Mela Sciences (NSDQ:MELA) shares slid 13 points on Wall Street yesterday after a devastating 2nd quarter forced the company to layoff 25% of its staff and impose an overall "restructuring of its operations."
The company posted a 35% increase in losses over the same quarter last year but a whopping 91% increase in sales over Q2 2012. The earnings release attributed the disappointing bottom line to an over-saturated sales force that is struggling to win contracts for the company’s flagship MelaFind skin cancer detection device.
The Irvington, N.Y.-based diagnostic device maker posted losses of $7.4 million, or 17¢ per diluted share, on sales of $144.4 million during the 3 months ended June 30, 2013. That compared to Q2 2012 losses of $5.5 million, or 18¢ per share, on sales of $75.8 million. Diluted per-share earnings were on par with analysts’ expectations at 17¢.
"While we are not pleased with the commercial traction that MelaFind has gained to date, we have embarked on the restructuring announced today along with several strategic initiatives to build a successful and profitable business," said interim CEO Robert Coradini in the earnings release.
In 2013, the company doubled its sales force from 14 to 28 and increased its sales, general and administrative costs from $3.5 million in the 2nd quarter of 2012 to $4.7 million this quarter.
"We are prioritizing our target list of dermatologists and their practices based on their geographic location and the proper level of support our reps and field specialists can provide," Coradini said in the quarterly conference call. "This philosophy has guided the restructuring and as of today, we have realigned our field-based organization accordingly."
Long-time Mela CEO Joseph Gulfo resigned without cause in June, and the company has still not named a permanent replacement.
MELA shares closed last night at 74¢ per share, down 12.9% on the day.