Medical device maker ArthroCare Corp. plans to cut 54 workers from its recently acquired San Juan Capistrano operation, Opus Medical Inc.
The layoffs come two months after Sunnyvale-based ArthroCare closed its $130 million acquisition of Opus, which was based in the South County city.
The layoffs are effective at the end of the week, according to a filing with the state Economic Development Department.
“All of the job changes are a result, basically, of duplication between our company and theirs,” said Mike Baker, ArthroCare’s chief executive.
Opus had about 75 workers prior to the acquisition. ArthroCare, which has more than 560 employees, won’t be leaving Orange County entirely.
“We plan to keep the research and development activity that’s currently at Opus open for the foreseeable future and shift some of the other activities to the other ArthroCare facilities,” Baker said.
Some Opus workers have been asked to consider relocating to Sunnyvale.
ArthroCare is set to have about 25 research and development workers in OC once the integration is done. The department eventually will move to a smaller facility, Baker said.
Baker said it’s possible that ArthroCare eventually would boost its OC head count, depending on the company’s growth.
“It will start out as a smaller group and will grow over time, probably,” he said.
James Hart, Opus’ chief executive, will remain with ArthroCare for another couple of months to help manage the integration, said John Raffle, the company’s vice president of corporate development and legal affairs.
Hart, who is an Arizona resident, then will serve as a consultant to ArthroCare through the remainder of 2005, Raffle said.
Publicly traded ArthroCare makes devices used in arthroscopic surgery as well as ear, nose and throat procedures, among others. Its Coblation technology uses radio frequency energy to remove soft tissue from patients.
Opus’ primary product is the AutoCuff arthroscopic device used to repair rotator cuff soft tissue. The device is sold to hospitals and surgery centers.
Opus launched AutoCuff in 2003, and Opus’ Web site said it’s been used on more than 20,000 patients.
“The product’s done pretty well, and we expect it to do well this year,” Baker said.
Opus was founded in 1999. It raised some $23.4 million in venture capital funding since being formed, including a $13.6 million round two years ago.
Investors included Prospect Venture Partners, based in Palo Alto, Three Arch Partners of Menlo Park, Apax Partners Inc., a large European private equity firm, and a group of non-institutional investors.
ArthroCare reported that operating profit doubled to about $10 million for the first nine months of 2004, versus a year earlier, on a 29% jump in sales to $111 million.
The company expects Opus to post about $16 million in sales in 2004 from sales of its AutoCuff device. The acquisition is seen boosting ArthroCare’s income in 2006.
Besides Sunnyvale and San Juan Capistrano, ArthroCare has operations in Texas, Minnesota, Sweden, the United Kingdom and Costa Rica, where most of its devices are made.
