Rare Daily Staff
Medical genetics company Invitae said it would cut 1,000 employees and named a new CEO as part of a reorganization to accelerate its move toward being cash flow positive and attract future investment.
The company said the reorganization includes streamlining and cost reduction programs that are expected to deliver approximately $326 million in annualized cost savings to be fully realized by 2023 and extend the company’s cash runway to the end of 2024. The company had about 3,000 employee at the end of 2021.
Invitae named chief operating officer Kenneth Knight as its CEO. He will also join the company’s board of directors. He succeeds Sean George. Randy Scott, Invitae’s co-founder, former CEO, and former executive chairman, is returning to the company as chairman of the board. Eric Aguiar, who has served as Invitae’s independent chairman since 2019, is now serving as lead independent director.
Invitae will eliminate non-core operations while realigning and sharpening its focus on the portfolio of businesses that generate sustainable margins and deliver returns to fuel future investment. In the testing business, Invitae will shift operational and commercial efforts to accelerate positive cash flow by maintaining robust support of the higher-margin, higher-growth testing opportunities among oncology, women’s health, rare disease, and pharmacogenomics. The company also plans to continue its expansion and integration of key digital health-based technologies and services to create a differentiated model in genetic health.
Longer-term, the company said it remains committed to its genomic management business. The company believes that it holds outsized growth potential and intends to continue to prioritize the tools, partnerships and applications that support the development of genome management as the catalyst for the future of healthcare.
In addition to cutting staff, the company is consolidating office and lab space, optimizing its product portfolio, reviewing spending, and reducing its international business to focus on serving less than a dozen international geographies.
Invitae has updated its 2022 annual revenue guidance to reflect the preliminary first half results and the anticipated impacts of the actions announced today, which include the sale or wind down of non-core products and services and the elimination of certain international territories to focus on more profitable revenue streams. Revenue in the near term is anticipated to be flat in the second half of 2022 over the first half, representing a low double-digit growth rate for full year 2022 over 2021 despite the impacts of the strategic realignment. The company expects 2023 to be an adjustment year and for longer term revenue growth rates to return to between 15 percent and 25 percent beyond 2023.
“These adjustments will meaningfully extend our cash runway and accelerate the pursuit of our long-term growth targets and positive cash flow,” said Invitae CEO Knight. “Most importantly, the plan reaffirms our commitment to leading the way in shaping the future of medicine through powerful genomic tools.”