Digital health companies enjoyed a pandemic-fueled boom in the past two years but changing market conditions have forced some startups to scale back their workforce.
Carbon Health, a hybrid primary care company that banked a hefty $350 million funding round a year ago, is cutting 8% of its global workforce, or about 250 employees, the company announced Thursday.
In a blog post, Carbon Health CEO Eren Bali cited the volatile capital markets as one key reason for the layoffs as well as concerns about the company's bottom line.
"For the last few years, we have been more focused on topline revenue growth, patient acquisition, patient retention and service expansion, and we have been less focused on profitability," he wrote.
He said the company needs to be less focused on growth and more focused on profitability.
Founded in 2015, the San Francisco-based company combines brick-and-mortar clinics with virtual services and operates 100 clinics in 16 states, along with Reno, Nevada, Seattle, New York City and several cities in California including San Francisco, Sacramento, San Diego and Los Angeles.
Carbon Health provides virtual care in 35 states plus Washington, DC.
The company's core business grew 4x in 2021 and will double again in 2022, Bali wrote in the blog post. However, like many healthcare providers, Carbon Health had significant revenue from COVID-specific lines of business.
"As COVID is entering a new phase, we are winding down some of those COVID-specific lines of business and that, unfortunately, means parting ways with some colleagues," he wrote.
The layoffs, alongside a number of non-personnel-related reductions in operating expenses, will allow Carbon Health to be profitable much earlier than the company had originally planned, he wrote.
Yesterday was the hardest day at @carbonhealth since we started the company 6 years ago. We had to take a difficult action in order to reduce the size of our global workforce to adapt to the changing market conditionshttps://t.co/R6o1eqWBA5
— Eren Bali (@erenbali) June 2, 2022
The company's $350 million raise last year boosted its valuation to a reported $3.3 billion. Since the pandemic started in early 2020, the company doubled its full-time staff to 1,600 employees as it opened over 80 clinics in 12 states and expanded its virtual clinics to 23 states. Executives said last July that the company is looking ahead toward a goal line of 1,500 clinics by 2025 “to become the largest primary care provider in the U.S.”
Last June, Carbon Health acquired virtual diabetes management startup Steady Health, representing its first push into remote, device-driven management of chronic conditions. In October, it picked up Alertive Healthcare, a remote patient monitoring company.
It recently inked a partnership with virtual care startup Hims & Hers to offer patients in California with direct access to providers for in-person medical appointments at clinics.
Carbon Health joins a number of other digital health companies that have cut staff in the past three months. Cerebral just announced it was laying off some employees as it restructures its operations. The company is mired in a federal investigation of its prescribing practices.
Health tech companies cutting staff this year included Mfine, a Bengaluru, India-based platform company (600 employees laid off), Stockholm-based digital health company Kry (100 employees), Thirty Madison, which recently merged with Nurx (24), divvyDOSE (62), Noom (495), Ahead (44), Chinese healthcare company WeDoctor (500) and Truepill, according to Layoffs.fyi, which keeps a database of reported layoffs.