The workforce reduction trend has swept the economy recently, and unfortunately, the medtech space is not immune to layoffs.
You’ve probably read about the ongoing layoffs sweeping the tech industry, media and more.
For instance, Yahoo, Disney, Zoom and more all reported workforce reductions as companies across industries grapple with economic pressures. Think inflation, supply chain challenges and more.
Medtech has shown some resilience in the present environment. Some major medical device companies released positive earnings. However, others announced headcount reductions, citing macroeconomic headwinds. Others felt the weight of regulatory issues and restructuring efforts.
Here are a few companies across medtech that enacted layoffs over the past several months.
3M
In 3M’s fourth-quarter earnings report, the company announced that it plans to reduce its global manufacturing workforce by 2,500. The company’s Chair and CEO Mike Roman attributed the decision to a need to align with adjusted production volumes.
Roman said the company expects macroeconomic challenges to persist in 2023, hence the decision to reduce 3M’s workforce.
“3M continues to focus on delivering for customers and shareholders in a challenging economic environment,” he said. “In a year impacted by inflation, global conflicts, and economic softening, our team took actions to position 3M for future success.”
Akili
The maker of digital therapeutics recently announced that its board of directors approved an operating plan for 2023 that includes a 30% workforce reduction.
In total, 30% of Akili’s workforce amounts to 46 employees spread across different areas and functions. The company communicated the decision to employees on Jan. 12. Akili said it expects to complete the reduction by the end of the first quarter. CEO Eddie Martucci called the decision “necessary but difficult” in a letter to employees.
Boston-based Akili develops a video game-based therapeutic for children with attention deficit hyperactivity disorder (ADHD).
Ambu
In a cost-cutting effort initiated last August, Ambu made plans to cut 200 employees from its global workforce. The Denmark-based company experienced difficulties in progressing its single-use endoscope technologies.
Given the company’s headcount of approximately 4,500 at the time, the 200 employees represent about 4% of its workforce.
Later that month, the company confirmed that it completed about 70% of its layoffs.
Baxter
In its fourth-quarter earnings report, Baxter announced layoffs as a result of its ongoing restructuring plan.
Last month, Baxter announced its plans to spin off its renal care and acute therapies units. The company expects its new process to complete by early in the second quarter.
In response to “significant macroeconomic challenges,” Baxter began to implement a cost reduction program. The program runs parallel with its operating model reshuffle and it expects to complete it later this quarter. Baxter anticipates savings of more than $300 million, but it includes a “global workforce reduction of less than 5%.”
Baxter listed 60,000 employees in its most recent annual report, which means the layoff could affect up to 3,000 workers. José (Joe) E. Almeida, Baxter chair, president and CEO, said the “journey” ahead “will involve” difficult decisions.
Butterfly Network
Handheld ultrasound technology developer Butterfly Network included in its third-quarter earnings report that it had layoffs on the way.
CEO Dr. Todd Fruchterman highlighted a plan to extend the company’s cash runway. That included “improved efficiencies and targeted reductions” in Butterfly’s workforce. The layoffs covered 10% of the company, which, at the end of 2021, had 463 total employees.
“The talent and mission-driven dedication of our team has made these decisions challenging on a personal level, but I am confident these changes strengthen our position to capture the value of our market-leading innovation and set us up for a future where Butterfly is the standard of care, everywhere,” Fruchterman said.
Illumina
In November 2022, Illumina commenced a headcount reduction totaling 5% of its global workforce. That came shortly after it reported third-quarter 2022 financial results. That report included mentions of “challenging macroeconomic dynamics that we expect will continue into 2023.”
As of its Jan. 2, 2022, annual report, Illumina’s headcount totaled approximately 9,100 full-time employees. It also declared 50 part-time employees and 1,600 temporary employees. The company made no mention of whether the workforce reduction impacts its Grail subsidiary or solely affects Illumina. As of that Jan. 2, 2022, report, Grail had 700 full-time employees and 300 temporary employees.
It remains in the midst of its much-scrutinized acquisition of Grail, which it initially spun off several years prior. The latest development in that saga came last month when reports surfaced that Illumina may face a heavy penalty in Europe for completing the acquisition.
Pear Therapeutics
Pear Therapeutics experienced a difficult 2022. The digital therapeutic developer went through multiple rounds of layoffs, resulting in the reduction of roughly 84 employees.
First, in July, Pear let go of roughly 25 employees, representing 9% of its workforce. The company attributed this round to overall operations restructuring amid a difficult macroeconomic environment.
Pear announced further reductions in November to extend its cash runway and reduce reliance on financing. Its reduction affected approximately 59 employees, representing 22% of its workforce. Pear expects this move to result in annual cost savings of approximately $10.7 million in 2023.
Philips
Like everyone in medtech, Philips felt the impact of supply chain issues and macroeconomic pressures. However, the company had another factor contributing to its woes: a massive respiratory device recall that continues to pile on troubles.
The Amsterdam-based medtech giant announced in October that it planned to cut its workforce by roughly 4,000 globally That amounted to about 5% of the headcount listed in its previous annual report.
In its fourth-quarter earnings report last month, Philips said it planned to eliminate a further 6,000 global positions. Half the cuts will take place this year, with the remainder to be done by 2025. The layoffs represent about 13% of Philips’ global workforce.
“2022 has been a very difficult year for Philips and our stakeholders, and we are taking firm actions to improve our execution and step up performance with urgency,” said CEO Roy Jakobs.
Retractable Technologies
In June, the maker of syringes, blood collection and IV catheter devices reduced its workforce by 16%. Retractable Technologies attributed the decision the completion of its facility expansion efforts. The completion of U.S. government orders related to COVID-19 vaccines also contributed.
The staff reduction affects the Little Elm, Texas-based company’s production, operations and logistics departments. Retractable Technologies projected overall annualized savings of approximately $2.1 million, or 13% in annual payroll expense. Separation costs are expected to be approximately $200,000.
As of March 11, 2022, the company had 235 employees.
Surgalign
Spine surgery technology developer Surgalign said in November that its board approved a corporate restructuring plan that includes layoffs.
Deerfield, Illinois–based Surgalign declined to disclose how many jobs it may cut as it streamlines its business. As of Dec. 31, 2021, Surgalign had 231 employees. That includes 70 outside the U.S.
The company estimated savings between approximately $30 million and 35 million in 2023.
Venus Concept
The medical aesthetic technology developer said earlier this month that it plans to implement a restructuring plan that includes a large workforce reduction.
Venus Concept plans to cut 70 employees, equalling a reduction of approximately 18% of its global workforce as of Dec. 31, 2022. It completed the first phase of the reduction, which affected employees in Israel and North America, on Feb. 6.
In connection with the actions, Venus Concept expects restructuring charges between $2 million and $2.5 million. The company expects to realize the majority of its savings in the second half of 2023.
Venus Concept projects the restructuring plan to result in total pre-tax savings of between $13 million and $15 million starting in 2024.
Verily
Google’s (NSDQ:GOOGL) Verily announced at the start of the year that, as part of a refined strategy, it slashed 15% of its workforce. The company aims to implement a simplified operating model.
Various reports suggested that Verily has more than 1,600 employees, so the layoff presumably affected more than 200 workers.
On Jan. 11, CEO Stephen Gillett issued a letter to all Verily employees. In it, he wrote that the company enforced its workforce reduction due to discontinued programs, full control of Granular and Onduo, and redundancy in the new, centralized organization.
Vicarious Surgical
In its fourth-quarter earnings report, surgical robot maker Vicarious Surgical announced a 14% workforce reduction. With approximately 165 employees listed in its most recent annual report, the cuts could involve around two dozen employees.
CEO Adam Sachs said the employees laid off mostly resided in selling, general and administrative expenses. The company undertook the decision to reduce cash burn and boost R&D spending as it looks to get a quality robotic surgery system on the market.
Sachs indicated that Vicarious Surgical’s regulatory timeline should feel no impact from the cuts. However, he said some risk existed around the company’s ability to respond to new developments in the regulatory process.
“While previously, it made sense for the company to deploy greater resources and parallel path multiple contingencies in order to absolutely minimize timeline risk wherever possible. In the current market environment, fiscal discipline requires a much more lean approach, focused on growing equity value and minimizing dilution,” Sachs said.