Livongo Q120 recap

LVGO - Q120

Fool take (Crumly):…
BreakerForce recap:
Buynholdisdead recap:
Saul’s take and buy:…
CC transcript:…
Digized on seq adds spiking in Q1:…
gmcnatt take:…
AnalogKid take:…
AnalogKid on moat:… [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…
  • partnered with Prognos Health to aggregate clinical lab data (opt-in program over members in partner labs)…
  • first provider selected into new curated healthcare platform Welltok from the Health Transformation Alliance (HTA)…
  • 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:…

  • 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.

long LVGO 3.5% (so far)


Perhaps the answers are in all those links, muji, but I’m hoping you can explain a couple of your acronyms for me.

BH, as in BH content

ML, as in ML/AI


Disclosure: LVGO 10.9% of our portfolio.

Rule Breaker / Supernova Starshot Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

Behavioral Health

Machine Learning

Thanks, Firestarter.

After posting, I saw a reference to Behavioral Health in his notes.

Perhaps machine learning is the answer to the other mystery… :slight_smile:

Rule Breaker / Supernova Starshot Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

1 Like

thanks for the great post Muji

re: I am not sure how far LVGO can go (customer-wise)

to see a physical representation, scroll quickly to page 7 of their investor presentation from the earnings report…

the green slice is their current customers, and that’s just diabetes


“the green slice is their current customers, and that’s just diabetes”

I believe it is also just for the USA…TAM big

I watched a video of an interview with the CEO a few months ago where he was asked about international expansion. He did not directly answer the question, but the impression that was given was that LVGO was looking into it but not ready to make any public announcements. I have no other information than that, but I will be surprised if they don’t announce something in the next six months.

They just raised some more cash, so they are financially ready to go.



The international expansion question has been asked of the execs a number of times and so far they have explained the US market is so huge they want to concentrate on it for the foreseeable future. They will expand into international markets but I believe it will be a year or two away.

I would expect it is pretty tough to manage a business growing organically at 100%+ and adding in international expansion would be really tough ! I also don’t believe they need to tap those additional markets to keep the growth rate at a hyper pace, certainly not for a while.

Extremely exciting future ahead for LVGO.



As I’ve posted elsewhere on this board, Livongo’s TAM in the US alone should be over 100 million customers (adults with diabetes/hypertension/other chronic conditions). They will be able to sustain 100% annual growth for several years solely in the US market.
For me, any international expansion is just icing on the cake.

And when the time comes, I envision this expansion happening not so much on a country-by-country basis, but rather via their large corporate customers (41% of their customers are >10K employees).
Think “land and expand” - once you’ve captured the US business of a large multinational, you’re in a good position to make a play for their European or Asian business too.
Obviously lots of regulatory work, but I think that’s a much smarter play than a top-down approach towards an entire country’s healthcare industry.