There’s a Chinese curse which when translated says; “May you live in interesting times.” Well when it comes to our wacky world that is being proved each and every day. But nowhere have things gotten more interesting than all the speculation of what happens if Livongo fails. That’s right that is not a misprint this company which just had a monster IPO, hasn’t even reported earnings yet and already people are talking about the impact their failure would have on the digital health space.
This is even wackier when you consider already some analysts are heaping hefty praise on this company which hasn’t reported earnings yet and so far, has only shown the capacity to lose lots of money. Maybe it’s our 20 plus years covering this wacky world or our many gray hairs that tell us if we didn’t know better this is setting up as a classic pump and dump.
Some of this speculation may be because of recent reports from CNBC noting the departures from Apple’s health unit. It seems that all is not well at the spaceship as the company is figuring out how they will play in the digital health sandbox.
Perhaps some of this speculation has to do with the fact that Verily, the life sciences unit of Google, has done lots of deals but really has nothing of substance to show for all their deal making. This is particularly true of their partnership with our chardonnay guzzling friends, Onduo which like Livongo is in the digital diabetes space.
Another wacky aspect here, and yes, we know this getting a little redundant, is how so many investors have been going around saying how they avoided the recent IPO. Which may be true for some but obviously their reluctance didn’t hurt the IPO which as we have noted was very successful. It’s almost as if these investors want Livongo to fail so they can brag about it later.
Now we have no idea if Livongo will fail or not. What we do know is that eventually they will have to make money and that is going to be very difficult to do. First as we have noted previously Livongo is not the only company in the digital diabetes space, far from it. This competition will do what competition does, push prices lower. It will also force some of the competitors to offer their services for FREE getting paid only if they produce the promised results.
The next problem will be new diabetes management systems such as Tyler and closed loop insulin delivery systems. The harsh reality for Livongo is that there is no need for their system when a patient is using a Tyler or closed loop insulin delivery system. Nor is there much of need when a patient is using a GLP-1.
That leaves the most difficult hurdle to overcome Type 2 patients who don’t use insulin or a GLP-1. And to be crystal clear here this is a hurdle faced by every digital diabetes company and one that none of them including Livongo will clear. Again we hate to be redundant but as we state consistently for these patients it all comes down to medication adherence, taking their pills as prescribed.
Everyone in digital diabetes seems to believe that with coaching these patients will become adherent but the fact is there is scant evidence to support this belief. Coaching can and has produced short term results but so far anyway there is no real evidence that shows these short-term results are sustainable over the long term. How many of us know someone who has lost weight only to gain it back 6 or 12 months later?
What every digital diabetes players fails to understand is that these patients have no vested interest in achieving better outcomes. It takes hard work to achieve better outcomes and with no vested interest in achieving these better outcomes these patients end up going back to their comfort zones over the long haul.
So what happens if Livongo fails? Maybe that’s the wrong question maybe everyone should start thinking what happens when they fail.