Please ensure Javascript is enabled for purposes of website accessibility

Why Livongo Health Stock Soared Higher on Tuesday

By Daniel Sparks – Updated Jul 7, 2020 at 10:34AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's second-quarter revenue crushed expectations.

What happened

Shares of Livongo Health (LVGO), which provides a cloud-based platform to help improve the lives of individuals with chronic conditions, jumped higher on Tuesday. The stock was up about 17% as of 10:05 a.m. EDT.

The growth stock's gain follows the company's announcement of its preliminary second-quarter revenue, which was far ahead of average analyst estimates.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Livongo said it now expects its second-quarter revenue to be between $86 million and $87 million, crushing analysts' consensus forecast for revenue of about $75 million. Management was previously guiding for revenue between $73 million and $75 million.

Highlighting how fast Livongo is growing, this revenue is up from $40.9 million in the year-ago period. Growing demand for remote care during the COVID-19 pandemic and for the company's whole-person approach to care is helping drive sharp revenue growth, management explained in a press release about the preliminary results. Member enrollment and retention have also been higher than expected, Livongo said.

Management did notably say $2 million to $3 million of its revenue during the period was non-recurring in nature. But even when excluding these items, revenue was much higher than expected.

Now what

Investors will look for more strong growth from Livongo throughout 2020. Before this preliminary revenue was released, analysts were expecting full-year revenue to increase 77% year over year. Following this outperformance, however, analysts will likely lift their outlook for Livongo's total 2020 revenue. 

Daniel Sparks 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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.