CareFusion Offsetting Device Tax with Restructuring and Benefits Reduction

CareFusion (San Diego, CA) is a global medical technology provider, offering systems that reduce healthcare-associated infections and medication errors. The company’s flagship product lines include patient identification systems, the Pyxis automated dispensing device, the Alaris IV device, ventilators, skin prep products, infection surveillance systems and surgical instruments. While the company maintains a foothold in several different health product markets, CareFusion has experienced a challenging financial environment in recent months.

One significant hurdle for CareFusion is the 2.3% medical device tax, a part of the Affordable Care Act. Under the 2.3% medical device tax, companies must pay a levy on their total sales each year. In response to this tax, CareFusion took some drastic steps.

According to employee reviews from GlassDoor, restructuring and layoffs have become standard practice at the company. In addition, employee benefits have changed significantly. According to one anonymous employee, CareFusion discontinued its 410(k) plan as a cost-cutting measure. Out of 249 reviews at GlassDoor, CareFusion commands 2.6 out of 5 stars.

While employee discontent may be increasing, the company’s R&D spending is on the rise too. In its fourth fiscal quarter, CareFusion increased R&D by $4 million. For the fiscal year, total R&D spending increased 17%.

CareFusion only faced the medical device tax for part of its 2013 fiscal year. If the company’s current strategy continues next year, more layoffs and restructuring may be on the way.

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Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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