GeoPharma (GORX) Announces Strategic Restructuring Plan
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GeoPharma, Inc. (Nasdaq: GORX) announced today a strategic restructuring plan that is intended to improve its financial performance by consolidating operations, reducing head count and lowering SG&A. The plan will allow the Company to maintain the focus of its core businesses and is directly in line with the Company's goal of achieving a return to profitability.
The plan includes a consolidation of GeoPharma's distribution segment by trimming the number of warehouse locations from five locations into three by closing the Dallas, Texas and the Cranston, Rhode Island locations. The accounts previously serviced by the Dallas hub will be maintained utilizing the Henderson, Nevada location. The Rhode Island accounts will be serviced by their existing drivers with support maintained by the Scranton, Pennsylvania location. "We anticipate that the closing of these two facilities will yield significant benefits for the Company without sacrificing the quality of service our customers have become accustomed to in dealing with us," stated Bob O'Leary Sports Science Chief Operating Officer Joe Mies. "Our projections under the new model have been conservatively realistic with regards to the maintenance of our premier and priority accounts from which we derive the bulk of our business. The benefits of closing these facilities far outweigh the potential downside as we project an immediate and meaningful positive impact for net income in our division for the March ended quarter and in the fiscal year to come." The closing of the Texas facility was implemented on December 3, 2008 and the Rhode Island facility occurred on January 9, 2009.
The restructuring initiative also includes a renegotiation of the Company's shipping contracts as well as an immediate discontinuation of any business expenditures that are not visibly commensurate with a reconcilable amount of sales or other net benefit to the Company.
Additionally, Company management is examining its debt structure to see if their monetary obligations can be reconfigured in a more advantageous manner. These options include, but are not limited to, the settling of prior obligations, replacement of current debt, and/or refinancing.
Furthermore, in an effort to showcase their commitment to reducing expenses and returning the Company to profitability, all of the Company's officers are taking an immediate pay reduction for the foreseeable future.
GeoPharma, Inc. engages in the manufacture, packaging, and distribution of private label dietary supplements, generic drugs, and health and beauty products for companies worldwide.
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