Reva Medical Announced Workforce Reduction In San Diego

REVA Medical Inc (ASX:RVA), based in Sydney and headquartered in San Diego, California, is a medical device company engaged in development and commercialisation of polymer-based bioresorbable products for vascular applications. Fantom Encore and MOTIV are the two bioresorbable vascular scaffolds used to treat coronary artery disease and below-the-knee peripheral artery disease (PAD) respectively. As of now, Fantom Encore is available in Switzerland, Belgium, Germany, Austria, Italy and many more countries.

In a recent announcement, the company informed that it is restructuring the workforce, to align with the prevailing market conditions for its business. As per the decision, REVA will reduce its personnel strength at the San Diego station to 22 employees representing a 44% decline in positions, to be effective from February 8th, 2019.

The company has a strong existing market reach and customer base for Fantom Encore, which is specifically designed with a market-leading strut profile with high strength and well-defined ease-of-use characteristics like x-ray visibility as well as an expansion upon one continuous inflation. It is also anticipating an exciting response with the roll-out of MOTIV following product assessment and pilot study, thus bringing a new treatment alternative to millions of PAD patients and their physicians.

However, the underlying reason for the move is the hazy short-term outlook caused by the current European Society of Cardiology Guidelines for the use of bioresorbable scaffolds in treating coronary artery disease. The management aims to ensure that their finances are managed judiciously ahead of any uncertainties to maintain its existing services to the customers.

In the early January 2019, REVA expanded its geographical reach across seven European countries with four new distribution partnerships which account for an AUD 290-million medical device market witnessing 350,000 percutaneous coronary intervention procedures conducted annually. These comprise A care a.s in Czech Republic and Slovakia; Polimed in Poland; Technoproject Limited in Russia; Danmeda in Lithuania, Estonia and Latvia. The distributor will be in charge of all sales, marketing, customer training and support in their respective regions. The commercial operations are expected to begin within the next 3 to 12 months.

Of late, the company released its Quarterly Cashflow Report for the quarter (Q4) ended 31st December 2018. As per the figures posted, there were cash outflows from operating activities at AUD 3.89 million and from investing activities at AUD 19000. Besides, financing activities resulted in cash inflows at AUD 20,000. Overall, the value of cash and cash equivalents remained positive at AUD3.19 million. The company estimates cash outflows for the next quarter to be at AUD 3.15 million.

Reva has a market capitalisation of AUD 87.16 million and is listed on the Australian Stock Exchange (ASX) with around 415.07 million outstanding shares. Over the past six months, the share price of RVA stock was as low as AUD 0.145 on December 21st, 2018 and as high as AUD 0.295 on August 1st, 2018. The stock has a 52-week-high of AUD 0.530.

With the close of the trading session on February 5th, 2019, the shares of the RVA stock were trading at AUD 0.210.

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