What Happens to All Those Covid Test Sites After the Pandemic
(Bloomberg) -- Early last year, at the onset of the coronavirus pandemic, a small genetics startup called Color Genomics set up a Covid-19 testing lab. It was the first step toward what became a full transformation of its business.
The company, now known as Color Health Inc., plans to announce a new investment Tuesday that values the startup at $4.6 billion, triple what it was just 11 months ago. Now Color must prove that a business built around a pandemic will serve a purpose when the virus is contained.
Color’s post-pandemic plan is based on the promise of another transformation. The startup currently has more than 6,500 Covid testing sites at offices, schools and elsewhere, as well as 500 vaccination sites across the U.S. Color will expand many of these locations for all sorts of health care purposes, such as administering flu shots or blood-pressure tests. The idea is to offer conveniently located outlets for routine health services, allowing workers and parents to cut out special trips to clinics.
“Some of the biggest challenges in health care are not the science but gaps in access,” said Othman Laraki, the chief executive officer of Color. “We view technology as a mechanism to broaden access.”
Laraki and Elad Gil, both serial technology entrepreneurs, co-founded Color in 2015. Their genetics testing business had been largely eclipsed by another, older Silicon Valley company, 23andMe Holding Co. But they were early to recognize the threat of Covid-19 and the opportunity it created for their business. Although Color still conducts genetic testing, Covid-related projects now account for more revenue. Last year, the company was profitable and expects to be so again this year.
Investors rewarded Color’s Covid pivot with a $1.5 billion valuation in January. This week’s deal lifts expectations further. Kindred Ventures and T. Rowe Price Group Inc. led the latest round, with participation from General Catalyst, Viking Global and Laurene Powell Jobs’s Emerson Collective. Color raised $45.7 million, with the total soon expected to reach $100 million, the company said.
The deal is further evidence of a boom time for health care businesses and for startups at large. U.S. digital health startups have raised $12.58 billion to date in 2021, according to PitchBook data, up from $6.52 billion for all of last year and $4.04 billion in 2019.
OneMedical, Optum and Ginkgo Bioworks compete in various ways with Color, but Laraki and his backers said the biggest competitor is health care orthodoxy—setting up an appointment at a doctor’s office and going through an insurance company. Color’s Covid services are offered by the California and Massachusetts state governments, at universities including Harvard and Stanford and inside companies such as Cisco Systems Inc. and Salesforce.com Inc.
Color’s latest round is all primary capital, Laraki said, meaning the cash is going into the company rather than buying shares owned by founders and early employees. No additional seats were added to the four-person board, which is comprised of himself, Color co-founder Gil, BlackRock Inc. co-founder Susan Wagner, and General Catalyst investor Hemant Taneja.
People who grew accustomed to having health services at their workplaces or schools will expect to have it long after the pandemic is over, said Steve Jang, a managing partner at Kindred Ventures. “This transformation is not just during Covid,” he said. “This is going to stick.”
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