Medical device maker Boston Scientific Corp. reported better-than-expected earnings for the second quarter Thursday and announced it would reduce its staff by between 5 and 6 percent to streamline operations.
The company announced a global restructuring program to eliminate unnecessary administrative positions and automate some production work. The company expects to shed between 1,200 and 1,400 employees by the end of 2013 through layoffs and attrition. Boston Scientific expects the cuts to save between $225 million and $275 million annually, some of which will be invested in other areas of the company. The company didn't specify which divisions would be cut.
The announcement came one day after Boston Scientific unveiled plans to expand operations in China, including the hire of up to 1,000 new employees.
For the second quarter, the Natick, Mass., company earned $146 million, or 10 cents per share, up 48 percent from $98 million, or 6 cents per share, in the prior-year period.
Company sales grew 2 percent to $1.98 billion, led by double-digit growth for peripheral artery stents and endoscopy equipment.
The company recorded one-time charges of $116 million; excluding those expenses it would have earned 17 cents per share. That was more than the 9 cents per share predicted by analysts polled by FactSet.
Boston Scientific raised its full-year 2011 forecast to between 64 cents and 70 cents per share, from 58 cents to 68 cents per share.
Company shares closed at $7.28, up 57 cents, or 8.5 percent, after rising as much as 13 percent earlier in the session.
Sales of the company's cardiovascular instruments, including drug-eluting stents, rose 2 percent to $841 million. Sales of stents have been sluggish for years amid questions about their benefits compared to drug therapy. Last month Johnson & Johnson announced it would exit the market for the devices after falling behind in product development efforts.
Sales of the company's best-selling devices, implantable heart defibrillators, increased a meager 3 percent to $544 million. Use of those devices has decreased due to cost-cutting efforts by hospitals and medical studies suggesting overuse of the implants. Boston Scientific first acquired the heart-zapping devices in the massive, $27 billion acquisition of Guidant in 2006, which has weighed on the company's balance sheet ever since.
Last year the company announced it would eliminate about 10 percent of its work force as part of a reorganization designed by Chief Executive Ray Elliott, who was recruited from orthopedics firm Zimmer. Elliott announced in May he would step down at year's end, just two years after he was brought in to fix the struggling company.
Boston Scientific said Thursday it paid down term loan borrowings of $750 million, reducing its debt to $4.2 billion. The company also announced a plan to buy back up to $1 billion in shares. That's in addition to the 37 million shares that remain available for repurchase under a prior authorization.
Crime Wave: Murders Skyrocket Across The Country in St. Louis, Milwaukee, Chicago, Atlanta, New York City | Katie Pavlich
Negligence: IRS Was Warned About Potential Hacking of Sensitive Taxpayer Information, Did Practically Nothing | Katie Pavlich
Obama Apparently Thinks He's the 'Closest Thing to a Jew That Has Ever Sat in This Office’ | Leah Barkoukis
IRS Commissioner: Sorry Thieves Stole Your Personal Info From Us, But We Can't Really Protect You In The Future | Katie Pavlich