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Teladoc & Livongo both report Q2 wins ahead of merger; Abbott sees revenue slip; and other digital health Q2 earnings

Shortly before news broke that Teladoc was set to acquire Livongo, the chronic disease management company announced its quarterly earnings results. On Aug 5 it announced that its second quarter total revenue came in at $91.9 million, which was up 125% YoY. The company reported a GAAP gross margin of 76.6% and non-GAAP gross margin of 77.3%.
The company attributed the gains to its growing partnerships, mainly with payer organizations. This fact also led to a jump in membership, which was up by 113% YoY.
During the call, Livongo’s CEO Zane Burke did hint at the Teladoc acquisition, though very few details about the merger were given at that time.

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“Overall we remain very confident in Livongo’s leading position in the applied health signal space. We believe joining with Teladoc will build on the momentum Livongo has demonstrated over the last few years, which allows us to pursue our mission of empowering people with chronic conditions to live better and healthier lives,” he said. 
A week prior to its big acquisition announcement, Teladoc Health CEO Jason Gorevic informed investors that his company had outperformed on “all key financial and operational metrics” during the quarter. 
YoY revenue grew 85% to $241 million in Q2, while total visits rose 203% YoY to 2.76 million. The company now boasts 51.5 total paid memberships, up 92% YoY. EBITDA and adjusted EBITDA were $2.7 million and $26.3 million, respectively.
Annualized utilization for the quarter was 22% (after excluding large health plan populations onboarded during the last 12 months).
Net loss for the quarter was $25.7 million, compared to $29.3 million at this time last year and $29.6 million in Q1 2020. This yielded a net loss per diluted share that came to $0.34, which included $0.10 tied to a convertible debt offering in May.
“Even as we continue to battle the coronavirus in the U.S. and other hard-hit countries, we are also seeing sustained demand in areas that are no longer considered hotspots. In some states where the curve has flattened, we are still seeing twice as many patient visits as last year,” Gorevic said in a statement accompanying the Q2 results. “While COVID-19 has accelerated the virtual care needs of consumers and providers alike, our broad based momentum in 2020 and beyond is rooted in the satisfaction and trust our partners have in our ability to transform the healthcare experience.”
Although Abbott’s revenue fell YoY in Q2 2020, the company still managed to come out well above Wall Street estimates. Total revenue this quarter was $7.3 billion, a decrease of 8.2% compared to the same period last year, but above the Wall Street projection of $6.85 billion. 
Net earnings for this quarter were $537 million, or $0.30 per share based on GAAP. These fell from $1 billion or $0.57 per share during Q2 2019. 
“This quarter was challenging from a growth perspective, and we significantly exceeded expectations and more importantly, exited the quarter in a much stronger position than we entered it,” Robert Ford, the president and CEO of Abbott, said in the earnings call. “We continued to advance our pipeline and achieved several important new product approvals during the quarter, and we’ve continued to lead in the area of diagnostic testing for COVID-19, which is significant and expected to carry forward beyond this year.”
New product approvals include FDA approval of FreeStyle Libre 2 as an integrated continuous glucose monitor, CE Mark approval for the TriClip heart valve repair system, and the Gallant implantable cardioverter defibrillator and cardiac resynchronization therapy defibrillator devices.
For the remainder of 2020, Abbott projects a full-year 2020 diluted earnings per share (EPS) from continuing operations on a GAAP basis of at least $2.00 and an adjusted diluted EPS from continuing operations of at least $3.25.
In addition to new roadblocks regarding its pending sale to Google, fitness wearable-maker Fitbit is reporting another downtick in its business. 
Revenue for the quarter came in at $261.3 million, versus $313.6 million during the same period last year. Overall device sales were down 30% YoY to 2.5 million, although the company noted that it has only released one new product in the first half of the year compared to four in 2019. 
Trackers made up the bulk of revenue (56%) thanks in part to the launch of the Charge 4, followed by smartwatches (40%) and non-device revenue driven by Fitbit’s premium subscription service (4%). The company also noted that its employer-focused offering, Fitbit Health Solutions, took a hit as a direct result of COVID-19 uncertainty.
“In this uncertain COVID-19 environment, we are seeing consumers turn to options that enable them to take charge of their health, such as Fitbit devices. In addition, many customers have taken advantage of Fitbit’s free premium trial offering and signed up for our subscription service,” James Park, cofounder and CEO, said in a statement. “While COVID-19 has impacted our business and there continues to be uncertainty around consumer demand and the economy, we are encouraged by the 12% year-over-year POS sales growth we’ve seen at retail and through Fitbit.com.”
Despite having some uncertainty in the impacts of the COVID-19 pandemic, Dexcom was able to produce significant year-over-year growth in Q2 2020. 
This quarter, Dexcom raked in $451.8 million in total revenue, a YoY increase of 34% from $336.4 million in 2019. A majority of the revenue in Q2 2020 ($367.1 million) came from the U.S. market. The adjusted EBITDA was $122.6 million. The second-quarter gross profit totaled $289.7 million or 64.1% of revenue compared to 61.4% of the revenue the same time last year. The net income was $77.1 million, or $0.79 per share.
For the remainder of 2020, Dexcom hopes to reach about $1.850 billion in revenue; meet non-GAAP gross and operating margins of 65% and 14%, respectively; and have an adjusted EBITDA of at least 24%.
“As an organization, we continue to make great strides as we invest in the initiatives that will drive Dexcom’s long-term growth, while also remaining disciplined as an organization – and this is evident in our second-quarter results,” Quentin Blackford, Dexcom’s COO and CFO, said in the earnings call.
As for Dexcom’s next generation of its continuous glucose monitor, the G7, president and CEO Kevin Sayer revealed there would not be a limited launch of the new system in 2020. However, the company plans to invest in G7 clinical trials, G7 manufacturing scale-up, new market efforts and direct-to-consumer advertising as the year progresses.
Apple, like much of big tech, continues to benefit from COVID-19. The company announced quarterly revenue of $59.7 billion (11% YoY increase), largely powered by growth in its products and services across regions. 
The company’s wearables, home and accessories business unit hit a quarterly revenue of $6.5 billion (17% YoY increase). The company noting once again that 75% of Apple Watch buyers are new to the product, although CEO Tim Cook also hinted to investors that new wearable purchases might still be dampened by the loss of in-store browsing. 
In regards to the company’s other devices, Cook also made a point to highlight new adoption among providers.
“In healthcare, we are seeing rapid acceleration of telehealth to support a more flexible model of patient care,” he said. “Many hospitals such as UVA Health, Rush University Medical Center and UC San Diego Health are using apps on iPad and iPhone to … triage, monitor and care for patients who are at home. This helps free up hospital capacity to support patients who need inpatient care, while enabling continued care for patients who do not require in-person visits.”
Alphabet reported a second quarter revenue of $38.3 billion, which represents a 2% year-over-year decrease. However, the revenue beat expectations by $937 million. It also beat EPS expectations by $1.92.  
This was mainly attributed to declines in advertising, however, CFO of Alphabet Ruth Porat said that Google Other and Google Cloud services made up for some of the revenue.
The company also reported that operating expenses are up 7% from last year.
In the call, CEO Sundar Pichai pointed out the company’s efforts to fight the global pandemic. In particular he highlighted that Google Maps and search are equipped to locate 12,000 COVID-19 testing centers in 20 countries. Also mentioned to investors was its contact tracing efforts, which was enabled by a partnership with Apple.
“As of today, authorities have rolled out official apps in 12 countries to alert people that they were in contact with another person who tested positive for the virus and that they should isolate and get tested,” he said.
iRhythm Technologies took a hit in its finances this quarter, but CEO Kevin King says he feels encouraged by the company’s recent rebound. 
“Despite the challenges presented by the pandemic, we have continued to deliver our Zio service without interruption to the physicians and patients that rely on it. Our team recognized the need for high quality care has never been greater and I could not be prouder of the commitment we have demonstrated,” he said. “Second quarter results were encouraging, despite the COVID-19 impact felt early in the quarter. We saw a steady pace of recovery in registration rates throughout the quarter that exceeded our initial expectations.”
Revenue for Q2 was $50.9 million, a decrease of 3% YoY from $52.4 million. iRhythm attributed the decrease to lower volumes but said it was slightly offset by increased average selling price.
The gross profit this quarter was $35.4 million, or 69.6% gross margin, a decrease from the same period last year of $39.4 million, or a gross margin of 75.2%. Operating expenses increased 11.1% from $50 million last year to $55.5 million in 2020. The net loss for Q2 2020 was $20.4 million, or $0.75 per share, compared to a net loss of $10.7 million, or $0.43 per share, from last year. 
iRhythm said it is not providing 2020 financial guidance due to the continued uncertainties of the impact of COVID-19.

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