Ro just raised one of the largest funding rounds ever for a direct-to-consumer healthcare startup. 

The digital health startup announced Tuesday that it raised $500 million in Series D funding at an undisclosed valuation. Existing investors General Catalyst, FirstMark Capital, and TQ Ventures led the round, which came together in just under four weeks, cofounder and CEO Zachariah Reitano told Insider.

Ro, which got its start selling Viagra and hair-loss treatments online, now offers prescription delivery, telemedicine, and in-home care. Reitano said he plans to use the new funding to carry out an ambitious plan to unseat traditional healthcare companies that handle everything from insurance to hospital stays.

Raising massive war chests has become common for direct-to-consumer healthcare startups over the past year. Many have benefited from the coronavirus pandemic, which closed in-person clinics and spurred a migration to telemedicine. The result has been a record-breaking year for healthcare VC funding in 2020. And Ro competitor Hims recently went public via SPAC at a $1.6 billion valuation.

The latest infusion of funding will help Ro accomplish its goal of reshaping the healthcare industry more quickly, Reitano said.

In practice, that looks like a suite of new offerings for Ro patients, with a particular focus on in-home care, Reitano said. Ro acquired Workpath, a company that provides on-demand phlebotomists for routine procedures in patients' homes, in December. Since then, it has already tapped into that network to help vaccinate house-bound at-risk patients against COVID-19 in New York.

Ro Pharmacy bottles
Ro Pharmacy offers generic medications.
Ro

Reitano's ambitions go beyond vaccinations. He wants to slash healthcare spending so meaningfully that the market in which his company operates shrinks by a third or even half.

"In healthcare, you'll hear a lot of founders say how amazing it is that the market is so large. That makes my blood boil. It's not amazing. It should be half the size," Reitano said.

$500 million will help Ro expand its physical footprint

Ro was founded in 2017 and has raised $876 million to date. Reitano told Insider he plans to eventually take the company public, but said he didn't want the distractions that come with the SPAC frenzy or a public listing at this time. 

The $500 million in funding is going to build technology and other tools to help Ro decrease the amount the average American patient spends on healthcare. Reitano said Ro wants to offer an insurance plan of its own eventually, though he said it would be different than current health insurance offerings.

The company doesn't currently take insurance, and Reitano said that won't change. Right now, Ro charges patients up front for medications and services

Ro plans to use the cash it raised to open more pharmacy distribution centers to help ship medications more quickly and at a lower cost. Ro plans to have 10 centers by the end of this year, and 15 centers by the end of 2022. Ro currently offers roughly 500 different generic medications for conditions like anxiety or diabetes for $5 or less. 

Ro wants to eliminate the middlemen in healthcare

Ro wants to eliminate inexpensive or inefficient healthcare processes, like the administrative work that helps insurance companies pay claims, so that it can dramatically cut costs and provide a better experience for patients, Reitano said.

Another process that should be on the chopping block is the practice of annual physicals, Reitano said. Continuous monitoring, whether from a Ro-integrated at-home device or a Workpath-dispatched medical professional, can give patients a better idea of their health in the long term and free clinicians to focus on patients who need to go to a hospital.

"The idea of a checkup should disappear," Reitano said. "It should just be continuous."

Reitano said his radical and well-funded vision for the future of healthcare comes from close to home. His father, a physician, helped treat his family's array of medical needs early on. The goal then, Reitano said, was to have everyone live a happy and fulfilling life regardless of their health status. He didn't see why other people without physician fathers couldn't get the same kind of care and has built the technology to make it a reality.

"The only way we as a society invest in technology is to turn luxuries into commodities," Reitano said. "From the printing press to the iPhone, technology solves scarcity, and high-quality healthcare is scarce."

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