Ever since I heard of this company something tweaked my BS detector, so I decided to do a little digging around today to see if all the hype is justified or if my spider senses may be onto something. As you can tell from my subject line, I wouldn’t touch this company. In fact, if I shorted stocks I’d short it.
Below is text from Livongo’s About Page.
The bold are my BS triggers which I’ll discuss briefly below…
Livongo offers a whole person platform that empowers people with chronic conditions to live better and healthier lives, beginning with diabetes and now including hypertension, weight management, diabetes prevention, and behavioral health. Livongo pioneered the new category of Applied Health Signals to silence Noisy Healthcare. Our team of data scientists aggregate and interpret substantial amounts of health data and information to create actionable, personalized and timely health signals. The Livongo approach delivers better clinical and financial outcomes while creating a different and better experience for people with chronic conditions.
What exactly is a whole person platform? The term is laughable.
Not really even sure “behavioral health” is a term with any actual meaning. Is there anyone left on planet Earth who doesn’t know we should sleep 8 hours, drink water, eat lean proteins, veggies, work out and spend time in nature? In a video on their site they talk about treating the whole person and mention that they could be dealing with “socio-economic” factors. So if a person is out of work, has marital difficulties and lives in a high crime area with limited health resources, the Livongo “whole person platform” does exactly what?
They do “weight management?” They’re Weight Watchers? Jenny Craig? Peloton? Joe Rogan Podcast? Is there an industry more rife with nonsense and outright fraud than weight loss? Eat less and move your fat bottom and you’ll be healthier. There I just practiced behavior modification in the health care space.
They silence noisy health care to create timely health signals? So presumably if you fail to take your meds, you get a “nudge” or the like reminding you to take them. Fine. Sounds reasonable enough.
But the CEO and founder talk a big game that makes them sound like the Stitch Fix of health care, where the magic formula is to combine incredible amounts of data with a human touch. So if a patient feels chubby and just ate a pizza instead of a salad and bungled their health scores by forgetting to take their meds, they call a Livongo health pro? How many times do they talk to the pro? How dedicated is each pro to each individual? And how the heck does Livongo scale this without breaking the bank? Anyone who has ever tried to start - and stick to - a diet/exercise plan knows how hard this is. What exactly does the helpline/coaching staff do?
Maybe you think I’m just being too hard on them. Okay, well here’s a site that’s committed to shining a light on the nonsense of the “Wellness” industry…
Are Livongo’s Outcomes Real?
The article questions a study Livongo cites…
By way of background, this study was conducted by Livongo’s employees, along with employees of its partnered diabetes supply company (Eli Lilly), which also funded the study. So there couldn’t possibly have been any conflict of interest, right? Right?
It was published in something called the Journal of Medical Economics (JME). And no, I hadn’t heard of this publication either. Turns out it’s an “open-access” journal offering “accelerated publication,” with an Impact Factor of 1.9.
Not familiar with the concept of Impact Factors? Those measure the influence of a publication. For instance, the New England Journal of Medicine tallies a 70.8. How hard is it to only get a 1.9?
Below is an article from the Validation Institute. Here’s a bit about their mission…
Performance validation makes it as easy as possible for health care purchasers to have confidence in the vendor partners and providers they choose to work with. Our attention to detail helps vendors sell smarter and purchasers buy with confidence.
The Livongo Study, as Interpreted by a CORA Pro
CORA stands for Certified Outcomes Report Analysis - if you become a CORA pro, the idea is you are better able appraise the validity of these studies we always hear so much about despite knowing nothing about what they actually did.
This article, in combination with the one above, implies that Livongo has an aggressive sales division which incentivizes companies to badger employees into signing up and then pushes more testing than is necessary.
To be clear. I don’t work in healthcare, am not especially familiar with Livongo and I realize they are growing like mad and it’s possible these doubts are over-stated. But I wouldn’t touch this company with a ten-foot pole when there are so many less complicated, more legit (Muji backed) companies, telling simpler stories. CrowdStrike sells software to stop hackers. Hackers are indisputably real and coming after virtually ever site on Earth. Simple, clear, authentic.
I don’t doubt Livongo’s ability to sell to companies and jack revenue for now and maybe in the next few years. I doubt their ability to help masses of people actually improve their behavior. Modifying human behavior is incredibly difficult. Shockingly so. For example, I listened to the founder of Duck Duck Go on the Invest Like the Best podcast and thought it a no-brainer to have more privacy in my searches. But til I actually downloaded the app and started using it took forever. And it was literally the easiest thing to do in the world.
Assuming - as I do - the articles cited above raise legit questions, what we have here is a company making questionable claims, operating in a space (behavior modification) that has failed miserably before and one that is based on a narrative of applying its methods to weight loss, hypertension, etc, etc. This story feels like such absolute BS to me - we’re gonna help people with diabetes and THEN the sky’s the limit! Hypertension, weight loss, etc. Give me f’n break. I have a close friend with diabetes and have watched him for years need to closely monitor his glucose or risk fainting, losing his vision and worse. So he MUST tend to this condition closely. For this type of condition I can see a massive need to closely monitor his actions. I have no clue if Livongo has a better mouse trap than his current methods. But if it’s just diabetes that is no guarantee whatsoever their “whole person platform” works for anything else.
If you’re long LVGO know it’s unpleasant to hear someone call your baby ugly but the euphoria on this stock seems misguided and I think with social media, stock message boards here we are always in danger of over-amplifying our own positive biases. I do it all the time rooting for my stocks.
Bottom line - what we have here is a complex story that requires faith in something totally unproven. All their massive revenue growth has proven is they can sell the story to companies/orgs that are looking to save money on health care costs. That these orgs will see real deep $ benefits is questionable at best.
It makes absolutely no sense to me to be invested in a company whose core claims are utterly unproven compared to Fastly, Zoom, Crowdstrike, Okta and DataDog who provide products/services that are highly rated by our own techies, orgs like Gartner and even used by the Fool.
Not sure when, but I think Livongo is going to get shellacked. My guess is they continue selling the service and leaders will crow about the unlimited growth to come. But eventually word will come out that there’s no major benefit from using their service. And on a future ER call they’ll miss earnings, talk about losing some big customers and the bottom will absolutely drop out. Normally I do not put a lot of faith in gleaning anything from insider sales. But on this one I’d watch it like a hawk because no doubt the big insiders won’t be the ones to lose their behinds if it tanks. It will be the same suckers who loaded up on Groupon when that blivid was allegedly going to replace Amazon.