A New Life For SeraCare In Milford
Susan Vogt, president and CEO of SeraCare Life Sciences in Milford with Gregory Gould, CFO. The company was in bankruptcy protection two years ago. Today, its business is growing.
Susan Vogt and Gregory Gould love overcoming challenges and solving problems and they’ve had lots of opportunities to do both since joining Milford-based SeraCare Life Sciences Inc. in the summer of 2006.
They joined a company — which sells products and services to the biotech industry — that was in bankruptcy protection and no longer traded its stock on the Nasdaq because it could not file its annual report for 2005 in time with the Securities and Exchange Commission. It was also the subject of an investigation by regulators and class action lawsuits by shareholders.
Rapid Recovery
In the summer of 2006, the company’s board of directors hired Vogt as its CEO and she brought Gould aboard. Over the next two and a half years the company exited bankruptcy as an independent company that paid all of its debts with interest, settled shareholder lawsuits, got the stock relisted on Nasdaq and was not charged in connection with the SEC investigation that was completed earlier this year.
“You have to have faith going forward that you’re going to make it work. It’s a result of just plain old hard work, there’s nothing magical about it,” Gould said in a recent interview at the company’s newly expanded Milford headquarters at 37 Birch St.
But the previous management didn’t make it easy for Vogt and Gould. Those former executives allegedly hid the loss of a large sale and inflated the company’s profits in the second and third quarters of 2005.
The irregularities came to light when the company switched auditors in a hurry late in 2005. The new auditing firm notified board members of its concerns about record keeping and a forensic auditor was hired. The auditor told the board that the previous 2005 quarterly statements filed could no longer be relied upon and they had to be pulled. The company reported it to the SEC, which launched an investigation.
The company ended up in bankruptcy, and fired two executives and several directors, eventually hiring Vogt and Gould.
And with them, the righting of the corporate ship was underway. “One of the first things we had to do was stabilize the company. Not surprisingly there was a fair amount of turnover,” Vogt said. They began consolidating: closing down the Oceanside, Calif., headquarters and bringing everything east. It also shut down its Cambridge and Pennsylvania locations. Originally split between Milford and West Bridgewater facilities, the company remade its headquarters on Birch Street in Milford and expanded the office, manufacturing and distribution space it had in three buildings.
“What we focused on was getting the details necessary to be able to file the company’s 10-K for 2005,” Gould said. All publicly-traded companies must file annual reports, 10-Ks, and quarterly reports, 10-Qs, with the SEC. The California staff had been let go, including the accounting department, and the financial details, what there was of them, had to be painstakingly put back together.
As the work began, Gould decided in order to have all the data be correct, his team would pull together the data for 2005 and 2006, and file those 10-Ks with the 2007 10-K, so the company’s stock could be relisted on the Nasdaq stock market.
In January it filed the three years worth of 10-Ks and the company’s stock was relisted in June. “Greg’s team worked around the clock until all of the reports were finished,” Vogt said. While they were hard to piece back together, being outsiders to that period made it easier for the team to be objective about what they found, Gould said.
Much of this and the settlement of the class action lawsuits went on while the company was reorganizing itself in bankruptcy court, from which it finally emerged in May 2007.
“People don’t realize the time and energy that is necessary to manage the bankruptcy process itself,” Vogt said. “Everything must be approved by the bankruptcy court, including your budgets.”
When it reemerged it also had $20.2 million it raised from a rights offering to shareholders to purchase additional shares, and 83 percent of its shareholders participated, Gould said.
In June 2007, it was able to get a $10 million line-of-credit from Merrill Lynch for working capital when necessary, Vogt said. In September 2007, it was awarded a $23.7 million contract with the AIDS unit of the National Institutes of Allergy and Infectious Disease at the National Institutes of Health. SeraCare will provide management and oversight of the NIAID’s disease study specimens.
Both of SeraCare’s Maryland facilities store and manage research and clinical trial specimens which it now does for NIAID as well.
The company also makes products used for quality control of infectious disease testing in hospital and clinical testing labs and blood banks as well as reagents, and other biological materials used in research, development and manufacturing of human and animal diagnostics, therapeutics and vaccines.
Growth Strategy
So where is the company going now that it seems to have a future? “In the near-term we think organic growth is doable. And we recognize that it is hard for a public company our size to stand alone,” Vogt said. “We also believe it’s possible to be growing through acquisitions for both market share and businesses that are complementary to ours that can expand what our portfolio offers.”
Its business is growing incrementally – the company’s third quarter revenues were $12.4 million, only $400,000 more than the same time last year. It posted a larger loss of $1.1. million for the third quarter this year, compared to $500,000 for the same time in 2007.
Vogt predicts that its future growth will come from its core products for molecular diagnostics, vaccine development and cellular assays where it has seen double-digit growth and continues to put research and development resources to expand them.
Both Vogt and Gould seem to be drawn to challenges. When asked what drew her to a company that seemed to have so many obstacles to overcome, Vogt said, “I was looking for an opportunity to have an impact. It was fundamentally a sound business with a good product, a good reputation and an incredible customer base.
And she chose Gould because she could tell he was action oriented, which was something the financial end of the company desperately needed. Vogt said he liked Gould’s straightforward leadership style and a trait he has being drawn to situations that can be turned around “My wife says I’m crazy that I like to solve problems.”
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