Acutus Medical has opted for a strategic realignment, envisioning a significant workforce reduction of 70%. Dr. Shaden Marzouk, the chair of Acutus’ board, characterized this downsizing as “hard but necessary steps.” Despite these layoffs, the company is determined to meet its obligations to Medtronic regarding the production of left-heart access products. This comes after Acutus decided to sell its left-heart access portfolio to Medtronic for $50 million.
Over a year ago, Acutus proposed a workforce cut of 65%, equating to about 160 staff members. Earlier in the year, Acutus was also removed from the Nasdaq listing.
By the close of 2023, Acutus had about 230 full-time staff. With the reduction process trimming it down by about 160 members, the firm retained approximately 70 staff. The recent downsizing implies that around 50 more employees faced job termination.
The restructuring is chiefly aimed to back the production and distribution of Medtronic’s left-heart access devices. This measure is expected to curtail cash outflows and diminish operational costs. Acutus projects to conclude these workforce adjustments by Q1 2025. The partnership will persist until the fulfillment of their agreed commitments.
“Our workforce reduction affects our staff, and it’s tough to let go of our invaluable and skilled colleagues,” expressed Takeo Mukai, Acutus’ CEO & CFO. “I wholeheartedly thank each one of them for their devotion to Acutus and its goal.”
**Financial Implications of Acutus’ Downsizing**
Acutus forecasts around $1.4 million to $1.8 million in pre-tax charges related to the downsizing and exits. Of these costs, about $300,000 will cover expected future cash expenses tied to relevant considerations. Additionally, around $1.2 million will be allocated for retention bonuses for key staff involved in the downsizing process. Lastly, potential contract termination fees could amount up to $300,000.
Most of these expenses are expected to be realized by the first quarter of 2025.
Acutus foresees its primary revenue source stemming from its agreement with Medtronic. The firm intends to manage its expenses and capital budgets to maintain operations aligned with the agreement while overseeing general and administrative duties. By minimizing expenditures, Acutus aims to capitalize on possible future earnout payments from Medtronic.
Acutus is positioned to benefit from future earnouts based on a portion of Medtronic’s net end-user sales of the linked products, potentially reachable until January 2027.
By the close of September 30, 2024, Acutus reported holding $12.6 million in cash, equivalents, marketable securities, and restrained cash. The company anticipates this reserve, in conjunction with anticipated Medtronic-linked returns and earnouts, to manage its debts and sustain its operational needs.