Diabetes-training startup Livongo documents to go public in a take a look at for fitness tech

Livongo, a startup that video display units and coaches sufferers with chronic illnesses, on Friday filed papers to launch its preliminary public providing, in what’s seen as a litmus take a look at for health-tech companies looking to translate early increase into fee within the public markets.

The supply is expected to be most of the first for a new generation of slick and savvy project-subsidized companies within the U.S. Virtual health quarter, which hasn’t produced an IPO since 2016. (Another such agency, scientific records information startup Health Catalyst, filed to move public on Thursday.) Longo’s offering has been expected for several months. The business enterprise has been increasing rapidly and jogging research to reveal that its services can improve patients’ consequences and store their employer’s money. Livongo delivered $68 million in revenue last yr, greater than double its haul in 2017, and is well on tempo to eclipse that figure this 12 months, after a first region in which it delivered $32 million, in keeping with the agency’s submitting with the Securities and Exchange Commission.

But Livongo is likewise losing money: It published a net loss of $33 million last yr and lost every other $15 million within the first 3 months of this year. The enterprise, which has its biggest workplaces in Silicon Valley and Chicago and employs extra than seven-hundred humans, makes the maximum of its money by charging self-insured employers to impart its monitoring and coaching offerings to their employees with continual illnesses. It reached a total of 679 customers at the stop of March, in step with the SEC submitting; some of the most important are Microsoft, Merck, and Delta Air Lines. Livongo additionally counts a handful of health plans and hospitals amongst its clients.

The business enterprise’s maximum critical commercial enterprise is diabetes — extra than 164,000 patients are enrolled. It’s made up approximately ninety% of its revenue — although, in recent months, Livongo has rolled out applications for high blood pressure, weight control, and behavioral fitness. Employers typically pay the business enterprise a rate of $75 according to month for that personnel who’re actively using Livongo’s diabetes program, and patients themselves don’t pay whatever out of pocket. When the personnel of Livongo’s customers signs up for the agency’s diabetes software, they get a clever blood-glucose meter, and checking outstrips inside the mail.

When sufferers sample their blood and run it thru the gadget, the one’s records get beamed lower back to Livongo. In turn, the corporation uses gadget learning algorithms to provide patients with customized tips and messages that display up on the display of the blood glucose meter. Livongo also employs a small army of fitness coaches who name patients proper away while their blood sugar readings come in too high or too low. In its SEC filing, the company states that it saves over $1,900 a yr in gross clinical prices for diabetes patients, as well as 7% weight loss for sufferers suffering from weight problems. But key questions continue to be, which include whether its effects will hold up over a long time and produce value for patients and employers and whether buyers may be convinced of its commercial enterprise version’s sturdiness.

It also faces lots of opposition, particularly in diabetes care, its biggest source of business. Companies consisting of Omada Health, Virtua Health, and Glooko also aim to reveal or instruct those sufferers. Longo’s SEC filing offers perception into how it’s faring as it takes on some of the sharp challenges for organizations inside the region. When a patron signs up to offer its personnel or protected sufferers with diabetes get admission to Livongo’s service, no longer each person who’s eligible signs up. On common, the best 34% of them pick to enroll within a yr, consistent with the filing. And the one’s sufferers who do determine to enroll in Livongo’s diabetes application have interaction with it at one-of-a-kind rates. On common, they log over 250 interactions with Livongo a year, the filing stated. Livongo hired Morgan Stanley, Goldman Sachs, and JPMorgan Chase & Co to underwrite the deliberate IPO. Citing a supply acquainted with the deliberate offering, Business Insider mentioned that the enterprise might be valued as excessive as $2.5 billion.