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Livongo, a company that uses technology to support diabetic patients, is expected to be made public as part of a wave of IPOs in the digital health sector.
The company set the price of its shares at $ 28 each Wednesday night, giving it a market value of about $ 2.5 billion. Livongo, based in Mountain View, California, sells 12.7 million shares, raising $ 355 million. The title should begin to be traded tomorrow on the Nasdaq.
Health Catalyst, a Utah-based health software company, is also set to begin trading on Thursday, after evaluating its IPO at $ 26 a share, raising $ 182 million and valuing the company at $ 1 billion. .
Livongo and Health Catalyst are joining a large number of IPOs in the health sector this year. Health software company Phreesia has already started operations earlier this month after raising $ 167 million in its IPO. Change Healthcare, a revenue management software company headquartered in Nashville, Tennessee, grew out of healthcare giant McKesson in June. It is currently trading at around $ 14 the action, after price of his offer at $ 13.
At least two other digital health companies are gearing up for the first public offerings this year, according to reports: the DNA testing company Ancestry and the clear-aligners company SmileDirectClub.
Read more: These 10 popular digital health startups are ready to go public in the next 12 months
Livongo was founded in 2014 and operates programs to support the care of people with diabetes and other chronic diseases with the help of a glucometer and a blood pressure monitor. other devices. Generally, large companies and insurers pay a monthly fee for care. Livongo's bet is that by using technology, coaching and other tools, it can manage these chronic diseases better and cheaply.
Prior to the IPO, Livongo raised $ 237 million from investors and was valued at $ 800 million.
According to the filing of the IPO, Livongo has grown rapidly, even though its financial losses are increasing. The company generated revenues of $ 68.4 million in 2018, more than double its $ 30.8 million in 2017. Its net loss increased from $ 16 million in 2017 to $ 33 million in 2018 .
Read more: The start-up in the health sector, Livongo, is preparing to become public. Here are the leaders and investors who will benefit the most.
In March, the company had 164,000 members in its largest diabetes program. About 29 million Americans are known to have one of two types of diabetes, most of which are type 2, in which the body has difficulty degrading blood sugar and which is often focused on the way of life.
A wave of IPOs in the digital health sector puts an end to a drought
Before this wave of public offerings, the most recent IPO in the digital health sector took place in 2016, when the iHRhythm monitoring company went public. Private health technology companies have accumulated large evaluations in recent years, but few have become public.
IPOs come at a crucial time for the digital health market. Start-ups seeking to apply technology to the health sector have raised approximately $ 14 billion in 2017 and 2018, which appears to be continuing in 2019. According to figures compiled by Rock Health, $ 4.2 billion has been invested in digital health in the first half. in 2019, poised to potentially beat the record 2018 funding year.
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Hemant Taneja, Managing Partner at General Catalyst and a member of the Livongo Board of Directors, has devoted much of his business to the digital health sector over the last 15 years in the electronic health record market. More recently, investors have poured money into companies with business models such as Livongo, where technology is used to help patients manage their care more directly.
"Really organizing online health care, which we consider the internet health care moment, is just beginning to happen," said Taneja. For him, the internet health care moment is to have a product that makes you forget – as much as possible – that you are taking care of your diabetes.
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