$3.6 Billion that my friends is what Livongo is worth after their historic IPO, $3.6 BILLION. That means right now Livongo a company with a short history, lots of losses in a crowded highly competitive market now has a larger market cap than Tandem ($3.5 Billion). Take a deep breath and think about that for just a moment.
Now we all know that Livongo’s market cap can change in a heartbeat nor does market cap have anything do with what a company is really worth. Market cap does not measure management skill or assess the competitive landscape the company faces. Market cap is just a simple calculation yet in Livongo’s case it is somewhat stunning.
When Verily and Sanofi formed their joint venture, Onduo , a Livongo competitor, the company was valued at $2 Billion which we along with many others thought was nuts. Well shows what we know and with Livongo’s eye popping IPO may just give Verily and/or Sanofi a way out of their troubled marriage.
According to Rock Health over $8 Billion of venture money has been invested in digital health in 2018 alone. Now not all of these companies are into digital diabetes, but many are which is why everyone is watching carefully how Livongo does. As we keep saying Livongo may be the first of these companies to go public, but it certainly won’t be the last. Investment bankers anxious to generate their fees are already texting emailing and pounded on doors hoping to land the next deal.
This is actually good news for Livongo as being the first immediately makes them the standard, they are now the company to beat in digital diabetes even though they may not be the best company in digital diabetes. And to be quite honest we aren’t even sure digital diabetes is all that great anyway as it’s just disease management with better technology. But who cares that disease management after lots of hype slowly faded away as companies discovered it didn’t produce the savings promised and there were other, cheaper ways to lower their healthcare costs.
Like so many stories in diabetes the Livongo story isn’t about patients achieving better outcomes, it’s all about money. Livongo’s goal is not to make patients better its goal is to lower cost for the patient’s employer. Livongo claims this happens when the patient achieves better control, but that claim has been difficult to prove without using fuzzy math. Just as employers bought into disease management years ago, they have bought into digital diabetes today.
But enough with the historical perspective or those damn pesky facts let’s allow Livongo and their team their moment in the sun. They have successfully pulled off the IPO and many have become instant multi-millionaires. Is America the greatest country on the planet or what?
Will the sunshine last or will it slowly fade away until the next hot thing comes along? Time will tell but for right now the time belongs to Livongo, congrats on pulling this off now let’s see if you can make money.