Headspace cuts 13% of its workforce, transitions staff therapists to contract and part-time roles

The news: Virtual mental health platform Headspace laid off 13% of its workforce and is transitioning all staff therapists to a “flex network” of contract and part-time roles.

The transition will be effective March 15, 2025. Headspace plans to launch additional programs to attract therapists to its contractor network in the coming months.

What’s driving these decisions? In an email to employees, CEO Tom Pickett said the layoffs are meant to “open up resources to reinvest in key strategic areas.”

While details are scarce, we have an idea based on two recent plays the company’s made.

1. In April, Headspace rolled out mental health coaching for its direct-to-consumer subscriber base, through which users can access one-on-one support for help managing stressful situations and improving emotional resilience.
2. And just last month, the company followed that up by launching Ebb, an AI companion integrated into its app that provides personalized emotional support to members.

In both instances, Headspace eschewed clinician-led therapy in favor of mental health alternatives that don’t rely exclusively on the expensive expertise of therapists.

Our take: Headspace’s recent moves are a sign of things to come in the broader digital mental health space.

There is still consumer appetite for telemental health services—but companies’ business models will look a bit different with a heavier emphasis placed on AI.

• We forecast that just over 26% of US adults will be using telemental health services by 2028, up from the nearly 24% expected to use them this year.
• We expect to see platforms like Headspace lean further into AI as a surrogate for some of the services therapists traditionally offer.
• As a recent example, telemental health startup Jimini Health launched with $8 million in pre-seed funding for a model that blends clinician-led therapy with an AI-based therapist assistant designed to be used in between sessions.

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