A gut-wrenching day of downsizing at Olive AI Inc. was so large that for speed and clarity employees were notified by email if they were staying or losing their jobs. But founder and CEO Sean Lane said retrenchment is essential so the company can survive and grow again.
The Columbus health IT unicorn cut 450 jobs on Tuesday, but guaranteed at least 10 weeks' pay, more for tenure longer than a year, and two months of benefits for affected employees. About 850 staff remain nationwide, the company confirmed.
"Going forward, we will focus on customer execution and delivering core solutions that deliver value and lead to profitability as a business," Olive said in written response to questions from Columbus Business First.
The company made an all-staff announcement at 11:45 a.m., followed by the round of emails notifying individuals of their status. Affected employees will be able to schedule one-on-one meetings with HR representatives, the company said. Remaining employees will attend a virtual all-staff meeting Tuesday afternoon for more detail on the new structure.
"We understand that communicating this via email is not ideal and, of course, would have preferred to do so individually, but given the size of this change, we wanted to provide clarity as soon as possible," Lane said in the announcement.
"This is going to be an incredibly difficult day," he said. "But Olive’s mission is critical, and we are confident this strategy is the right one. I'm inspired by what we've achieved together thus far and know that with this transformation, we will ensure Olive's impact for many years to come."
The company has raised a cumulative $848 million in venture capital since its 2013 founding. In 2018 it sold off all its prior assets as the former CrossChx, in essence reborn as a startup. As Olive it doubled or tripled sales annually until now, growing to about 950 hospital clients.
Olive's staff is nationwide, about half in Central Ohio. It's still well above the levels committed to in a 2019 state tax credit in which it pledged 175 jobs, and outperformed a city tax incentive that expired at the end of 2020, projecting 68 new jobs.
The company shared Tuesday's announcement exclusively with Business First and through a spokeswoman provided written answers to follow-up questions. Some of the answers repeat what was in the all-staff message, and the company did not answer a question about what severance packages will cost.
The following are excerpts from that written Q&A, condensed:
Is the Worthington HQ project canceled? We are moving forward with the project. This is a long-term investment that will support our vision and strategy. However, our planned investments for immediate improvements to this property will be scaled back.
Do you need to raise more capital, or have operating runway following the cuts? We believe we have the resources and capital necessary to enable us to execute against our strategy and realize our mission for the foreseeable future.
Until now, were you pursuing an Amazon-like approach of building market share at all costs? If so why? We’ve grown rapidly over the last several years in service of creating a new health experience for humankind. Olive’s values of “choose vision over status quo” and “act with urgency” drove us to make significant investments across the most pressing parts of healthcare, scale our teams and move quickly to bring solutions to the market. The realities of today’s economy forced us to rethink this approach.
Are there hospital or insurer clients for whom you’ve overpromised what you’ve been able to deliver? Our fast-paced growth and scope of effort strained our product and engineering resources and prevented us from executing quickly on key initiatives. Going forward, we will focus on doing one thing: driving critical connections between providers and payers. For the provider market, this will start with the Autonomous Revenue Cycle, which includes patient access, reimbursement, and authorization SKUs. For the payer market, we’ll focus on Utilization Management Transformation. (These two groups of products represent 80% of revenue.)
How are Drive Capital and other investors advising you through this crisis? We’re fortunate to have strong and committed board members and investors who have diverse experience navigating different economic environments. They believe in Olive’s vision and are supportive of our plan.
Are Lane or any senior leaders planning to step down? The transformation of our strategy has impacts at all levels of the organization to help us realize our mission. Given our new strategy, there will be some changes to the roles and responsibilities of our executive team.
The company has had many pivots and ups and downs over the decade. What gives you confidence you can grow again from the new core? Prioritizing end-to-end processes that enable payer-provider connectivity as our go-forward strategy provides us a unique advantage in the market, and gives us confidence as we look ahead. Our expectations are high for what we can achieve – we remain deeply passionate about solving healthcare’s biggest problems. Today’s announcement means we will get more precise with how we do that.
