Medtronic has been kicked off the Fortune 500 for moving the company’s headquarters to Ireland while continuing to operate out of Minneapolis, Minnesota. The company would have ranked 185th on the list.
“The Fortune 500 is going to remain a list of companies based in the U.S.,” Scott DeCarlo, Fortune’s list editor, told The Washington Post (The Post). “We want to maintain the integrity of the list.” Ten companies have been kicked off the Fortune list since 2000 for leaving the country.
Medtronic’s move to Ireland was part of a $42.9 million acquisition of the company by Dublin-based Covidien, MinnPost reported.
“The financial structure and optimization of tax discussion came after. The tax rates for Medtronic do not change a significant amount, but the structure gives us access to the cash generated by Covidien assets abroad, which we can then reinvest into US technologies,” Medtronic CEO Omar Ishrak told the Financial Times in June 2014.
According to MinnPost, current law dictates that U.S. corporations pay taxes to nations abroad on the profits they earn there, but companies can bring those profits back to the U.S. without them being taxed at higher rates. Covidien’s acquisition of Medtronic was designed to allow Medtronic to bring its foreign profits back to the U.S. while avoiding the higher U.S. tax levies.
Medtronic has had problems with several of its medical devices in recent years including the company’s Sprint Fidelis defibrillator leads, SynchroMed Pain Pump and Sigma pacemakers, all of which resulted in product recalls. Medtronic has made headlines, however, with its Infuse bone graft device. Off-label use of Infuse in cervical spine surgeries, as well as lateral approach or posterior approach spinal procedures, has been linked to serious and potentially deadly side effects ranging from ectopic or uncontrolled bone growth at or near the site of surgery to cancer and acute neck swelling.
Lawsuits have been brought against Medtronic and its subsidiaries on behalf of claimants who allege Infuse caused them catastrophic injuries. The suits allege that Medtronic used false and deceptive marketing schemes aimed at promoting Infuse for off-label purposes.
Medtronic is currently facing more than 1,000 Infuse lawsuits.
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