Alere's ($ALR) fifth-largest stockholder is pressuring the company to sell off some of its units and focus on its profitable diagnostics business, taking issue with Alere's board nominations and reluctance to change.
In a letter to CEO Ronald Zwanziger, Coppersmith Capital Management asks Alere to exit its Health Information Solutions business, sell its consumer products joint venture with Proctor & Gamble and consider ditching its toxicology unit, figuring all that will generate about $3 billion Alere can use to pay down the mounting debt from "its expansion binge over the past two years."
Furthermore, Coppersmith wants Alere to shave between $50 million and $100 million from its annual costs, restoring spending to pre-expansion levels, and Coppersmith has nominated three board members who could institute the changes. The firm owns about 5.8% of Alere.
Alere didn't respond to a request for comment Tuesday morning, but the company has nominated four board members of its own to replace the incumbents. However, that amounts to little more than a "commitment to the unacceptable status quo and an attempt to avoid stockholder input and real change at Alere," Coppersmith wrote, and the company's actions are only furthering investor discontent.
"This reinforces just how out of touch you are with the serious concerns of the vast number of Alere stockholders with whom we have spoken in the last few weeks," Coppersmith wrote, "so we will state it plainly: Stockholders are demanding substantial changes to the company's strategy and structure, including comprehensive strategic and operational rationalization, not simply a different cast of characters to oversee management's floundering strategy, structure and performance."
Alere has been on shaky financial ground of late, losing $62.3 million last quarter despite a 10% jump in revenue, which reached $735.2 million. The company lost $62.7 million in the fourth quarter of 2012 on $756 million in sales.
- read the letter
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