Virtual opioid use disorder (OUD) provider Bicycle Health has laid off 15% of its workforce.
The Boston-based company didn’t elaborate on the impetus for the move or which departments were impacted. Rather, a representative told Behavioral Health that the layoffs realigned resources to “direct patient care.”
“We remain laser-focused on providing consistent and high-quality care to our patients, and growing our care delivery teams to expand access to treatment for the rising number of people in America struggling with opioid use disorder,” the company said in a statement.
Bicycle Health has raised $87 million in venture funding, according to Crunchbase. Its latest fundraising came in 2022, when the company raised a total of $55 million in a Series B funding round led by Omaha-based InterAlpen Partners.
The layoffs also came soon after clinicians at Bicycle Health filed to unionize with the Union of American Physicians and Dentists (UAPD). The secret ballot will be held on April 8. Clinicians within the organization tell BHB they are concerned about recent changes in leadership’s attitudes toward balancing profitability and patient care. Bicycle pushed back against the clinicians’ characterization of working conditions within the company.
The company did not comment on whether or not the layoffs and the unionization effort are at all connected.
The layoffs come despite recent deals that presumably would boost patient volumes. In February 2024, Bicycle Health and virtual mental health giant Talkspace Inc. (Nasdaq: TALK) announced a deal allowing referral access across each company to additional mental health and addiction treatment services.
Bicycle Health operates in 32 states and has served more than 33,000 patients. Talkspace operates in all 50 states, employs about 5,500 clinicians, and has about 91,000 active users in its consumer-facing and enterprise-facing services as of the end of 2023.
Bicycle also announced a partnership with the retail giant Albertsons to offer buprenorphine extended-release injections available in clinics in 17 states in September 2023.
The environment for digital behavioral health companies has become especially treacherous. Funding for any virtual health company has diminished significantly after eye-popping numbers in 2021. Behavioral health has recently been a top care segment for those investments, especially according to data tracked by Rock Health.
Other data shows that investments in digital health startups have reached a multi-year low. However, behavioral health deals continue to stand out despite a change in the types of deals getting done.
“Deals that are getting done have weighed heavily toward structures with existing investors, and we’ve also seen greater rates of debt financing and rounds with undisclosed valuations,” Pitchbook said in a previous report.
Further, inflation and high interest rates have been eating at companies’ bottom lines and making investment and deals more difficult. This may lead to greater distress and falling valuations for digital behavioral health companies, leading to a long-expected wave of consolidation in the space.
“For many players, 2023 was a year of looking for and locking down lifeline measures,” Rock Health said in its 2023 year-end report. “To buy time, startups sought out creative financing measures such as extension rounds, unlabeled raises, and ‘silent’ deals from existing investors. Most companies also made operational adjustments that reduced reliance on outside capital.
“But if 2023 was a transition year defined by creative moves to stay afloat, 2024 will require some startups to face the music (raise at a reduced valuation, seek an acquisition or exit, or shut down).”
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