Ro, a direct-to-consumer health company valued by its investors at $5 billion, is nearing a deal to acquire at-home sperm storage upstart Dadi, per multiple sources familiar with the unicorn’s business. The deal would be Ro’s fourth acquisition in the past 12 months, along with Workpath, Kit and Modern Fertility.
The deal is near close but could still fall through. It’s unclear how large the deal is, but one source estimated that the transaction will close at $100 million. Ro and Dadi did not immediately respond to request for comment.
Dadi launched in 2019 with a temperature-controlled at-home fertility test and sperm collection kit, with a mission to remind men that “infertility isn’t a women’s issue, it’s both a men’s and women’s issue,” according to co-founder and CEO Tom Smith. The startup has since raised $10 million in known venture capital, per Crunchbase, from investors such as firstminute Capital, Third Kind Venture Capital and The Chernin Group.
Dadi’s closest competitor is Legacy, which has similarly raised venture capital for a sperm-testing and freezing service. Legacy won TechCrunch’s Startup Battlefield competition at Disrupt Berlin 2018 and has raised over $20 million to date from investors like FirstMark, Y Combinator and Justin Bieber.
The acquisition comes amid rising tensions at Ro, where current and former employees say that the healthcare company has struggled to keep up with the demands of new growth-stage goals. Many employees, some of whom have since left the company, said the tipping point for them was when Ro pursued rapid acquisitions for growth, instead of fixing culture and operations for longtime teams within the company.
“Each acquisition felt like it came out of nowhere,” a recently resigned employee interviewed by TechCrunch said about the cadence of deals. “We’ve never really integrated with any of our companies that we’ve acquired; so what are we doing this for? The focus [of the company] would shift a lot because of these acquisitions, and, leaders would say ‘this is a growth company, that’s what happens.’”
That said, two of Ro’s latest acquisitions seem to mesh well with Dadi when it comes to strategy. Kit, which Ro acquired in June, is an at-home diagnostics company with an array of customizable products, from finger prick blood tests to weight measurement tools. The startup, similar to Dadi, wants to make it easier for consumers to be proactive about their health within the comfort of their own homes.
“There’s a fragmentation of care, fragmentation of data and providers aren’t kept in the loop,” Zachariah Reitano, co-founder and CEO of Ro, said about the Kit acquisition. “And we have so much work to do, but Kit is such an important and essential piece in that infrastructure to again bring more and more of a patient’s care under the same roof.”
Dadi will also bolster Ro’s apparent efforts to move into the fertility space, underscored by its $225 million buy of Modern Fertility. Led by Carly Leahy and Afton Vechery, Modern Fertility offers an at-home fertility test for women as well as a slew of personalized support for reproductive health issues.
And of course, Ro started out as a business in the men’s health space by focusing on erectile dysfunction. Its ED line continues to account for half of the health tech unicorn’s revenue.