One of the Charleston region's largest technology employers plans to lay off 250 workers and take other steps to save $23 million, citing the financial stress from the coronavirus pandemic.
The job cuts are just one part of a restructuring plan that Benefitfocus Inc. announced Tuesday. It will cost the Daniel Island-company roughly $5 million to implement, and it includes freezes on hiring and promotions as well as the suspension of company contributions to employee retirement plans.
The layoffs, which are effective Friay, affect about 17 percent of its workforce. The company had 1,560 employees as of Dec. 31.
“The decisions we have made over the past several weeks, and particularly today, have been very difficult," Benefitfocus CEO Ray August said in a statement. "Our associates are more than talented colleagues; they’re friends, respected professionals, and members of our community. We are supporting our impacted associates with equitable separation and benefits packages.”
August will not be paid a salary for the time being, according to the announcement. Other executives will take a 20 percent pay cut, and the board of directors will see reduced compensation as well.
The company's core cloud-based software platform allows workers at about 150,000 employers to enroll in and manage their workplace benefits, such as health care.
But a rash of job cuts across the country is expected to result in a $50 million to $60 million drop-off in revenue from those customers this year.
Benefitfocus had predicted that its 2020 sales would total $310 million to $320 million. Now, it expects that figure to drop to $250 million to $270 million. In its preliminary results for the first quarter, the company reported a loss of $11 million.
In addition to its Daniel Island campus, Benefitfocus has offices in the Upstate, New York, Oklahoma and Wisconsin. Its employees have been working from home since March 19.
The laid-off South Carolina workers will join the ranks of at least 270,000 residents who are out of a job because of the pandemic.
The global health crisis struck the U.S. economy as Benefitfocus was inching closer to turning a profit for the first time since its initial public offering in 2013. It reported a $3.8 million loss for the last three months of 2019, its smallest quarterly loss since the IPO.
Shares of Benefitfocus dropped 13 percent Tuesday to $9.90 on heavy trading volume. The current price is well under half of what it was when the company went public.