What do they do?
In their own words -
We use smart, connected devices, personalized digital guidance, and 24x7x365 access to health professionals to make it easier for people with chronic conditions to stay healthier.
They are a health platform company the supply smart devices to help patients manage their diabetes, hypertension, weight loss, mental health and potentially other conditions down the line.
They do this through a web based software platform and AI which support patients primarily via smartphones. More here https://www.livongo.com/program.html#Technology
Their AI tech is called Applied Health Signals: https://www.livongo.com/applied-health-signals/
Their customers are mainly large self-funded employers looking to better manage their chronic disease costs. The company’s growth plan includes the use of its channel partners (Express Scripts, CVS, Health Care Service Corporation, Anthem, and Highmark, which represented 59 percent of the company’s revenues in the first three months) of 2019,and new engagement methods to open up new distribution and marketing avenues for Livongo products, as well as upselling existing customers into new verticals.
There is potentially a significant risk if they were to lose a channel partner to a competitor
How good is the product?
Well, the growth metrics are good, and there is some published data to support it
but it is also very reasonable to query the quality of the study
Some background info pre IPO here
They are a small cap with an EV <$2billion at the time of writing
Growth and operational metrics from todays ER
Rev Growth YoY 156% (accelerating)
Non GAAP Op Margins -21% (improving )
Modified Rule of 40 Score 135
Non GAAP Gross Margins 69%
Estimated Year Sales 162
Analyst estimates for growth rate in 2020: 70%
Second Quarter Fiscal 2019 Client and Member Metrics:
•192,934 enrolled Livongo for Diabetes Members, up approximately 140% year-over-year.
•720 Clients, up 92% year-over-year organically.
•Total Contract Value of $74.2 million, up from $24.8 million in the second quarter of 2018.
Glassdoor reviews skew positive
The founder, Glen Tullman, is now the executive Chairman
Glen Tullman former Chief Executive Officer of Allscripts, the leading provider of Electronic Health Records, Practice Management and Electronic Prescribing systems.
Zane Burke is the Chief Executive Officer of Livongo. Burke previously spent five years as president of Cerner Corporation
LVGO IPO’d in July 2019 at a price of $28, above expected range. They drifted down towards $30, and took a beating after their ER on 5th Sept, to a price of $24 with an EV of circa 1.9B
I’m still digging into this one, but the prelim screen looks interesting and the current beat down might suggest a reasonable risk/reward ratio with a medium term horizon. I don’t yet have a clear idea of competition but I’ve added a small starter position while I look further.
Grateful for any other input