Juul Labs is planning to lay off 30% of its staff in efforts to cut operating costs and boost profits amid a “period of regulatory and marketplace uncertainty.”
The e-cigarette maker aims to restructure their workforce by reducing the company’s headcount to enable them to maximize profitability and cash-flow generation.
Reportedly, the headcount layoff will affect about 250 employees reducing the company’s workers to about 650.
“We will be substantially reducing our headcount and, unfortunately, saying goodbye to a number of highly valued team members who have made tremendous contributions to the mission,” Juul said in a release.
According to Juul spokesperson, the layoff will reduce their operating expenses by $225 million.
In a release, Juul was stated to continue investing in their core priorities, including delivery of high quality products to their partners, development of new products, engagement with FDA authorizations, and commercial growth in compliance with laws and regulations.
However, in order for them to fulfill these priorities, they needed to substantially reduce their team members.
“With these operating cost reductions, JLI is positioned to increase our adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margins and generate meaningful free cash flow before litigation settlements.” Juul added.
With this, they will reduce their access capital pre-PMTA (Premarket Tobacco Product Application) and extend their time in continuing to pursue market orders from FDA.
In reports from last year, Juul products have been ordered off the market by FDA to ensure that their e-cigarettes meet the public health standards.
Consequently, it was reported that Juul appealed the decision on the sales ban and the ban was reversed for the time being.
Moreover, Juul has faced multiple legal challenges in the previous years and it caused a turmoil in their overall sales. In efforts to secure funds, avoid bankruptcy, and continue their production in the coming years, they are coping with reduction strategies to stay afloat.
