What to make of all this?
As much as we aren’t ones for explanations lots of people like to know the why’s and wherefores. No they cannot be content that their Dexcom, Tandem or Insulet shares have skyrocketed this year, they must know why they have skyrocketed. Yes, this backward-looking Monday morning quarterbacking doesn’t do much, but it seems to comfort many. Now we’d sure like to be nice and indulge these people or we could be bold and help everyone figure out when the next rocket ship will take off or when the next one will crash.
Since Momma Kliff didn’t raise an idiot let’s look to the future, not the past the place we have already been. And when it comes to diabetes devices the future is looking pretty damn good but as per usual isn’t getting here fast enough. Once again, the FDA is moving at glacial speed with what should be simple approvals, the Libre2 and Control IQ being the most recent examples and don’t forget Lilly is also waiting for approval of their connected pen.
Now we hate to state the obvious but what’s making the device area so exciting is CGM. We’ve said it before and will say it again CGM is the straw that stirs the diabetes cocktail. The other day we read a report that talked about the new way cool whiz bang toys coming from Medtronic, how these toys might be a threat to Insulet or Tandem. The only problem one part of these way cool whiz bang toys is defective, and it just so happens it’s the most important part of the toy. When Mr. Salmon starts swimming in the Medtronic diabetes pool the first thing he should do before anything else is fix the damn sensor.
It would also be nice if he also brought the sensor into the 21st century eliminating any fingerstick calibrations, long warm up periods and better sensor application. But given how important this piece of equipment is we’ll settle for producing sensors that are accurate and reliable.
We also think it’s time for everyone to realize that Senseonics and Livongo have the exact same problem. It’s not about how many plans they get on, it’s all about how many patients use their technology and then keep using it. We have nothing against an implantable sensor and Senseonics makes a damn good one. However the business model doesn’t work very well and that in essence is the issue here.
Livongo on the other hand would make us feel much better if they stopped all the bullshit and actually stated how much revenue they actually earned; not how much they MIGHT earn. This crazy convoluted accounting method isn’t worth much, doesn’t tell much and is extraordinarily misleading. Just once we’d like to hear one of the analysts ask a simple question; “Excuse me Mr. CFO if you did not use this crazy accounting method and actually counted the money that actually came through the door how much revenue would that be?” As a follow up he should then ask; “Thank you for not answering my question but heck let’s try something very simple how much money does it cost to capture a patient and keep a patient enrolled and while we’re at it how many patients drop out of the plan in any given quarter?
Only in our wacky world can a company lose over half of their market cap and be hailed as hero’s. Only in our wacky world are the people who are running this scam, excuse me company, out doing fireside chats instead of running the damn company for the benefit of its stakeholders. Only in our wacky world are all the analysts who follow this company falling all over themselves to find witty explanations rather than see what’s right in front of their eyes. Listen we have long known these analysts are spineless creatures without even the hint of a backbone or moral compass but with Livongo they have hit a new low and that my friends is saying something.
So here we are on a sunny albeit cold Chicago day earnings season over for the time being and looking forward once again. Before you know it, we’ll be in Vegas for CES and then that beautiful city by the bay for JPM. Until then some turkey, a visit from old St Nick, plus some candles on that menorah thrown in as well. So take our advice and just enjoy the holidays and don’t worry about the why and wherefores in our very wacky world. As Momma Kliff has said, it’s really not worth the effort to figure out why everyone else is so damn stupid.
Have a great weekend everyone.