Boston Scientific Endo Buyout
Karen Prange, senior vice president and president of Urology and Women’s Health at Boston Scientific
Who is doing anything to stop these giants from injuring women? No one apparently, not even our government agency.
How do you become a giant? You ignore the damage you have caused to thousands of women and you buy up as many companies as possible using millions and billions, instead of giving fair and just compensation to those who have been injured by your implants. Here is an announcement made by Boston Scientific themselves in a press release dated March 2nd 2015. Now they are up and running and want to promote their new products. I am now going to give women more information so that you know the best way to stop this is to refuse low blow deals. Turn this around and don’t accept a pitiful payment.
If you missed my last blog, it is a very important part of this story. Read it here
Boston Scientific Announces Definitive Agreement To Acquire American Medical Systems’ Urology Portfolio For Up To $1.65 Billion
Combined Business to Advance Patient Care with Leading Solutions Across Major Urology Categories
Mar 2, 2015
MARLBOROUGH, Mass., March 2, 2015 — Boston Scientific Corporation (NYSE: BSX) today announced that it has entered into a definitive agreement with Endo International plc (NASDAQ: ENDP) (TSX: ENL) to acquire the American Medical Systems urology portfolio, which includes the Men’s Health and Prostate Health businesses, for $1.6 billion in up-front cash and a potential additional $50 million milestone based on 2016 sales. The company expects to close the transaction in the third quarter of 2015, subject to customary closing conditions.
Up to 1.6 billion. Why then are injured women worth so little. Why are they left without enough compensation to take care of their injuries now and the future consequences of these horrible implants?
Upon completion of the transaction, the AMS Men’s Health and Prostate Health businesses will become part of Boston Scientific Urology and Women’s Health. The acquisition encompasses the AMS product portfolio for treating urologic conditions, including benign prostatic hyperplasia (BPH), male stress urinary incontinence and erectile dysfunction. These technologies complement Boston Scientific’s strong kidney stone, pelvic organ prolapse, female stress urinary incontinence and abnormal uterine bleeding treatment portfolios, and together, will provide customers with a comprehensive urology, urogynecology and gynecologic surgery portfolio. The AMS women’s health business for treating pelvic organ prolapse and female stress urinary incontinence is not included in the transaction.
Boston Scientific is languishing behind Johnson & Johnson in becoming the biggest giant selling mesh implants, but they are quickly catching up. Do any of them give a crap about injured women? No they don’t.
“We believe this strategic acquisition will strengthen Boston Scientific’s global leadership in the urology device category while delivering a strong return to our investors,” said Mike Mahoney, president and chief executive officer of Boston Scientific. “The combination of Boston Scientific’s Urology and Women’s Health and AMS’ urology portfolios will create a business with nearly $1 billion in annual sales and enable significant synergies and strong future growth prospects through portfolio innovation and international market expansion. We look forward to serving customers and impacting patient care in ways that could not be realized by either company alone.”
I have no doubt it will bring in a strong return for their investors. Nearly $1 billion in annual sales? Of course, none of it will go to any of the injured parties who suffer from their implants. They have plenty of lawyers on the payroll to make sure that doesn’t happen. So why do they want this acquisition? Read on.
Based in Minnetonka, Minn., the AMS Men’s Health and Prostate Health businesses include approximately 800 employees worldwide, and generated 2014 sales of approximately $400 million and adjusted operating income of approximately $130 million, excluding amortization and certain allocated expenses. GAAP operating income, including amortization and certain allocated expenses, was approximately $60 million in 2014. Upon closing, Boston Scientific will acquire a diverse portfolio, including:
- The minimally invasive GreenLight XPS™ and HPS™ Laser Therapy Systems for treating BPH, a non-cancerous enlargement of the prostate and one of the most common diseases among aging men. Worldwide, BPH affects approximately 90 million men over 50 each year, with over 25 million suffering from moderate to severe symptoms.[3-6] The GreenLight XPS System is a leading BPH laser treatment technology.
- The AMS 800™ Urinary Control System for treating stress urinary incontinence, a condition affecting an estimated 12 million men worldwide, with 70-80% of cases secondary to prostate cancer treatment.[7-12] AMS is a leading provider of male incontinence treatment devices. There must be big bucks in incontinence implants for men and they want to tap that well in order to gain momentum to get bigger than J & J.
- The AMS 700™ Inflatable Penile Prosthesis for treating erectile dysfunction, a condition affecting more than 200 million men annually worldwide, with nearly 50% of men over 60 suffering from moderate to severe symptoms.[6,13] AMS is a leading provider of erectile restoration devices. Yep! That really means big bucks.
Commenting on the agreement, Karen Prange, senior vice president and president of Urology and Women’s Health at Boston Scientific Corporation said, “Urology is an exciting area with ample opportunities to address unmet medical needs. This acquisition is intended to bring together the global talent, expertise and product portfolios of both companies to drive continued healthcare advancements and value for our customers. Together, our strong leadership and innovative solutions can help physicians provide relief, restore bodily functions and enable millions of patients worldwide to regain control of their lives.”
Yep, you read it right. A woman is the senior vice president. How can she sleep at night? Of course without any problem due to her huge check every year. Want to know what she looks like? Here she is. I think we deserve a picture of the person in charge and who doesn’t seem to give a dam about women’s health due to their implants.
Here is another photo of Karen Prange.
Karen Prange I want to ask you one question. Did you have mesh put in you? If not it is time you did. It is the only way you will ever understand what this does to a woman’s body. Then you will see that top dog career of yours go the way of many women’s careers. Then do you really think Boston Scientific will give a crap? Of course not. And neither will the thousands of women who suffer every day because of the implants you push through the system.
The acquisition is expected to result in annual pre-tax synergies in excess of $50 million by the end of 2018. On an adjusted basis, the transaction is expected to be breakeven to adjusted earnings per share in 2015, accretive by at least 3 cents in 2016, approximately 7 cents in 2017, and increasingly accretive thereafter. The transaction is expected to be less accretive (or dilutive, as the case may be) on a GAAP basis 2015 through 2017, due to amortization expense and transaction and integration costs.
The acquisition is being structured as an asset purchase for tax purposes. Boston Scientific intends to finance the acquisition through a combination of existing and newly committed credit facilities. J.P. Morgan Securities LLC acted as financial advisor to Boston Scientific.
Conference Call and Webcast Information
Boston Scientific will host a conference call to discuss this transaction today, Monday, March 2, at 8:30 am E.T. The call will be hosted by Mike Mahoney, president and chief executive officer, and Dan Brennan, executive vice president and chief financial officer.
Financial and operational highlights of the AMS transaction are also available on the Investor Relations section of the website under the tab, “Quarterly Results and Non-GAAP Reconciliations.”
About Boston Scientific
Boston Scientific transforms lives through innovative medical solutions that improve the health of patients around the world. As a global medical technology leader for more than 35 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare.
Here is something you may want to read about how Boston Scientific have been doing business over the years and I personally believe greed will eventually be their final downfall. This was written in July 2011 in the Boston on-line Magazine. Remember that July 2011 was when the FDA put out a warning about pelvic mesh. I am giving you the entire article to read and you can draw your own conclusions.
Boston Scientific and the Road to Ruin
How greed, incompetence, and arrogance brought the world’s leading medical device company to its knees. The reporters words not mine,
This spring, Boston Scientific cofounder Pete Nicholas took to the stage at the end of a shareholders meeting to deliver “a few words.” Nicholas began his remarks by reminiscing about 2004, the 25th anniversary of the Natick-based medical device powerhouse. Back then, he said, Boston Scientific was the “unambiguous leader” in its industry, universally acclaimed for its phenomenal success and place “among the top 100 most valuable companies on the New York Stock Exchange.”
The 50 or so suits scattered in the largely empty downtown Boston auditorium remembered the time well: The Company’s stock that year hit an all-time high of $45 a share.
But then Nicholas recalled the years that followed: the company getting sanctioned by the FDA; seeing the market for its devices stall; and making what has since been dubbed the second-worst acquisition in the history of corporate America. Along the way, Boston Scientific’s stock price slid into single digits.
Nicholas’s comments were direct and honest, but it would have been difficult for any executive to put into words just how severe the turn in the company’s fortunes had been. Boston Scientific prided itself on being an innovative force that pushed the possibilities of medical technology. But that ambition also fostered a culture that on too many occasions had pushed beyond legal, ethical, and financial boundaries. Fed by hubris, testosterone, ego, and greed, the company slogged through a now-legendary string of operational and strategic blunders, quality-control problems, and allegations of outright corruption. “What’s next?” a Wall Street analyst had asked in the middle of it all. “Locusts?”
Actually, with respect to Nicholas’s attempts to revitalize the company’s battered image, a plague might have been preferable to what he was about to announce. Standing behind Nicholas, listening to a speech that had quickly turned gloomy, was Boston Scientific’s president and CEO, Ray Elliott. Renowned as a turnaround artist who could resuscitate struggling organizations, Elliott had, too much fanfare, agreed in 2009 to come out of retirement and staunch the bleeding at Boston Scientific.
But now even he was bailing. “I heard from Ray about a week ago that he would like to now step down,” Nicholas said. “We reluctantly accepted his wishes.”
Despite the significance of the development, the auditorium remained eerily quiet. On Wall Street, though, analysts were gasping. “Very surprised,” “Shocked,” and “Gobstopped” typified the reactions. Shares of the company’s already beleaguered stock plummeted another 10 percent, to less than $7 by the close of the market.
And nothing changed.
Boston Scientific remains a giant. The company employs 25,000 people worldwide and has revenues of $8 billion. But Elliott’s departure came as the nadir in a long run of bad news. It reinforced the company’s image as the premier problem child in an industry with no shortage of problem children, and as the shareholders meeting came to an end, it left hanging in the air a couple of critical questions: How the hell could things at a company this great have gotten so bad? And could Boston Scientific possibly recover?
Plenty, as it would turn out. The company’s phenomenal growth led to some spectacular problems — arrogance, avarice, and treachery among executives and the rank and file alike — which became so embedded in the culture of Boston Scientific that even now, nearly two decades later, the company is still unspooling its infected threads. (Despite repeated requests, Boston Scientific officials declined to comment for this story. Ray Elliott would answer only limited questions.)
And the tale thickens.
There are two cases that best illustrate all that has gone wrong with Boston Scientific.
The first began in 1995, and involved an Israeli war hero and his wife. Kobi and Judith Richter owned a company called Medinol, which held a patent for a stent — a small metal-mesh tube that, after being threaded to the heart, expands to prop open clogged arteries.
At the time, Johnson & Johnson had just released the first coronary stent on the U.S. market — Note this part and Boston Scientific and Johnson & Johnson were far from friendly. The two behemoths had a tendency, as one former Boston Scientific executive put it, “of buying companies out from each other’s noses.” Their competition became ferocious, which may have had something to do with the fact that J&J had at one point tried to acquire Boston Scientific — which did not go over well in Natick. In working with Medinol, then, Boston Scientific may have seen not just a good business deal, but also a chance to stick it to J&J by getting in on its stent action.
Medinol and Boston Scientific drew up a contract under which the Richters’ company would make its metal-mesh stents, called Nir stents, and Boston would market them. But the arrangement proved troublesome. The Richters were difficult to deal with — they missed deadlines and kept asking for more money, according to a suit filed by Boston Scientific. (The Richters denied these claims.) So Boston Scientific looked for a way around Medinol.
Pete Nicholas and his CFO, Larry Best, ordered the construction of a top-secret manufacturing facility in Ireland called Project Independence. Doesn’t this smack of the latest illegal stuff they have got into? Continue reading but in case you missed it, here is what they did when they brought in counterfeit mesh in from China They also created a shell company, which carried the pseudonym BBD (as in Bringing a Better Deal). According to allegations in a lawsuit filed years later by the Richters, the purpose of the secret facility and shell company was to steal Medinol’s stent design so that Boston Scientific could manufacture them on its own and either cut Medinol out of the deal entirely or depress the company’s value to the point where Boston Scientific could acquire it at a fire-sale price.
By the time of the Richters’ lawsuit, Pete Nicholas had himself taken a seat on the board and named Jim Tobin as Boston Scientific’s new CEO. The Richters claimed in court documents that Tobin had told them that his colleagues were “crooks” and that he was “ashamed to be working for such a dishonest company.” Crook’s? Yes I do believe they were right and right now I feel they are not an honest company in any shape or form. In fact I am darn right disgusted with them and all the other pharmaceutical companies.
In court proceedings Tobin denied that he had ever made those comments. Boston Scientific countersued the couple, and insisted that the secret facility was developed as a backup plan because, the company said, the Richters had fallen behind in production. In a summary judgment weighing both suits, a judge determined that Boston Scientific had acted in bad faith. The company settled and paid Medinol $750 million in 2005. I keep reading and researching to inform women and every time I find something out about them, I get sick to my stomach. When will the FBI pay attention and do something about them?
You would think it couldn’t get any worse, but you would be wrong. Continue.
But the tale of the Nir stent involves allegations far worse than double dealing. According to the U.S. Attorney’s office, an investigation revealed that within weeks of launching Nir on the U.S. market in August 1998, Boston Scientific received reports of life-threatening problems with the stent’s delivery system. Some of the balloons used to expand the stent to its full size leaked or burst. According to a resulting lawsuit, Nicholas admitted in a conference call that he knew the Nir stent was faulty and that the company couldn’t continue to sell it. Wait, read this But it did anyway. Boston Scientific kept the faulty product on the market — making $1.5 million in sales each day. The company did send out a letter to physicians that mentioned the flaws, but tried to downplay them. And I am sure they are doing this now about the pelvic mesh kits they are still pushing.
The FDA found out about the stents and ultimately met with Boston Scientific to discuss them. By that point, one person had died and 26 had been injured due to the flawed stent, according to the FDA. On October 5, 1998, Boston Scientific issued a recall. In 2004, the company paid the government $74 million to settle the case. It admitted no wrongdoing. This is what pisses me off. The government fines and the company continues doing the same thing because they never admit wrong doing. This is what is wrong with the FDA and what they do. Time for a complete overhaul and put some injured people on the panel, not doctors who stand to gain from these products and drugs.
Another case emblematic of the problems at Boston Scientific was the purchase of the Indiana company Guidant. By 2005, with revenue in the billions thanks to a new stent, Boston Scientific’s board wanted the company to diversify beyond its main business. Guidant had a good chunk of the lucrative market for pacemakers and implantable cardiac defibrillators, devices that shock the heart back into rhythm.
Guidant, in other words, looked like an attractive buy. But Boston Scientific wasn’t the only company to take notice, and, adding to the consternation, Johnson & Johnson looked like it was about to beat them to the punch. But as a J&J–Guidant deal was nearing completion, a patient with a Guidant defibrillator in his chest died. Guidant was forced to issue a massive recall and faced lawsuits and investigations. These developments led J&J to lower its offering price for the company. Undeterred, Boston Scientific pounced. It made an unsolicited offer for Guidant, which set off a bidding war.
Former executives describe what ensued as an all-out testosterone fest. They claim that Boston Scientific’s top brass became so obsessed with beating J&J that they failed to heed warnings that Guidant was a toxic asset. In the end, Boston Scientific spent $27 billion on a deeply troubled firm facing a mountain of messy litigation for alleged corruption and malfeasance.
In June 2006, less than two months after Boston Scientific closed the deal, it had to recall more of Guidant’s faulty defibrillators. The following April brought yet another recall. Boston Scientific had to shell out $296 million to the federal government after Guidant pleaded guilty to criminal charges related to its sale of defibrillators with deadly defects. The company has paid the feds $22 million more to settle charges that Guidant sales representatives gave kickbacks to doctors who bought defibrillators from the company. Boston Scientific has also spent $234 million to date to settle more than 8,000 claims from patients with Guidant devices. Two class actions and 37 more individual lawsuits await adjudication or settlement. In January of this year, the Department of Justice filed a civil lawsuit against Boston Scientific related to the problems with Guidant.
Randel Richner, the former vice president of global government affairs at Boston Scientific, says the company’s problems through the years have only been exacerbated by a “Wild West attitude” toward the regulatory agencies. And what is anyone doing about it? Nothing! “It was hard to convince the upper management that there needed to be a more proactive way to deal with the government,” Richner says. “We had the image of pushing the envelope, of snubbing our nose at authority. We were like a rebellious teenager. That attitude made us successful, but we needed to make a cultural shift when it came to working with agencies that were critical to our success.”
The FDA did not take kindly to this rebellious teenager. In early 2006, it issued a warning letter informing Boston Scientific that until the company addressed its quality-control concerns, the agency would not entertain new submissions for some of Boston’s products. The FDA needs to take this company down once and for all.
Jim Tobin, the man who’d succeeded Nicholas as CEO, spent a couple of years trying to fix this mess. Then, in 2009, the company unexpectedly announced his resignation, and Ray Elliott replaced him in July of that year. Elliott had made a name for himself by keeping investors rich and happy during his time as CEO of the orthopedic device maker Zimmer Holdings. He’d also been on Boston Scientific’s board. Elliott has said that he agreed to take the helm of Boston Scientific to help out “old friend” Pete Nicholas. The compensation didn’t hurt, either: Elliott earned $33.4 million in cash, stock, and options, making him the second-highest-paid CEO in America that year, according to Forbes.
Elliott came in with plenty of swagger. He was the new boss in town, he told his executives on numerous occasions. He took public shots at his competitors. He improved Boston Scientific’s long-term prospects by acquiring one company that was developing an aortic valve device, and another that had already come up with a device for asthma. The turnaround at Boston Scientific had begun, he
announced at every opportunity.
He also made it clear that he wouldn’t put up with any nonsense from his employees. During a call with analysts last year, he announced that he had “exited” from the company a few sales reps who “repeatedly breached our healthcare professional code of conduct.” Some of those people wound up getting hired by St. Jude Medical, a medical device competitor. Elliott knew what tends to happen when sales reps switch companies: Their accounts go with them. But it was the principle that mattered, he told investors. Boston Scientific could easily lose $100 million in sales by canning the reps, but, “We are going to run the company properly, and if we’re a somewhat smaller company short term or long term, so be it.” No worry there. There are always new reps who step in their place and they are blood thirty for money.
Elliott also shelled out a total of $2.4 billion to settle 17 patent infringement lawsuits with Johnson & Johnson. To help pay down Boston Scientific’s $6 billion in debt, Elliott shed the company’s neurovascular division. He also laid off more than 1,000 workers.
But doing the right thing didn’t end up doing Elliott much good. Boston Scientific’s sales and share price continued to fall. The executive eventually admitted to analysts that the mess he’d found after taking over was greater than he had anticipated. Last year, for example, the firm lost $300 million in sales when it was forced to hold shipment of some defibrillators because it had failed to file paperwork with the FDA — an amateur blunder that Morningstar analyst Debbie Wang says never should have occurred at a major medical device maker. It not only cost Boston Scientific money and slowed its climb out of the hole, but it also indicated that the company was still having operational difficulties. “Sometimes I feel like the right hand doesn’t know what the left hand is doing at Boston,” Wang says. Elliott says that the paperwork issue was part of a “bad system we’ve since corrected.”
It’s still not entirely clear why Ray Elliott resigned, but the move has raised the question of whether more bad news awaits. One Wall Street analyst says it’s hard to believe the company’s portrayal of the CEO’s departure as nothing more than the normal course of business. “It sounds hollow,” the analyst says.
Not all of the speculation has to do with Boston Scientific’s past. The same analyst points out that when Elliott announced his resignation from Zimmer Holdings, that move, too, was cast in rosy hues: He was going home after a job well done. Within months, however, the orthopedic industry was rocked after Zimmer and a few other companies settled a Department of Justice investigation into kickbacks allegedly paid to doctors.
Elliott says he left on his 10th anniversary of running Zimmer and that he had no idea about the DOJ investigation when he made his decision to resign. As to Boston Scientific, he says investors shouldn’t anticipate more bad news, since none is coming.
But internal problems are not the only challenges Boston Scientific faces. The world in which it operates has changed. Patient advocates, government investigators, and concerned doctors have made the public aware of some of the industry’s shadier practices. The kickbacks scandal at Guidant resulted in Boston Scientific agreeing last year to post on its website the payments it makes to physicians. And device failures and quality-control issues at Boston Scientific, and at other companies like Medtronic, have led to increasing calls for the FDA to tighten the approval process, which has slowed the pace at which new products get to market.
What’s more, it’s become evident that some medical devices have been overutilized. An academic study in 2007 found that doctors were grossly overusing stents, one of Boston Scientific’s core products. That report sent stent sales spiraling. Then, this past January, another study suggested that cardioverter defibrillators — Boston Scientific’s other core product — were also being overutilized by doctors. The Department of Justice is investigating why this might be. Defibrillator sales, too, are now down. Over-utilized by doctors. The same thing is happening with mesh kits and will continue to happen for years to come because no one is stopping them.
Add to all this the impending healthcare reform, which emphasizes cost cutting across the healthcare sector, and the medical device industry may be witnessing the end of an era. For Boston Scientific, it is a perilous time indeed. No they are just beginning and it is time the FDA did something to protect the American people from this corporate giant.
None of which is to say that the company will implode any time soon. It has mended its relationship with the FDA and, in recent months, gained approval for two new stents. The company reported a small profit last quarter of $20 million, on revenue of $1.9 billion. Mending its relationship with the FDA? What about mending it with the people of this country? Stop screwing over the American public.
But the stock price at press time remained in the single digits. And famed hedge fund Paulson & Company, once Boston Scientific’s largest investor, has dramatically reduced its stake in the firm since 2010, shedding about 85 million total shares — while correspondingly upping its position in competitor Medtronic.
There are competing theories for why, exactly, Elliott left. But it just may be that, as one analyst puts it, “Boston Scientific is too fucked up to fix.”
They will keep going because the lawyers did not get a good settlement for injured women. They too have failed us and have allowed these companies to walk away scot free, while they pocket millions from our suffering. I am truly disgusted with them all.