Teleflex, a supplier of medical devices to hospitals, announced Wednesday that it will reduce its workforce and consolidate plants as part of a new restructuring plan.
The announcement was made as part of its first-quarter earnings results. In describing the restructuring, Teleflex acknowledged that continuing cost pressures drove the decision to eliminate jobs and to move certain manufacturing plants to lower cost areas.
The news release did not specify how many jobs would be eliminated and which plants would close. An email and a call to a Teleflex representative was not immediately answered. The restructuring will start in the second quarter and will end by 2017. The company expects to take a a pre-tax charge of $42 million to $53 million associated with the restructuring.
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While no details were available on the exact nature of restructuring, Teleflex clearly stated its benefits: the Wayne, Pennsylvania company expects to save $28 million to $35 million annually once the plan is fully implemented with some savings kicking in as early as next year.
“We think a restructuring was widely expected at some point in [first half of 2014], and believe investors were looking for savings that would generate $0.20-$0.40 in annual savings, Richard Newitter, an analyst with healthcare investment bank Leerink Partners, wrote in a research note Wednesday.
Newitter added that he views Teleflex’s quarterly performance as “solid” especially given the challenging environment where hospitals are scrutinizing purchases, using less equipment and reducing costs.
In the quarter ended March 30, the company garnered revenue of $438.6 million, up from a $411.9 million in the same period a year ago. Profits climbed to $35 million, or 76 cents per diluted share, up from $27 million, or 63 cents in the comparable period last year.
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