Livongo, Health Catalyst shares surge on first day of trading

wall street bull color
Livongo Health and Health Catalyst are two of the latest health technology companies to go public. (Alexander Naumann/Pixabay)

Livongo Health and Health Catalyst, two of the latest health technology companies to go public, jumped in their trading debuts Thursday.

The companies, which trade under the symbols LVGO and HCAT, both saw their share prices surge by at least 50% in midday trading.

It comes just about a week after healthcare software company Phreesia had its own strong public debut on July 18 when its stock climbed about 53% above its offering price and it closed trading about 40% above its set price. When health IT company Change Healthcare began trading on the Nasdaq exchange on June 27 it was the first digital health initial public offering in three years.

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Shares of Livongo, a chronic disease management company that has a strong focus on diabetes management, jumped 58% in its trading debut after the company priced its initial public offering late Wednesday at $28 a share, above the pricing range it had previously given of between $24 and $26. The company sold around 12.7 million shares of its common stock to raise $355.2 million.

The company is valued at roughly $5.2 billion on a fully diluted basis, according to The Wall Street Journal.

Livongo, based in Mountain View, California, brought in $68.4 million in revenue last year, more than double its revenue in 2017, according to an SEC filing. 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.

The company is now led by former Cerner CEO Zane Burke who took the CEO position in December 2018.

RELATED: Phreesia has a strong public debut as 2nd digital health IPO in 2019

Salt Lake City-based Health Catalyst, a data and analytics company, also priced its IPO above its given price range of between $24 and $25 a share, selling 7 million shares at $26 each to raise $182 million.

The company’s valuation stands at roughly $1.5 billion, The Wall Street Journal reports.

Health Catalyst, which was founded in 2008, brought in $112.6 million in revenue in 2018, a 54% increase year over year from 2017, according to the company's S-1 filing. In 2018, greater than 90% of its total revenue was recurring in nature, the company said.

Health Catalyst chief financial officer Patrick Nelli told FierceHealthcare company leaders felt its size, scale and predictability made the time right to go public.

"The digitization of the healthcare space has been a multi-decade transition. And as we thought about the public markets, we believe if we’re truly going to help all healthcare organizations to become data-informed that we need to be larger. Ultimately we felt the public markets was the right path," he said.

Nelli said the company is uniquely positioned to help healthcare organizations use analytics to tackle major challenges like wasteful spending, changing economics and increasing data complexity.

RELATED: Diabetes management startup Livongo files to go public

"There’s over a $1 trillion of waste in the healthcare system and without access to advanced data and analytics, it’s really hard to tackle and reduce that waste," Nelli said. "That’s ultimately what drives demand for our solution. We help our customers organize their data, find insights from that data, and provide services to help them leverage the insights from that data to meaningfully improve."

Yonatan Adiri, founder and CEO at Healthy.io, a Tel Aviv-based company that develops smartphone-based urine analysis tests, said Wall Street validation will help to accelerate even more digital health innovation from companies using technology to improve the quality, efficiency and personalization of health care

"Livongo's IPO points to the overall success of digital health that is clinically-proven, evidence-based, and aimed at major cost drivers—in this case, chronic disease," Adiri said in a statement.

Healthy.io plans to bring its FDA-cleared smartphone camera health solutions to the U.S. in the months ahead, he said.

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