Dive Brief:
- Acutus Medical is laying off approximately 160 employees in a restructuring that will leave it focused solely on meeting the manufacturing and distribution terms of its deal with Medtronic.
- The company went public in 2020, raising $159 million to challenge Abbott, Boston Scientific, Johnson & Johnson and Medtronic for the electrophysiology mapping market. However, Acutus is yet to have a big impact on the sector.
- Rather than keep striving to grow market share, the company has decided to exit mapping and ablation and focus on its remaining cash on the Medtronic partnership. Medtronic bought an Acutus business last year and will source devices from the company for up to four years.
Dive Insight:
Acutus developed mapping technology to try to reduce the rate of atrial fibrillation recurrence after patients undergo ablation. The company pitched its non-contact approach to mapping as a better fit for atrial fibrillation and other complex or unstable arrhythmias, but has struggled to translate its belief in the technology into commercial success.
Medtronic acquired Acutus’ left-heart access transseptal crossing business in 2022, paying $50 million upfront and an additional $20 million before the end of the year. The agreement made Medtronic the exclusive distributor of the devices but Acutus remained the manufacturer.
Now, Acutus has decided its best option is to abandon plans to grow its mapping and ablation business and limit its activities to the support of Medtronic.
“In all, the company will largely operate as a contract manufacturing business until the earnouts are completed and then either return cash to shareholders (after paying down its $34.8 million in debt) or look to reinvent itself should the earnouts come in better than expected,” William Blair analysts wrote in a note to investors.
Acutus will stop making its AcQMap Mapping System, AcQMap 3D Mapping Catheter, AcQBlate Force-Sensing Ablation Catheter, the AcGuide Max 2.0 steerable sheath and associated accessories. The company will explore strategic alternatives for the businesses, including a potential sale, but no longer needs employees that work on the products, leading it to outline plans to lay off about 65% of its staff.
The people set to leave the business include the CEO David Roman, SVP of Commercial Kevin Mathews and Chief Administrative Officer Tom Sohn. CFO Takeo Mukai will take on the CEO role alongside his existing duties.
William Blair welcomed Acutus’ strategic shift: “Though the mapping and ablation business was showing signs of stability and growth over the last several quarters, ultimately it would have required potentially additional capital raises. Given the current financial environment, we believe the size of these transactions would likely have been sizable to reach cash flow breakeven,” the analysts wrote.
Acutus, which ended September with $45.5 million in cash and cash equivalents, expects the restructuring to cost $21 million to $32 million. The company withdrew its 2023 financial guidance due to the strategy change and restructuring.