Livongo Health announced better-than-expected quarterly sales in the first quarter of 2020 and expects revenue in the range of $65.5 million to $66.5 million.
That beat the company's own earlier guidance for $60 million to $62 million in the first quarter of 2020, and the average estimate of analysts polled by Zacks Investment Research for $62 million, according to Investor's Business Daily.
Livongo, a chronic disease management company that has a strong focus on diabetes management, announced its preliminary Q1 financial results on Tuesday. The company will hold a first-quarter 2020 earnings call on May 6.
The company's stock jumped 10.2% on Tuesday.
Canaccord Genuity analyst Richard Close said in a recent note to clients that Livongo is benefiting from a push to stay home amid the coronavirus pandemic, Investor's Business Daily also reported.
"What has become increasingly clear is the value proposition of telehealth and remote monitoring in providing effective triage, care, and a solution to mitigate the impact of a pandemic like COVID-19," Close said. "While telehealth is more episodic, remote monitoring can enable the early detection of potential health issues and focus attention to individuals most at risk."
The Mountain View, California-based digital health company raised its revenue guidance as many companies are reducing their revenue projections for the first quarter during the COVID-19 outbreak and the challenging economic climate.
The financial result for the first quarter of fiscal 2020 is preliminary and subject to change in connection with the completion of the company’s quarter-end closing process and the preparation of the unaudited financial statements for the first quarter of 2020, Livongo said.
Livongo's sales growth was driven by more than 620 client launches in the first quarter of 2020, compared to 231 client launches in the first quarter of 2019, according to the company.
“We began 2020 well-positioned to pursue our mission of empowering people with chronic conditions to live better and healthier lives, and now more than ever, our efforts are necessary to support our members and clients through the COVID-19 pandemic,” said Zane Burke, Livongo's CEO said in a statement.
Client launches and member enrollment are ahead of expectations, Burke said.
"We continue to see strong demand in our pipeline. Livongo is in the unique position of providing assistance to some of the most vulnerable populations, people with chronic conditions," he said.
Livongo Chief Financial Officer Lee Shapiro said the company is seeing increased interest in its core Livongo for Diabetes solution as well as its other solutions for hypertension, weight management, and behavioral health.
"As we shared in our fourth-quarter earnings call, 35% of our estimated value of agreements in the fourth quarter came from other offerings outside of diabetes," Shapiro said.
Remote monitoring and telehealth have been widely adopted as a "new standard of care," Shapiro said.
"The silver lining in the dark cloud of coronavirus is that we will look back months from now and recognize this as a watershed moment for digital health," he said.
The company is still not profitable, reporting a loss of $6 million in its fourth quarter, or $0.06 on a per-share basis. For the full year 2019, the company reported a loss of $54.9 million, or $1.08 per diluted share.
The company plans to reach profitability in 2021 on an adjusted EBITDA basis, Shapiro said during the company's fourth-quarter and full-year earnings call on March 2.
Livongo is currently hiring to meet increasing demands, the company said.
The current health crisis is hitting digital health startups unevenly. While companies like Livongo and telehealth company Teladoc report a surge in demand for their services, other firms have reported layoffs.
Los Angeles-based Anagram, a healthcare care billing startup, laid off 17 staff members this past Friday. "Given the current economic conditions, we had no other choice," Anagram CEO and co-founder Jeremy Bluvol posted on LinkedIn. The company had been known as Patch and recently rebranded to Anagram.
Stat News also reported that diabetes coaching startup Virta Health has laid off some of its employees while Halo Neuroscience, a San Francisco-based startup working on brain stimulation technology mostly used by athletes, furloughed most of its roughly 30-person team on March 20.
With a strong sales pipeline, Livongo expects "another strong quarter" in the second quarter of 2020, Shapiro said, although he acknowledged the uncertainty of the evolving COVID-19 outbreak and the potential impact on technology companies.
"There are certainly challenges that all companies are going to face. The environment that we in, providing digital health, is somewhat insulated from those burdens. We serve health plans and pharmacy benefit managers, but we also serve clients in markets that are going to be impacted, such as transportation and hospitality," he said.
Livongo counts Amazon and Target among its clients and Shapiro noted that those large companies are currently hiring more staff to meet the needs in the market, which means more potential members enrolled in Livongo's solutions.
Meanwhile, many companies that have furloughed workers continue to maintain those worker's health benefits, he noted.