As is unfortunately their wont, countless companies have begun laying off broad swaths of employees in accordance with their end-of-year financial results. And the medtech industry isn’t immune: In the last week alone, Sema4, Pear Therapeutics and Illumina all announced workforce reductions.
Latest to follow suit is Teleflex, which laid out a restructuring plan this week that will include an undisclosed number of layoffs. According to a Monday filing (PDF) with the U.S. Securities and Exchange Commission, the devicemaker kicked off its restructuring efforts on Nov. 15, with an eye toward canceling out the “increasing cost and inflationary pressures in the healthcare industry.”
Teleflex didn’t note how many workers will be affected by the reorganization, and the company hasn’t yet filed any Worker Adjustment and Retraining Notification (WARN) Act notices in its home state of Pennsylvania or in North Carolina, where its North American regional office is located; employers must file WARN notices at least 60 days before laying off 50 or more employees.
As of its 2021 annual report (PDF), Teleflex counted approximately 14,000 workers around the world. About 4,000 are based in the U.S., while the remaining 10,000 are scattered across 31 other countries.
Teleflex didn’t immediately respond to a request for additional details about the layoffs.
The restructuring—which is expected to stretch into and be “substantially completed” in 2023—will see Teleflex relocate some of its manufacturing operations to lower-cost locations already in its portfolio. It also plans to streamline certain undisclosed business functions across the company, which is where the layoffs come in.
Altogether, the restructuring is estimated to cost Teleflex between $31 million and $40 million, the bulk of which will hit its bottom line next year, according to the SEC filing. More than half of that total—between $18 million and $22 million—will come from termination benefits paid out to laid-off employees.
The remaining balance will stem from the costs of closing facilities and transferring manufacturing operations to different locations, as well as from “project management costs and accelerated depreciation,” per the company.
Despite those charges, Teleflex said in the filing that it expects to see the cost-cutting measures kick in fairly quickly in 2023. Once the restructuring plan has been fully implemented, it’s expected to bring in pre-tax savings between $21 million and $23 million per year.
News of the restructuring plan come as Teleflex has seen its earnings slip in the last two quarters. After starting the year on an upward trajectory, with modest revenue growth of 1.2% year over year, its earnings turned tail, registering declines of 1.3% in the second quarter and 1.9% in the third.
With those steadily dropping numbers, Teleflex has thoroughly tempered its full-year forecasts. It went into 2022 expecting to see its revenues grow between 2.3% and 3.8%, but is closing out the year expecting them to land somewhere between a 0.75% year-over-year drop and a 0.25% nudge upwards.