Memorandum

Livongo acquires Diabeto, allowing capture of glucose data from 40+ non-connected BGMs; strategic move to expand device compatibility; interview with CEO Glen Tullman – September 25, 2017

Executive Highlights

  • Livongo has acquired Diabeto, a startup offering a small, plug-in device that provides Bluetooth connectivity to over 40 non-connected BGMs. The Diabeto device transfers readings from the non-connected BGM to a dedicated app (iOS and Android) and eventually directly into Livongo’s own iOS and Android apps.
  • While Livongo has its own cellular-enabled BGM (a far more seamless experience), this acquisition dramatically expands its BGM device compatibility – users/payers who prefer their current BGM and strips will now have access to Livongo’s coaching services.  
  • Diabeto will be priced at “less than half” of what “existing connectivity solutions in the market” sell for – presumably referring to Glooko. This acquisition seems like a move to compete with Glooko’s broader device compatibility, but also to offer wraparound coaching. Livongo currently has a user-base of over 50,000, up from “over 35,000” in May. Can it reach its ambitious goal of 100,000 users by the end of 2017?  
  • See our interview with CEO Glen Tullman for more on the company’s strategy and competitive implications.

Livongo announced during EASD that it has acquired Diabeto. The New Jersey-based startup manufactures a small plug-in device that turns >40 BGMs into Bluetooth-enabled devices – expanding Livongo’s source of glucose data beyond its own cellular-enabled BGM. Financial terms were not disclosed. By plugging the small “Diabeto Birdie” or “Diabeto RED” device into a non-connected BGM (the former for most meters with 2.5-mm and 3.5-mm data ports, and the latter for Accu-Chek meters with IR protocol), Diabeto transfers readings to a dedicated app (iOS and Android) and eventually directly into Livongo’s own iOS and Android apps.

Livongo of course has its own cellular-enabled BGM, but this strategic acquisition responds to market feedback – making the company’s service (including 24/7 CDE remote support) more attractive to patients who want to stick with their current meter, and presumably to payers who don’t want to switch to Livongo’s strips (or force patients to do so). Livongo’s direct-to-consumer subscription model with its own cellular BGM and unlimited strips currently costs $65/month. Based on the press release, Diabeto will now allow it to provide coaching and apps for those on other meters.

Livongo CEO Mr. Glen Tullman expects Diabeto to be priced at “less than half” of what “existing connectivity solutions in the market” sell for – we assume this refers to Glooko’s platform, which is $59.95/year for individual patients and more expensive custom pricing for clinics/health systems. We see this acquisition as a definite move to compete with Glooko, who pioneered the device-agnostic hardware connector and now serves 1+ million patients following its diasend acquisition.

As the BGM field turns over to Bluetooth meters, the need for hardware adaptors like Diabeto should disappear; however, this will take years to fully transfer the market and this acquisition seems like a clear stop-gap until then. Driving CGM in type 2 diabetes will also take time, of course. Livongo currently has over 50,000 enrollees, up from “over 35,000” in May. Will this move help the company accelerate to reach its goal of 100,000 users by the end of 2017?   

Interview with CEO Glen Tullman

Q: Why acquire Diabeto? How does this fit into Livongo’s overall strategy and business model?

Mr. Tullman: First, we don’t believe in forcing healthcare of any kind on people. That includes forcing them to use our meter. We want to be so good they choose to use it (and we’re getting better every day at that). But for those who want to keep their meter and upload data, we wanted a way for them to do that. Diabeto and Glooko are not really products, they are really connectivity features. [Editor's Note: Glooko has more than 1 million users and over 6,000 clinics using its product.] But we’ll make it easy and inexpensive if a payer or patient wants that capability. 

Please don’t mistake downloading data from either for a comprehensive product experience, which leads to behavior change and healthier outcomes.

From what we’ve seen with our clients, Bluetooth downloading products like Glooko and even Diabeto don’t generally get more than 3%-4% adoption in the patients they are offered to. We get 40% adoption for our Livongo product – that’s a 10x difference. [Editor's Note: Glooko told us its average enrollment rate is actually 50%-60% and engagement rate is 30%-60%, with 43% of its users also logging events like diet, medications and exercise. We're not sure why the discrepancy is so large between what Livongo has heard and what Glooko told us.]

Q: What’s next for Livongo? Could Livongo partner with CGM players to provide coaching?

Mr. Tullman: I think you should expect Livongo to go deeper into the science of diabetes and helping people with diabetes figure out all of the best ways and options to be and stay healthy and healthier (device, other conditions, diet, etc.). We’ll be there with ideas, information, and support, all personalized to their needs, making solutions easier (less hassles) and less expensive. Diabeto is the first of a number of these additional enhancements. 

As for CGMs and the artificial pancreas, which I’ve personally supported to help develop and find a cure, both will continue to make progress and Livongo will partner and gather information from them where appropriate and where our members want to use them as part of their overall diabetes solution. Remember, however, that we’re more than Type 1. For type 2, we’re years away from simple, non-invasive CGM solutions that people with type 2 will wear every day. When they do wear those, we’ll find that the solution to better health will be not just better sensors and technology, but a comprehensive approach that leads to (i) happier people; (ii) improved clinical outcomes; and (iii) lower overall costs. That will take more than just better technology. Folks like Dr. Bill Polonsky have known that all along. It will take a focus on the psychology and behavioral aspects of diabetes.

[Editor’s Note: Diabeto’s website notes, “…we are continuously striving to make the Diabeto hardware compatible with more meters and soon CGMs.” If Livongo doesn’t directly partner with a CGM company to provide wraparound coaching, then plugging the Diabeto devices into receivers/phones intermittently to pull CGM data could be a workaround – albeit a very clunky one, given where CGM is heading. Dexcom (G5), Abbott (LibreLink), and Medtronic (Guardian Connect outside the US) all have connected products out, which makes the Diabeto plug-in seem unnecessarily clunky. We assume the clear path forward on CGM is a direct cloud integration via API (like Dexcom’s just-released) or pulling data from Apple Health Kit and Google Fit.] 

Q: What about evidence? Have any of Livongo’s studies/outcomes been published? 

Mr. Tullman: We have published in JMIR submitted to Health Affairs and Diabetes Care (pending acceptance) and have a manuscript driven by UMass. We are focused on demonstrating value and growing our business. (See our ADA coverage of Livongo’s oral here and poster here.)

Q: Livongo has stated in the past that it plans to move beyond diabetes, including into hypertension– any updates on this front?

Mr. Tullman: We announced last week that we added a well known and respected cardiologist to lead developments in the hypertension space and he will drive our planned Beta release at the end of 4Q17 for a few key clients. 70% of people with type 2 diabetes also have hypertension. If you want them to be healthier, you have to address both their diabetes and their hypertension. That’s important to us: better health, not silos.

Q: How does Livongo plan on curating its nutrition recommendations? Will you be implementing diet advice directly from organizations like the AHA?

Mr. Tullman: We recognize some of the controversy with the AHA nutrition recommendations. (Editor’s Note: see here and here.) We are not taking generic advice off the shelf from anywhere and implementing it. We are actively developing our own approach to digital Medical Nutrition Therapy (MNT) supported with our CDEs. They are only one of many sources we’re using.

 

-- by Maeve Serino, Brian Levine, Adam Brown, and Kelly Close