A rebounding Boston Scientific Corp. (NYSE:BSX) said it plans to eliminate up to 1,400 jobs as part of a restructuring program aimed at saving between $225 million to $275 million annually by 2013.
The job cuts are "designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments, thereby increasing shareholder value," according to a press release. The announcement came as part of the Natick, Mass.-based medical device giant’s second-quarter earnings release. The company beat Wall Street’s expectations and raised its sales and earnings guidance, sending share prices up nearly 10 percent in early-morning trading.
Boston Scientific reported profits of $146.0 million, or 10 cents per diluted share, on sales of $1.98 billion during the three months ended June 30. That’s a bottom-line increase of 49.0 percent and boost to diluted EPS of 66.7 percent, compared with Q2 2010. Back then net income was $98.0 million, or 6 cents per share, on sales of $1.93 billion.
The numbers beat The Street’s expectations and BSX’s own predictions, prompting the company to boost its EPS guidance for the rest of the year. A panel of 24 analysts polled by MarketWatch had forecast earnings of 9 cents per share.
Investors might also have liked BoSci’s most recent move to pay down its debt load, a $750 million pre-payment of the balance of its term loans that reduced its gross debt load to $4.2 billion. The company said it’s paid down more than $1.8 billion in debt ahead of schedule during the past year. It also announced a new, $1.0 billion plan to buy back shares of its own stock (on top of 37 million shares remaining in a prior repurchasing plan).
Boston Scientific said it expects full-year sales of between $7.68 billion and $7.88 billion, up from prior guidance of $7.60 billion to $7.90 billion, and adjusted EPS of 64 cents to 70 cents, up from 58 cents to 68 cents.
BSX shares were trading at $7.46 per share as of about 10 a.m. today, up more than 11 percent.
The restructuring program is aimed at saving $225 million to $275 million by the end of 2013. The job cuts will begin this quarter and continue through the end of 2013, with between 1,200 and 1,400 positions eliminated.
The program is projected to cost between $155 million and $210 million, up to $200 million of that in cash. About $10 million of that will come during the third quarter this year, the company said.
It’s not all layoffs at Boston Scientific these days, however. The company announced a plan yesterday to increase its workforce in China six-fold over the next five years with a $150 million investment. BoSci said it aims to increase sales in the People’s Republic to more than $500 million by 2017, about 25 percent of its estimate of the market there.