A Medical Device Daily
With sales of its top medical devices continuing to drop, the Boston Globe reported over the weekend that Boston Scientific (Natick Massachusetts) is planning broad job cuts that could affect its Massachusetts employees.
Executives of the company, facing shifts in how doctors treat coronary problems, are planning an extensive restructuring of the company as well as a sell-off of most of its $500 million in stock and other investments the Globe said.
Boston Scientific employs 28,000 people worldwide, including 2,400 in Massachusetts, chiefly at its Natick headquarters, its Marlborough endosurgery division, and a Quincy distribution center. On a conference call with analysts on Friday to discuss second-quarter earnings, new CFO Sam Leno said the company expects to disclose an expense-reduction plan, including job cuts, by year-end.
“There is no one business or no one corporate staff function that is being singled out,” Leno said during the call.
Asked about specific effects on local operations, a company spokesman said jobs in Massachusetts “may or may not be affected.”
“We won’t know until the review is completed later this year,” spokesman Paul Donovan told the Globe.
To help its bottom line and pay down $7.4 billion in net debt, mostly incurred when it acquired Guidant (Indianapolis) for $27.2 billion last year, the company is planning to restructure operations, cut the workforce, and sell most of its investment portfolio, both stock and private venture-type holdings. It is also considering a partial initial public offering of its growing endosurgery division (Medical Device Daily, March 14, 2007).
In May, Donovan told the Globe the potential public offering and the asset sell-off would not affect Massachusetts jobs, but did not address restructuring. In his interview on Friday he said the restructuring could have a local impact.
On Friday, the company reported a 2Q07 profit of $115 million, or 8 cents a share, slightly below consensus Wall Street estimates. That compares to a $4.3 billion loss last year, when the company declared a massive writeoff associated with the Guidant purchase. But the underlying business is struggling, with worldwide sales of its flagship Taxus drug-coated stent falling more than 30% to $437 million from $647 million in the same quarter last year. In the U.S. the Taxus sales decline was even more pronounced at more than 40%.
Sales of implantable defibrillators, which the company acquired by buying Guidant last year, were $377 million , down slightly from $383 million a year ago.