Boston Scientific Corporation (NYSE:BSX) announced that it is cutting 1,500 jobs worldwide to cut costs, following 1,000 jobs cut earlier this year, and that its chief financial officer is leaving, reports ABC News. The job cuts will take place over the next two years through a combination of attrition and layoffs.
Boston Scientific has been losing money
The company, which currently has about 24,000 employees, is trying to cut $200 million from its annual operating expenses and redirect some money towards better growth opportunities. Its stock fell 3.1% to $11.91 following the news, though it is still high relative to history. Boston Scientific Corporation (NYSE:BSX) has been losing money steadily since 2005, when it spent $27 billion on implantable defibrillator company Guidant, just as demand for the devices started to decline. It’s also on the hook for Guidant’s alleged malpractice, selling defective medical devices to Medicare patients between 2002 and 2005, and last week it agreed to settle with the Justice Department for $30 million.
Boston Scientific posted losses
Boston Scientific Corporation (NYSE:BSX) posted $5 million in losses this quarter, a huge improvement over the $664 million in losses it reported this time last year. It reported that while heart stents and other types of cardiac devices were continuing to decline, other product categories were increasing and mostly offset the loss.
Aside from litigation and legacy costs related to Guidant, the company has expressed concerns about the impact of Affordable Care Act implementation. The new healthcare program will be funded largely through a new medical device tax, which will most likely put a drag on growth once it goes into effect. There is also a lot of uncertainty surrounding ObamaCare in general, and the company may want to cut costs simply to guard against downside risk.
Jeffrey Capello will step down at the end of the year
CFO Jeffrey Capello, who has been with Boston Scientific as CFO since 2010, will step down at the end of the year to “pursue opportunities for a broader management position” and will be replaced by Boston Scientific Corporation (NYSE:BSX)’s corporate controller Daniel Brennan, who has been with the company since 1996. Capello will work closely with Brennan for the next few months and remain with the company until May 2014 to ensure a smooth transition.