Venus Concept (Nasdaq:VERO) announced today that it plans to implement a restructuring plan that includes a large workforce reduction.
The medical aesthetic technology developer also intends to change up its executive leadership team amid the restructuring.
Venus Concept plans to cut 70 employees, equalling a reduction of approximately 18% of its global workforce as of Dec. 31, 2022. It completed the first phase of the reduction — impacting employees in Israel and North America — on Feb. 6.
Shares of VERO dipped 3.8% at 37¢ apiece as the market opened today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — rose 12.3%.
In connection with the actions, Venus Concept expects restructuring charges between $2 million and $2.5 million. It intends to substantially settle those charges in cash. The company expects to realize the majority of its savings in the second half of 2023.
Venus Concept projects the restructuring plan to result in total pre-tax savings of between $13 million and $15 million starting in 2024.
“We recently completed the first phase of the comprehensive strategic review and assessment of the Company outlined on our third quarter earnings call,” said Rajiv De Silva, CEO of Venus Concept. “The assessment, once completed, will inform the development of a transformational plan focused on repositioning Venus Concept to enhance the cash flow profile of the business and to accelerate the path to long-term, sustainable, profitability and growth.”
Other restructuring plans include discontinuing operations in unprofitable markets and consolidating functions. Venus Concept plans to eliminate or reduce investments in non-core areas and prioritize the allocation of resources to promising growth opportunities.
Venus Concept initiates executive leadership transitions
The first move as part of the restructuring sees President and Chief Business Officer Hemanth Varghese appointed to a newly created roll. Varghese now serves as president and chief innovation and business officer. His responsibilities include leading global research and development activities.
Additionally, Venus Concept appointed William McGrail, VP of global regulatory affairs and quality assurance, to SVP of technical operations and compliance. His responsibilities include overseeing all technical operations Those include manufacturing and supply chain, regulatory affairs, quality and technical services.
COO Søren Maor Sinay also announced his decision to leave the company through mutual agreement due to personal reasons. His employment in the capacity of senior advisors continues through March 6, 2023.
“I want to take this opportunity to thank Maor for his 5-plus years of service to the company and wish him well in his future endeavors,” De Silva said. “I am excited at the appointment of Hemanth and Bill to their respective new roles. … As Venus Concept executes our transformational plan, it is imperative that we have the organizational structure and experienced leadership to improve profitability and ensure long-term success.”
Preliminary fourth-quarter results
Venus Concept projects revenues for the three months ended Dec. 31, 2022, to range between $23.5 million and $24.5 million. That marks a decrease of between 25% and 28% year over year. However, it’s an increase of 9% to 14% from the previous quarter.
The company said the results reflect its shift to prioritize cash system sales.
BTIG analyst Marie Thibault said the preliminary results fall short of consensus estimates but top BTIG’s projections of $23.5 million. She expects more information on the workforce reduction and restructuring on the company’s earnings call next month.