(Bloomberg) -- Cerebral Inc. directors voted to oust the mental telehealth giant’s founder and chief executive officer, Kyle Robertson, as the booming industry draws scrutiny from federal law enforcement and patient advocates, according to a person familiar with the matter.
Robertson had built Cerebral into a $4.8 billion behemoth in online mental health, but alarmed his own clinicians with what they described as an emphasis on attracting customers that medical experts said threatened patient safety.
In a statement Robertson read at a Wednesday board meeting, a transcript of which was reviewed by Bloomberg News, he said the directors “must be dead set on ensuring that we continue to prescribe controlled medications.” Robertson had announced to Cerebral employees on Monday that the firm would stop writing prescriptions for most controlled substances.
Cerebral is facing a federal investigation into its prescribing practices -- yet Robertson’s statement suggested that board members want to continue dealing with controlled substances for business reasons. “This would make sense given that the Board has repeatedly stated to me that we are underperforming our business goals and pressured me to find ways to increase revenues,” he said in the statement.
He also questioned the validity of the board’s efforts to remove him. “If you do push me out, illegally, I plan to pursue all avenues, legal and otherwise, to defend myself and highlight the nefarious actions that the Board of Directors will take today and I expect will take in the future.”
Spokespeople for Cerebral didn’t immediately respond to requests for comment.
Major investors with board seats led the effort to replace Robertson as CEO with David Mou, who was already the company’s president and chief medical officer. Mou, who attended Harvard business school and medical school, co-founded Valera Health, another mental health-focused digital startup in 2015, according to his LinkedIn profile.
Mou has previously set aggressive targets for Cerebral clinicians to write prescriptions, according to two people familiar with his remarks and a lawsuit filed against the company.
Speaking with managers, Mou had said 95% of people who see a Cerebral nurse should receive a prescription, according to two people familiar with his remarks. (A spokesman for the company said in February that the 95% prescribing rate “refers only to the subset of patients who have received a clinical mental health diagnosis that warrants a prescription as first line treatment.”)
In an April lawsuit, former Cerebral vice president Matthew Truebe said Mou told employees that he aimed to prescribe stimulants to all of Cerebral’s patients seeking treatment for hyper activity/attention deficit disorder. ““We plan to vigorously defend ourselves against these false and unfounded allegations,” a spokesperson for the company said in response to Truebe’s allegations.
Robertson cofounded Cerebral in 2019 and transformed it into one of the world’s fastest growing startups. One early TV ad featured Robertson, who has no formal medical training, sitting on a couch with his psychiatrist father and psychotherapist mother. When the company launched a partnership with Olympic gymnast Simone Biles, Robertson appeared alongside her on NBC’s Today Show, and in photos posted to Twitter and LinkedIn. A representative for Biles didn’t reply to a request for comment.
Under Robertson’s leadership, Cerebral drew key investments, including from SoftBank Vision Fund 2, Len Blavatnik’s Access Industries and WestCap Group. All three investors have seats on Cerebral’s board; their representatives didn’t respond to requests for comment.
SoftBank has a track record of pushing out founders, including WeWork’s Adam Neumann and Brandless’s Tina Sharkey.
In the case of Robertson, his style also alienated some employees, who said the startup’s drive for growth had imperiled patient care.
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Cerebral came in for heightened scrutiny after Bloomberg Businessweek reported in March that many of the nurse practitioners it employed said they feared the company was over-prescribing the addictive amphetamines used to treat attention deficit/hyperactivity disorder. Others raised concerns about the company’s aggressive advertising on social-media platforms, including TikTok. After that report appeared, the federal Drug Enforcement Administration interviewed at least two employees, according to people familiar with the conversations.
Earlier this month, Cerebral received a grand jury subpoena from the US Attorney’s office for the Eastern District of New York. A company spokeswoman said at the time that a federal investigation was focused on possible violations of the Controlled Substances Act and that the company intended to cooperate fully with the probe. “To be clear, at this time, no regulatory or law enforcement authority has accused Cerebral of violating any law,” the spokeswoman said.
Cerebral and Robertson, who launched a publication focusing on startups while attending the University of Pennsylvania’s Wharton School of business, got into the business of prescribing controlled medications after federal officials relaxed previous rules requiring in-person examinations for such prescriptions.
That change, which came at the beginning of the Covid-19 pandemic, was designed to make it easier for people to access mental health care. And some Cerebral patients have said the company’s approach – using coordinators to handle patients’ incoming calls, allowing nurse practitioners to often prescribe drugs after just one 30-minute evaluation and distributing medications by mail – improved their lives greatly.
At the same time, some of Cerebral’s own nurses questioned whether the company was making ADHD medicines, such as Adderall, too easy to obtain. Experts say such medication can be subject to abuse by those who don’t have the disorder.
After criticism surfaced in Businessweek and other media outlets, Truepill, an online pharmacy favored by Cerebral, stopped filling prescriptions for Adderall and other controlled substances.
Earlier this month, Cerebral said it would stop writing new prescriptions for Adderall and other ADHD drugs. Days later, the company said it had received the grand jury subpoena. US Attorney Breon Peace’s office has declined to comment.
Then, on Monday, Robertson announced to Cerebral employees that it would stop writing prescriptions for most controlled substances. He wrote in an email that they’ll be discontinued for new patients beginning on May 20 and for existing patients on Oct. 15. He said Cerebral will continue, when appropriate, to prescribe Suboxone and Narcan, which treat opioid addiction and overdoses.
Robertson has said Cerebral’s launch was rooted in his own struggle with anxiety and depression as a gay man. “Finding the right care was nearly impossible,” he said in the commercial he appeared in. As CEO, he has displayed a leadership style that employees described as abrasive.
Medical staff said they felt Robertson ignored their expertise and recruiters said he micromanaged them as they attempted to staff the company. Robertson told Businessweek in March that he’d begun working with an executive coach to resolve issues.
In an email sent to employees on Monday afternoon, Robertson said the company’s decision to stop prescribing most controlled substances was the result of “the evolving landscape around the accessibility of mental health care, and the ability for patients to return to an in-person or hybrid care model.”
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