Boston Scientific's board has approved a sweeping restructuring package designed to lower costs and better align the company's operations with growth priorities, the medical device maker said in a regulatory filing. The board approved the plan on July 21.
The company said the plan centers on supply chain optimization and changes to its organizational structure, including moving certain production activities between factories. These operational adjustments are intended to improve efficiency and position the company to address global market demand more effectively.
Implementation of the changes is scheduled to begin this year and is expected to be substantially complete by the end of 2029. Boston Scientific estimated the program will carry pre-tax charges in a range of $700 million to $800 million, with $600 million to $700 million of that amount anticipated to be cash expenditures.
As part of the restructuring, the company said there will be job reductions. At the same time, Boston Scientific noted it will continue hiring in areas where the business is expanding and will shift personnel and resources toward locations and functions that meet evolving global demand.
When the restructuring is fully in place, Boston Scientific expects to lower its annual expense base by approximately $500 million. The company said much of those savings will be redirected into growth initiatives.
Investors will have an additional data point on the company's operations when Boston Scientific reports second-quarter results on July 29. The company highlighted that market attention will likely focus on the performance of its heart device portfolio in that upcoming report.
Context and implementation
The program comprises supply chain changes, internal organizational restructuring and the relocation of some manufacturing activities between the company's factories. The firm characterized the moves as measures to optimize its production footprint and cost base.
Financial outline
- Estimated pre-tax cost of the plan: $700 million to $800 million.
- Expected cash outlay: $600 million to $700 million.
- Estimated annual run-rate expense reduction once complete: about $500 million.
Timing
The company expects the work to commence during the current year and to be largely finished by the end of 2029.