Ro, a healthcare unicorn that last raised $150 million just months ago at a $7 billion valuation, has cut 18% of its staff to “manage expenses, increase the efficiency of our organization and better map our resources to our current strategy,” leadership wrote in an e-mail obtained by TechCrunch and confirmed by multiple sources.
“Due to our obligation to protect patient healthcare information, there will not be a transition period for those departing the company,” the e-mail continues. “We know that this will feel abrupt and hope you can find alternative ways to connect to say goodbye to your teammates.” Impacted employees will get two months of severance pay and support for job placement. The healthcare unicorn is offering two months of paid healthcare benefits.
Ro confirmed the news to TechCrunch and provided a copy of the aforementioned e-mail that CEO Zachariah Reitano sent to staff. A spokeswoman said that Ro is still hiring.
The layoff today, per one source, impacts most of Ro’s recruiting team. Another source says that the announcement was unexpected, and that current employees were told about the workforce reduction via Zoom without the chance to ask any questions. In the e-mail, Ro asserts that people who were impacted by the layoffs were told in 1:1 conversations.
In the email, leadership says it took steps over the past six months to prepare for a possible downturn, including narrowing focus and raising additional capital. The capital they’re alluding to, despite being at a higher valuation, was solely funded by existing investors. The financing event was less than its preceding round. The absence of new investors signaled that the company stuck to people who already have financial stakes in the company’s future success.
Ro’s decision to lay people off comes after a number of executives left the company, including Ro COO George Koveos, GM of Ro Pharmacy Steve Buck and most recently, Modern Fertility co-founder Afton Vechery. Vechery’s departure, which happened around one year after her company was acquired by Ro, has been rumored for over six months — first sparked by an employee exodus that peaked last year. At that time, former and current employees spoke to rising tensions at Ro that were caused by the health tech company’s inability to gain meaningful revenue from newer products.
Its ED line continues to account for half of the health tech unicorn’s revenue. In a statement, the company said that, alongside its acquisition and pharmacy growth, it launched Ro Mind for mental health and Ro Derm for skincare. In a statement in response to TechCrunch’s 2021 investigation into Ro’s culture and business, Reitano said that Derm is on pace to do over $20 million in revenue in 2021. He also said that non-Roman revenue is growing faster than Roman, reportedly 150% year over year.
In a previous, separate email sent to employees, Ro leadership said that they will put “more energy and resources toward fewer initiatives” for the remainder of Q2 and H2. “Narrowing the focus does not mean we will launch any fewer products or services for patients. In fact, we believe it will have the opposite effect. We will increase the speed of innovation for patients,” the memo continues, also noting that it will build “new products for existing patients.”
“The mantra for the remainder of the year (and potentially beyond) will be growth with discipline,” the e-mail continued. Quite a different feel than just last year when the company raced to be the “Amazon of healthcare.”
Source: Tech Crunch