Becoming part of a group of digital health companies that are ending a three-year drought in IPOs in the sector, Mountain View-based digital health startup Livongo went public on July 25. The company’s shares were initially priced at $28 with an implied market value of around $2.5 billion; in first day trading, shares surged 36 percent, leaving Livongo valued at about $3.6 billion. The company sold approximately 12.7 million shares and raised over $350 million.
Founded in 2014, Livongo provides programs to assist in the care of those with diabetes and other chronic conditions through the use of glucose meters and other medical devices. Big companies and insurers pay monthly fees to provide the service to their employees and clients. While Livongo started off focused solely on diabetes—a condition that effects or could affect over 100 million Americans—it has since expanded into other disease areas including mental health and hypertension. Ultimately, the company believes that it can improve condition management and lower costs through a combination of coaching, technology and other tools.
As of March, Livongo had approximately 164,000 members in its program to treat diabetes, the company’s largest.
Prior to its IPO, Livongo has raised $237 million from private investors and was valued at $800 million. While the company has experienced rapid growth in recent years, it has also seen deepening financial losses; while Livongo more than doubled its revenue from 2017 to 2018 from $30.8 million to $68.4 million, its net loss also more than doubled from $16 million to $33 million in the same period.
Livongo was not the only digital health company to make its market debut on July 25. Utah-based healthcare software company Health Catalyst entered public trading the same day, pricing its shares at $26 and raising $182 billion on a valuation of $1 billion. Healthcare software company Phreesia and revenue cycle-management software company Change Healthcare have also entered public trading in the past two months.
Before the IPOs of Livongo, Health Catalyst, Phreesia and Change Healthcare, a digital health company had not gone public since cardiac monitoring company iRhythm in 2016.
Livongo trades on the Nasdaq under the ticker “LVGO.”