Couple thoughts on LVGO

There is a good “Deuling Fools” segment from the June 20 broadcast at the link below (if you have a Fool premium membership). Nothing revolutionary if you already know the company, but I like getting as many viewpoints as I can.…

Opinion - I believe there is a good possibility of stronger than expected new patient sign-ups in the 2nd quarter. LVGO is an optional service for people that are covered by it in their health plans - meaning, they are not just automatically enrolled in LVGO when there health plan starts to offer it as a service. The patient has to actually fill out some forms and go through the enrollment process to get signed up for it. My hypothesis is that with many people stuck at home over the last few months, they have a lot more time available to go through the process of signing up for something that they might have been putting off. Also, 3 of the biggest risk factors for severe cases of COVID are diabetes, obesity, and hypertension - LVGO has programs for each of these. If I was in the high risk category, and if I had not previously taken the time to sign up for LVGO, I would probably have prioritized it in the last 3 months. NOTE - this is just speculation on my part, and I have no data to support it.

A possible counter argument would be that with all of the layoffs that have occurred, some people might have been dropped from coverage of LVGO. Again, I have no data on this either I’m just throwing it out there as a possibility.

The other major thing that I have noticed is that there has been almost no insider selling in the last 3 months even when the stock price has gone from $45 to $75. There could be some selling coming up which would negate this argument, but for now this is a strong indication to me that the insiders expect the stock price to go higher. Compare LVGO insider selling to other SaaS companies, and you will see what I mean. LVGO insiders are holding on to their shares = bullish.

In past conference calls the CFO has highlighted how predictable the LVGO business model is for future quarters. They sign up new clients now, but the service is not actually rolled out to those clients for 6 - 9 months. So, they have good visibility for expected growth for the next year.

Long LVGO - 18.1% (but foolishly sold covered calls on half my shares at $50)


That was a great watch, especially with the Splunk earnings review! Also long Splunk.

His point about 2 customers making up around 42% of revenue is something to watch (down from 48% a year ago). That is normally a reason to stay away from a stock, but in this case the dynamic of those customers (they lead to users) is really important and the value proposition for those customers is so strong it doesn’t bother me.

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