Approaching sale, HDL cuts more employees

HDL's headquarters on Fifth Street downtown. Photo by Burl Rolett.

HDL’s headquarters on Fifth Street downtown. Photo by Burl Rolett.

The bloodletting continues at Health Diagnostic Laboratory.

The downtown lab company confirmed Wednesday that it has cut an additional 21 employees as it works through Chapter 11 bankruptcy proceedings and positions itself for a sale. It’s at least the fourth round of layoffs at the once fast-growing firm in the last year.

The company said the latest cuts were made in preparation of a debtor-in-possession financing deal it struck last month to give it enough cash to continue operating through the end of its bankruptcy process.

“The measure was contemplated in the operating budget prepared to secure the availability of a DIP financing arrangement and submitted in our bankruptcy proceeding,” an HDL representative said in a statement. “The personnel reduction is unfortunate and we are mindful of the challenges and difficulties this causes our former colleagues and their families.”

With this latest round, HDL has cut at least 225 jobs since August 2014. The company now has a total of 570 employees, down from more than 800 at its peak.

HDL said its existing employees “will remain with us as we move forward in the weeks ahead to complete a strategic transaction and exit from the bankruptcy process.”

The company would not specify the types of positions that were eliminated in these latest layoffs. It would also not say where the jobs were located, saying only that they affected its national workforce.

The streak of layoffs began after a Department of Justice investigation was made public in a front-page Wall Street Journal article. The government was looking into the company’s past practice of paying fees to doctors to order its lab test and whether those fees were considered kickbacks. The company also said it stopped paying fees to doctors in June 2014 after a federal fraud alert was issued.

HDL has since settled with the government to the tune of $47 million, but its former CEO Tonya Mallory is now under the government’s microscope for her role in what is alleged to be a massive kickback scheme.

Once HDL’s issues with the feds became widely known, the company’s revenue started a steep decline, culminating in its bankruptcy filing in early June. In court filings, HDL has stated that its net revenue dropped by 47 percent in the fourth quarter of last year.

It is now pursuing a sale of the company through a court-approved auction process that is expected to conclude in September.

HDL's headquarters on Fifth Street downtown. Photo by Burl Rolett.

HDL’s headquarters on Fifth Street downtown. Photo by Burl Rolett.

The bloodletting continues at Health Diagnostic Laboratory.

The downtown lab company confirmed Wednesday that it has cut an additional 21 employees as it works through Chapter 11 bankruptcy proceedings and positions itself for a sale. It’s at least the fourth round of layoffs at the once fast-growing firm in the last year.

The company said the latest cuts were made in preparation of a debtor-in-possession financing deal it struck last month to give it enough cash to continue operating through the end of its bankruptcy process.

“The measure was contemplated in the operating budget prepared to secure the availability of a DIP financing arrangement and submitted in our bankruptcy proceeding,” an HDL representative said in a statement. “The personnel reduction is unfortunate and we are mindful of the challenges and difficulties this causes our former colleagues and their families.”

With this latest round, HDL has cut at least 225 jobs since August 2014. The company now has a total of 570 employees, down from more than 800 at its peak.

HDL said its existing employees “will remain with us as we move forward in the weeks ahead to complete a strategic transaction and exit from the bankruptcy process.”

The company would not specify the types of positions that were eliminated in these latest layoffs. It would also not say where the jobs were located, saying only that they affected its national workforce.

The streak of layoffs began after a Department of Justice investigation was made public in a front-page Wall Street Journal article. The government was looking into the company’s past practice of paying fees to doctors to order its lab test and whether those fees were considered kickbacks. The company also said it stopped paying fees to doctors in June 2014 after a federal fraud alert was issued.

HDL has since settled with the government to the tune of $47 million, but its former CEO Tonya Mallory is now under the government’s microscope for her role in what is alleged to be a massive kickback scheme.

Once HDL’s issues with the feds became widely known, the company’s revenue started a steep decline, culminating in its bankruptcy filing in early June. In court filings, HDL has stated that its net revenue dropped by 47 percent in the fourth quarter of last year.

It is now pursuing a sale of the company through a court-approved auction process that is expected to conclude in September.

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