Dive Brief:
- Acutus Medical said Wednesday that it plans to cut about 70% of its employees and reduce operations to solely support the obligations of its deal with Medtronic for left-heart access devices.
- Acutus has begun the layoffs and expects to complete them in the first quarter of 2025. The company said in the announcement that the cuts will “meaningfully reduce cash burn as well as ongoing operating expenses,” adding it expects costs in a range of from $1.4 million to $1.8 million. Acutus did not immediately respond to a request for comment on the number of people who will be affected.
- Carlsbad, California-based Acutus has now tied two mass layoffs to the Medtronic deal. In November 2023, Acutus said it would eliminate approximately 65% of its employees, about 160 people, to solely focus on the manufacturing and distribution deal with Medtronic.
Dive Insight:
Acutus is the latest medtech company to announce layoff plans in what has become one of the biggest trends in the industry. Over the past two years, dozens of companies have eliminated tens of thousands of jobs across numerous sectors and treatment areas.
Acutus' latest move is tied to agreements the company made with Medtronic more than two years ago. In 2022, the company entered into an asset purchase agreement and a distribution agreement with Medtronic for left-heart access products. In June 2022, Medtronic bought Acutus’ left-heart access portfolio for $50 million upfront and $20 million paid in November 2022.
Shaden Marzouk, chair of Acutus’ board of directors, said in a statement that the latest layoffs follow an “extensive strategic review” by the board and are necessary to “reduce the size of our organization while complying with our remaining obligations to Medtronic.”
As of Dec. 31, 2023, the company had 233 employees, according to a federal securities filing.
California’s database for Worker Adjustment and Retraining Notification filings showed an entry from Acutus on Dec. 2 for the permanent layoff of 57 employees, effective Feb. 1, 2025.
Acutus’ exclusive source of revenue will continue to come from the sale of left-heart access products in the Medtronic deal. Its operating expenses and working capital will support manufacturing, quality and supply chain activities.
In addition to the $50 million and $20 million payments in 2022, Acutus received a $17 million payment in January 2023 under the asset purchase agreement, according to a November filing with the Securities and Exchange Commission. In the filing, Acutus said it received $8.4 million in contingent consideration based on Medtronic’s product sales during the first nine months of 2024.
Acutus can receive payments based on Medtronic’s sales through January 2027. Acutus has $12.6 million in cash, cash equivalents, marketable securities and restricted cash, according to this week’s announcement. The company said its cash on hand, distribution revenue from the deal and future payments will be sufficient to pay outstanding debt and fund the business.
