Ro, a healthcare unicorn who last raised $150 million at a $7 billion valuation just months ago, has cut 18% of his workforce to “manage spending, increase the efficiency of our organization and align our resources more closely with our current strategy,” the leadership wrote. in an email obtained by TechCrunch and confirmed by multiple sources.
“Due to our obligation to protect patient healthcare information, there will be no transition period for those who leave the company,” the email continues. “We know this will feel abrupt and we hope you can find alternative ways to connect to say goodbye to your teammates.” Affected employees will receive two months of severance pay and support in placing a job. The care unicorn offers two months paid care allowance.
Ro confirmed the news to TechCrunch and provided a copy of the aforementioned email that CEO Zachariah Reitano sent to staff. A spokeswoman said Ro was still hiring.
Today’s layoff will affect most of Ro’s recruiting team, according to one source. Another source says the announcement was unexpected and current employees were notified of the staff reduction via Zoom without the opportunity to ask questions. In the email, Ro states that people affected by the layoffs have been informed in 1:1 conversations.
In the email, the leadership says it has taken steps over the past six months to prepare for a potential downturn, including narrowing its focus and raising additional capital. The capital they refer to, despite having a higher valuation, was funded solely by existing investors. The funding event was less than the previous round. The absence of new investors indicated that the company was holding on to people who already have financial interests in the company’s future success.
Ro’s decision to lay off people 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 came about a year after her company was acquired by Ro, has been rumored for more than six months — first sparked by a workers’ exodus that peaked last year. At the time, former and current employees talked about mounting tensions at Ro caused by the health tech company’s inability to generate meaningful revenue from newer products.
The ED line continues to account for half of the health tech unicorn’s revenue. In a statement, the company said that, in addition to the pharmacy acquisition and growth, it launched Ro Mind for mental health and Ro Derm for skin care. In a statement in response to TechCrunch’s 2021 investigation into Ro’s culture and business, Reitano said Derm is on track to generate more than $20 million in revenue by 2021. He also said that non-Roman revenues are growing faster than Roman, reportedly 150% per year over year.
In an earlier, separate email sent to employees, Ro’s leadership said they will “put more energy and resources into fewer initiatives” for the remainder of the second quarter and second half of the year. “Narrowing the focus does not mean we will launch fewer products or services for patients. In fact, we think it will have the opposite effect. We will increase the innovation rate for patients,” the memo continues, noting also that it will “build new products for existing patients.”
“The mantra for the rest of the year (and possibly beyond) will be growth with discipline,” the email continued. A very different feeling from last year when the company raced to become the ‘Healthcare Amazon’.