Embark Behavioral Health, a prominent Phoenix-based provider of youth behavioral health services, has laid off approximately 60 employees as part of a broader effort to streamline its operations. These Embark Behavioral Health layoffs, which affect senior and middle management roles, span various departments, including human resources, recruiting, information technology, and executive positions at the facility level. Alongside these workforce reductions, the company also revealed that it would be closing six locations, including five outpatient facilities in the Los Angeles region and a residential treatment facility in Oregon. These actions are being described as part of a strategic “targeted reduction-in-force,” aimed at optimizing the company’s resources and ensuring its long-term sustainability.
Scott Filion, the newly appointed CEO of Embark Behavioral Health, issued a statement emphasizing that the decision was made to focus on operational efficiency while continuing to provide high-quality care to those in need. Filion acknowledged the difficulty of the decision, noting that the company remains fully committed to its mission. “While this was an incredibly difficult decision, it reflects our ongoing commitment to being responsible stewards of our resources and ensuring that we can continue to provide a high level of care to those who need it most,” Filion said in an email to Behavioral Health Business. “We are as resolved as ever in providing the highest quality of care and positive outcomes to families who have and will entrust us in their care.”
Although the company did not confirm the specific positions affected or the total number of employees impacted by the Embark Behavioral Health layoffs, it did make it clear that the layoffs were part of an overall strategy to enhance its operational focus. The reduction of administrative and managerial roles in areas such as human resources and IT, as well as the closure of certain facilities, is expected to reduce operational overhead while allowing the company to better allocate resources toward its core services. Embark has also committed to providing transitional benefits to those affected by the layoffs, underscoring the company’s effort to support its workforce during this challenging time.
These recent Embark Behavioral Health layoffs come just under two years after Embark’s acquisition by private equity firm Consonance Capital Partners, which gained a controlling interest in the company in a deal worth $400 million. Sources familiar with the acquisition told Behavioral Health Business that the deal was valued at an EBITDA multiple ranging from 12 to 15 times. The firm’s investment was intended to facilitate Embark’s expansion and growth, positioning it for long-term success in the competitive behavioral health space. However, this acquisition was followed by several changes, including the closure of Embark’s wilderness therapy division in 2023. Some of these wilderness therapy programs were slated to be restructured into residential treatment centers, reflecting a shift in the company’s focus.
Further restructuring was evident with the hiring of Scott Filion as CEO in August 2023. Filion, a veteran of the health tech and consumer technology industries, took on the role in September 2023, replacing long-time CEO Alex Stavros. Under Filion’s leadership, the company has been focused on refining its business model, improving operational efficiency, and strengthening the quality of care it provides to its clients. The recent Embark Behavioral Health layoffs and facility closures are part of these ongoing efforts to optimize resources and ensure that Embark can continue to provide care to youth and families struggling with behavioral health challenges.
The announcement of these Embark Behavioral Health layoffs and closures comes amidst broader industry trends. Layoffs have become a consistent theme across the behavioral health sector in recent years, with many companies facing financial and operational challenges. In 2022 and 2023, several notable providers, including Array Behavioral Care, Bicycle Health, Akili Inc., and Brightline, announced layoffs as part of their restructuring efforts. The behavioral health industry, particularly in the residential treatment center space, has been under increasing scrutiny from both regulators and industry critics. This scrutiny was heightened by a critical report released by the U.S. Senate Finance Committee in June 2023, which called for investigations into the practices of major players in the youth mental health segment. Many behavioral health advocates argue that the report fails to account for the underlying economic and regulatory challenges faced by providers, including underinvestment and lax oversight.
Embark Behavioral Health’s decision to restructure and close locations also aligns with the broader trend of industry-wide adjustments in response to changing economic conditions. While the behavioral health sector is undoubtedly facing some turbulence, especially following the challenges of the COVID-19 pandemic, many experts believe that the layoffs do not necessarily indicate a grim future for the industry. Instead, they reflect the efforts of providers to adapt to the post-pandemic landscape and reconcile the new economic realities. Behavioral health providers, like many other sectors, are rethinking their business models and optimizing their operations to better meet the needs of their patients while ensuring financial sustainability.
Layoffs have been especially prevalent in the tech sector, with many companies navigating the post-COVID “new normal” and reassessing their operational strategies. As behavioral health providers increasingly incorporate digital and telehealth services, the trend of workforce reductions has extended into this space. For example, in May 2024, Monte Nido & Affiliates, a provider specializing in eating disorder and mental health treatment, announced layoffs of about 130 employees. More recently, Alma, a digital therapy enablement platform, laid off 9% of its workforce, reflecting the broader impact of these adjustments on the industry.
Despite these challenges, the overall rate of layoffs in the healthcare sector has slightly decreased, with many providers refocusing on efficiency and care delivery. Embark’s restructuring efforts, while difficult for those directly impacted by the Embark Behavioral Health layoffs, appear to be part of a larger trend of businesses in the behavioral health space aligning their operations with market demands and focusing on sustainability. As the company moves forward, Embark Behavioral Health is committed to ensuring that it continues to offer high-quality services for youth struggling with mental health issues, while navigating the complexities of a rapidly changing landscape.
