California-based healthcare startup Cerebral is laying off 20 percent of its employees.

Chief Executive Officer David Mou addressed the restructuring in an internal email to staff.

The memo said affected employees will be informed over the course of the week.

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Job cuts will be made across “all divisions,” including operations, support, and clinical care.”

Mr. Mou said: “This is a challenging time for many companies.

“In order to continue to work towards our mission, we have a duty to our patients to ensure our business is healthy and sustainable throughout challenging economic times.”

A familiar source said the layoffs will hit both full-time staff and independent contractors.

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These contractors provide counseling and clinical services to patients through telehealth appointments.

Cerebral was investigated by Bloomberg News in the spring for its prescribing practices for restricted drugs such as the ADHD treatment Adderall.

The US Department of Justice is looking into potential breaches of the Controlled Substances Act but has not charged Cerebral with breaking the law. 

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The company previously announced job losses in May. 

In the email, Cerebral dropped its growth targets and said it would reinvest marketing spending in clinical quality and safety efforts.

A company spokesperson said: “These changes are focused specifically on realizing operational efficiencies while prioritizing clinical quality and safety across the organization.

“They will enable the company to pursue a patient-first growth model that supports and empowers clinicians.”

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Earlier this month, staff were told in an internal memo the company plans to end the ‘care counselor program.’  

The program paired clients with a staff member who helped them with coping techniques and exercises. 

In the email, Mou said a “minority” of patients who had access to the service used it, and that “only a small number” used it on a continuous basis.

Several of those care counselors received termination notices on Monday, October 24.

Source: Bloomberg

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