A whole lot of nothing

There are just times when you read a press release, then reread it and all of a sudden realize it says nothing. We had such an experience this morning when our friends at Livongo issued a press release that stated the following;

“Livongo (LVGO), the leading Applied Health Signals company empowering people with chronic conditions to live better and healthier lives, today announced that it is available through the CVS Health Point Solutions Management service. Point Solutions Management is a full service offering for CVS Caremark pharmacy benefit management (PBM) clients to contract, onboard, and manage health and care solutions including Livongo’s Diabetes, Hypertension, Weight Management, and Diabetes Prevention programs. “

The implication like everything else with Livongo is that now available to more POSSIBLE patients these POSSIBLE patients will sign up and become REAL REVENUE GENERATING patients. Come to think of it pretty much everything Livongo does is all about what’s POSSIBLE and rarely about what’s REAL and this includes the convoluted way they calculate revenues.

Now if you’re looking for something very REAL about Livongo take a look at this;

“Livongo Health (NASDAQ:LVGO) CFO Lee Shapiro sold 27,500 shares of Livongo Health stock in a transaction that occurred on Thursday, March 5th. The shares were sold at an average price of $27.66, for a total transaction of $760,650.00. “

Mr. Shapiro himself stated during the last earnings call;

“As it relates to members of our executive leadership team, we expect a small percentage of holdings to come to market for personal or tax reasons through standard 10b5-1 plans. We do limit annual sales by our executive leadership team.”

To be clear here it is quite possible that the Mr. Shapiro and other members of the executive leadership team have not lost confidence in the company and just want to cash in some of their holdings, but the timing of the sale combined with his comments does make one wonder. Keep in mind that Livongo shares once traded above $40 per share but has since fallen into the mid 20’s.

What everyone needs to grasp with Livongo, and every other digital player is access to POSSIBLE patients doesn’t necessarily translate into REAL revenue producing patients. Companies such as CVS really have nothing to lose and everything to gain by providing more opportunities for patients to sign up this costs them nothing, it’s only when a patient signs up that they begin paying. It should also be noted that Livongo is NOT the only option available to patients.

Per a post on the MedCity website;

“Livongo, Hinge Health, and a handful of other digital health companies will join CVS Health’s platform for PBM clients. CVS announced it would add five companies to its Point Solutions Management Service, a service it launched last year to make it easier for CVS Caremark clients to contract with third-party apps and monitor their performance.”

What’s happening here is what always happens, Livongo wants everyone to think they are knocking the cover off the ball when in reality they haven’t even gotten into the batter’s box. As we have seen with so many minor leaguers who look great against minor league pitching it’s a whole different story when they get called up to the big leagues and have to face big league pitching.

The fact is it’s pretty easy to hit fastballs even when they are coming at the hitter at 100 mph. It’s a completely different set of facts when hitters face the full range of pitches thrown by big league pitchers. As Momma Kliff used to say if this really was as easy as they claim it is everyone would be knocking the cover off the ball when in reality it isn’t so easy which is why there are minor leagues.

By our way of thinking Livongo is still playing in the minor leagues and like many minor leaguers there is no guarantee they will ever make it to the big time.