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| Boston Sci co-founders Pete Nicholas (left) and John Abele (right)--Courtesy of Boston Scientific |
Boston Scientific ($BSX) announced the impending retirement of co-founder and current chairman Pete Nicholas, after almost 40 years of service, including 16 years as its first CEO, beginning in 1979. But the news has been overshadowed, at least temporarily, by the disclosure that the Brazilian feds are investigating the company.
And the company isn't the only one receiving scrutiny in Brazil. The federal Administrative Council of Economic Defense (CADE) in December served a search warrant on Boston Scientific's Brazilian subsidiary, "as well as on the Brazilian offices of several other major medical device makers who do business in Brazil, in furtherance of an investigation into alleged anti-competitive activity with respect to certain tender offers for government contracts," according to Boston Scientific's annual SEC filing.
The company said it is cooperating fully with CADE's inquiry.
Boston Scientific boasts 20% revenue growth in Brazil, which it has called the second biggest contributor (after China) towards its goal of achieving 15% of its sales in emerging markets. Overall, emerging markets revenue grew 15% during Q4 2015.
Separately, the company announced that CEO Michael Mahoney will become the new chairman of the board upon Nicholas' retirement in May.
"The company is in an excellent position under Mike's leadership, and with the support of a strong and dedicated board and an outstanding worldwide team of dedicated employees, the company remains poised to continue its current trajectory of successful growth," Nicholas said in a statement. "This transition is an exciting and forward-looking one for the entire company, and I know it will further enhance the ability of Boston Scientific to continue to serve patients and strengthen its high performance both as an innovator and leader."
Nicholas' retirement occurs a year ahead of schedule; last year, he said he would retire in 2017. Fellow co-founder John Abele retired in 2005, according to LinkedIn.
Meanwhile current director and former Becton Dickinson ($BDX) CEO Edward Ludwig will serve as lead independent director. And former of CEO of Tufts Medical Center and the Floating Hospital for Children, Ellen Zane, has been appointed by the board to serve as a director.
"These changes represent a major milestone in the history of the company as Pete's dedication, passion and commitment were instrumental In bringing the benefits of interventional medicine to patients in need. Under Pete's leadership, Boston Scientific has become a leading global healthcare corporation serving 22 million patients each year, and we are deeply indebted for his decades of service and love of the company," Mahoney said in a statement.
Wall Street has expressed faith in the company's management, and believes it has turned the corner after a series of setbacks like the disastrous $27 billion acquisition of Guidant in 2006. Innovations like the S-ICD defibrillator and neuromodulation devices powered 8% growth in 2015 net sales (adjusting for exchange rate fluctuations), which stood at $7.5 billion.
But the company still lost $327 million for the year, mainly due to net litigation charges of $1.1 billion. They topped the $1 billion mark in 2014 as well. Patient lawsuits related to its transvaginal mesh continue to dog the company and eat into its bottom line.
- here's the SEC filing (see page 103)
- read the release about the co-founder's retirement