Baxter Names Jose Almeida, Former Head of Covidien, New CEOby
Plans to review all the medical manufacturers' businesses
Backs aims to boost efficiency and capital allocation
Baxter International Inc. named Jose Almeida its chief executive officer, taking over for Robert Parkinson, who has run the medical-supplies company for the past 11 years.
Almeida, who has dealmaking experience as the former leader of Covidien Plc, became the second high-profile medical technology executive to join Deerfield, Illinois-based Baxter this month, after Boston Scientific Corp. CEO Mike Mahoney was named to the board. Third Point LLC, Baxter’s biggest shareholder, has sought leadership changes after saying in August that the company was undervalued.
Almeida, currently with the Carlyle Group in Washington, spent eight years at Covidien, the Dublin-based hospital supplies and medical technology company. While Covidien was sold to Medtronic Plc in January for $52.6 billion in cash, stock and debt, Baxter took the opposite route, slimming down and splitting off its biotechnology and pharmaceuticals business into a separate company called Baxalta Inc. this year.
Almeida said he plans to review each of Baxter’s businesses in the next 120 days, valuing the businesses based on cash flow projections to help determine where the company should focus. Some units will remain the same or smaller than they are today, while others will grow though acquisitions, Almeida said. The company’s products include infusion pumps, surgical tools, and dialysis systems for kidney disease.
"The company has a solid strategy,” he said in a telephone interview. “Our objective is to make sure we take that strategy and make it even better going forward, so that in three to five years we are in the right place. Now is the moment of launching Baxter 2.0."
Almeida, 53, is joining the company immediately as an executive officer and will become CEO Jan. 1, according to a statement Wednesday. Parkinson, who served as chairman and chief executive since 2004, announced his retirement earlier this year. He will become chairman emeritus.
Almeida, who praised the current plan to boost the company’s efficiency and improve its capital allocation, said he was approached by a headhunter about the job and rigorously vetted for the past several months.
Baxter posted adjusted earnings per share of 41 cents in the third quarter on Tuesday, beating the 29-cent estimate of 12 analysts compiled by Bloomberg. The company said it plans to lay off 1,400 people, or about 5 percent of its workforce, to save $130 million annually and boost operating margins.
Almeida said he doesn’t have a specific size in mind for the company, even as rivals grow or merge to offer hospitals a wider array of products for one-stop shopping and better value.
"There is no right size for the company," he said. "It’s more about how relevant you are to the markets. You can be any size, it’s how efficient you are. There is never a magic number."
Almeida, a native Brazilian who goes by "Joe," took over as the second CEO of Covidien in 2011 after it was spun off from Tyco International Ltd. in 2007. He first joined the company as director of manufacturing in 1995 and rose to president of Covidien’s medical devices business before taking the top spot.