Juul Labs Announces Layoffs as Part of Restructuring

The company aims to reduce its operating costs in the wake of multiple high-dollar settlements with both the federal and state governments.
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SAN FRANCISCO — Juul Labs Inc. launched plans for a company restructuring aimed at reducing operating costs which will include layoffs and reducing the company's headcount.

[Read more: Juul Seeks Approval for Vape With Age-Verification Capabilities]

The restructuring plan will enable Juul Labs to maximize profitability and cash-flow generation while allowing it to continue to invest in its core priorities, which include the delivery of products to commercial partners, ongoing development of next-generation products, engagement with the U.S. Food and Drug Administration (FDA) regarding pending and possible future market authorization applications, and general commercial growth, the company stated. 

The restructuring and reduction plan comes as the company faces multiple legal woes over the last few years. In April, Juul Labs settled a multistate lawsuit over its marketing to underage smokers for $462 million, before agreeing to an additional, separate multimillion dollar settlement with the state of Minnesota over similar marketing violations. Both cases come on top of a resolution to a federal suit in 2022 which resulted in a settlement that topped more than $1 billion.

Unfortunately, the company's problems have not ended with the resolution of the state and federal cases, either. This past week, NJOY filed complaints against Juul Labs with the U.S. International Trade Commission and in the U.S. District Court for the District of Delaware, alleging some of Juul's products infringe on NJOY's patents.

In the wake of these headwinds, Juul Labs stated it believes cost reductions will better position the company to increase its adjusted EBITDA margins and generate meaningful free cash flow before the expected payment of litigation settlements are due. 

Juul Labs also asserted the restructuring should extend the time horizon needed to continue pursuing market orders from the FDA and generate positive equity value as the company pays down its liabilities.