Telehealth Cerebral Cuts Staff Amid Industry Slowdown and Federal Investigations

(Photo Credit: Hal Gatewood/Unsplash)
(Photo Credit: Hal Gatewood/Unsplash)

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The age of the digital Dr. Feelgood may be drawing to a close.

Cerebral, a telehealth company that’s allegedly too quick to prescribe new patients medications, is cutting 20% of its staff as it shrinks operations, according to a Monday report from The Wall Street Journal.

The Doctor Will Zoom You Now

Under nerve-wracking lockdowns, many seeking mental treatment turned to digital health startups like Cerebral, Done, and Sympatient. But the success had a short half-life, plus nasty side effects.

Operating on 30-minute phone calls, doctors and nurse practitioners said they felt pressured to prescribe Adderall – a controlled substance to treat ADHD that was plastered all over Cerebral and Done’s social media ads. Adderall prescriptions in the US jumped to 41.4 million in 2021, up 10.4% from 2020, according to Iqvia Holdings Inc., a data and research services provider. In 2021, the digital health industry as a whole raised $29.2 billion in venture capital, according to Rock Health, a San Francisco-based venture investor and advisory firm. Now under investigation by the FTC and the DOJ for haphazardly writing prescriptions, Cerebral is also cutting costs and employees as they navigate a digital health industry on the come down:

  • A Cerebral spokesperson told the WSJ the shrinking was to match patient demand and lower growth targets. By Q3, digital-health startups have collected only $12.6 billion, not even half of last year’s venture capital investments. Earlier this month, the company also announced it would phase out providing new patients with care counseling.
  • In a memo to his staff, CEO Dr. David Mou said, “These are challenging times for many companies. In order to continue to work towards our mission, we have a duty to our patients to ensure our business is healthy and sustainable throughout challenging economic times.”

In Poor Health: Startups are ailing but so are 100-year-old conglomerates. Just days after taking the helm of Philips, a medical equipment business, CEO Roy Jakobs announced the company would cut 4,000 jobs, roughly 5% of its workforce. In one year, shares at Philips plunged 73% from $48 to $13. Luckily, the company does sell defibrillators.