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Robot startup Vicarious is latest medtech company to cut jobs

diving letter:

  • Vicarious Surgical, which is preparing to file a 510(k) for a robotic system to compete with Intuitive Surgical’s da Vinci, said it plans to lay off 14% of its workforce to save money.
  • The move is part of cost-cutting plans that the company says will give it a cash flow of around two years.
  • The medtech sector has been hit by a string of layoff announcements over the past few days. Baxter is among the largest equipment manufacturers downsizing, cutting less than 5% of its global workforce, or about 3,000 jobs. Abbott is firing temp workers who manufactured COVID-19 tests at a Maine facility.

Dive insight:

Funded by Bill Gates and Becton Dickinson, Vicarious goes up against much larger competitors from established robotic surgery company Intuitive in an attempt to bring a new system to market. Medtronic in December enrolled the first patient in a clinical trial in the US with its Hugo robotic-assisted surgery system, while J&J also has a robotic system in development.

Another surgical robot developer, Titan Medical, announced last week that it was laying off 48 employees after failing to find a buyer for its assets.

Based in Waltham, Mass., Vicarious is cutting sales, marketing and administrative jobs but increasing research and development funding with the goal of “focusing spending on the things that get quality product to market quickly.” ‘ CFO William Kelly said on an earnings call on Monday. The job cuts would affect about 23 of the 165 employees as of March 2022, according to Vicarious’ latest annual report.

“Although we have deliberately structured these changes to meet our development and regulatory deadlines, [we] understand that reducing resources, particularly reducing future planned expenses, naturally introduces additional time risk,” Kelly told analysts on the conference call.

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The company burned $67 million in cash in line with its expectations in 2022, ending the year with $116 million on its balance sheet. That’s enough to cover Vicarious’ expenses for about two years, he said.

BTIG analyst Ryan Zimmerman said Vicarious is taking a calculated risk in reallocating research and development resources.

“Honestly, we think some of the hiring may have been premature in anticipation of a FY25 launch, so if [Vicarious] operate leaner and still be able to stay on schedule, investors should be okay with that,” Zimmerman wrote in a research note.

Shares of Vicarious are down about 4% to $3.35 in morning trade Nasdaqafter rising about 14% on Monday.

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