Livongo Health, Inc. (NASDAQ: LVGO), the leading Applied Health
Signals company empowering people with chronic conditions to live
better and healthier lives, today announced financial results for
its first quarter ended March 31, 2020.
“Livongo is well positioned to provide
assistance to some of the most vulnerable populations during the
COVID-19 pandemic - people with chronic conditions - and our remote
monitoring, digitally powered and real-time personal coaching
capabilities, and access to telehealth services are well suited to
track vital signs of interest in maintaining the health of our
Members,” said Zane Burke, Chief Executive Officer of Livongo.
“The COVID-19 pandemic has accelerated the need for new virtual
care delivery models like Livongo. We are pleased to announce
our relationship with the Government Employees Health Association,
Inc. (GEHA), to provide the Livongo for Diabetes, Hypertension, and
Diabetes Prevention solutions for federal employees, retirees, and
their dependents that receive GEHA medical coverage.”
First Quarter Fiscal 2020 Financial
Highlights:
- Revenue: Total
revenue for the quarter was $68.8 million, up 115% year-over-year,
driven by the continued adoption of our Applied Health Signals
platform.
- Gross Margin: GAAP
gross margin of 73.7% and non-GAAP gross margin of 74.4%.
- Net Loss and Non-GAAP Net
Income: GAAP net loss of $5.6 million, and GAAP net loss
per share attributable to common stockholders of ($0.06) on a
diluted basis; and non-GAAP net income of $3.9 million, and
non-GAAP net income per share attributable to common stockholders
of $0.03 on a diluted basis.
- Adjusted EBITDA:
$3.8 million in the first quarter of 2020.
- Livongo
for Diabetes Members: Over 328,000 as of March 31,
2020, up approximately 100% year-over-year.
- Livongo
Clients: 1,252 Clients as of March 31, 2020, up
approximately 44% quarter-over-quarter.
- Estimated Value of
Agreements (EVA): $89.0 million, up from $48.1 million in
the first quarter of 2019. EVA consists of the estimated value of
agreements signed in the quarter with new Clients or expansions
entered into with existing Clients.
“We have invested heavily in an integrated
product experience and enabled our sales and Client teams to share
the importance of offering one platform with solutions to manage
multiple chronic conditions at scale. We believe our whole
person approach empowers people with one or more chronic condition
to address the challenges they face generally, and specifically in
times of crisis such as with the current pandemic,” said Livongo
President Dr. Jennifer Schneider, M.D., M.S. “To support the
unprecedented behavioral health needs and increased stress reported
by our Members during this time of crisis, we quickly launched new
COVID-19 modules within the Livongo for Behavioral Health solution
and made them available to all Clients and Members to support their
needs. In the past month, we've seen increased utilization of all
of our Livongo programs, including our market leading behavioral
health solution.”
Second Quarter and Fiscal 2020
Outlook
- For the second quarter of 2020, the
company expects revenue in the range of $73.0 million to $75.0
million, and adjusted EBITDA in the range of ($2.0) million to
$0.0.
- For 2020, the company now expects
revenue to grow between 70% and 78% to the range of $290.0 million
to $303.0 million, ahead of our previous guidance of approximately
$280.0 million to $290.0 million. Adjusted EBITDA is expected to be
in the range of ($14.0) million to ($10.0) million.
“Livongo started strong in 2020, with results
driven by a record number of Client and program launches in the
first quarter,” said Lee Shapiro, Livongo Chief Financial Officer.
“The company continues to closely monitor the situation relating to
the COVID-19 pandemic for impacts on our business, as many of our
Clients and Members have experienced economic challenges. Livongo
is well positioned to deliver remote care for Members at a time
when Clients appreciate the importance of ensuring the health of
their beneficiaries and team members.”
Additional information on Livongo's reported
results is included in the financial tables below.
Non-GAAP Financial Measures and Key
Metrics
Reconciliations of non-GAAP financial measures
to the most directly comparable financial results as determined in
accordance with GAAP are included at the end of this press release
following the accompanying financial data. We believe that these
non-GAAP financial measures, when taken together with the
corresponding GAAP financial measures, provide meaningful
supplemental information regarding our performance by excluding
certain items that may not be indicative of our business, results
of operations, or outlook. However, non-GAAP financial information
is presented for supplemental informational purposes only, has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for financial information presented in
accordance with GAAP. In addition, other companies, including
companies in our industry, may calculate similarly-titled non-GAAP
measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measures as tools for comparison. We compensate
for these limitations by analyzing current and future results on a
GAAP basis as well as a non-GAAP basis and by providing specific
information regarding the GAAP items excluded from these non-GAAP
financial measures.
For a description of these non-GAAP financial
measures, including the reasons management uses each measure,
please see the section of the tables titled "About Non-GAAP
Financial Measures."
The forward-looking Adjusted EBITDA contained in
the section titled "Second Quarter and Fiscal 2020 Outlook"
excludes (i) depreciation and amortization, (ii) amortization
of intangible assets, (iii) stock-based compensation expense, (iv)
lock-up related payroll taxes, (v) acquisition-related expenses,
(vi) change in fair value of contingent consideration, (vii) other
income, net, and (viii) provision for (benefit from) income taxes.
We have not reconciled adjusted EBITDA guidance to GAAP net income
(loss) because we do not provide guidance on GAAP net income (loss)
or the reconciling items between adjusted EBITDA and GAAP net
income (loss) as a result of the uncertainty regarding, and the
potential variability of, certain of these items, the effect of
which may be significant. Accordingly, a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP
measure is not available without unreasonable effort.
In addition, we calculate and present certain
key business metrics that we believe are useful in evaluating our
business. For a description of these key metrics, including the
reasons management uses each measure, please see the section of the
tables titled "Key Metrics."
Quarterly Conference Call
The first quarter 2020 earnings conference call
and webcast will be held today, Wednesday, May 6, 2020,
at 4:30 p.m. Eastern Time. Livongo management will host the
call, followed by a question and answer session. All interested
parties may dial 270-215-9499 and reference “Livongo” to listen to
the quarterly conference call. Participants may join the webcast
here. A replay of the call will be available via webcast for
on-demand listening shortly after completion of the call on the
Investor Relations section of the company’s
website, www.livongo.com, and will remain available for
approximately 90 days. To assist with the financial portion of this
earnings call supplemental slides can be found on our investor
relations website here.
About Livongo
Livongo empowers people with chronic conditions
to live better and healthier lives, beginning with diabetes and now
including hypertension, weight management, diabetes prevention, and
behavioral health. Livongo pioneered the category of Applied Health
Signals to offer Members clinically-based insights that focus on
the whole person and make it easier to stay healthy. Using its
AI+AI engine, Livongo's team of data scientists aggregate and
interpret substantial amounts of health data and information to
create actionable, personalized, and timely health signals
delivered to Livongo Members exactly when and where they need them.
The Livongo approach delivers better clinical and financial
outcomes while creating a different and better experience for
people with chronic conditions. For more information, visit:
www.livongo.com or engage with Livongo on LinkedIn or Twitter.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements generally relate to
future events or Livongo’s future financial or operating
performance. In some cases, you can identify forward looking
statements because they contain words such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “going to,” “could,”
“intends,” “target,” “projects,” “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative
of these words or other similar terms or expressions that concern
Livongo’s expectations, strategy, priorities, plans or intentions.
Forward-looking statements in this release include, but are not
limited to, statements regarding Livongo’s ability to grow and
expand its platform, number of Clients and number of members,
anticipated enrollment rates, the success of Livongo’s new
partnerships and integrations and the expansion of Livongo's
existing relationships, the success of Livongo’s new Client
relationships, including with federal government entities, the
adoption of Livongo’s solutions and the expansion of multi-product
adoption, anticipated growth in revenue, Livongo’s ability to
support the needs of to its Members and vulnerable populations
during the COVID-19 pandemic, anticipated utilization of Livongo
programs during the COVID-19 pandemic, and Livongo’s future
financial and operating performance, including its outlook and
guidance for the second quarter and full year 2020. Livongo’s
expectations and beliefs regarding these matters may not
materialize, and actual results in future periods are subject to
risks and uncertainties that could cause actual results to differ
materially from those projected, including risks regarding
Livongo’s ability to retain Clients and sell additional solutions
to new and existing Clients, Livongo’s ability to attract and
enroll new members, the growth and success of Livongo’s partners
and reseller relationships, Livongo’s ability to estimate the size
of its target market, uncertainty in the healthcare regulatory
environment, Livongo’s ability to support its Members and offer
additional programs during the COVID-19 pandemic, continuing and
developing effects of COVID-19 including the effects of the
outbreak on the general economy and the specific economic effects
on Livongo’s business and that of its Clients, Members and
suppliers, and Livongo’s future financial performance, including
trends in revenue, costs of revenue, gross profit or gross margin,
operating expenses, paying Clients, and free cash flow. The
forward-looking statements contained in this release are also
subject to other risks and uncertainties, including those more
fully described in Livongo’s filings with the Securities and
Exchange Commission, including Livongo’s Annual Report on Form 10-K
for the year ended December 31, 2019 and in Livongo’s Quarterly
Report on Form 10-Q that will be filed following this earnings
release. Livongo's SEC filings are available on the Investor
Relations section of Livongo's website at ir.livongo.com and on the
SEC's website at www.sec.gov. The forward-looking statements in
this release are based on information available to Livongo as of
the date hereof, and Livongo disclaims any obligation to update any
forward-looking statements, except as required by law.
Investor Relations:
John
HallockInvestor-relations@livongo.com617-615-7712
Media:
Jake Mazankepress@livongo.com630-640-5253
LIVONGO HEALTH, INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
data)(unaudited) |
|
March 31, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
218,228 |
|
|
$ |
241,738 |
|
Short-term investments |
150,000 |
|
|
150,000 |
|
Accounts receivable, net of allowance for doubtful accounts of
$1,385 and $1,245 as of March 31, 2020 and December 31, 2019,
respectively |
52,446 |
|
|
40,875 |
|
Inventories |
19,245 |
|
|
28,983 |
|
Deferred costs, current |
22,595 |
|
|
16,051 |
|
Prepaid expenses and other current assets |
13,869 |
|
|
9,860 |
|
Total current assets |
476,383 |
|
|
487,507 |
|
Property and equipment, net |
12,835 |
|
|
10,354 |
|
Operating lease right-of-use
assets |
17,189 |
|
|
— |
|
Restricted cash, noncurrent |
1,270 |
|
|
1,270 |
|
Goodwill |
35,801 |
|
|
35,801 |
|
Intangible assets, net |
15,773 |
|
|
16,469 |
|
Deferred costs, noncurrent |
10,495 |
|
|
5,700 |
|
Other noncurrent assets |
215 |
|
|
3,460 |
|
TOTAL ASSETS |
$ |
569,961 |
|
|
$ |
560,561 |
|
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
8,509 |
|
|
$ |
8,362 |
|
Accrued expenses and other current liabilities |
29,068 |
|
|
27,801 |
|
Deferred revenue, current |
5,351 |
|
|
3,945 |
|
Advance payments from partner, current |
1,767 |
|
|
1,767 |
|
Total current liabilities |
44,695 |
|
|
41,875 |
|
Operating lease liabilities,
noncurrent |
15,476 |
|
|
— |
|
Deferred revenue, noncurrent |
748 |
|
|
654 |
|
Advance payment from partner,
noncurrent |
7,754 |
|
|
7,754 |
|
Other noncurrent liabilities |
— |
|
|
2,914 |
|
TOTAL LIABILITIES |
68,673 |
|
|
53,197 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, par value of $0.001 per share |
— |
|
|
— |
|
Common stock, par value of $0.001 per share |
97 |
|
|
95 |
|
Additional paid-in capital |
670,962 |
|
|
671,467 |
|
Accumulated deficit |
(169,771 |
) |
|
(164,198 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
501,288 |
|
|
507,364 |
|
TOTAL LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY |
$ |
569,961 |
|
|
$ |
560,561 |
|
|
|
|
|
|
|
|
|
LIVONGO HEALTH, INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(in thousands, except per share
data)(unaudited) |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Revenue |
$ |
68,823 |
|
|
$ |
32,067 |
|
Cost of revenue(1)(2) |
18,108 |
|
|
9,863 |
|
Gross profit |
50,715 |
|
|
22,204 |
|
Operating expenses: |
|
|
|
Research and development(1) |
13,997 |
|
|
8,994 |
|
Sales and marketing(1)(2) |
27,655 |
|
|
14,643 |
|
General and administrative(1)(3) |
15,846 |
|
|
14,114 |
|
Change in fair value of contingent consideration |
84 |
|
|
674 |
|
Total operating expenses |
57,582 |
|
|
38,425 |
|
Loss from operations |
(6,867 |
) |
|
(16,221 |
) |
Other income, net |
1,315 |
|
|
462 |
|
Loss before provision for
income taxes |
(5,552 |
) |
|
(15,759 |
) |
Provision for (benefit from)
income taxes |
21 |
|
|
(1,388 |
) |
Net loss |
$ |
(5,573 |
) |
|
$ |
(14,371 |
) |
Accretion of redeemable
convertible preferred stock |
— |
|
|
(41 |
) |
Net loss attributable to
common stockholders |
$ |
(5,573 |
) |
|
$ |
(14,412 |
) |
Net loss per share
attributable to common stockholders, basic and diluted |
$ |
(0.06 |
) |
|
$ |
(0.79 |
) |
Weighted-average shares used
in computing net loss per share attributable to common
stockholders, basic and diluted(4) |
95,543 |
|
|
18,207 |
|
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Cost of revenue |
$ |
92 |
|
|
$ |
6 |
|
Research and development |
2,216 |
|
|
361 |
|
Sales and marketing |
2,052 |
|
|
219 |
|
General and administrative |
3,703 |
|
|
4,924 |
|
Total stock-based compensation expense |
$ |
8,063 |
|
|
$ |
5,510 |
|
|
|
|
|
|
|
|
|
(2) Includes amortization of intangible assets as follows:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
Cost of revenue |
$ |
420 |
|
|
$ |
327 |
|
Sales and marketing |
276 |
|
|
237 |
|
Total amortization of intangible assets |
$ |
696 |
|
|
$ |
564 |
|
|
|
|
|
|
|
|
|
(3) Includes acquisition-related expenses as follows:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
General and administrative |
$ |
— |
|
|
$ |
207 |
|
Total acquisition-related
expenses |
$ |
— |
|
|
$ |
207 |
|
|
|
|
|
|
|
|
|
(4) For the three months ended March 31, 2020,
the weighted-average shares used in computing net loss per share
attributable to common stockholders, basic and diluted, include the
weighted-average outstanding shares for the following common stock
issued in connection with our IPO in July 2019: (i) all shares of
redeemable convertible preferred stock then outstanding,
totaling 58,615 shares, were automatically converted into an
equivalent number of shares of common stock on a one-to-one
basis and (ii) we sold 14,590 shares of our common stock at an
offering price of $28.00 per share, including 1,903 shares of
common stock pursuant to the exercise in full of the underwriters'
option to purchase additional shares.
LIVONGO HEALTH, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(in
thousands)(unaudited) |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net loss |
$ |
(5,573 |
) |
|
$ |
(14,371 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization expense |
1,180 |
|
|
696 |
|
Amortization of intangible assets |
696 |
|
|
564 |
|
Operating lease right-of-use asset and operating lease liabilities
expense |
1,100 |
|
|
— |
|
Change in fair value of contingent consideration |
84 |
|
|
674 |
|
Allowance for doubtful accounts |
235 |
|
|
98 |
|
Stock-based compensation expense |
8,063 |
|
|
5,510 |
|
Deferred income taxes |
— |
|
|
(1,396 |
) |
Changes in operating assets and liabilities, net of impact of
acquisitions: |
|
|
|
Accounts receivable, net |
(11,806 |
) |
|
(11,916 |
) |
Inventories |
9,738 |
|
|
472 |
|
Deferred costs |
(11,196 |
) |
|
(5,510 |
) |
Prepaid expenses and other assets |
(764 |
) |
|
(2,609 |
) |
Accounts payable |
(98 |
) |
|
3,142 |
|
Accrued expenses and other liabilities |
(3,024 |
) |
|
(480 |
) |
Operating lease liabilities |
(546 |
) |
|
— |
|
Deferred revenue |
1,500 |
|
|
75 |
|
Advance payments from partner |
— |
|
|
(136 |
) |
Net cash used in operating activities |
(10,411 |
) |
|
(25,187 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Purchases of property and equipment |
(1,762 |
) |
|
(340 |
) |
Capitalized internal-use software costs |
(1,325 |
) |
|
(1,284 |
) |
Acquisitions, net of cash acquired |
— |
|
|
(27,435 |
) |
Net cash used in investing activities |
(3,087 |
) |
|
(29,059 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Proceeds from exercise of
stock options, net of repurchases |
1,722 |
|
|
314 |
|
Payment of deferred offering
costs |
(286 |
) |
|
— |
|
Payment of deferred
acquisition-related contingent consideration |
(884 |
) |
|
— |
|
Taxes paid related to net share
settlement of equity awards |
(10,564 |
) |
|
— |
|
Net cash (used in) provided by financing activities |
(10,012 |
) |
|
314 |
|
Net decrease in cash, cash
equivalents, and restricted cash |
(23,510 |
) |
|
(53,932 |
) |
Cash, cash equivalents, and
restricted cash, beginning of period |
243,008 |
|
|
109,107 |
|
Cash, cash equivalents, and
restricted cash, end of period |
$ |
219,498 |
|
|
$ |
55,175 |
|
Reconciliation of
cash, cash equivalents, and restricted cash: |
|
|
|
Cash and cash equivalents |
$ |
218,228 |
|
|
$ |
54,996 |
|
Restricted cash |
1,270 |
|
|
179 |
|
Total cash, cash equivalents, and restricted cash, end of
period |
$ |
219,498 |
|
|
$ |
55,175 |
|
|
|
|
|
|
|
|
|
About Non-GAAP Financial Measures
In addition to our financial results determined
in accordance with U.S. Generally Accepted Accounting Principles
(GAAP), we believe non-GAAP measures are useful in
evaluating our operating performance. In particular, we believe
that the use of non-GAAP net income (loss), adjusted gross profit,
adjusted gross margin, and adjusted EBITDA is helpful to our
investors as they are metrics used by management in assessing the
health of our business and our operating performance. We use
these non-GAAP financial measures to evaluate our ongoing
operations and for internal planning and forecasting purposes. A
reconciliation is provided below for
each non-GAAP financial measure to the most directly
comparable financial measure stated in accordance with GAAP.
Investors are encouraged to review the related GAAP financial
measures and the reconciliation of
these non-GAAP financial measures to their most directly
comparable GAAP financial measures, and not to rely on any single
financial measure to evaluate our business.
Non-GAAP Net Income (Loss)
We define non-GAAP net income (loss) as net loss
less (i) stock-based compensation expense, (ii) amortization of
intangible assets, (iii) acquisition related expenses, (iv) lock-up
related payroll taxes, (v) change in fair value of contingent
consideration, and (vi) tax impact. Non-GAAP net income (loss) is
used by our management to understand and evaluate our operating
performance and trends. We believe that non-GAAP net income (loss)
is helpful in providing useful information about our operating
results because it eliminates the effect of items that are
unrelated to overall performance, but non-GAAP net income (loss) is
not meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction
with our consolidated financial statements prepared in accordance
with GAAP.
LIVONGO HEALTH, INC.RECONCILIATION OF GAAP TO
NON-GAAP MEASURES(in thousands, except
percentages)(unaudited) |
|
Three Months Ended March 31, 2020 |
|
GAAP |
|
Stock-BasedCompensationExpense |
|
Amortizationof IntangibleAssets |
|
Lock-UpRelatedPayrollTaxes |
|
Change inFair Value ofContingentConsideration |
|
Tax Impact |
|
Non-GAAP |
Cost of revenue |
$ |
18,108 |
|
|
$ |
(92 |
) |
|
$ |
(420 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,596 |
|
Gross profit |
$ |
50,715 |
|
|
$ |
92 |
|
|
$ |
420 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
51,227 |
|
Gross margin |
73.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
74.4 |
% |
Research and development |
$ |
13,997 |
|
|
$ |
(2,216 |
) |
|
$ |
— |
|
|
$ |
(153 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,628 |
|
Sales and marketing |
$ |
27,655 |
|
|
$ |
(2,052 |
) |
|
$ |
(276 |
) |
|
$ |
(167 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
25,160 |
|
General and
administrative |
$ |
15,846 |
|
|
$ |
(3,703 |
) |
|
$ |
— |
|
|
$ |
(280 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,863 |
|
Change in fair value of
contingent consideration |
$ |
84 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(84 |
) |
|
$ |
— |
|
|
$ |
— |
|
Total operating expenses |
$ |
57,582 |
|
|
$ |
(7,971 |
) |
|
$ |
(276 |
) |
|
$ |
(600 |
) |
|
$ |
(84 |
) |
|
$ |
— |
|
|
$ |
48,651 |
|
Income (loss) from
operations |
$ |
(6,867 |
) |
|
$ |
8,063 |
|
|
$ |
696 |
|
|
$ |
600 |
|
|
$ |
84 |
|
|
$ |
— |
|
|
$ |
2,576 |
|
Income (loss) before provision
for income taxes |
$ |
(5,552 |
) |
|
$ |
8,063 |
|
|
$ |
696 |
|
|
$ |
600 |
|
|
$ |
84 |
|
|
$ |
— |
|
|
$ |
3,891 |
|
Net income (loss) |
$ |
(5,573 |
) |
|
$ |
8,063 |
|
|
$ |
696 |
|
|
$ |
600 |
|
|
$ |
84 |
|
|
$ |
— |
|
|
$ |
3,870 |
|
Net income (loss) attributable
to common stockholders |
$ |
(5,573 |
) |
|
$ |
8,063 |
|
|
$ |
696 |
|
|
$ |
600 |
|
|
$ |
84 |
|
|
$ |
— |
|
|
$ |
3,870 |
|
Net income (loss) per share
attributable to common stockholders, diluted |
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
0.03 |
|
Weighted-average shares used
in computing net income (loss) per share attributable to common
stockholders, diluted |
95,543 |
|
|
|
|
|
|
|
|
|
|
|
|
112,278 |
|
|
Three Months Ended March 31, 2019 |
|
GAAP |
|
Stock-BasedCompensationExpense |
|
Amortizationof IntangibleAssets |
|
AcquisitionRelatedExpenses |
|
Change inFair Value ofContingentConsideration |
|
Tax Impact |
|
Non-GAAP |
Cost of revenue |
$ |
9,863 |
|
|
$ |
(6 |
) |
|
$ |
(327 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,530 |
|
Gross profit |
$ |
22,204 |
|
|
$ |
6 |
|
|
$ |
327 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
22,537 |
|
Gross margin |
69.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
70.3 |
% |
Research and development |
$ |
8,994 |
|
|
$ |
(361 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8,633 |
|
Sales and marketing |
$ |
14,643 |
|
|
$ |
(219 |
) |
|
$ |
(237 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
14,187 |
|
General and
administrative |
$ |
14,114 |
|
|
$ |
(4,924 |
) |
|
$ |
— |
|
|
$ |
(207 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8,983 |
|
Change in fair value of
contingent consideration |
$ |
674 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(674 |
) |
|
$ |
— |
|
|
$ |
— |
|
Total operating expenses |
$ |
38,425 |
|
|
$ |
(5,504 |
) |
|
$ |
(237 |
) |
|
$ |
(207 |
) |
|
$ |
(674 |
) |
|
$ |
— |
|
|
$ |
31,803 |
|
Loss from operations |
$ |
(16,221 |
) |
|
$ |
5,510 |
|
|
$ |
564 |
|
|
$ |
207 |
|
|
$ |
674 |
|
|
$ |
— |
|
|
$ |
(9,266 |
) |
Loss before provision for
income taxes |
$ |
(15,759 |
) |
|
$ |
5,510 |
|
|
$ |
564 |
|
|
$ |
207 |
|
|
$ |
674 |
|
|
$ |
— |
|
|
$ |
(8,804 |
) |
Provision for (benefit from)
income taxes |
$ |
(1,388 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,396 |
|
|
$ |
8 |
|
Net loss |
$ |
(14,371 |
) |
|
$ |
5,510 |
|
|
$ |
564 |
|
|
$ |
207 |
|
|
$ |
674 |
|
|
$ |
(1,396 |
) |
|
$ |
(8,812 |
) |
Accretion of redeemable
convertible preferred stock |
$ |
(41 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(41 |
) |
Net loss attributable to
common stockholders |
$ |
(14,412 |
) |
|
$ |
5,510 |
|
|
$ |
564 |
|
|
$ |
207 |
|
|
$ |
674 |
|
|
$ |
(1,396 |
) |
|
$ |
(8,853 |
) |
Net loss per share
attributable to common stockholders, diluted |
$ |
(0.79 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.49 |
) |
Weighted-average shares used
in computing net loss per share attributable to common
stockholders, diluted |
18,207 |
|
|
|
|
|
|
|
|
|
|
|
|
18,207 |
|
Adjusted Gross Profit and Adjusted Gross
Margin
Adjusted gross profit and adjusted gross margin
are key performance measures that our management uses to assess our
overall performance. We define adjusted gross profit as GAAP gross
profit, excluding stock-based compensation expense and amortization
of intangible assets. We define adjusted gross margin as our
adjusted gross profit divided by our revenue. We believe adjusted
gross profit and adjusted gross margin provide our management and
investors consistency and comparability with our past financial
performance and facilitate period-to-period comparisons of
operations, as these metrics eliminate the effects of stock-based
compensation and amortization of intangible assets from
period-to-period as factors unrelated to overall operating
performance. The following table presents a reconciliation of
adjusted gross profit from the most comparable GAAP measure, gross
profit:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
(dollars in thousands) |
Gross profit |
$ |
50,715 |
|
|
$ |
22,204 |
|
Add: |
|
|
|
Stock-based compensation expense |
92 |
|
|
6 |
|
Amortization of intangible assets |
420 |
|
|
327 |
|
Adjusted gross profit |
$ |
51,227 |
|
|
$ |
22,537 |
|
Adjusted gross margin (as a
percentage of revenue) |
74.4 |
% |
|
70.3 |
% |
Adjusted EBITDA
Adjusted EBITDA is a key performance measure
that our management uses to assess our operating performance.
Because adjusted EBITDA facilitates internal comparisons of our
historical operating performance on a more consistent basis, we use
this measure for business planning purposes and in evaluating
acquisition opportunities.
We calculate adjusted EBITDA as net income
(loss) adjusted to exclude (i) depreciation and amortization,
(ii) amortization of intangible assets, (iii) stock-based
compensation expense, (iv) lock-up related payroll taxes, (v)
acquisition-related expenses, (vi) change in fair value of
contingent consideration, (vii) other income, net, and (viii)
provision for (benefit from) income taxes.
The following table presents a reconciliation of
adjusted EBITDA from the most comparable GAAP measure, net income
(loss):
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
(in thousands) |
Net loss |
$ |
(5,573 |
) |
|
$ |
(14,371 |
) |
Add: |
|
|
|
Depreciation and
amortization(1) |
1,180 |
|
|
696 |
|
Amortization of intangible
assets |
696 |
|
|
564 |
|
Stock-based compensation
expense |
8,063 |
|
|
5,510 |
|
Lock-up related payroll
taxes(2) |
600 |
|
|
— |
|
Acquisition-related
expenses(3) |
— |
|
|
207 |
|
Change in fair value of
contingent consideration |
84 |
|
|
674 |
|
Other income, net(4) |
(1,315 |
) |
|
(462 |
) |
Provision for (benefit from)
income taxes |
21 |
|
|
(1,388 |
) |
Adjusted EBITDA |
$ |
3,756 |
|
|
$ |
(8,570 |
) |
|
|
|
|
|
|
|
|
______________
(1) Depreciation and amortization include
depreciation of property and equipment and amortization of
capitalized internal-use software costs.(2) Lock-up related payroll
taxes represent the employer portion of payroll taxes paid in
connection with the stock releases upon the expiration of the
lock-up agreement related to the IPO.(3) Acquisition-related
expenses consist primarily of transaction and transition related
fees and expenses, including legal, accounting, and other
professional fees.(4) Other income, net includes interest income,
interest expense, and other income (expense).
Some of the limitations of adjusted EBITDA
include (i) adjusted EBITDA does not properly reflect capital
commitments to be paid in the future, and (ii) although
depreciation and amortization are non-cash charges, the
underlying assets may need to be replaced and adjusted EBITDA does
not reflect these capital expenditures. Our adjusted EBITDA may not
be comparable to similarly titled measures of other companies
because they may not calculate adjusted EBITDA in the same manner
as we calculate the measure, limiting its usefulness as a
comparative measure. In evaluating adjusted EBITDA, you should be
aware that in the future we will incur expenses similar to the
adjustments in this presentation. Our presentation of adjusted
EBITDA should not be construed as an inference that our future
results will be unaffected by these expenses or any unusual or
non-recurring items. When evaluating our performance, you should
consider adjusted EBITDA alongside other financial performance
measures, including our net loss and other GAAP results.
Key Metrics
We monitor the following key metrics to help us
evaluate our business, identify trends affecting our business,
formulate business plans and make strategic decisions. We believe
the following metrics are useful in evaluating our business.
Our key metrics are as follows:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
(dollars in thousands) |
Clients(1) |
1,252 |
|
|
709 |
|
Enrolled Diabetes Members |
328,510 |
|
|
164,168 |
|
Estimated Value of Agreements(2) |
$ |
89,009 |
|
|
$ |
48,063 |
|
(1) First quarter of 2019 has been updated to conform to
current methodology as described further below.(2) Previously
referred to as total contract value
Clients. We define our clients
as business entities that have at least one active paid contract
with us at the end of a particular period. Entities that access our
platform through our channel partners, such as PBMs and resellers,
are counted as individual clients. Historically, we have treated
our partnerships with health plans as a single client, though
multiple employers may contract for our services through a single
health plan, because of the relatively small number of employers
who enrolled under those plans. Because of the increase in the
number of employers who are enrolling through health plans instead
of other channels, beginning with the first quarter of 2020 we
believe that it is more appropriate to treat health plans in the
same manner as we treat our channel partners, such as PBMs and
resellers, and include entities who enroll in our platform through
a health plan as separate clients. The historical information
presented has been revised to include such entities as individual
clients. We do not count our channel partners, such as PBMs, health
plans, or resellers as clients, unless they also separately have
active paid contracts for our solutions. If business units or
subsidiaries of the same entity enter into separate agreements with
us, they are counted as separate clients. However, entities that
have purchased multiple solutions through different contracts are
treated as a single client.
Enrolled Diabetes Members. We
believe our ability to grow the number of enrolled diabetes members
is an indicator of penetration of our flagship solution, Livongo
for Diabetes. We define our enrolled diabetes members as all
individuals that are enrolled in Livongo for Diabetes at the end of
a given period. This number excludes: (i) employees or
dependents of a client that has ceased using our solution,
(ii) employees who no longer have an employment relationship
with an active client, and their dependents, and
(iii) employees and dependents who have not been active on or
used our solution for a period of time as specified in the
applicable client’s agreement, which is typically between four and
six months.
Estimated Value of Agreements
(EVA). This represents the estimated value of agreements,
signed in the relevant period and was previously referred to as the
Total Contract Value, or TCV, in certain of Livongo's previous
filings with the Securities and Exchange Commission. Estimated
Value of Agreements includes agreements entered into with new
clients or expansions entered into with existing clients. Estimated
Value of Agreements is helpful in evaluating our business because
it provides some visibility into future revenue. Our new client
subscriptions typically have a term of one to three years, and we
generally invoice our clients in monthly installments at the end of
each month in the subscription period based on the number of
members in such month who were active on or used our solution
within a certain period of time, as specified in the applicable
client’s agreement. We define Estimated Value of Agreements as
contractually committed orders to be invoiced under agreements
initially entered into during the relevant period. Agreements are
only counted in Estimated Value of Agreements in the period in
which they are entered into, and for purposes of this calculation,
we assume an average member enrollment rate. Our estimates include
assumptions regarding the total recruitable individuals at a
client, commencement of enrollment period, enrollment method,
starting enrollment rates, monthly increases to enrollment rates
over time, contract length, and client size and industry. Estimates
also assume the agreement will not be terminated early and will be
serviced for the full term, there are no changes to the total
recruitable individuals at a client during the relevant period, and
no changes to the per participant per month fee during the relevant
period. Until such time as these amounts are invoiced, which occurs
at the end of each month of service, they are not recorded in
revenue, deferred revenue, or elsewhere in our consolidated
financial statements.
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