Three more digital health ‘unicorns,’ Cedar, LetsGetChecked and Forward, have undergone layoffs as the industry continues to face macroeconomic headwinds.
Cedar, a New York City-based medical payments technology company, said it was letting go 24% of its 500-plus person workforce last Friday. Florian Otto, the company’s CEO, said in a LinkedIn post that the move was coming because of current market climate and a need to restructure following its acquisition of OODA Health, in May 2021 for $425 million.
In March 2021, Cedar landed a $200 million Series D funding round, led by venture capital firm, Tiger Global Management. The funding round boosted the digital health company’s overall valuation to $3.2 billion.
LetsGetChecked, a Dublin, Ireland-based virtual testing and diagnostics company, confirmed it had undergone an undisclosed number of layoffs. The company, which reportedly employs more than 200 people, cited its recent acquisitions of genomics startups, Veritas Genetics and Veritas International and digital health platform company BioIQ as the chief reason for the layoffs.
In June 2021, LetsGetChecked received $150 million in a Series D funding round led by Casdin Capital. With that funding round, the company’s valuation surpassed $1 billion. The company, founded in 2015, saw growth during COVID-19 thanks to its at-home testing capabilities.
Forward, a San Francisco-based primary care startup which operates tech-enabled clinics across 25 cities, reportedly laid off 5% of its workforce on Monday. The company cited market conditions as the reason for the reduction, according to an initial report from Fierce Healthcare. Forward did not response to an inquiry for comment.
Forward received $225 million in a Series D funding round in March 2021 led by SoftBank Vision Fund 2 and Peter Thiel’s Founders Fund. The funding round put the company’s valuation at more than $1 billion.
These layoffs come as digital health funding has receded from the highs of 2021. Last quarter was the lowest in two years, according to Digital Health Business & Technology’s data. Investors are increasingly telling portfolio companies to keep profitability in mind.
“Over the last few years, there’s been a mentality out there that has been growth at all costs and don't worry about cash burn,” said John Ryan, managing partner of Wells Fargo Strategic Capital. “We're trying to focus our companies on continuing to grow but to do it with profitability and cash preservation in mind.”
OncoHealth, an oncology digital health company, recently received a strategic investment from Arsenal Capital Partners and McKesson Corporation. CEO Rick Dean said that the company has an experienced management team who has been through downturns before and thus feel confident in its strategy to maintain financially responsible growth mode.
“You had a lot of companies that were getting larger valuations on EBIDTA negative results, and the motto was, ‘grow, grow, grow’ and now the motto for some of those organizations is, ‘cut, cut, cut,’” Dean said.
Other notable recent digital health layoffs include:
Cerebral, the embattled mental health startup based in San Francisco, underwent layoffs in late June. The company said it was restructuring its operations and eliminating a number of positions, although it did not specify how many. In December 2021, Cerebral received a $300 million funding round, giving it a valuation of nearly $5 billion. It is dealing with several controversies, including multiple investigations into its business practices from the federal government.
Carbon Health, which combines traditional brick and mortar clinics with telehealth, trimmed 8% of its workforce, which equates to 250 employees. Carbon CEO Eren Bali cited volatile capital markets as the reason for the layoffs. The San Francisco-based Carbon received a $350 million Series D funding round in July 2021, led by Blackstone’s Horizon platform, which valued the company at $3 billion.
Cue Health, a virtual testing company based in San Diego, California, laid off 170 people in light of economic hardships and reduced funding for COVID-19 testing. In September 2021, the company went public in a $200 million initial public offering that opened at $16.76 per share. As of Monday afternoon, Cue's stock price on the Nasdaq was $3.37.
Ro, a direct-to-consumer telehealth company based in New York City, laid off 18% of its 750-employee workforce in late June. The company cited the economic downturn as the primary reason for the layoffs. In March 2021, the company received a massive $500 million funding round, valuing it at more than $7 billion.
Truepill, a digital health pharmacy company based in San Mateo, California, laid off 15% of its staff in early June, which equated to about 150 employees. Sid Viswanathan, the company’s CEO, said it was adjusting its financial strategy to address the broader economic climate. In October 2021, Truepill received a $142 million Series D funding round that put its valuation at $1.6 billion.