“I went outside for the first time in six days,” said Everlywell founder and CEO Julia Cheek, via Zoom from her living room in Austin in late March. “I’ve been working 20 hours a day.” Cheek, 36, was three weeks removed from a decision she’d made for Everlywell to offer tests for Covid-19. In the time since, the company had been battered by conflicting and confusing guidance from the federal government, a national economic tailspin, and frantic pleas for help from the public.
Everlywell makes at-home diagnostic tests for common health issues, such as sexually transmitted diseases and vitamin deficiencies. After a health scare opened Cheek’s eyes to the frustrating costs and lack of transparency in lab testing, she left her role as Moneygram’s VP of corporate strategy to found Everlywell in 2015. By selling tests directly to consumers or through retailers like Target, and then processing the results through independent labs, Everlywell is challenging the status quo in an industry dominated by two massive incumbents, Quest Diagnostics and LabCorp. Recently, the 90-person company was named the third-fastest-growing in this year’s Inc. 5000 Series: Texas.
None of that prepared Cheek for trying to respond to the coronavirus pandemic at a moment when the government was woefully behind on testing availability and infrastructure–even as hospitals were reeling and patients were dying.
I had no intention of our getting involved in Covid-19 testing.
I was following the news to the same extent that I think most Americans were when the disease was starting to become a problem in China. Back in the third week of January, our chief medical officer, Frank Ong, and I were flying from Boston to Chicago. He and his wife are both doctors, and he said, “You know, Julia, this virus in Wuhan, I’ve been watching it, and I believe it could become a global pandemic.”
Not many people were really saying that at that point, especially in the U.S. He’s a balanced and measured person, so when I heard him say it, I took it quite seriously.
For the next month, the disease started spreading around the world, and a level of hysteria set in, but I still didn’t realize we’d be getting involved. At the end of February, I was on a podcast, and the host asked why Everlywell wasn’t offering Covid-19 tests. I said, “We’re a startup. How could we ever get involved in that?” Not because I thought that startups can’t be innovative and respond, but because our size versus the scope of the problem seemed like a David and Goliath situation. We’re constantly talking with our lab partners, and it was clear everyone kind of assumed the government and the two dominant lab companies, LabCorp and Quest, had this.
A few days later, on February 29, the FDA issued its emergency use authorization for testing. [An EUA is official guidance to accelerate the availability of countermeasures in an emergency.] It suddenly became very clear that the U.S. had not adequately prepared either the public or the private sector for what was going to be needed to respond. The numbers were starkly terrible for testing–a huge capacity shortage. The number of people getting tested in the U.S. was in the hundreds.
It was a smart move to pull other labs in. But this testing takes time to validate, and it takes time to get right.
About a week later, on March 5, I saw that the telehealth startup Ro had released a really cool symptom checker. It led me to feel urgently that we needed to respond. The situation was dire, and it was specific to our industry.
I started looking at the numbers, and I realized that we, as a small startup, could actually make a really big impact here. We are this interesting middle layer that connects smaller independent labs with demand and then optimizes for capacity and need.
The next day, Friday, March 6, I called our board and asked for approval to give away a million dollars–which makes no sense, because we’re a startup that needs the money. The idea was to create an incentive for smaller labs around the country to focus on this problem. They would apply for development grants from us so they could ramp up test production. The board said, “This is bold leadership. You should do it.”
In about two hours, we created something like an XPrize challenge. We laid out very strict criteria. You have to file and meet all the FDA EUA requirements, you have to be able to process 5,000 samples a day or be able to ramp up to that, and so on. Qualifying labs would get cash grants of $100,000 to $250,000 from us, up to $1 million total. I wrote a Medium post to announce it, and it went up on Sunday.
As Covid-19 crippled Italy, home to one of the world’s key suppliers of nasopharyngeal test swabs, Everlywell staff had to scour the planet to find a new supply for the company’s Covid-19 test kits.COURTESY EVERLYWELL
As a venture capital-backed startup, Everlywell has invested heavily in its growth. The company is not currently profitable, but Cheek says it should be within two years. Everlywell has raised over $50 million from investors, most of it less than a year before Cheek made the decision to get into Covid-19 testing. That cash made it possible for the startup to put up $1 million for the challenge. But, as Cheek made clear, the economic downturn will pose stiff challenges to the company, and a seven-figure investment with no direct effect on the bottom line was far from the obvious move.
Ever since it became clear that the pandemic would create an economic crisis, all of my investors have been saying we need to plan to have no more capital for the next 18 months, and we need to be ready to cut 25 to 50 percent of our planned spending. It’s not about growth right now. It’s about survival.
So we found ourselves having these two very different conversations. “Hey, we have to be planning for doomsday and how we’re going to survive.” And then, “Hey, this is a million dollars in our bank account that we are going to give away.”
So why do it? One reason was that we had a responsibility. A second was that we believe our model–home health testing, telemedicine–has such importance to the future of health care. Being able to show its real public health value during a crisis would be very validating.
Lab testing is not sexy. I often talk about how expensive lab testing is for people–how the lack of access to lab testing and the lack of pricing transparency is a public health crisis. People don’t always listen. It’s boring. I get it.
This is not how I wanted lab testing to become part of the consumer conversation. But it’s now here in this way. It’s our job to respond.
I think that no matter what happens in the future, there will never be a bigger moment for this company, full stop.
Cheek and her executive team held a companywide town hall the afternoon of March 6 and announced that they were heading into a period that would require enormous effort from everyone. That same day, the city of Austin canceled the SXSW festival that was set to begin the following week and bring to town more than 200,000 people for 10 days of close-quarters networking and revelry. It became clear that everyone would soon be working from home. The following Friday, the city shut down its schools. As Everlywell was fielding responses to its coronavirus testing challenge, the whole office packed up and headed to Zoom.
To be frank, a million dollars should not have gotten a significant response. In the scheme of biotech R&D, that’s a pretty small amount of money. But the independent labs we were targeting are often smaller facilities, regional labs, and they’re often slim-margin businesses. So the post got a lot of traction in that community. Our clinical team and our chief medical officer spent the entire week on calls with labs.
By Friday, March 13–the day we left to work remotely–we had so many applications from labs, it was already clear who the first grant recipients would be. I sat down with my leaders and I said, “OK, by what date do we want to try to have something out there? What will it take in terms of supply chain or tech build?” Our normal timeline would be six to 12 weeks, but someone said, “Is there any way that we can pull that in?”
Let me be clear: Fully integrating all these labs is a lot of work. Standing up a digital experience to communicate test results is a lot of work.
I said to the team, “I’m going to start with the soonest possible launch date, next Friday, the 20th; I need each of you to tell me why not. Then, I’m going to move it back.” Everybody just looked at me. I said again, “Next Friday, the 20th.” And they all said, “We can get it done.”
On Wednesday of that week, we announced that we were going to have at-home test kits ready for consumers on the following Monday. I had talked to a reporter from Time about it. I got a text from my CFO that said, “I’ve never been prouder of my CEO.” I had no idea what he was referring to; I was totally focused on what we had to do and didn’t realize that the article had gone viral.
I had no appreciation for the magnitude of what was about to happen.
I started to receive hundreds of emails from people begging me for tests. This is in addition to all the emails going to the rest of the team, going to the customer care team. It was wonderful–and heartbreaking–but also frankly overwhelming, because we still had a lot of work to do.
Health care providers and frontline workers were desperately saying, “We can’t get access to testing, and we’re in a highly affected area, and we’re triaging people who are coming in, and I think I have it myself, and I’m still working on the frontlines.” An ER doctor on the frontlines in San Francisco had no tests for her patients. A community hospital for the Cherokee Nation had not been allocated any testing and was dealing with community spread. Nursing homes. I’m getting texts from doctors, screenshots of texts from people who know doctors.
I’m not a particularly emotional leader. I generally don’t cry a lot. I think I’m pretty calm in a crisis. But for me personally, it’s been a lot to process.
As news that Everlywell would be the first American company to offer home testing spread around the country, the FDA made an announcement that, in fact, it would not be allowing home testing. It was one step in a dizzying series of policy shifts that left Cheek’s team scrambling to understand what they could and couldn’t do. Meanwhile, questions and criticism–including from the House Oversight Committee–started pouring in to Everlywell, alongside the pleas for help.
The number-one area of criticism from consumers was the price. We were offering the tests for $135, which was the cost to run a single test: the lab, the components, the overnight shipping. We had never considered doing this for profit. And we’ve beat up our partners enough and lowered the cost enough to where they’re not either. Still, I knew we’d get criticized for it.
When Congress passed its coronavirus relief bill, it promised that testing would be free for all Americans. But it didn’t make clear how businesses producing tests would get paid. We believe that testing in this situation should be free, but we can’t do it for free. Was the answer that we just shouldn’t offer the test? Is that really the solution?
Just like I knew price would be one of the main pieces of feedback, I also knew that test accuracy would be a concern. Our partner labs would be testing samples that consumers self-collected: How would those samples compare with samples taken in a clinic? We’d been designing the process to have the lowest false-negative rates possible. We had plans for that.
The third piece of feedback we heard was, “Hey, there’s a scarcity of resources. What’s your responsibility to allocate to the frontlines?” That, coupled with the personal emails I was receiving, led us to decide soon after the launch announcement that we’d allocate a portion of our tests to health care providers.
We were marching along with that plan when I started seeing several other private companies announce home tests.
I thought that we had to be launching with the CDC-recommended collection material [cell samples collected by a lengthy cotton nasopharyngeal swab that has to be pushed far up into the nose, where it meets the throat]. These companies were launching with, like, a cheek swab, or saliva collection. On top of that, there had been a proliferation of at-home rapid tests, which are like pregnancy tests, where you get the results right there in the home. There have been other companies that have tried to offer either internationally approved tests or fraudulent tests, claiming they’re approved for sale in the U.S.
I was confused. Is this a state-level issue? Is it a federal issue? We have great counsel and great compliance advisers, and we had been using the federal guidelines. But the guidelines were being updated every two to five days–so we’d regroup and review them again. On Wednesday, March 18, President Trump said the administration was looking at “self-swabbing” as a promising development. I finally decided there was too much inconsistency: We had to reach out to the FDA.
Almost immediately after I emailed the agency on Friday–they hadn’t seen my email, I’m sure–the FDA issued a statement that it hadn’t approved at-home tests for Covid-19.
There were two reasons for the statement. One was these fraudulent rapid tests. The other was that they believed in the potential of the right kind of at-home tests but wanted time for “actively working with test developers in this space.”
I spent two hours on the phone that evening with the FDA. We wrapped up at 10:30. By then, we had no question that–given the price feedback, the pleas from health care providers, and the changed guidance from the FDA–we would not launch with consumers until we had more clarity. Instead, we would expand our allocation of tests to health care providers.
We launched on Sunday, March 22 at 10 p.m. Two of our eight partner labs were up and running. So we had the capacity to send out 5,000 or 6,000 kits per day. We had, over the weekend, signed five contracts with health care providers.
These are organizations that range from 200 workers to 10,000. We prioritized as best we could on the basis of the highest need areas around the country. In a day, over 500 organizations submitted requests for over a quarter of a million kits. Once all our labs are set up, we can get to about 200,000 to 250,000 tests per week.
As we were working on all of that–and talking every day with the FDA and with local and federal legislators, still trying to get the consumer at-home tests launched–Vice President Pence announced that Americans would soon “be able to test themselves and send it in.” That was two days after the FDA had said no. That caused more confusion, because the next day, it turned out he meant the FDA would approve self-swabbing with shorter swabs in a drive-through clinical setting, not at home.
There’s been a sense of whiplash every 48 hours or so.
THE WAY FORWARD