Heart-mapping technology developer Acutus Medical has begun implementing a series of measures to slash tens of millions of dollars from its annual operating expenses, the company said Wednesday, with a round of layoffs included in those cost-cutting actions.
Acutus didn’t say how many positions would be eliminated in its planned reduction in force. It did note, however, that the layoffs had to be preceded by a notice to the government and affected employees, as required by the Worker Adjustment and Retraining Notification (WARN) Act, which requires 60-day notice before employers lay off at least 50 workers. The WARN notice has yet to be made publicly available.
“We have undertaken a detailed review of our strategic priorities, the external environment and cost structure and are restructuring the company to sharpen our focus and strengthen our financial position,” said CEO Vince Burgess. “While challenging, this restructuring is a critical step in positioning Acutus for the future, and we are committed to treating impacted employees with respect and support through this period of change.”
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The job cuts and other “cost reduction measures” are expected to cut down Acutus’ yearly operating expenses by $23 million to $25 million compared to last year. In total, those reduced expenses, plus other cuts to manufacturing operations and improvements to Acutus’ working capital, are predicted to drop its quarterly spending rate by 30% to 40% by the end of this year.
Acutus is aiming to streamline its operations by boosting the use of its cardiac-mapping consoles in certain, unspecified geographic regions and narrowing its product development pipeline. Its current range of cardiac mapping technologies allow doctors to better visualize heart function, helping them diagnose and treat atrial fibrillation and other arrhythmias.
Because Acutus said it submitted the WARN notice on Jan. 13, the layoffs won’t be finalized until later in the first quarter of this year, at which time the company’s forecasted cost savings will begin kicking in.
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The restructuring was announced alongside Acutus’ preliminary end-of-year financial results. For all of 2021, the California-based company is expecting to report revenues falling somewhere between $17.1 million and $17.3 million—more than double the $8.5 million it reported for the full year 2020.
Though that impressive revenue growth has been repeated throughout the past several quarters, the company has simultaneously been plagued by high operating costs. For the full year 2020, for example, Acutus reported operating expenses of $83.9 million—almost 10 times its annual revenue—leading to a gross margin of negative 88%.
That trend continued into last year. In its most recently available financial report, for the third quarter of 2021, Acutus chalked up $23.2 million in operating expenses against $4.6 million in revenue, with a gross margin of negative 86%.
Accordingly, for much of the year and a half since it went public in a $182.6 million IPO in August 2020—under the clever ticker symbol “AFIB”—Acutus’ stock has been on a solidly downward trend. In the last year alone, it’s plummeted from an annual high of just under $26 per share to an all-time low this week of $2.46.