Healthcare stocks aren’t the only ones delivering cost-cutting plans these days. But diagnostics testing solutions maker LumiraDx (NASDAQ:LMDX) might be delivering some of the biggest cuts seen yet. It’s got some massive layoffs planned, and that’s not all. As a result, investors sent LumiraDx shares higher in Thursday afternoon trading.
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The centerpiece of LumiraDx’s cost-cutting plan is its layoffs. It’s not planning to reduce headcount by 10% or even 25%. It’s planning a 40% cut, hitting not only full-time but also part-time and contractor roles. That, along with some other cost-cutting measures, is expected to save LumiraDx roughly $36 million per year. That savings will help LumiraDx embrace growth, which it will apparently manage to do without a large portion of people actually doing the work.
It’s not just sustainable growth, either; reports from Lab Pulse note that one of the biggest reasons LumiraDx had all those people on board was to absorb explosive demand for COVID-19 testing products. With COVID-19 tests a lot less prevalent than they once were, LumiraDx needs much fewer people. Now, LumiraDx can put its focus back on more closely-held core functions. It’s already working to pivot away from COVID-19; it recently landed $14.2 million from the Bill & Melinda Gates Foundation for tuberculosis testing.
Despite this mass exodus, analysts are largely behind LumiraDx. With three Buy recommendations and one Hold, LMDX stock is currently classified as a Strong Buy. Furthermore, it comes with a healthy 150.86% upside potential thanks to its average price target of $1.46.
