LVGO Q120

Livongo Ipo’d on July 25th, 2019
Livongo (LVGO)
Price $53.40 5/27/2020
Market Cap $5.1 billion
P/S of 24.65
P/E NA

Livongo Health (NASDAQ:LVGO): Q1 Non-GAAP EPS of $0.03 beats by $0.07; GAAP EPS of -$0.06 beats by $0.05. Revenue of $68.82M (+114.6% Y/Y) beats by $2.71M.

Current:

May 6th, 2020 1Q:2020 earnings’ highlights:
** Revenue was $68,823 million up 114% From 32,067 million
**TTM Revenue was $206,954 million or $2.17 per share
** Earnings per share loss ($.06) down from Loss ($.79)
** TTM earnings (loss) ($1.11)
** Diluted share count 95,543 million
** Cash $368,228 Million; debt 0
** Cash flow for the quarter was ($13,498) million up from ($26,811) million yoy
** TTM cash flow was ($53,277) million
** Stock based compensation for the quarter was $8,063 million up from $5510 million
** TTM stock based compensation was $76,569 Million
** Gross profits were $50,715 million up 128% from $22,204 million
** Total operating expenses were $57,582 million up 50% from $38,425 million
** Net Income loss ( $5,573) Million up from loss (14,371) Million
** Trading range between March 3rd, 2020 and May 7th, 2020 was $18.76 to $56.63 : PE ratio range NA: PS ratio range was 8.66 to 26.14
**The day of the report the stock closed at $46.96 the next day it went to $56.63 and closed at $52.43 up 11.6 %.

Highlights:

**Over 328,000 enrolled Livongo for Diabetes Members, up 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.

All numbers are Gaap:

Income Statement:

Revenue was $68,823 million up 114.6% from $32,067 million YoY. Gross Margins were 74% up from 69%. Operating Margins were loss (10%) up from loss (51%). Net Income was loss -$5,573 Million up from a loss -$14,412. EPS was -$.06 up from -$.79.
Lvgo is growing very fast but they already are almost profitable. Their operating margins are already at the highest level yet, -10% and they are reducing their costs of R&D, S&M, and G&A. Let’s look at the numbers.


           Q118     Q218     Q318      Q418     Q119     Q219      Q319       Q419     Q120
Revenue    $12462   $15981   $18782    $21206   $32067   $40915    $46860     $50356   $68823
Growth%                                         157.3%   156%      149.5%     137.5%   114.6%
GM         75%      71%      70%       68%      69%      71%       76%        78%      74%
OM         -35%     -41%     -59%      -62%     -51%     -32%      -44%       -21%     -10%
Net Inc    -$4252   -$6231   -$10558   -$12502  -$14412  -$13019   -$19152    -$8783   -$5573
EPS        -$.26    -$.38    -$.64     -$.72    -$.79    -$.69     -$.27      -$.09    -$.06
Non-Gaap EPS                                             -$.46     -$.05        .02      .03

Operating Expense as a percentage of Revenue


         Q118     Q218     Q318     Q418     Q119     Q219     Q319     Q419     Q120
 R&D     33%      35%      36%      40%      28%      25%      38%      25%      20%
S&M      45%      49%      59%      57%      46%      44%      51%      43%      40%             
G&A      32%      28%      34%      39%      44%      33%      30%      27%      23%

Balance Sheet:

Their Balance sheet declined this quarter with $368,228 million in cash down from $391,738 sequentially. The Company has no debt on the books.

 In Thousands
           Q219        Q319      Q419       Q120
Cash       $38165      $399820   $391780    $368228
Debt       $237,012    $0        $0         $0

Cashflow Statement:

The company was Free CashFlow negative this quarter. They haven’t been cashflow positive since their IPO. They have no earnings and negative cashflow so they are growing very fast but they also are burning cash. Here is what their Free cashflows look like.

 in thousands
             Q119          Q219          Q319          Q419           Q120
FCF         -$26811      -$16656       -$17458       -$6165         -$13498

They are FCF negative, their operating expenses are coming down, and their gross margins are going up. Dr. Jennifer Schneider, the President of Lvgo stated in the Conference Call” We also reaffirm our goal of profitability in 2021 on an adjusted EBITDA basis.”

Here is what their Stock compensation looks like:

 In thousands
               Q119      Q219     Q319      Q419      Q120
Stock comp     $5510     $10147   $25727    $32632    $8063

Their stock compensation is up YoY, it has come down sequentially. It is hard to really make a judgment on what it will do from here. Personally I think $8 million in stock compensation is very cheap for a company growing this fast.

Conclusion:

Lvgo is building out a platform for healthcare and selling it to leading Health plans and pharmacy benefit managers IE Blue Cross Blue Shield and CVS. While they are not yet FCF positive, nor earnings positive, they are very close to becoming profitable. At this time their Revenue is growing very fast and they are trying to grab as much market share as possible.

I am going to finish this conclusion with some final numbers.


            Q218     Q318     Q418     Q119     Q219     Q319     Q419     Q120
 Members                                        192934   207815   222700   328000
Clients                                         720      771      804      1252
Eva         24.8M     62.3M    56.1M    48.1M    74.2M    85.5M    76.7M    89M

EVA=Estimated Value of Agreement

What is LVGO:

“Livongo serves the whole person across multiple chronic conditions by uniquely combining technology and data science with a human touch. This empowers our Members to manage their chronic conditions on their own terms” said Livongo President, Dr. Jennifer Schneider, M.D., M.S.
They currently offer the following solutions:

Livongo for Diabetes: We serve members with type 1 and type 2 diabetes. This solution offers our members a cellular-connected interactive blood glucose meter, unlimited blood glucose test strips, personalized messages to support behavior change, which we call Health Nudges, digital tools across mobile, web, and email, as well as coaching and monitoring. Additionally, we offer 24x7x365 monitoring, whereby members who have dangerously low or high blood glucose receive a call from one of our in-house Certified Diabetes Educators, or CDEs, within a few minutes, no matter where they are in the world. In 2019, we announced a partnership with Amazon to leverage a HIPAA-compliant Amazon Alexa to power a voice-enabled cellular blood glucose monitoring system, allowing members to easily interact with us via the most natural and personalized communication channel - their voice.

Livongo for Hypertension: Members receive a connected blood pressure monitor and cuff which is wireless and transmits data after each measurement to our mobile app. We recently introduced a cellular-connected blood pressure monitor and cuff as well. Members are able to review results, get Health Nudges for managing their blood pressure by reminding them to take their medication, follow a healthy eating pattern, be more physically active, and receive coaching and monitoring. Members have access to the same digital toolkit and expert coaching that’s available to them through Livongo for Diabetes.

Livongo for Prediabetes and Weight Management: Members who are at risk for developing diabetes or are overweight are offered a combination of a cellular-connected weight scale, a rich mobile experience that includes health education curricula and content, personalized coaching by registered dieticians and exercise physiologists, Health Nudges, group classes, and online communities to encourage healthy eating and exercise habits. We acquired the technology underlying this solution in 2018.

Livongo for Behavioral Health by myStrength: This solution uses a digital-first approach to delivering evidence-based interventions including cognitive behavioral therapy, acceptance and commitment therapy, positive psychology, mindfulness, and motivational interviewing to help resolve clinical conditions, build resiliency, manage stress, improve

November 6th, 2019 3Q:2019 earnings’ highlights:
** Revenue was $46,860 million up %149.5 From $18,782 million
** TTM Revenue was $141,048 million or $1.95 per share
** Earnings per share loss ($.27) down from Loss ($.64)
** TTM earnings (loss) ($2.47)
** Diluted share count 72,197 million
** Cash $399,820 Million; debt 0
** Free Cash flow for the quarter was ($17,458) million.
** Stock based compensation for the quarter was $25,727
** Gross profits were $34,459 million up 161% from $13,224 million
** Total operating expenses were $55,574 million up 129% from $24,238 million
** Net Income loss ( $19,725) Million up 86% from loss ($10,588) Million
** Trading range between September 6th, 2019 and November 6th, 2019 was $15.12 to $27.36 : PE ratio range NA: PS ratio range was 7.74 to 14
** The day of the report the stock closed at $21.20 the next day it went to $27.73 and closed at $24.43 15%.
** 192,934 enrolled Livongo for Diabetes Members, up 140% year-over-year with 38,170 new Livongo for Diabetes Members in Q2
** 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.

March 2nd, 2020 4Q:2019 earnings’ highlights:
** Revenue was $50,356 million up %137.46 From $21,206 million
** TTM Revenue was $170,198 million or $1.78 per share
** Earnings per share loss ($.09) down from Loss ($.72)
** TTM earnings (loss) ($1.84)
** Diluted share count 94,347 million
** Cash $391,738 Million; debt 0
** Free Cash flow for the quarter was ($6,165) million.
** Stock based compensation for the quarter was $32,632
** TTM stock based compensation was $74,016 Million
** Gross profits were $39,420 million up 176% from $14,308 million
** Total operating expenses were $47,141 million up 72% from $27,432 million
** Net Income loss ( $6,043) Million up 107% from loss ($12,502) Million
** Trading range between November 7th, 2019 and March 2nd, 2020 was $23.25 to $31.82 : PE ratio range NA: PS ratio range was 12.88 to 17.64
** The day of the report the stock closed at $26.70 the next day it went to $28.20 and closed at $24.29 down 9%.
** Ends year with 222,700 enrolled Livongo for Diabetes Members, up 96% year-over-year
** Ends year with 222,700 enrolled Livongo for Diabetes Members, up 96% year-over-yearLivongo Clients: 804 Clients as of December 31, 2019, up 95% year-over-year.
** Estimated Value of Agreements (EVA): $76.7 million, up from $56.1 million in the fourth quarter of 2018. It consists of the estimated value of agreements signed in the quarter with new Clients or expansions entered into with existing Clients.

May 6th, 2020 1Q:2020 earnings’ highlights:
** Revenue was $68,823 million up 114% From 32,067 million
** TTM Revenue was $206,954 million or $2.17 per share
** Earnings per share loss ($.06) down from Loss ($.79)
** TTM earnings (loss) ($1.11)
** Diluted share count 95,543 million
** Cash $368,228 Million; debt 0
** Cash flow for the quarter was ($13,498) million up from ($26,811) million yoy
** TTM cash flow was ($53,277) million
** Stock based compensation for the quarter was $8,063 million up from $5510 million
** TTM stock based compensation was $76,569 Million
** Gross profits were $50,715 million up 128% from $22,204 million
** Total operating expenses were $57,582 million up 50% from $38,425 million
** Net Income loss ( $5,573) Million up from loss ($14,371) Million
** Trading range between March 3rd, 2020 and May 7th, 2020 was $18.76 to $56.63 : PE ratio range NA: PS ratio range was 8.66 to 26.14
** The day of the report the stock closed at $46.96 the next day it went to $56.63 and closed at $52.43 up 11.6 %.
** Over 328,000 enrolled Livongo for Diabetes Members, up 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.

Andy

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