SurModics Inc (SRDX)

[Democritus_of_Abdera]

Reorganization into Business Units....

Yesterday (Oct 14), SRDX announced another reorganization (with one time charges of about $1.5M and staff reductions of about 13%). see: http://phx.corporate-ir.net/phoenix.zhtml?c=80353&p=irol-newsArticle&ID=1483059&highlight=

Apparently, this reorganization reverses some of the changes made in the reorganization announced seven months ago (March 4, 2010) under Bruce Barclay’s leadership. The March reorganization was described as:

Effective immediately, SurModics will be organized by functional expertise rather than its previous business unit structure. The Company remains committed to its key markets - Cardiovascular, Ophthalmology, and Diagnostics, and this new organizational structure will provide a more effective platform to support SurModics' growing business in "Therapeutic: Other Markets." Specifically, it will allow the Company to better participate in a wide and growing number of additional markets for its current and future technologies with medical device, pharmaceutical, and biotechnology companies. see: http://phx.corporate-ir.net/phoenix.zhtml?c=80353&p=irol-newsArticle&ID=1399206&highlight

The current reorganization is described as:

SurModics, Inc. (Nasdaq: SRDX), a leading provider of drug delivery and surface modification technologies to the healthcare industry, announced today initiatives intended to reduce its cost structure and renew its focus on business units. These changes are designed to more closely match operations and cost structure with the current customer environment, while at the same time maintaining investment in long-term growth initiatives.... The Company will be organized into three business units [Medical Device ... Pharmaceuticals... In Vitro Diagnostics ...]

Reorganizations, if “smart”, can have a significant positive impact on morale and productivity. However, they also risk demoralization and loss of momentum. Not being intimately involved with the company, I have no way of judging whether this is a good or bad change.

However, as an investor, I take note of “tea leaves”... one that might indicate a pending purchase of additional resources or companies may be found in:

"Rightsizing the business provides SurModics with the flexibility to make investments and pursue growth opportunities in our Medical Device and In Vitro Diagnostics businesses, while positioning the Company for long-term success in our Pharmaceuticals business....

From an organizational chart view. on the other hand, this reorganization would facilitate divestiture and downsizing, should such a plan be in the works... (note that this wild speculation on my part).