Juul strikes financing deal, plans to cut 30% of jobs to dodge bankruptcy
Packages of Juul e-cigarettes are displayed for sale in the Brazil Outlet shop on June 22, 2022 in Los Angeles, California.
Mario Tama | Getty Images
Juul Labs said Thursday it secured financing from early investors, as it made plans to lay off nearly a third of its staff in a bid to avoid bankruptcy.
“Today, Juul Labs has identified a path forward, enabled by an investment of capital from some of our earliest investors,” a Juul spokesperson told CNBC. “This investment will allow Juul Labs to maintain business operations, continue advancing its administrative appeal of the FDA’s marketing denial order and support product innovation and science generation.”
The company has not released any details or terms of the investment.
Juul said that in order for it to move forward and for operations to continue a “reorganization” of its global workforce will be necessary. The company plans to lay off about 400 people and cut its operating budget by 30% to 40%.
Juul has faced financial strains in recent years. In 2015, it introduced its popular e-cigarette, touting it as a safer alternative to smoking traditional cigarettes. Since then, the company has been saddled by a variety of legal challenges. Juul settled several large cases brought by state authorities, largely related to its marketing practices, which many suits allege were deceptive and failed to warn about the risks of its products.
The deal came ahead of a new report from the Food and Drug Administration and the U.S. Centers for Disease Control and Prevention that said e-cigarettes — for the ninth consecutive year — were the most commonly used tobacco product among middle and high school students in 2022. Overall, nearly 3.1 million students used tobacco products this year, according to the agencies. More than 2.5 million used e-cigarettes.
The report said many factors contribute to youth tobacco product use, including flavors, marketing and misperceptions of harm.
The FDA ordered Juul to stop selling its vaping products this year and then placed a temporary hold on its order in July. The headwinds hurt the company’s bottom line, and analysts predicted it might file for Chapter 11 bankruptcy protection as a way out.