Livongo, Led By Ex-Allscripts CEO, Gets $105M for Health Tech Tools

Xconomy San Francisco — 

Livongo Health, a startup that develops connected devices and software for patients with diabetes and other chronic conditions, said earlier this week it had raised $105 million from investors to support further development of its technology.

Livongo’s latest financing round was led by Kinnevik and General Catalyst Partners, which reportedly helped incubate the startup and was its earliest backer.

In addition to the new funding round, which a spokesperson for Livongo said values the Mountain View, CA-based company at more than $800 million, it also announced a partnership with Cambia Health Solutions. That Portland, OR-based business conglomerate operates regional health insurance plans in the Pacific Northwest that together have more than two million members.

Livongo’s digital platform fits into a trend of healthcare providers and technology firms working to engage patients outside the four walls of a hospital or clinic. The company was founded in 2014 by Glen Tullman, who understands well the growing emphasis on digital tools in healthcare—he previously was CEO of Chicago-based Allscripts (NASDAQ: MDRX), one of the leading sellers of electronic medical records software.

Livongo, which has more than 160 employees, has annual sales of more than $60 million, the company spokesperson said.

In a phone interview, Tullman, Livongo’s CEO, said his team will initially work with Cambia to provide glucometers and smartphone apps developed by Livongo to members of Cambia health plans in Idaho, Oregon, Utah, and Washington who live with diabetes. The startup’s Livongo for Diabetes program will be offered through Regence Blue Cross and Blue Shield insurance providers.

In a press release, Livongo said that over time, it and Cambria plan to co-develop products and services designed to provide more personalized care to a broader group of patients.

Tullman said it’s still too early to know what the partnership will yield. But one possibility is a program that lets patients provide more input around the end-of-life care they receive.

“Today, if you’re diagnosed with cancer, all of a sudden the [healthcare] system takes over and says, ‘You should do this and you should do that,’” Tullman said. “We start treating this disease without actually talking to the people to say, ‘What’s your life going to be like?’ There are some decisions to be made.”

Diabetes was Livongo’s first area of concentration after Tullman launched the company. His son Sam, who is now 22, was diagnosed with type 1 diabetes at age 8, Glen Tullman said. A seasoned healthcare business executive, he began learning about health insurers’ methods and policies for distributing blood glucose test strips, which people with diabetes depend on to measure whether their blood sugar levels are in a healthy range.

“I learned how ridiculously hard we made it for people who want to stay healthy and outside the hospital,” Tullman said. “If your child needs test strips and insulin to stay alive and your insurance company says they’re going to limit the amount you get, you say, ‘How can these kinds of things be?’”

Livongo has developed its own glucometer and also ships test strips (at no additional cost) to patients who qualify through the employers and health plans the startup works with. The device, which measures how quickly insulin is being absorbed, might suggest to a user whose blood glucose is higher than normal that he refrain from eating within two hours of bedtime.

The company has also developed a blood pressure cuff for patients with hypertension, Tullman said. The monitoring device is currently able to transmit readings to computers and mobile devices via a Bluetooth connection, though Livongo is working to develop a new version that can talk to other devices using a cellular signal.

Livongo’s customer list features a number of large, self-insured employers, such as Lowe’s (NYSE: LOW) and Target (NYSE: TGT). According to company materials, other Livongo clients include health insurers and pharmacy benefit managers, which manage prescription drug benefits for commercial and government-provided heath plans.

Tullman said Livongo uses a traditional software-as-a-service (SaaS) business model, under which it charges customers monthly fees to use its digital tools. However, he said that unlike some companies with SaaS structures, Livongo only charges customers for those members or employees who actually use its products in a given month.

Cambia also participated in the round through Echo Health Ventures, a company co-owned by Cambia that invests in digital health startups. Other participants in the investment included DFJ, Kleiner Perkins Caufield & Byers, Merck Global Health Innovation Fund, Microsoft Ventures, Sapphire Ventures, Zaffre Investments, and 7wire Ventures, a Chicago-based healthcare venture fund Tullman co-founded in 2013.