In response to the company reporting third-quarter earnings, shares of Livongo Health (LVGO), a provider of real-time health coaching for chronic diseases, rose 15% as of 3:02 p.m. EST on Thursday.
Livongo's third-quarter numbers looked great:
- Revenue jumped 148% to $46.7 million.
- Adjusted gross margin was 75%.
- Net loss was $19.7 million.
- Non-GAAP (adjusted) net loss was $3.4 million, or $0.05 per share. That was less than half of the $0.13 loss per share that Wall Street was expecting.
Management also shared upbeat guidance with investors:
- Fourth-quarter revenue is expected to land between $49.0 million and $49.5 million. That's much higher than the $45.9 million that Wall Street was expecting.
- Fourth-quarter adjusted EBITDA is expected to be between negative $5.5 million and negative $5.0 million.
- Full-year 2019 revenue is now expected to come in between $168.5 million and $169.0 million. That's also nicely above the $161.9 million that traders were modeling.
- Full-year 2019 adjusted EBITDA is expected to be between negative $26.7 million and negative $26.1 million.
Given the expectation-topping results and guidance, it isn't hard to figure out why shareholders are having a good day.
There's a lot going right at Livongo Health today. Revenue is growing rapidly, gross margin is strong, the net loss is shrinking, and the opportunity ahead of the business is huge.
There's no doubt that the stock is pricey -- shares trade for more than 18 times trailing sales -- but the triple-digit growth more than justifies the premium. I think this is a growth stock that's easy to root for, and investors should get to know it.