Digital mental health unicorn Headspace is eliminating its staff therapist corps and 13% of its workforce.

Headspace CEO Tom Pickett told employees in an email that the layoffs were necessary to “reset” the company and “return to our roots by driving innovations in both technology and care models that disrupt existing systems.”

The move comes four months after the company named Pickett, formerly the chief revenue officer of DoorDash, to the role of CEO, succeeding Russell Glass, who announced his departure in March.

A representative of Headspace declined to answer specific questions about the impetus of the layoffs.

“We recently made organizational changes at Headspace that aim to accelerate the evolution of our product and service offerings and position the business for continued, sustainable growth,” the representative said in a statement.

However, in the email, Pickett said the company’s costs and revenue were out of alignment.

“We believe that we are uniquely positioned to leverage the Headspace brand, our vast content and self-help capabilities, and our human care delivery network to stitch together unique, tech-enabled experiences that deliver superior outcomes at lower costs,” Pickett said. “To achieve that, we need to align our cost structure with our revenue base, while creating the opportunity to invest in the capabilities that will drive us forward.”

In addition to the layoffs and impact on the clinical workforce, the company will transition Chief Product and Design Officer Leslie Witt and Chief Purpose Officer Dr. Wizdom Powell to advisory roles.

Pickett said the chief product officer’s role was too broad and encompassed too many teams. Some of the teams will be moved to the purview of other executives while the company redesigns the role. The company’s senior vice president of product, Johnson Lieu, will take on the role on an interim basis. Headspace will integrate its  diversity, equity and inclusion (DEI) efforts into its “People Team.”

“At all levels of the business, we’re prioritizing singular ownership, accountability, and focused scope of roles so that teams can go deep on their areas of expertise,” Pickett said in the email.

Where Headspace is going, where it came from

In the email, Pickett said that a “flexible and scalable” provider network is key to meeting the needs of its customers.

“Every current and potential client we speak to continues to express a desire for increased access to therapy via a larger therapy network with a higher level of provider choice,” Pickett said.

The company is transitioning all its staff therapists to a “flex network” of contractors and part-time roles. Current staffers are being offered roles with the newly composed network. The change will be effective March 15, 2025. Headspace will launch additional, unspecified programs to attract therapists to the company’s contractor network in the coming months.

The layoffs are meant to “open up resources to reinvest in key strategic areas,” Pickett said.

“We were intentional with every moving piece and how it fits within our vision for what’s next,” he added.

The “what’s next” is not clear based on Pickett’s email or the statement from the company. Pickett said the company continues its mission to increase access to mental health care and support. He also described that mission as “[empowering] providers to practice at the top of their scope and [pulling] unnecessary costs out of the system.”

In August 2021, Ginger and Headspace announced a merger, creating Headspace Health, which offered a wide spectrum of wellness, meditation and telehealth services and a valuation north of $3 billion.

In July 2023, Headspace Health laid off about 15% of its workforce. A few weeks later, the company raised $105 million in debt financing from Oxford Finance. At that time, Glass told BHB that the financing would go to investment to meet demands for “in-person clinical care, more robust substance use disorder (SUD) support and our next-generation [employee assistance programs] EAP.”

Headspace also leaned into non-clinical coaching to aid individuals requiring support beyond what was provided by self-service tools but didn’t require a therapist. The company representative did not specify if coaching roles were impacted. A source familiar with the matter said coaches were impacted by the layoffs. It expanded coaching services to its direct-to-consumer offering earlier this year. It was previously reserved as a business-to-business line.

The layoffs follow a handful of others in behavioral health that are largely concentrated in the digital health space. Lyra Health, a B2B-focused competitor to Headspace, announced layoffs that impacted 2% of its non-direct care staff. Digital therapy enablement platform Alma cut 9% of its workforce. In September, Brightline shuttered most of its digital offerings and state markets to focus on hybrid in-person and digital behavioral health care for children and their families.

Last week, Behavioral Health Business reported that youth mental health provider Embark Behavioral Health had cut 60 leadership and administrative roles and closed a handful of service locations.

“The executive team, board of directors, and I are confident that by making these tough choices now, we’re setting Headspace on a path toward deep and everlasting impact,” Pickett said. “And I am personally committed to guiding us through this moment of reset and positioning us to truly democratize mental health support — making support and care accessible to anyone, anywhere, at any time in a way that meets each person where they are on their mental health journey, empowers providers to practice at the top of their scope, and pulls unnecessary costs out of the system.”