LVGO SA article

I came across this LVGO SA article that I found interesting.…

A few things that I had not seen before.

  1. LVGO NPS score is 64. Median Healthcare industry NPS score -27

  2. LVGO NRR is around 112%.

  3. In future, we might start seeing a reducing Gross margin as LVGO starts offering more services including Obesity and hypertension.

Overall a good article with lots of graphs and numbers that I had not seen before.

  • Gaurav

Does anybody know more about the enrollment statistics mentioned in the article? It says:

The most concerning metrics for Livongo are member enrollment and engagement, which appear to be somewhat low. Livongo for Diabetes clients who launched enrollment in 2018 only had 34% of total recruitable individuals signed up after 12 months.

Jefferson Health has achieved a 49% enrollment rate amongst eligible employees with a 90% activation rate after several years. The majority of member enrollment occurs within the first 6-12 months of launching services, and it appears Livongo will have difficulty achieving enrollment above 50% in the foreseeable future with most clients.

In addition to modest levels of enrollment, monthly member churn is 2%, which implies a 78.5% retention rate over 12 months. This figure is concerning, as it indicates the service is not particularly sticky for members. Livongo’s member churn actually compares favorably to most subscription healthcare companies though, particularly B2C companies. While member churn is high, there is likely a core group of members who derive value from the service and will continue to use it long term. For example, amongst Iron Mountain (IRM) employees who were Livongo members, 74% felt better about managing their diabetes and 75% wanted to keep using Livongo.


Replying to wpr101

I have not personally seen those figures before, but they don’t concern me too much in the short term. LVGO is still adding large clients and they have a clear growth path for the next year. They don’t need every eligible person to join in order to be successful. However, they will hit a saturation point where member adoption and churn will become more important, but I don’t think it will be for a long time.

My bigger concern is around moat and potential competition - which the SA article covered very well.

Long LVGO - largest position (but sold covered calls on half my shares)

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