BIOLASE Technology, Inc. (BIOLASE) has revealed an operational restructuring and changes to its debt structure including cost reductions designed to decrease the cash breakeven point to sales levels under $50 million and repayment of its outstanding debt. Recent actions include a global work force reduction of about 20%, which follows a December reduction in force of about the same size. In addition, temporary salary reductions averaging 10% have been implemented company wide.
Worldwide, the company is in the process of restructuring its sales and marketing business units in four countries in order to eliminate direct selling infrastructure costs. The company announced that historically, the 4 foreign subsidiaries had not reached breakeven sales points and were losing a total of about $4 million per year.
In New Zealand and Australia, the company has signed a distribution agreement with the foreign subsidiaries of Henry Schein Inc., its exclusive North American distribution partner. It is also seeking similar partnerships in Germany and Spain with the aim of maintaining a high level of sales and customer support. The total workforce reduction since last fall is about 37%.
Chief executive officer Jake St. Philip said, “Like many capital equipment companies, we are not immune to the impacts of the weak economic environment. However, we have products that we know help dentists differentiate themselves, expand their patient base, do more procedures and enhance their cash flows. We do not think the fourth quarter’s performance and the value our products bring to the market are in alignment right now, and have been in the process of reexamining every component of our business strategy in light of the current environment. We are also pushing forward with our research and development plans to ensure the long-term future of BIOLASE.”
Chief financial officer Dave Mulder said, “While we are in this transitional period, we have reduced inventory intake and production levels so we can monetize the current inventory balances in excess of $12 million, with a much higher wholesale value. We are currently working towards a new asset-based line of credit versus the historic line which was based primarily on cash collateral.”