Enzo Biochem to lay off 247 on LI after lab unit sale

Enzo Biochem Inc. will lay off about 247 Long Island employees following the sale of its laboratory testing unit, according to a government filing.

The Farmingdale company is calling on its shareholders to ratify the $146 million sale to Laboratory Corporation of America Holdings, known as Labcorp, at a special meeting on May 22.

A spokeswoman for Labcorp, based in Burlington, North Carolina, noting that the deal has yet to close, declined to respond to questions, including whether the company would hire any of the laid-off workers.

Enzo officials did not respond to questions.

The sale of the assets of the Enzo Clinical Labs unit was announced on March 16 as part of what the company described then as a strategic "focused return" initiative begun in 2022 with investment bank Jefferies LLC "to maximize shareholder value." 

Company shares almost doubled after the deal was announced. On Wednesday, Enzo shares gained 0.2% to close at $2.49.

The layoff represents more than half of Enzo's total head count based on a 2022 presentation that said the company had 479 employees worldwide. 

The workers, whose "approximately 247" layoffs are scheduled for July 17, according to a filing with New York State, are not represented by a union.

The clinical labs unit accounted for more than half of the company's $16.3 million in revenue for the quarter ended January 31. That division offers scores of tests, including those for measles, mumps, hepatitis, thyroid deficiency and COVID-19. 

The remainder of revenue was generated by the Enzo Life Sciences unit, whose antibodies, assays and genomic probes are sold to biotechnology companies.

In its earnings announcement, Enzo said the sale of its laboratory testing unit positions the company "to consider strategies to maximize the potential and value of the company’s remaining assets, including the Enzo Life Sciences segment.”

In November 2018, the Babylon Industrial Development Agency granted Enzo Biochem $2.8 million in tax abatements over 15 years after the company expanded its Farmingdale campus with a third building and agreed to hire 60 people over three years.

At the time, the company said it expected to spend $13.5 million to buy the 35,800-square-foot building and upgrade its three facilities on Executive Boulevard. Enzo told the IDA that its wage rates averaged $268,532 for management employees, $78,897 for professional employees and $42,130 for administrative employees.

On Wednesday, the IDA said it plans to meet with Enzo officials as it determines whether to seek to claw back tax abatements if the layoffs put the company out of compliance.

“If these layoffs cause Enzo Biochem’s employment levels to fall below their obligated requirements, the IDA will uphold its fiduciary responsibility to the taxpayers of the Town of Babylon by seeking to recapture any and all tax benefits,” Babylon IDA chief executive Tom Dolan said.

Enzo Biochem, founded in 1976, moved back to Farmingdale in 2022 after listing Manhattan as its headquarters for several years.

In November 2021, Hamid Erfanian succeeded Dr. Elazar Rabbani as Enzo's chief executive as the company faced pressure to improve financial performance from activist shareholders.

Enzo's deal with Labcorp includes a "no shop" restriction, curbing the Long Island company's ability to solicit higher bids on its clinical labs unit. Should Enzo strike a deal with another bidder, the company would have to reimburse up to $5 million of Labcorp's expenses or pay it a termination fee of $5 million.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.