Health Winners & Losers: Obagi

Staff cuts and earnings peppered the news on an overall tepid Tuesday for health stocks.

Merck MRK said Monday after the market close that it will slash its salesforce by 1,200 positions, or roughly 15%, as part of a previously announced strategy to transition to a new commercial model in the U.S. where the company is dealing with declining sales. Merck said the layoffs will be completed by the end of July.

The pharmaceutical company's shares were down 0.4% at $38.81.

In related news, Reuters reported Tuesday that medical-device maker Medtronic MDT will cut roughly 1,100 jobs in areas where growth has slowed. The stock was roughly flat at $49.04.

In earnings, Human Genome Sciences HGSI fell 8% to $6.10 Tuesday after releasing its quarterly results after Monday's market close. The company narrowed its loss to $46.9 million, or 35 cents a share, from 38 cents a share in the 2007 quarter, and reported a 33% rise in revenue to $12.3 million. However, Wall Street analysts expected a narrower loss of 19 cents a share on revenue of $14.9 million.

Meanwhile, Obagi Medical ProductsOMPI took a beating after scaling back full-year guidance with its quarter results. The company now expects sales in the range of $113 and $117 million, vs. prior estimates of between $120 and $125 million. It now predicts profit of between 81 cents a share and 85 cents a share, down from 94 cents a share to 98 cents a share.

For the first quarter, the company reported profit of $3 million, or 13 cents a share, on net sales of $25.4 million. Analysts were looking for 18 cents a share on revenue of $27.1 million. Obagi shares were down 20% at $6.97.