When the COVID-19 pandemic began, it didn’t take long for health companies to start offering tests for people who didn’t want to wait in long lines at public health facilities.
Prices for single PCR tests exceeded $100 in most cases, and Calgary-based Ichor Health was one of the companies generating lots of revenue through these test sales.
The company began operating before the pandemic but soon ballooned to open five Alberta clinics and installed new machinery to facilitate testing.
“We had about $150,000 to $160,000 a month in overhead costs that was being supported by COVID testing,” said CEO Mike Kuzmickas.
But with the number of reported cases declining across the country, along with restrictions that require these tests, the gold rush is now in the rearview mirror and companies like Ichor Health are trying to pivot into other services in order to stay afloat.
Kuzmickas said the plan was never to live off of COVID-19 testing forever, but the drop in revenue was far steeper than anticipated.
“I got stuck in a position where I had a very high cash burn rate with significantly less revenue coming in. So, in order to live to see another day, so to speak, we had to basically shut everything in, close the offices, lay everybody off.”
Ichor is now in “hibernation,” according to Kuzmickas, and hoping to relaunch again in the future by offering molecular tests for various other diseases. As for when that happens, the CEO is not sure, and there currently doesn’t seem to be much demand.
“I would say I dramatically overestimated people’s willingness to pay for preventative testing out of pocket,” Kuzmickas said.
‘Not the same as before’
Even a company labelled as a “disruptor” by its founder for offering COVID-19 tests at a far lower price than average has struggled lately. Art Agolli, CEO and founder of Equity Health Services, said his company has had to reduce staff in the past few months and is now looking to use its technology in new ways.
“We’re diversifying in other areas … DNA testing, cancer testing, things like that,” said Agolli.
Agolli said there is still some need to test travellers going to countries that require molecular tests, but the demand will likely never reach the same level as it did during the height of the pandemic.
“It’s not the same as before. A lot of it has to do with the mandates from different governments for travel that have been removed.”
Agolli and Kuzmickas agree the pandemic may have helped develop testing technology so it can now be used for other purposes. Going forward, Agolli said he hopes there’s less of a focus in the medical testing industry on just making profit.
“Yes we’re there to make a profit, but we felt in a pandemic as a health care company it’s not our business to gouge,” he said.
“This business doesn’t have to be this expensive and doesn’t have to hurt the pockets of Albertans and Canadians.”