Calling Shenanigans on Livongo

Hi BroadwayDan,

You likely made some good points…but some of your post is demonstrably wrong.

If you type ‘Livongo’ into PubMed (the NIH funded search engine for medical and biological research…and the best tool for finding academic articles in those fields) you find 30 results:
https://pubmed.ncbi.nlm.nih.gov/?term=livongo

The first article is in Journal of Medical Internet Research (impact factor 4.9) which specializes in health informatics and health services research. Many of the others are also in similarly decent journals.

Skimming the list, and reading a few, it’s clear that there have been a series of research efforts addressing a range of topics (diabetes outcomes, diabetes cost, weight loss, etc.). Some of the papers I read were authored by Livongo employees in collaboration with researchers at Stanford,Duke, etc., and others did not have any obvious Livongo employee participation. As the performance of CGMs improves, and presumably Livongo’s software, it makes sense to keep researching the efficacy of their products.

So your assertion that their research is perched on two weak papers is simply not true.

As to why a ‘whole’ person matters…Type 1 diabetes is an incredibly complex disease. Depression, triggered by T1D is very common. Weight has a very significant impact on your odds of getting T2D and on your ability to control it. Buzzwords may really push your buttons…but there is substance there as well as hype.

My son was recently diagnosed with T1D, and I can tell you from my own dataset of 1, that having a CGM results in a significant improvement in quality of life. CGMs have demonstrated a very significant impact on long term T1D health outcomes, and thereby on medical costs (use PubMed to research these topics and decide for yourself). The linkage between tight control of your glucose levels and long term effects like blindness are very well established.

Read the papers for yourself.

I’d also note that Kaiser Permanente just bought their mental health service and is providing it free to all members. Evidently, their due-diligence established real benefits…sufficient to offset the cost of the program.

I personally have stock in Livongo. I found their diabetes product to have a significant positive impact, and their recognition of the coupling between chronic diseases to provide a strong basis for future growth. Good product today. More in the pipeline. I’m keeping my money where it is.

Best regards,
Chemfool2

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Livongo Founder and Executive Chairman said:
what we’ve done today is we have wonderful technology we have apps and we have devices and we have medications and we have health coaches and all of this and yet for people with chronic conditions it hasn’t gotten any better with all of this effort. and what we have to do is put that together into an experience that people have and that’s really what we’re doing at Livongo today and we call it applied health signals. and that is taking this information aggregating all this information from people’s bodies from their pharmacy records or healthcare records or electronic health records interpreting what that means for those people and then applying it getting it back to those people and doing what Amazon and Netflix and others do so well iterating to see did it work and if it worked do more of it and if it didn’t do less of it.

Livongo may not be doing any fancy stuff but they are trying their best to close the loop of all the disconnected pieces and serving their patients through iterations. We could call them a system integrator. While it is relatively easy to list out patient’s wants and needs, it is not easy at all to create an environment that will satisfy all your patients.

Livongo supports AI+AI for our members across a variety of uses cases. Here are just a few experiences that we’re already doing for Livongo members.

EXPERIENCE #1: Medication Optimization (in Partnership With a Pharmacist) for Diabetes
Problem Statement: Medication optimization (enabling the use of the right medication at the right dosage, and evaluation of the impact of that medication/dosage) is considered one of the most difficult things to improve in medicine. A member is on a number of different medications and is having a hard time knowing what to take when, maintaining refills, and is seeing a decline in staying on their medications due to that confusion and sense of being overwhelmed. As a result, their blood glucose levels are increasing. Livongo’s AI+AI Solution:
Livongo’s AI+AI engine uses a data science and behavior change approach that drives actionable and personalized impact in tight partnership with pharmacists from the leading national pharmacy chains.

First we Aggregate a variety of data: eligibility, formulary, current medications, pharmacy claims (to understand what conditions a member has), biometric screening data where possible, and their ongoing blood glucose data (from their Livongo blood glucose meter).
Then we Interpret that data and ascertain a set of signals that tell us the member is not taking to their medications, and that’s why their blood glucose levels are spiking. We know this, because the member’s blood glucose values are high, and they are intermittently refilling their prescriptions.

We then use our Livongo live coaching application (Apply) to help understand the member’s medication barriers. When the member speaks with our coach, we probe about why they aren’t taking their medication. If the member identifies a side effect of the medication, we identify an alternate medication that is on their formulary and connect them live with their pharmacist (by phone) to discuss the switch, or directly with their provider. The pharmacist (or provider) formalizes the switch to the new medication and guides them to make sure they are taking their medication optimally. The pharmacist has the new medication delivered to the member’s doorstep.

As the member uses their new medication, Livongo observes that their blood glucose is improving and Iterates the coaching messages, nudges, and encouragement to help keep the member on the medication.

In doing this, we reduce the complexity of the back and forth for a member with their pharmacist and providers trying to manage their medications and getting the right medication for them to be as healthy as possible.

EXPERIENCE #2: Medication Affordability for Diabetes and Hypertension
Problem Statement: A member has both diabetes and hypertension and is struggling to pay for their medications to stay healthy.

Livongo’s AI+AI Solution: In this scenario, Livongo can provide a special AI+AI solution for a member who is working for clients of ours that have put in place a program to completely pay for medications (with $0 co-pay for their employees) if a member performs certain health-related activities, such as measure their blood pressure regularly using the Livongo for Hypertension program.

So in this case, Livongo Aggregates the data that tells us which meds are in that $0 co-pay program and the criteria to be eligible for the program. We combine that data with the tracking data about how individuals are performing against those criteria. We mix in all the data we described in the last scenario: pharmacy claims, blood pressure values, blood glucose values, formulary, medications.

We Interpret all that data and create clear health signals that tell us that a specific member would use the medications more consistently if they are offered a $0 co-pay plan. And we also ascertain that the member often has a lag between prescription refills, so that signals to us that they may be having trouble getting to the pharmacy to actually pick up their prescriptions.
As part of a live coaching session, a Livongo coach Applies these signals by introducing the $0 co-pay opportunity to the member, and offers to help ensure delivery of their hypertension medication refills. The member is excited and uses the Livongo cellular-connected blood pressure cuff to measure their blood pressure consistently over the next month. They are then eligible for their $0 co-pay medication.

Livongo passes this eligibility information, blood pressure signals, and blood glucose values back into the engine, ensuring that the member’s next refill is a $0 co-pay, observes that the member’s blood pressure is improving, and Iterates the next coaching session content to congratulate and encourage the member to keep up their great progress.

In doing this, we reduce the costliness of healthcare for the member while also helping them achieve their health goals.

EXPERIENCE 3: Smarter Coaching for Weight Management
Problem Statement: A member has recently decided to take control of their weight but has been unsuccessfully using a traditional weight-loss program before. The coaches called them during the workday. They were too embarrassed to even talk to the coach, and so avoided the calls and had a bad feeling about the whole experience. They had one call and felt that the coach really didn’t know anything about them specifically and wasn’t a good “fit” at all so they gave up.

Livongo’s AI+AI Solution: For the member experience on Livongo’s Weight Management program, we Aggregate their eligibility data, nutrition and exercise data, psychographic information, and communication preferences. We have a powerful set of algorithms that allow us (from a few member-provided responses) to understand the profile of the member and how to most appropriately coach them in terms of content, style, and tonality. We also aggregate nutritional data, as well as Fitbit® exercise data.

We then Interpret their data and create a weight management curriculum that is most appropriate for them.

As we Apply that weight management curriculum, via digital, voice, video, or group-based coaching, we observe the member’s interactions and patterns. Members use Livongo applications to track nutritional data, Livongo’s digital scale to track their weight, and they interact with their Fitbit, which feeds data iteratively back into Livongo’s Aggregate layer.

Then we Iterate the coaching content and determine how best to deliver it specifically for them, continually tailoring the program to their needs. We also watch for signs of burnout and encourage them in the tough moments. For example, we may suggest they join a group coaching session to learn from their peers. Such advice is not based on speculation, rather on actual signals we’ve generated through AI+AI about what they need and what would work best for them (patterned on what we’ve seen work for others).

In doing all of this, we reduce the confusion around the set of options that work for a specific person to have impact on their weight. We help people understand what specifically works for them, and help them achieve their weight management goals!

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Sounds like Sour Grapes to me Dan. Sorry you missed the ride.

Livongo’s revenue growth continues to speak for itself. It is higher than any company discussed on this board besides Zoom. Where does the revenue come from? Giant insurance companies- are they all being bamboozled like you seem to be implying? Do you think they aren’t doing their DD and all just throwing money at Livongo and hoping it saves costs for them? Do some research on Glenn Tullman, maybe that will help you change your mind.

I still see a lot of doubters in investing communities on this company. This to me is a good sign.

Disclaimer- Long LVGO, third largest position
Bnh

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Diabetes is a medical problem poorly served by existing solutions.

No, diabetes are TWO distinct medical problems, type 1 and type 2. As far as I know type 1 is chronic and incurable. Type 2 is curable, I know because I no longer have it. The cure was losing 50 pounds. Not only was I cured of type 2 diabetes but of all the associated illnesses. I no longer take any medication that I was supposed to take for life.

The main thing that keeps me from Livongo is that the two other monitoring companies I follow, BioTelemetry, Inc. (BEAT) and iRhythm Technologies, Inc. (IRTC) are not doing so well. Anyone know why the disconnect exists? Is it the sales method?

Denny Schlesinger

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The main thing that keeps me from Livongo is that the two other monitoring companies I follow, BioTelemetry, Inc. (BEAT) and iRhythm Technologies, Inc. (IRTC) are not doing so well. Anyone know why the disconnect exists? Is it the sales method? – Denny

Rather than keeping me from Livongo, the examples you provide would have me thinking it was even MORE evidence to own it.

Disclosure: LVGO ~18% of portfolio

Rob
Rule Breaker / Supernova Starshot Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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Livongo offers a whole person 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. Livongo pioneered the new category of Applied Health Signals to silence Noisy Healthcare. Our team of data scientists aggregate and interpret substantial amounts of health data and information to create actionable, personalized and timely health signals. The Livongo approach delivers better clinical and financial outcomes while creating a different and better experience for people with chronic conditions.
https://ir.livongo.com/investor-relations

I agree that this is a too long and too many buzz words for a mission. That’s because it is not a mission, it is a investor relations statement about the company – and I think they would be better off leading with their mission:

OUR MISSION
Livongo has reinvented the healthcare experience for people with chronic and behavioral health conditions. Our Applied Health Signals solutions deliver actionable, personalized, and timely insights that make our members happier and healthier, while reducing overall healthcare spending.

Behavioral health is a thing:
Behavioral health is defined as the connection between behaviors and the health and well-being of the body, mind and spirit. This includes a wide variety of healthcare services.
https://www.insynchcs.com/blog/behavioral-health-vs.-mental-…

There is a lot more at that site on behavioral health. This thread is helping me get clearer on what Livongo does – I was being lazy as I only have a small position.

One thing I try to keep in mind about innovation and disruption is that there is a tendency to assume that there is insufficient value, because it require a different way thinking in order to see that value.

Enjoy,
Brian

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Good discussion. I obviously own a lot of LVGO. In fact, it’s moved from my #4 spot (14.8%) to #2 (18.2%) with this recent surge. I tend to view my holdings something like this:

Conviction = numbers + narrative

You simply can’t deny Livongo’s numbers. They are overwhelming and meet just about every checkpoint we have around here. The recent preannouncement suggests this isn’t slowing any time soon. I’d guess at least through 2020 since current clients have already committed for the year.

The narrative is a different story. Even as a bull, I view Livongo’s story as about 50% substance and 50% slick marketing. It’s admittedly unproven, but LVGO is the only company I know in this arena diligently working to show positive ROI. They have a smart founder with skin in the game. The company president is also an MD. And they REALLY seem to know how to navigate this space.

As mentioned by several, it is near impossible to significantly change most human behavior. However, I don’t view that as what Livongo’s trying to do. They are simply trying to be a helpful tool for those who are willing to help themselves. There seems to be enough of those folks around to make it work right now. In addition, LVGO is perfectly positioned as a remote monitoring option during a pandemic where people with chronic issues are hesitant to even venture outside. Will these conditions be enough to justify the hype and bring about significant change? Darned if I know, but I don’t need to. I only need to know clients WAY more in tune with this market – Kaiser, CVS, Blue Cross Blue Shield – have decided to give LVGO a legitimate chance. Until that narrative changes, I don’t see a reason to adjust my current conviction.**

** Of course, it’s a lot easier to say that when my entire position built between March and June is up 202%. That’s taken away at least some of the sting from choosing SMAR over ZM last December. :smiley:

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In addition to chemfool2’s points, I would think it is just as appropriate to question the trustworthiness of the blog you posted as it is to question the validity of Livongo’s solution. The author of this article shed some light on that here:

“With respect to your blogger himself, they (Livongo Management) noted that the blogger had approached them a number of years ago and solicited compensation to endorse LVGO on his site. They obviously declined, and since the post you referenced, he has been unwilling to respond to their requests to engage in discussion. They claim he has been paid in the past by one of their competitors and is running a pay-to-play scheme. We noticed that he is very promotional of the Validation Institute on his site. It turns out he is listed as a certified consultant/broker for the VI (https://validationinstitute.com/certified-professionals/), which offers a certificate program starting at $1195 (https://validationinstitute.com/certification/). In a prior post, he trumpeted the benefits of the CORA Pro certificate course while simultaneously cherry-picking a couple of points to disparage LVGO (https://dismgmt.wordpress.com/2019/05/23/questions-to-ask-li…). We find his motives at best ambiguous. Needless to say, numerous 3rd party consultants have raised concerns to LVGO about this blogger and his claims.”

Regarding the author’s point that those study results were self-reported, there are certainly better methods to perform a study but may not be realistic to implement with live clients. In any case, Livongo’s results can be corroborated by additional studies that used more controlled methods: https://www.hindawi.com/journals/jdr/2018/3961730/#B13.

A commenter on the Seeking Alpha article I wrote raised similar concerns and I addressed them thoroughly: https://seekingalpha.com/article/4316581-livongo-health-revo….

The rest of your points seem to be related to questioning the effectiveness of Applied Health Signals as a whole. Livongo is the first to scale but they are by no means without competition as their largest competitor, Omada Health, is focused on pre-diabetes / weight management but is expanding to compete in the same conditions as LVGO. A look at their app reviews tells it all about how effective they are. Livongo is also no slouch, they clock in a 4.8/5 rating on 13,134 reviews on the app store, some of the reviews are of patients saying it has changed their lives.

But forget all that, look at their results. Employers signing up in droves for multi-year contracts, churn at only 2% a month, and an NPS of +64. They claim demonstrable cost savings of $1900 per year per patient which translates into an average 3.7x ROI after one year, and 4.4x after two years. Is that all due to good salesmanship? In an interview, the CEO said this: “What’s fascinating is that we have a handful of clients where the experience and the outcomes are so good that they’re paying for the insulin if the member uses Livongo (https://www.fool.com/investing/2019/11/27/exclusive-intervie…).

And insurers are also loving it. It was the only “preferred service” on Express Script’s new digital health formulary. This was a clear indication of their dominance as Express scripts staked their own reputation behind LVGO. https://pharmaphorum.com/news/livongo-takes-centre-stage-in-…

So here we have really happy insurers, employers, and patients. Patients get to see better outcomes from gaining a better overall picture of their health and having access to personalized resources at their fingertips to help them manage it; providers can better utilize precious appointment times to more effectively engage with patients on a deeper level, having been provided with the real-time dataset that the app has gathered; and insurers can save costs from fewer hospitalizations, lower intake of medications, and more productive and happy patients. I think the results speak for themselves.

I was first introduced to this space because my friend is doing something really similar with his digital health startup he founded for managing behavioural health and I can attest to the validity of the research behind it. I think it’s not uncommon for investors to share your concerns considering that nothing like this has been done before (the technology simply wasn’t there yet), but that is the reason why LVGO gave such an incredible buying opportunity in the months following IPO. Now, with COVID-19 shining a spotlight on this space, I think that investors are starting to realize that there is a revolution going on in healthcare and it’s based on empowering patients.

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Brian,

After skepticism to the point I tore apart one of their clinical trials, I came to your same conclusion. I bought a large amount of Livongo 5 or so weeks ago. I initially was very skeptical due to two things: (1) clinical trials, and (2) like what is the value add and CAP here? I tossed it aside after looking at the numbers, and realizing that this is a tremendous and disruptive (disruptive in creating green fields, not setting aside other solutions) in medicine.

There are two things in all of medicine that can save the most money and produce the most marginal improvement in medical outcomes: (1) exercise (and people are out there counting their steps these days, Fitbit and Apple have not hurt there), and (2) compliance with cardiovascular and metabolic disease. This latter point is an enormous and unsolved pain point. Here comes Livongo that finally produces a solution, and a solution that saves its customers (large medical networks) money.

Livongo is not a monopoly (VIDA, for example, is what is used by my health insurance network) but Livongo is the clear and undisputed leader in the market. It reminds me of ISRG (that was a clear monopoly) who was derided by medical insiders as no proof of improved outcomes, too expensive, and the like. Yet, the numbers spoke SO WHAT! ISRG did eventually produce those clinical outcome trials, but only years later.

Anyway, once I figured this out, and that this does not appear to be a commodity market, AND Livongo still has not expanded internationally, and its indications are mostly new and still really unexploited (thus lots of room for upside surprise even beyond the core product) I did what I do, and I bought a lot at one time. Subject always to changing my mind and sell at any time, or of course continuing to buy more if I please, but you hit it on the head, and Livongo is the clear market leader, and also clearly has the endorsement of the leading figures in the market, and its clinical trials are well ahead of anyone else:

Livongo has reinvented the healthcare experience for people with chronic and behavioral health conditions. Our Applied Health Signals solutions deliver actionable, personalized, and timely insights that make our members happier and healthier, while reducing overall healthcare spending.

One thing I try to keep in mind about innovation and disruption is that there is a tendency to assume that there is insufficient value, because it require a different way thinking in order to see that value.

It seems to provide more relative value than Teladoc does, and yet Teladoc continues to be the dominant player in its market. Livongo is not treated as anything but in its market. It has some customer concentration issues. 5 customers make up 58% of its current revenues. Will something else come along and knock them off? That is always a risk with any investment. But Livongo’s advantage is not its better product (which appears to be the case, with multiple and growing clinical evidence demonstrating its efficacy and advantage vs other solutions (well at least in one study)), but its first mover advantage, and network connections, and relationship with its customers.

Could be wrong, but that is why I invested here.

Tinker

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don’t want to be argumentative Denny but diabetes is one disease see definition
https://www.niddk.nih.gov/health-information/diabetes/overvi….

Diabetes is a disease that occurs when your blood glucose, also called blood sugar, is too high.

Type 1 ,2 and gestational. All 3 are different forms or types of the disease

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Behavioral health is not a buzzword. It a department in Medicine. It is the relationship between psychiatry (MDs) and clinical psychology. They work together to provide mental health care that can in-office or inpatient (ER visits, crises centers, admissions). Just Google “behavioral health” and your favorite university and see that it’s a real field.

It also interacts with other fields of medicine in the realm of compliance. Compliance, especially with chronic disorders, is the most important component to long term health (maintenance or cure).

Small nudges like reminders (alarms, calender) are helpful but they still require the patient to create those reminders. Creating apps with push notification results in better compliance. A simple analogy is setting up your alarm or calendar to set up a doctor’s appointment. Most physicians don’t rely on the patient to remember as 20% of patients would forget about an appointment. So offices began calling patients to remind them. This decreases the no show rate but actually creates the unintended consequence of making patients reliant on the reminder and became contact points to allow them to cancel. Next came email reminders. A big leap but not everyone checked their email. Now offices are sending text reminders and no-show rates have fallen tothe 5% range.

This same thing occurs with diabetics. Some offices would call patients with severe cases as a way to decrease admissions (capitated HMO providers) but this can be expensive, relies on actually reaching patients, and requires the doctor to stop and talk to patient. So diabetes clinics were developed where nurses specialized in diabetes would adjust insulin based on protocols until the patient demonstrated excellent control. This is expensive.

Having automatic reminders saves the doctors from having to contact dozens of patients and saves insurances ER visits and admissions.

AI controlled insulin pumps that monitor glucose continuously and responds with insulin injection mimicing normal insulin release could be LVGO next play or could take them out if developed by someone else.

I see LVGO as a intermediate-term gorilla that will be individually be picked off by companies that specialize in AI driven artificial system controlling devices. This is because there is no loyalty in medicine to any device/company by the insurance companies. There is no way that LVGO can prevent competitors from creating better systems. And insurances will drop you when something else does something similar for 5% less. And it doesn’t have to be equal or better, just comparable. Each year the insurance companies will squeeze LVGO to get more with less reimbursement.

But in the intermediate term, it will do well as insurance companies put more patients into the system.

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I have really enjoyed the discussion on this. Thanks to everyone that provided input - especially those who have medical experience. I have been following this company for 6+ months and have read everything I could find on it, and I learned several new things through all these posts. I find it interesting that it took a counter-perspective to bring out all this great information.

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https://enlyft.com/tech/products/livongo

So basically 31 hr departments decided to incorporate livongo in their healthcare benefit package and revenue in 1st quarter 2020 is approx. $69 million.

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https://ir.livongo.com/static-files/b8b645dc-4ef3-4291-8760-…

This slide states over 1200 clients and 30% of fortune 500 companies.

5 customers make up 58% of revenues? Is client and customer the same thing?

If 5 customers make up 58% of revenues I would love to know who those customers are.

For me, the simple narrative for Livongo is that America’s high hospitalization costs mean the Livongo doesn’t need to be that effective for there to be a solid ROI. Even if, each year, they only prevent one trip to the hospital by every ten diabetics, the cost of a hospital visit is so high that money will be saved.

And their customers have the data to prove–or disprove–that ROI. So to me, it seems reasonable to bet that ROI exists, and also to bail if there is convincing evidence arises that there is no ROI (such as Livongo losing customers).

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BroadwayDan,

Let me start by stating that there are 34 million diagnosed diabetics in the US with 500k new diagnoses each year. At present, LVGO manages just 328k of those (<1%). Those are domestic numbers, not international.

This seems like common sense to me, but from reading your post you’ve self-proclaimed as not medically savvy, so I’m going to explain it from a medical point of view. None of what I say is meant to be condescending and I want to state that I am grateful for stumbling upon this board. It’s given me 63% returns YTD. Better than any year I’ve ever had in my 6 year investing career. Thank you Saul and community.

Diabetes is a disease that requires tight control of one’s blood glucose. If HgbA1C rises above 7%, long term damage and irreparable changes occur to the vascular system of the body. This affects the heart, kidneys, carotids, retinas, peripheral vasculature, and reproductive organs. Often a way to scare a male diabetic patient straight is to inform them that they may be unable to obtain an erection if they let their diabetes go unchecked. I’ve personally witnessed countless diabetics be hospitalized for infections (bacteria love glucose), surgical amputation of gangrenous or necrotic extremities (due to loss of blood supply), and diabetic keto-acidosis (requiring mechanical ventilation and intensive care measures including hourly monitored/adjusted insulin infusions. These patients can die easily due to metabolic changes and electrolyte shifts between their cells and plasma which can ultimately results in dysrhythmias and cardiac arrest.)

It’s no wonder diabetes is the single worst comorbidity for those with a COVID infection!! I’d be concerned if I was obese, diabetic, and hypertensive. Yet, those are the THREE most common co-morbidities I see on a DAILY basis as an anesthesia provider. It is common place in my line of work. Just another “day-in-the-life”.

Healthcare has been SLOWLY transitioning from a reactive entity to a proactive entity. With good reason too. The money is in treatment. Hospitals make much more money to react to a problem or perform surgery than to prevent a problem. Surgery is where the money is. I’m surprised insurance companies haven’t pushed harder for preventative measures. It would save them money!

As for Muji, here is his LVGO analysis:

LVGO - Q120

PR: https://ir.livongo.com/news-releases/news-release-details/li…
Fool take (Crumly): https://www.fool.com/premium/coverage/investing/2020/05/08/c…
BreakerForce recap: https://boards.fool.com/livongo-q1-review-34497163.aspx
Buynholdisdead recap: https://boards.fool.com/lvgo-q120-34522030.aspx
Saul’s take and buy: https://boards.fool.com/why-i-took-a-position-in-livingo-thi…
CC transcript: https://www.fool.com/earnings/call-transcripts/2020/05/07/li…
Digized on seq adds spiking in Q1: https://boards.fool.com/no-problem-i-added-some-more-today-a…
gmcnatt take: https://boards.fool.com/matt-already-pointed-out-but-worth-r…
AnalogKid take: https://boards.fool.com/i-own-a-large-chunk-of-lvgo-it39s-ac…
AnalogKid on moat: https://boards.fool.com/quotwhat-exactly-is-livongo39s-compe…… [under-rated post!]

Revenue 68.8M +114.6%, +27% seq !!
EVA (Est Value of Agreements) 89M +85%
Adj Op Inc 2.5M (vs -8M) swung pos
… margin +3.7% (vs -28.9%) !! +3260 bps
Adj Gross Margin 74.4% +330bps, -548bps seq
Adj EBITA 3.8M (vs -9.2M) swung pos
Adj EPS 0.03 (vs -0.49) swung pos
Opex 57.5M +50%
… 23% of rev -2100bps !!
CFFO -10.4M (vs -25.2M)
FCF -13.5M (vs -26.8M)
… margin -19.6% (vs -83.6%)
Cash 368M
Custs 1252 +77% !!, +44% seq

  • Diabetes Members 328K +100% !!, +32% seq
    $NER 110%
  • 18% of clients have >1 solution
  • services are more vital under COVID-19 pandemic, as chronic disease sufferers are so at risk (78% of COVID-19 ICU visits were from those having pre-existing or chronic conditions)
  • added new solutions for Diabetes Prevention and Behavioral Health
  • new modules for to manage stress & anxiety from COVID-19 only 3% of BH content but driving 25% of member views
  • partnered with Dexcom to hook into their G6 glucose monitor https://www2.livongo.com/news/livongo-and-dexcom-partner-to-…
  • partnered with Prognos Health to aggregate clinical lab data (opt-in program over members in partner labs) https://ir.livongo.com/news-releases/news-release-details/li…
  • first provider selected into new curated healthcare platform Welltok from the Health Transformation Alliance (HTA) https://www.prnewswire.com/news-releases/the-health-transfor…
  • major new cust Kaiser Permanente, signed up for Behavioral Health
  • major new cust Govt Empl Health Assoc non-profit provider, signed multi-condition contract (largest ever) to cover their 2M members
  • FDA granted emergency period for in-patient facilities to use LVGO’s diabetes meter

Investor slide deck: https://ir.livongo.com/static-files/9d0d9694-2ab8-4699-be48-…
*328k diabetes members, vs 31.4M total

  • 500k new diabetes diagnoses per yr
  • 1252 clients +44% QoQ
  • Q120 rev 68.8M +115%
  • $NER 110%

My stance: I now own Livongo. This is not a biotech hinging on a binary outcome – this is a med-tech company using hardware and ML/AI to improve lives, by managing a user’s existing health condition on their ever growing “Applied Health Signals” platform. They are gaining customers at a huge rate, likely due to their heavy focus on proving ROI for companies and healthcare providers. I had them on watch list a while but am always drawn to those pesky enterprise SaaS providers over it. However, these numbers from the current Q are too good to pass up. I wish I would have acted faster (before the massive rise over past few weeks), but there is no better time than now to buy in to their continued execution from here.

[I’d really like to thank Saul’s teachings for this shift in my investing behavior. As a contrast, my typical reaction to a price rocketing up after stellar earnings is “I’ll just wait til it has a FUD price stumble and get in then” – which then is a moment that never comes (or does and I’m not paying attn).]

Look at top line revenue growth in tandem with the massive drop in opex as a % of rev, as a perfect example of what we call OPERATIONAL LEVERAGE. The company is massively ramping top line, while drastically reducing the expenses needed to generate that hugely increasing revenue. I like seeing this very, very much – so much so that I cannot put off owning this company any longer. This leverage then leads to all the bottom line metrics swinging positive last Q and this Q. Op and Cash flow margins all trending the right way.

It’s a smallish position, as ultimately I am not sure how far LVGO can go (customer-wise), and unlike enterprise SaaS providers, scaling up covered members has its limits with its platform. There is a process involved, so they have to SLOW the on-boarding of new members in order to temper it’s own platform growth! [If that is the extent of its “problems” here … sign me up.] So far, their game plan (of getting more and more customers that are covering their members) has been stellar. More diseases & conditions can be added from here, and every bit of data they are collecting only strengthens the ML-driven system’s power. It’s not much of a moat (others can and are capturing their members’ data and building ML engines over it), but their experience in this and first-mover advantage has really created a nice core platform that can only expand from here as they become the go-to market leader in this new frontier.

CEO: In particular, we believe remote monitoring is rapidly becoming the new standard in health and care. Livongo’s connected technology allows our members to track vital signs of interest in maintaining health. … There is no question in our mind that this pandemic has accelerated a more extensive virtual care delivery model. Remote monitoring is here to stay, and we expect it to become the standard of care for the most vulnerable and expensive populations.

I expect lumpiness from here, as customer sign-ups & member on-boarding waxes and wanes. If they show signs of expanding into new conditions to cover, I would likely increase my position from here. Clearly it’s a new reality from this pandemic, and the populace has now had a sea change in their options of ‘tele-health’ vs in-person visits. This is a great trend, and LVGO is at the forefront. I like that, tech-wise, the sky is the limit in what they can cover to help members manage their own health. And I expect this company to continue tying their platform into more and more to smart-watch and medical monitoring devices from here.

-muji
long LVGO 3.5% (so far)

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END MUJI’s review

NEVERMIND that they just raised Q2 guidance from $73-75 million to $86-87 million! 113% revenue growth vs 83% revenue growth previously forecasted

COVID caused an acceleration of many things. Cloud adoption, remote work, and telehealth. Why go through the pain in the ass of getting hospitalized if you can avoid it? Though, admittedly I’ve taken care of patients who just enjoy the attention and turkey sandwiches and sprite we can provide at the hospital. Yum!

What exactly is a whole person platform? The term is laughable.
This is a common term in healthcare. Just google doctor of osteopathy (DO). What I take them to mean by this is they offer solutions for diabetes, hypertension, and mental health.

Not really even sure “behavioral health” is a term with any actual meaning. Is there anyone left on planet Earth who doesn’t know we should sleep 8 hours, drink water, eat lean proteins, veggies, work out and spend time in nature? In a video on their site they talk about treating the whole person and mention that they could be dealing with “socio-economic” factors. So if a person is out of work, has marital difficulties and lives in a high crime area with limited health resources, the Livongo “whole person platform” does exactly what?

Yikes okay. Behavioral health is common terminology in healthcare and encompasses mental as well as physical health. Especially mental health which is an underserved population. If behavioral health was such common sense, we wouldn’t have as much of a homeless population, people on selective serotonin re-uptake inhibitors, or people committing suicide. We would have far lower obesity and diabetes rates because people would do the right thing and eat the right thing.

Individuals perform better when they are held accountable. THIS is common sense. Why has Peloton done so well? People haven’t been able to go to health clubs and gyms where there’s a social aspect and they’re held accountable by their peers. Instead they’re now held accountable by their peers and lifestyle coaches with the added bonus of doing it from home. Oh wait, this also sounds like Livongo.

I won’t pretend to know the tactics of Livongo’s sales team or the future or the end result of Livongo’s game, but it sounds way less far-fetched than you are making it out to be. If they do “badger” clients, it is probably with some good reason as I’ve described above.

I don’t doubt Livongo’s ability to sell to companies and jack revenue for now and maybe in the next few years. I doubt their ability to help masses of people actually improve their behavior. Modifying human behavior is incredibly difficult. Shockingly so. For example, I listened to the founder of Duck Duck Go on the Invest Like the Best podcast and thought it a no-brainer to have more privacy in my searches. But til I actually downloaded the app and started using it took forever. And it was literally the easiest thing to do in the world.

This is the most sensible point you made in this post. It is EXTREMELY hard to modify behavior. We are prone to the status quo and we fall into habits. We are inclined to do what requires the least effort. (Thank Jesus this board is NOT like that). Look at Apple watches and FitBit’s. Those things alert you if you haven’t moved enough, essentially modifying behavior. Everyone’s talking about “getting their steps in”.

I am intrigued by LVGO based solely on the TAM of diabetes and their <1% crack into the TAM thus far. They save employers and insurers money and ultimately should reduce healthcare costs in general. It is the long-term effects of obesity, diabetes, and hypertension that tax the healthcare system the greatest.

Respectfully,

HugoStocklitz…
Long LVGO since $27 (it has organically become my largest holding)

87 Likes

Here is a link to Muji’s original post since none of the links I inserted work.

https://discussion.fool.com/livongo-q120-recap-34525093.aspx

  • HugoStocklitz
1 Like

Type 1 ,2 and gestational. All 3 are different forms or types of the disease

While it is true that some people can control their type 2 diabetes with diet and exercise … for a while, anyway … it is not true to think that everyone can.

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Type 1 ,2 and gestational. All 3 are different forms or types of the disease

While it is true that some people can control their type 2 diabetes with diet and exercise … for a while, anyway … it is not true to think that everyone can.

I think everyone can but not everyone will. Not even a majority I would guess.

2 Likes

BroadwayDan, I totally agree with your assessment and have posted my skepticism on this board in the past. I didn’t want to push too hard as I know many on this board are long LVGO, but since you started it here is my assessment. My conclusion is that this company is perhaps committing some kind of fraud? I can’t prove it of course. But the story, as you said, makes no sense.

No one can give me a good answer as to why LVGO is so successful when:

  1. They have no proprietary tech
  2. They rebrand a standard device provided by Dexcom https://www.fiercehealthcare.com/tech/jpm20-livongo-strikes-…
  3. There are at least five independent competitors, you mentioned Omada. There are more all of whom are not doing well.
  4. All major health insurance companies also have solutions for this. Here is the link to Optum’s solution. https://www.optum.com/content/dam/optum3/optum/en/resources/…
  5. The claims are nearly impossible to prove and don’t directly benefit the buying department which is HR.
  6. Why is revenue soring for an optional health service in a down market?

It’s very possible, that I may be wrong. All I know is I will not be buying this stock anytime soon. If you’re long LVGO, I wish you all the best of luck.

2 Likes