Virtual Mental Health Provider Headspace Health Lays Off 180 Employees

Digital behavioral health unicorn Headspace Health has laid off another 180 employees, according to numerous reports and social media posts.

The latest round of layoffs impacts 15% of the total company, the Los Angeles Times reported. This news comes six months after the San Francisco-based company announced cutting 50 positions, or about 4% of its staff.

Headspace is just one of many virtual behavioral health providers that have downsized as factors including rising interest rates, high labor costs and the war in Eastern Europe have shaken the economy.


In a memo obtained by the LA Times, Headspace’s CEO, Russell Glass, told workers that he had underestimated the impact the economy would have on consumers and that the company was still looking to be cash-flow positive by next year.

“With the privilege of supporting the mental health and wellbeing of millions of people around the world also comes great responsibility to focus on the health of our business and safeguard it for the future,” a spokesperson for Headspace told Behavioral Health Business in an email. “On June 29th, we announced several important changes to our strategy and organizational structure at Headspace, including reducing the size of our workforce by 15%. These changes will equip the company for the future and pave a strong path to profitability. We’re deeply grateful for the employees we said goodbye to and are committed to supporting them through this time of transition.”

Headspace Health was formed in 2011 when behavioral health app Headspace and virtual mental health provider Ginger completed a $3 billion merger.


In November, the company rolled out its unified enterprise mental health and well-being offering to members. The service offers Ginger’s on-demand coaching, therapy and psychiatric services, and Headpsace’s meditation and mindfulness app.

Before the merger, both Ginger and Headspace had raised a significant amount of money from investors. Founded in 2011, Ginger raised more than $220 million in venture funding before the deal.

Meanwhile, Headspace, which started in 2010 focusing on the direct-to-consumer market, raised $215 million before the merger.

Headspace Health’s mental wellness competitor, Calm, has also announced reductions over the last year. In August, the company slashed its workforce by 20%, or about 90 employees. Like Headspace, Calm was also valued at over $1 billion.

Digital mental health companies have struggled over the last year. Virtual providers Talkspace, Cerebral, Eleanor and Foresight have all announced layoffs. Additionally, behavioral health tech company Mindstrong shut down earlier this year.

Investors have also begun to pull back on funding virtual behavioral health companies. Behavioral Health funding decreased by 56% from 2021 to 2022, according to a report by San Francisco-based digital health venture capital and advisory firm Rock Health.

Still, there have been some glimmers of hope for the industry. In June, hybrid care provider Octave raised $52 million in Series C funding to fuel its expansion into all 50 states, and digital mental health platform Spring Health raised $71 million in April.

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