Digital health startup Ro, which hit a $7 billion valuation back in February, is laying off 18% of its workforce amid a market downturn.
In a note sent to all employees Thursday, which was shared with Fierce Healthcare, Ro CEO Zachariah Reitano said the company took steps in the past six months to prepare for possible economic downturn including raising additional capital and narrowing its focus.
'We came to the unfortunate conclusion that we needed to make more significant changes to manage expenses, increase the efficiency of our organization, and better map our resources to our current strategy," Reitano said in the companywide note.
"This decision was unequivocally the hardest decision we’ve ever had to make as leaders and I take full responsibility for the position we’re in today," he said.
Insider first reported the layoffs Thursday, citing a leaked email.
The laid-off workers were informed Thursday in one-on-one conversations, Reitano said. The company had about 750 employees before making the staffing cuts.
"In light of the current environment, we have decided to realign our teams to better map to our strategic priorities. As a consequence, Ro has implemented difficult yet important changes to the organization of the business. We are incredibly grateful for the contributions of all those impacted and have done our very best to support them in this transition," a Ro spokesperson said in an emailed statement.
The company, based in New York City, announced in March 2021 it had raised half a billion dollars to scale up its platform that includes online pharmacy services, telehealth and in-home care.
The company is backed by General Catalyst, FirstMark Capital, TQ Ventures, Shawspring Partners, which led the most recent round, along with other VC investors.
The direct-to-patient startup has seen over 1.5 million patients in the past five years—more than 500,000 new patients in the last year alone—and facilitated over 8 million virtual visits, the company said earlier this year.
Ro started out four years ago selling erectile dysfunction medication and hair loss supplements to men. The company has since built out a telehealth company with three online health clinics. In 2021, Ro signaled its intentions to expand into remote monitoring for chronic conditions and planned to venture into the home-based healthcare market with its acquisition of software company Workpath.
Ro has acquired multiple startups in the past year to tack on additional offerings, including at-home diagnostics company Kit, reproductive health company Dadi and women’s health startup Modern Fertility for $225 million.
In February, Ro announced the launch of its own digital skincare clinic, Ro Derm, designed to provide customized dermatology telehealth visits and treatments. The offering follows in the footsteps of the startup’s digital mental health clinic Ro Mind and online pharmacy Ro Pharmacy.
Ro Pharmacy saw 150% revenue growth in 2021, according to the company, and brought more than 700 new medications to its formulary.
The startup said earlier this year it planned to launch an online and mobile platform to give patients access to all of Ro’s offerings, addressing mental health, women’s health, men’s health, fertility, metabolic health and skincare.
Zeitano said the company took steps to slate employees into other roles within the company rather than make cuts. For those employees who were let go, the company offered two months of severance pay as well as two months of paid healthcare benefits. The company extended the options exercise window to three years and is offering career services and job placement support.
The company also will pay severance on top of planned parental leave, he said.
Zeitano said Ro made the decision to ensure the company's long-term success.
In the companywide note, he acknowledged employees might feel "let down" or have doubts about the layoffs.
"On top of it, we’ve described our exciting future and our significant runway. Both remain true. I understand this duality is a lot to digest," he said.
Ro joins a growing list of other digital health companies that have scaled back their workforces as the market has constricted after enjoying a pandemic-fueled boom in the past two years.
Carbon Health, a hybrid primary care company that banked a hefty $350 million funding round a year ago, cut 8% of its global workforce, or about 250 employees, the company announced earlier this month.
Cerebral just announced it was laying off some employees as it restructures its operations. The company is mired in a federal investigation of its prescribing practices.
Health tech companies cutting staff this year included Mfine, a Bengaluru, India-based platform company (600 employees laid off); Stockholm-based digital health company Kry (100 employees); Thirty Madison, which recently merged with Nurx (24); divvyDOSE (62); Noom (495); Ahead (44); Chinese healthcare company WeDoctor (500); and Truepill, according to Layoffs.fyi, which keeps a database of reported layoffs.