7 digital health ‘unicorns’ that have struggled

The digital health landscape has taken a dramatic roller coaster ride over the past three years.

In 2021, funding broke records amid $30 billion in deals. Digital health companies were enjoying $100 million-plus funding rounds and getting “unicorn” ($1 billion-plus) valuations almost every week. Last year began nearly as hot but sputtered out: In the fourth quarter -- only $2.5 billion in deals took place.

As the digital health funding market has shifted downward, companies once deemed unicorns have had to lay off employees, sell lagging businesses and even file for bankruptcy. Some are pivoting to new product lines while others forge ahead.

Here are seven digital health that have struggled since earning their horns:

Cerebral

• What it does: Cerebral is a digital mental health startup that provides therapy and medication.
• When it earned unicorn status: In June 2021, the company scored a $127 million funding round, led by investment firm Access Industries, which valued the company at $1.2 billion. Six months later, it received a $300 million funding round by investment firm SoftBank, which increased the valuation to $4.8 billion.
• Challenges: Cerebral has endured scrutiny over a prior practice of prescribing controlled substances to treat attention deficit hyperactivity disorder, including an ongoing investigation by the Justice Department, a lawsuit from a former executive alleging unethical prescribing practices, the replacement of co-founder Kyle Robertson as CEO and three rounds of layoffs, most recently in February.
• Company perspective: Cerebral never cared about the unicorn label and is focused on delivering high-quality, convenient care, a spokesperson wrote in an email.

Truepill

• What it does: TruePill is a digital pharmacy company that does business with patients, as well as health insurance companies, employers and pharmaceutical manufacturers.
• When it earned unicorn status: In October 2021, it received $142 million in a funding round led by an undisclosed partner, which valued the company at $1.6 billion.
• Challenges: Truepill, which worked with Cerebral, stopped handling Schedule II prescriptions in May 2022. The Drug Enforcement Administration alleged in December that the company wrongfully filled thousands of prescriptions for stimulants used to treat ADHD. CEO and co-founder Sid Viswanathan said the company is cooperating with the DEA. Truepill undertook four rounds of layoffs last year.
• Company perspective: Truepill did not respond to a request for comment.

Olive AI

• What it does: Olive AI develops technology to help providers and insurers automate the revenue cycle.
• When it earned unicorn status: In December 2020, it received $225 million in a funding round led by venture firm Tiger Global that valued Olive AI at $1.5 billion. Seven months later in July 2021, it received $400 million in a round led by investment firm Vista Equity Partners that brought its valuation to $4 billion.
• Challenges: Olive AI laid off 450 employees, or 35% of its staff, last July as CEO Sean Late cited strategic missteps and a challenging economy. In October, the company sold its population health and 340B product lines to Rotera, a healthcare artificial intelligence company, to focus on revenue cycle management and utilization management technologies. But then it sold its utilization management solution to Availity this month.
• Company perspective: Olive AI did not respond to a request for comment.

Pear Therapeutics

• What it does Pear Therapeutics was a prescription digital therapeutics that developed solutions for opioid use disorder and insomnia.
• When it earned unicorn status: The company went public in December 2021 through a $1.6 billion deal with special purpose acquisition company Thimble Point Acquisition.
• Challenges: Pear Therapeutics developed software applications that must be prescribed by clinicians for opioid use disorder, chronic insomnia and substance use disorder. While it was able to get some insurance coverage, its troubles mounted after going public in 2021. The company earned just under $13 million in revenue in 2022 while suffering more than $120 million in losses. Pear Therapeutics filed for Chapter 11 bankruptcy protection and laid off most of its employees last month. Founder and former CEO Corey McCann said the company failed because of denials from payers and market conditions.
• Company perspective: The company's assets will be sold as part of bankruptcy proceedings.

Elemy

• What it does: Elemy offers virtual and in-person applied behavioral analysis services for children with autism spectrum disorder.
• When it earned unicorn status: The company received $219 million in a Series B funding in October 2021 that valued it at $1.15 billion. SoftBank led the round, along with Goodwater Capital and Premji Invest.
• Challenges: In July, Elemy came under scrutiny for shutting down services in Georgia and Illinois without giving patients three months to transition to new providers.CEO Yury Yakubchyk said the company sent out cancelation notices to families in those states by accident and rectified the situation a few days later. The company underwent four rounds of layoffs in 2022 as it automated some functions and converted most of its clinicians into independent contractors.
• Company perspective: Yakubchyk wrote in an email that Elemy never thought much about the unicorn label. The company’s board and team are building for the long term and believe in the company, he wrote.

Talkspace

• What it does: Talkspace offers virtual therapy and psychiatric evaluations.
• When it earned unicorn status: The company went public in a January 2021 deal that valued it at $1.4 billion through special purpose acquisition company Hudson Executive Investment.
• Challenges: Talkspace’s stock price, which opened at $8.90 per share, has been below $1 for the last six months. The company got a notice of potential delisting from the Nasdaq Stock Exchange in November. Co-founder Oren Frank departed in November 2021, 10 months after Talkspace went public, following poor financial performance; Dr. Jon Cohen succeeded him. The company laid off an undisclosed number of employees at the end of 2022. The company has a market capitalization of $132.7 million.
• Company perspective: Chief Financial Officer Jennifer Fulk wrote in an email that financial markets have changed drastically since Talkspace went public and that the company has made tremendous progress toward profitability and has sufficient capital to achieve positive cash flow.

Akili Interactive

• What it does: Akili Interactive develops video game treatments for children with ADHD.
• When it earned unicorn status: The company went public in January 2022 deal through a $1 billion deal with special purpose acquisition company Social Capital Suvretta Holdings.
• Challenges: Akili had one of the only initial public offerings in digital health last year. Shares debuted at $36.06 in August. On Thursday, they closed at $1.49. The company has a $114 million market capitalizaiton. In January, Akili laid off 30% of its workforce, according to a Securities and Exchange Commission filing.
• Company perspective: Akili did not respond to a request for comment.