Startup Cerebral Soared on Easy Adderall Prescriptions. That Was Its Undoing.

Hope came from the federal government, which was concerned that people wouldn’t be able to see their physicians during Covid-19 lockdowns. It had just granted online providers the ability to prescribe so-called schedule 2 controlled substances, drugs such as OxyContin and Vicodin, which are often abused and would normally require an in-person doctor visit.

Cerebral saw an opportunity in one such drug, Adderall, a powerful stimulant used to treat attention-deficit hyperactivity disorder, or ADHD. In a February 2021 presentation to attract new investors, Cerebral said a pilot project showed that it was half as costly to advertise for ADHD patients than for those with depression and anxiety because each ad dollar yielded more customers. Treating ADHD could expand its market by 30%, the presentation suggested.

Billionaire Len Blavatnik’s privately held industrial group Access Industries signed up, leading a $127 million financing that included technology investor Silver Lake and hedge-funder Bill Ackman. Masayoshi Son’s SoftBank Group Corp. would lead a $300 million round a few months later.

With the big checks in hand, Cerebral’s co-founder and chief executive, Kyle Robertson, launched the company into the ADHD treatment business using Silicon Valley’s disruptive playbook. Cerebral splurged on social media ads and hired gymnast Simone Biles as celebrity spokeswoman. It hired hundreds of contractors to prescribe medication after short online appointments, adding people so fast that one convicted felon joined its ranks.

Cerebral signed up tens of thousands of clients for mental-health treatment, increased sales 10-fold last year to a projected $100 million, and hit a $4.8 billion valuation less than two years after its launch. ADHD increased to 20% of its business, according to a company document.

Now the success story is falling apart. The board fired Mr. Robertson last month, shortly after the company revealed that it had received a subpoena from federal prosecutors looking into possible violations of the Controlled Substance Act. CVS Health Corp. and Walmart Inc. stopped filling its prescriptions for controlled substances such as Adderall. CVS unit Aetna said last week it would remove Cerebral as an in-network provider. Cerebral management has warned staff to expect layoffs.

Cerebral says it is providing necessary treatment and filling a need for mental-health care services at a time when demand outstrips supply. The company said it is no longer prescribing most controlled substances and that a “single digit percentage” of its patients were given a controlled substance to treat ADHD. Despite the criticism, many patients say the company has helped them get needed mental-health treatment.

Spokespeople for SoftBank, Silver Lake and Bill Ackman declined to comment. Nami Park, who represents Access Industries on Cerebral’s board, didn’t respond to requests for comment.

For his part, Mr. Robertson issued a memo after his firing saying the board “colluded to make me the scapegoat for prescribing controlled medications and providing care for ADHD.” He said that he kept investors informed and that some encouraged him to get into the Adderall-prescribing business. A spokesman said Mr. Robertson relied on subordinates “to make nearly all decisions” related to Cerebral’s clinical practices.

Cerebral said it has no comment on Mr. Robertson’s feeling that he has been made a scapegoat.

Cerebral’s board said in a statement that it “has acted and will act in the best interest of the Company and its shareholders to provide quality clinical care to patients in need of mental-health care. We stand fully behind the new leadership team in continuing to deliver on the Company’s important mission.”

Cerebral’s rise and the turmoil that ensued show how Silicon Valley’s emphasis on industry disruption and lightning-fast growth, fueled by exuberant funding, can run into trouble in healthcare, especially when patients are involved.

The pitch

In 2018, Mr. Robertson dropped out of the M.B.A. program at the University of Pennsylvania’s Wharton School and eight months later was working on an idea for the startup that would become Cerebral. The son of a psychiatrist and a psychotherapist in Cincinnati, he said he struggled with mental-health challenges when he was younger.

Mr. Robertson teamed up with Ho Anh, a physician who had previously worked at Hims & Hers Health Inc., a medication startup that prescribed erectile dysfunction and hair-loss pills after online appointments. By early 2019, the 26-year-old Mr. Robertson was emailing potential investors about seed capital.

The Cerebral founders saw an opening for a startup focused on drugs to treat “bread-and-butter” psychiatry clients, as Dr. Anh referred to them, those with mental-health conditions such as depression and anxiety. Dr. Anh, who left the company in 2021, didn’t respond to requests for comment.

The model: Customers sign up for a subscription, in most cases paying $85 a month for a medication-management plan. A patient receives a 30-minute online consultation with a nurse practitioner, who prescribes medication. After that, their subscription covers medication renewals and follow-up consultations.

Initially, Cerebral targeted its ads at women in their 20s and 50s on social media, and prescribed antidepressant medications such as generic Lexapro. In May 2020, less than four months after its launch, it had $300,000 in sales for the month, according to an internal financial report reviewed by the Journal.

Yet the company found that such customers often weren’t profitable. The advertising cost to bring them through the front door was too high, since they typically would keep paying only for about three months, the financial report showed and people familiar with the issue said. The company disputed the three-month figure but declined to elaborate.

To make its business model work, Cerebral needed customers coming back for medication, these people said.

With the onset of the pandemic, mental-health patients were unable to see their doctors in person, so federal regulators loosened regulations that limited telemedicine practice. Among the changes was a temporary expansion of the list of drugs that could be prescribed after virtual appointments to include controlled substances such as Adderall and other stimulants. Cerebral planned to move quickly.

In a June 2020 presentation for prospective investors reviewed by the Journal, Cerebral listed controlled substances as one of its new products, which would help it “accelerate landgrab.” Some of the first controlled substances it prescribed were benzodiazepines such as Xanax to treat anxiety. The presentation projected that Cerebral would treat ADHD by year-end.

Oak HC/FT, a leading healthcare venture-capital firm whose managing partner Annie Lamont is married to Connecticut Gov. Ned Lamont, signed on to lead that round of funding. Oak put in $35 million, an important stamp of approval which gave Cerebral an $85 million valuation.

A spokesman for Oak declined to comment.

A few weeks after joining Cerebral’s board later that year, independent director Jesse Horwitz texted Mr. Robertson to say he’d heard “Adderall startups were doing well early innings” and to ask “is Adderall in Cerebral pipeline?” Mr. Robertson responded that Cerebral’s ADHD treatment was rolling out and “growing like crazy,” according to texts reviewed by the Journal.

“Awesome,” replied Mr. Horwitz, who didn’t respond to requests for comment.

Others were wary. Nine venture-capital firms that declined to invest at that time told the Journal that the company’s aggressive advertising and prescribing practices gave them pause.

“We wanted to back a team in mental health committed to clinical quality. Ultimately, we perceived their focus to be more in marketing,” said Aike Ho, partner at venture capital ACME Capital, which passed on investing in that round of financing.

Adderall and similar stimulants are amphetamines, and widely accepted as a primary treatment for ADHD. Psychiatrists say the drugs can benefit patients properly diagnosed with the condition and many patients experience the condition for years before getting on a life-changing treatment plan.

But illicit transactions for Adderall and other stimulants are also the most popular entries on StreetRx.com, a website that compiles data on illicit drug transactions from people who anonymously report the price, quantity and location of drugs they have purchased on the street. Stimulants surpassed opioids as the largest drug class reported to the website in late 2019.

Adderall is popular among users who don’t have ADHD for providing a buzz that can help them pull an all-night study session, for instance, or counter the effects of alcohol to keep partying longer. Misuse can have side effects such as sleep difficulties, mood swings and panic attacks and can also lead to dependency.

Cerebral officially launched ADHD treatment in March 2021, noting the results of its pilot that suggested ADHD treatment with Adderall would attract long-term patients who were cheaper to bring in. A later investor presentation said patients diagnosed with ADHD and treated with stimulants “have substantially higher retention” than other patients and that ADHD patients were more valuable than depression and anxiety patients.

Cerebral said the presentations are designed for investors and use terminology and metrics that are commonly used to measure financial strength and potential for growth.

Scaling Up

By the fall of 2021, Cerebral was approaching 100,000 paying subscribers, with a 2,500-strong workforce.

To keep up with demand, Mr. Robertson pushed recruiters to hire quickly, at one point demanding they bring in 200 new clinicians a week, said a person familiar with Cerebral’s recruiting.

As Cerebral rolled out treatment for ADHD and bipolar disorder, which are more complex to diagnose or treat than moderate depression or anxiety, it often didn’t hire psychiatric mental-health nurse practitioners, or PMHNPs, who have special training in psychiatric care and are more qualified to see patients with more serious problems.

A Journal analysis of public records identified more than 400 Cerebral nurse practitioners licensed in states where the company treated ADHD who lacked the specialized PMHNP credential.

In most job postings for nurse practitioners from January until May of this year, Cerebral called the special psychiatric mental-health nurse practitioner credential, which requires extra training, “preferred but not a deal breaker,” according to screenshots from the Internet Archive, an online service that stores old versions of websites.

Cerebral said in its statement that it hires as many PMHNPs as it can, given limited supply of them, and that it ensures patients with more complex conditions such as bipolar disorder are treated only by PMHNPs. It said that family nurse practitioners are qualified to see patients for anxiety, depression and other conditions.

Some clinicians came on before they were fully vetted.

One nurse practitioner was hired two months after her conviction for money laundering had been announced in a Justice Department press release. She remained with Cerebral until May, two weeks after she received a two-year sentence. She reports to prison Monday.

The company also hired a Connecticut doctor, Martin Perlin, who had been reprimanded by state regulators for laxness in his opioid prescriptions and who agreed not to renew his license in the state in 2017.

“I don’t think they vetted me adequately when they hired me,” said Dr. Perlin, who added that he was grateful the company gave him a chance to work after he disclosed the past issues related to his license and prescribing practices. He is still licensed in New York.

Cerebral declined to comment on the clinicians beyond providing their employment dates. It said it is improving its employee screening process. Mr. Robertson’s spokesman said he wasn’t responsible for recruiting.

The marketing

From 2020 to 2021, Cerebral planned to increase its marketing budget more than 10-fold, according to documents. On TikTok alone, Cerebral spent more than $13 million from January to May this year, making it the third-biggest advertiser behind HBO and Amazon, according to research firm Pathmatics.

Cerebral’s marketing practices were a departure from typical psychiatry, where clinicians don’t buy ads promising a quick diagnosis for a particular condition.

One set of ads on Instagram and TikTok showcased a young woman shoving a doughnut in her mouth or plunging her fingers into a cake under the words, “Why overeating can be fueled by ADHD.”

Instagram and TikTok removed some Cerebral ads for violating their body image policies.

Another ad from April of this year suggested that Cerebral’s service was a “hack” to get Adderall, frustrating investors because the company had promised to run ads through a clinical committee, said a person familiar with their concerns.

When customers signed up, Cerebral asked them if they were interested in being prescribed a controlled substance so they could be routed to a nurse practitioner with a license to prescribe such medication. This isn’t a question typically asked on intake forms in a psychiatry office and was designed to give clients the drugs they wanted, said people familiar with the intake process.

“We previously outsourced the creation of many of our ads. We have since hired a creative director and team, and have brought many of our creative processes in house instead of using external agencies so that we can better control the content and narrative,” said the company in its written statement.

Practitioner concerns

The ads worked and customers flooded in by the tens of thousands in the more than 20 states where Cerebral offered ADHD treatment. Nurse practitioners who operated in some of those states said most of their new clients sought treatment for that condition. Having seen the ads, many clients self-diagnosed ADHD and were primed to expect access to a prescription, the clinicians found.

“It’s risky because you really have to figure out who is drug seeking and who is really suffering from ADHD because the clients know what to say to get a stimulant, to get that diagnosis, because they googled it,” said Kriupa Samson, a psychiatric mental-health nurse practitioner from New York who recently left Cerebral.

Another Cerebral nurse practitioner said she saw a patient who answered all the questions correctly to suggest he had ADHD. At the end of the appointment he said he had lied about having ADHD and instead liked to crush and snort Adderall tablets.

A challenge diagnosing ADHD is distinguishing it from other conditions, such as anxiety and depression, that can present similar symptoms but require different treatment. Psychiatrists say a typical ADHD evaluation should run at least 90 minutes in part to eliminate the other possible diagnoses.

When Cerebral was designing its ADHD treatment protocol, some clinicians pushed to increase evaluation times to 45 minutes from the company’s standard 30 minutes for depression and anxiety, said people familiar with their concerns. Mr. Robertson rejected the idea, citing higher costs and disruptions to the company’s scheduling system, said a person familiar with the decision.

Cerebral said clinicians aren’t required to diagnose or treat during a patient’s first appointment.

Mr. Robertson’s spokesman said the decision about visit length was delegated to Cerebral general managers.

One patient who received stimulant prescriptions from Cerebral in September said she suffered hallucinations after taking the drug. Her boyfriend said he called an ambulance because he feared she might hurt herself.

A doctor at the hospital where she stayed for nearly a week attributed her episode to Adderall use and ordered her to stop taking the medication, according to the patient and records reviewed by the Journal. She said she attempted to cancel her subscription but continued to receive marketing emails and monthly charges from the company.

Cerebral said it couldn’t comment on patient cases, citing confidentiality rules.

Some patients said Cerebral gave them an accessible option for mental-health care treatment that they wouldn’t have been able to afford otherwise.

Jonathan Hall, 43, said he received depression treatment from Cerebral last year at a time when he didn’t have insurance. A father of four, he said that treatment helped him apply for a job. And an April prescription for Adderall for previously undiagnosed ADHD helped him quit drinking and make other life changes, he added.

“With Adderall, it doesn’t feel like everything is insurmountable anymore,” said Mr. Hall.

Boosting Adderall

Mr. Robertson wanted more ADHD patients to be prescribed Adderall, alleged Matthew Truebe, Cerebral’s former vice president in charge of product and engineering, in a labor lawsuit filed in April. The suit alleges that Mr. Robertson directed Cerebral employees to track the extent to which patient retention correlated with stimulant prescriptions.

“When Cerebral determined that patients who were prescribed stimulants were more likely to remain Cerebral customers, the CEO directed Cerebral employees find ways to prescribe stimulants to more ADHD patients to increase retention,” the lawsuit said.

Cerebral and Mr. Robertson’s spokesman said the allegations in the complaint are false. Mr. Robertson’s spokesman said he worked to increase the percentage of patients on first-line treatments such as Adderall together with his clinical advisers.

David Mou, then Cerebral’s chief medical officer and now its new CEO, also oversaw projects to encourage stimulant prescriptions, internal documents show. One project was designed to “nudge” clinicians toward preferred treatments, including stimulants for ADHD patients. A separate one sent emails to clinicians to push them to prescribe stimulants to 100% of ADHD patients without comorbidities.

Cerebral said that Adderall is the preferred treatment for such patients. Dr. Mou, who replaced Mr. Robertson as CEO in May, said that now that he is in charge the company will “triple down” on clinical quality.

Some Cerebral nurse practitioners previously told the Journal that they felt pressured by company emails that flagged specific patient cases for them to review and suggested they switch the patient’s medication or change the diagnosis.

“You get a message saying you’re out of compliance. And then I sometimes didn’t want to do what I thought was best, because I don’t want to get flagged,” said Ms. Samson, the nurse practitioner from New York.

She said she agreed with the basic guidelines the company provided for ADHD treatment, which include stimulants as the preferred medication for those without co-occurring conditions. But they didn’t always fit every patient, she said, noting: “You can’t just go down the flow chart and say it always works.”

Online ads show Cerebral is moving on to its next growth opportunity, joining a crowded field that is treating opiate addiction with prescriptions for a different controlled substance, suboxone. “Cerebral Subox Online Treatment,” says one of the many ads popping up on Google. “Overcome Opioid Use With Medication.”

The company says such treatment is badly needed considering the severity of the nation’s opioid crisis.

—Elisa Cho and Jim Oberman contributed to this article.

Write to Rolfe Winkler at [email protected], Khadeeja Safdar at [email protected] and Andrea Fuller at [email protected]

Hope came from the federal government, which was concerned that people wouldn’t be able to see their physicians during Covid-19 lockdowns. It had just granted online providers the ability to prescribe so-called schedule 2 controlled substances, drugs such as OxyContin and Vicodin, which are often abused and would normally require an in-person doctor visit.

Cerebral saw an opportunity in one such drug, Adderall, a powerful stimulant used to treat attention-deficit hyperactivity disorder, or ADHD. In a February 2021 presentation to attract new investors, Cerebral said a pilot project showed that it was half as costly to advertise for ADHD patients than for those with depression and anxiety because each ad dollar yielded more customers. Treating ADHD could expand its market by 30%, the presentation suggested.

Billionaire Len Blavatnik’s privately held industrial group Access Industries signed up, leading a $127 million financing that included technology investor Silver Lake and hedge-funder Bill Ackman. Masayoshi Son’s SoftBank Group Corp. would lead a $300 million round a few months later.

With the big checks in hand, Cerebral’s co-founder and chief executive, Kyle Robertson, launched the company into the ADHD treatment business using Silicon Valley’s disruptive playbook. Cerebral splurged on social media ads and hired gymnast Simone Biles as celebrity spokeswoman. It hired hundreds of contractors to prescribe medication after short online appointments, adding people so fast that one convicted felon joined its ranks.

Cerebral signed up tens of thousands of clients for mental-health treatment, increased sales 10-fold last year to a projected $100 million, and hit a $4.8 billion valuation less than two years after its launch. ADHD increased to 20% of its business, according to a company document.

Now the success story is falling apart. The board fired Mr. Robertson last month, shortly after the company revealed that it had received a subpoena from federal prosecutors looking into possible violations of the Controlled Substance Act. CVS Health Corp. and Walmart Inc. stopped filling its prescriptions for controlled substances such as Adderall. CVS unit Aetna said last week it would remove Cerebral as an in-network provider. Cerebral management has warned staff to expect layoffs.

Cerebral says it is providing necessary treatment and filling a need for mental-health care services at a time when demand outstrips supply. The company said it is no longer prescribing most controlled substances and that a “single digit percentage” of its patients were given a controlled substance to treat ADHD. Despite the criticism, many patients say the company has helped them get needed mental-health treatment.

Spokespeople for SoftBank, Silver Lake and Bill Ackman declined to comment. Nami Park, who represents Access Industries on Cerebral’s board, didn’t respond to requests for comment.

For his part, Mr. Robertson issued a memo after his firing saying the board “colluded to make me the scapegoat for prescribing controlled medications and providing care for ADHD.” He said that he kept investors informed and that some encouraged him to get into the Adderall-prescribing business. A spokesman said Mr. Robertson relied on subordinates “to make nearly all decisions” related to Cerebral’s clinical practices.

Cerebral said it has no comment on Mr. Robertson’s feeling that he has been made a scapegoat.

Cerebral’s board said in a statement that it “has acted and will act in the best interest of the Company and its shareholders to provide quality clinical care to patients in need of mental-health care. We stand fully behind the new leadership team in continuing to deliver on the Company’s important mission.”

Cerebral’s rise and the turmoil that ensued show how Silicon Valley’s emphasis on industry disruption and lightning-fast growth, fueled by exuberant funding, can run into trouble in healthcare, especially when patients are involved.

The pitch

In 2018, Mr. Robertson dropped out of the M.B.A. program at the University of Pennsylvania’s Wharton School and eight months later was working on an idea for the startup that would become Cerebral. The son of a psychiatrist and a psychotherapist in Cincinnati, he said he struggled with mental-health challenges when he was younger.

Mr. Robertson teamed up with Ho Anh, a physician who had previously worked at Hims & Hers Health Inc., a medication startup that prescribed erectile dysfunction and hair-loss pills after online appointments. By early 2019, the 26-year-old Mr. Robertson was emailing potential investors about seed capital.

The Cerebral founders saw an opening for a startup focused on drugs to treat “bread-and-butter” psychiatry clients, as Dr. Anh referred to them, those with mental-health conditions such as depression and anxiety. Dr. Anh, who left the company in 2021, didn’t respond to requests for comment.

The model: Customers sign up for a subscription, in most cases paying $85 a month for a medication-management plan. A patient receives a 30-minute online consultation with a nurse practitioner, who prescribes medication. After that, their subscription covers medication renewals and follow-up consultations.

Initially, Cerebral targeted its ads at women in their 20s and 50s on social media, and prescribed antidepressant medications such as generic Lexapro. In May 2020, less than four months after its launch, it had $300,000 in sales for the month, according to an internal financial report reviewed by the Journal.

Yet the company found that such customers often weren’t profitable. The advertising cost to bring them through the front door was too high, since they typically would keep paying only for about three months, the financial report showed and people familiar with the issue said. The company disputed the three-month figure but declined to elaborate.

To make its business model work, Cerebral needed customers coming back for medication, these people said.

With the onset of the pandemic, mental-health patients were unable to see their doctors in person, so federal regulators loosened regulations that limited telemedicine practice. Among the changes was a temporary expansion of the list of drugs that could be prescribed after virtual appointments to include controlled substances such as Adderall and other stimulants. Cerebral planned to move quickly.

In a June 2020 presentation for prospective investors reviewed by the Journal, Cerebral listed controlled substances as one of its new products, which would help it “accelerate landgrab.” Some of the first controlled substances it prescribed were benzodiazepines such as Xanax to treat anxiety. The presentation projected that Cerebral would treat ADHD by year-end.

Oak HC/FT, a leading healthcare venture-capital firm whose managing partner Annie Lamont is married to Connecticut Gov. Ned Lamont, signed on to lead that round of funding. Oak put in $35 million, an important stamp of approval which gave Cerebral an $85 million valuation.

A spokesman for Oak declined to comment.

A few weeks after joining Cerebral’s board later that year, independent director Jesse Horwitz texted Mr. Robertson to say he’d heard “Adderall startups were doing well early innings” and to ask “is Adderall in Cerebral pipeline?” Mr. Robertson responded that Cerebral’s ADHD treatment was rolling out and “growing like crazy,” according to texts reviewed by the Journal.

“Awesome,” replied Mr. Horwitz, who didn’t respond to requests for comment.

Others were wary. Nine venture-capital firms that declined to invest at that time told the Journal that the company’s aggressive advertising and prescribing practices gave them pause.

“We wanted to back a team in mental health committed to clinical quality. Ultimately, we perceived their focus to be more in marketing,” said Aike Ho, partner at venture capital ACME Capital, which passed on investing in that round of financing.

Adderall and similar stimulants are amphetamines, and widely accepted as a primary treatment for ADHD. Psychiatrists say the drugs can benefit patients properly diagnosed with the condition and many patients experience the condition for years before getting on a life-changing treatment plan.

But illicit transactions for Adderall and other stimulants are also the most popular entries on StreetRx.com, a website that compiles data on illicit drug transactions from people who anonymously report the price, quantity and location of drugs they have purchased on the street. Stimulants surpassed opioids as the largest drug class reported to the website in late 2019.

Adderall is popular among users who don’t have ADHD for providing a buzz that can help them pull an all-night study session, for instance, or counter the effects of alcohol to keep partying longer. Misuse can have side effects such as sleep difficulties, mood swings and panic attacks and can also lead to dependency.

Cerebral officially launched ADHD treatment in March 2021, noting the results of its pilot that suggested ADHD treatment with Adderall would attract long-term patients who were cheaper to bring in. A later investor presentation said patients diagnosed with ADHD and treated with stimulants “have substantially higher retention” than other patients and that ADHD patients were more valuable than depression and anxiety patients.

Cerebral said the presentations are designed for investors and use terminology and metrics that are commonly used to measure financial strength and potential for growth.

Scaling Up

By the fall of 2021, Cerebral was approaching 100,000 paying subscribers, with a 2,500-strong workforce.

To keep up with demand, Mr. Robertson pushed recruiters to hire quickly, at one point demanding they bring in 200 new clinicians a week, said a person familiar with Cerebral’s recruiting.

As Cerebral rolled out treatment for ADHD and bipolar disorder, which are more complex to diagnose or treat than moderate depression or anxiety, it often didn’t hire psychiatric mental-health nurse practitioners, or PMHNPs, who have special training in psychiatric care and are more qualified to see patients with more serious problems.

A Journal analysis of public records identified more than 400 Cerebral nurse practitioners licensed in states where the company treated ADHD who lacked the specialized PMHNP credential.

In most job postings for nurse practitioners from January until May of this year, Cerebral called the special psychiatric mental-health nurse practitioner credential, which requires extra training, “preferred but not a deal breaker,” according to screenshots from the Internet Archive, an online service that stores old versions of websites.

Cerebral said in its statement that it hires as many PMHNPs as it can, given limited supply of them, and that it ensures patients with more complex conditions such as bipolar disorder are treated only by PMHNPs. It said that family nurse practitioners are qualified to see patients for anxiety, depression and other conditions.

Some clinicians came on before they were fully vetted.

One nurse practitioner was hired two months after her conviction for money laundering had been announced in a Justice Department press release. She remained with Cerebral until May, two weeks after she received a two-year sentence. She reports to prison Monday.

The company also hired a Connecticut doctor, Martin Perlin, who had been reprimanded by state regulators for laxness in his opioid prescriptions and who agreed not to renew his license in the state in 2017.

“I don’t think they vetted me adequately when they hired me,” said Dr. Perlin, who added that he was grateful the company gave him a chance to work after he disclosed the past issues related to his license and prescribing practices. He is still licensed in New York.

Cerebral declined to comment on the clinicians beyond providing their employment dates. It said it is improving its employee screening process. Mr. Robertson’s spokesman said he wasn’t responsible for recruiting.

The marketing

From 2020 to 2021, Cerebral planned to increase its marketing budget more than 10-fold, according to documents. On TikTok alone, Cerebral spent more than $13 million from January to May this year, making it the third-biggest advertiser behind HBO and Amazon, according to research firm Pathmatics.

Cerebral’s marketing practices were a departure from typical psychiatry, where clinicians don’t buy ads promising a quick diagnosis for a particular condition.

One set of ads on Instagram and TikTok showcased a young woman shoving a doughnut in her mouth or plunging her fingers into a cake under the words, “Why overeating can be fueled by ADHD.”

Instagram and TikTok removed some Cerebral ads for violating their body image policies.

Another ad from April of this year suggested that Cerebral’s service was a “hack” to get Adderall, frustrating investors because the company had promised to run ads through a clinical committee, said a person familiar with their concerns.

When customers signed up, Cerebral asked them if they were interested in being prescribed a controlled substance so they could be routed to a nurse practitioner with a license to prescribe such medication. This isn’t a question typically asked on intake forms in a psychiatry office and was designed to give clients the drugs they wanted, said people familiar with the intake process.

“We previously outsourced the creation of many of our ads. We have since hired a creative director and team, and have brought many of our creative processes in house instead of using external agencies so that we can better control the content and narrative,” said the company in its written statement.

Practitioner concerns

The ads worked and customers flooded in by the tens of thousands in the more than 20 states where Cerebral offered ADHD treatment. Nurse practitioners who operated in some of those states said most of their new clients sought treatment for that condition. Having seen the ads, many clients self-diagnosed ADHD and were primed to expect access to a prescription, the clinicians found.

“It’s risky because you really have to figure out who is drug seeking and who is really suffering from ADHD because the clients know what to say to get a stimulant, to get that diagnosis, because they googled it,” said Kriupa Samson, a psychiatric mental-health nurse practitioner from New York who recently left Cerebral.

Another Cerebral nurse practitioner said she saw a patient who answered all the questions correctly to suggest he had ADHD. At the end of the appointment he said he had lied about having ADHD and instead liked to crush and snort Adderall tablets.

A challenge diagnosing ADHD is distinguishing it from other conditions, such as anxiety and depression, that can present similar symptoms but require different treatment. Psychiatrists say a typical ADHD evaluation should run at least 90 minutes in part to eliminate the other possible diagnoses.

When Cerebral was designing its ADHD treatment protocol, some clinicians pushed to increase evaluation times to 45 minutes from the company’s standard 30 minutes for depression and anxiety, said people familiar with their concerns. Mr. Robertson rejected the idea, citing higher costs and disruptions to the company’s scheduling system, said a person familiar with the decision.

Cerebral said clinicians aren’t required to diagnose or treat during a patient’s first appointment.

Mr. Robertson’s spokesman said the decision about visit length was delegated to Cerebral general managers.

One patient who received stimulant prescriptions from Cerebral in September said she suffered hallucinations after taking the drug. Her boyfriend said he called an ambulance because he feared she might hurt herself.

A doctor at the hospital where she stayed for nearly a week attributed her episode to Adderall use and ordered her to stop taking the medication, according to the patient and records reviewed by the Journal. She said she attempted to cancel her subscription but continued to receive marketing emails and monthly charges from the company.

Cerebral said it couldn’t comment on patient cases, citing confidentiality rules.

Some patients said Cerebral gave them an accessible option for mental-health care treatment that they wouldn’t have been able to afford otherwise.

Jonathan Hall, 43, said he received depression treatment from Cerebral last year at a time when he didn’t have insurance. A father of four, he said that treatment helped him apply for a job. And an April prescription for Adderall for previously undiagnosed ADHD helped him quit drinking and make other life changes, he added.

“With Adderall, it doesn’t feel like everything is insurmountable anymore,” said Mr. Hall.

Boosting Adderall

Mr. Robertson wanted more ADHD patients to be prescribed Adderall, alleged Matthew Truebe, Cerebral’s former vice president in charge of product and engineering, in a labor lawsuit filed in April. The suit alleges that Mr. Robertson directed Cerebral employees to track the extent to which patient retention correlated with stimulant prescriptions.

“When Cerebral determined that patients who were prescribed stimulants were more likely to remain Cerebral customers, the CEO directed Cerebral employees find ways to prescribe stimulants to more ADHD patients to increase retention,” the lawsuit said.

Cerebral and Mr. Robertson’s spokesman said the allegations in the complaint are false. Mr. Robertson’s spokesman said he worked to increase the percentage of patients on first-line treatments such as Adderall together with his clinical advisers.

David Mou, then Cerebral’s chief medical officer and now its new CEO, also oversaw projects to encourage stimulant prescriptions, internal documents show. One project was designed to “nudge” clinicians toward preferred treatments, including stimulants for ADHD patients. A separate one sent emails to clinicians to push them to prescribe stimulants to 100% of ADHD patients without comorbidities.

Cerebral said that Adderall is the preferred treatment for such patients. Dr. Mou, who replaced Mr. Robertson as CEO in May, said that now that he is in charge the company will “triple down” on clinical quality.

Some Cerebral nurse practitioners previously told the Journal that they felt pressured by company emails that flagged specific patient cases for them to review and suggested they switch the patient’s medication or change the diagnosis.

“You get a message saying you’re out of compliance. And then I sometimes didn’t want to do what I thought was best, because I don’t want to get flagged,” said Ms. Samson, the nurse practitioner from New York.

She said she agreed with the basic guidelines the company provided for ADHD treatment, which include stimulants as the preferred medication for those without co-occurring conditions. But they didn’t always fit every patient, she said, noting: “You can’t just go down the flow chart and say it always works.”

Online ads show Cerebral is moving on to its next growth opportunity, joining a crowded field that is treating opiate addiction with prescriptions for a different controlled substance, suboxone. “Cerebral Subox Online Treatment,” says one of the many ads popping up on Google. “Overcome Opioid Use With Medication.”

The company says such treatment is badly needed considering the severity of the nation’s opioid crisis.

—Elisa Cho and Jim Oberman contributed to this article.

Write to Rolfe Winkler at [email protected], Khadeeja Safdar at [email protected] and Andrea Fuller at [email protected]