In late 2014, the startup was renamed Livongo Health. And just over a year later, in August 2020, he forged the largest digital health deal with an $ 18.5 billion merger with Teladoc, which also provides telemedicine services but in a different market niche.
Livongo’s growth strategy has been based on a number of secret sauces, including an employee base that consists primarily of patients with diabetes, including its own president, Jennifer Schneider.
Schneider told Fortune a personal story shortly after the company’s IPO about his use of the Livongo platform, which had increased in popularity (and revenue) in previous years. She was touring the country promoting the public offering before waking up with low blood sugar, leaving her confused and dazed. That particular incident may have been unique in the midst of a hectic tour, but it may be a living reality for many diabetes patients.
Using the company’s technology, Schneider says he took his blood sugar readings, and the Livongo connected platform was able to relay this information to a diabetes specialist who could provide immediate, personalized advice. (In this case, the advice was to raid the hotel minibar to get your glucose numbers back.)
That convenience factor has only grown as interconnected technologies have become a regular part of our everyday lives, leading to changing consumer attitudes in digital healthcare. For example, Accenture finds that consumers are increasingly likely to choose healthcare service providers who can offer virtual offerings, such as the ability to use remote devices (like Livongo) to keep track of their biometric data.
Those trends are confirmed by Livongo’s revenue, which more than doubled to nearly $ 170 million, from $ 68 million, between 2018 and 2019, driven by high participation rates.
Although Livongo has made rapid progress in recent years, it took more than a decade, and a global crisis, to get to this point. “We as humans are a bit slow at changing behavior,” Schneider tells Fortune.
As with everything else right now, the coronavirus pandemic accelerated the process.
“There was that great, great time aha! With COVID. And I think the market said, ‘Oh wow, this is not just a small piece of the puzzle. This is actually the future in the future,'” he says. , referring to the staying power of telemedicine in American healthcare. As more patients were able to see their doctors virtually, they realized the benefits of the approach.
In New York’s large Presbyterian health system, about 4% of outpatient visits were telehealth visits before the pandemic. That number has skyrocketed since then, with between 85% and 95% of outpatient psychiatric visits taking place online. Similar peaks have occurred for the maintenance of chronic diseases.
This speaks to the synergies and logic behind the Livongo-Teladoc agreement. Analysts at Piper Sandler paint the merger as a natural corporate marriage, particularly during times of pandemic.
“The challenge for Teladoc has been utilization, which has improved considerably thanks to COVID,” they write in a research note.
On the other hand, Livongo health advisers for diabetes, hypertension, and other chronic conditions cannot actually prescribe medications, a problem Teladoc can solve by giving company customers access to a group of doctors in the network of Teladoc.
This particular merger may be the largest of its kind to date. But don’t be surprised if you see a growing number of similar deals as telehealth leaves a lasting mark on American healthcare.
