I’m not certain what anyone will try to make of thee numbers exactly with respect to LVGO, but the additional users of Dexcom’s products for diabetes blood sugar monitoring has to be relevant to Livongo’s situation, either positive or negative. (I suspect positive, but they are competitors within the space.) Quite obvious that Dexcom scaled right through the overhead from unprofitable to profitable, and they just released their new G6 device, a Continuous Glucose Monitor (CGM) with smartphone apps and Apple Watch app. ( https://www.dexcom.com/get-started-cgm/40?sfc=701f30000018vi… )
"After the conclusion of the quarter, commenced launch of Dexcom G6 Pro CGM system, the first and only single-use, professional CGM available in blinded and unblinded modes “Our growth in the second quarter reflects the commitment of the Dexcom teams to rapidly adjust during the COVID-19 pandemic and ensure service to our customers and our communities,” said Kevin Sayer, Dexcom’s chairman, president and CEO. “We are pleased to reinstate 2020 guidance as we press forward to bring Dexcom CGM to the many more who stand to benefit from real-time glucose monitoring.”
2020 Annual Guidance
The company is reinstating guidance for fiscal year 2020 revenue, gross profit, operating margin, and Adjusted EBITDA margin as follows:
• Revenue of approximately $1.850 billion (25% growth) • Non-GAAP Gross profit margin to meet or exceed 65% • Non-GAAP Operating margin to meet or exceed 14% • Adjusted EBITDA margin to meet or exceed 24%"
I have wondered the same. I learned of Dexcom through advertisements on the evening news. It looked slick and I can imagine man people reaching for their phone to order. While I understand that this is not the same product as Livongo, I had to wonder about potential business being siphoned off.
It must be easier, it seems to me, to wear a patch that continually monitors and reports your blood sugar. Anyone here have experience of either product?
I don’t know much about the product lines, only what I’ve been reading here. Seems like Livongo has a slightly different business model, getting insurer-plan-buy-in and support for the expected medical expense reduction, but I don’t see how it is super-different from the info Dexcom wants to know about customers interested in the G6.
Whether Livongo’s software is better and will stay better than whatever the Dexcom G6 works with seems like an open question.
Definitely prefer to hear more opinions from people who have experience as users and doctors than whatever I can divine from my own thought process. I know there has been some discussion of Dexcom in the past w/r/t Livongo, but the G6 seems like a big step forward from Dexcom and there’s TV advertising which if pharma ads haven’t proved to you can drive usage, your head is in sand… I had modicum of success using Greg’s search tool to search the board for Dexcom and/or DXCM, but I’m not linking any of what I found, here.
Yes, I saw Dexcom CEO on Mad Money this past week. Jim Cramer brought up Livongo and what their relationship was with them. He said they have been in talks with LVGO and are trying to partner up and get the data from their systems on LVGO’s. It would give the diabetes patients and their doctors even more data to be able to maintain and track all from one system. If this happens it could be HUGE for LVGO.
" Yes, I saw Dexcom CEO on Mad Money this past week. Jim Cramer brought up Livongo and what their relationship was with them. He said they have been in talks with LVGO and are trying to partner up and get the data from their systems on LVGO’s. "
I think this is the exact point. The Dexcom G6 is a great CGM…I know partially because my son has one. It acquires blood glucose readings every 5 minutes, will send alarms when the patient goes hypoglycemic, and forwards data to up to 10 people for realtime monitoring. It will couple both the the patient’s insulin pump and to a variety of mobile devices (includes phones, Apple watches, etc.). It is a wonderful step forward in providing an assessment of blood sugar!!
Livongo’s efforts are complementary to Dexcom’s. Dexcom provides the data. Livongo assesses the data and then determines what the patient can do to improve their self-care. It looks for trends, and enables the patient to work out causes so that they can avoid hospitalizations in the short term due to hypoglycemia, and to avoid severe complications in the long term due to high blood glucose levels.
The two make each other very much better than either could be separately.
I read their journal publications and (both companies) and was very impressed.
I’m long on Livongo and grateful to them both as an investment and for the quality of care they enable.
Well, I guess my “big question” is are we certain that Livongo’s apps are substantially better than Dexcom’s app? Because it does appear that Dexcom has its own app for the G6 and that the app can share data with upto 10 followers.‡
‡ Separate Follow App required.
I’m thinking the Follow App is like the apps that ‘plug’ devices into Alexa app on the iPhone.
" Well, I guess my “big question” is are we certain that Livongo’s apps are substantially better than Dexcom’s app? Because it does appear that Dexcom has its own app for the G6 and that the app can share data with upto 10 followers.‡
‡ Separate Follow App required."
The Dexcom Follow App is pretty cool. I use it. Follow charts CGM readings for up to 24 hours and is updated with every measurement. It also sends alerts. Note that all it does is report the data (which is a big deal!). There is no assessment made though.
I see this as complementary to, rather than competitive with, Livongo.
Dexcom is a partner but also type 1 diabetes is around 13% of the market. Dexcom for those 2 is for only very serious cases.
For the most part Dexcom has minor impact on Livongo’s SAM and that SAM grows every year.
Yes, some Dexcom users use Livongo as well. But Dexcom certainly could try to disintermediate LVGO. If so, why? I don’t know but that is always the concern.
Where will CGM tech be in 5 or 10 years? Don’t know. For now not really an issue for LVGO.
This in turn will expand Livongo’s market considerably.
The current qualifications to get a cgm through Medicare are:
Has type 1 or type 2 diabetes
Performs frequent blood glucose meter (BGM) testing (=4x/day)
Uses an insulin pump or takes =3 daily injections of insulin
Requires frequent adjustments to their treatment regimen based on BGM or CGM testing results
So right now, not that many type 2s have a cgm. But with the results of new studies showing that cgms do help non-dependent type 2s, and can be cost-effective, DXCM and other cgm makers are pushing and most likely will get insurance/medicare approval to open the markets up to non-insulin-dependent type 2s. Getting the doctors on board to recommend them should be fairly easy once they see the results. DXCM has been working on expanding the T2 market for some time and they again mentioned it in their Q2 earnings call:
"We are pressing forward in support of our various partnerships to reach the whole type 2 population, including our work with UnitedHealthcare, Intermountain Healthcare, Livongo, Welldoc, Onduo and others. We are also excited about the launch of our G6 professional products which has several appealing use cases as we explore the full value of our CGM platform. The product provides a natural extension into the type 2 non-intensive market by leveraging the strong existing reimbursement framework for professional CGM with a tool that empowers clinicians.
I can’t even imagine the increase in LVGO’s volume of data capture … which through their AI will improve their ability to help their members. But I’m not sure how much it will increase their member market.
Getting the feds on board back in 2019 was a big deal and that helped them make new big deals with others. Those deals don’t require type 2s to use insulin, as far as I know…the member potential is already there. So it really is a matter of LVGO needing to keep signing up the insurance companies/large organizations and LVGO and their clients to get employees to sign up as members in order to expand their market. Yes? No? Either way, getting type2 non-insulin-dependent will be good.
My investment in Livongo came prior to my fully understanding the entire market it is serving but understanding just enough that I made my usual large entrance at an opportune moment. This thread has been very helpful. The CGM market, considered a threat, is likely more akin to IBM as a threat to MSFT in the early years. The more IBM PCs sold, the more the SAM increased for MSFT.
LVGO is not Microsoft, nor DXCM IBM, but the analogy is apt. IBM PCs were of little use without software. Microsoft created this value for IBM. Meanwhile Microsoft OS was of little value without IBM putting out their boxes and pushing it to more and more markets. Synergy at its finest. Yet there was fear that IBM would simply disinter mediate Microsoft at will. I mean DOS is really a crappy piece of software not all that complicated…
DXCM, with the modern age way of business competition thinking, is focusing on its core product, and identifying what enhances the value of their product. Livongo has been specifically mentioned at least 2x on this thread by DXCM. As Livongo adds value to what can be done with the DXCM product, so DXCM creates additional boxes that Livongo can reach customers on. Synergy.
It is important to understand these things unless you think everything a CGM does is a threat to the business instead of what it appears to be, a real and growing opportunity and Dexcom and Abbott and the like will push to continually expand this market as well. Livongo is clearly the leading provider of value add services to CGM devices in the United States. Perhaps it will remain so as CGM products push internationally as well.
Anyway, I found this some valuable insight that although grossly overvalued (as is most things we invest in) perhaps quite undervalued if that synergy exists, if CGM companies do expand the market, and if what Livongo does is grow in competitive power as their access to data grows (as we are told happens with AI. So often that is marketing talk, but sometimes it actually is a fact directly on the mark).
The Livongo software is supposed to create “behavior modification” (ie improvement in habits and diet?). Just how much difficult “AI” there is in that is unclear to me, but I started this thread this morning basically on the premise that if Dexcom had this much growth, we should expect a lot of growth from Livongo, too.
(The possible contra position would require thinking that Dexcom is disintermediating Livongo with its own software, which could happen, except Livongo is still getting the insurance companies’ buy-in right now, so I tend to think Livongo’s current trend is “Up.” for a while even if competition comes harder, later.)
This is important discussion for LVGO holders.
I am long LVGO since $27 and honestly missed the bus on DXCM though it was on my radar for 2 years…
I really like Tinker’s analogy of IBM/MSFT or HW/SW… I think it summarized current status for DXCM / LVGO as it relates to each other…
however, here are a few differences, other points to consider.
DXCM market is really T1D and LVGO market is really T2D…
T1D is much patient base, DXCM ASP is much higher (~$6K) so T1D is very valuable market for DXCM… vs not really big impact for LVGO…
On the other hand, DXCM has to beat Abott and Medtronix to expand its share of this large, lucrative T1D market which means their R&D needs to be focused on this momentum they have…
Therefore, I believe at-least for now, these are two different companies, focused on different spectrum of the market and really no competitive or collaborative impact on each other…
One has to believe DXCM will offer continued enhancement to its app, including AI, that may obviate (make it unnecessary to use) LVGO service for DXCM CGM user in the future… (even though some tesimonials above say they are complimentary today)… mostly because T1D patients are obviously aware of their problem and actively managing…
So again, for T1D, I dont expect LVGO to make much dent and I would expect DXCM to cover whatever lose end they can cover…
T2D competitive scenario - one would think DXCM will like to expand into T2D… biggest issue I see so far is the cost of CGM… at $6K, insurers are not going to be happy to support widespread use of CGM for T2D patients…
therefore, you see DXCM efforts in bringing lower cost CGM into the market… although for now, this really is helping them to better compete in T1D market rather than expanding into T2D market
So I would think at some point, DXCM gets a reduced cost version into T2D market, uses its app and convinces insurers to addresses a sub-set of T2D market where patient is seriously struggling… and thats where there is some overlap between DXCM and LVGO where a patient is using both or LVGO loses to DXCM…
I think scenario where LVGO loses a patient to DXCM is too narrow… and may be a bit far into the future to be impactful…
2. One has to believe DXCM will offer continued enhancement to its app, including AI, that may obviate (make it unnecessary to use) LVGO service for DXCM CGM user in the future… (even though some tesimonials above say they are complimentary today)… mostly because T1D patients are obviously aware of their problem and actively managing…
nilvest, this is my number 1 concern about Livongo, but, about every company I own stock in has some scenario that could jeopardize their buisiness. This is Livongo’s. That is, the glucose monitoring systems obsoleting Livongo’s service. Every single day I’ve owned Livongo shares that has been my primary concern. But until something actually happens, I’m holding onto the shares. I am quite certain that if we as individual investors have identified this risk, Livongo has as well. The only other concern I have, is, how complex is this “AI” and “machine learning” that prompts and nudges when glucose levels are too high. It seems like “machine learning” can only take that so far. I try not to base my investment decisions on hypotheticals since the world changes so fast and things can wind up happening very differently.
nilvest, this is my number 1 concern about Livongo
yeah, it is a valid concern but hopefully, you get an idea that even with that, overlap between DXCM and LVGO is narrow… / small portion of the market…
One thing I would modify in my previous post is that DXCM is effective not just for T1D but also “insulin intensive T2D” patient base… just reading DXCM latest earnings transcript, they claim 20% of DXCM user base is “insulin intensive T2D”… which is what is driving DXCM growth…
To me… “insulin intensive T2D” is just extension of T1D… and so DXCM is trying to expand deeper from the top of the diabetes population spectrum(T1D… “insulin intensive T2D”…)… whereas LVGO is squarely in the lower / mid of belly of the diabetes population spectrum… which is very large population… where people have proven diabetes for a while, it is not intensive enough to be on the insulin regimen and these people are struggling to control the disease even though technically they can… to this base, insurance is not willing to fork out $6K for CGM and a $75/ month LVGO support is extremely valuable…
and there are millions of people in this mid spectrum of diabetes where LVGO still has some way to get its first 1 million member…
So there is a long runway to grow for both companies and I would not let this theoretical concern hurt my LVGO holding decision for now.
DXCM needs to go after the T2D market to maintain growth. T2D makes up about 90% of cases of diabetes, with the other 10% due primarily to T1D. Obesity and lack of exercise are usually associated with T2D (my 2 aunts sigh…). Plenty of that in America. So expect the competition between LVGO and DXCM to grow (frenamies).
But given the higher T2D market share and growth rate at LVGO, I say let this puppy run.
