Alphabet's Verily signs L'Oreal in multi-year skin deal as losses grow

Alphabet Inc's health tech arm Verily on Thursday announced its newest tie-up in its search for sustainable revenue, saying it would study skin health and explore new products with cosmetics maker L'Oreal SA. Verily previously has drawn criticism from its former executives for signing flashy, one-off research collaborations instead of focusing more attention on landing recurring subscribers to its software for clinical research and disease management.

Alphabet Inc's health tech arm Verily on Thursday announced its newest tie-up in its search for sustainable revenue, saying it would study skin health and explore new products with cosmetics maker L'Oreal SA.

Verily previously has drawn criticism from its former executives for signing flashy, one-off research collaborations instead of focusing more attention on landing recurring subscribers to its software for clinical research and disease management. The critics have said Verily's approach has left it with intermittent revenue and further off from generating profit.

Verily last year booked about $400 million in revenue, according to a source briefed on the figures. Over a quarter of sales came from the low-profit-margin business of administering COVID-19 tests for outside organizations, and Verily's overall losses widened significantly compared with 2020, the source said. The company does not publicly report financial results and declined to comment on them.

It also declined to disclose terms of what it called a "strategic, multi-year partnership and research collaboration" with L'Oreal. But project plans include both a long-term software component and co-development of a new telecare service for dermatologists and consumers. The deal is Verily's first with a beauty company and follows years of talks with L'Oreal. Corporate sibling Google, which is testing an artificial intelligence tool for identifying skin conditions https://www.reuters.com/article/ctech-us-tech-fitzpatrick-exclusive-idCAKCN2DU0UA-OCATC, is not involved, executives said.

Dr. Amy Abernethy, one of Verily's presidents, said the clinical studies program she oversees would underpin a longitudinal examination into skin issues and environments and behaviors possibly affecting them. Results could aid development of diagnosis and treatment options. Existing technology struggles to differentiate between similar-looking skin conditions, said Abernethy, who has worked closely with skin cancer patients.

By working together, the companies' aim is to "power every single person with access to the most inclusive and personalized information on their skin management," said Barbara Lavernos, deputy chief executive officer at L'Oreal. Verily's deal follows a similar partnership unveiled last August with Colgate-Palmolive Co to study oral health.

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