Health tech investors and companies shopping for a new M&A target this year may want to check out the produce section.
Pear Therapeutics announced Friday that it has begun looking into “strategic alternatives” that could bolster its currently precarious financial situation. Besides a potential acquisition, merger or outright sale, the company is also looking into a possible licensing agreement for or sale of specific assets and additional fundraising attempts among other “strategic transactions.”
The digital therapeutics maker didn’t offer up a timeline for the process and said in a statement sent to Fierce Medtech that it won’t be providing further updates “unless or until the company’s board of directors has approved a definitive course of action or otherwise determines that other disclosure is necessary or appropriate.”
In the announcement, Pear noted that if it’s not able to lock down a strategic transaction, it may have to reorganize, restructure or completely liquidate the company.
After the news went live on Friday morning, Pear’s already spiraling stock price took a sharp dip. It opened at an all-time low of just 33 cents per share—about a 50% drop from Thursday’s $0.63 closing price—and bounced around a bit before settling around the $0.40 mark by midday. The stock price hasn’t risen above $1 per share in the last two weeks.
Alongside the news that it’s looking into a potential sale, Pear filed a notice (PDF) Friday with the U.S. Securities and Exchange Commission (SEC) withdrawing the financial forecasts it had previously issued for 2022 and 2023, adding that it won’t be holding a conference call to discuss its fourth-quarter and full-year 2022 earnings.
Though Pear kicked off 2022 with its sights set on achieving $22 million in net revenues for the year, more than a 400% increase over the previous year’s $4.2 million haul—predictions that it upheld after reporting its first-quarter earnings—it soon trimmed down that forecast. As it began a restructuring process in the third quarter of the year that centered on “narrowing” its “business focus”—including layoffs of 25 employees, about 9% of its workforce, by the end of July—Pear said that its full-year net revenues would instead fall somewhere between $14 million and $16 million.
The updated predictions held steady a few months later as Pear embarked on yet another wave of cost-saving efforts that saw 59 more employees laid off. In its third-quarter earnings report announcing the layoffs in November, the company said the restructuring would help save around $10.7 million in 2023. At the time, it suggested that revenues would skyrocket in 2023, reaching somewhere in the range of $27 million to $37 million.
Pear’s money-saving attempts have come as the company’s operating expenses have reached perilous heights. In 2021, it recorded total expenses of nearly $110 million, resulting in a net loss of about $65 million for the year.
By the third quarter of last year, Pear’s 2022 operating expenses had already stretched past $104 million—well above the $74 million it had spent by the same point in 2021—and the company calculated a net loss of more than $49 million for the first nine months of the year. In a conference call discussing the quarter’s results, Chris Guiffre, Pear’s chief financial officer and chief operating officer, said the company was hoping the restructuring moves would help bring 2023’s operating expenses below the $100 million threshold.
Pear took another stab at padding its wallet at the start of this year, when it filed a notice (PDF) with the SEC outlining a plan to sell up to $300 million worth of stock shares.