Livongo Health (LVGO) Financial Report Summaries

Risks

• The Merger may not be completed within the expected timeframe, or at all, and the failure to complete the Merger could adversely affect our business, results of operations, financial condition, and the market price of our common stock.
• The announcement and pendency of the Merger could adversely affect our business, results of operations, financial condition, and the market price of our common stock.
• After the Merger, our stockholders will have a significantly lower ownership and voting interest in Teladoc than they currently have in Livongo and will exercise less influence over management.
• After completion of the Merger, Teladoc may fail to realize the anticipated benefits and cost savings of the Merger, which could adversely affect the value of Teladoc common stock.
• We have a history of net losses, we anticipate increasing expenses in the future, and we may not be able to achieve or maintain profitability.
• Our relatively limited operating history makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.
• The failure of our solutions to achieve and maintain market acceptance could result in us achieving sales below our expectations, which would cause our business, financial condition and results of operation to be materially and adversely affected.
• The market for our solutions is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change, which makes it difficult to forecast demand for our solutions.
• We operate in a very competitive industry and if we fail to compete successfully against our existing or potential competitors, some of whom may have greater resources than us, our business, financial condition and results of operations could be adversely affected.
• Competitive solutions or other technological breakthroughs for the monitoring, treatment or prevention of chronic conditions or technological developments may adversely affect demand for our solutions.
• The growth of our business relies, in part, on the growth and success of our clients and channel partners and certain revenues from member enrollment, which are difficult to predict and are affected by factors outside of our control.
• If the number of individuals employed by our clients decreases or the number of members which subscribe to our solutions decreases, our revenue will likely decrease.
• Our business, financial condition and results of operations may fluctuate on a quarterly and annual basis, which may result in a decline in our stock price if such fluctuations result in a failure to meet the expectations of securities analysts or investors.
• Acquisitions and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact our business, financial condition and results of operations. Additionally, if we are not able to identify and successfully acquire suitable businesses, our operating results and prospects could be harmed.
• If we are unable to expand our sales and marketing infrastructure, we may fail to enroll sufficient members to meet our forecasts.
• We incur significant upfront costs in our channel partner, reseller, client, and member relationships, and if we are unable to maintain and grow these relationships over time, we are likely to fail to recover these costs, which could have a material adverse effect on our business, financial condition and results of operations.
• A substantial portion of our sales comes from a limited number of channel partners and resellers.
• Our sales and implementation cycle can be long and unpredictable and requires considerable time and expense. As a result, our sales and revenue are difficult to predict and may vary substantially from period to period, which may cause our results of operations to fluctuate significantly.
• If we are unable to attract new clients and expand member enrollment with existing clients, our revenue growth could be slower than we expect, and our business may be adversely affected.
• Potential members’ failure to enroll after a client enters into an agreement with us could negatively affect our business, operating results, financial condition and growth prospects.
• Any failure to offer high-quality implementation, member enrollment, or ongoing support may adversely affect our relationships with our clients, or existing or prospective members, and in turn our business, financial condition and results of operations.
• If we fail to effectively manage our growth, we may be unable to execute our business plan, adequately address competitive challenges or maintain our corporate culture, and our business, financial condition and results of operations could be harmed.
• If we are not able to develop and release new solutions and services, or successful enhancements, new features and modifications to our existing solutions and services, our business, financial condition and results of operations could be adversely affected.
• We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable solutions or the generation of significant future revenues.
• We may be unable to successfully execute on our growth initiatives, business strategies or operating plans.
• Expansion into international markets is important for our long-term growth, and as we expand internationally, we will face additional business, political, regulatory, operational, financial and economic risks, any of which could increase our costs and hinder such growth.
• Economic uncertainty or downturns, particularly as it impacts particular industries, could adversely affect our business and operating results.
• We depend on a limited number of third-party suppliers for certain components, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business.
• Our business, financial condition and results of operations may be adversely affected by the COVID-19 pandemic or other similar epidemics or adverse public health developments.
• We depend on our talent to grow and operate our business, and if we are unable to hire, integrate, develop, motivate and retain our personnel, we may not be able to grow effectively.
• Changes to our packaging and pricing options could adversely affect our ability to attract or retain clients and members.
• Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture and our business may be harmed.
• If we are not able to maintain and enhance our reputation and brand recognition, our business, financial condition and results of operations will be harmed.
• Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, members or partners, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.
• If we or our third-party suppliers fail to comply with the FDA’s Quality Systems Regulation, our ability to distribute medical devices that are provided to members as part of our solution could be impaired.
• Our medical device operations are subject to FDA regulatory requirements.
• Material modifications to our devices may require new 510(k) clearances, premarket approval, or may require us to recall or cease marketing our devices until new clearances or approvals are obtained.
• If we fail to comply with healthcare and other governmental regulations, we could face substantial penalties and our business, financial condition and results of operations could be adversely affected.
• Our use, disclosure, and other processing of personally identifiable information, including health information, is subject to HIPAA and other federal, state, and foreign privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm and, in turn, a material adverse effect on our client base, member base and revenue.
• Public scrutiny of internet privacy and security issues may result in increased regulation and different industry standards, which could deter or prevent us from providing our products to our clients, thereby harming our business.
• The information that we provide to our partners, clients and members could be inaccurate or incomplete, which could harm our business, financial condition and results of operations.
• Evolving government regulations may require increased costs or adversely affect our business, financial condition and results of operations.
• We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.
• Failure to comply with anti-bribery, anti-corruption and anti-money laundering laws could subject us to penalties and other adverse consequences.
• If our arrangements with our clients are found to violate state laws prohibiting the corporate practice of medicine or fee splitting, our business, financial condition, results of operations and our ability to operate in those states could be adversely impacted.
• We may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance.
• Our business depends upon the interoperability of our solution across a number of medical devices, operating systems and third-party applications that we do not control.
• Our proprietary solutions may not operate properly, which could damage our reputation, give rise to claims against us, or divert application of our resources from other purposes, any of which could harm our business, financial condition and results of operations.
• Indemnity provisions in various agreements potentially expose us to liability for intellectual property infringement and for breaches of our business associate agreements.
• If the shift by companies to subscription business models, including consumer adoption of healthcare products and services that are provided through such models, and, in particular, the market for our solution, develops slower than we expect, our growth may slow or stall, and our operating results could be adversely affected.
• We may be required to delay recognition of some of our revenue, which may harm our financial results in any given period.
• Certain of our operating results and financial metrics may be difficult to predict as a result of seasonality.
• We have been and may be in the future subject to legal proceedings and litigation, including intellectual property and privacy disputes, which are costly to defend and could materially harm our business, financial condition and results of operations.
• The enactment of legislation implementing changes in the U.S. taxation of international business activities, the adoption of other tax reform policies or changes in tax legislation or policies in jurisdictions outside of the United States could materially impact our business, financial condition and results of operations.
• Failure to protect or enforce our intellectual property rights could harm our business, financial condition and results of operations.
• We have been and may be in the future subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate.
• Any disruption of service at our third-party data and call centers or Amazon Web Services could interrupt or delay our ability to deliver our services to our clients.
• We rely on internet infrastructure, bandwidth providers, third-party computer hardware and software and other third parties for providing services to our clients and members, and any failure or interruption in the services provided by these third parties could expose us to litigation and negatively impact our relationships with clients and members, adversely affecting our business, financial condition and results of operations.
• We incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, financial condition and results of operations.
• Our common stock may be less attractive to investors for so long as we are an emerging growth company, however, we expect to cease being an emerging growth company on or before December 31, 2020 and, as a result, will incur additional costs and experience increased demands placed upon on our management.
• Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business or the ability to raise funds to pay our substantial debt.
• We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all, may cause dilution to our stockholders, or adversely affect our ability to operate our business.
• Our debt agreements contain certain restrictions that may limit our ability to operate our business.
• If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
• We have spent, and may in the future spend, substantial funds in connection with the tax liabilities that arise upon the settlement of RSUs and the manner in which we fund these expenditures may have an adverse effect on our financial condition or dilution to our stockholders.
• Our reported financial results may be affected by changes in accounting principles generally accepted in the United States, and difficulties in implementing these changes could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.
• If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
• Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
• The applicability of sales, use and other tax laws or regulations on our business is uncertain. Adverse tax laws or regulations could be enacted or existing laws could be applied to us or our clients, which could subject us to additional tax liability and related interest and penalties, increase the costs of our solution and adversely impact our business, financial condition and results of operations.
• If our enterprise resource planning system or other software systems prove ineffective, we may be unable to timely or accurately prepare financial reports, make payments to our suppliers and employees, or invoice and collect from our users.
• Our business could be disrupted by catastrophic events and man-made problems, such as power disruptions, data security breaches, terrorism and health epidemics.
• Regulations related to conflict minerals may cause us to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of our devices.
• The trading price of our common stock could be volatile, and you could lose all or part of your investment.
• As of June 30, 2020, our executive officers, directors, and holders of 5% or more of our common stock collectively beneficially owned approximately 42.8% of the outstanding shares of our common stock and continue to have substantial influence over us, which will limit your ability to influence the outcome of important transactions, including a change in control.
• Sales of substantial amounts of our common stock in the public markets, or the perception that such sales could occur, could reduce the price that our common stock might otherwise attain.
• If securities or industry analysts publish reports that are interpreted negatively by the investment community or publish negative research reports about our business, our share price and trading volume could decline.
• Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.
• Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
• We do not intend to pay dividends for the foreseeable future, other than the Special Dividend.
• Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders.
• We could be subject to securities class action litigation.
• The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
• The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.
• The capped call transactions may affect the value of our common stock.
• We are subject to counterparty risk with respect to the capped call transactions.