Boston Scientific picked Ray Elliott as the change agent less than two years ago to help turn things around for the medical device giant, and now Elliott is on his way out.
The Natick, MA-based company (NYSE: BSX) said today that Elliott, 61, informed the board of directors on May 4 that he plans to resign from his post at the end of December. The board has formed a search committee to look for a new CEO, and Elliott will be part of the search for his replacement, the company said.
Investors balked at the sudden turn of events, sending Boston Scientific shares down almost 10 percent, to $7 a share, at 2:51 pm Eastern, following the mid-day announcement. Elliott, who made a lot of investors money in this previous job at Warsaw, IN-based Zimmer Holdings (NYSE: ZMH), acknowledged in today’s statement that he’s saying goodbye before the turnaround job is complete.
While Boston Scientific pointed to a number of accomplishments in its press release today—things like improving the R&D pipeline, streamlining operations, paying down debt, and cultivating future management talent—investors will surely frown on the Elliott era. Sales declined almost 5 percent last year, compared with 2009. The stock was 30 percent higher—at $10 a share on June 25, 2009—on the day Elliott was named the new CEO.
“We believe we have accomplished a lot during my time here: a strengthened senior leadership team, a clear and executable strategic plan we call ‘POWER,’ a basis for success in Emerging Markets, a solidified balance sheet due to debt paydown and refinancing and much more,” Elliott said in a statement. “And while the company continues to evolve, we expect that much of the turnaround work will be complete by the end of the year. We believe we are well positioned for future growth. Therefore, I believe the time is right for someone new to take the reins, complete execution of that plan and take Boston Scientific to the next level and new heights.”
Elliott went on in his statement to offer a little more than the usual corporate boilerplate. Just reading between the lines—I’ve never interviewed Elliott personally, so this is pure conjecture—the tone sounds to my ear a little bit like burnout from someone who’s too young to really “retire” from business.
“It has been, and continues to be, an honor to lead Boston Scientific, but after nearly 40 years in healthcare, the last 33 of those in general management and as a company president, it’s time for me to permanently pass the baton to a long-term CEO,” Elliott said in the statement. “Finding the right time to leave is difficult. Leaving too soon or staying too long can both be problematic. However, this decision is mine and mine alone. I am grateful to have received tremendous Board and employee support as CEO, often during challenging times.”
Bloomberg captured some of the negative reaction on Wall Street in one of its first reports. “Ray Elliott, the tough guy of the industry, after a lot of bluster and bravado, seems to be throwing in the towel,” Phillip Nalbone, an analyst at Wedbush Securities in San Francisco, told the business news service. “It’s a big blow to people who have been pinning hopes for a turnaround at Boston Scientific on Elliott and his team.” Over at Forbes, Matt Herper’s post is headlined: “Boston Scientific Turnaround Expert Quits Before the Turnaround.” This story is clearly to be continued.