Boston Scientific Plans Layoffs

After Boston Scientific reported a better-than-expected second-quarter profit, the company  announced it would reduce its staff by between 5 and 6 percent to streamline operations.

The company announced a global restructuring program to eliminate unnecessary administrative positions and automate some production work. The company will eliminate 1,200 and 1,400 employees by the end of 2013 through layoffs and attrition. Boston Scientific expects the cuts to save between $225 and $275 million annually, some of which will be invested in other areas of the company. The company didn’t specify which divisions would be cut.

The announcement came a day after Boston Scientific unveiled plans to expand operations in China, including the hire of up to 1,000 new employees. For the second quarter (ended June 30), the Natick, Mass., company earned $146 million, or 10 cents per share, up 48 percent from $98 million, or 6 cents per share, in the prior-year period. Company sales grew 2 percent to $1.98 billion, led by double-digit growth for peripheral artery stents and endoscopy equipment.

Sales of implantable heart defibrillators, increased 3 percent to $544 million. Use of the devices has decreased due to cost-cutting efforts by hospitals and medical studies suggesting overuse of the implants. Boston Scientific first acquired the technology in the massive, $27 billion acquisition of Guidant in 2006, which has weighed on the company’s balance sheet ever since.

Last year the company announced it would eliminate about 10 percent of its work force as part of a reorganization designed by Chief Executive Ray Elliott, who was recruited from orthopedics firm Zimmer. Elliott announced in May he would step down at year’s end, just two years after he was brought in to fix the struggling company.

Boston Scientific said Thursday it paid down term loan borrowings of $750 million, reducing its debt to $4.2 billion. The company also announced a plan to buy back up to $1 billion in shares. That’s in addition to the 37 million shares that remain available for repurchase under a prior authorization.

In addition, the company is planning to lay off 167 employees at its location in Doral, Fla., according to the South Florida Business Journal.

BSX filed a Workers Adjustment and Retraining Notification Act notice with the state of Florida, warning 167 people would be laid off between Sept. 20 and Oct. 7. The medical device company operates out of a 350,000-square-foot facility in the city. BSX said in a past notice that the entire facility would eventually be shuttered, according to the SFBJ.

The decision to close its Doral facility “was made as part of our previously announced strategy to reduce complexity and improve efficiencies across our global manufacturing network,” Erik Kopp, a spokesman for Boston Scientific told the paper. “We deeply regret the impact this decision will have on our Miami employees, and have a plan in place that will provide severance pay, outplacement services and other resources for eligible employees to assist in the transition.”

At one time, the company had said the jobs performed at the Doral location would be done at a location in Costa Rica.