Acutus Medical announced a realignment of resources and operational downsizing resulting in a 70% workforce reduction.
Dr. Shaden Marzouk, the company’s board chair, called the downsizing “hard but necessary steps” in a news release. The company intends to continue to comply with its remaining obligations to Medtronic for the production of left-heart access products. Acutus sold its left-heart access portfolio to Medtronic for $50 million.
Just over a year ago, Carlsbad, California–based Acutus announced plans to lay off 65% of its workforce, totaling roughly 160 employees. Earlier this year, the company was also delisted from the Nasdaq market.
Before enacting those layoffs, at the end of 2023, the company reported 230 full-time employees on board. Following the 160-person headcount reduction, the company likely had around 70 remaining employees.
A WARN report filed with the California Employment Development Department listed 57 workers permanently let go, effective Feb. 1, 2025.
The reduced operations are designed to solely support the manufacturing and distribution of Medtronic’s left-heart access products. Acutus expects its actions to meaningfully reduce cash burn and ongoing operating expenses. It anticipates the completion of the reduction in the first quarter of 2025. The company plans to continue manufacturing for Medtronic until it fulfills its obligations under their purchase agreement.
“The operational downsizing impacts our team, and it is difficult to part with our valued and highly talented colleagues who have made substantial contributions to our company,” said Takeo Mukai, CEO & CFO of Acutus. I want to thank each one of them for their dedication to Acutus and our mission.”
The financial impact of the Acutus downsizing
Acutus anticipates approximately $1.4 million to $1.8 million in pre-tax downsizing and exit-related charges. Approximately $300,000 of that represents future cash expenditures for related consideration and costs. Additionally, around $1.2 million represents future expenditures for retention bonuses to certain employees set to assist with the downsizing. Finally, up to $300,000 could potentially go toward contract closing costs.
The company expects the majority of the charges to come in the first quarter of 2025.
Acutus plans for its exclusive source of revenue to continue to come from its Medtronic deal. It plans to utilize operating expenses and working capital to support operations related to that, plus general and administrative functions. The company intends to continue minimizing costs while picking up potential earnout payments from Medtronic.
Acutus remains eligible to receive additional earnouts based on a percentage of Medtronic’s total net end-user sales of the related products. That eligibility stretches to January 2027.
As of Sept. 30, 2024, the company had $12.6 million in cash, equivalents, marketable securities and restricted cash. It expects that cash on hand, plus Medtronic-related revenue and earnouts, to service outstanding debt and fund the remaining business.
