ROA healthcare unicorn that raised $150 million last month at a $7 billion valuation has laid off 18% of its workforce to “manage expenses, increase the efficiency of our organization, and better map our resources to our current strategy.” , the leadership wrote in an e-mail obtained by Meczyki.Net and confirmed by multiple sources.
“Due to our obligation to protect patient health care information, there will be no transition period for those leaving the company,” the e-mail continues. “We know this will feel sudden and hope you can find alternative ways to connect to say goodbye to your teammates.” Affected employees will get two months severance pay and support for job placement. Healthcare Unicorn is offering two months of paid healthcare benefits.
Ro confirmed the news to Meczyki.Net and provided a copy of the above e-mail that CEO Zacharias Reitano sent to employees. A spokesperson said the RO is still recruiting.
Layoffs affect most of Ro’s recruiting team today, per one source. Another source says that the announcement was unexpected, and existing employees were informed about the reduction in the workforce via Zoom without asking any questions. In the e-mail, the RO claimed that those affected by the layoffs were communicated in a 1:1 conversation.
In the email, leadership says it took steps over the past six months to prepare for a potential recession, including reducing focus and raising additional capital. The capital they are pointing to, despite being at a high valuation, was funded entirely by existing investors. The financing event was lower than in its previous round. The absence of new investors indicated that the company was clinging to people who already had financial stakes in the company’s future success.
RO’s decision to lay off people comes after RO COO George Kovios, RO Pharmacy’s GM Steve Buck and most recently Modern Fertility co-founder Afton Vachery. Vachery’s departure, which comes nearly a year after Ro acquired his company, has been rumored for more than six months — the first sparked by an employee exodus that peaked last year. At the time, former and current employees talked about the growing tension in RO due to 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, with its acquisition and pharmacy development, it launched RO Mind for mental health and RO Derm for skin care. In a statement in response to Meczyki.Net’s 2021 investigation into Ro’s culture and business, Retano said Derm is on pace to do more than $20 million in revenue in 2021. He also noted that non-Roman revenues were growing faster than Romans, reportedly 150% year over year.
In the past, in separate emails sent to employees, the Ro leadership had said they would put “more energy and resources toward fewer initiatives” for the remainder of Q2 and H2. “Reducing 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 accelerate the pace of innovation for patients,” the memo continues, adding that Also noting that it will be creating “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 experience than last year when the company raced to become the “Amazon of healthcare.”