Meet Livongo ($LVGO)

What does the company do?

From the company's About Us Section: "Livongo offers a platform that empowers people with chronic conditions to live better and healthier lives, beginning with diabetes and now including hypertension, weight management, diabetes prevention, and behavioral health....Our team of data scientists aggregate and interpret substantial amounts of health data and information to create actionable, personalized and timely health signals"
In a nutshell, Livongo collects data from patients (Using Livongo branded devices, like a Bluetooth Blood Pressure reader that connects to an app), use that data to create actionable signals that can be used by health professionals/health coaches to create better patient outcomes. For example if a diabetic patient's reading are out of range, there's a specialist who can reach out to a patient via text or call to offer guidance.
Why Livongo? I Initially came across this company while I was looking for a Health Care company that fit the criteria below:

• Be on the right side of emerging trends. Health Care Remote Monitoring and Behavioral Health are growing trends in the Health Care Sector
• A scalable business with strong growth potential, and competitive gross margins. 115% Revenue Growth Y-O-Y, 70% Gross Margins Respectively for Q1 2020
• A company that would grow despite the challenges of operating during the Covid-19 pandemic
• Last but not least, is that the above requirements were able to drive the company's stock growth. On that note, as of 5/31/20, $LVGO is up almost 100% since it's IPO in 2019.

Performance Metrics

Addreassable Market: 147 Million people with Chronic Conditions. (An aside, 147 million people With health conditions is unacceptable. Especially for country like the U.S).
Of those 147 Million people with Chronic Conditions, Livongo believes they have a Market Opportutnity of $46.7 Billion. For context, Livongo brought in $69 Million in Q1, 2020. $69 Million of $46.7 Billion, Livongo still has a lot of room to spread it's elbows.
Revenue Model - How does Livongo generate revenue? Directly from Consumers or Health Organizations? Answer is Both. Clients (Added 320 Q1 2020, up 44% Quarter over Quater to 1252 Clients in Total - Are these clients on a recurring revenue plan? If yes, Great News) Member enrollment ahead of expectations with over 320,000 Livongo for Diabetes members. A 100% increase from Q1 2020. Tripple digit percentage point growth in Revenue. From $32 Million in Q1 2019, to $69 Million in Q1 2020, a 115 % Surge.
A range of $73-75$ Million in Projected Revenue for Q2 2020, to reflectling strong Quarter-over-Quarter growth. Livongo RAISED Revenue Guidance of the full year at $290 to $303 Million based on "Predictable & Highly Recurring Business Model".

Tailwinds

Partnerships:

• Health Transformation Alliance - A Digital Health Market Place with 50 Large Employers covering 7 Million Employees. As a listed partner, Livongo has opportunity to add clients and members
  
• Government Employee Health Association Contract- Covering 2 Million Government Employees. Employees with Chronic Conditions can Join Livongo as a covered benefit. Second major Government Contract in a year
  
• Partnertship with Dexcom & Abbott. Dexcom is a leader in Continuous Glucose Monitoring. Abbott is leader in Medical Device Manufacturing. I'd imagine the plan here is to "integrate data recorded using Dexcom/Abbott devices ....to drive insight back to individual person"
  
• Kaiser Permanente Selected Livongo as a Behvaioral Health Partner for all it's Members. "Largest Behavioral Health Contract in Livongo's History to be rolled out over the next 5 years"

Competition

Remote Monitorig is without question going to be a very competitive space, with a lot of new start ups and established players trying to join the space. Teladoc Health, Medtronic, Johnson & Johnson, Abbott, Dexcom are all strong players trying to nudge some elbow room in this space. Livongo enjoys stellar Gross Margins (over 70%) to continue investing in a multi-product catalog.

TakeAways

• For newly listed companies ($LVGO IPO'd in 2019), you want to see strong revenue in Year-Over-Year Revenues as the company begins to gain standing in the market place. 115% Revenue Growth YOY. Check.
  
• High Gross Margins: Livongo recorded Gross Margins of over 70%. That means really low cost of goods. Though the company did record a Net Loss for the quarter (5.5), as revenue grows, marketing ($27 million) and research ($14 million) will take a smaller and smaller share of revenue. Livongo projects to be profitable in 2021.
• Goverment & Private Contracts. Livongo has already earned 2 government, as well as a private contract with Kaiser. The number of clients grew 44% in the first 3 months of 2020. With high gross margins, and continued Client and membership growth, there's tremendous upside for $LVGO.

Some Buzzwords

#RemoteMonitoring #ConnectedTechnologies #PersonalizedCare