Direct-to-consumer virtual health company Ro announced Monday it’s $200 million Series C funding round. With these additional funds, the company is now valued at $1.5 billion.
The existing investor, General Catalyst, led the round with participation from FirstMark Capital, Torch, SignalFire, TQ Ventures, Initialized Capital, 3L, BoxGroup and the Chernin Group. Ro has raised $376 million since its founding in 2017.
WHAT IT DOES
Ro originally began as a platform targeting men’s sexual health and wellness. From there, the company created digital health clinics for women, known as Rory, and for smoking cessation, named Zero. The three clinics offer treatment for almost 20 conditions ranging from sexual health to allergies.
In addition to the clinics, the company has Ro Pharmacy, which offers over 500 generic medications for $5 per drug per month.
Last December, Ro launched its weight management treatment, Plenity. The product was born out of a partnership between Ro and biotech company Gelesis, which makes the medication. According to the pair, Plenity helps users lose on average 22 pounds and about 10% of their body weight.
Through all of its services, Ro has created what it calls a “full-stack infrastructure,” which means patients only have to interact with the Ro network from beginning to end.
“That’s what allows us to provide that unique experience to both providers, where they can communicate with pharmacists and other physicians, nurses, and also an unrivaled experience for patients,” Zachariah Reitano, the CEO and cofounder of Ro told MobiHealthNews.
WHAT’S IT FOR
Reitano says the company will use the capital to further its mission of building technology to help bring affordable and accessible healthcare to consumers through three new components.
First, it is adding remote patient monitoring with integrated devices to offer chronic disease care-management to patients. Ro will also plan to offer different types of diagnostic testing, whether it’s through Ro’s at-home services or at in-person labs, according to Reitano. The third area Ro hopes to expand into is in urgent care.
“We’ll use this investment to really build out the Ro platform, all in service of our mission, which is to become a patient’s first call,” Reitano said.
In addition to the new services, Ro is doubling its engineering team and is currently looking for new members.
Ro’s main competitor is Hims, which also started out as a men’s health and wellness platform.
Hims also has a platform for women now, called Hers, which offers products for acne, birth control, anti-aging and hair care.
Most recently, Hims is reportedly looking to go public. According to a report from Reuters, the startup is weighing a potential sale to an unnamed special purpose acquisition company (SPAC), a "blank-check company" that uses the proceeds of an IPO to acquire or merge another business. The deal would value Hims at over $1 billion, Reuters' sources said, although the telehealth brand is also considering other deal options.
When it comes to Ro’s strategy for raising capital, Reitano says private financing made the most sense this time.
“We didn’t feel the need to go out into other sources of financing,” he said. “But you sort of assess the best form of financing for the company based on your needs and based on what the market’s telling you.”
Since joining the mail-order pharmacy space, Ro now faces competition from PillPack, which was acquired by Amazon in 2018; Capsule, which made a name for itself by promising to deliver medications in two hours to anyone in New York City; and NowRx, which specializes in same-day, same-hour prescription delivery.
On the whole, telehealth has been embraced by the healthcare industry, primarily because of the COVID-19 pandemic.
Reitano believes that the future of telehealth is bright, with much of the responsibility of continuing it falling on companies like Ro.
“If we want to look at it glass-half-full, what this public health crisis has allowed us to do is it has helped pull forward a lot of the innovation and attention to the flaws of the healthcare system that have existed for quite some time,” he said. “Now that people have been exposed to telehealth, and see the benefits of it, it’s on us to make sure that we maintain that momentum.”
ON THE RECORD
“The team is very excited because it is some element of external validation of the products and services that we built for patients. But I think, frankly, the team is fully aware that the goalpost has moved and the scoreboard has reset,” Reitano said. “The investment is great and the valuation is nice to see, but it’s only great if we can build the products and services for patients that we set out to do.”