Boston Scientific May Trim Assets to Cut Debt

Boston Scientific Corp. expects to disclose a long-range plan to cut jobs and sell off assets later this year, but its Massachusetts operations should emerge largely unscathed, according to the company and analysts.

Scaling back is an unfamiliar position for Boston Scientific, once a fast-growing juggernaut in the medical-device industry, and still the most valuable life-science company in Massachusetts.

After taking on billions of dollars in debt to buy rival heart-device firm Guidant Corp. last year, the company has watched its stock slide as sales of its top product, drug-coated stents for heart repair, have fallen because of safety concerns. To boost investor enthusiasm, its executives have recently been telling Wall Street analysts that they intend to sell off parts of the company and trim its workforce. They would use proceeds and savings to help pay down the $7.2 billion in net debt now on the books.

Exactly where those cuts would fall has not yet been decided, say executives. But chief operating officer Paul LaViolette told stock analysts in a recent presentation that the company wouldn’t sacrifice its “core” businesses, those central to its growth plans. Those include drug-coated stents, Guidant’s implantable heart-rhythm devices, and its small neural-implant division in California.

He said the company was putting into place a company wide “structure and efficiency improvement program” that it would describe in greater detail later in the year.

The company’s endosurgery division, which is based in Marlborough, is being considered for a partial initial public offering, an unusual strategy for raising money in which Boston Scientific would maintain its ownership of the division but sell off a chunk as an independently traded stock.

Boston Scientific spokesman Paul Donovan said the company’s new strategy — including the potential public offering of the endosurgery unit — would “most likely have little or no impact on jobs in Massachusetts.”

Only about 2,400 of Boston Scientific’s 28,000 worldwide employees work in Massachusetts, chiefly in three locations. The company’s Natick headquarters and its endosurgery unit in Marlborough employ just under 1,000 people each, and about 500 people work at its large distribution center in Quincy.

In one sense, the company has numerous options to cash in on assets around the edges of its business. It makes thousands of different medical devices, many acquired over the years as Boston Scientific bought one small device company after another. But many of those products are small sellers unlikely to make a huge impact in the firm’s ability to pay down its debt.

“I think it’s going to be small stuff,” said Morgan Stanley analyst Glenn Reicin in an interview.

The sell-off could have repercussions for another local company, analysts said. Boston Scientific owns more than $90 million in stock of Aspect Medical Systems Inc. , a 300-person Norwood company that makes brain monitors. That amounts to nearly 27 percent of Aspect’s stock, making Boston Scientific the largest holder of the stock.

Donovan, the company spokesman, said Boston Scientific did not comment on individual investments.

One key to future plans will be the company’s new chief financial officer, Sam Leno. He arrives in June to replace Larry Best, the firm’s longtime CFO and the architect of its massive growth over the past 15 years.

“The big wild card is the new CFO,” said Tao Levy, a medical-device analyst at Deutsche Bank. “He’s going to need to go through the portfolio, get a sense of strategy, and if he’s comfortable with their debt level then there probably won’t be too much of a change.”

“But if he decides that sales aren’t looking so good,” said Levy, “then there might be some pruning.”

SOURCE: BOSTON.COM