Boston Scientific to Initiate Restructuring in 2019, Job Losses Expected
Marlborough, Mass.-based Boston Scientific plans to initiate a three-year global restructuring program in 2019 that will reduce operating expenses by $100 to $150 million by the end of 2022. The restructuring will support a push toward improving operating performance and sustainable value.
The company outlined its planned restructuring in a filing with the U.S. Securities and Exchange Commission last week. Boston Scientific said key activities under the global restructuring program will include supply chain network optimization that is intended to maximize Boston Scientific’s “global manufacturing and distribution network capacity and building functional capabilities that support business growth.”
As part of the restructuring, Boston Scientific said there will be some disruption of employment over the course of the program.
“While new jobs are created in areas of growth and resources are deployed to support an expanding portfolio and growing global market needs, the company does expect some employee attrition and limited headcount reductions to result from these restructuring activities,” Boston Scientific said in its SEC filing.
Once the restructuring is complete, Boston Scientific said it anticipates that its overall employee base will remain “relatively unchanged.” The company did not provide specifics in its filing on how many jobs may be initially lost.
The restructuring plan was announced two months after Boston Scientific acquired California stent maker Veiniti, Inc. in a deal worth up to $160 million. The deal marked the third acquisition for Boston Scientific over the summer months. In July the company snapped up Claret Medical for up to $270 million. It also bought Cryterion Medical, Inc. for $202 million. Boston Scientific already owned a significant chunk of Cryterion.
According to the filing, Boston Scientific estimates that the restructuring program will result in pre-tax charges of approximately $200 million to $300 million. Of those charges, approximately $180 million to $280 million is expected to result in future cash outlays, the company said. Termination benefits, which are included in the above figures, are expected to cost the company between $75 million and $100 million, according to the filing. Additionally, Boston Scientific noted that the restructuring costs will likely include up to $50 million for consultants fees.
In August, Boston Scientific did lay off about 85 employees from a Burlington, Mass. facility gained through the 2016 acquisition of Cosman Medical. Those layoffs began in September and were expected to be completed in December. The facility manufactures products used in pain relief.
At the time the layoffs at the Burlington site were announced, a Boston Scientific spokesperson told BioSpace that the company made a decision following the Cosman acquisition to transfer manufacturing, supply chain and quality operations for our radio frequency ablation (RFA) product from the Burlington site to other Boston Scientific facilities.
“This change will integrate our manufacturing and distribution networks to gain efficiencies, leverage key capabilities and accelerate the global expansion of this important chronic pain therapy for more patients around the world. Research and Development, Customer Service and Sales functions will remain in Burlington,” Kate Haranis, a spokesperson for Boston Scientific, said in an email at the time.