Boston Scientific ($BSX) is gearing up for the changing of the guard. Interim CEO Hank Kucheman will step down Nov. 1, and then President Mike Mahoney--a veteran executive previously at Johnson & Johnson ($JNJ)--will finally take the top spot, capping a transition plan first laid out a year ago. Kucheman gave an exit interview of sorts to The Boston Globe, explaining that the major acquisitions, layoffs and restructuring that have taken place under his relatively short tenure are all part of a master plan: helping the struggling device company diversify and respond to a rapidly changing health care universe.
"In the past, the recipe for success with devices was safety, effectiveness and acute performance," Kucheman told the Globe. "Now you have to add cost effectiveness and comparative performance. You have to prove that you can lower the overall cost of health care and the cost to society. "
Boston Scientific gets to show the world Oct. 18 how much progress it has made when it releases its third-quarter earnings. Kucheman has already measured expectations through company statements and previous interviews insisting that long sluggish revenue will resume growing in 2013, after many flat quarters, and a $3.4 billion loss in the 2012 second-quarter stemming from a goodwill impairment charge.
We may not see a huge improvement in cardiac earnings, but the company has taken steps to diversify through a number of acquisitions. The company, for example, now has a newly approved, wireless S-ICD defibrillator through its now-closed $150 million-plus purchase of Cameron Health earlier this year. Just recently, Boston Scientific snatched up Rhythmia Medical for $90 million-plus, giving it a presence in electrophysiology, and snatched up BridgePoint Medical in Minneapolis (price not disclosed) to access that company's catheter-based coronary disease treatment.
Many other existing products are being refreshed in the marketplace, Kucheman says, asserting once again to the Globe that "this is a conscious part of our strategy to strengthen the franchise."
Analysts, as the Globe notes, believe that the company has made major progress in its turnaround efforts but could be hurt, particularly in cardiac and endoscopy device sales, by tightening reimbursement payments. We'll see Thursday if Boston Scientific's revamp will be reflected in its numbers.
- read The Boston Globe story
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