Business & Investment

Alphabet’s Verily is betting on long-term rewards from Reuters virus testing deals

© Reuters. During the COVID-19 outbreak in Pasadena, vehicles are lined up for a self-swab coronavirus disease (COVID-19) test at Rite Aid Drive-Through.


Palais Dave

Oakland, CA (Reuters)-Alphabet (NASDAQ :) Inc’s Verily is a healthcare venture that is one of the most prominent “other bets” of tech giants, and the coronavirus outbreak opens up immediate business opportunities. Brought.

Since February last year, the company has shifted many of its approximately 1,000 employees to developing software for government and employers to manage coronavirus testing.

Immediately landed major customers, including California. Records show that $ 49.6 million was paid to schedule virus tests using baseline software.

The small deal included a previously unreported $ 3.1 million grant from the US Centers for Disease Control and Prevention to operate a California testing site.

Indeed, executives said the pandemic job was an opportunity to demonstrate the company’s capabilities and attract new customers.

“Conversations flow naturally that way,” said Dr. Jessica Mega, Berrilee’s Chief Medical and Scientific Officer.

Critics say this effort was another pastime for Berrilee and bounced between dozens of projects without generating a stable source of income. The venture has raised more than $ 1.8 billion from outside investors, including Alphabet and private-equity fund Silver Lake.

Turning temporary buyers into long-term customers may be wishful thinking, according to four industry analysts.

Two former executives and current employees have another one-time opportunity rather than focusing on attracting regular subscribers to the software for clinical research, disease management, and other tasks. Criticized the company for using.

“I don’t think COVID will give them a significant boost,” said one of the people speaking on anonymous terms.

CEO Andy Conrad told employees that Verily is pushing for an initial public offering. More consistent sales are essential to a successful debut on Wall Street.

Verily’s overall sales are not disclosed by Alphabet. Evercore ISI analyst Kevin Rippey estimates total “other bets” revenue in 2020 to be around $ 650 million, with Verily contributing less than $ 175 million. Former executives said Berrilee’s actual earnings were higher, and another analyst suggested that $ 200- $ 300 million would be more realistic.

“We had to help”

Spinned out of Google in 2015, Berrilee develops devices and software aimed at improving data collection, treatment, research and patient care.

With healthcare companies, including collaboration with DexCom Inc on a miniaturized blood glucose monitor and clever and high-profile experiments with Alcon (NYSE :) AG to create smart contact lenses for similar measurements. Revenue from collaboration is skyrocketing.

But Berrilee’s economic future depends on baseline-led software products. This helps pharmaceutical companies enroll participants in clinical trials and analyze research data. It aims to reduce paperwork and site visits compared to traditional methods.

After governments such as California began seeking help, Mega said the company had reworked its baseline to schedule coronavirus testing. The software is also used to schedule the 460 Rite Aid (NYSE :) Corp pharmacy, which provides tests as part of a partnership with the Department of Health and Human Services.

The baseline allowed about 2 million people nationwide to be tested last year, she said.

Dr. Vivian Lee, President of Health Platforms at Verily, said the government’s COVID-19 project helped jump-start individual test software called Healthy at Work and Healthy at School.

According to Berrilee, the new tool has 20 customers, including Brown University and some biotechnology companies. According to previously unreported records, the University of Alabama at Birmingham has spent $ 6.9 million on Healthy at School.

Ralph Zottra, vice president of the university, said Berrilee is considering software to verify if students have been vaccinated because the company is a “good partner.”

When the need for coronavirus testing software is gone, Verily aims to move some new customers to Onduo, one of its core products alongside Baseline. The program includes sensors, diet coaching, and other personalized tools that insurance companies and employers can provide to manage chronic illness and general health.

Onduo counts insurers such as Walgreens Boots Alliance (NASDAQ :) Inc and CareFirst as customers.

Still, both Onduo and Baseline continue to be very small players in the healthcare software market, worth more than $ 100 billion annually in the United States, according to researchers, Livongo and Omada Health Inc of Teladoc (NYSE :) Health Inc. Some large rivals such as last year’s pandemic resources.

Livongo, which competes directly with Onduo, reported that sales in the first three quarters of 2020 more than doubled year-on-year to $ 267 million.

Mega defended Berrilee’s move during the greatest public health crisis of the century.

“Over the company, we raised our hands,” she said. “We had the opportunity and we had to help, which is accelerating our core business.”

Alphabet’s Verily is betting on long-term rewards from Reuters virus testing deals Alphabet’s Verily is betting on long-term rewards from Reuters virus testing deals

Back to top button