Back in August, the company formerly known as Google shocked Wall Street by announcing a massive restructuring. It was to morph into a holding company called Alphabet Inc (GOOG, GOOGL), that held different independent companies.
As you know, Google began as a simple search company. But its interests were wide-spread, and 11 years after going public, it found itself invested in a wide variety of disparate fields: Venture capital, driverless cars, an upstart cable company, and the life sciences division all strayed from its search business.
Yesterday, GOOG announced that its life sciences segment would be organized into an independent company called Verily. As you might expect from a Google offshoot, the company has some interesting and ambitious goals. Here’s what investors should know:
Verily: Understanding Disease on an Individual Level
First and foremost, investors should know that Verily’s financials won’t be broken out in quarterly reports. GOOG’s core search business will be broken out, then the rest of Alphabet’s results. But that doesn’t mean Verily won’t have an impact on the business.
GOOG’s Verily, which means “truly,” says its mission is “to bring together technology and life sciences to uncover new truths about health and disease.”
It will operate across four key segments: hardware, software, clinical, and science.
Hardware: The flagship product here is the contact lens with a built-in glucose sensor, aimed at helping those with diabetes keep tabs on their levels throughout the day. “Smaller, more powerful, and more convenient” devices and tools are the end-goal.
Software: It shouldn’t be surprising that GOOG’s Verily is software-heavy. This is where the company’s vision of understanding why diseases progress differently in different people comes to fruition. It’s also the main reason Verily could end up revolutionizing healthcare if its proactive philosophy takes hold. After all, “information exists in every aspect of our bodies,” GOOG reminds us, and Verily is developing algorithms, platforms, and machine learning techniques to analyze and use those data.
Clinical: This is where GOOG partners with other bigwigs in private industry, government, and academic fields to study the next big thing. Clinical is also pursuing what it calls “The Baseline Study,” which it describes as “a multi-year initiative that aims to identify the traits of a healthy human by closely observing the transition to disease.”
Science: The science team at Verily has some verily lofty goals:
“Our science team is pursuing research that will help us precisely understand the processes that lead to conditions like cancer, heart disease, and diabetes. We develop automated experimental and computational systems biology platforms and life sciences tools that provide more information about biological function in health and disease than has ever been available.”
Okay then!
At the end of the day, GOOG’s Verily is in good hands. CEO Andy Conrad, Ph.D., is former chief scientific officer at LabCorp (LH), and is one of the handful of executives that will benefit from the new Alphabet structure. Larry Page and Sergey Brin wanted to retain their top brainy talent, and by turning Google into a holding company with a bunch of individual companies run by different CEOs, GOOG is better equipped to do that.
Advancements in medicine take time, and given the constraints of testing and FDA compliance, leaps and bounds happen over years, not quarters. But with a bold mindset and a better ability to focus on just life sciences now that Verily’s an independent company, investors may soon have to start thinking of GOOG as one part tech company, one part healthcare juggernaut.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
