TORONTO - Nuclear medicine company MDS Inc. (TSX:MDS) says it will cut 150 jobs in Toronto as it moves its headquarters to Ottawa and eats severance charges that include $7 million for its former chief executive officer.
The company said it will book about $21 million of restructuring charges in fiscal 2010, including severance pay for former CEO Stephen DeFalco, as well as the severance and benefits of other employees.
DeFalco, an American, was hired several years ago to turn around the company, which had been lagging in financial and stock market performance. He sold off many of its businesses, including the MDS lab division, acquired other companies and focused on the global market.
However, the recession squeezed the company and troubles in its drug research and nuclear medicine division also hit its bottom line.
In the fiscal year ended Jan. 8, MDS lighted its losses to $15 million from $246 million in 2008 when it wrote down the cost of its MAPLE reactor program.
A shortage of medical isotopes caused its revenues from continuing operations to slide to $231 million from $296 million a year earlier.
The company faced the fallout from the shutdown of the Atomic Energy of Canada's NRU reactor in last May when it put offline due to a heavy water leak.
Last week, MDS said it could begin processing medical isotopes again as early as April if the AECL restarts the reactor in March.
The company also aims to hire about 50 new employees in Ottawa at its new head offices.
MDS is now selling most of its remaining business units as it reinvents itself as a smaller business focused on its MDS Nordion nuclear medicine business.
The company has reached an agreement to sell its Analytical Technologies business to Washington, D.C.,-based Danaher Corp. (NYSE:DHR) for $650 million, and is currently seeking a buyer for its Pharma Services unit.
It will keep its MDS Nordion business, best known for supplying medical isotopes and other tests around the world.
In its outlook for this year, the company said that it expects to generate positive earnings before interest, taxes, depreciation and amortization once the restructuring is completed, though it didn't provide a timeline for when it expects those results to come through.
"In addition to a lower number of corporate employees, we would expect to incur lower costs in certain areas, such as audit and insurance resulting from the reduced size and nature of the remaining business," the company said in its annual report, issued Tuesday.
Overall, the company has faced $30 million in severance charges, of which it already logged $9 million in the fourth quarter of fiscal 2009, with the remaining $21 million being logged this year.
Shares of MDS fell seven cents to $8.07 in afternoon trading on the Toronto Stock Exchange.