The COVID-19 pandemic has accelerated the use of virtual care, and companies like Livongo stand to benefit big-time.
Livongo, a chronic disease management company that has a strong focus on diabetes, reported a 115% jump in first-quarter revenue, increasing from $32 million a year ago to $68.8 million, according to the company's first-quarter 2020 earnings results.
That exceeds the company's earlier projections of first-quarter revenue in the range of $65.5 million to $66.5 million resulting from better-than-expected quarterly sales. It also beat Wall Street forecasts. Five analysts surveyed by Zacks Investment Research expected revenue of $65.6 million.
Livongo's sales growth was driven by 621 new client launches in the first quarter of 2020, compared to 231 client launches in the first quarter of 2019, according to the company.
The Mountain View, California-based digital health company signed a major government contract in the first quarter with the Government Employee Health Association (GEHA). GEHA is a not-for-profit provider of medical and dental plans for federal employees covering more than 2 million federal employees, retirees and their dependents. It represents one of Livongo's largest contracts to date, said Livongo's CEO Zane Burke during the company's earnings call Wednesday.
Livongo for Diabetes members increased 100% year over year to over 328,000, marking an increase of over 164,000 members on a net basis from the first quarter of 2019, according to the company.
In the first quarter, Livongo added a record 380 new clients, up approximately 44% quarter over quarter and raising the number of total clients to 1,252, Livongo Chief Financial Officer Lee Shapiro said during the call.
"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," Burke said.
The company's strong sales performance was primarily driven by growth in its core Livongo for Diabetes solution and with meaningful contributions to revenues from its hypertension, weight management and behavioral health offerings, according to Burke.
Livongo reported a loss of $5.6 million in its fourth quarter, compared to a loss of $14.3 million in the first quarter of 2019. On a per-share basis, the company reported an earnings loss of 6 cents compared to a loss of 79 cents per share a year ago. The results also beat Street expectations. The average estimate of four analysts surveyed by Zacks was for a loss of 4 cents per share.
The company went public in July, and its stock was up nearly 20% premarket to over $55 Thursday morning.
Livongo raised its revenue guidance for the year to $290 million to $303 million, which represents growth of 78% for the year, he said. Adjusted EBITDA loss is expected to be in the range of $14 million to $10 million.
For the second quarter, the company expects revenue in the range of $73 million to $75 million and adjusted EBITDA in the range of zero to a loss of $2 million.
The company plans to reach profitability in 2021 on an adjusted EBITDA basis, Shapiro said.
With more than 147 million Americans living with a chronic condition and 40% living with more than one, Livongo has a significant opportunity to continue growing its member base, Burke said.
As the U.S. continues to address the impact of the COVID-19 pandemic and the possibility of a resurgence of the virus later in the year, there will be a demand for remote monitoring technology, according to Burke.
"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. We expect that the ability for both personalized care, as well as broad population surveillance will become critical going forward as an early warning and monitoring system for the healthcare system at large and a way to efficiently deliver care to those who need it most exactly when and where they need it," he said.
During the COVID-19 outbreak, federal policymakers have relaxed requirements for remote monitoring reimbursement to aid providers while stay-at-home orders are in place.
Policy changes from the Centers for Medicare & Medicaid Services (CMS) resulted in inpatient access to Livongo and Medicare approvals for remote patient monitoring, Burke said, noting that he anticipates those policies remaining both on a temporary and longer-term basis.
"Congress has acted to deliver the emergency aid and economic relief Americans and businesses need to get through this phase of the COVID-19 pandemic. While that is a great first step, we anticipate the government will take further actions to expand the use of remote monitoring, managing and testing to better protect our most vulnerable populations with diabetes, hypertension, keeping them at home, healthy and out of harm's way," Burke said.
In January, Livongo struck a deal with Dexcom to integrate Dexcom's continuous glucose monitoring (CGM) device into its diabetes coaching platform. Dexcom is the largest manufacturer of CGM devices, and Livongo wants to mine those data and use artificial intelligence to offer its members more personalized, actionable insights for diabetes management.
In April, the company received an Emergency Use Authorization from the U.S. Food and Drug Administration (FDA) to use their remote blood glucose meter in hospitals.
Livongo’s remote blood glucose meter was originally approved by the FDA for in-home use in 2014.
"Our technology in the inpatient setting can now help providers better manage people with diabetes who are being treated for COVID-19. This also helps hospitals running out of personal protective equipment and facing staffing shortages, so we can better help protect those who are in the direct lines of fire," Livongo President Jennifer Schneider, M.D., said.
Livongo does not currently plan to sell the Livongo for Diabetes solution to the specific inpatient market long term, she said.