Digital health startup Livongo Health filed a preliminary prospectus with the Securities and Exchange Commission (SEC) on Friday for a $100 million initial public offering (IPO).
The number of shares to be offered and the price range have not yet been determined, according to the S-1 registration statement. The Mountain View, California-based startup will be listed on the Nasdaq exchange under the ticker symbol "LVGO."
The chronic disease management company brought in $68.4 million in revenue last year, more than double its revenue in 2017, according to its S-1 filing with the SEC. The company is on pace to surpass that figure this year as it brought in $32 million in just the first quarter of 2019, representing a year-over-year growth rate of 157%, according to the filing.
But the company's losses have widened as well. Livongo posted a net loss of $16.9 million in 2017, and that grew to $33 million last year. The company lost another $15 million in the first three months of 2019.
While the digital health sector has raised billions in venture funding, it hasn't produced an IPO since 2016. Livongo is the third company in a week to file to go public. Healthcare software company Phreesia filed a preliminary prospectus with the SEC on June 21 for a $125 million IPO. Data warehousing and analytics company Health Catalyst filed to go public on Thursday. Health Catalyst also plans to raise $100 million for its IPO, according to the filing.
Livongo started with a focus on diabetes management in 2014 and has since expanded to other health conditions such as hypertension, weight management, and behavioral health. The company uses technology like glucose meters and wearables to monitor individuals' health conditions and provides personalized messages and coaching to keep them on track.
As of March 31, 2019, Livongo had 679 clients and over 164,000 Livongo for Diabetes members; that part of the business makes up about 90% of the company's revenue, according to the SEC filing.
The company estimates the market size for employees of self- and fully insured employers with diabetes in the United States to be approximately $12.3 billion. "Over the longer term, we see an additional $15.9 billion opportunity for adults with diabetes receiving healthcare coverage from Medicare or Medicaid," the company said in its S-1 filing.
Earlier this week, the company announced an integration with activity trackers like Apple Watch and Fitbit that enables members to receive notifications on those devices related to blood sugar readings, nutrition, and exercise.
Many digital health companies have targeted chronic disease management, as it is a sizable market. As of 2014, approximately 60% of all U.S. adults lived with one or more chronic conditions, and over 40% had two or more chronic conditions, according to the Centers for Disease Control and Prevention. Patients with chronic and behavioral health conditions represented 90% of U.S. healthcare spend in 2014, CDC data shows.
Livongo faces competition from companies like Omada Health, Virta Health, and Glooko, which are also offering products and services to monitor or coach diabetes patients.
The company said it offers an integrated suite of solutions to promote sustainable health behavior change based on easy, real-time data capture supported by intuitive devices, insights driven by data science, and a "human touch" when the member needs it.
The company identified a number of risks it faces as it attempts to grow its business, such as its history of net losses. The company anticipates increasing expenses in the future, according to the SEC filing. The market for Livongo's solutions is new, rapidly evolving and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change, which makes it difficult to forecast demand for its solutions. Competitive solutions or other technological breakthroughs for monitoring and preventing chronic conditions could also hamper the company's growth.
Health IT company Change Healthcare began trading on the Nasdaq exchange under the trading symbol "CHNG" on Thursday. Shares of the company started trading at $13, which was lower than the company's target price of $16 to $19 per share, according to the Nashville Business Journal. The company's shares rose to $15 at the end of trading on Thursday.
Majority owner McKesson congratulated the company on its IPO in a public statement and announced that it expects to exit its investment in Change Healthcare in a tax-efficient manner.
"Congratulations to Change Healthcare on this significant milestone in the company’s history," McKesson CEO Brian Tyler said. "For McKesson, this is an important next step in our efforts to unlock value for McKesson shareholders from our investment in the Change Healthcare business."