Cardinal cutting 1,300 jobs ahead of CareFusion spin-off

By Gareth Macdonald

- Last updated on GMT

Related tags Cardinal

Falling sales to hospitals are forcing Cardinal Health to cut 1,300 jobs from the clinical and medical products units that it plans to float under the CareFusion banner later this year.

Cardinal, the second biggest drug distributor in the US, will incur charges of around $57m (€43m) through to 2010 but in the long term believes that the job cuts and the spin-off will save it nearly $130m a year.

CEO Kerry Clark said that while painful for the firm’s workforce, the redundancies are “necessary to help offset current economic conditions and will ultimately strengthen our businesses for the longer-term​.”

Cardinal will eliminate around 800 jobs from its global operations and remove another 500 positions through natural attrition.

While unable to specify in which countries the redundancies would be made, company spokesman Jim Mazzola told the Columbus Dispatch​ that, excluding the firm’s Ohio base, the cuts will be made across the board.

According to media reports Cardinal’s operations in Southern California will bear the brunt of the US cuts, with 125 jobs going in San Diego and a further 55 positions being eliminated in Palm Springs and Yorba Linda.

Cardinal also said that it “will implement cost control measures and additional reductions in discretionary spending across all of its businesses, primarily in response to a delay in hospital capital spending and the overall decline in the global economy​.”

The cuts will leave the new San Francisco-headquartered CareFusion group, which is expected to generate revenues of around $4bn a year, with a global workforce of 15,900 employees.

CareFusion’s product roster will include infusion and dispensing technologies as well as those for respiratory care, infection prevention, surgery, diagnostics and hospital monitoring equipment

While Cardinal reiterated that it plans to complete the spin off in the summer, the firm told Reuters​ that: “outside factors could push the timing of the transaction to later in the year​.”

Regardless of potential delays, Cardinal remained confident the customer base the new group will inherit, which extends to 120 countries, will enable it to build on the operating earnings of $725m in the fiscal year that ended in June 2008

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