Yep knew this was coming

Per a company issued press release;

“Livongo Health, Inc. (LVGO) today announced plans for the commencement of an underwritten public offering of 2,777,327 shares of common stock by certain selling stockholders.”

The release goes onto state;

“In connection with the proposed offering, the selling stockholders, Livongo, and Livongo’s executive officers, directors and certain significant holders of its common stock including General Catalyst, Kinnevik, and 7Wire Ventures, have agreed, subject to certain exceptions, not to sell any of Livongo’s common stock for 90 days following the date of the prospectus relating to the proposed offering. “

Now let’s state from the start we have no problem when insiders sell shares. Nor do we have an issue when after an IPO certain employees, insiders, etc. want to translate paper gains into real money. This is par for the course and happens all the time. Our question here is one of timing, why they chose to do this now rather than wait? While some of these insiders may be under a time constraint most are not, meaning simply they did not have to do this now.

Reading through the S-1 filed for this event we found a host of new information and also learned that the company continues to be very good at one thing; losing money. That for all the whiz bang way cool about all they have proven so far anyway is they can lose millions of dollars. That for all highly publicized contracts and their rather convoluted method for calculating revenue when it comes to real money, they are losing a boatload of it.

The question we continue to have and should be asked by every investor and analyst is; how will they reverse these loses when competition is intensifying which will likely drive costs down. Besides Onduo, the Sanofi Verily partnership, Livongo is facing more competitors at every turn. Well-heeled competitors like Amazon who are doing the same thing Livongo does just in a slightly different way. And what about every SMBG company that offers coaching or the many Dexcom wannabes who besides wanting to be like Dexcom want to be like Livongo too.

Yes, we know that most everyone wants to stay away from those pesky facts, but the facts are thanks to advanced insulin delivery technology, i.e. Tyler and/or hybrid closed loop insulin delivery systems plus increasing GLP-1 usage that the number of possible new members for these programs are DECREASING not increasing. That so far anyway the only company we have seen go after non-insulin using Type 2 patients is Onduo. And this is the group everyone should target but is the most difficult to work with.

We won’t say that Livongo is a house of cards waiting to collapse but it sure does feel that way. We don’t want to say that their convoluted method for calculating revenue is borderline illegal but it sure does feel pretty damn close to that. We will for sure say that CGM is replacing their old fashioned SMBG system and that fact alone could cripple the company in the future. We will also state emphatically that employers have nothing much to lose here but will likely find out after a year or so they haven’t gained a heck of a lot either. That for all the fancy math used by Livongo top calculate “savings” there is no there there.

For Livongo and shareholders this is a race against time. What will happen first? Will the company get acquired or will the truth come out? Time is not on the company’s side as the longer they remain independent the more likely it becomes investors will figure out the only thing the company is really good at is losing money. We have seen this movie before with disease management companies and while the technology may be better now the ending will be the same.