Mountain View, California-based Livongo Health has officially filed papers for their public offering in one of the most hotly anticipated IPOs in recent digital health history.
The company, which will be listed on the Nasdaq exchange under the ticker symbol “LVGO,” offers tech-enabled solutions that help to monitor and manage people with chronic conditions like diabetes, hypertension and behavioral health issues.
The number of shared being offered in the IPO and their pricing range has not yet been determined. Underwriters on the IPO are Morgan Stanley, Goldman Sachs and J.P. Morgan.
Livongo was launched in 2014 and emerged from a previous company called EosHealth that was invested in by Livongo Founder Glenn Tullman’s VC firm 7wire Ventures. The company has raised nearly $240 million from investors, including a $105 million Series E that valued it at $800 million.
Citing a source familiar with the company, Business Insider reported that the company hopes to raise $200 million from its IPO at a valuation as high as $2.5 billion.
Tullman, who also serves as the company’s executive chairman, has a long history with the public markets, successfully shepherding EHR company Allscripts and health IT company Enterprise Systems to successful IPOs.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
According to its S-1, Livongo has 164,000 members across 679 clients, which include 20 percent of the Fortune 500. The company has more than 470 employees and earns most of its revenue through PMPM contracts with self-insured employers like CitiGroup, PepsiCo, Target and Delta Airlines.
It has also signed agreements with four of the top seven payers in the country including Anthem, HCSC and Highmark Health – and two of the largest PBMs – Express Scripts and CVS. Livongo said it relies on these non-exclusive channel partners and resellers for around 50 percent of its revenue.
In it’s S-1 filing, the company says it saves more than $1,900 annually in healthcare costs for the typical Livongo member and in their diabetes patients drive a 22 percent average reduction in total medical spending and a 26 percent reduction in avoidable ER costs.
The company’s financials show continuing growth for Livongo. Last year, the company made $68.4 million in revenue, more than double the $30.9 million figure from 2017. The company’s $32.1 million in revenue for the first three months of 2019 also represents a 157 percent year-over-year increase from the year prior.
Still, Livongo is unprofitable and continues to lose money. The company saw a net loss of $16.9 million in 2017 and $33.4 million in 2018. That trendline has continued with a net loss of $15 million for the first three months of 2019. All told, the company has an accumulated deficit of 128.6 million.
Livongo’s largest current shareholders according to its S-1, are venture capital firm General Catalyst (which owns 25.4 percent of the company and led the company’s Series A round), Swedish investment company Kinnevik AB (which owns 12 percent of the company) and Kleiner Perkins (which owns 8.9 percent of the company).
The largest individual shareholder in the company is Tullman, who owns 4.6 percent of the company, followed by CEO Zane Burke, who previously served as the president of health IT giant Cerner and owns 1.2 percent of the company.
The company’s recent focus has been building out its “AI+AI platform,” which uses artificial intelligence to analyze data from multiple sources and use it provide health suggestions at the right time for users.
While the move toward an IPO has raised Livongo’s profile considerably, there’s plenty of competition from fellow chronic disease management companies like Virta Health, Vida Health and Omada Health, which just announced a $73 million Series D at a $600 million valuation.
After a relative drought of digital health IPOs since 2016, activity has ramped up considerably this year with New York patient intake software company Phreesia filing for its IPO and Nashville-based Change Healthcare recently upping its potential IPO proceeds to more than $1 billion.
In fact, Salt Lake City-based healthcare data company Health Catalyst just filed its own S-1 earlier this week.
The influx of IPO activity comes at a welcome time for the digital health industry where the lack of exits and slowing investment pace had some observers fearing a bubble.
Photo: jxfzsy, Getty Images
