The shakeup at Boston Scientific (NYSE:BSX) last week proved that while the sheriff may be headed for the sunset, he’s not ready to hang up his spurs just yet.
With little more than a month past his two year anniversary of taking the helm at BSX, J. Raymond Elliott continues to re-shape the Natick, Mass.-based medical device colossus, despite the fact that he is essentially a lame duck with just a few months left in his current position as CEO until his scheduled retirement at the end of December.
A lame duck with a heckuva quack that is, as evidenced by an exchange he had during the company’s conference call with investors when Glenn Novarro from RBC Capital Markets, LLC said that most of The Street saw Elliott’s retirement announcement as as an indication that there was something amiss with the company’s turnaround.
“I think most of The Street looked at your retirement and said there must be something wrong with the turnaround, something must be failing, there must be another shoe to drop,” he said.
To which, Elliott replied.
“I’m leaving because I’m old, Glenn,” he said. “No, there’s nothing. There is no shoe to drop. Health’s fine, business is in great shape. I’m doing what I came here to do.”
With a little more than four months left in his tenure as CEO, it is obvious that what Ray Elliot came to Boston Scientific to do was to leave the company with as much of his imprint as possible. It’s a job he has excelled at. In just 25 months Elliott has:
- Reduced the company’s workforce by more than 2,200 employees in two major restructuring efforts. First, in February 2010 and again last week with the announcement that BSX will shed up to 1,400 jobs by 2013.
- Paid down a significant amount of the company’s long term debt: At the end of 2008, BSX had accumulated more than $6.78 billion in long term debt. While some of that had been carved into by the time he took over, Elliott has aggressively paid down the company’s tab to just over $4.1 billion. Those efforts are paying off for the company, which has been pulled out of junk bond status by two of the big three ratings agencies.
- Reshuffled the executive deck by replacing more than 75 percent of his senior management team.
- Shed most of the company’s legal woes by negotiating the $296 million between Guidant and the U.S. Justice Dept. over faulty implantable defibrillators.
- Expanded BSX’s global footprint by, for the first time, making the company a player in the ever important emerging markets.
And, last week Elliott added another quest to his final act at BSX; resuscitating the company’s limp stock price with an aggressive $1 billion repurchasing program that he said was aimed at boosting shareholder value.
“I want to be clear. Our philosophy on share buyback is buying back an undervalued company in order to create shareholder value,” he said. “So we’re not interested in spiking the EPS or spiking the stock or continuing on if at some point it got to be what we believe is fairly valued. It is simply an exercise for us in creating shareholder value as long as it’s undervalued, as long as we believe it’s undervalued.”
Unfortunately, this may end up being Elliott’s most daunting task, as shares of BSX have been in a prolonged slump for years now. In fact, shares of BSX haven’t cracked the $8 per share mark since February 2010 and have been fluctuating between $5.04 and $7.96 for the past year, despite mostly positive developments at the company.
As the company looks to find Elliott’s successor they’ll certainly have a difficult time replacing him because the company he or she inherits will have as much of Ray Elliott’s imprint on it as yesterday’s Boston Scientific had the imprint of John Abele and Peter Nicholas.