Buzzy digital health startup Livongo just filed to go public at a $2.5 billion valuation

Courtesy Livongo

Livongo, a company that sells diabetes monitoring technology, on Friday filed paperwork to go public with the US Securities and Exchange Commission.
The company most recently had a post-money valuation of $800 million.
Livongo is seeking to raise up to $200 million in its IPO and achieve a valuation of $2 billion to $2.5 billion, according to a person familiar with the matter.
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Livongo, a company that sells diabetes monitoring technology, just filed to go public.

The company on Friday filed paperwork with the US Securities and Exchange Commission to trade on the Nasdaq under the ticker symbol LVGO. Livongo plans to raise up to $200 million in its IPO and achieve a valuation of $2 billion to $2.5 billion, according to a person familiar with the matter. The terms of the offering are subject to change as the IPO draws near.

Livongo was founded in 2014 and operates diabetes and other chronic disease management programs using a glucose meter and other devices on behalf of big companies and insurers who pay monthly fees. Livongo’s bet is that by using technology, coaching, and other tools, it can manage those chronic conditions better and ultimately at a lower cost.

Before the IPO, Livongo had raised $237 million from investors, and most recently had a post-money valuation of $800 million.

There are about 29 million Americans known to have one of the two types of diabetes, of which the majority have type 2, in which the body has a hard time breaking down sugar in the blood and is often lifestyle driven.

A wave of digital health IPOs

Should the Livongo IPO be a success, it could open up a new wave of digital health companies to the public markets.

Already, healthcare software company Phreesia filed in June to go public, looking to raise $125 million. Change Healthcare, a Nashville-based revenue cycle management software company spun out of healthcare giant McKesson on Thursday looked to raise $1 billion in its IPO, and has a valuation of about $5 billion.

At least three other digital health companies are reportedly gearing up for initial public offerings this year, according to news reports. They include DNA-testing company Ancestry, health-data-storage company Health Catalyst, and clear-aligners company SmileDirectClub.

Prior to this wave of public offerings, the last digital health IPO came in 2016, when the cardiac monitoring company iRhythm went public. Private health-tech companies have racked up big valuations in recent years, but few have gone public.

It’s coming at a critical time for the market. Startups looking to apply technology to the healthcare industry raised about $14 billion in 2017 and 2018 combined from investors, but that funding seems to be slowing down this year. According to figures compiled by Rock Health, investments in digital health for the first quarter of 2019 were a little under $1 billion, a much slower pace.

Courtesy Livongo

Livongo’s competitors

Livongo faces competition from startups including Omada Health and Virta Health. Andreessen Horowitz-backed Omada Health just raised an additional $73 million at a $600 million valuation, CNBC reported. Virta Health has raised a total of $73 million and aims to help manage type 2 diabetes with the help of coaching and lifestyle changes.

Mountain View, California-based Livongo was founded by former Allscripts CEO Glen Tullman. Tullman’s son has type 1 diabetes, so he saw firsthand how difficult it was to manage the condition. To start, the idea was to build diabetes solutions that would fit seamlessly into people’s lives.

"No one cares about the technology," Tullman told Business Insider in 2016. "They simply want to live their life."

Through acquisitions, Livongo has expanded into tools to help people with other chronic diseases. In 2018, it bought Retrofit, a Chicago-based company focused on weight management, and in January 2019, the company acquired Denver-based behavioral health company myStrength.

JPMorgan Chase, Goldman Sachs, and Morgan Stanley are the lead advisers to Livongo on the IPO.

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