Livongo’s founder Glen Tullman
Livongo Health shares surged as much as 62% in their stock market debut on Thursday, the latest sign that public investors are buying into the digital health trend.
The company provides diabetes services to large employers, a space that’s attracting big dollars in the quest to ultimately provide better coverage and bring down costs. The IPO has been touted by the industry as a potential benchmark for other start-ups that sell disease management services to large companies and health systems.
Livongo was joined by Health Catalyst, a distributor of data analysis tools to hospitals, which also hit the market on Thursday and gained as much as 56%. Livongo raised over $350 million in its offering, while Health Catalyst brought in over $180 million.
Backed by Microsoft and venture investors, Livongo is part of an emerging group of companies using technology tools like coaching in a bid to improve health outcomes. The company connects with smartwatch manufacturers like Apple and Fitbit to deliver nudges that serve as reminders to its users to eat healthy and exercise, and was among the first to introduce a medical skill to Amazon’s Alexa voice assitant.
In 2018, digital health companies raised more than $8.1 billion in venture capital financing, according to Rock Health. In Livongo’s space, there’s competition from health coaching companies, including Omada Health and Virta Health. But there have been few significant exits in the market, meaning investors are paying particularly close attention to how Livongo performs. After its debut, the company is worth about $3.6 billion.
Livongo started out by focusing on diabetes — more than 100 million Americans are living with the disease or are considered at high risk — but has since moved into other disease areas, including hypertension and mental health.
The company said revenue more than doubled in 2018 to $68.4 million from a year earlier, while its loss widened to $33.4 million from $16.9 million in 2017.
WATCH: Livongo’s Glen Tullman on the company’s IPO