Boston Scientific Corp. (NYSE:BSX) cut about 160 workers in its Arden Hill, Minn., facility, according to a press report.
The facility makes pacemakers and implantable cardiac defibrillators, which run through the company’s Cardiac Rhythm Management business unit. News of the cuts were reported by the Pioneer Press newspaper, which based its report on a notice from the the Minnesota Department of Employment and Economic Development.
Rumors of job cuts at BSX’s Arden Hills facility have been rampant since February, when chief medical officer Keith Dawkins told Boston Scientific employees that the job cuts were necessary for the firm to remain competitive, according to a report from Reuters News Service.
In April, press reports again surfaced reporting that the company was issuing pink slips to employees in Arden Hills and that the Natick, Mass.-based medical device giant could cut some 10 percent of its 5,000 employee work force in Minnesota. Nuveen Asset Management analyst Tim Nelson told the Pioneer Press at the time that cuts could run up to 500 jobs.
Boston Scientific has been on an austerity kick for the past two years since J. Raymond Elliott took over as CEO for James Tobin in the summer of 2009. The company announced in early 2010 that it would be cutting 1,300 jobs as part of a global restructuring plan, to “further rationalize and refocus its business portfolio.”
Cuts in the company’s CRM division would not be surprising, as the entire industry is experiencing a slowdown in the number of procedures involving pacemakers and implantable cardiac defibrillators, due to a double whammy of a U.S. Dept. of Justice inquiry and a January JAMA study that said 22.5 percent of patients in the U.S. fell short of medical guidelines to receive an implantable defibrillator.
The report has had a bit of a chilling effect on procedural volumes and was the primary reason BSX took a nearly $700 million impairment of goodwill charge during the first quarter.
“We believe physician reaction to JAMA study results in early January and the DOJ and local inquiries into ICD implant appropriateness of use is contributing, but we don’t believe they will be long-lasting,” CEO Ray Elliott told analysts on an earnings call. “We have taken the U.S. CRM goodwill write-down predominantly as a result of our future view of the market in its entirety, including all the various players.”
