel; the
effect on relationships with customers, suppliers, and other third
parties; and the diversion of management time and attention to the
integration; (xiii) the number of shares and amount of cash that
will be required in connection with any post-closing milestone
payments, including as a result of changes in the trading price of
the Company’s common stock and their effect on the amount of cash
needed by the Company to fund any post-closing milestone payments
in connection with the acquisitions; (xiv) the continuation of
recent quality issues with respect to our global supply chain; (xv)
the effect and timing of changes in laws or in governmental
regulations; and (xvi) other risks described in our public filings
with the SEC. These factors should be considered carefully, and
undue reliance should not be placed on the forward-looking
statements. Each forward-looking statement in this communication
speaks only as of the date of the particular statement. Copies of
the Company's SEC filings may be obtained by contacting the Company
or the SEC or by visiting Surgalign’s website at
http://www.surgalign.com/ or the SEC’s website at
http://www.sec.gov/. We undertake no obligation to update these
forward-looking statements except as may be required by law.
Investor and Media Contact: |
Surgalign Contact: |
Glenn Wiener |
Kristine Simmons |
gwiener@gwcco.com |
ksimmons@surgalign.com |
+1 917 887 8434 |
+1 619 206 4648 |
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