Health tech IPO activity picks up with filings from Livongo, Health Catalyst, Phreesia

Dive Brief:

Chronic disease management startup Livongo Health has moved to launch an initial public offering, filing a form S-1 with the Securities and Exchange Commission Friday. Founded in 2014, the digital health platform primarily targets diabetes patients, but has since added programs for hypertension, weight management, and through its January acquisition of myStrength, behavioral health.
The Silicon Valley startup, which markets its personalized monitoring and patient support services mainly to employers and health plans, said in the filing it had 679 clients as of March 31, adding 50,000 users in the first quarter of 2019 to reach about 164,000 total, driven by its diabetes unit.
The much anticipated proposed IPO could wind up being the first in digital health since ambulatory cardiac monitoring device maker iRhythm went public in 2016. Adding to the flurry of health tech activity last week were similar filings from healthcare data analytics platform Health Catalyst and patient software maker Phreesia.

Dive Insight:

Livongo, headed by former Cerner president Zane Burke, has seen rapid revenue growth, largely on strength of its core diabetes offering. The SEC filing claims clients save an average of $1,900 in healthcare spending per participating diabetes patient. The company's future success bets on the continued rise of chronic disease.

The startup reported revenue of $30.9 million in 2017, more than doubling to $68.4 million in 2018. In the first quarter of 2019 alone, the company brought in $32.1 million in revenue, marking a year-over-year growth rate of more than 150%. Livongo also reported it has an accumulated deficit of $128.6 million as of March 31.

Growth of clients, members and blood glucose checks 2014-2019 (not including myStrength members)

Livongo

The S-1 revealed sales through Livongo's top five channel partners — which include Express Scripts, CVS and Anthem — accounted for half of all revenues in 2018 and 59% of revenue in the first quarter of 2019.

The company announced earlier in the week its mobile health app is set to integrate with Apple, Fitbit and Samsung smartwatches to offer personalized notifications. Earlier this year, the company received CMS approval to become a Medicare Advantage provider.

Livongo said in the document the number of shares to be offered and the price range for the proposed offering have not been determined. The company hired Morgan Stanley, Goldman Sachs and J.P. Morgan to lead the effort to join the Nasdaq Global Market Select, where it's looking to claim the ticker symbol 'LVGO.'

Livongo's ramp-up comes the same week fellow digital chronic disease platform Omada Health announced it raised $73 million in a recent funding round, which it said it will use to expand its digital care program, particularly for patients with Type 2 diabetes, hypertension, anxiety and depression. Other competitors include Virta Health and Glooko, all aiming for a slice of the market of approximately 30 million patients with Type 2 diabetes.

Health IT company Health Catalyst submitted its own S-1 Thursday. Founded in 2008, the company offers hospitals and other healthcare providers subscriptions to health data and analytics software. The company reported having 126 customers as of Dec. 31, with Partners HealthCare and UPMC among its ranks, bringing in more than $112 million in revenue last year. The same day, revenue and payment cycle software company Change Healthcare began trading on Nasdaq after filing a prospectus with SEC in March.

Patient intake software company Phreesia filed an S-1 Wednesday to trade on the New York Stock Exchange. Founded in 2005, the company's revenues approached $44 million last year.