(Bloomberg) — Cerebral Inc., the troubled mental telehealth startup, reversed plans to make soon-to-be-fired workers stay in their jobs for two months in order to qualify for severance, according to people familiar with the cuts.
The company has been eliminating staff and changing its business model after an investigation by Bloomberg revealed that former workers were concerned the company was overprescribing controlled substances such as Adderall. Cerebral is under investigation by federal authorities, has parted ways with its founding CEO, and has stopped prescribing some drugs.
When details of the layoffs were announced internally last month, some employees were informed that their last day would be Aug. 31. They were promised four weeks severance pay if they stayed on through that date and met performance goals, according to internal company communications reviewed by Bloomberg and to three Cerebral employees who spoke to Bloomberg on the condition of anonymity.
In addition, some employees were told they would be required to remain actively employed in good standing through Aug. 31, 2022, in order to be eligible for severance. Two employees expressed concern about meeting performance goals that were being tied to the severance agreement.
An outside spokesperson for Cerebral, Dan Childs, declined to share further information on what workers would have to do to keep their jobs during that period.
In total, about 350 people will lose their jobs, about 8% of the company’s total workforce, according to two people familiar with the matter.
The layoffs will “simplify our structure, reinvest into our core business, double down on quality, and better align our operating model to best meet the evolving mental health needs of the patients we serve,” Childs said. He declined to comment on the number of jobs cut.
Some employees expressed frustration about the arrangement and wanted to leave sooner. Cerebral then backtracked from its initial plan.
According to a June 29 email describing the changes, certain employees originally set to depart at the end of August were informed that they could leave the company on July 1 with severance. They were given approximately 24 hours to make the decision.
Childs declined to comment on the reason for the about-face. He said that the company predominantly cut people from support and operations roles, and that no clinicians were laid off.
On LinkedIn, people who described themselves as Cerebral employees with titles like clinical administrator, recruiter and care coordinator posted that they had lost their jobs. Cerebral uses the title “care coordinator” for customer service liaisons who answer inquiries from patients and help schedule appointments.
In May, the company told Bloomberg it had planned to hire more care coordinators in the Philippines, but that these employees would not replace the US-based staff. On Friday, Childs said in an email that as part of the restructuring, contract employees would take on the roles of some of the employees who were being let go.
“The restructuring that Cerebral has completed provides for additional contract employees to handle patient coordination and administrative responsibilities,” said Childs. “Cerebral has long been augmenting its staff coordinators with contractors.” He declined to say where the contractors would be located.
Cerebral was founded in 2020 and quickly rose to prominence as the Covid-19 pandemic heightened the demand for online health services. Last year, it received $300 million in funding from the SoftBank Vision Fund 2, giving it a $4.8 billion valuation at the time.
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