Ro, a healthcare unicorn who last raised $150 million at a $7 billion valuation a few months ago, has downsized 18% of his staff to “manage expenses, improve the efficiency of our organization and our.” Better align resources with our current strategy,” the leadership wrote in an email obtained by TechCrunch and confirmed by multiple sources.
“Due to our commitment to protecting patient health information, there will be no grace period for those leaving the company,” the email continued. “We know this is going to feel abrupt and hope you find alternative ways to connect to say goodbye to your teammates.” Affected employees will receive two months’ severance pay and job placement assistance. The health unicorn offers two months of paid health care.
Ro confirmed the news to TechCrunch and provided a copy of the aforementioned email that CEO Zachariah Reitano sent to employees. A spokeswoman said Ro is still hiring.
Today’s layoff affects most of Ro’s recruitment team, according to one source. Another source says the announcement was unexpected and current employees were briefed about the downsizing via Zoom with no opportunity to ask questions. In the email, Ro claims that people affected by the layoffs were informed in 1:1 meetings.
In the email, leadership says it has taken steps over the past six months to prepare for a possible downturn, including narrowing focus and raising additional capital. The capital they allude to was funded solely by existing investors, despite a higher valuation. The funding event was smaller than the previous round. The lack of new investors signals that the company is sticking with people who already have a financial stake in the company’s future success.
Ro’s decision to lay off employees comes after a number of executives left the company, including Ro COO George Koveos, GM of Ro Pharmacy Steve Buck and most recently Afton Vechery, co-founder of Modern Fertility. Vechery’s departure, which came about a year after Ro took over her company, has been rumored for over six months – first prompted by a brain drain that peaked last year. At the time, former and current employees spoke of rising 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 sales. In a statement, the company said it launched Ro Mind for mental health and Ro Derm for skin care alongside its acquisition and pharmacy growth. In a statement in response to TechCrunch’s 2021 investigation into Ro’s culture and business, Reitano said Derm is poised to generate over $20 million in revenue in 2021. He also said that non-Roman revenue is growing faster than Roman revenue, reportedly by 150% a year on year.
In an earlier, separate email sent to employees, Ro’s leadership said they will be “putting more energy and resources on fewer initiatives” for the remainder of the second quarter and second half. “The focus does not mean that we will bring fewer products or services to patients. In fact, we believe it will have the opposite effect. We will increase the rate of innovation for patients,” the memo continues, also noting that “new products will be developed 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 than last year, when the company became the “Amazon of healthcare”.