It turns out the rumors were true: Minnesota-based employees of Boston Scientific Corp. (NYSE:BSX) began receiving pink slips this week.
Reports surfaced last month that the Natick, Mass.-based medical device giant was planning to lay off workers from its cardiology, rhythm and vascular business in the Twin Cities.
The unit, which manufactures pacemakers and implantable defibrillators, is Boston Scientific’s largest and conducts the majority of its operations in Arden Hills, Minn. and Maple Grove, Minn. The company didn’t say how many employees would lose their jobs.
But Nuveen Asset Management analyst Tim Nelson cited rumors that the current cuts could run up to 500 jobs, according to the Pioneer Press. Boston Scientific employs about 5,000 people in the Twin Cities, meaning the region could see a 10 percent drop in BSX jobs.
“This workforce reduction is consistent with restructuring initiatives previously announced,” spokesman David Knutson told the newspaper.
Chief medical officer Keith Dawkins told Boston Scientific employees in early March that the job cuts were necessary for the firm to remain competitive.
The company topped analysts’ estimates with $2 billion in Q4 sales as it reversed $1.2 billion net loss from last year’s fourth quarter, but still ended 2010 in the red. Company officials said revenues for its cardiovascular group dropped 7 percent to $813 million during the quarter. For the full year, the cardiovascular unit posted sales of $3.2 billion, down 7 percent from $3.5 billion last year. U.S. defibrillator sales were $1.04 billion in 2010, compared to $1.25 billion in 2009, a nearly 17 percent fall.
"We need to examine our expense base from scratch as if we are building the required infrastructure to support our size and our expected growth as we know it today," CEO Ray Elliot said in a February conference call scheduled to discuss the company’s 2010 financial results.
"We have instilled a great deal of discipline in headcount expense management, and over the past few years have done an excellent job of controlling our operating expenses… However, with rapidly changing market conditions that will put more pressure on margins, we know that we must do more," he said.
Boston Scientific is not the only cardiac device maker feeling the effects of a sluggish market. Fridley, Minn.-based Medtronic Inc. (NYSE:MDT) said Feb. 22 it plans to eliminate about 2,000 jobs, paring its overall workforce by roughly 5 percent.
Boston Scientific employed about 25,000 globally as of Dec. 31 2010, according to its latest filing (PDF) with the Securities & Exchange Commission.
BSX shares were up more than 2.5 percent on the day, trading at $7.16 in mid-afternoon activity.