Livongo, a startup that displays and coaches sufferers with persistent ailments, on Friday filed papers to launch its preliminary public providing, in what’s seen as a litmus check for health-tech firms looking for to translate early progress into worth within the public markets.
The providing is anticipated to be among the many first for a brand new era of slick and savvy venture-backed firms within the U.S. digital well being sector, which hasn’t produced an IPO since 2016. (One other such firm, medical data knowledge startup Well being Catalyst, filed to go public on Thursday.) Livongo’s providing had been anticipated for a number of months, as the corporate has been increasing quickly and operating research to attempt to present that its providers can enhance sufferers’ outcomes and save their employers cash.
Livongo introduced in $68 million in income final 12 months, greater than double its haul in 2017, and is nicely on tempo to eclipse that determine this 12 months, after a primary quarter wherein it introduced in $32 million, in keeping with the corporate’s submitting with the Securities and Trade Fee. However Livongo can also be dropping cash: It posted a internet lack of $33 million final 12 months, and misplaced one other $15 million within the first three months of this 12 months.
The corporate, which has its largest places of work in Silicon Valley and Chicago and employs greater than 700 folks, makes most of its cash by charging self-insured employers for offering its monitoring and training providers to their workers with persistent ailments. It reached a complete of 679 prospects on the finish of March, in keeping with the SEC submitting; a couple of of the most important are Microsort, Merck, and Delta Air Traces. Livongo additionally counts a handful of well being plans and hospitals amongst its prospects.
The corporate’s most essential enterprise is in diabetes — greater than 164,000 sufferers are enrolled and it’s made up about 90% of its income — although in latest months Livongo has rolled out packages for hypertension, weight administration, and behavioral well being. Employers usually pay the corporate a charge of $75 per 30 days for these workers who’re actively utilizing Livongo’s diabetes program, and sufferers themselves don’t pay something out of pocket.
When the workers of Livongo’s prospects join the corporate’s diabetes program, they get a sensible blood-glucose meter and testing strips within the mail. When sufferers pattern their blood and run it by means of the machine, these knowledge get beamed again to Livongo. In flip, the corporate makes use of machine studying algorithms to supply sufferers with personalised ideas and messages that present up on the display screen of the blood glucose meter. Livongo additionally employs a small military of well being coaches who name sufferers immediately when their blood sugar readings are available too excessive or too low.
In its SEC submitting, the corporate states that it saves over $1,900 a 12 months in gross medical bills for diabetes sufferers, in addition to 7% weight reduction for sufferers fighting weight problems.
However key questions stay, together with whether or not its outcomes will maintain up over the long run and produce worth for sufferers and employers, and whether or not traders may be satisfied of the sturdiness of its enterprise mannequin.
It additionally faces loads of competitors, particularly in diabetes care, its largest supply of enterprise. Firms reminiscent of Omada Well being, Virta Well being, and Glooko are additionally aiming to observe or coach these sufferers.
Livongo’s SEC submitting presents perception into the way it’s faring because it takes on a few of the sharp challenges for firms within the sector. When a buyer indicators as much as give its workers or lined sufferers with diabetes entry to Livongo’s service, not everybody who’s eligible indicators up. On common, solely 34% of them select to enroll inside a 12 months, in keeping with the submitting. And people sufferers who do resolve to enroll in Livongo’s diabetes program interact with it at totally different charges. On common, they log over 250 interactions with Livongo a 12 months, the submitting mentioned.
Livongo employed Morgan Stanley, Goldman Sachs, and JPMorgan Chase & Co to underwrite the deliberate IPO. Citing a supply conversant in the deliberate providing, Enterprise Insider reported that the corporate may very well be valued as excessive as $2.5 billion.