Premier Laser Halts Production, Lays Off Staff as It Weighs Options
The company that pioneered lasers used in the painless treatment of tooth decay said Wednesday that it has halted production, furloughed two-thirds of its work force and hired a consultant to consider its options, including possible bankruptcy reorganization.
The batch of grim news at Premier Laser Systems Inc. in Irvine is the latest in a spiral of troubles at the once-promising maker of medical and dental lasers. Earlier this year the company shuffled management, leading to the departure of founder Colette Cozean. She left after Premier lost more than $70 million in the past 2 1/2 years and amid criticisms that Cozean was unable to successfully market the company’s products.
Michael J. Quinn, who replaced Cozean as Premier’s chief executive, said Wednesday that this week’s layoff of 54 of the company’s 80 workers, including scientists and engineers, would last at least three weeks. For his part, Quinn said he is working without his salary of $300,000 until further notice.
Quinn said the company has hired turnaround specialist Crossroads Capital Partners in Newport Beach to help plot Premier’s course of action, which could also include finding joint-venture partners.
In an interview, however, Quinn hinted that bankruptcy reorganization might be the most palatable option, because “potential investors might like a cleaned-up company” before parting with their cash. The company is desperate for cash, he acknowledged.
“We definitely have the capability to pull this thing out, but we need some investment,” Quinn said. “We have great products and great people, but no cash. So the stool is a little wobbly.”
As of Dec. 31, Premier had less than $415,000 in cash on hand. And its current liabilities exceeded current assets by more than $4 million.
In the quarter ended Dec. 31, the company reported a net loss of almost $3.3 million, or 20 cents a share, on sales of $2.4 million. That compared to a $12.1-million loss, or 81 cents a share, on revenue of $3.5 million for the same period a year earlier.
The company’s stock touched a 52-week low on Wednesday before closing at $1.28, down 28 cents in Nasdaq trading.
Among Premier’s other problems, it disclosed in its latest quarterly earnings filing that the Securities and Exchange Commission is investigating the company’s “revenue reporting practices and related management issues” for its 1997 fiscal year and part of fiscal 1998.
Quinn, who joined Premier last November, declined to comment on the regulatory investigation, and Cozean could not be reached for comment.
Premier’s latest filing also revealed that Cozean and Jeffrey Anderson, former vice president for regulatory affairs, have sued the company. Cozean alleges that Premier failed to pay her certain salary and benefits. She is seeking damages of more than $340,000. Anderson is asking for in excess of $120,000 in severance pay. Quinn said the company will fight the lawsuits.
Premier first appeared in the national spotlight in the spring of 1997, when it received approval from the Food and Drug Administration to market a new dental laser that could treat tooth decay fairly painlessly. The product drew an avalanche of attention and was hailed as a giant step toward drill-free dentistry.
But the laser, which was expected to propel Premier to long-term success, never was embraced by dentists. Supplier problems also plagued Premier’s efforts.
William Relyea, an analyst with Josephthal & Co., said Premier still has lots of valuable assets, including product patents and technology. But it faces a host of challenges.
“What you see here is obviously a company that is regrouping,” said John Westergaard, chairman of Westergaard.com Inc., a New York publisher of financial newsletters who follows Premier. “Whether it succeeds or not remains to be seen.”
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Laser Low
Premier Laser Systems’ stock has never recovered since peaking in mid-1997. But the company faltered in marketing its products, losing investors’ confidence. Nasdaq delisted its shares for a period in 1998. Monthly closes and latest:
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Wednesday: $1.28
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*Stock was delisted for about four months.
Source: Bloomberg News
