In another move designed to deal with big debt and stagnating device sales, Boston Scientific (Natick, Massachusetts) reported its long-anticipated restructuring after the stock market closed on Wednesday.

The company said it will eliminate about 2,300 positions worldwide, or about 13% of an 18,000-person, non-manufacturing workforce baseline as of June 30.

The reductions will be initiated this month and are expected to be substantially completed worldwide by the end of 2008, the company said, and that lay-offs outside the U.S. will be initiated following completion of information sharing and consultations with required bodies.

In addition, the company said it expects another 2,000 employees to leave the company in connection with its previously reported divestitures, including plans reported in August and July to sell off its cardiac surgery and vascular surgery businesses, its fluid management business and the auditory assets of Advanced Bionics (Valencia, California).

Collectively, these businesses represent about $550 million in 2007 sales for Boston Scientific.

The company didn’t say how the layoffs would be divided among its business units, but that it will answer questions about the restructuring during its third-quarter earnings conference call, scheduled for early today (and to be reported on by MDD in Monday’s issue).

The company said it expects the reductions in staff will result in total pre-tax charges of $450 million to $475 million, or 20 cents-22 cents per diluted share. These mostly cash charges will be recorded primarily as restructuring expenses, with a portion recorded through other lines of the income statement. From $275 million to $300 million will be recorded in 4Q07, the remainder expected to be recorded throughout 2008 and 2009.

The company plans to reduce its operating expenses (exclusive of amortization and royalty expenses) against a 2007 baseline of about $4.1 billion by an estimated $475 million to $525 million in 2008, a reduction of 12% to 13%, with a further reduction of an estimated $25 million to $50 million in 2009.

“The expense and head count reductions we are announcing today are intended to bring our expenses back in line with our revenues, while preserving our ability to make investments in quality, R&D, capital and our people that are essential to our long-term success,” said Jim Tobin, president/CEO of the company, in a statement on the restructuring. “While difficult, these reductions are in the best interest of the company and will create greater value for our customers and their patients, as well as for our employees and shareholders. These actions will enable us to institute meaningful change that will create lasting benefits.”

Boston Sci said that eligible employees affected by the head count reductions will be offered severance packages, outplacement services and other assistance.

“We understand the impact these reductions will have on our employees, and we are committed to helping ease the transition,” said Tobin. “We will treat everyone with respect and dignity, and we will provide support to affected employees.”

Coupled with the head count reductions are plans to restructure several businesses and product franchises, the company said, in order “to leverage resources, strengthen competitive positions, and create a more simplified and efficient business model.”

As part of the plan, the peripheral Interventions and interventional cardiology businesses will be combined under a single management structure to create a more integrated business focused on interventional specialists, while enhancing technology and management efficiencies.

In another move the company said the electrophysiology business will be integrated with the cardiac rhythm management business to better serve the needs of electrophysiologists by creating a more efficient organization.

In another move, the oncology business and its four franchises will be restructured. Three will be integrated into other businesses within Boston Scientific, and the oncology venous access franchise will be combined with the fluid management business, which the company expects to sell.

And finally, the company’s international group will be consolidated from three regions to two. The existing three regions are: Europe, Asia Pacific/Japan, and Inter-Continental; the two new regions will be: Europe/Middle East/Africa, and Canada/Latin America/Asia Pacific/Japan.

In a research note, Bear Stearns med-tech analyst Rick Wise called the restructuring “aggressive,” and said the cost-cutting moves should lead to higher EPS, adding at least 15 cents to 20 cents to GAAP EPS in 2008 and $0.20 to 25 cents in 2009-net of the EPS dilution from asset sales and “lost sales and profits.” He said while the company’s shares should react positively to the restructuring news, “multiple uncertainties related to DES and ICD market growth and market shares,” will continue to cloud the company’s near-tem financial outlook.

JPMorgan med-tech analyst Michael Weinstein said that the cuts are “unprecedented” in size, but because Boston Scientific has so many shares outstanding, the company will save only 25 cents to 27 cents a share.

That may not be enough to offset falling sales, he said, and it is not clear what effect the cuts will have on Boston Scientific’s R&D, sales support, product pipeline and its ability to compete.

Boston Scientific has struggled with its finances since its $27.2 billion acquisition of Guidant (Indianapolis) last year. As a result of that transaction, the company is carrying more than $8 billion in debt.

In 2Q07, Boston Scientific’s defibrillator sales were down 20% from two years before, when a series of recalls hurt the company’s reputation. Sales of stents — especially the once lucrative drug-eluting type — have been hurt by critical medical studies and were down 27% from a year ago.

Finally, the company in August pulled back on its decision to sell a minority stake (up to 25%) in its endosurgery business that could have generated close to $1 billion. That prompted several creditors to lower the company’s debt ratings to junk-bond levels (Medical Device Daily, Aug. 6, 2007).