By Susan Kelly

CHICAGO (Reuters) - Shares of Boston Scientific Corp (BSX.N) plummeted 16 percent on Tuesday, wiping out $2.4 billion of market value, after the company cut its profit outlook and its chief executive warned of dire consequences from a proposed health reform tax.

The medical device maker, which released its third-quarter results late Monday, cited decelerating growth and greater pricing pressure in the market for devices that manage irregular heart rhythms for the reduction in its full-year profit outlook.

On Tuesday, it warned that a proposed tax in the U.S. health care reform bill that cleared the Senate Finance Committee last week could have serious consequences for the company, including job losses.

"The bill that came out of the committee last week makes absolutely no sense and would be very damaging to Boston Scientific, and the medical device industry as a whole," Boston Scientific Chief Executive Ray Elliott said during a post-earnings conference call.

"In a nutshell, it would raise costs and lead to significant job losses. It does not address the quality of care but the political scorecard of savings."

Elliott said that the company's tax liability would be doubled, adding $150 million to $200 million a year, and it would be forced to make substantial cuts in research and development spending, which could result in 1,000 to 2,000 jobs being lost at Boston Scientific.

Shares of Boston Scientific closed down $1.59 or 15.7 percent at $8.57 on the New York Stock Exchange; earlier they fell as low as $8.39.

Shares of St Jude Medical Inc (STJ.N), a rival maker of implantable cardioverter defibrillators, ended down $1.12 or 3.3 percent at $33.16. Medtronic Inc (MDT.N), the largest maker of ICDs, saw shares fall $1.34 or 3.53 percent to $36.65.

St Jude, which issued its own profit warning earlier this month, is due to report third-quarter results on Wednesday.

Analysts said Elliott's comments highlighted the risk to medical technology companies should the fee on devices be enacted, causing some investors to pull out of the stocks.

"When a CEO says something like that, it doesn't bode well for the entire medtech universe," said Lazard Capital Markets analyst Sean Lavin.

The Senate bill in its current form contains $4 billion in annual fees on medical device makers beginning in 2010 to pay for health care reform. The device industry is fighting to remove or reduce the fees.

"Part of what's still not clear is the whole issue of the tax," said Morningstar analyst Debbie Wang. "The odds are it's going to be whittled down to something; we just don't know what it's going to be yet. They are going to get hit, but how big the hit will be is just not clear."

In addition to direct fees on device makers, the industry faces a double tax because hospitals, which have agreed to accept $155 billion in cuts in government payments over 10 years, will pass on part of that burden to device makers, said Elliott.

Late Monday after the NYSE closed, Boston Scientific reported third-quarter earnings that missed expectations and cut its full-year forecast.

The company said the overall cardiac rhythm management device market is growing at about 4 percent, with U.S. growth at 2 percent. That is below the company's prior expectations for market growth of 5 to 6 percent, and U.S. defibrillator growth of 3 percent, Elliott said.

The U.S. drug-eluting stent market, in which Boston Scientific also participates, is stable, with U.S. procedures up about 1 percent, Elliott said.

(Reporting by Susan Kelly, editing by Gerald E. McCormick, editing by Matthew Lewis)