Alphabet's Verily Exits Insurance Business: A Strategic Pivot Towards Precision Health

Alphabet Inc.'s health tech subsidiary, Verily, has announced its decision to sell its insurance business, Granular Insurance Company, to Elevance Health. This strategic move aligns with Verily's long-term goals and the broader healthcare landscape, as the company refocuses on its core mission of bringing the promise of precision health to everyone, every day.

Verily, launched in 2015 as a moonshot within Alphabet's innovation lab X, has a history of pivoting to address emerging needs and opportunities in the healthcare sector. The company initially developed hardware like continuous glucose monitors but shifted its focus to pandemic response during the COVID-19 outbreak and later to precision medicine in 2022. The sale of Granular Insurance Company is the latest in a series of strategic changes at Verily, which has also included slashing its workforce, restructuring its business, and overhauling its executive leadership.

Granular Insurance Company, launched in 2020 with financial backing from the commercial insurance unit of the Swiss Re Group, offered self-funded employers a data-based approach to managing risks, costs, and achieving better outcomes. The company's success and growth, with revenue rising nearly sixfold through the first nine months of 2023 to $151 million, made it an attractive acquisition target. However, Verily's decision to sell Granular aligns with its long-term goals of focusing on precision health and leveraging strategic partnerships.

The sale of Granular to Elevance Health brings potential synergies and influences the competitive dynamics in the employer stop-loss insurance market. Elevance Health's extensive customer base in the healthcare industry could provide Granular with access to new clients, allowing it to grow its business more rapidly. Additionally, Granular's use of data and technology to better protect self-funded employers from cost volatility could complement Elevance Health's existing capabilities, potentially attracting more clients and increasing market share.



The acquisition could also lead to enhanced risk management for Elevance Health, as Granular's focus on the 0.6% of the employee population driving 35% of employer healthcare expenditures could help improve underwriting processes and reduce overall claims costs. Furthermore, the combination of Granular's innovative approach to stop-loss insurance and Elevance Health's resources could lead to the development of new products and services, helping Elevance Health differentiate itself from competitors and attract more customers.



In conclusion, Verily's decision to sell Granular Insurance Company to Elevance Health is a strategic move that aligns with the company's long-term goals and the broader healthcare landscape. The acquisition brings potential synergies and influences the competitive dynamics in the employer stop-loss insurance market, as Elevance Health gains a foothold in the stop-loss insurance market and Verily refocuses on its core mission of precision health.