Johnson & Johnson to Cut 3,000 jobs in Medical Devices Division
Healthcare conglomerate Johnson & Johnson said it would cut about 3,000 jobs within its medical devices division, or between 4 percent and 6 percent of the unit's global workforce, over the next two years.
The company said on Tuesday that it expected to record pre-tax restructuring charges of $2 billion to $2.4 billion in connection with these plans, of which about $600 million will be recorded in the fourth quarter of 2015.
Leerink analysts said the announcement meant that an acquisition was still on the cards for J&J, given that it had about $37 billion in cash as of the end of the third quarter.
"We continue to believe J&J is an active acquirer with a focus likely heavily weighted toward it's lagging Medical Devices business...it's a matter of when, not if, J&J does a deal", they wrote in a note.
J&J also reiterated its full-year 2015 forecast, and said the restructuring in the devices business move would not impact the $10 billion share repurchase program.
The company said the restructuring would affect its orthopaedics, surgery and cardiovascular businesses within the larger medical devices unit.
The consumer medical devices, vision care and diabetes care, part of the same division, would not be affected, J&J said.
The restructuring is expected to result in annualized pre-tax cost savings of $800 million to $1 billion, J&J said. Most of these savings are expected by the end of 2018, including about $200 million in 2016.
New Brunswick, N.J.-based J&J currently employs about 60,000 within its medical devices unit, part of a global workforce of about 127,000.
The Band-Aid maker is expected to report its fourth quarter results on Jan. 26.
The company's shares rose about 1 percent to $98.25 in premarket trading.