With new CEO, Invitae lays off more than 1,000 employees, slims international footprint

Overseen by a newly appointed CEO, genetic testing company Invitae will lay off more than 1,000 employees as part of a year-long restructuring plan that’s expected to ultimately save the company hundreds of millions of dollars annually.

The San Francisco-based company’s board of directors approved the plan on July 16, according to a filing (PDF) this week with the U.S. Securities and Exchange Commission. The multi-pronged approach will see Invitae narrow the scope of its genetic testing and genomic management operations, reduce its physical footprint and make other potential cost-saving cuts throughout the business.

The restructuring is expected to be completed by the end of June 2023. Though expected to cost Invitae between $75 million to $100 million in cash to carry out—plus additional non-cash costs, which weren’t specified by the company—the efforts are ultimately forecasted to save Invitae around $326 million per year.

“First, our refocused and realigned platform will allocate resources where they should be: At our core, we are a growth-oriented genomic testing platform. Second, aggressive actions to substantially reduce spend over the coming 12-18 months will improve operating leverage and align Invitae’s cost structure with current market dynamics and the broader economy,” the company's new CEO, Kenneth Knight, said in a statement.

“Invitae’s new operating plan has far-reaching and—for many of our dedicated, hard-working team members—difficult implications, and we regret that impact," added Knight, who officially took the helm this Monday in a rearrangement of the company's executive team that was announced the same day as the restructuring plan. Knight, who was named chief operating officer in mid-2020, is stepping in for Sean George, who will remain on Invitae's board of directors through the company's annual meeting in June 2023.

"Invitae is committed to working closely and compassionately with those adversely affected to help ensure as smooth a transition as possible, and we thank everyone on our team for their contributions,” Knight said.

In tandem with the more than 1,000 staff laid off, Invitae said it plans to consolidate its underutilized office and laboratory spaces. That means exiting about 100 unnamed countries and territories “where the company’s business is less developed,” according to the SEC filing, whittling down Invitae’s international footprint to fewer than a dozen countries.

Alongside the physical reductions, Invitae plans to streamline its product portfolio. In the genetic testing space, it’ll narrow its focus only to what it has designated as “higher-margin, higher-growth testing opportunities,” including oncology, women’s health, rare disease and pharmacogenomics. To support those efforts, the company plans to continue expanding its digital services and technologies and grow its genomic management business.

In unveiling the restructuring plan, Invitae also offered a financial update. Though preliminary earnings for the second quarter show revenues clocking in around $136 million—about a 14% increase over the same period last year—the company lowered its forecast for the remainder of the year. Citing its first-half earnings and the costs of the restructuring, full-year revenues are now expected to show only “low double-digit growth” over 2021, a far cry from the 40% growth it predicted at the start of 2022.

Once it wraps up the cost-cutting moves next year, however, Knight said during a call with investors this week that “we expect revenue to grow annually between 15% to 25% until we reach a point of cash flow breakeven.”