Dive Brief:
- Pear Therapeutics filed for Chapter 11 bankruptcy, according to a Friday filing with the Securities and Exchange Commission.
- The digital therapeutics company laid off 170 employees, the majority of its workforce, leaving a team of 15 people to continue operations.
- CEO Corey McCann stepped down on Thursday, leaving Christopher Guiffre, Pear’s chief financial officer and chief operating officer, to lead the company.
Dive Insight:
Pear, facing financial challenges, started exploring strategic alternatives earlier this month, and continues to seek a sale of its assets or the whole company. The company has prescription apps cleared by the Food and Drug Administration for insomnia and substance use disorder, but has struggled to meet revenue goals as it tries to sell a new type of treatment.
The company reported revenue of $10.4 million in 2022, largely from agreements with state agencies. Pear had initially set a goal of $22 million in revenue at the start of the year, and narrowed that to $14 million to $16 million midyear.
The company underwent two rounds of layoffs last year as it sought to preserve its cash and narrow its focus to selling the FDA-cleared products. Earlier this month, BTIG analysts wrote that Pear’s management believed the company had enough cash and equivalents to fund operating and capital expenses into Q2.
With a Chapter 11 filing, the company has bought time to restructure under court supervision. Pear reached a settlement agreement with its lender before filing, and plans to use its available cash to fund operations and costs for the ordinary course of its business, the company wrote in a statement on Friday. McCann will continue to serve as a member of the board and will provide consulting services to the company during the sale process.
