Roa healthcare unicorn that last raised $150 million just a few months ago at a valuation of $7 billioncut 18% of its workforce to “manage expenses, increase the efficiency of our organization, and better align our resources with our current strategy,” management wrote in an email obtained by TechCrunch and confirmed by multiple sources.
“Due to our obligation to protect patient health information, there will be no transition period for those leaving the company,” the email continues. “We know this will feel abrupt and hope you can find other ways to connect to say goodbye to your teammates.” Affected employees will receive two months of severance pay and job placement support. The health unicorn offers two months of paid health care benefits.
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 is still hiring.
Today’s layoff, a source says, impacts most of Ro’s recruiting team. Another source says the announcement was unexpected and current employees were notified of the downsizing via Zoom without being given the opportunity to ask questions. In the email, Ro says those affected by the layoffs were notified in 1:1 conversations.
In the email, management says it has taken steps over the past six months to prepare for a potential downturn, including focusing on concentration and raising additional capital. The capital to which they refer, although having a higher valuation, was financed solely by existing investors. The funding event was lower than its previous round. The absence of new investors has signaled that the company is sticking to people who already have a financial stake in the company’s future success.
Ro’s decision to lay off people comes after a number of executives left the company, including Ro chief operating officer George Koveos, Ro Pharmacy chief executive Steve Buck and, most recently, co-founder by Modern Fertility, Afton Vechery. Vechery’s departure, which came about a year after Ro acquired his company, has been rumored for more than six months – first sparked by an exodus of employees that culminated in the last year. At that time, former and current employees spoke of growing tensions at Ro caused by the health tech company’s inability to generate meaningful revenue from new 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 growth of its pharmacy, it launched Ro Mind for mental health and Ro Derm for skincare. In a statement responding to TechCrunch’s 2021 survey of Ro’s culture and business, Reitano said Derm was on track to make over $20 million in revenue in 2021. He also said that Non-Roman incomes were growing faster than Roman, apparently by 150% per year. over the year.
In an earlier separate email sent to employees, Ro’s management said it would devote “more energy and resources to fewer initiatives” for the remainder of Q2 and H2. “Reducing the target does not mean that we will launch 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 rest of the year (and potentially beyond) will be to grow with discipline,” the email continues. Quite a different feel to last year when the company raced to be the ‘Amazon of healthcare’.