Sleep disorder diagnostic kits maker Itamar Medical Ltd. (TASE:ITMR) has laid off 17 employees, 20% of its workforce in Israel and the US. The measure will save the company $1.2 million dollars.
The layoffs come barely two weeks after announcing that the US Food and Drug Administration (FDA) had approved the company's Watch-PAT 200 sleep disturbance diagnosis system. The company now says that sales are likely to slow, reducing its business, due to regulatory delays in obtaining a Certificate of Medical Necessity from the US Center for Medicare and Medicaid Services (CMS).
Itamar Medical has outsourced its US marketing to a distributor, InVentiv Health Inc. (Nasdaq: VTIV), which replace the company's US marketing staff. Itamar Medical had NIS 10.6 million in sales in 2007 and spent NIS 4.1 million on sales and current operations. The company had NIS 18.7 million in cash at the end of March.
Itamar Medical stated that on March 14, CMS, which is responsible for the Medicare and Medicaid health baskets, notified the company that it would be possible to obtain insurance indemnification for the treatment of sleep disorders on the basis of home tests in addition to sleep laboratory tests.
However, Itamar Medical president and CEO Israel Schreiber now says, "CMS made the decision, but implementation in the field has been slower than expected. The first quarter results reflected CMS's first draft decision, which actually included a negative sentence for us. We believed that we could reverse the decision, and that was the case, but we suffered a slowdown in sales in the meantime. There is no need to elaborate on the market climate or on the shekel-dollar exchange rate."
Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2008
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