After much speculation and anticipation, chronic care management startup Livongo officially went public on Thursday. The company closed its first day 36% above its initial pricing of $28 and is currently trading for over $41 per share on NASDAQ. The company's includes more than 12 million shares of common stock.
“It’s a signal to the market ... that [the industry] is ready for a consumer-first experience in healthcare, and to stay healthy living their best life,” Zane Burke, CEO of Livongo, told MobiHealthNews.
This comes less than a month after the digital health company officially filed for an IPO on the Nasdaq Global Select Market.
“I think this was the third largest every healthcare IT initial offering. It is a big offering and the market activity was great,” Burke said.
While this is an exit for the startup, Burke said the main focus is on continuing to grow the company.
“This IPO, basically we offered up less than 15% of the company,” Burke said. “We weren’t talking money off the table, but this is truly about how we are preparing for the future. This is to fuel future growth.”
Burke said the company is looking to the behavioral health space and continuing to grow its chronic care management in the future.
WHY IT MATTERS
Venture firms are continuing to pour money into digital health startups; however, the exit strategy for many of these companies is still murky. The industry continues to see M&As as the primary vehicle, while IPOs remain lagging.
“With the surge in funding, and absence of an equally robust exit market, there is more scrutiny on digital health than ever before, begging the question: will value creation track with recent investment trends?” Rock Health wrote in a report published at the beginning of 2019. “Given that over $30 billion in venture dollars have been invested in digital health since 2011, and assuming investors expect an approximate 4X return over 10 years, the market should grow to $120 billion in the next four to six years. That is a pretty large number, but with a $3.5 trillion healthcare market, this magnitude of return is conceivable. However, with today’s high but as-yet-unrealized expectations, we aren’t surprised to see the b-word increasingly pop up in conversations.”
However, things are changing. This year is seeing a surge of digital health companies going public — potentially a signal to the future.
“2019 marks the end of the three-year digital health IPO drought,” the analyst wrote in a mid-year update. “Five companies — Livongo, Health Catalyst, Change Healthcare, Phreesia and Peloton — have announced plans to enter the public market this year.”
THE LARGER TREND
Founded in 2014 with a focus on diabetes care, the Californian company has quickly expanded to include products for hypertension, blood pressure monitoring and other chronic conditions.
In the last year few years it has made a number of acquisitions, including weight-management and disease prevention startup Retrofit, diabetes care company Diabeto and behavioral health app MyStrength.
Last year the company got a $105 million boost in new Series E funding, primarily from existing investors.
