In truth, Alphabet Inc.’s life sciences unit that experimented with diabetes-detecting contact lenses and launched Covid-19 testing programs, says it has raised $1 billion in new investment. led by its parent company, filling its war chest as the health tech market heats up at the top.
As part of Friday’s announcement, Verily also said two executives will leave their positions with the company. Longtime founder and CEO Andy Conrad will become executive chairman, and Verily’s current chairman, Stephen Gillett, will step into the role of CEO in January. CFO Deepak Ahuja is leaving “for another opportunity”.
The capital injection will be used to support the company’s efforts in data platforms, research and technology that aim to make healthcare more individualized, Verily said. The company will also consider further investments in strategic partnerships and potential acquisitions. Verily said the new roles are part of succession planning as the company becomes more operationally and commercially focused.
Verily, formerly Google Life Sciences, was a division of the company’s semi-secret research and development group called Google X, until it spun off as an independent subsidiary of Alphabet in 2015.
The cash injection prepares Verily to better compete as health-tech deal-making accelerates, said Wedbush Securities analyst Daniel Ives. In July, Amazon announced it would acquire clinic chain One Medical in an all-cash deal valued at $3.49 billion.
“It’s an arms race with Amazon, Apple, Microsoft and other tech stalwarts building their strategic partnerships and muscle within the healthcare vertical,” Ives said. “I view the $1 billion in capital as dry powder just to do more M&A and really get more into investment mode at a time when it’s a turning point 12 to 18 months ahead.”
Alphabet is working to push its Other Bets business towards profitability. The group posted an operating loss of around $5.3 billion last year. The developments at Verily reflect a restructuring of Alphabet’s self-driving car unit, Waymo, which took place last year and could pave the way for a divestiture, Bloomberg Intelligence analysts wrote in a note after the news. announcement.
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