Company Quick10K Filing
Livongo Health
Price19.39 EPS-0
Shares94 P/E-54
MCap1,831 P/FCF-118
Net Debt-400 EBIT-34
TEV1,432 TEV/EBIT-42
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-03-24
S-1 2019-12-09 Public Filing
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-09-05
S-1 2019-06-28 Public Filing
8-K 2020-07-07 Earnings, Exhibits
8-K 2020-06-01
8-K 2020-05-19
8-K 2020-05-06
8-K 2020-04-07
8-K 2020-03-23
8-K 2020-03-02
8-K 2019-11-06
8-K 2019-10-07
8-K 2019-09-05

LVGO 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Qualitative and Quantitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 lvgo-20200331x10qxex311.htm
EX-31.2 lvgo-20200331x10qxex312.htm
EX-32.1 lvgo-20200331x10qxex321.htm
EX-32.2 lvgo-20200331x10qxex322.htm

Livongo Health Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
0.60.40.30.1-0.0-0.22018201820192020
Assets, Equity
0.10.10.0-0.0-0.1-0.12018201820192020
Rev, G Profit, Net Income
0.40.30.20.10.0-0.12018201820192020
Ops, Inv, Fin

Document
false--12-31Q1202000016392251245000138500019000000.0010.00190000000090000000095301000972930009530100097293000000.0010.0011000000001000000000000P4YP6M1D0.02080.50.5100000 0001639225 2020-01-01 2020-03-31 0001639225 2020-04-30 0001639225 2020-03-31 0001639225 2019-12-31 0001639225 2019-01-01 2019-03-31 0001639225 us-gaap:CommonStockMember 2019-12-31 0001639225 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001639225 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001639225 2018-12-31 0001639225 us-gaap:RestrictedStockMember us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001639225 2019-03-31 0001639225 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001639225 us-gaap:RetainedEarningsMember 2020-03-31 0001639225 us-gaap:RetainedEarningsMember 2019-03-31 0001639225 us-gaap:CommonStockMember 2020-03-31 0001639225 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001639225 us-gaap:CommonStockMember 2019-03-31 0001639225 us-gaap:RestrictedStockMember us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001639225 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001639225 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001639225 us-gaap:RestrictedStockMember 2019-01-01 2019-03-31 0001639225 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001639225 2019-01-01 0001639225 us-gaap:CommonStockMember 2018-12-31 0001639225 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001639225 us-gaap:RetainedEarningsMember 2019-12-31 0001639225 us-gaap:RetainedEarningsMember 2018-12-31 0001639225 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001639225 us-gaap:RetainedEarningsMember 2019-01-01 0001639225 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001639225 us-gaap:IPOMember 2019-07-31 0001639225 us-gaap:IPOMember 2019-07-01 2019-07-31 0001639225 us-gaap:CommonStockMember 2019-07-01 2019-07-31 0001639225 us-gaap:OverAllotmentOptionMember 2019-07-01 2019-07-31 0001639225 2019-07-31 0001639225 us-gaap:CommonStockMember 2019-07-01 2019-07-31 0001639225 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-07-31 0001639225 us-gaap:CommonStockMember 2019-06-27 2019-06-27 0001639225 us-gaap:RedeemableConvertiblePreferredStockMember 2019-06-27 2019-06-27 0001639225 lvgo:PartnerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2019-01-01 2019-03-31 0001639225 lvgo:PartnerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2019-01-01 2019-03-31 0001639225 lvgo:PartnerBMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-03-31 2020-03-31 0001639225 lvgo:PartnerAMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2019-12-31 2019-12-31 0001639225 lvgo:PartnerBMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2019-12-31 2019-12-31 0001639225 lvgo:PartnerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-03-31 0001639225 lvgo:PartnerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-03-31 0001639225 lvgo:PartnerAMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-03-31 2020-03-31 0001639225 lvgo:LivongoForHypertensionAndLivongoForPrediabetesAndWeightManagementMember lvgo:AdjustmentForCapitalizationAndAmortizationOfDeviceCostsMember 2019-09-30 0001639225 us-gaap:AccountingStandardsUpdate201602Member 2020-01-01 0001639225 lvgo:IncreaseInSellingAndMarketingExpenseMember 2019-01-01 2019-09-30 0001639225 lvgo:AdjustmentForCapitalizationAndAmortizationOfSalesCommissionsMember 2019-01-01 2019-09-30 0001639225 lvgo:LivongoForHypertensionAndLivongoForPrediabetesAndWeightManagementMember lvgo:AdjustmentForCapitalizationAndAmortizationOfDeviceCostsMember 2019-09-30 2019-09-30 0001639225 lvgo:ExecutionCreditsMember 2020-01-01 2020-03-31 0001639225 lvgo:ContractMember 2020-03-31 0001639225 lvgo:DevicesMember 2020-01-01 2020-03-31 0001639225 lvgo:ContractMember 2019-12-31 0001639225 lvgo:ExecutionCreditsMember 2020-03-31 0001639225 lvgo:ContractMember 2020-01-01 2020-03-31 0001639225 lvgo:DevicesMember 2019-12-31 0001639225 lvgo:ExecutionCreditsMember 2019-12-31 0001639225 lvgo:DevicesMember 2020-03-31 0001639225 us-gaap:AccountingStandardsUpdate201409Member lvgo:DevicesMember us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2019-01-01 0001639225 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2019-01-01 0001639225 us-gaap:AccountingStandardsUpdate201409Member lvgo:ExecutionCreditsMember us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2019-01-01 0001639225 lvgo:ExecutionCreditsMember 2019-01-01 2019-03-31 0001639225 lvgo:DevicesMember 2018-12-31 0001639225 lvgo:ContractMember 2019-01-01 2019-03-31 0001639225 lvgo:ExecutionCreditsMember 2018-12-31 0001639225 lvgo:DevicesMember 2019-03-31 0001639225 lvgo:DevicesMember 2019-01-01 2019-03-31 0001639225 lvgo:ExecutionCreditsMember 2019-03-31 0001639225 lvgo:ContractMember 2019-03-31 0001639225 us-gaap:AccountingStandardsUpdate201409Member lvgo:ContractMember us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2019-01-01 0001639225 lvgo:ContractMember 2018-12-31 0001639225 2021-04-01 2020-03-31 0001639225 2020-04-01 2020-03-31 0001639225 lvgo:MyStrengthMember 2019-02-28 0001639225 lvgo:MyStrengthMember 2019-02-01 2019-02-28 0001639225 lvgo:MyStrengthMember 2020-01-01 2020-03-31 0001639225 lvgo:MyStrengthMember 2019-01-01 2019-03-31 0001639225 lvgo:MyStrengthMember 2019-12-01 2019-12-31 0001639225 lvgo:RetrofitMember 2019-12-31 0001639225 lvgo:RetrofitMember 2019-04-01 2019-04-30 0001639225 lvgo:RetrofitMember 2018-04-01 2018-04-30 0001639225 srt:MaximumMember lvgo:RetrofitMember 2019-01-01 2019-03-31 0001639225 lvgo:RetrofitMember 2018-04-30 0001639225 lvgo:FormerRetrofitStockholdersMember lvgo:RetrofitMember 2019-04-01 2019-04-30 0001639225 lvgo:RetrofitMember 2020-03-31 0001639225 lvgo:RetrofitMember 2020-01-01 2020-03-31 0001639225 lvgo:MyStrengthMember us-gaap:CustomerRelationshipsMember 2019-02-01 2019-02-28 0001639225 lvgo:MyStrengthMember us-gaap:DevelopedTechnologyRightsMember 2019-02-01 2019-02-28 0001639225 lvgo:MyStrengthMember us-gaap:TradeNamesMember 2019-02-01 2019-02-28 0001639225 us-gaap:TradeNamesMember 2019-12-31 0001639225 us-gaap:CustomerRelationshipsMember 2019-12-31 0001639225 srt:WeightedAverageMember us-gaap:CustomerRelationshipsMember 2019-01-01 2019-12-31 0001639225 us-gaap:DevelopedTechnologyRightsMember 2019-12-31 0001639225 srt:WeightedAverageMember us-gaap:DevelopedTechnologyRightsMember 2019-01-01 2019-12-31 0001639225 srt:WeightedAverageMember us-gaap:TradeNamesMember 2019-01-01 2019-12-31 0001639225 us-gaap:TradeNamesMember 2020-01-01 2020-03-31 0001639225 us-gaap:CustomerRelationshipsMember 2019-01-01 2019-03-31 0001639225 us-gaap:DevelopedTechnologyRightsMember 2020-01-01 2020-03-31 0001639225 us-gaap:TradeNamesMember 2019-01-01 2019-03-31 0001639225 us-gaap:DevelopedTechnologyRightsMember 2019-01-01 2019-03-31 0001639225 us-gaap:CustomerRelationshipsMember 2020-01-01 2020-03-31 0001639225 us-gaap:CustomerRelationshipsMember 2020-03-31 0001639225 us-gaap:DevelopedTechnologyRightsMember 2020-03-31 0001639225 srt:WeightedAverageMember us-gaap:TradeNamesMember 2020-01-01 2020-03-31 0001639225 srt:WeightedAverageMember us-gaap:CustomerRelationshipsMember 2020-01-01 2020-03-31 0001639225 us-gaap:TradeNamesMember 2020-03-31 0001639225 srt:WeightedAverageMember us-gaap:DevelopedTechnologyRightsMember 2020-01-01 2020-03-31 0001639225 us-gaap:LeaseholdImprovementsMember 2020-03-31 0001639225 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2020-03-31 0001639225 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2019-12-31 0001639225 lvgo:ComputerEquipmentAndSoftwareMember 2019-12-31 0001639225 us-gaap:FurnitureAndFixturesMember 2020-03-31 0001639225 us-gaap:FurnitureAndFixturesMember 2019-12-31 0001639225 lvgo:ComputerEquipmentAndSoftwareMember 2020-03-31 0001639225 us-gaap:LeaseholdImprovementsMember 2019-12-31 0001639225 lvgo:MeasurementInputRevenueDiscountRateMember 2020-03-31 0001639225 lvgo:MeasurementInputRevenueVolatilityMember 2020-03-31 0001639225 us-gaap:MeasurementInputDiscountRateMember 2020-03-31 0001639225 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001639225 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:BankTimeDepositsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001639225 us-gaap:MoneyMarketFundsMember 2019-12-31 0001639225 us-gaap:CashMember 2019-12-31 0001639225 us-gaap:BankTimeDepositsMember 2019-12-31 0001639225 us-gaap:MoneyMarketFundsMember 2020-03-31 0001639225 us-gaap:BankTimeDepositsMember 2020-03-31 0001639225 us-gaap:CashMember 2020-03-31 0001639225 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2020-03-31 0001639225 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2019-07-01 2019-07-31 0001639225 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:PrimeRateMember 2019-07-01 2019-07-31 0001639225 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2019-07-31 0001639225 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2019-12-31 0001639225 srt:MinimumMember 2020-01-01 2020-03-31 0001639225 srt:MaximumMember 2020-01-01 2020-03-31 0001639225 us-gaap:RestrictedStockMember 2020-03-31 0001639225 us-gaap:EmployeeStockOptionMember 2020-03-31 0001639225 us-gaap:WarrantMember 2019-12-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember 2019-12-31 0001639225 us-gaap:EmployeeStockMember 2019-12-31 0001639225 us-gaap:EmployeeStockMember 2020-03-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember 2020-03-31 0001639225 us-gaap:WarrantMember 2020-03-31 0001639225 us-gaap:EmployeeStockOptionMember 2019-12-31 0001639225 us-gaap:RestrictedStockMember 2019-12-31 0001639225 2019-07-01 2019-07-31 0001639225 us-gaap:CommonStockMember lvgo:SecondaryOfferingSharesFromExistingShareholdersMember 2019-12-31 0001639225 us-gaap:CommonStockMember lvgo:SecondaryOfferingSharesFromExistingShareholdersMember 2019-12-01 2019-12-31 0001639225 srt:MaximumMember 2019-01-01 2019-03-31 0001639225 lvgo:WarrantExpiringFebruary2025Member 2020-03-31 0001639225 us-gaap:SellingAndMarketingExpenseMember 2019-01-01 2019-03-31 0001639225 us-gaap:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-03-31 0001639225 us-gaap:CostOfSalesMember 2019-01-01 2019-03-31 0001639225 us-gaap:CostOfSalesMember 2020-01-01 2020-03-31 0001639225 us-gaap:SellingAndMarketingExpenseMember 2020-01-01 2020-03-31 0001639225 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-03-31 0001639225 us-gaap:ResearchAndDevelopmentExpenseMember 2019-01-01 2019-03-31 0001639225 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0001639225 lvgo:RestrictedStockUnitsRSUsAndPerformanceSharesMember 2020-01-01 2020-03-31 0001639225 lvgo:RestrictedStockUnitsRSUsAndPerformanceSharesMember 2020-03-31 0001639225 lvgo:RestrictedStockUnitsRSUsAndPerformanceSharesMember 2019-12-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001639225 us-gaap:EmployeeStockMember lvgo:A2019EmployeeStockPurchasePlanMember 2019-07-01 2019-07-31 0001639225 lvgo:A2019EmployeeIncentivePlanMember 2019-07-01 2019-07-31 0001639225 lvgo:PerformanceBasedRestrictedStockUnitsMember 2020-01-01 2020-03-31 0001639225 lvgo:ServiceAndMarketBasedOptionsAndRestrictedStockUnitsMember 2020-01-01 2020-03-31 0001639225 us-gaap:EmployeeStockMember 2020-01-01 2020-03-31 0001639225 lvgo:ServiceBasedRestrictedStockUnitsMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2020-01-01 2020-03-31 0001639225 lvgo:ServiceBasedRestrictedStockUnitsMember us-gaap:ShareBasedCompensationAwardTrancheTwoMember 2020-01-01 2020-03-31 0001639225 lvgo:ServiceBasedRestrictedStockUnitsMember 2019-01-01 2019-01-31 0001639225 lvgo:ServiceAndMarketBasedRestrictedStockUnitsMember 2019-01-01 2019-01-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-01-31 0001639225 lvgo:A2019EmployeeIncentivePlanTransferredFrom2014And2008StockIncentivePlansMember 2019-07-31 0001639225 lvgo:CanceledMarketbasedOptionsMember 2019-01-01 2019-03-31 0001639225 us-gaap:RestrictedStockMember 2019-03-01 2019-03-31 0001639225 lvgo:PerformanceBasedRestrictedStockUnitsMember 2019-04-01 2019-04-30 0001639225 us-gaap:EmployeeStockMember lvgo:A2019EmployeeStockPurchasePlanMember 2019-07-31 0001639225 lvgo:ServiceAndMarketBasedOptionsAndRestrictedStockUnitsMember 2019-01-01 2019-03-31 0001639225 lvgo:RestrictedStockUnitsAndPerformanceBasedRestrictedStockUnitsMember 2020-01-01 2020-03-31 0001639225 lvgo:RSUsVestedAndReleasedMember 2020-03-01 2020-03-31 0001639225 srt:MaximumMember us-gaap:EmployeeStockMember lvgo:A2019EmployeeStockPurchasePlanMember 2019-07-01 2019-07-31 0001639225 lvgo:ServiceAndMarketBasedOptionsAndRestrictedStockUnitsMember 2020-03-31 0001639225 lvgo:ServiceBasedRestrictedStockUnitsMember 2020-01-01 2020-03-31 0001639225 us-gaap:RestrictedStockMember 2020-01-01 2020-03-31 0001639225 lvgo:RestrictedStockUnitsAndPerformanceBasedRestrictedStockUnitsMember 2019-01-01 2019-03-31 0001639225 lvgo:ServiceBasedRestrictedStockUnitsMember 2019-01-01 2019-03-31 0001639225 lvgo:A2019EmployeeIncentivePlanMember 2019-07-31 0001639225 lvgo:SharebasedPaymentArrangementOptionServiceAndMarketBasedMember 2019-03-01 2019-03-31 0001639225 2019-01-01 2019-12-31 0001639225 us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0001639225 lvgo:PerformanceBasedRestrictedStockUnitsMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2020-01-01 2020-03-31 0001639225 us-gaap:RestrictedStockMember 2020-01-01 2020-03-31 0001639225 us-gaap:EmployeeStockMember 2019-01-01 2019-03-31 0001639225 us-gaap:RedeemableConvertiblePreferredStockMember 2020-01-01 2020-03-31 0001639225 us-gaap:WarrantMember 2020-01-01 2020-03-31 0001639225 us-gaap:EmployeeStockMember 2020-01-01 2020-03-31 0001639225 us-gaap:RedeemableConvertiblePreferredStockMember 2019-01-01 2019-03-31 0001639225 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0001639225 us-gaap:RestrictedStockMember 2019-01-01 2019-03-31 0001639225 us-gaap:WarrantMember 2019-01-01 2019-03-31 0001639225 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001639225 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001639225 lvgo:SalaryUnderEmploymentAgreementMember 2020-01-01 2020-03-31 iso4217:USD iso4217:USD xbrli:shares xbrli:pure xbrli:shares lvgo:segment

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-Q
_________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File Number: 001-38983
___________________________________________
Livongo Health, Inc.
(Exact name of Registrant as specified in its charter)
___________________________________________
Delaware
 
26-3542036
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
150 West Evelyn Avenue, Suite 150
Mountain View, California 94041
(866) 435-5643
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
___________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
        Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
LVGO
The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
 
Accelerated filer 
 
 
 
Non-accelerated filer
 
Smaller reporting company 
 
 
 
Emerging growth company 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of April 30, 2020, the registrant had approximately 97,817,000 shares of common stock, $0.001 par value per share, outstanding.
 



TABLE OF CONTENTS

 
 
PAGE
 
 
 
 
 
 
 
 
 
 



1


NOTE REGARDING FORWARD-LOOKING STATEMENTS
As used in this Quarterly Report on Form 10-Q, references to “Livongo,” “we,” “us,” “our,” “the Company,” and similar references refer to Livongo Health, Inc. and its consolidated subsidiaries, except as expressly indicated or as the context otherwise requires.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which statements involve substantial risk and uncertainties. Forward-looking statements generally relate to future events or our 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,” “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 our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our ability to retain clients and sell additional solutions to new and existing clients;
our ability to attract and enroll new members;
the growth and success of our partners and reseller relationships;
our ability to estimate the size of our target market;
uncertainty in the healthcare regulatory environment;
our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, operating expenses, paying users, and free cash flow;
our ability to achieve or maintain profitability;
the demand for our solutions or for chronic condition management in general;
our ability to compete successfully in competitive markets;
our ability to respond to rapid technological changes;
our expectations and management of future growth;
our ability to develop new solutions, or enhancements to our existing solutions, and bring them to market in a timely manner;
our ability to offer high-quality coaching and monitoring;
our ability to attract and retain key personnel and highly qualified personnel;
our ability to protect our brand;
our ability to expand payor relationships;
our ability to maintain, protect, and enhance our intellectual property;
restrictions and penalties as a result of privacy and data protection laws;
our expectations about the impact of natural disasters and public health epidemics, such as the coronavirus, on our business, results of operations and financial condition;
our ability to successfully identify, acquire, and integrate companies and assets;
the increased expenses associated with being a public company;
our anticipated uses of net proceeds from our initial public offering; and
the future trading prices of our common stock.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our other filings with the Securities and Exchange Commission, or the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans,

2


intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

 



3


PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
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 (Note 9)

 

Stockholders’ equity:
 
 
 
Preferred stock, par value of $0.001 per share; 100,000 shares authorized as of March 31, 2020 and December 31, 2019, respectively; zero shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

 

Common stock, par value of $0.001 per share; 900,000 shares authorized as of March 31, 2020 and December 31, 2019, respectively; 97,293 and 95,301 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
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

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


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
18,108

 
9,863

Gross profit
50,715

 
22,204

Operating expenses:
 
 
 
Research and development
13,997

 
8,994

Sales and marketing
27,655

 
14,643

General and administrative
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
95,543

 
18,207

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


LIVONGO HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited)
 
Redeemable
Convertible Preferred
Stock
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Total
Stockholders’ Equity (Deficit)
 
Shares
 
Amount
 
 
Shares
 
Amount
 
Balance as of December 31, 2019

 
$

 
 
95,301

 
$
95

 
$
671,467

 
$
(164,198
)
 
$
507,364

Issuance of common stock upon exercise of stock options

 

 
 
1,247

 
1

 
1,721

 

 
1,722

Issuance of common stock upon release of stock awards

 

 
 
1,120

 
1

 
(1
)
 

 

Tax withholding on releasing of stock awards

 

 
 
(375
)
 

 
(10,564
)
 

 
(10,564
)
Stock-based compensation expense

 

 
 

 

 
8,339

 

 
8,339

Net loss

 

 
 

 

 

 
(5,573
)
 
(5,573
)
Balance as of March 31, 2020

 
$

 
 
97,293

 
$
97

 
$
670,962

 
$
(169,771
)
 
$
501,288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2018
58,615

 
$
236,929

 
 
17,691

 
$
18

 
$
21,789

 
$
(113,613
)
 
$
(91,806
)
Cumulative effect adjustment from adoption of ASC 606

 

 
 

 

 

 
4,685

 
4,685

Accretion of redeemable convertible preferred stock

 
41

 
 

 

 
(41
)
 

 
(41
)
Issuance of common stock upon exercise of stock options

 

 
 
454

 

 
314

 

 
314

Issuance of restricted stock awards

 

 
 
982

 
1

 
(1
)
 

 

Issuance of common stock upon vesting of restricted stock units

 

 
 
491

 
1

 
(1
)
 

 

Stock-based compensation expense

 

 
 

 

 
5,526

 

 
5,526

Net loss

 

 
 

 

 

 
(14,371
)
 
(14,371
)
Balance as of March 31, 2019
58,615

 
$
236,970

 
 
19,618

 
$
20

 
$
27,586

 
$
(123,299
)
 
$
(95,693
)
The accompanying notes are an integral part of these condensed consolidated financial statements.


6


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

Non-cash operating lease cost
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

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
 
 
Accretion of redeemable convertible preferred stock
$

 
$
41

Purchases of property and equipment included in accounts payable and accrued liabilities
$
491

 
$
112

Contingent consideration liability related to myStrength acquisition
$

 
$
3,300

Unpaid working capital adjustment related to myStrength acquisition
$

 
$
119

Capitalized internal-use software costs in accounts payable and accrued liabilities
$
(141
)
 
$
(163
)
Unpaid offering costs
$

 
$
331

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


LIVONGO HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization and Description of Business
Nature of the Business
Livongo Health, Inc. (“we”, “us”, “the Company”, or “Livongo”) was incorporated in the state of Delaware on October 16, 2008, under the name of EosHealth, Inc. In September 2014, we changed our name to Livongo Health, Inc. Livongo empowers people with chronic conditions to live better and healthier lives. We have created a unified platform that provides smart, cellular-connected devices, supplies, informed coaching, data science-enabled insights and facilitates access to medications across multiple chronic conditions to help our members lead better lives. We currently offer Livongo for Diabetes, Livongo for Hypertension, Livongo for Prediabetes and Weight Management, and Livongo for Behavioral Health by myStrength. We create consumer-first experiences with high member satisfaction, measurable, sustainable health outcomes, and more cost-effective care for our members and our clients. This approach is leading to better clinical and financial outcomes while also creating a better experience for people with chronic conditions and their care team of family, friends, and medical professionals. Our headquarters are located in Mountain View, California, and we serve customers throughout North America.
Initial Public Offering
In July 2019, we completed our initial public offering ("IPO") in which we issued and sold 14,590,050 shares of our common stock at an offering price of $28.00 per share, including 1,903,050 shares of common stock pursuant to the exercise in full of the underwriters' option to purchase additional shares. We received net proceeds of $377.5 million, after deducting underwriting discounts and commissions of $28.6 million and offering costs of $2.4 million. Offering costs were capitalized and consisted of fees and expenses incurred in connection with the sale of our common stock in the IPO, including the legal, accounting, printing and other IPO-related costs. Upon completion of the IPO, these deferred offering costs were reclassified to stockholders’ equity and recorded against the proceeds from the offering. Immediately prior to the closing of the IPO, all 58,615,488 shares of our then-outstanding redeemable convertible preferred stock automatically converted into 58,615,488 shares of common stock at their respective conversion ratios and we reclassified $236.9 million of redeemable convertible preferred stock to additional paid-in capital and $0.1 million to common stock on our condensed consolidated balance sheet.
Reverse Stock Split
In June 2019, our board of directors and stockholders approved a 1-for-2 reverse stock split of our common stock and redeemable convertible preferred stock, which was effected on June 27, 2019 pursuant to an amendment to our amended and restated certificate of incorporation. The par value of the common stock and redeemable convertible preferred stock was not adjusted as a result of the reverse stock split. All references to redeemable convertible preferred stock, common stock, options to purchase common stock, restricted stock awards, restricted stock units, common stock warrants, per share data, and related information included in the accompanying condensed consolidated financial statements have been adjusted to reflect this reverse stock split for all periods presented.
Liquidity and Capital Resources
We have incurred losses since inception. As of March 31, 2020, we had an accumulated deficit of $169.8 million. During the three months ended March 31, 2020, we incurred a net loss of $5.6 million and used $10.4 million of cash in operating activities. During the three months ended March 31, 2019, we incurred a net loss of $14.4 million and used $25.2 million in operating activities.
As described above, we received net proceeds of $377.5 million from our IPO in July 2019. Prior to our IPO, we primarily funded our operations through the sale of our redeemable convertible preferred stock. The continued execution of our long-term business plan may require us to explore financing options such as issuance of equity or debt instruments. While we have historically been successful in obtaining equity financing, there can be no assurance that such additional financing, if necessary, will be available or, if available, that such financings can be obtained on satisfactory terms.

8


Risks and Uncertainties
On March 11, 2020, the World Health Organization declared the 2019 novel coronavirus, or COVID-19, a global pandemic. We are closely monitoring the impact of COVID-19 on all aspects of our business. While the COVID-19 pandemic has not had a material adverse impact on our financial condition and results of operations to date, the future impact of the coronavirus outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our clients and our sales cycles, impact on our marketing efforts, and effect on our suppliers, all of which are uncertain and cannot be predicted. Public and private sector policies and initiatives to reduce the transmission of COVID-19 and disruptions to our operations and the operations of our third-party suppliers, along with the related global slowdown in economic activity, may result in decreased revenues, decreased collections, and increased costs, and we expect such impacts on our revenue , collections, and costs to continue through the duration of this crisis. As of the issuance date of these financial statements, the extent to which the coronavirus outbreak may materially impact our financial condition, liquidity or results of operations is uncertain. However, due to our subscription-based business model, the effect of the coronavirus outbreak may not be fully reflected in our revenue until future periods. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic impact may materially and adversely affect our results of operations, cash flows and financial positions as well as our customers.
2. Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of Livongo Health, Inc. and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
The condensed consolidated balance sheet as of December 31, 2019 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP. The accompanying interim condensed consolidated balance sheets as of March 31, 2020, the interim condensed consolidated statements of operations and the interim condensed consolidated statements of redeemable convertible preferred stock and stockholders’ deficit for the three months ended March 31, 2020 and 2019, and the interim condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited. These interim condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary to fairly state our financial position as of March 31, 2020, the results of our operations for the three months ended March 31, 2020 and 2019 and result of our cash flows for the three months ended March 31, 2020 and 2019. The financial data and other financial information disclosure in the notes to these interim condensed consolidated financial statements related to the three months periods are also unaudited. The results for the three months ended March 31, 2020 are not necessarily indicative of the operating results expected for the year ending December 31, 2020 or any future period.
Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our latest annual report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 24, 2020. We have revised our condensed consolidated statements of operations and cash flows for the three months ended March 31, 2019 to reflect the adoption of Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASC 606, as of January 1, 2019, on a modified retrospective basis. This revision was made because our financial statements presented in our Quarterly Report on Form 10-Q for the period ended March 31, 2019 were prepared in accordance with ASC 605, the prior accounting standard. In addition, we made other adjustments to our financial results for the first quarter through the third quarter of 2019 to correct errors that consist of (i) a $1.9 million total adjustment for the capitalization and amortization of device costs for Livongo for Hypertension and Livongo for Prediabetes and Weight Management, (ii) a $1.2 million total reduction of sales and marketing expenses for the capitalization and amortization of certain sales commissions, and (iii) a $0.4 million increase in sales and marketing expenses. We evaluated the materiality of these revisions, quantitatively and qualitatively, and determined that these revisions were not material to any of our previously issued condensed consolidated financial statements.
Comprehensive Loss
For the three months ended March 31, 2020 and 2019, there was no difference between comprehensive loss and net loss.

9


Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Such estimates, judgments, and assumptions include: revenue recognition, allowance for doubtful accounts, the period of benefit for deferred commissions, the period of benefit for deferred device costs, estimated costs for capitalized internal-use software, assessment of the useful life and recoverability of long-lived assets, fair values of stock-based awards, contingent consideration in business combinations, the incremental borrowing rate ("IBR") applied in lease accounting, and income taxes. Actual results could be different from these estimates. While the COVID-19 pandemic has not had a material adverse impact on our results of operations to date, our estimates for revenue recognition and allowance for doubtful accounts, as well as our other estimates, judgments, and assumptions, may be materially and adversely different from our actual results as a result of the COVID-19 pandemic. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected.
Emerging Growth Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we may not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies until required by private company accounting standards.
Concentration of Risk
Financial instruments that potentially subject us to credit risk consist principally of cash, cash equivalents, certificates of deposit, and accounts receivable. We maintain our cash primarily with domestic financial institutions of high credit quality, which may exceed federal deposit insurance corporation limits. We invest our cash equivalents in highly rated money market funds and short-term investments in certificates of deposit. We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk on cash, cash equivalents, investments and restricted cash and perform periodic evaluations of the credit standing of such institutions.
Our sales are predominately to self-insured employers, healthcare providers, and insurance carriers located throughout North America. Accounts receivable are recorded at the invoiced amount, and are stated at realizable value, net of an allowance for doubtful accounts. We perform ongoing assessments of our clients to assess the collectability of the accounts based on a number of factors, including past transaction experience, age of the accounts receivable, review of the invoicing terms of the contracts, and recent communication with clients. We have not experienced material credit losses from our accounts receivable.
Significant clients and partners are those which represent 10% or more of our net accounts receivable balance or revenue during the period at each respective consolidated balance sheet date. There were no clients that represented 10% or more of our revenue or accounts receivable balance for the periods presented. For each significant partner that represented 10% or more of our accounts receivable balance or revenue during the periods presented, revenue as a percentage of total revenue and accounts receivable as a percentage of net accounts receivable were as follows:
 
Revenue
 
Accounts Receivable
 
 Three Months Ended March 31,
 
March 31,
 
December 31,
 
2020
 
2019
 
2020
 
2019
 
 
 
 
 
 
 
 
Partner A
24
%
 
25
%
 
20
%
 
23
%
Partner B
18
%
 
23
%
 
22
%
 
25
%
We utilize a limited number of manufacturing vendors to build and assemble our products. The hardware components included in our devices are sourced from various suppliers by the manufacturer and are principally industry standard parts and components that are available from multiple vendors. Quality or performance failures of the glucometer or changes in the contractors’ or

10


vendors’ financial or business condition could disrupt our ability to supply quality products to our clients and thereby have a material adverse impact on our business, financial condition and results of operations.
Recent Accounting Pronouncements Adopted in Fiscal 2020
Leases: In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance (collectively, "ASC 842"), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. This ASU is effective for us for the interim periods and year ending December 31, 2020. Early adoption is permitted. We adopted ASC 842 on January 1, 2020 using the modified retrospective approach by electing to use the optional transition method which allows us to continue to apply the previous guidance, including disclosure requirements, in the comparative periods presented.

We elected to use certain practical expedients permitted under the transition guidance within the new guidance, which allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We also elected not to use the hindsight practical expedient in determining the lease term and impairment of the operating lease right-of-use ("ROU") assets and elected not to record operating leases with an initial term of 12 months or less on our condensed consolidated balance sheets. We elected not to separate lease and non-lease components for all classes of underlying assets.

Adoption of the new lease standard resulted in the recording of ROU assets and operating lease liabilities of approximately $18.1 million and $18.6 million, respectively, as of January 1, 2020. The difference between the ROU assets and operating lease liabilities primarily relates to deferred rent of $0.5 million recorded in accordance with the previous lease guidance. The adoption had no impact on total cash flows from operations other than a change within operating cash flows.

We determine if an arrangement is or contains a lease at inception. Our lease agreements do not contain any material options to extend or terminate leases, any material residual value guarantees, any material restrictions or covenants, or any material variable lease payments. Any variable lease payments consist of common area maintenance, taxes and other costs and are expensed as incurred. We have performed an evaluation of our other contracts with customers and suppliers in accordance with ASC 842 and have determined that, none of our other contracts contain a lease.

ROU assets represent our right to use an underlying asset for the lease term, while operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. In determining the present value of lease payments, we use our IBR based on the information available at the lease commencement date, including the lease term, for operating leases. The incremental borrowing rate is a hypothetical rate based on our understanding of what our credit rating would be for a secured borrowing in the country where the lease was executed. Upon adoption, the ROU asset was valued at the amount of the operating lease liabilities adjusted for lease incentives, prepaid rent, and deferred rent as of January 1, 2020.

The adoption of the new standard resulted in changes to our accounting policies for leases and in additional disclosures. See Note 8.
Stock-Based Compensation: In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The standard simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to the nonemployees with the requirements for share-based payments granted to employees. ASU No. 2018-07 is effective for us for the interim periods and the year beginning January 1, 2020. Early adoption is permitted. We adopted this new standard using a prospective method on January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.
Disclosure of Fair Value Measurement: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB's disclosure framework project. The new standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including interim reporting periods within those fiscal years. ASU 2018-13 is effective for us for the interim periods and the year beginning January 1, 2020. We adopted the new standard using a prospective method effective on January 1, 2020. The adoption of this ASU resulted in additional disclosures in Note 6 of our condensed consolidated financial statements.

11


New Accounting Pronouncements Not Yet Adopted
Credit Losses: In June 2018, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently. For trade receivables, loans, and other financial assets, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than a reduction in the amortized cost basis of the securities. This new standard is effective for us for the interim periods within and the year ending December 31, 2020. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
Cloud Computing Arrangements Implementation Costs: In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software. This ASU is effective for us for the year ending December 31, 2021, and interim periods within the year ending December 31, 2022. Early adoption is permitted. This standard could be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the impact of this ASU on our consolidated financial statements and expect to apply this standard using the prospective transition method.
Income Taxes: In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies that accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amending existing guidance to improve consistent application. This new standard is effective for our interim periods and year beginning January 1, 2022. Early adoption is permitted. Most amendments within this standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
3.
Revenue, Deferred Revenue and Deferred Costs and Other
Deferred Revenue
Deferred revenue activity is as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Balance at beginning of period
$
4,599

 
$
2,051

Amounts billed but unrecognized
3,140

 
1,378

Revenue recognized
(1,640
)
 
(1,309
)
Assumed from business combination

 
1,407

Balance at end of period
$
6,099

 
$
3,527

Balance at the end of period (in thousands):
 
March 31,
 
December 31,
 
2020
 
2019
Deferred revenue, current
$
5,351

 
$
3,945

Deferred revenue, noncurrent
748

 
654

Total deferred revenue
$
6,099

 
$
4,599


We expect to recognize $5.4 million of revenue in the next 12 months and $0.7 million of revenue thereafter, related to future performance obligations that were unsatisfied or partially satisfied as of March 31, 2020.

12


Accrued Rebates
Accrued rebates represent the amounts in client contracts that are subject to pricing adjustments based on various performance metrics, such as member satisfaction scores, cost savings guarantees and health outcome guarantees, which if not met typically require us to refund a portion of the per participant per month fee paid. We defer an estimate of the amount of consideration that we expect to refund to our clients from the monthly per participant per month fee until the performance metric is met. As of March 31, 2020 and December 31, 2019, accrued rebates of $1.7 million and $1.2 million, respectively, were recorded within accrued expenses and other current liabilities on our condensed consolidated balance sheets.
The activity is as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Balance at beginning of period
$
1,152

 
$
609

ASC 606 adoption date impact adjustment

 
(222
)
Amount deferred
776

 
193

Revenue recognized
(198
)
 
(2
)
Payments

 
(45
)
Balance at end of period
$
1,730

 
$
533


Deferred Costs and Other
Deferred costs and other activity is as follows (in thousands):
 
Three Months Ended March 31, 2020
 
Deferred Device Costs
 
Deferred Contract Costs
 
Deferred Execution Credits
 
Total
Balance at beginning of period
$
18,579

 
$
2,988

 
$
184

 
$
21,751

Additions
17,144

 
174

 
418

 
17,736

Revenue recognized

 

 
(130
)
 
(130
)
Cost of revenue recognized
(5,973
)
 

 

 
(5,973
)
Sales and marketing expenses recognized

 
(294
)
 

 
(294
)
Balance at end of period
$
29,750

 
$
2,868

 
$
472

 
$
33,090

 
Three Months Ended March 31, 2019
 
Deferred Device Costs
 
Deferred Contract Costs
 
Deferred Execution Credits
 
Total
Balance at beginning of period
$
8,469

 
$

 
$

 
$
8,469

ASC 606 adoption date impact adjustment

 
3,692

 
771

 
4,463

Additions
8,495

 

 
112

 
8,607

Revenue recognized

 

 
(245
)
 
(245
)
Cost of revenue recognized
(2,598
)
 

 

 
(2,598
)
Sales and marketing expenses recognized

 
(254
)
 

 
(254
)
Balance at end of period
$
14,366

 
$
3,438

 
$
638

 
$
18,442



13


Balance at the end of period (in thousands):
 
March 31, 2020
 
Deferred Device Costs
 
Deferred Contract Costs
 
Deferred Execution Credits
 
Total
Deferred costs, current
$
20,961

 
$
1,162

 
$
472

 
$
22,595

Deferred costs, noncurrent
8,789

 
1,706

 

 
10,495

Total deferred costs
$
29,750

 
$
2,868

 
$
472

 
$
33,090

 
December 31, 2019
 
Deferred Device Costs
 
Deferred Contract Costs
 
Deferred Execution Credits
 
Total
Deferred costs, current
$
14,746

 
$
1,121

 
$
184

 
$
16,051

Deferred costs, noncurrent
3,833

 
1,867

 

 
5,700

Total deferred costs
$
18,579

 
$
2,988

 
$
184

 
$
21,751



4. Business Combinations
Retrofit Inc.
We acquired all of the issued and outstanding shares of Retrofit Inc. (“Retrofit”), a privately-held, Illinois-based entity, and a leading provider of weight-management and disease-prevention programs, through a share purchase agreement (the “Retrofit Purchase Agreement”) in exchange for cash consideration (the “Retrofit Acquisition”) in April 2018. The Retrofit Acquisition provides us with an evidence-based diabetes prevention program that enhances our data science capabilities and our expertise in holistic weight management including nutrition, exercise and mindset.
The total consideration transferred as part of the Retrofit Acquisition consisted of a cash payment on the closing date, adjusted for customary closing adjustments, of $12.4 million. Upon the close of the Retrofit Acquisition, as part of the Retrofit Purchase Agreement, we placed in escrow an earn-out consideration of $7.0 million held by a third-party escrow agent to be released to the former stockholders of Retrofit contingent upon achieving future qualified member targets as determined on December 31, 2019, 2020, and 2021 (the “Retrofit Contingent Consideration”). We recorded a corresponding escrow asset of $7.0 million on our condensed consolidated balance sheet upon the close of the acquisition. We estimated the fair value of the Retrofit Contingent Consideration to be $6.2 million as of the acquisition date using a Monte Carlo simulation model, which together with the cash consideration resulted in total purchase consideration of $18.6 million. The Retrofit Contingent Consideration is subject to remeasurement at each reporting date until the payments are released from escrow, with the remeasurement adjustment reported in our condensed consolidated statements of operations. For the three months ended March 31, 2020 and 2019, the fair value of the Retrofit Contingent Consideration had increased and we recorded an expense of $0.1 million and less than $0.1 million, respectively, within the change in fair value of contingent consideration on our condensed consolidated statement of operations. In April 2019, we released $1.8 million from the escrow deposit, of which $1.3 million was paid to the former stockholders of Retrofit. As of March 31, 2020 and December 31, 2019, the remaining Retrofit Contingent Consideration was $2.9 million and $2.8 million, respectively.
myStrength, Inc.
In February 2019, we acquired all of the issued and outstanding shares of myStrength, Inc. (“myStrength”), a privately-held entity based in Denver, Colorado, and a leading provider of digital behavioral health solutions through an agreement and plan of merger (the “myStrength Purchase Agreement”) in exchange for cash consideration (the “myStrength Acquisition”). The myStrength Acquisition has enabled us to more fully address the health of the whole person by bringing behavioral health conditions including depression, anxiety, stress, substance use disorder, chronic pain, opioid addiction and recovery, and insomnia to our Applied Health Signals solution.

14


The total consideration for the myStrength Acquisition was $30.1 million in cash, subject to a closing adjustment of $0.1 million. As part of the myStrength Purchase Agreement, we are obligated to pay an earn-out consideration up to $5.0 million contingent upon satisfying future milestones for the year ended December 31, 2019 (the “myStrength Contingent Consideration”). We estimated the fair value of the myStrength Contingent Consideration to be $3.3 million as of the acquisition date using a Monte Carlo simulation model, which together with the cash consideration, resulted in total purchase consideration of $33.5 million. The myStrength Contingent Consideration was subject to remeasurement at each reporting date until the payments are made, with the remeasurement adjustment reported in our condensed consolidated statements of operations. For the three months ended March 31, 2019, we increased the fair value of the myStrength Contingent Consideration and recorded an expense of $0.6 million in our condensed consolidated statements of operations. In December 2019, we paid $2.4 million of the myStrength contingent consideration to the former shareholders of myStrength. In the three months ended March 31, 2020, we paid the remaining fair value of the myStrength contingent consideration of $2.6 million.
The purchase consideration of $33.5 million was allocated as follows:
 
Amount
 
(in thousands)
Cash and cash equivalents
$
2,643

Accounts receivable
1,337

Other current assets
140

Property and equipment
114

Intangible assets
13,900

Other assets
34

Total assets acquired
18,168

Accounts payable
173

Accrued expenses and other liabilities
1,787

Deferred revenue
1,407

Deferred tax liability, net
1,396

Total liabilities assumed
4,763

Goodwill
20,092

Total purchase consideration
$
33,497


The following table sets forth the components of the identifiable intangible assets acquired and their estimated useful lives as of the acquisition date:
 
Cost
 
Useful Life
 
(in thousands)
 
(years)
Customer relationships
$
4,300

 
7.0
Developed technology
9,200

 
7.0
Trade name
400

 
5.0
Total
$
13,900

 
 

The estimated fair values of the intangible assets acquired were determined based on the income approach to measure the fair value of the trade name, customer relationships, and developed technology. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.
Additionally, in the first quarter of 2019, we incurred a total of $0.2 million of acquisition-related costs as a result of the myStrength acquisition.
Goodwill represents the excess of the purchase consideration over the estimated acquisition date fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is primarily attributable to expected post-acquisition synergies from integrating myStrength’s assembled workforce and developed technology into our product offerings and cross-selling opportunities. Goodwill recorded is not deductible for income tax purposes. The results of operations of myStrength have been included in our consolidated financial statements from the respective date of purchase.

15


Unaudited Pro Forma Financial Information
The following unaudited pro forma information presents the combined results of operations as if the myStrength Acquisition had been completed on January 1, 2018, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include adjustments primarily related to the following: (i) interest expense related to the legacy debt of myStrength that was not acquired; (ii) amortization of the acquired intangible assets; (iii) fair value adjustment for deferred revenue; (iv) the inclusion of acquisition-related costs as of the earliest period presented; and (v) the associated tax impact of the acquisitions and these unaudited pro forma adjustments.
 
March 31, 2019
 
(in thousands)
Revenue
$
32,666

Net loss
$
(13,031
)

5. Balance Sheet Components
Inventories
Inventories of $19.2 million and $29.0 million, as of March 31, 2020 and December 31, 2019, respectively, consisted of finished goods.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
 
March 31,
 
December 31,
 
2020
 
2019
 
(in thousands)
Prepaid expenses
$
7,170

 
$
6,691

Escrow deposit, current
5,342

 
2,100

Interest receivable
606

 
504

Prepaid rent
263

 
352

Short-term deposits
484

 
201

Other current assets
4

 
12

Total
$
13,869

 
$
9,860


Property and Equipment, Net
Property and equipment consisted of the following:
 
March 31,
 
December 31,
 
2020
 
2019
 
(in thousands)
Computer, equipment and software
$
3,442

 
$
2,218

Furniture and fixtures
1,463

 
915

Capitalized internal-use software
12,545

 
11,229

Leasehold improvements
1,664

 
1,092

Property and equipment
19,114

 
15,454

Less: accumulated depreciation
(6,279
)
 
(5,100
)
Property and equipment, net
$
12,835

 
$
10,354


Depreciation and amortization expense was $1.2 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively.

16


Intangible Assets, Net
Intangible assets consisted of the following as of March 31, 2020:
 
Gross Value
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted-
Average
Remaining
Useful Life
 
(in thousands)
 
(years)
Customer relationships
$
8,190

 
$
(1,479
)
 
$
6,711

 
6.8
Developed technology
11,020

 
(2,268
)
 
8,752

 
5.4
Trade name
448

 
(138
)
 
310

 
3.8
Total
$
19,658

 
$
(3,885
)
 
$
15,773

 
 
Intangible assets consisted of the following as of December 31, 2019:
 
Gross Value
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted-
Average
Remaining
Useful Life
 
(in thousands)
 
(years)
Customer relationships
$
8,190

 
$
(1,227
)
 
$
6,963

 
7.1
Developed technology
11,020

 
(1,848
)
 
9,172

 
5.7
Trade names
448

 
(114
)
 
334

 
4.0
Total
$
19,658

 
$
(3,189
)
 
$
16,469

 
 

Amortization expense for intangible assets for the three months ended March 31, 2020 and 2019 is as follows:
 
Three Months Ended March 31,
 
2020
 
2019
 
(in thousands)
Customer relationships
$
252

 
$
209

Developed technology
420

 
327

Trade names
24

 
28

Total
$
696

 
$
564


The expected future amortization expense related to intangible assets as of March 31, 2020 was as follows:
 
Amount
 
(in thousands)
Remainder of 2020
$
2,073

2021
2,762

2022
2,750

2023
2,494

2024
2,324

Thereafter
3,370

Total
$
15,773


Goodwill
Goodwill was $35.8 million as of March 31, 2020 and December 31, 2019. Through March 31, 2020, there have not been any impairment of goodwill.

17


Other Noncurrent Assets
Other noncurrent assets consisted of the following:
 
March 31,
 
December 31,
 
2020
 
2019
 
(in thousands)
Escrow deposit, noncurrent
$

 
$
3,150

Other
215

 
310

Total
$
215

 
$
3,460


Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
 
March 31,
 
December 31,
 
2020
 
2019
 
(in thousands)
Accrued bonus
$
3,304

 
$
8,652

Vendor accruals
4,305

 
3,984

Contingent consideration, current
2,915

 
3,004

Accrued commissions
3,046

 
2,611

Accrued payroll and employee benefits
2,545

 
2,291

Accrued sales and use taxes
194

 
932

Accrued rebates
1,730

 
1,152

Employee contribution to ESPP
2,303

 
1,805

Operating lease liabilities, current
2,877

 

Other accrued expenses
5,849

 
3,370

Total
$
29,068

 
$
27,801


6. Fair Value Measurements
The following table sets forth the fair value of our financial assets and liabilities by level within the fair value hierarchy:
 
March 31, 2020
 
Level 1
 
Level 2
 
Level 3
 
Fair Value
 
(in thousands)
Assets
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
105,566

 
$

 
$

 
$
105,566

Short-term investment:
 
 
 
 
 
 
 
Certificate of deposit
150,000

 


 

 
150,000

Total assets at fair value
$
255,566

 
$

 
$