At the StartUp Health Conference, Livongo President Jennifer Schneider said the company’s work with Dexcom would create a new stream of data for both companies.

A day after Livongo’s president spoke in detail about the data partnership the company struck with Dexcom, a top continuous glucose monitoring company, its stock edged up — to nearly $31.

Since the company’s public debut back in July, it is yet to attain IPO levels of nearly $45.

The deal itself wasn’t necessarily surprising — Dexcom has been striking interesting partnerships with tech companies ever since it received FDA approval for its interoperable continuous glucose monitor. But it was interesting in that it brought together two different user groups: Livongo’s software primarily targets type 2 diabetes patients, while patients with type 1 diabetes primarily use CGMs.

At the StartUp Health Conference, Livongo President Jennifer Schneider said the main draw of the deal was the data that the two companies would collect.

“With a CGM, you’re collecting data and marrying that with our insights,” Schneider said in a discussion moderated by MedCity News Editor-in-Chief Arundhati Parmar. “It will help really get the member a better outcome and reduce clinical costs overall.”

Livongo, which went public in July, pairs type 2 diabetes patients with health coaches. The company’s app sends users “nudges”, or notifications related to a patient’s health. For example, if a user had high blood sugar levels after waking up, it might direct them to eat dinner earlier in the evening.

The company reported more than 200,000 users across 771 clients in November. Since its IPO, Livongo’s financials have been steady. In the third quarter, the company reported revenues of $46.7 million, up 148 percent year-over year. But it also reported a net loss of $19.7 million. The company’s stock just tipped over $30 on Tuesday, after news broke of the partnership.

Currently, most of Livongo’s members use glucometers and testing strips to track their blood sugar levels. Roughly 10 to 20 percent of them use CGMs, Schneider said.

The partnership would let users opt to share the blood sugar data that is constantly being collected by Dexcom’s CGM with Livongo’s software. In turn, Livongo would be able to push out “nudges,” insights and notifications related to a user’s health. Both companies seem hopeful that the deal will help them get more users in the massive — and growing — type 2 diabetes market, with 32 million people diagnosed with the condition.

“Dexcom’s had incredible success predominately with type 1. We have the ability to monitor people on finger sticks and notice who’s not doing well, who will benefit, and offer continuous glucose monitors,” Schneider said. “I don’t see this as either or. I think it’s absolutely together. Our ability to drive insights and the wrap-around services component are very complementary to the device component that Dexcom has done.”

The partnership is expected to launch this quarter, though some details still need to be worked out. Type 2 diabetes and type 1 diabetes and two very different conditions, and different strategies will be required to manage them.

Still, the deal should be a boost for Livongo, along with another important development going into 2020. Livongo was named the preferred provider for diabetes and hypertension on Express Scripts’ first digital health formulary, a distinction that Schneider said would help them speedily bring their solutions to the market.

Having big partners is helpful, but winning over employers is still a challenge that many digital health companies face, including Livongo. The company says that use of its platform is associated with savings of $88 per employee or member, but studies have shown that employers are investing in health and wellness programs but can’t quantify a benefit.

The retrospective study, published in the Journal of Medical Economics, was funded by Eli Lilly and Company and was not randomized. Schneider explained that the company conducted the study this way because running a randomized, controlled trial on cost would take about two-and-a-half years.

And in response to a question about why the stock has fallen from its IPO level, she seemed to suggest that the market doesn’t understand the company well, yet.

“We’ve been performing and executing very well in our plan. We are building a company of value. We know that. We have customers that continue to stay with us and sign up,” she said. “What we’re doing is different. It takes people a little bit of time to understand what’s different.”

Photo credit: Elise Reuter

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