Livongo Health (NSDQ:LVGO) shares jumped yesterday after the company landed a two-year deal with the Federal Employees Health Benefits Program that could add as much as $30 million a year to its top line.
Mountain View, Calif.-based Livongo developed a digital health platform to manage chronic diseases, selecting diabetes as its first target. Yesterday the company said the FEHBP deal is for Type 1 and Type 2 diabetes patients covered by the federal program, which has 8 million members.
Eligible patients in the federal program will be able to use the Livongo system, including a glucose meter, unlimited test strips and lancets at no cost, according to the FEHBP.
The two-year agreement, which is slated to begin Jan. 1, 2020, is expected to add $20 million to $25 million next year and $30 million to $35 million in 2021, Livongo said. The projected enrollment gains are higher than previously thought, at 25,000 new members next year and another 20,000 in 2021, compared with 20,000 to 30,000 total members previously, the company said.
“This is Livongo’s largest agreement to provide diabetes services in our history and is another great example of the market’s excitement about our Applied Health Signals platform and how our business is expanding from working primarily with self-insured employers, to broader and larger markets including government employees, labor unions, and the fully-insured populations of our health plan partners,” CEO Zane Burke said in prepared remarks. “As we continue to show that Livongo creates a better member experience that leads to improved clinical outcomes and lower costs, we are excited to work with more organizations that are bringing Livongo’s services into the fabric of the health benefits design for hundreds of thousands of people.”
“This win highlights two of our competitive advantages. First, government entities and large plans want to see multi-year, clinically validated results at scale, and only Livongo has that independently validated data. Second, our AI+AI engine, which aggregates information from our own devices, electronic health records, pharmacy records, smart watches, and continuous glucose monitors, interprets that information, applies it back to our Members to learn what works, and then iterates using Health Nudges™, is making us smarter and more Member focused every day,” added president Dr. Jennifer Schneider.
Livongo raised $356 million in an upsized initial public offering in July. LVGO shares closed up 18.4% at $20.50 apiece yesterday.