Medtech firms have cut thousands of jobs this year. Will layoffs continue in 2025?

Medtech firms have cut thousands of workers in the last two years, leaving employees wondering what’s to come in 2025.

In the past two months, DNA testing company 23&Me announced plans to cut 200 jobs, orthopedics firm Smith & Nephew announced plans to cut 150 jobs and diabetes tech firm Embecta said it would cut 125 positions after discontinuing its insulin patch pump program. 

A MedTech Dive analysis found that there have been more than 14,000 layoffs across the industry from January 2023 to mid-2024.

Profitability pressures, mergers and strategic shifts have driven the cuts, industry experts said. Looking to next year, they said more layoffs are likely, but they also expect the situation to stabilize. 

“Layoffs are just wildly challenging for the individuals impacted,” said Sheryl Jacobson, who leads Deloitte Consulting’s medtech practice. “We’re all humans, and it’s all our lives.”

Profit pressures drive cuts, restructurings

One factor driving layoffs in the past year was profitability pressure from investors. Hospitals are still recovering from the COVID-19 pandemic, and many still have negative margins, Jacobson said. Meanwhile, stocks for publicly traded medtech companies have not performed as well as their boards or Wall Street would like.

“They’re under a lot of pressure, and a lot of margin pressure, and all of that is making them rethink their portfolio, rethink their operating model, rethink what skills and capabilities they need,” Jacobson said. 

Smaller, earlier-stage companies are also feeling the crunch as investor expectations change around profitability. 

“They used to be willing to trade off strong revenue growth with a lack of profitability, but that’s changed and investors seem to really favor improving profitability and cash flow even if the growth is a bit slower as a result,” said Needham analyst Mike Matson.

Although inflation rates have tempered, costs for components and services have not gone back down, Matson added.
“I don’t think there’s a quarterly analyst call where there isn’t, ‘When are you getting back to pre-COVID margins?’” said John Babitt, a life sciences partner at EY. “And the short answer is, maybe that’s not the right question. Everybody is in the boat that they are.”

M&A, portfolio shuffling affect jobs

Another industry trend affecting jobs has been companies spinning out, selling and buying up businesses as they shift their priorities. 

“The larger strategic organizations have been really consistently changing, right-sizing, making adjustments for several years now,” said Holly Scott, a senior partner at medtech search firm the Mullings Group. 

For example, Edwards Lifesciences recently sold its critical care business to BD and bought four structural heart companies: Innovalve Bio Medical, a stake in Affluent Medical, JenaValve Technology and Endotronix. In September, Edwards announced plans to cut about 540 employees, or 3% of its workforce.
More activity from private equity firms has added to the recent uptick in M&A, Deloitte’s Jacobson said.

“It takes a while for companies to make portfolio shifts, because they’re selling either large parts of their business, or they’re buying and you have to deal with integration,” Jacobson said. “So we would expect the M&A to continue over the next 12 to 24 [months].” 

What roles are affected most?

In early 2024, many of the affected jobs were in diagnostics, with layoffs at Thermo Fisher, Illumina, and Cue Health, which shuttered its business in May.

Both diagnostic testing and diagnostic monitoring saw “enormous growth” during the COVID-19 pandemic, Scott said. Since then, demand for diagnostic testing dropped significantly, and diagnostic monitoring has leveled out.

“We saw a heavy flux into the business and then a flux out,” Scott said. 

More recently, Scott has seen larger companies making cuts across the board.