Less than three months after LipoScience last downgraded its financial forecast, the Raleigh medical diagnostics company cut its revenue projection deeper Friday and said that its CEO had resigned after 10 years of steering the company.
LipoScience was the first of several Triangle health care companies to go public this year, a sign that the local health care sector was rebounding after the recession. LipoScience began publicly trading on the Nasdaq exchange in January with projections of aggressive growth, but the high expectations failed to materialize and the company’s stock has lost half its value.
“The company is incrementally destroying value as it makes new investments,” said Andrew Zamfotis, an analyst with Eva Dimensions in New York. “They are investing capital ... but are not generating a sufficient return to cover their cost of capital.”
The company’s shares slipped Friday to $5.76, down 67 cents on the day. The Piper Jaffray firm downgraded the company and cut its target price from $14 a share to $6 a share. LipoScience executives were not available for comment Friday, said spokesman Phil Denning.
Outgoing CEO Richard Brajer, 52, issued his own statement saying he agreed it was time for him to step down.
“Given my interests and the current shortfall to guidance, the board and I mutually decided that now was the right time for a transition,” Brajer’s statement said. He also said that he aspires “to launch another great company.”
LipoScience installed board member Robert Greczyn as interim CEO and announced a search for a permanent chief executive. Before joining the company’s board in 2011, Greczyn, 62, had been CEO of Blue Cross and Blue Shield of North Carolina, the state’s biggest insurance company.
Putting Greczyn in charge signals to investors that LipoScience has redoubled on its strategic goal of expanding the number of insurers that pay for the NMR Lipo-Profile test, which assesses a patient’s risk of heart disease. Insurers that pay for the test are limited to Medicare, Tricare, WellPoint, United Healthcare and several Blue Cross Blue Shield affiliates, including North Carolina’s.
“Now they’ve got a known entity in the industry running the company,” said Stephen Brozak, an analyst with WBB Securities in New Jersey.
LipoScience said in a statement that Greczyn “is an industry veteran” who has “knowledge of the managed care industry.” As a board member, Greczyn has been a “close adviser,” according to the statement.
Heart disease assessment
The company’s diagnostic test measures lipoprotein particles in the bloodstream that cause plaque buildup in arteries and lead to heart disease. LipoScience has promoted its product as a more accurate assessment of heart disease risk because it measures lipoproteins in the blood, rather than estimating heart disease risk from cholesterol levels, which can vary widely among patients and are an imprecise indicator of coronary health.
“They’re looking to introduce a disruptive technology,” Brozak said of LipoScience. “Their data systems are a significant advancement. The questions is: Who’s going to pay for it?”
LipoScience also said Friday that second-quarter earnings, scheduled to be announced Tuesday morning, will be on the low end of the company’s previous guidance. Full-year earnings for 2013 are also being reduced – from a range of $54 million to $56 million, to a range of $52 million to $54 million.
As recently as March, the company was projecting that its 2013 revenue would increase by as much as 11.3 percent.
Then in May, LipoScience reported a $2.8 million net loss for the first quarter and cut its earnings forecast. At the time the company vowed an aggressive strategy to improve its financial performance.
LipoScience employed about 200 people as of December 31. The company did not provide an updated work force total Friday.