Viewing the market ceiling of digital therapy from Livongo

Since being acquired by Teladoc, Livongo has achieved rapid growth, from 553,000 a year ago to 725,000 at the end of the third quarter of 2021, a growth rate of 31%
.

Although the growth rate is not eye-catching compared with the previous over 100%, because the previous base has been low, the absolute number of customer acquisitions still guarantees high growth.

However, if you look at Teladoc's second-quarter financial report, Livongo has 715,000 members in the second quarter of 2021, a growth rate of 74.
4% compared with 410,000 in the same period last year
.

In the entire third quarter of 2021, there was only a net increase of 10,000

In the third quarter of 2021, the number of Teladoc members remained stagnant, only increasing from 52 million in the second quarter to 52.
5 million
.

However, the revenue growth rate still reached 108%, mainly due to the promotion of Livongo

If the revenue of Livongo superimposed on other acquired companies has exceeded 1/3 of Teladoc's revenue, Teladoc will increasingly rely on health management companies for growth
.

According to data from CB Insights, digital medical investment in the second quarter of 2021 is withdrawing from the traditional online consultation field and entering the field of health management.

Judging from the development trend of the market, although the digital therapy focused on chronic disease management, especially in the field of diabetes management, has a large population base, for example, there are more than 30 million people with diabetes in the United States
.

However, the participation rate of people with chronic diseases in health management is not high
.

Take Livongo as an example.

1) Employees and their families who have stopped using Livongo Diabetes Management after joining

2) Employees who have resigned

3) After joining, there are employees who have not used Livongo Diabetes Management for 4 to 6 consecutive months

Therefore, if Livongo wants to expand the number of members, it must continue to increase its potential customer base.
Selling itself to Teladoc, which has the largest customer base, is to expand the number of members.
Facts have also proved that this strategy is correct
.

However, the market did not expect that such a large number of users would not be able to bring sustained growth to Livongo
.

Before Livongo merged with Teladoc, the customer overlap rate between the two did not exceed 25%

In order to maintain growth, Teladoc pushed Livongo into other diseases
.

In 2018, Livongo has expanded the disease to the field of hypertension and behavioral health.

As a member participates in multiple chronic disease management projects at the same time, the monthly income contributed by a single member has also increased rapidly, from US$118/month in the third quarter of 2020 to US$247/month in the second quarter of 2021, and then to the third quarter 257 USD/month
.

However, even under the premise that it is all free, most people with chronic diseases are still reluctant to join the health management plan.
Under the premise that the growth rate of traditional consultations has fallen sharply, Teladoc's growth next year will face great challenges
.

In order to meet this challenge, it recently launched the Primary360 general practice plan, which mainly provides online consultation general practice services for personal insurance customers, hoping to convert some users to chronic disease management

Therefore, from the perspective of the overall market size, digital therapy for a single disease is facing a large ceiling.
This is still on the premise that American companies pay their employees in full
.
If you put aside this premise, it is less likely to rely solely on individual self-paid users to promote digital therapy
.
The most difficult thing in this market is not from 0 to 1, because there are always some self-financed seed users, but from 1 to 10, the possibility of scale is non-existent under the premise of lack of corporate payment
.