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Here's Why Livongo Stock Popped on Friday

By Cory Renauer – Updated Apr 3, 2020 at 4:25PM

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A leading health plan provider will offer its members a Livongo service for free.

What happened

Shares of Livongo (LVGO), a leading applied health signals company, jumped on Friday after a Kaiser Permanente made the company's mental wellness app available to members at no cost. The stock gained 11.2% on Friday.

So what 

Kaiser Permanente's a not-for-profit healthcare plan provider with about 12.2 million members. Now, most members can use their smartphones to access myStrength for free and without a referral. 

Cash raining down on a person looking at their phone.

Image source: Getty Images.

In 2019, the number of people enrolled in Livongo's diabetes-monitoring service grew 96% year over year to 222,683 members. To keep expanding at an astronomical rate, Livongo acquired myStrength last January. Instead of just sending patients home with a prescription for antidepressants and hoping for the best, the myStrength program offers a structured self-care program to help nudge patients to stay on track.

Now what

The COVID-19 pandemic and stay-at-home orders designed to fight it have heightened anxiety and stress for everyone, but Livongo hardly needs a health emergency to grow its list of potential customers. Roughly one-sixth of American adults are dealing with a mental illness, and an estimated 157 million suffer from at least one chronic health condition.

Investors worried about temporary shocks to the economy will appreciate the Livongo's subscription fee model. Reliable revenue streams might not stop the stock from sliding temporarily if the market melts down again. With steady cash flows during economic downturns, though, Livongo shares have a pretty good chance to pop back up once the dust settles.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Livongo Health Inc. The Motley Fool has a disclosure policy.

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