E-cigarette company Juul Labs has raised approximately $1.3 billion in new financing, the company disclosed in a recent regulatory filing. This influx of funding comes after Juul cut hundreds of jobs over the past year in an effort to reduce operating costs amid mounting legal pressures.
New Funding to Support Juul’s Ongoing Operations
Juul sought to raise $1.6 billion in total funding, of which they have secured $1.27 billion so far. The company plans to use these funds to continue operations and navigate ongoing lawsuits related to their marketing practices.
Over the past two years, Juul has conducted multiple rounds of layoffs affecting hundreds of employees. They’ve also reduced operating budgets in areas like marketing. However, significant funding was still required to keep the company solvent.
This latest capital infusion will provide support as Juul deals with legal actions from several U.S. states. In April 2022, Juul settled with 34 states and territories over allegations that they unlawfully marketed to minors. The $438 million settlement will be paid out over 6-10 years.
Legal Headwinds Continue for E-Cig Leader
In addition to the state settlement, Juul faces hundreds of personal injury lawsuits alleging their products caused nicotine addiction in teens and young adults. They also remain under investigation by the FDA over unauthorized marketing claims made about their e-cigarettes.
These legal issues, coupled with rising operating costs, have threatened Juul’s financial standing. Their products represent over 35% of the U.S. e-cigarette market, but shrinking market share and distribution contracts have negatively impacted revenue.
The $1.3 billion in new capital will provide Juul with more runway as they navigate these challenges. However, long-term profitability remains uncertain for the embattled company.
Altria Exits Investment, Acquires New E-Cig Company
Another blow came late last year when tobacco giant Altria dissolved its 35% stake in Juul Labs. Altria invested $12.8 billion for this minority share in 2018. They exited the arrangement amid Juul’s mounting legal and regulatory troubles.
Shortly after divesting from Juul, Altria announced a $2.8 billion acquisition of competitor Njoy Holdings. This move allows Altria to remain invested in the e-cigarette space with a company not facing the same controversies as Juul.
This loss of investment from one of the largest tobacco companies further motivated Juul to seek alternative funding to stay operational. The $1.3 billion in new financing will buy Juul time, but ongoing legal and regulatory issues continue to threaten their long-term viability.