Key Takes on LVGO’s Partnership

After the close on October 12, Livongo Health (LVGO) https://www.livongo.com announced they had entered into a strategic relationship with Guidewell https://www.guidewellcom to offer the Livongo for Diabetes Solution to select members of Florida Blue which is a subsidiary of Guidewell and Blue Cross/Blue Plan of Florida https://www.floridablue.com.

Credit Suisse https://www.credit-suisse.com offers key takes on the partnership that came about via TDOC/LVGO’s existing commercial reseller agreement. LVGO was able to leverage the reseller agreement with TDOC, which allowed the two companies to cross-sell products ahead of the merger close.

Notably, TDOC began offering telehealth services to Florida Blue members on January 1, 2016. As part of the agreement with Guidewell, LVGO will provide access to Livongo for Diabetes through Guidewell’s consumer engagement solution Onlife Health https://www.lifehealth.com, which helps guide health plan members through their healthcare journey.

Although TDOC had provided hints to the early success of the reseller agreement, Credit Suisse analysts, see the Guidewell/LVGO deal as the first formal announcement for cross-selling efforts in the TDOC/LVGO merger.

A press release notes that the Livongo for Diabetes Solution to be available to select members of Florida Blue, has more than four min members at a ~10% diabetes prevalence rate, puts the total opportunity for LVGO at around 400K members.

The focus is now on consumer-centric virtual care. Though the Onlife Health platform, TDOC and LVGO will offer select Florida Blue members with diabetes an end-to-end experience encompassing connected devices, advanced data science, and telehealth.

As discussed in Credit Suisse’s upgrade of TDOC on August 17, the TDOC/LVGO merger will 1) Accelerate LVGO’s time to contract which is similar to how LVGO utilizes PBMs, 2) Enhance the stickiness of TDOC’s existing client base, and 3) Allow TDOC/LVGO to leverage data from TDOC’s underlying members in order to provide data-driven health insights and improve LVGO’s enrollment rates.

Credit Suisse analysts see the Guidewell partnership as potentially serving as an example of how TDOC/LVGO can provide a framework for enhanced value to customers as a combined company. The analysts expect TDOC to provide additional details on their earnings call and as noted in the preview note, they expect TDOC to update their 2020 outlook for the two month contribution from LVGO.

For more information and to provide feedback, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.

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