Shares in IntriCon Corp. fell nearly 19 percent Friday, a day after its second-quarter results punctuated the business conditions that led it to restructure in June.
IntriCon, an Arden Hills-based maker of miniature medical devices including hearing aids and diagnostic monitors, on Thursday reported a 23 percent decline in revenue during the April to June quarter from the year-ago period.
The firm was hurt by lower sales to Medtronic Inc. while that company awaits regulatory approval for an insulin pump that includes IntriCon parts. The expiration of a contract with the Singapore government for professional audio products that IntriCon makes also contributed to the reduction in sales.
For the quarter, IntriCon experienced a net loss of $3.4 million, greater than the $82,000 net loss of the year-ago period.
Revenue was $11.5 million, down from $14.9 million a year ago. Medical product sales dropped 20.9 percent from a year ago, hearing-aid sales declined 19.5 percent and professional audio sales plummeted 37.5 percent, the firm said.
IntriCon in June announced that it was facing the revenue decline and restructuring itself, including cutting jobs, to concentrate on products with the highest growth potential.
"We expect to see an immediate $2 million in annual cost savings in the third quarter, and we anticipate we will achieve an additional $1 million by the end of the year," CEO Mark Gorder said in Thursday's results announcement.
Because the announcement came after market hours on Thursday, investors got their first chance to react to the news on Friday. IntriCon shares closed down 71 cents a share to $3.07 on the Nasdaq Stock Market. Trading volume was nearly 10 times the daily average.
IntriCon's reorganization plan involves reducing its 560-employee workforce by 35 people and selling assets in Maine and Singapore. The earnings report treated the Maine operations and part of the Singapore audio business as discontinued operations.
Based on those plans, IntriCon said that its continuing operations would regain profitability in this year's fourth quarter.
"We believe that these savings, combined with an anticipated rebound in medical and hearing health sales in the second half of the year, will allow us to achieve anticipated profitability from continuing operations in the 2013 fourth quarter," Gorder said.
Steve Alexander • 612-673-4553
