Livongo Q1 Review

Hi All,

Livongo reported what I thought was a terrific Q1 2020 yesterday. The stock is certainly reacting strongly today, up about 17% to a new high of $55. And that is up about 175% since hitting a mid March low of around $20.

Revenue was up 115% for the quarter to $68.8 million

Gross Margins (non-GAAP) improved to 74.4% from 70.3%.

Livongo for Diabetes Members: Over 328,000 as of March 31, 2020, up approximately 100% year-over-year.

Livongo Clients: 1,252 Clients as of March 31, 2020, up approximately 44% quarter-over-quarter (!!)

Estimated Value of Agreements (EVA): $89.0 million, up from $48.1 million in the first quarter of 2019. EVA consists of the estimated value of agreements signed in the quarter with new Clients or expansions entered into with existing Clients.

Operating Cash flow is/was negative but it did improve to -$10.4 million from -$25.2 million over Q1 2019.

Operating margins improved to positive 4%, from -29% a year ago.

Net Income improved to $3.9 million, from a loss of $8.8 million YOY.

$368 million in cash, and equivalents and no debt.

Conference Call Tidbits

Zane Burke – Chief Executive Officer
While it’s challenging for many, our business model and the steps we have taken have positioned us to help those in need. 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. We expect that the ability for both personalized care, as well as broad population surveillance will become critical going forward as an early warning and monitoring system for the healthcare system at large and a way to efficiently deliver care to those who need it most exactly when and where they need it.

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. We’ve also been receiving feedback from highly respected and innovative HR and benefits professionals who believe that Livongo is key to keeping their people healthy, while also saving money. And Livongo is unique in that we have detailed studies to prove that Livongo improves care, saves money, and provides a great member experience.

As we have stated on past calls, with more than 147 million Americans living with a chronic condition and 40% living with more than one, Livongo has a significant opportunity to continue growing our member base. Because of our virtuous business model, we believe the COVID-19 pandemic has only reinforced the value of the service we provide our members and clients. In the first quarter, we added a record 380 new clients, which takes us to 1,252 overall clients, which is up approximately 44% quarter over quarter. Member enrollment was ahead of expectations with over 328,000 Livongo for Diabetes members as of the end of the quarter.

Further, we continue to see strong demand in our pipeline. We work closely with regulators and legislators in Washington to reduce barriers for the use of remote monitoring, which resulted in inpatient access to Livongo and Medicare approvals for remote patient monitoring, which we anticipate remaining both on a temporary and longer-term basis. Congress has acted to deliver the emergency aid and economic relief Americans and businesses need to get through this phase of the COVID-19 pandemic. While that is a great first step, we anticipate the government will take further actions to expand the use of remote monitoring, managing and testing to better protect our most vulnerable populations with diabetes, hypertension, keeping them at home, healthy and out of harm’s way.

The CEO also highlighted 2 important new customers in the quarter:

Two other important headlines for the quarter. First, as the number of employee health management programs continue to grow, large employers are increasingly challenged to organize and manage these programs for their employees.

They want one partner to work with. This trend was already under way before COVID-19, but the pandemic accelerates it. We expect that larger, multiproduct, well-capitalized organizations will have an increased advantage. In March, we announced the Health Transformation Alliance, or HTA, and Welltok.

Its consumer engagement platform created a new curated marketplace focused on digital health to help make it easier for their membership, which includes over 50 large employers serving 7 million employees independents, to select and contract with digital health providers. I’m excited to again share that Livongo was selected as the first partner for this new program, and we see this as a promising new channel for the company. We’re already meeting with many of the HTA members to identify and serve their eligible populations. Second, after a highly competitive process during most of 2019, I am proud to announce Livongo was selected by the Government Employee Health Association, known as GEHA, a not-for-profit provider of medical and dental plans for federal employees covering more than 2 million federal employees, retirees, and their dependents.

Recognizing the importance of helping at-risk populations to stay healthy, eligible GEHA members will now receive our diabetes, hypertension, and diabetes prevention programs as a covered benefit. GEHA represents one of the largest contracts in our history and is our second major government contract signing in a year and the first of its size to validate our whole-person approach. This contract signing demonstrates Livongo’s growing presence and success in the government and labor markets and the importance of our solutions. This is a very significant deal and checks all the boxes validating our strategy, scale, multiproduct, new sector expansion, and a competitive win based on our years of experience, which we believe that no other consumer digital health company has.

Q&A Snippits

Sean Wieland – Piper Sandler – Analyst

Hi. Thanks so much. So you said, Zane, remote monitoring is becoming the new standard of care. And what I’d like to better understand is what needs to happen in coming out of this crisis, this pandemic to kind of reengineer what primary care looks like? And what needs to make – what needs to happen to make remote monitoring more integral to overall primary care workflow? And maybe as a tag line on that, an update on what’s going on at KC Blue?

Zane Burke – Chief Executive Officer

Thanks, Sean. And great to hear your voice as well, and I appreciate the question. So there’s a couple of things that actually have already occurred from a government perspective. So we’ve seen some regulatory changes from CMS, particularly during this emergency time period that’s allowing that remote patient monitoring with pre-existing relationships – that may not have a pre-existing relationship to get reimbursed for those fees.

That’s really significant. So that’s an important change that we’re seeing from a DC perspective. We’ve seen a number of other changes in terms of what we’ve seen from the cost-sharing in that space, as well as a number of items. So this is really about the reimbursement aspects.

The fee-for-service Medicare space is another area where there’s been a significant change in the reimbursement side. So as you know, in healthcare, there’s been so many perversities on the reimbursement aspects of what happens and what the pandemic has done is really accelerated that rate of change dramatically on the reimbursement side and the acceptance and really the requirement for both telehealth service and remote patient monitoring. And as people look at the future of this, they’re really going to say, “How do I actually stay out of that healthcare system? How do I keep people healthy and out of the system? Those people that have the highest risk or actually, overall, even those with chronic conditions, how do we keep them out of the health system?” And that’s where remote patient monitoring, and specifically, Livongo has a truly unique opportunity to thrive. And so what I would say is you’re seeing the sea change from a reimbursement perspective.

We need to codify. Some of those pieces became permanent changes. Some of those are temporary changes. So when we get past the emergency time period, we’ll need to see those get fully into it.

But I think the genie is out of the bottle in terms of remote patient monitoring. And that’s going to be part of the future healthcare system as it moves forward. Glen, do you have anything you’d like to add to that?

Glen Tullman – Founder and Executive Chairman

Thanks, Zane. Sean, I would only add that there are a number of government programs now that are actually providing funding for our clients, particularly health systems, and we’re working collaboratively with them. A number of those organizations have been selected. So we don’t know the impact of that yet, but we expect that will also start to drive some of the reengineerings of the system.

But Zane said it perfectly, and that is that it has become overnight both telehealth. And if you like telehealth, you’ll love remote monitoring because telehealth is after there’s a problem. Remote monitoring is preventing the problem in the first place, keeping people out of environments that might be dangerous. And if you remember back in Italy, literally the doctors were begging people, "Don’t come to our offices.

Don’t show up in ERs and don’t go to the hospital." And that has sunk in. And I think one of the indications is a lot of the hospitals are actually saying now, “People are scared to go to the hospital.” Now I’m not sure that’s wonderful. But in fact, there is a new realization that these are places where the germs are, where the viruses are. And if you can care for people remote, that’s best.

Anne Samuel – J.P. Morgan – Analyst

Hi, guys. Thanks for taking the question. You touched a little bit on how scale is an advantage right now. And was just wondering if you’ve seen any changes in the competitive landscape, maybe any opportunities for M&A as some of the smaller players in the marketplace start to face liquidity issues.

Zane Burke – Chief Executive Officer

Well, I think it’s a great question. That, obviously, our scale allows us to sell to clients like GEHA. So first off, in the marketplace, I think people are going to have a flight to safety. And we’re viewed as a safe choice.

And because of our virtuous business model, our clients don’t just like us, they love us. We deliver strong clinical outcomes and a hard financial ROI. And that’s exactly what the market is looking for, but they’re looking for a safe choice. And I was on the phone with one HR Benefits Director recently, and they said, “You don’t get fired for buying Livongo.” And that was just here recently.

And I think that’s part of where, I think, you’re going to see the difference here. And obviously, we have great scale across the ecosystem that’s different than others. And that allows us to weather storms in some of these different markets that may be a little bit choppier than others in terms of the short term. But in the long run, this really gives us the opportunity, both from our capital position, our market position, the value that we provide to really accelerate on the backside.

And so obviously, there’s nothing to talk – we can’t comment on any M&A activities, but we are uniquely positioned in this marketplace to consider those strategies, inclusive of our continued investment in the back half of the year in our internal investments. And so that just means that we’re uniquely positioned. And where you see some competitors who are laying people off, we’re going to invest in more and more people because the opportunity, the total addressable market share is massive and the need is so great and the future is so bright.

Obviously there is much more and here is a link to the transcript for those interested:…



Livongo Health First Quarter 2020 Earnings Conference Call & Webcast posted to their site:

Annoyingly up over 11% on the day I planned to buy more. I forgot it was an earnings day. Oh well. Ignoring market timing…


Thank you for posting this and points of emphasis. I thank so many folks who spoke about this wonderful company at length in Q4 and Q1 while the stock seemed beaten down for no reason that reconciled to their LTBH investment premise. The pandemic also offers an incredible and underappreciated catalyst in the 20s. I bought my first position at $25 in January, and then bought more at $27 on Apr 1st as it started moving up. Now >9% of my portfolio. I may add more.

What an incredible move in such a short period, but most importantly, it is clear the market is beginning to realize their potential. See MF article today:…

I believe Livongo is just getting started with TONS more market share and valuation from here.

Fool on!



Hi Rockleppard,

Anytime! Seemed crazy to me that a company with SaaS like recurring revenue, high margins, triple digit revenue growth, a powerful AI-AI interface, etc etc could trade for something like 6-7x revenue back in March and April! It’s current PS is something like 16x, which isnt necessarily crazy for this type of growth.

I havent run my personal numbers just yet, but with todays climb it has grown very close to my number two holding, Crowdstrike.



With this much potential, even after today’s ramp up in prices, LVGO is probably best bargain in the market.

Bet quote, from exec chairman Glenn Tullman (this guy is a legend in healthcare software)

And if you like telehealth, you’ll love remote monitoring because telehealth is after there’s a problem. Remote monitoring is preventing the problem in the first place

And LVGO is king of remote monitoring and support… This is why I like LVGO over TDOC… also it is a recurring revenue (vs TDOC visit fees is seasonal)

Still a lot of upside to this stock for both in short and long term.


Totally off-topic so forgive (or delete) my post, but you just helped me realize that Glenn has another legendary family member (Howard, his brother). Worked for him in Chicago in the late 90’s at before they sold to EMusic.
Small world!

Matt already pointed out, but worth repeating some here again I think.

  • They guided for 93% revenue growth at the high end and got 115%

  • Sequential revenue growth was 27%. They are guiding for 9% sequential growth in Q2 at the high end.

  • CFFO improved yoy from (25,187) to (10,411). Not positive, but moving in the right direction

  • Adj gross margin improved yoy from 70.2% to 74.4%. BUT it fell sequentially from 79.2%

  • Adj op margin improved yoy from (28.9%) to 3.7%. And sequentially improved from 1.81%

  • Adj net margin improved yoy from (27.6%) to 5.62%!! And sequentially about even from 5.8%

  • Adj EPS improved yoy from (0.49) to .03!

  • Adj EBITDA improved yoy from (8.5 million) to 3.7 million. This was ahead of guidance, which was (4.5 million) at the high range. WHOA!!

  • Number of clients improved yoy 76.6% from 709 to 1252. And Sequentially improved 35.8%!

  • Enrolled diabetes members improved yoy 100% from 164,168 to 328,510! And last quarter I noted that sequential gain was decelerating to 7%. But this quarter it grew 32% sequentially!


Just incredible numbers and worth pointing out the 115% revenue growth was all organic.
Motley Fool released a number of articles on Livongo since their results including one which posed the question : Is LVGO a potential 100 bagger ?


100-baggers are nice but the first double is the hardest. After that, each “bagger” is a smaller percentage gain. Saul points that out

LVGO has doubled in the past 2 months but seems to have LOTS of tailwinds COVID or no COVID