Boston Scientific Aims for Major Cost Reductions in Global Restructuring

Boston Scientific Aims for Major Cost Reductions in Global Restructuring June 9, 2016
By Alex Keown, Breaking News Staff

MARLBOROUGH, Mass. -- In an effort to support massive strides it has made this year, Boston Scientific Corporation , a medical device company, said it will undergo a corporate restructuring expected to reduce operating expenses by up to $150 million by 2020 and support long-term growth and innovation.

The restructuring plan is focused on developing global commercialization, technology and manufacturing capabilities in key growth markets, continuing implementation of the company's plant network optimization strategy and expanding operational efficiencies in support of the company's operating income margin goals, the company said in its announcement. Although broad sounding, Boston Scientific did not provide any specifics in its restructuring plans.

However, part of that restructuring will include the elimination of an unknown number of employees. However, in its Wednesday announcement, Boston Scientific said it anticipates the overall employee headcount to remain about the same as the restructuring will likely create new positions in “areas of growth.”

"We are taking these steps to build on our momentum and meet the challenges of affordable health care around the globe," Mike Mahoney, chief executive officer and chairman of the board, Boston Scientific, said in a statement. "We will continue to invest in strategic growth opportunities that enhance our reach, capabilities and efficiency to sustain our global competitiveness. These initiatives can help us deliver innovative solutions to more patients and enable profitable growth over the long term."

The news of the restructuring comes on the heels of the company achieving several regulatory wins, including the launch of the Precision Montage MRI Spinal Cord Stimulator (SCS) System after the U.S. Food and Drug Administration granted approval in May. Also in May, the FDA granted approval for two catheters that can be used with the Rhythmia Mapping System. The IntellaNav XP and the IntellaNav MiFi XP navigation-enabled ablation catheters designed to map and ablate were approved to treat Type I atrial flutter, an abnormal rhythm of the upper chambers of the heart. These are the first magnetically-tracked catheters that Boston Scientific will offer to the U.S. market. Along with the immediate launch of the catheters, the company is also releasing a software enhancement for the Rhythmia Mapping System. In April, Boston Scientific snagged FDA approval for a suite of products deemed safe for use in MRI environments, including two new pacemakers and a pacing leads system.

In addition to the regulatory hurdles Boston Scientific has met in recent weeks, the company has also posted strong earnings. In April the company reported quarterly sales of $1.96 billion, an 11 percent increase over the same period the previous year. As a result Boston Scientific increased its revenue forecast, predicting revenue of about $8 billion for the year.

Under the restructuring plan, the company said it anticipates a total pre-tax charges of approximately $175 million to $225 million.

Boston Scientific’s stock was up slightly in after-hours trading, hitting $22.80 per share. Over the past three months, shares of Boston Scientific have been on a steady upswing, in part due to the success the company has seen with regulatory approval of multiple products and higher than expected earnings.

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