SFBC International Elects to Phase Out Operations in Florida; Company Will Continue to Deliver Early Through Late Phase Clinica
18 May 2006 - 12:30PM
Business Wire
SFBC International, Inc. (NASDAQ: SFCC), a provider of drug
development services to branded pharmaceutical, biotechnology,
generic drug and medical device companies, today announced that it
plans to cease all of its operations in Florida, including its
Miami and Ft. Myers facilities. In addition, the Company announced
today that the Miami-Dade County Unsafe Structures Board failed to
issue an extension for reviewing the plans submitted by the Company
related to its planned structural improvements to the Miami
facility. "SFBC International remains dedicated to providing the
highest-quality, early and late phase clinical trial testing
services to our clients," said Jeffrey P. McMullen, president and
chief executive officer of SFBC International. "The recent decision
by the Unsafe Structures Board will further hinder our ability to
restore profitability at our Miami operation, resulting in an
acceleration of our review and decision to discontinue the
operations of this part of the Company. We will work closely with
our clients to plan for an orderly completion of ongoing studies at
these locations. Planned Phase I studies at Florida facilities will
be directed where possible to our clinics in Quebec City, Montreal
and, when completed later this year, in our new Toronto facility.
When the various options were evaluated, it became evident that
taking immediate, decisive action by shutting down our Florida
operations would result in greater long-term value for our
shareholders and clients. Removing the burden of the losses from
the Florida operations as well as the previously estimated
remediation costs for the facility in Miami, will enable us to
dedicate our financial resources as well as our executive
committee's time to ensure the reputation and performance for the
overall Company." "We are withdrawing the guidance that we have
provided for our 2006 financial results until we can provide
updated guidance, including an estimate of the loss from
discontinued operations," stated David Natan, vice president and
chief financial officer of SFBC International. "While the Florida
operations were expected to account for approximately 10% of
revenue in 2006, the losses from these operations were previously
expected to impact our earnings from operations by approximately
$7.5 million - $9.0 million in 2006." Mr. McMullen concluded,
"Decisions like this are not made without extensive review and
careful consideration of all factors. We know that this decision
will greatly impact our employees in Florida who have been valued
members of the Company." The Miami-Dade County Unsafe Structures
Board gave the Company 60 days from May 17, 2006, to file for a
permit to demolish the Miami facility. However, the Company intends
to appeal this ruling to the Florida courts and potentially file an
injunction to stay these proceedings to facilitate an orderly shut
down of operations and complete the transition of any studies to
its Canadian facilities, where possible. About SFBC International,
Inc. SFBC International, Inc. is an international drug development
services company offering a comprehensive range of clinical
development, clinical and bioanalytical laboratory, and consulting
services to the branded pharmaceutical, biotechnology, generic drug
and medical device industries. SFBC has more than 35 offices,
facilities and laboratories with approximately 2,500 employees
strategically located throughout the world. For more information,
visit SFBC's website at www.sfbci.com. Forward-Looking Statements
The statements made in this press release relating to the
leveraging the strong reputation of the Company's subsidiaries, the
estimated impairment charge, estimated stock option expense, and
2006 guidance are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Act").
Additionally words such as "seek," "intend," "believe," "plan,"
"estimate," "expect," "anticipate" and other similar expressions
are forward-looking statements within the meaning of the Act. Some
or all of the results anticipated by these forward-looking
statements may not occur. Factors that could cause or contribute to
such differences include, but are not limited to, whether adverse
publicity relating to SFBC's Miami operations causes clients to
select competitors, not only for early stage branded clinical
trials but also for other aspects of SFBC's business; SFBC's
ability to resolve open issues relating to its Miami property
including whether it can change the hospital-type classification
and successfully appeal and/or enjoin the Miami-Dade County Unsafe
Structures Board ruling, whether a building permit will be issued,
whether it can complete its remediation plan on a timely basis and
within reasonable cost parameters, whether SFBC will prevail in the
pending land lease litigation and whether it will be able to
relocate its Miami business; continued adverse publicity related to
actions of the United States Senate Finance Committee; developments
with respect to the SEC's inquiry and securities class action
lawsuits and derivative lawsuits; SFBC's assessment of its current
FDA inspections; SFBC's ability to successfully achieve and manage
the technical requirements of specialized clinical trial services,
while complying with applicable rules and regulations; the Miami
subsidiary's continued ability to recruit participants for clinical
trials; regulatory changes; changes affecting the clinical research
industry; a reduction of outsourcing by pharmaceutical and
biotechnology companies; SFBC's ability to compete internationally
in attracting clients in order to develop additional business;
cancellation of contracts; SFBC's ability to retain and recruit new
employees; SFBC's clients' ability to provide the drugs and medical
devices used in its clinical trials; SFBC's future stock price;
SFBC's financial guidance; and the national and international
economic climate as it affects drug development operations. Further
information can be found in SFBC's risk factors contained in its
Form 10-K filed with the SEC in 2006 and other filings with the
Securities and Exchange Commission.
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