In the wake of Chief Financial Officer Karen Parkhill’s February announcement that Medtronic would be delivering “significant expense reductions” in the final months of its 2023 fiscal year—which closes out at the end of April—the medtech giant is closing a California facility, resulting in a round of layoffs.
The facility in question is located in Silicon Valley's Sunnyvale. It came under Medtronic’s purview with the 2019 acquisition of cardiac ablation tech maker Epix Therapeutics. A company representative told Fierce Medtech that Medtronic had begun internally communicating its plans to move manufacturing of Epix’s DiamondTemp catheter from Sunnyvale to Galway, Ireland, in October 2020, with the California facility’s closure long planned for this year.
According to a notice Medtronic filed with the state’s Employment Development Department (EDD) in accordance with the federal Worker Adjustment and Retraining Notification act—and which was shared with Fierce Medtech by the EDD—the closure will result in layoffs of 59 employees.
The layoffs are expected to begin "in or about April 2023" and will continue through the end of September, per the notice, which was dated March 29 and received by the EDD last week. The affected employees comprise all of the workers at the Sunnyvale facility, and they were notified of the impending reductions during two in-person town hall meetings at the end of October 2022, Medtronic wrote in the notice.
“Medtronic operates in a highly competitive environment and is continually taking actions to drive effectiveness and efficiencies to drive growth and position us for the future. As we assess our business, we need to make longer-term structural changes to ensure the sustainability of our organization,” the company said in a statement sent to Fierce Medtech. “We previously announced plans to close this facility, and after careful analysis and consideration we have made the necessary decision to close the site in June 2023, therefore eliminating some positions.”
The statement continued, “We recognize the work, dedication and commitment of our Medtronic team. We are providing employee assistance and will work to retain and redeploy affected employees to other parts of the company, wherever possible.”
Parkhill’s warning of “significant” cost-cutting came as Medtronic saw its slipping sales finally level out in the third quarter of its fiscal year. After registering year-over-year revenue drops of 8% and 3% in the first two quarters, respectively, the company’s revenues almost broke even in the third quarter, falling less than half a percent from the same period the previous year.
Meanwhile, the devicemaker has plowed ahead in slimming down its far-flung business. Its previously announced plan to carve off its renal care solutions business and launch a standalone kidney tech company in partnership with DaVita resulted in the unveiling of Mozarc Medical last week.
Also on the chopping block are the company’s patient monitoring and respiratory interventions businesses, which have seen their sales take a major hit as demand for ventilators wanes in tandem with dropping COVID-19 hospitalizations. Medtronic originally said the units would spin out into yet another standalone company, but several of its fellow medtech giants—including GE HealthCare and ICU Medical—have reportedly shown interest in recent months in acquiring them instead.
All three of those business units came from Medtronic’s medical surgical portfolio. With their planned departures, all that remains in the portfolio are the company’s GI and surgical businesses—the latter of which was the target of another, smaller-scale slimdown earlier this year as Medtronic combined its surgical robotics and surgical innovations operating units into a single segment.