A Medical Device Daily
Medtronic (Minneapolis) confirmed in a securities filing this week that it will eliminate 900 positions nationwide in a workforce reduction that began earlier this year.
As of late July, 349 jobs had already been eliminated in the medical technology company’s cardiac rhythm disease management division, based in the Twin Cities, its cardiovascular division in Santa Rosa, California, and its Physio-Control (Redmond, Washington) business.
The quarterly filing did not say how many jobs had been eliminated in each division.
The company said it will complete the workforce reduction by the end of its fiscal year on April 30, 2008.
The initiatives “were designed to drive manufacturing efficiencies” in the cardiovascular business, which makes heart valves and coronary stents. The Physio-Control division was downsized because U.S. shipments of external defibrillators were suspended following sanctions by the FDA.
The company is trying to “rebalance resources” in its locally based cardiac rhythm disease management business “in response to current market dynamics,” the filing says.
The division makes heart defibrillators, sales of which have slowed following a series of recalls since 2005 of the device, primarily by Guidant (Indianapolis), now part of Boston Scientific (Natick, Massachusetts) as its Cardiac Rhythm Management division.
The cuts at Medtronic are being made through retirement packages, voluntary separations and dismissals.
In 4Q07, the company took a $36 million restructuring charge due largely to employee termination costs related to severance and continued medical benefits and outplacement services. In the first quarter of fiscal 2008, Medtronic reported an additional $14 million cost related to the restructuring, according to the filing.
Separately, the company indicated that it intends to pursue the spin-off of Physio-Control, its wholly owned subsidiary that makes external defibrillators, emergency response systems and other support systems used by hospital emergency room personnel, after it resolves issues with the FDA
Earlier this year, the company suspended shipments of certain products because of quality problems. It currently is working with the FDA on taking corrective actions and those should be completed by the end of the year. Once the issues are resolved, it will proceed with the spinoff, the filing said.
The company first disclosed its plans to spin off Physio-Control business last December, saying that the unit was no longer central to the company’s long-term strategic business (Medical Device Daily, Dec. 5, 2006).