ro buys Kit - At-Home Health Testing Acquisition

Ro Acquires At-Home Diagnostics Firm Kit

Ro, a virtual care provider operating on a direct-to-consumer model, has completed the acquisition of Kit, a company specializing in at-home diagnostic products. These products range from finger-prick blood tests to tools for measuring weight. The financial details of the transaction were not disclosed.

Shared Vision Drives the Deal

Zachariah Reitano, a co-founder of Ro, initially explored Kit as a potential partner to enhance its platform with high-quality testing capabilities. He and Kit’s co-founders, Philip Fung and Erik Salazar, discovered a common goal: building a fully integrated primary care system. They also recognized existing barriers hindering consumer access to healthcare. This alignment of objectives ultimately led to Ro’s decision to acquire the 17-month-old company.

Kit's Role as a White-Label Solution

Kit collaborates with health insurance providers, clinical research organizations, self-insured employers, and telehealth platforms to deliver customized at-home diagnostic tests. Essentially, it functions as a white-label service for physicians, providing them with a platform to order and customize tests for their patients. This in-network approach differs from Ro’s focus on direct-to-consumer healthcare, making the integration of Kit’s customer base a key consideration. The ability to lower prices and meet consumer expectations will be crucial.

Focus on User Experience

Reitano highlighted Kit’s user-centric design. Customers receive a Kit box containing everything needed, along with access to the Kit app for step-by-step testing guidance. The box includes helpful items like a hand warmer to improve blood flow and a practice pad for comfortable sample collection.

“My initial experience with Kit genuinely felt like a glimpse into the future,” Reitano stated. “Such experiences are relatively rare.” He refrained from naming specific competitors, but noted that other at-home diagnostic companies often have “outdated” procedures involving cumbersome pamphlets and unclear instructions. Key competitors in the at-home testing market include Everlywell and LetsGetChecked, both of which have secured substantial venture capital funding.

Addressing Fragmentation in Healthcare

Kit previously secured $3.3 million in seed funding from investors including Expa, Sherpalo Ventures, South Park Commons, Slow Ventures and Village Global, according to Crunchbase. Reitano emphasized the need to address fragmentation within the healthcare system, particularly concerning data and provider communication. He believes Kit is a vital component in creating a more unified patient care experience.

Expanding Ro's Infrastructure

This acquisition provides Ro with its first dedicated laboratory facility. Ro now has access to Kit’s CLIA-certified and CAP-accredited lab, which is owned and operated in San Francisco, California.

A Series of Strategic Acquisitions

Ro’s acquisition of Kit marks its third acquisition within the last year. In December 2020, the company acquired Workpath, an API for in-home care services, enabling at-home professional visits and diagnostic testing. In May 2021, Ro purchased Modern Fertility for over $225 million, expanding its women’s health offerings with fertility testing and reproductive health services. Modern Fertility’s $129 at-home hormone test complements Kit’s range of services.

Challenges and Opportunities Ahead

Reitano acknowledges that becoming a major consolidator in the digital health space wasn't a pre-defined goal, but rather an emergent opportunity. From a technical standpoint, Ro is currently integrating three startups into its existing infrastructure, with potential for further acquisitions. Successfully integrating new and existing customers without disrupting service, and reducing the costs of high-quality diagnostic products, will be key challenges.

However, Reitano is optimistic about the potential for scale. Ro’s large patient base, spanning millions of individuals across 50 states, can drive down costs and accelerate the growth of companies like Kit, which was recently valued at $5 billion.