Boston Scientific's Mahoney blames device tax for massive job cuts
|Boston Scientific CEO Mike Mahoney|
Mahoney told FierceMedicalDevices after the company's earnings call on Jan. 29 that the tax was definitely a factor in the decision to cut more jobs. However, slow-growing business in other areas is also to blame, he told us. And the decision to eliminate more positions follows a restructuring move from 2011 that is eliminating 1,400 jobs.
"The impact of the medical device tax is to the tune of $75 million for Boston Scientific," he said. "So it is appropriate for us, now that it has gone through, to adjust our cost structure. That has certainly contributed to it. The other factors are, we are continuing to right-size some of our business units that are not growing as quickly."
Mahoney told us that Boston Scientific ($BSX) hasn't targeted the job cuts yet based on business unit or country (though they will be targeted in some fashion, and also made through employee attrition). And some of those cost-cutting moves, he said, will be through "right-sizing" Boston Scientific's corporate infrastructure when it relocates its headquarters from Natick, MA, to its nearby Marlborough, MA, campus in 2014.
Some of Boston Scientific's worst financial numbers in 2012 once again came from its interventional cardiology and cardiac rhythm management business. As Boston Scientific has expanded into newer areas, including endoscopy sales and neuromodulation, their proportion of the company's overall revenue has dipped from 60% just a few years ago to between 50% and 55%. But Mahoney told us the business lines remain important, as illustrated by its acquisitions last year of Cameron Health and Fierce 15 company Vessix Vascular, among many other technology buys.
"They're still very important," Mahoney said of the company's interventional cardiology and CRM product lines. "There are still new unmet clinical needs that we can try to solve in both of those businesses, and there is a growing procedural demand outside of the U.S. for both of those businesses as well. They're very important to the company."
Looking ahead, Mahoney reiterated, the company expects the first half of 2013 to still reflect sales declines, with a rebound to kick in during the second part of the year.
Readers may remember that Boston Scientific kept a robust acquisition pace in 2012. Mahoney said the company will likely not repeat rapid M&A movement in 2013, though it will continue to eye new technology that might fit its long-term plans.
"We will look for companies in growth markets, and companies that we provide synergies with, so they make sense to be part of Boston Scientific and we can win with them," Mahoney told us.
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