Boston Scientific CEO Out

J. Raymond Elliot will be retiring from his position of CEO at Boston Scientific at the end of 2011.

Elliot has served as president and CEO for less than two years. During that time, demand for Boston Scientific’s heart stents and pacemakers decreased. Overall sales decreased to $7.8 billion; a 4.7 percent decline from 2009. Quarterly sales have not yet surpassed the $2.1 billion generated during Elliot’s first full quarter; in the first full quarter of 2011, revenue fell 1.8 percent, to $1.9 billion. In February, Elliot predicted that 2011 would be a “difficult” year for the company, as economic pressures continued to negatively affect sales.

“Ray Elliot, the tough guy of the industry, after a lot of bluster and bravado, seems to be throwing in the towel,” said Philip Nalbone, an analyst at Wedbush Securities in San Francisco, Calif. “It’s a big blow to people who have been pinning hopes for a turnaround at Boston Scientific on Elliot and his team.”

Elliot said the company is positioned for growth because of a turnaround that included paying back debt, settling litigation, selling off a neurovascular unit and creating a senior leadership team.

“The time is right for someone new to take the reins, complete execution of that plan and take Boston Scientific to the next level,” Elliot said.

Unfortunately for investors, many thought Elliot was that person.

“This is bad for investors because Ray convinced people that he had a thoughtful plan and was going to be there to see it through,” Nalbone said.

Derrick Sung, an analyst with Bernstein Research in New York, N.Y., speculated about the possible ripple effect of Elliot’s departure.

“The ensuing internal uncertainty at the company could also reduce morale and trigger further departures,” he wrote in a note to investors.

Boston Scientific is headquartered in Natick, Mass. The company has formed a CEO search committee, on which Elliot will serve, to find a replacement.