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Startup Spora Health Closed Shop in 2022 and Laid Off Its Workers - Business Insider

Author: Business Insider

Source: https://www.businessinsider.com/spora-health-startup-closed-laid-off-workers-2023-10

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Spora Health's founder and CEO, Dan Miller, told Insider his firm was seeing thousands of patients.Insider has since found Spora is struggling after closing shop and laying off its workers in 2022.Miller was pushed out of his last company after he was accused of misusing funds, documents show.The way Dan Miller told it, his startup Spora Health was crushing it, providing high-quality care to "thousands" of people online.But now he's backtracking, after Insider's reporting found Spora to be struggling after laying off its workers.Miller founded the Bay Area startup in 2019 to take on a serious problem: In the US, people of color tend to have worse healthcare experiences and outcomes than white people.He said he wanted to erase these disparities by training healthcare providers in bias and health equity.Spora attracted a ton of media attention early on.Articles in Fast Company, TechCrunch, and other outlets highlighted Miller's mission.Insider first wrote about Spora in 2021 when it landed $3 million in a seed-plus round, bringing its total funding to $4.1 million. At the time, the company was tiny, serving about 100 patients in four states, Miller said back then.Two years later, Insider interviewed Miller to determine whether to feature him on an annual list of top young healthcare leaders.In an interview in July, Miller said the company had "expanded significantly," offering online healthcare in more than 22 states.He said Spora planned to be available nationwide this year.Miller said Spora was serving "thousands" of patients "right now" and working with "a lot of large enterprises," including Fortune 10 companies, to provide Spora's services to their workers or other groups of people.He declined to disclose those companies."I wish I could say some names, but I can't right now, but things have been going really, really well," he said in July.The impression Miller gave of Spora was one of a young company firing on all cylinders.Based on the interview, Spora's mission, and previous conversations with Miller, Insider included him on the list and published an interview with him.After the interview came out, a former employee contacted Insider to share a more troubling view of Spora, prompting Insider to look into the company more deeply.Interviews with seven former employees and a source close to the company, as well as an internal memo, suggest that Spora shut down, at least temporarily, near the end of 2022 and laid off its small team of workers after failing to pay them for a month. Some former workers are still trying to recover their pay from Spora.Insider also found that Spora's size might be more limited than Miller said.Some of the clinicians listed on Spora's website no longer work for the company or aren't seeing patients.Public documents show Spora's business registrations have gone inactive or fallen out of compliance in numerous states.Confronted with these findings, Miller confirmed in a phone call on October 23 that Spora had laid off all of its workers after it was unable to raise a Series A funding round last year.He said he had believed the company would need to shut down and that he was able to keep Spora alive by renegotiating contracts with employers and health plans and signing new ones.He said that more than 2,000 people had registered online to get care from Spora but that not all of them had attended appointments with a clinician.He declined to say how many people had received care from Spora this year but said "it's been slow." The company, which now has fewer than five employees, is working to raise money so it can hire more people and grow, he said."Going into 2023, we were able to have another chance and keep our doors open and try to keep serving all of our patients and all of our customers and stakeholders," Miller said. "But obviously as a solo founder and running the show on my own for a little bit of time, things are slow."Insider also reviewed internal communications and a complaint filed with the US Securities and Exchange Commission that show Miller was pushed out of his previous venture before Spora, a company that provided mental-health care online, after he was accused of misappropriating tens of thousands of dollars of company funds.Miller declined to comment on this company.Insider has removed Miller from its list of top young healthcare leaders.Spora shut down in 2022 and laid off its employees, email saysThe telehealth startup Spora Health's app.Spora HealthIn early 2022, Spora seemed to be gaining some traction.It had turned its focus from selling its services directly to consumers to also working with employers, Miller said in the July interview.The startup had secured at least one big contract, with Apple, according to three former Spora employees and another source close to Spora.A page on Spora's site says Apple partnered with Aetna and UnitedHealthcare to offer Spora to Apple employees.Apple and Aetna didn't return requests for comment. UnitedHealthcare declined to comment.Still, five former employees said Spora was treating few patients, and nowhere near thousands, as of the latter half of 2022.By the middle of 2022, things started to break down at Spora.Miller spent six weeks away from the company in June and July of that year while taking part in a Stanford Graduate School of Business executive education program, according to five former Spora employees and a source close to the company.Miller left Spora in the hands of his chief of staff, who had been with the company for a few months, four of those former employees said.His absence confused some employees, who were under the impression he was working to raise a Series A round.Two former employees said progress on various projects stalled while Miller was away because he wasn't available to sign off.In November, paychecks stopped coming, according to four former employees.Then, on the Monday after Thanksgiving, Miller held a company meeting in which he told employees Spora was shutting down, two former employees said.Three former employees recalled that Miller said the company didn't have enough money to continue operations.Miller followed up with an email to employees on November 30 that said Spora had ceased operating and "everyone's employment is terminated" as of November 28. Insider reviewed a copy of the email, which also said any retroactive payments would be made directly to employees' bank accounts.He said in the email that Spora was in talks to get acquired.Three former employees told Insider recently that they still hadn't been paid fully and were working to recover what they say they are owed.Miller told Insider he had expected to be able to pay employees and wind things down at Spora with bridge financing after the Series A round fell through.But he said an investor gave Spora less than it initially said it would and Spora didn't have enough money to pay all workers.Spora's investors, including Refactor Capital, Human Ventures, and MaC Venture Capital, didn't respond to requests for comment on this story.The venture firm M13 declined to comment.Miller said he paid some workers with his own money in November and December and then paid other former employees what he thought was the full amount Spora owed them in late February and early March of this year.Spora has been communicating with the former employees to determine how much it still owes them, and Miller said he was working to resolve the matter.Miller was pushed out of his previous company after he was accused of misusing company fundsMiller called Spora the third company he's founded. It's not the first to run into difficulties.Before Spora, Miller started the mental-health care company Level Therapy, an app launched in 2016 that people could use to have video chats with therapists, and FreshSessions, a marketplace for musicians to book recording studios, according to news articles and his LinkedIn profile.Level raised hundreds of thousands of dollars through the incubator 500 Startups (now 500 Global), a SeedInvest crowdfunding campaign, and from individual investors, company documents show.In September 2017, Level executives accused Miller of using company funds for personal reasons and demanded that he resign, according to internal documents and emails.Miller's cofounder also filed a police report that month related to his use of funds, according to an internal email.A police department document shows the report was filed but not its contents.An investor filed a complaint with the SEC in October 2017 alleging Miller misappropriated funds and misrepresented information to prospective investors about the company's finances and progress.Insider viewed a copy of the complaint.The investor said the SEC never responded to the complaint. An SEC spokesperson said the agency doesn't comment on the existence or nonexistence of a possible investigation.At least $31,000 of expenses that Miller charged to Level in 2017 were for personal reasons and unrelated to business, according to an auditor's analysis provided to Level executives in September 2017 and viewed by Insider.A summary of the audit also says the full amount of an outside investment did not appear to have been deposited in Level's bank account.In a September 2017 email seen by Insider, Miller denied allegations of fraud.He eventually agreed to pay roughly $32,000 to Level, according to a copy of a promissory note dated December 13, 2017.He paid the sum more than three years later, in February 2021, according to a message viewed by Insider.By then, Miller had already moved on.In November 2020, news outlets reported that Spora had raised about $1 million in seed funding.In the October 23 interview, Miller declined to comment on his time at Level.Spora most likely isn't operating at the scale Miller claimedThis year, Miller has continued to do interviews about Spora and celebrate company milestones, without any mention of the company ceasing operations or laying off staff.Miller wrote about company achievements on LinkedIn, including posts about a collaboration with a design studio and achieving accreditation for Spora's cultural-competency training program. In April, Spora issued a press release sharing results from its maternal-health program.Currently, Spora's reach appears to be more limited than Miller said in July.Spora's medical group has filed paperwork to do business in at least 18 states, but the registrations aren't active or current, or have been revoked, in 10 of them, according to Insider's review of public documents.In the October 23 interview, Miller said that Spora's counsel didn't file this paperwork on time because of a clerical error but that the paperwork had since been sent off to bring Spora's registrations back into good standing.He maintained that Spora had coverage in 22 states.Still, Spora's website as of October 27 allows people in only nine states to sign up for a membership.Spora's website also provided inaccurate information about the company's medical staff by including clinicians who no longer work for the company.As of mid-September, 11 clinicians — mostly nurses and physician assistants — were listed as available for appointments, according to Insider's review.Four of them told Insider they either no longer worked with Spora or hadn't seen Spora patients in a year.Two of the clinicians declined to speak with Insider, and Insider could not reach the rest.Two doctors listed on Spora's website as "featured Spora providers" also told Insider that they no longer worked for the startup. The company's founding physician, whose name is signed to an email sent to new members, also no longer works for Spora, two former employees said.Miller said Spora was working to ensure its systems don't show providers who don't have availability or who are no longer with the company."Sometimes things, it takes time to get to them with the team that we have right now, the limited team and the limited resources and the folks that we've brought back," Miller said."But we're working to make sure that we can continue to grow and scale, and also that we continue to provide high-quality care for everyone, but also making sure that the product reflects that."One of the former clinicians still listed as taking appointments told Insider that despite starting with the company in mid-2022, she never saw any patients before she was told the company was shutting down at the end of last year.Another former clinician said she only ever treated a handful of Spora patients."It wasn't a very busy place," she said.Want to tell us about your experience with Spora?Contact Shelby Livingston at [email protected] Price, Emmalyse Brownstein, Ryan Pickrell, Gloria Dawson, Stephanie Hallett, Alcynna Lloyd, and Hayley Peterson contributed reporting.

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