LVGO - Q120
PR: https://ir.livongo.com/news-releases/news-release-details/li…
Fool take (Crumly): https://www.fool.com/premium/coverage/investing/2020/05/08/c…
BreakerForce recap: https://discussion.fool.com/livongo-q1-review-34497163.aspx
Buynholdisdead recap: https://discussion.fool.com/lvgo-q120-34522030.aspx
Saul’s take and buy: https://discussion.fool.com/why-i-took-a-position-in-livingo-thi…
CC transcript: https://www.fool.com/earnings/call-transcripts/2020/05/07/li…
Digized on seq adds spiking in Q1: https://discussion.fool.com/no-problem-i-added-some-more-today-a…
gmcnatt take: https://discussion.fool.com/matt-already-pointed-out-but-worth-r…
AnalogKid take: https://discussion.fool.com/i-own-a-large-chunk-of-lvgo-it39s-ac…
AnalogKid on moat: https://discussion.fool.com/quotwhat-exactly-is-livongo39s-compe… [under-rated post!]
Revenue 68.8M +114.6%, +27% seq !!
EVA (Est Value of Agreements) 89M +85%
Adj Op Inc 2.5M (vs -8M) swung pos
… margin +3.7% (vs -28.9%) !! +3260 bps
Adj Gross Margin 74.4% +330bps, -548bps seq
Adj EBITA 3.8M (vs -9.2M) swung pos
Adj EPS 0.03 (vs -0.49) swung pos
Opex 57.5M +50%
… 23% of rev -2100bps !!
CFFO -10.4M (vs -25.2M)
FCF -13.5M (vs -26.8M)
… margin -19.6% (vs -83.6%)
Cash 368M
Custs 1252 +77% !!, +44% seq
- Diabetes Members 328K +100% !!, +32% seq
$NER 110%
- 18% of clients have >1 solution
- services are more vital under COVID-19 pandemic, as chronic disease sufferers are so at risk (78% of COVID-19 ICU visits were from those having pre-existing or chronic conditions)
- added new solutions for Diabetes Prevention and Behavioral Health
- new modules for to manage stress & anxiety from COVID-19 only 3% of BH content but driving 25% of member views
- partnered with Dexcom to hook into their G6 glucose monitor https://www2.livongo.com/news/livongo-and-dexcom-partner-to-…
- partnered with Prognos Health to aggregate clinical lab data (opt-in program over members in partner labs) https://ir.livongo.com/news-releases/news-release-details/li…
- first provider selected into new curated healthcare platform Welltok from the Health Transformation Alliance (HTA) https://www.prnewswire.com/news-releases/the-health-transfor…
- major new cust Kaiser Permanente, signed up for Behavioral Health
- major new cust Govt Empl Health Assoc non-profit provider, signed multi-condition contract (largest ever) to cover their 2M members
- FDA granted emergency period for in-patient facilities to use LVGO’s diabetes meter
Investor slide deck: https://ir.livongo.com/static-files/9d0d9694-2ab8-4699-be48-…
- 328k diabetes members, vs 31.4M total
- 500k new diabetes diagnoses per yr
- 1252 clients +44% QoQ
- Q120 rev 68.8M +115%
- $NER 110%
My stance: I now own Livongo. This is not a biotech hinging on a binary outcome – this is a med-tech company using hardware and ML/AI to improve lives, by managing a user’s existing health condition on their ever growing “Applied Health Signals” platform. They are gaining customers at a huge rate, likely due to their heavy focus on proving ROI for companies and healthcare providers. I had them on watch list a while but am always drawn to those pesky enterprise SaaS providers over it. However, these numbers from the current Q are too good to pass up. I wish I would have acted faster (before the massive rise over past few weeks), but there is no better time than now to buy in to their continued execution from here.
[I’d really like to thank Saul’s teachings for this shift in my investing behavior. As a contrast, my typical reaction to a price rocketing up after stellar earnings is “I’ll just wait til it has a FUD price stumble and get in then” – which then is a moment that never comes (or does and I’m not paying attn).]
Look at top line revenue growth in tandem with the massive drop in opex as a % of rev, as a perfect example of what we call OPERATIONAL LEVERAGE. The company is massively ramping top line, while drastically reducing the expenses needed to generate that hugely increasing revenue. I like seeing this very, very much – so much so that I cannot put off owning this company any longer. This leverage then lead to all the bottom line metrics swinging positive last Q and this Q. Op and Cash flow margins all trending the right way.
It’s a smallish position, as ultimately I am not sure how far LVGO can go (customer-wise), and unlike enterprise SaaS providers, scaling up covered members has its limits with its platform. There is a process involved, so they have to SLOW the on-boarding of new members in order to temper it’s own platform growth! [If that is the extent of its “problems” here … sign me up.] So far, their game plan (of getting more and more customers that are covering their members) has been stellar. More diseases & conditions can be added from here, and every bit of data they are collecting only strengthens the ML-driven system’s power. It’s not much of a moat (others can and are capturing their members’ data and building ML engines over it), but their experience in this and first-mover advantage has really created a nice core platform that can only expand from here as they become the go-to market leader in this new frontier.
CEO: In particular, we believe remote monitoring is rapidly becoming the new standard in health and care. Livongo’s connected technology allows our members to track vital signs of interest in maintaining health. … There is no question in our mind that this pandemic has accelerated a more extensive virtual care delivery model. Remote monitoring is here to stay, and we expect it to become the standard of care for the most vulnerable and expensive populations.
I expect lumpiness from here, as customer sign-ups & member on-boarding waxes and wanes. If they show signs of expanding into new conditions to cover, I would likely increase my position from here. Clearly it’s a new reality from this pandemic, and the populace has now had a sea change in their options of ‘tele-health’ vs in-person visits. This is a great trend, and LVGO is at the forefront. I like that, tech-wise, the sky is the limit in what they can cover to help members manage their own health. And I expect this company to continue tying their platform into more and more to smart-watch and medical monitoring devices from here.
-muji
long LVGO 3.5% (so far)
