Medtronic lays off 220 workers at Mounds View cardiac unit
- Article by: DEE DePASS and JAMES WALSH
- S tar Tribune staff writers
- May 2, 2012 - 9:45 PM
Medtronic Inc. confirmed Wednesday that it is laying off about 220 workers from a Mounds View division that makes pacemakers and implantable heart defibrillators.
Workers in the cardiac rhythm disease management division were notified last week after officials decided to restructure the unit. It is not clear what types of jobs are being cut.
Piper Jaffray & Co. analyst Thomas Gunderson said the layoffs look like an effort by new CEO Omar Ishrak to put his stamp on the Fridley-based company's largest division, one that has struggled with slumping sales.
"This is just ongoing belt- tightening in tough economic times," Gunderson said.
Gunderson said there have been difficulties across the industry, though he said the market has flattened out and appears "stabilized for now." But Medtronic also faces a new medical device tax that could go into effect next year as part of the Obama administration's health care overhaul.
The cardiac rhythm unit contributed about $1.2 billion of the firm's $3.92 billion in third- quarter revenue. However, Gunderson said defibrillator sales used to grow 20 percent a year but now grow maybe 2 percent. Growth in pacemaker sales has also slid to maybe 5 percent a year.
Medtronic spokesman Christopher Garland said in an e-mail that the company is giving terminated employees benefits and transition assistance, "including external outplacement assistance services, medical benefit subsidies and severance pay."
Medtronic has about 8,000 workers in the state.
In recent months, Medtronic executives have said they are taking steps to diversify their product mix beyond its core stable of heart-related products.
Medtronic, which generates about 45 percent of revenue from overseas, has been looking to expand into other products such as drug-coated stents; a device that controls high blood pressure by shocking nerves in the kidney, and an aortic valve system for the heart that doesn't require the patient's rib cage to be sawed open.
In February, Medtronic reported third-quarter earnings that rose 1 percent to $935 million, or 88 cents a share, as revenue grew 2 percent to $3.92 billion. Excluding one-time items, earnings of 84 cents a share matched analysts' expectations as compiled by Bloomberg.
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