Juul Labs on Wednesday announced a company restructuring aimed at reducing operating costs which will see the e-cigarettes maker ‘substantially reducing’ its workforce.
While the company didn’t reveal any number, reports said 30 per cent of the staff would be affected.
The restructuring is aimed at maximising profitability and cash-flow generation, while continuing to invest in its core priorities, the company said in a statement.
Juul has announced job cuts in November last year, as it secured financing to stay afloat. The company had then planned to lay off around 400 employees while cutting its operating budget by up to 40 percent.
The fresh round of job cuts would see it laying off around 250 people, bringing its headcount to around 650, and reduce operating expenses by $225 million, reports said.
“As difficult as this moment is, we remain fundamentally optimistic about the prospects for JLI – a view rooted in our belief that our technology and our pipeline of new innovations represent the most valuable ever brought forward to transition adult smokers away from cigarettes while combating underage use,” the company said in the statement.
Juul has been under pressure over the past year, as it has had to deal with lawsuits related to marketing of its e-cigarettes.
The company in April has agreed to pay $462 million (£370m) to six states and the District of Columbia to settle charges that it violated numerous laws in marketing tobacco products to youth.
The agreement followed an earlier $438.5 million Juul settlement with 34 different US states.
On Tuesday Altria Group said its subsidiary NJOY has filed a complaint against Juul Labs with the US International Trade Commission (ITC), seeking a ban on the import and sale of certain JUUL products, alleges that the products infringe certain patents owned by NJOY.
Last year, the FDA has banned the sale of all currently marketed JUUL products in the US market after finding the vaping giant had failed to address certain safety concerns.
Juul has immediately secured a court stay on the ales ban and the regulator itself put its decision on hold later, saying there are scientific issues unique to the Juul application that warrant additional review. Juul’s administrative appeal is still pending.
Meanwhile, Juul is looking to bring its next-generation vapour platform, JUUL2 System, which is launched in the UK in 2021, to the US market, and the company has filed a Premarket Tobacco Product Application (PMTA) for the product to the FDA in July.
Juul said by increasing adjusted EBITDA margins and generating meaningful free cash flow before litigation settlements, the latest operating cost reductions will help reduce the need to access capital pre-PMTA, extend the time horizon to continue the pursuit of market orders from FDA and generate positive equity value.
Simon Hannah
