Alphabet’s Verily Benefits From Virus-Testing Deals And Hoping For Long-Term Payoff

The novel coronavirus pandemic has offered an immediate business opportunity to Verily, a healthcare venture of Alphabet Inc and is considered to be one of the most prominent among the “other bets” of the tech giant.

In a major shift in its core operations, the company deployed many of its about 1,000 employees, who were previously engaged in the development of software for governments and employers, to manage coronavirus testing starting last February.

The company was very quick to strike deals with a number of customers including the state of California in a deal which was $49.6 million, according to records, for allowing the state to utilise the company’s Baseline software for schedule of Covid-19 tests.

A $3.1 million grant from the National Foundation for the Centers for Disease Control and Prevention, which was unreported previously, for operating California testing sites, were among the smaller deals that the venture secured.

The company was able to showcase its capabilities and thereby appeal to new customers by the work it had done during the pandemic, said executives of Verily.

“The conversations are naturally flowing in that way,” said Dr. Jessica Mega, Verily’s chief medical and scientific officer.

Critics however argued that this was but only another of the many new projects that the company takes up and it has not been able to stick to one which can assure steady flow of revenues. Alphabet and other, including private equity firm Silver Lake, have invested about $1.8 billion in the venture already.

According to analysts, the company could find it hard to convert one time temporary customers into long term ones.

Criticising the latest pandemic era move of the company, reports quoted two former executives and a current employee, who said that the company was getting busy in dealing with one time customers and should rather focus on making recurring customers who would subscribe to its software for clinical research, disease management and other tasks.

“I don’t think COVID will give them significant tailwinds,” said one of the people, speaking on the condition of anonymity, claimed reports.

Verily is moving towards launching of an initial public offering, the company’s Chief Executive Andy Conrad has told employees. He has also pointed out that it was important for the company to find out more consistent avenues of sales as that would be essential for the company’s IPO to be successful.

Alphabet does not disclose the overall sales figures for Verily.

According to estimates made by Evercore ISI analyst Kevin Rippey, the overall revenue for the “other bets” of Alphabet in 2020 was about $650 million with $175 million being contributed by Verily.

While reports quoting the company’s former executives hinted that the actual revenues for the company to be higher, another analyst estimated the company’s 2020 revenues to be between $200 million to US$300 million to be more realistic.

Devices and software aimed at improving data collection, treatment, research and patient care are developed by Verily which was spun out of Google in 2015.

(Adapted from

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