JPM20: Livongo strikes deal with Dexcom to integrate continuous glucose monitoring data

Livongo wants to mine data from continuous glucose monitoring devices and use artificial intelligence to offer its members more personalized, actionable insights for diabetes management. (Livongo)

SAN FRANCISCO— Digital chronic care management company Livongo is partnering 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, company executives said at the 38th annual J.P. Morgan Healthcare Conference in San Francisco on Tuesday.

Dexcom's G6 CGM system accurately measures glucose levels just beneath the surface of the skin and sends data wirelessly every five minutes without the typical fingerstick. From those readings, it collects 280 data points that Livongo can use to drive its health coaching to help patients manage their conditions.

"This collaboration is about aggregating data and making it easier for members to manage their condition," Zane Burke, Livongo CEO, said during a presentation at the conference. "The relationship with Dexcom is a great first start to putting together an architecture for chronic care."

Livongo will aggregate data from the CGM device, cross-reference with proprietary blood pressure and weight data from its connected devices and then use advanced data science to interpret that information and offer members personalized health insights, he said.

"As we get more and more data, every piece of data that we get makes us better," Burke said.

Dexcom's CGM solutions are used predominantly by those with Type 1 diabetes, while Livongo's target market is predominantly people with Type 2 diabetes because Livongo utilizes a blood glucometer that requires test strips and lancets. 

Canaccord Genuity analyst Richard Close said in a research note that the integration is an encouraging sign for investors. "Now that Dexcom CGM users will have the ability to sync with and utilize Livongo's services, the company has demonstrated that the CGM market does not necessarily pose a threat, rather it could be complementary," Close wrote.

Livongo struck a similar deal in 2018 with Abbott, which makes a CGM system called the FreeStyle Libre Pro, to integrate that device into its diabetes program.

Livongo President Jennifer Schneider, M.D., estimated that 10% to 20% of the company's Livongo for Diabetes members use a CGM.

"We will be able to collect near-real-time data and pair that with insights and human coaching to drive saving and clinical results," Glen Tullman, Livongo chairman, said, noting that members are more satisfied with the experience because they don't have to prick their finger to check their blood sugar levels.

RELATED: Livongo increases full-year revenue guidance following strong Q3 financial performance

Mountain View, California-based 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 such as glucose meters and wearables to monitor individuals' health conditions and also leverages artificial intelligence to provide personalized messages and coaching, what it calls "nudges," to keep people on track.

Livongo also recently announced it's teaming up with health kiosk company Higi to bring a branded program to nearly 500 retail pharmacies in Michigan. Higi operates a network of 10,000 "smart health" stations in pharmacies and grocery stores. The partnership with Livongo will scale across Higi's full network throughout 2020, Livongo executives said at JPM Tuesday.

Through the stations, consumers can determine their risk for chronic conditions, measure and track their health data and enroll in Livongo’s chronic condition management solutions. 

"Where do people go every week? Higi has 10,000 stations in pharmacies, in grocery stores, YMCAs and health clubs. This makes it easy for consumers to take a health survey and enroll. This is consistent with our strategy to meet members where they are and to empower consumers to manage their conditions and enroll in our solutions," Tullman said.

RELATED: Livongo, Health Catalyst shares surge on first day of trading

Burke said the partnership with Higi represented a "baby step" toward a direct-to-consumer approach for the company.

Room for growth in chronic condition management

Livongo was one of several healthcare technology companies to go public in 2019.

In its second quarter as a public company, Livongo reported strong financial and operational performance that surged past sales and profit expectations. Its third-quarter 2019 revenue rose 148% year over year to $46.7 million, beating Wall Street estimates of $42.6 million.

In 2017, the company reported revenue of $30.9 million, growing to $68.4 million in 2019. In its third-quarter earnings call, the company projected full-year 2019 revenue between $168.5 million and $169 million. 

Livongo currently has 771 clients, including four of the top seven health plans, leading health systems, government organizations, labor unions and 20% of 2018 Fortune 500 companies, executives said.

Livongo has barely scratched the surface of its addressable market, as 31.4 million people have diabetes and 147 million people in the U.S. have a chronic condition, executives said. 

Livongo reports demonstrable clinical outcomes among members that use its platform as well as cost savings for clients, Burke said.

RELATED: Livongo reports 156% revenue growth in Q2, but stock falls as earnings miss Wall Street estimates

The company counts two of the largest pharmacy benefit managersCVS Health's Caremark and Express Scriptsas clients. 

"CVS has expanded the number of products they sell through us and they use us for their own employees, Express Scripts, they’ve done the same. They have voted with their pocketbooks. When they have the risk they are using us exclusively. We have preferred status on their formulary," Tullman said.

The company started with large self-insured employers and is now moving into the fully insured business. "That makes us incredibly sticky," Burke said.

When asked during a Q&A session who Livongo's biggest competitors were, Burke responded, "We haven’t met our biggest competitor yet." He noted a broad set of competitors, what he referred to as "ankle biters," with individual niches in the market. 

"We will compete in those niches, but I have not seen anyone doing a fully integrated metabolic platform that's created a consistent experience and that's unique about our approach," he said.

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