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What the numbers say: Last year, 26 digital healthcare startups conducted layoffs to extend their cash runways and conserve cash as interest rates increased and venture funding retreated. This year, 18 digital health startups have already conducted layoffs and will likely cross last year's tally. Color, Cerebral, and Innovaccer laid off 300, 285, and 245 employees, respectively, in 2023. Relevance: Last week, weight-loss telehealth startup Calibrate Health reduced its workforce strength by 18%, adding to its layoffs tally after laying off 24% of its workforce in July 2022 to reach profitability. The company pivoted from offering obesity drug prescriptions to becoming a workforce benefits service provider. Pharmacy startup Medly declared bankruptcy Dec. 2022, laying off 100% of its workforce. Mindstrong Health laid off 128 employees recently, including the CEO and CFO.
What's next: VC firm Andreessen Horowitz's general partner Julie Yoo reckons further layoffs are on the horizon as startups will reduce their expenses even further this year to avoid raising down rounds. Yoo adds, "Companies will go through multiple rounds of layoffs as the market signals don't turn significantly better, and they'll have to continue to extend their runway if they're trying to avoid raising a round that they believe will be punitive in some form." |
