Omada Health Inc Aktie

All right. I think we're live here. Well, I want to welcome everyone to the -- I guess the last session of the 2026 Goldman Sachs Global Healthcare Conference. Very pleased to have the management team from Omada here with us today. Sean Duffy, Founder and CEO; Steve Cook, Chief Financial Officer.

I want to keep this as interactive as possible. I say this in every session, offer the opportunity to ask questions. No one asks any, but they're more than happy to come up after and ask you. But this is being webcast, so in the event you do have a question, please just raise your hand, and we'll get a mic to you or I'm happy to repeat the question.

Maybe, Sean, I'll kind of start high level here. You've been public about a year. Maybe just kind of give us your reflections on sort of what you envisioned for the company as you began the public market journey and how things have gone?

Well, thank you, David. Hi, everybody. David is saving the best for last here. So we just crossed the year milestone of being public and just been extraordinarily proud of the team's progress. I mean if you look at all the commitments we had at the time of IPO, I mean every single one, financial, revenue, margin, profitability profile, strategy, we delivered.

I think we've come ahead of schedule in many areas. And I think it's all reflected in the Q1 results. I mean, a $78 million quarter, 43% growth, adjusted EBITDA positive in the most cost-heavy quarter of the year. So just thrilled with the progress. And it's against the backdrop of just so much excitement and dynamism in the chronic disease space and the recognition that yesterday's care models of a visit-by-visit approach won't serve tomorrow's needs. So we're feeling that, and it's showing up in the numbers.

And I want to dive into the business model for a second. I want to -- obviously, we'll get to some -- more of the specifics. But you compete in a space that's been challenging for companies to really figure out a durable growth model. And I think we actually first met in like 2014 or '15 when you were early in Omada's journey, you were sort of figuring out, I think at that point, you were doing like a risk-sharing model with one of your key customers. And over time, you've sort of evolved the business model. Talk to us about how you landed on the current business model for the company and why you think it's a sustainable growth vehicle?

Yes. I mean the big AHA, which has always been Omada's strategy for the business is to be an actual provider of care delivering the real clinical and economic value. And I think if you looked at yesterday's digital health, those business models did not have that characteristic. And that's where real public health care spend is. And so Omada, we are between-visit provider. We contract as a covered entity. We file claims. It's on kind of unique codes, but it allows us to hit the exact same medical expenditures as an HCA would, a tenant would, a Stanford hospital would. Although, of course, we don't have the clinics that we have to pay to build out. And it's tailor-made specific for chronic care.

And so the revenue model is very simple for Omada. We love it. It is when someone signs up, we start to charge. And it's a monthly fee. And that monthly fee is filed through claims, hits the medical expense no different than if that -- let's use the self-insured employer, if that employee went across the street to get a procedure at Stanford Hospital. But it's a monthly fee that includes all of what we do.

And so that model really works for a number of reasons. Number one, you're very aligned with your customers. They know that when they're paying for the Omada solution, they're paying for people that are engaged, they're paying for value. We love that. Secondly, it has great durability characteristics for the business. I mean, I think you've seen that. If you look at our quarter-by-quarter revenue build, you just see the consistent growth over time. I think the pricing and the revenue model is reflective of that.

And one of the things you referenced there, that I think sometimes goes overlooked is just the breadth and depth of clinical data you have, especially when compared to other digital health companies these days. The way sometimes I described the company to investors and they ask why is this different, I will use, a lot of companies started as software companies and tried to become health care companies. You've actually -- you've made investments very similar to a health care product type company and clinical-to-clinical data that you're now leveraging software to deliver care. Maybe just sort of talk about your clinical development strategy and how much you think that's contributed to the revenue you generate.

Yes. So the end market for us is a very risk-averse buyer. And the moment you say hi, especially if you're supporting an employer through a channel like a health plan or PBM, you've got the medical directors of these organizations inspecting your solution and they want to see data. And I remember in the earlier days -- I mean, I left medical school at Harvard and -- to found Omada. And I kind of asked myself what would convince my critical friends that our solution worked. And it's -- there's one answer. It's peer-reviewed studies. And so we've spent many millions of dollars. I mean, these are multiyear investments. We have an arsenal of 30 peer-reviewed publications, they range from operational trials that we optimize for speed to academic medical center led multimillion-dollar RCTs.

And when we go to buyers, we can show those data, both clinical and economic as well as things like industry-leading accreditations. Omada was the first and remains the only NCQA accredited for diabetes and -- diabetes and hypertension and that allows you to earn trust with buyers, which becomes a durable moat at the end of the day.

Maybe we can sort of jump into the business now. I mean you started as a kind of prevention company and you've evolved in this multi-platform, multi-service line business pretty quickly. So maybe just contextualize for investors where you are in that kind of diversification of offerings and give us a feel of like where adoption is in each of those.

So we began Omada's journey in prevention of obesity. So really it was kind of the first chapter of Omada. We expanded the diabetes to hypertension, to cholesterol, to MSK care. And that was not TAM driven. Just to be clear, that was customer-driven. Because what happens is if you earn trust with customers, employers -- I mean, we have over 2,000, 25 million covered lives, over a decade of operating history with them. If you earn their trust, they ask you to do more for them. And so each one of those condition expansions came from a customer ask where they saw in action, they saw our capabilities and they recognized that they have new needs that they'd love us to support.

And the way we judge those is number one, clinical feasibility. Is this a between-care need, where longitudinal day-to-day support matters for patient outcomes and not just an incrementally different way, but a transformationally different way. That's kind of the first judge. The second judge is their business model and is there commercial adoption. And so if a customer asks for it, that helps answer the yes on the other side.

And we've seen really just exciting full platform growth. I mean the -- right around 50% of new customers start Omada's journey -- with their journey with Omada in a multiproduct fashion. We did announce, looking kind of last year, that both hypertension and diabetes grew over 45%. So it's not just weight, it's not just GLPs for Omada. It's the attention broadly on metabolic and chronic care is -- that is supporting the remit of all the clinical...

And maybe just to go one level deeper. Can you just visualize for us what a between-visit care need looks like for a type 2 diabetic, endocrinologist every 6 months, like what is -- just paint a picture of someone that's not maybe on a pump and a CGM and they're on drugs, like what are those between-visit needs?

Let's contrast it to the existing. I mean, this brings me back to early Omada, before we [Audio Gap] I sat at home. And it's funny because I remember we did a tour outside of Atlanta and I'm sitting at home with this patient and the health care academic would have said, "Oh, this individual is under care." Because they have an attributed PCP, they've been prescribed their meds. But then you ask what they received, what's on their mind, and they didn't pick up their scripts. They weren't taking their meds. Their health trajectory was heading in the wrong direction. They had no idea on their sugar levels.

And that became the issue. Because if you study this space, it's extraordinarily hard to get any outcome. You really have to drop in the paratroopers in this clinical category and they need day-to-day support that includes a symphony of things, connected devices to monitor progress, education curriculum, community support, care team engagement. That's not just that doctor telling me what to do, it's the health coach or the diabetes educator that's listening to their goals, supporting them because what you need to create is a feel of accountability and progress.

And so what our care teams do is: a, make sure that the person is equipped with all the needed connected devices. So we mail a cellular scale, blood pressure cuff, glucometer, every patient with diabetes gets right at the beginning to -- FreeStyle Libre CGM, so those are the hardware. Then they meet their care teams, diabetes educator, health coach. Those care teams get to know them as individuals. And then the software experience combines all of those other pieces.

And so that gives the person a feeling of for the first time in my life, I have like someone in my corner, in my pocket on a daily basis rooting for me. And you ask them if they -- like what -- to compare and contrast back to standard of care currently, and it's a night and day difference.

And then maybe how does it work on the other end? One of the questions I get from investors is like if Omada is offering all these different services, don't they hire a ton of professionals to support that. Help us understand your side of it and how much infrastructure is required and how technology can be leveraged to make that efficient?

I mean, we did benefit we did -- it's interesting, like I -- we did have to bite off building it all. Now thankfully, all those costs are behind us [Audio Gap] numbers. But we had to build every single piece of [Audio Gap] at least we didn't believe you could deliver the member experience needed as an example and you -- like an off-the-shelf EHR. So we built our entire Care Team platform that our care teams use to support our members ourselves because it's different. Like the care we deliver is a longitudinal daily engagement model versus fee-for-service episodic model, which a lot of the EHRs are built upon.

So we did have to take burden of that, but equally, we're appreciating that. I mean our -- if you look at our margin progress, our long-term targets that we've communicated are 70% plus, we ended last year in the upper 60s, 68%. So nipping at it. Could we have done that without the Care Team platform, investments in technology, AI? No. I mean, I was our first ever health coach for Omada when I founded the company, flying totally blind, just look at a weight chart, message a person, total guess. And the way we run the operations right now is the complete opposite.

I think one piece just from an economic standpoint, on the R&D side, when we want to spin up a new Care Track on our existing tech stack, we approach that with like modularity and flexibility in mind. We revamped our new GLP-1 product in just a couple of months on our existing tech stack. So we didn't need to go back and deploy tens of millions of dollars to reinvest to stand that up. And so that's going to continue to benefit us from an operating leverage perspective as well.

And maybe that's a good segue to talk about GLP-1s.

Never heard of them.

Yes. I was just at ADA this past weekend. So certainly all the rage. I don't know if GLP-1 adoption has gotten to that part of the country quite yet. But the -- maybe just talk to us about why you launched the GLP-1 Care Track and talk about the prescribing thing in a second. Maybe we'll start with just the Care Track, why you've -- what you said is probably -- it sounds like customer-driven. What were customers telling you about GLP-1s that led to that development? And what have you seen in the utilization so far?

Yes. I mean this is an area where I think we're thanking ourselves for, in our view, getting really ahead of the market here because 3 or 4 years ago, I mean, Omada -- imagine Omada, we've got thousands of customers at that point in the journey, a lot of them were prevention obesity customers.

Some of them started to cover GLP-1s for obesity. And then they started calling us. And there the average voice would say, "Sean, we're looking at the cost of this and the slope of the curve and it looks vertical. There is no slope in the curve. Like does this go to infinity. Like what do we do? Equally, we're looking at persistence data. And we're seeing that our employees who are paying for these meds before are not persistent on the meds. We're seeing a regain in real-world evidence. Like help us think through what to do here. Because clearly, the med can be effective. But equally, we're worried about waste, and we want to think through how to maximize the value."

And this is an area that we care a lot about because these are incredible medicines, and they're incredible pairing with comprehensive lifestyle solutions. And so we developed the first version of our Care Track, which is kind of gen 1, which paired the Omada that they knew alongside a GLP-1, optimizing for on-therapy outcomes.

And then if the patient goal was to discontinue, doing everything we can to reduce or ideally eliminate regain after discontinuation. And then every year, we've built upon that knowledge in kind of a rinse-and-repeat fashion, leading us to the most recent version of the Care Track, which includes all the bells and whistles, including prescribing and titration of the medicines themselves.

Because the market is getting more and more complex and more and more difficult for buyers. Despite some, obviously, moderation in the price, you take almost any unit price for GLPs and multiply it by the prevalence, and this is an enormous cost decision for employers. So for Omada to come in to almost manage effectively that spend and be really a value maximizer and almost like a GLP operating system layer for the accounts has been attractive to the market.

And do you have a sense of how customers are measuring the success? They look at their medical spend and they add GLP-1 to it, is their intention that we had a medical spend of some number. We add GLP-1 and this number comes down to justify the investment? Or -- and what are you seeing play out in the real world?

It's interesting, so you've got like a 40-60 split -- 45% or so but you got the minority of employers or the lesser are those who cover GLP-1s for obesity. They're not covering it right now because they are hoping for a total cost of care reduction. They're covering it because they see that these meds are effective, and they are responsive to employee voices. And so they bring Omada in -- really in the hopes of gaining what we're all after, which is that saving. And it's that savings through medical outcome.

So they want to see from Omada, are the right employees using the meds. And so that's where our prescribing network can come in. Of course, aligned with all the obesity society guidelines, best-in-class clinical practices. So it helps kind of avoid the stories you hear of the dermatologists that it's like a fitness center prescribing a GLP-1. And so there's kind of the clinical integrity piece that they're getting from Omada. And then there's the weight loss outcomes while on the med, of which we've seen upwards of about 30% increase in weight loss on our Care Track than not.

And then discontinuation because you talk to a patient, a very common goal is to try to get off the meds. And so what we can say to the individual is, "David, that's an amazing goal. It's not going to be an easy one, but it's not your destiny to have to set your goal to regain. Let's work together while on therapy." And the analogy we often use is would you run a marathon tomorrow without training. And the answer is obvious no.

And so you can use that on therapy window to support rethinking nutrition habits, exercise habits, kind of ask what a week in their life looks like from an eating standpoint, ask them if there's anything they've ever wanted to do physically that they can't, and build some success there. And then we've seen that in the discontinuation data. And we followed patients out to a year, seeing weight -- minimal, minimal regain at the end of the year, whereas the natural progression should be 6% to 7% increase at that point.

Got it. GLP-1s obviously represent a huge opportunity, but I -- sometimes I think investors do get a little bit over their skis in the sense of GLP-1s is all the growth in members. And we try to do some math behind what sort of GLP-1 and ex-GLP member growth is contributing. Our assessment is in that the non-GLP member growth actually represents the majority of your growth and GLP-1s is additive to that. Maybe help us think through the -- is that an accurate interpretation? And how do you want investors to think about GLP-1s and then the aggregate growth profile?

Let me talk about the selling motion and then pass it off to Steve. The selling motion for the GLP-1 Care Track involves saying hi to self-insured employers just like we would any other employer. Now we are proud that we now work with the 3 largest PBMs in the country to deploy not just our Care Track, but the broader suite of Omada services.

And so if an employer wants to contact Omada for GLPs, very quickly, the conversation turns into, "Oh, wait, I probably shouldn't just cover Omada for those employer -- employees that are using GLPs. I should cover more broadly. I should think about Omada for diabetes, Omada for hypertension." So it turns into a broader platform sale, which is reflected in the numbers.

I mean we did -- just to help absolve concerns there, I mean, we do periodically and plan to continue to kind of share a little kind of view at the aggregate GLPs. And end of last year, we announced -- we crossed 150,000 folks in Omada's care programs where we're supporting them alongside of GLP.

886,000 total.

Yes, that's right. And ending Q1 members was just north of 1 million. So it gives you a general sense. Because in any given account, there's still going to be the minority on a GLP, we expect that -- those proportions to continue.

Yes. Look, we got our start of prevention and weight health. What we previously disclosed is that 75% of our revenue is in prevention weight health, where part of the GLP-1 revenue sits and then the other 25% is in diabetes and hypertension. And per Sean, I think given we're using the GLP-1 conversation as the tip of the spear to engage with employers, we've seen growth across all of them fairly equally, one is not really outpacing the other. And it's important because the diabetes and the hypertension economics, they're some of our most profitable members. They're in program the longest, they're priced at the top end of our range. So we really like the profile of those members in our overall P&L build.

And on member growth, I was talking to someone about Omada yesterday, and they asked me, well, if they have 50% retention at year 1, if you have 1 million members to grow that, does that 1 million go to 500,000, then you've got to grow 700,000 to get to 20% growth? It's sort of a confusing dynamic for people. And I was like, no, it doesn't work that way. But maybe just illuminate that for folks more broadly.

Yes, absolutely. So this is just -- it's simpler than it seems. So you are right that if you look at the shape of a member who joins at about the end of the first year, north of 55% are still engaging monthly; end of year 2, north of 50%. So you do -- clearly, obviously, you lose people along the way. Some of that loss is for people leaving the organization. And so what happens mechanically is every single year, you're getting thousands of new enrollments from old accounts that just come in the door.

So you look at some of our legacy customers like Costco, every single year, we get thousands and thousands of new business as usual Costco new members coming in. And the whole cost structure for Omada, the lion's share of the cost structure is getting that account. It's not the e-mail marketing to get the members in. Those are just automated once we close the accounts. And so that, once we explain that, tends to help people get a little bit more comfortable. So it's not like we're refilling that 50%. A lot of that is coming from the existing accounts because of those exact dynamics.

The revenue variability is at the account layer. We've gone back and then looked at every customer vintage in Omada's history and the net dollar retention has always been above 100% because of that dynamic. If Costco has 100,000 employees, they lose 10,000 every year. They're replacing those 10,000, and they're growing on top of that. And then we're going back in and we're adding more products across our existing customer base. And so you just get these really durable, really predictable revenue cohorts across the employer base.

That's a very helpful framing. And maybe just to kind of pull on the 3 PBM contracts where you now have access. Maybe just how should we think about the conversion of the PBM contract access to member to revenue?

Yes. So let's look at just the shape of the self-insured employer market. So we have about 8% of that. And then the white space within that, those are employer accounts that ideally we can knock on their doors and convince them to work with Omada. The thing about employers is the vast majority would far prefer not doing a direct contract with Omada or any solution in our space. They don't want to have to bring it to procurement if they can avoid it. Per the risk-averse buying standpoint, they're like, "Well, I'd like my health plan and my PBMs medical leadership to look at this to see if it's worth its salt to evaluate the clinical data." So that's another argument for why they'd love to go through channel.

And so that's all great. It does create a moat if you can get the channel. Right now, if you add up the market share of the 3 major PBMs, the CVS Caremark, [ Express Scripts ], Optum Rx, something like 80% of scripts. So if you're a sales rep and you happen to be at the Conference Board talking to heads of benefits or self-insured employers, the first question you're going to ask if you're on the Omada sales team is what PBM do you use because the majority answer is going to be one that we work with. And so that turns into a fast follow where you can say, "Hey, that's fabulous. We have an integrated relationship with CVS Caremark. We've worked for years, a wonderful relationship with Express Scripts. Did you hear about our new Optum Rx relationship?" That turns into that meeting where we can talk about the easy button to deploy not just our Care Track, but the broader suite of Omada services.

So if you think about like their own -- the selling cycle to the PBM, but then they also have to go -- there are a couple of different steps there. So if you think about Optum as an example where you've just announced access, you talked about that not being reflected in your 2026 guidance. But maybe just operationally, what are the steps that have to take place now to bring Optum members on to Omada?

The average selling cycle for employers is building pipeline in the first half and closing in the second half. And so in the building pipeline stage, we have our field reps that are out there. We have a channel management team that aligns all the needed relationships in every single market, figuring out a way to structure joint pipeline reviews, make sure that the Optum Rx sales teams have all the right training, that there's great collaborations between their field teams. So you build pipeline and then you close in back half for deployment in the first half of the next year. So that's the typical.

There always is the off-cycle accounts that's like, hey, I really want this tomorrow. And so we may see some of those this year. But in terms of what we underwrite for any new channel, it's pipe build in first half, closing in second half for deployment the next year.

And just remind us the size of the member population or the accessible population that getting Optum brings you?

I mean it's -- I mean OptumRx overall has nearly 70 -- I think 70 million, 80 million covered lives that include fully insured plans. The ASO side, I believe, is closer to 30 million. So if you add up the overall ASO market, roughly 75% to 80% will work with a PBM that we work with is the best way to think about it.

The other point I think about just from a cost perspective, our sales team is roughly 25 total people. Because you're leveraging the health plans and the PBMs to distribute Omada and you're partnering with them, we've been able to keep our sales force relatively flat over time. That's just created a significant amount of operating leverage in sales and marketing over time. So it's a really nice feature of how we're contracting and then ultimately deploying to employers.

And as you think about member growth, Steve, as you and your team do your planning for the year and the budgeting, like one of the things I always get asked, how do you know? Like could member growth be 30%, be 35%, be 20%, be 50%? I mean it seems like there's a wide range of outcomes. So how do you think about forecasting that number? And what are some tools that you can give investors to gain visibility into the outlook there?

Look, for the prior point, we have a decade plus of amazing data on all of our existing book of business. So we know at the account level, how much like, on average, Costco is going to ultimately refresh and add to that population. That's ultimately 75%, 80%. It's just the business you close in year that is going to cascade for the next year.

And then we're going to work really closely with our sales team, look at all of our pipeline build, make some assumption on covered lives conversion, pipeline conversion and then determine like -- kind of stress test like a high, mid, low scenario on how much we expect to close in year. But it's really -- you have so much great insight at the end of the year because you know how much pipe you built in H2, and that's going to be your Q1 revenue build. And that's where you see the majority of our new enrollments come in is in that first quarter. And so we have a lot of great data to help like ascertain where we're going to land early on in the year, and that's how we run our entire planning process.

And as we translate that to revenue, you don't give ARPU per se. It's like trailing 3-year thing you gave at the time of the IPO, I think -- but everyone tries to come up with a sort of PMPM or some reflection of pricing. How should investors think about that translation from member growth to revenue?

Yes. So pricing and revenue per member are distinctly different in our business. Pricing, we've steadily increased through time. Revenue per member is a combination of channel, product mix, customer vintage. So this is a multifactorial way to ultimately calculate that. Last year, in Q1, we were at $279. This year, we're at $276. So roughly flat on a year-over-year basis if we're looking at it on a trailing 12-month basis. That's how we think it's the most apples-to-apples way to look at revenue per member because definitionally, our members are someone who's been billed once in the last 12 months. So it's a complete apples-to-apples compare.

What's not in the guide and where we view potential upside is on additional product closures in the back half of the year, more cholesterol being added, potentially some early wins in prescribing that we realize in the year. And then we have several internal motions on driving engagement up. So if we can keep folks in program longer by making the product experience more compelling and increase the attach and they stay an extra 2, 3, 6 months, that's incremental ARPU that drops directly to the bottom line because it has very little incremental carrying costs. And so you could construe that as being upside to the current guide.

And as you bring on new accounts, I think if you look at this market historically, one of your competitors, they've seen -- when they bring on new accounts, they used to give a PMPM. You actually see it go down. So when you bring on new books of business, do you have to discount at all to bring them on? What's the pricing on new business?

No. Typically, we've had success in increasing price through time and then also attaching more of our products from the outset. CVS and Optum are both great examples. CVS, we're working with them across all of our condition areas, and then we're working with Optum across the majority of our condition areas and then we attach prescribing. Prescribing is priced at roughly 2.5x the price of our legacy -- some of our legacy prevention offerings.

And so we've had -- that's been a huge part of our success is just through time attaching the entire product suite, often coming with higher ARPU products and then folks are staying in program longer, and that's where the durability has been coming from the last couple of years.

So shouldn't that number go up over time?

We expect it to. We certainly would expect it to go up over time. The only counter dynamic to that is we are finding that really in Q1, for the first time, we saw a lot of diabetics in their -- even their fourth, fifth and even sixth year with Omada. When you get further out on the curve of engagement, when you're in that fifth year, you don't engage as much, you're probably billing 2, 3 months on average, you're still contributing revenue at very high margins, but you're in that member count. And so it does have a little bit of a dilutive effect on revenue per member, but that's still revenue and margin that we want. And so we're okay with that. But there's -- I would say we're more biased to like future upside from that perspective given the other areas we cover.

And as you think about setting guidance and targets for the company, you've meaningfully outperformed all of the expectations that were set at the time of the IPO and in your time as a public company and even coming really strong out of the gates here in Q1. I appreciate -- I think everyone appreciates the conservative approach to setting guidance and putting yourselves in a position to deliver consistent results. But maybe just help us like operationally think through like what has transpired in the business, end markets or customers or market share that has enabled such significant outperformance?

You can start.

Well, let me just talk about the three growth levers, if you will, in our algorithm. There's the first, which is covered lives. And so that's what you can sell. That's the care areas, matrix against the end market. So a self-insured employer, fully insured plan, integrated health system. That's kind of like the first. The second is enrollment initiatives. Just every single day, innovation relative to how you get people in, different campaign types, different campaign schedules, different messages, leveraging data science, leveraging A/B testing to figure out how you best get people in. And then the third is engagement. And that's the stickier that we can create the program experience for people, the more ARPU we realize.

And so those are the three. In the last couple of years, we've had a lot of innovation bets in the second two, especially in the back half that have delivered in an outsized way. Those are typically experiments. We never underwrite them because you want to see them come through. And equally, we don't tend to, per Steve's comments, underwrite any like off-seasonality deployments from like a Omada for cholesterol or prescribing given typically you close and then deploy in the next year.

Yes. Anytime we're ramping into a new channel, we'll always take a very measured approach because you just don't know exactly how quickly you're going to build into that. And so with CVS and Optum, CVS is obviously [Audio Gap] Optum. But as those things start to ramp, we can get more specific on how we underwrite that.

And I think to your point, we're a full year ahead of some of the IPO projections. We just logged our highest ever gross margin quarter in Q1 at 64% with our long-term target being 70%. So we have really near-term visibility into getting to that target with the potential to maybe raise that in the future. So we're really excited about that.

And on the point of profitability, you made a couple of references to the different operating leverage points in the model. How do you think about the balance between sort of scaling profitability, but also opportunities to reinvest for growth?

I think this year is a great example of that. We're going to continue to make progress this year towards our 20% adjusted EBITDA margin target, improving upon what we did last year, but we did qualify this as a year where we're going to be investing into AI and into prescribing. I think prescribing was the lion's share of our investment this year, and then we backed that up with the Optum Rx deal. And so that's what we spent a lot of time last year kind of teeing up is like, hey, we're going to go enter prescribing and then we kind of punctuated that with adding Optum Rx, and that will ultimately add some leverage to the business going into next year.

Excellent. Well, maybe just to close out here, maybe, Sean and Steve, I'll turn it back to you, you've obviously been on the road, I think, meeting with investors, you're presenting here today. It is probably one of the last times you'll be in front of investors before second quarter earnings. But what's kind of the take-home message you want to leave people with, both in the room and on the webcast here?

Yes. I think we hit a lot of it. So just to distill it, I think the founding of Omada was predicated on the fact that a visit model doesn't work for chronic. And if you look at where today's disease burdens are, it's obesity-related disease. And if you look at where the therapeutic landscape and the technology landscape has evolved, we now have more instruments pointed toward those areas than we ever had before.

And so the thesis for Omada is AI alone isn't going to cut it. GLP-1s alone are not going to cut it. You need, if you will, a care provider that can tie the two together. And we think we're really well positioned for this [Audio Gap] actually well positioned in a moment where software velocity [Audio Gap] to do more, us to do more for our customers and better leverage our channels.

I mean we have more launches and new programmatic capability launches this year than we ever had in Omada's history. I mean GLP-1 Flex Care, Omada for prescribing, Omada for cholesterol, and that's because our product velocity has increased within the organization, and we're able to leverage our channels to do it. So we really feel blessed that many of the investments we've put forward over the last decade that took a lot of cooking are starting to yield great healthy, nutritious meals for Omada.

Excellent. Well, with that, we're out of time. Steve and Sean, thank you so much for participating in the conference, and we look forward to getting the next update in August.

Super. Thank you, David.

Thank you.

Good day and thank you for standing by. Welcome to the Omada Health First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Craig Gracey, Chief Accounting Officer, Investor Relations.

Thank you. Good afternoon. Welcome to Omada Health's first quarter 2026 earnings conference call. Joining me today are Sean Duffy, our Co-Founder and CEO; Wei-Li Shao, our President; and Steve Cook, our CFO.

Before we begin, I'd like to note that we will be discussing non-GAAP financial measures that we consider helpful in evaluating Omada's performance. You can find details on how these relate to our GAAP measures, along with the reconciliations in the press release that is available on our website. We will also make forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in the risk factors found in our SEC filings. Actual results could differ materially, and we assume no obligation to update these forward-looking statements.

With that, I'll turn the call over to Sean.

Thank you, Craig. Good afternoon, everyone, and thank you for joining us. Q1 2026 was a milestone quarter for Omada. Here is our financial snapshot compared to a year ago; 42% revenue growth with a lower net loss and positive adjusted EBITDA, with a higher gross margin, and a guidance raise.

Our business is largely driven by four growth levers. Let me explain the importance of each; expanding reach, the total lives with benefits coverage for our programs through channel and employer relationships; increasing enrollment, how effectively we convert those covered lives into multi-condition members; deepening engagement through advancements in our member experience, including our AI-powered food and behavior platform that includes OmadaSpark and Meal Map; and operational efficiency, the AI, clinical model and operational investments designed to improve outcomes and margins as we scale.

I'll walk through the headlines across all four levers. Wei-Li will then take you inside the platform, into the operational and commercial detail behind reach, enrollment and engagement. Steve will walk through the financial picture, including our updated outlook. And I'll come back at the end to bring it all together.

The headline of the quarter is reach. In Q1, we saw the new investments in our GLP-1 capabilities begin to demonstrate traction. Omada is proud to join Optum Rx's Weight Engage portfolio to help employers expand responsible, clinically supported access to GLP-1 and other anti-obesity medications through their existing pharmacy benefit manager. This collaboration marks Omada's first offering of prescribing capabilities within a PBM channel, reflecting our shared commitment to improving coordinated care for employers and members.

Omada now has relationships with the nation's leading pharmacy benefit managers, who serve most commercially insured lives and process 80% of prescription claims. And today, we announced that Omada is joining Eli Lilly and Company's Employer Connect to offer our GLP-1 Care Track, also including prescribing capabilities, directly to employers.

Across these announcements, Omada can now meet employers where they are, whether they are already covering GLP-1s, exploring coverage for the first time or looking for a lower-cost alternative through an employer defined contribution model. And critically, our GLP-1 capabilities remain the tip of the spear for sales conversations across the broader Omada platform which is driving growth across the full cardiometabolic suite.

Turning to enrollment. In Q1, our total members grew 51% year-over-year, crossing 1 million for the first time in our history, a direct result of our expanded reach and our relentless iteration in enrollment marketing effectiveness. We continued to see strong enrollment across our GLP-1 services, but importantly, across the full suite of our cardiometabolic services like hypertension and diabetes.

On engagement, member engagement continued to deepen this quarter as we scaled our nutrition experience, with continued advancements in OmadaSpark and Meal Map. And on efficiency, we narrowed our GAAP loss significantly and delivered positive adjusted EBITDA in Q1, which is historically our most cost-intensive quarter, showing the operating leverage we committed to demonstrating.

Behind that result is AI showing up across our business in a structural way. In care delivery, our tooling now summarizes member data and surfaces potential next actions for care team review, reducing the administrative burden on our care teams. In engineering, AI-assisted development has accelerated our product velocity and the ability to say yes to new customer needs. And across operations and member support, we are converting routine manual processes into automated workflows that create capacity without adding cost. Taken together, these investments are not only improving the member and care team experience today, we believe they are beginning to provide a foundation for a structural tailwind to margins.

The reason we have scaled this way, adding channels, adding conditions, adding capabilities like prescribing without breaking stride is that each new relationship, each new capability plugs into a complex system that promotes a positive, durable network effect for Omada and differentiates us from our competitors.

Part of what underpins our commercial success is a large set of relationships that we have built over the past 15 years. Omada has worked to build institutional trust with many of the nation's largest employers, health plans and PBMs, embedding our programs in benefit designs, clinical workflows and compliance processes, to create integrated partnerships that we believe many of our partners have come to rely upon.

Our clients are not paying us to make their business more efficient; they are not buying software or SaaS seats. They are paying us to improve the health of their members and provide measurable outcomes in diabetes, hypertension, cholesterol, weight health and MSK. We have worked thoughtfully for years, investing in areas like clinical sophistication, regulatory and privacy compliance and information security to meet the exacting standards of these partners, not as a software vendor, an automated tool or a consumer wellness solution, but instead as a HIPAA-covered entity and a recognized provider of true healthcare.

We also have rich cardiometabolic data assets, tens of millions of care team interactions and billions of data points across weight, diabetes, hypertension musculoskeletal health. This data advantage is a reflection of our scale and operating history and helps us rapidly improve our care. We have published 30 peer-reviewed studies and maintain third-party accreditations from organizations like NCQA and URAC evidencing our ability to meet their exacting standards and further differentiating our clinical, regulatory and compliance capabilities.

And we have designed our own co-intelligent care model that combines human coaching with AI tools to deliver personalized care at scale using our unique data to power functional AI workflows for members and care teams, not just model benchmarks. That combination of enterprise-grade distribution, extensive data, clinical and accreditation depth, proven and published outcomes and a care model refined over more than a decade of real-world deployment, that is the durable position that we work to maintain and to widen quarter-after-quarter.

Before I turn it over to Wei-Li, I want to ground this in the lives of the people we serve. One member recently shared, I've been using the Omada app for years, and it truly changed my life. Through better choices, discipline and consistency, I've lost over 60 pounds. I don't need a seat belt extender on planes anymore. My toes don't tingle. I make better choices without feeling restricted. For years, I thought food was my best friend. It was comfort. It was coping. Now I see it for what it is, fuel for the life I'm building.

Exceptional stories like that are why Omada exists. 3 in 4 American adults have at least one chronic condition, and over half have 2 or more chronic conditions. And the healthcare system still organizes much of their care around limited clinical touchpoints. Omada puts the space between those visits at the center of care.

With that, over to Wei-Li.

Thanks, Sean. As Sean shared, we crossed the milestone of 1 million total members. We ended Q1 with 1,025,000 million total members, up 51% year-over-year. This is 139,000 net new members in Q1 '26 compared to 107,000 in Q1 '25. Importantly, growth was broad-based across the cardiometabolic suite. We saw strong year-over-year growth in our hypertension and diabetes programs, reinforcing that our momentum extends well beyond GLP-1 offerings. Multi-condition close rates remain strong.

Two complementary drivers are amplifying this growth. First, enhancements to our enrollment experience converted more eligible members across email and direct mail, with particularly strong gains in diabetes and hypertension. Second, we continued to transition a majority of our accounts to Omada-led outreach, which is generating enrollment rates higher than non-Omada-led accounts.

Turning to our commercial progress. This quarter we made meaningful strides expanding our channel and customer relationships. We now have relationships with all 3 of the nation's largest pharmacy benefit managers and are deepening our presence across the GLP-1 ecosystem. As Sean mentioned, we are proud to have joined Optum Rx's Weight Engage portfolio. In addition to GLP-1 care, Omada's prevention and weight health, hypertension and musculoskeletal programs are available for Optum Rx clients to purchase.

And as an independent program administrator in Eli Lilly and Company's Employer Connect, we plan to support employers seeking direct GLP-1 access by pairing our clinical support and behavioral coaching model. Employers will be able to offer their members transparent, clinically guided access to anti-obesity medications alongside Omada's wraparound care.

In the quarter, we also added several large, nationally recognized private employers as customers, including L.L.Bean, QuikTrip and Breakthru Beverage, alongside additional public sector and regional health system wins. Together, these new and expanded relationships meaningfully extend our reach and further multi-condition penetration, while giving us access to a broader and more diverse set of covered lives across PBM, health plan and employer channels. We are still in the early innings of serving many of these newly covered populations, which can take multiple sales cycles to build into.

GLP-1s have not just driven demand for medication, they have expanded how many employers think about cardiometabolic care more broadly. Whether or not they choose to cover these therapies, we find that employers are increasingly prioritizing weight and metabolic health and looking for solutions that can support their populations. This shift has played directly to our strengths. This reflects a fundamental reality. 9 out of 10 people taking GLP-1s for obesity are also managing at least one other chronic condition.

Since launching our GLP-1 Care Track, we have supported more than 150,000 members as of the end of 2025, building proof points for our wraparound care model. Let me walk you through how our offerings map to the different ways employers approach GLP-1 benefits. For employers already covering GLP-1s through one of our PBM partners, our GLP-1 Care Track delivers companion care, including behavioral coaching, support with side effect management and other clinical support, alongside the pharmacy drug benefit. This is now available through the 3 largest PBM channels. Our GLP-1 Care Track can also help sustain outcomes after discontinuation, with data showing just 0.8% average weight change one year after stopping therapy compared to 11% to 12% regain in key clinical trials without ongoing support.

For employers seeking clinically managed prescribing, as GLP-1 therapies evolve, employers need support navigating medication selection and titration across benefit designs intended to improve outcomes and manage cost. Prescribing is a natural extension of our model, and we are excited about our first offering of prescribing capabilities with Optum Rx. Given annual enrollment cycles, we expect revenue contribution from prescribing offerings to build more meaningfully in 2027.

For employers not yet covering GLP-1s who want an alternative to traditional coverage, we can support direct-to-employer pathways that give them a more flexible way to begin offering access with more predictable costs. That includes Omada GLP-1 Flex Care, which combines clinical evaluation, prescribing support, behavioral coaching and ongoing virtual care, while eligible members access medication through vetted cash-pay channels. It also includes our work with Lilly's direct-to-employer offering, which provides employers with another option for transparent net cost for Zepbound and allows them to define contribution levels, creating a predictable cost structure for obesity medications.

For members discontinuing GLP-1 therapy who need ongoing support, we provide behavioral coaching, clinical guidance and multi-condition care. In published results, members who remained engaged with our Care Track largely sustained their outcomes at 12 months. This is where the full value of the platform becomes clear, supporting members not just during medication use, but across their broader health journey.

The strategic takeaway is this, GLP-1s have increased both the demand for and the complexity of cardiometabolic care. Employers need a partner who can navigate that complexity across coverage models, clinical needs and member journeys. And Omada is building exactly that clinical infrastructure, connecting programs, prescribing and support into a unified platform to help maximize the benefits of GLP-1 investments.

Now turning to our evidence base. Our newest clinical analysis announced last month, demonstrates that Omada members in our GLP-1 Care Track on average lost 1.8x the total weight and twice the body fat, while preserving their lean muscle mass compared to a control group over a 12-week period. This is a clinically meaningful result that we believe matters to employers seeking to justify spending on GLP-1 medication. Without structured lifestyle and clinical support, employers may end up paying for poor results, funding high pharmacy spend on medication that is not providing the durable outcomes their employees seek.

These results, combined with our established body of 30 peer-reviewed studies and insights from supporting 2 million members over the past 15 years, have continued to differentiate Omada in competitive evaluations. Taken together, our expanding commercial relationships, broadening GLP-1 capabilities and growing body of evidence reinforce a simple point, Omada is becoming part of the connective tissue between how employers buy, how members engage and how outcomes are delivered across the digital cardiometabolic landscape.

With that, I'll turn it over to Steve.

Thank you, Wei-Li. Hello, everyone. Q1 was the strongest first quarter in Omada's history; on members, on revenue, on gross margin and on adjusted EBITDA. Over the past year, we have been building capabilities to position Omada for durable growth, prescribing infrastructure, AI-empowered care delivery and an expanding set of GLP-1 and cardiometabolic solutions.

Revenue was $78 million, up 42% year-over-year, driven by strong GLP-1 Care Track adoption, increased multi-condition penetration across our cardiometabolic suite and continued progress in enrollment effectiveness. As discussed in last quarter's call, Q4 2025 included approximately $2 million of revenue related to a one-time transaction that did not recur in Q1. Adjusting for that item, Q1 revenue grew 6% sequentially over Q4. The strength of these results, combined with the early traction we are seeing across our new commercial relationships, gave us the conviction to raise full year guidance, which I will walk through in a moment.

Turning to gross profit. The leverage in our business continued to show as we delivered strong year-over-year gross margin expansion. Our GAAP gross profit was $49 million in Q1, representing a GAAP gross margin of 62%, up from 58% in Q1 '25. On a non-GAAP basis, gross margin was 64%, up from 60% in Q1 '25. As we've shared, Q1 has historically been our lowest gross margin quarter due to higher enrollment volume and the related care team and device costs.

The underlying drivers remained strong, efficiency gains from our self-built care team platform, AI-powered tools that enhance care team productivity and the operating leverage inherent in our multi-condition model. As a result, we see a path to continued gross margin expansion over time, and we believe there is a path to exceed our current long-term target of 70% annual gross margin.

One item I want to flag briefly is the minor impact we have seen thus far from the conflict in Iran, which modestly increased device-related cost of revenue due to increased shipping costs. This has not been material to Q1, and we currently estimate the full year impact at roughly $1 million. We are also evaluating selectively pre-purchasing certain devices to incur shipping costs upfront as a further hedge against volatility.

Let me walk through the unit economics. Total members is our headline metric, but it is a composite of members at different stages with different economic profiles, and that composition is key to understanding our business. Historically, the shape of the member curve has been largely consistent. In year 1, revenue per member has generally been at its highest, because enrollment, devices and initial care activities are concentrated in that period. In years 2 and 3, revenue per member has historically stepped down as members move into streamlined, longer term care, but gross margin per member has stepped up as care delivery costs are meaningfully lower once the front-loaded first year activities are behind us. The member relationship has generally become more profitable on a unit basis as it matures, even as the revenue line moderates.

The takeaway in this quarter is a positive structural shift in our member base. Members have stayed with Omada longer, and each successive enrollment year has been larger than the one before it, 2025 most of all. Together, those dynamics mean a structurally higher share of our total members sits in year 2 and beyond entering 2026. That puts near-term pressure on blended revenue per member by design, while lifting typical longer term gross profit per member, the more accretive phase of the curve.

This is a good outcome for the business without any change to per program pricing or contract terms. We expect gross profit per member to remain a strength of our model and aim for it to expand further over time as new channel partnerships, our GLP-1 care options and prescribing programs layer incremental economics into the existing member base.

Moving to operating expenses. Our approach is unchanged, invest responsibly behind key opportunities and continue driving toward profitable growth. On prior calls, we mentioned our investments into prescribing capabilities, and it's now clear these investments are aligned to serve our new agreement with Optum Rx. While building these capabilities, we also demonstrated operating expense leverage in the quarter. On a percentage of revenue basis, both GAAP and non-GAAP operating expenses declined approximately 5 percentage points year-over-year. That leverage is the output of the drivers we have consistently pointed to, scaling through channel partnerships, getting more from our existing sales force and tight spending discipline across the rest of the business.

The other driver, and an increasingly important one, is AI. We are not evaluating the leverage opportunity from AI in only one area of the company, the opportunity reflects a deliberate company-wide evaluation of AI tooling across every function. As AI adoption deepens, we believe it can become a tailwind to operating leverage and margin expansion as we look towards 2027 and beyond.

Our GAAP net loss narrowed to $3 million compared to $9 million in Q1 '25 and adjusted EBITDA was $1 million, an improvement of $5 million year-over-year. Delivering positive adjusted EBITDA in our historically highest cost quarter reflects the structural scalability of our model playing out. This strong start to the year has led to an improved full year adjusted EBITDA outlook that I'll discuss in a moment. Our strengthened profitability profile has continued to a strong balance sheet as well. We ended Q1 with cash and cash equivalents of $212 million and continue to carry no debt, having fully repaid our term loan ahead of schedule in 2025.

Now let me turn to our outlook. We are raising our full year revenue guidance to $322 million to $330 million, up from our prior range of $312 million to $322 million. For adjusted EBITDA, we expect a range of $14 million to $20 million, up from a prior range of $7 million to $15 million. At the midpoints, revenue guidance represents approximately 25% growth year-over-year and adjusted EBITDA reflects a nearly 3-fold improvement compared to 2025. For both revenue and adjusted EBITDA, the low-end of the new guidance range is approximately at the high-end of our previous range, reflecting the strength of the quarter and our improved outlook for the year.

The raise reflects 2 drivers; continued commercial momentum across our channel and PBM partnerships and sustained enrollment effectiveness across the cardiometabolic suite. We believe the new and expanded commercial relationships, along with the record number of planned new program launches, position Omada well for durable growth, more diversified revenue and increasing profitability. Several of those programs and relationships are still in the early stages of commercial ramp, and we do not expect them to contribute materially to revenue in 2026. However, we are in the active selling season for 2027, and that is where we expect these relationships to begin converting to revenue. We believe our growth rate and margin trajectory together demonstrate the financial profile of a durable, high-quality growth business with a clear line of sight to the next wave of revenue from new programs and expanded commercial relationships.

With that, I'll turn it back to Sean for some closing remarks before we open it up for questions.

Thank you, Steve. Let me bring it together. Less than a year ago, we stood in front of you as a newly public company with a bold set of ambitions. We said we would invest responsibly in GLP-1 capabilities and AI, demonstrate operating leverage and prove that clinical quality and scale are not fundamentally at odds. We feel we have delivered on those commitments every quarter since, and Q1 2026 is the latest proof point. Today, we have over 1 million total members. We have significantly expanded our commercial reach. We have an expanding multi-condition platform that includes prevention and weight health, GLP-1 support, diabetes, hypertension, cholesterol and musculoskeletal care.

We have an evidence base of 30 peer-reviewed studies and a growing body of real-world data that powers our differentiated use of AI and helps us demonstrate ROI to customers. And we have a financial profile that has tracked meaningfully ahead of where consensus expected us to be at this point in our journey as a public company. Our 2026 plans include rolling out more new offerings than in any year in the history of our company. The foundation is built. We believe the market is responding. And our team has the ambition to expand our impact from here.

With that, we will open it up for questions.

[Operator Instructions] Our first question comes from Craig Hettenbach at Morgan Stanley.

Wei-Li, nice to see you stay close to your former employer. GLP-1 developments are moving fast, and you outlined a bunch of these. Can you just touch on where you're seeing the most interest from current and prospective customers?

Craig, Wei-Li here. Good to hear your voice. Thanks for the question. In terms of where the market is moving as it relates to interest from customers for GLP-1s, we're really seeing it kind of spread fairly evenly across the spectrum. And so maybe it's worth kind of reminding people what that spectrum is. You can basically look at the GLP-1 marketplace, from an employer standpoint, split into 2 buckets. The first one is those that have leveraged the various number of GLP-1 benefit design solutions to their PBM or their health plan. And then those who have yet started -- have not yet provided coverage for GLP-1s but are actually wanting to, and that represents at least half the marketplace.

And so what we're seeing across the spectrum is really interest in 2 categories. Again, the PBM provided solutions, they're diverse. They meet certain market needs. And then also a new segment that's taking a look at alternatives that include different benefit design solutions, different defined benefit contributions and so on and so forth. This year is, from our perspective, the year where employers will take a look at all these different solutions, determine which one makes sense and they'll be experiencing a wider range of benefit design solutions to meet what we see as a very diverse and wide-ranging set of needs.

Having said all that, we are building traction in our GLP-1 Flex Care program. Obviously, we've just now become part of an option within the Lilly Employer Connect program. And so we'll begin building pipe there. And then obviously, Optum Rx as well as the relationship with CVS Caremark that we mentioned last year. So we're really seeing kind of even table growth in our pipeline across all those relationships. And we see that as reflecting the, again, diverse and wide range needs from GLP-1 coverage options across the employer landscape.

And Craig, this is Sean here. So just to pile on top. To summarize the strategy, Omada endeavors to have a version of our GLP-1 solution that meets whatever version of your strategy sits in. And we think that's strategic because it is a dynamic market. You find employers that want to cover, you find employers that can't and the flexibility in our solutions allows us to address all of these segments.

Very helpful. And then just as my follow-up, any update on just the multi-condition sales? Kind of how that's trending and implications to the operating leverage in the business?

Yes. Thanks, Craig. Wei-Li here. In terms of the multi-condition sales, we continue to build momentum in that direction. As you know, others know, that's been a long-standing strategy for us, consistent strategy for us. We have shared in previous earnings calls that our multi-condition close rates or attach rates are on average between 40% to 50%. That hasn't changed. We continue to see that, which we think is a good lead indicator and reinforcer of the strategy and the momentum we will continue to experience in multi-condition sales.

Our next question comes from Constantine Davides at Citizens.

Just on the PBM partnerships you announced, obviously, ESI is furthest along, but I'd love to understand what's similar or leverageable from one PBM relationship to another? And then as you look at Caremark ramping up and soon Optum, what nuances require a little bit of learning or heavy lifting on your part?

Yes. Constantine, Wei-Li here. Thanks for the question. In general, if you're referring to the go-to-market motion with each of the PBMs, if that's the question, I would say, in general, the approach is similar directionally. And the way I would describe that is basically we partner with their sales teams, their account executives. They oftentimes number in the thousands, which helps us expand our share of voice and selling footprint out in the marketplace. And we're certainly doing that across CVS Caremark, Optum Rx. We've begun doing that now, of course, as you might expect, and of course, ESI or Evernorth. So that part is similar and is a scalable motion for us given the enablement is similar and we can do that.

The other one that is similar, of course, is multiple of our products are available through each and every one of those channels. So you'll find a complement of our cardiometabolic as well as MSK programs available in addition to GLP-1. So that too is similar as well. The other one that I think would be reliably similar across them, which again speaks to the scale of the opportunity across all 3 is that the sales motion and sales cycle is similar from a timing and what it would take, and they actually feather and layer on top of each other.

So what do I mean? So obviously, we've had a longer-standing relationship with ESI and Evernorth. That's a mature business. It continues to grow nicely. We build pipe. Last year, we announced CVS Caremark. And at that time, when I -- when we announced that, I said our first order of business is to build pipe. We did that. Our second order of business in the back half of the year was to close deals. We did that too as well. And then the third order of business, of course, was Q1 this year is to deploy those deals. And we've got now thousands and thousands of new members coming into our business through the CVS channel. We expect and certainly plan to do the similar thing with Optum Rx. So we'll follow that same first, second, third order of business with material gains and contribution from Optum Rx predominantly beginning in Q1 of next year.

Our next question comes from Richard Close at Canaccord Genuity.

Yes. Congratulations. I'm curious on the Lilly announcement direct-to-employer, how that specifically works? What's the, I guess, program offering you're offering? And is it the employers are giving the member essentially a certain amount of money to purchase the drug directly and then you're essentially getting paid by the employer for the companion program? Just help us better understand that.

Yes, Richard, this is Sean. Let me just characterize which segment that sits in, and then I'll pass it to Wei-Li for the details there. So the Lilly Direct program is for the employers that do not cover GLP-1s. And so it's a similar category as our GLP-1 Flex Care. And so it offers the chance for those employers to give their employees something. And although in that instance, they're not paying for the med, they can create an employer-specific benefit contribution to the med.

Yes. Thanks, Sean. Let me follow through in terms of how it works. Obviously, Lilly would be the definitive body to talk about the entire program, but I certainly can talk about how it relates to Omada. The Lilly Employer Connect program is a solution that is outside the PBM, it's a carve-out. And employers will opt into the Lilly Employer Connect solution. And as part of that, have the option to actually engage and utilize Omada should they actually choose Omada as their clinical backbone.

If they do, there are 3 components. The first one is the clinical part of it, which is a scaled offering of our GLP-1 prescribing solution seamlessly married up to our GLP-1 Care Track, which is our lifestyle wraparound solution. The second one is through Lilly and the Employer Connect program is to be able to access a net transparent cost or price for Zepbound. And then the third is, as you mentioned, an option for employers to actually reduce the out-of-pocket cost for the GLP-1, in this case, Zepbound, through a defined benefit contribution and employers in partnership with the different administrators on the platform could pick the level that they want to do so.

All in all, the goal is to provide an alternative to -- because again, the need for coverage and how they want to do coverage and how employers choose to do that, the needs are diverse and wide ranging, and this represents an opportunity to meet a significant amount or a few segments in that buyer selection. And so I think I'd cap it off by saying, as Sean just said, to reinforce that, we're proud and privileged to be able to be part of the Lilly Employer Connect program, but it really is about a bigger portfolio strategy and allowing employers to opt into a number of different potential benefit design solutions, knowing that Omada is the clinical backbone in the one they would choose.

Okay. Very helpful. And then we've been hearing a lot more of employers in the face of these rising costs historically have waited to implement programs with January, the new benefit year. But we've been increasingly hearing that they need to do something now. So I'm curious what you're hearing? What you're thinking about like the opportunity for intra-year launches? Just any update there would be helpful.

Yes. Richard, I take your question to me not just about GLP-1s, but writ large in the category and what's impact to Omada is. I'll speak to GLP-1s first, then I'll speak to the broader cardiometabolic sector, obviously, that we lead in. On GLP-1s, yes, I mean, it's true. There are a number of employers that have made their benefit design solution decision, some of which obviously are rolling them out, some of which are kind of waiting and watching and evaluating this year.

Suffice it to say, I think a lot of employers, regardless of their solution are accelerating their decision-making process, meaning they're engaging in that process sooner in the year than they normally do. Now whether or not that leads to an acceleration for off-cycle closed deals, we're too early in the year to be able to see that. But we know that the pipeline is building nicely in that regard across the portfolio of benefit design solutions. So I think there's stuff there yet to be seen. But certainly, the conversations would be more active than typical, I guess, is the way I would put it.

Across the cardiometabolic suite, because GLP-1s is kind of the gateway to a broader cardiometabolic discussion to support clinically those employees that are not taking a GLP-1, that is kind of riding the coattails of the GLP-1 discussion. And so we find that also to be increasing in activity and is certainly contributing to pipe build. But again, too early to call as to whether or not that's going to lead to more off-cycle builds.

Where we do see -- our off-cycle deals. Where we do see more off-cycle deals coming through is when we're launching actually new programs. For instance, we announced our cholesterol program last year, we are seeing more off-cycle deal closes sooner in the year than we normally would have for a product that may be for a few years.

Our next question comes from David Roman at Goldman Sachs.

Steve, I wanted just to come back to your commentary around pricing, and I don't know if the right metric is revenue per member. Is that a metric that are you suggesting is going to be flat over time? Is that going to go up as we look at an increased number of multi-condition contracts? I'm just trying to make sure I understand the direction of travel that you were pointing us to on that dynamic.

Yes, David, great to hear from you, and thank you so much for the question. For some of the prepared remarks, this is really the output of 2 features in the business that we actually believe to be beneficial. The first is that we're just improving churn, and we're having members stay with us longer into their second, their third and even their fourth year of Omada tenure. And as a result of that, what you have happened is you see a little bit more moderated revenue contribution into those second, third and fourth years. But what's most important there is those carry very little incremental cost as most of the cost is front-loaded into the first year of their engagement. And as such, they're driving -- they're some of our highest margin members in our total member base.

We do expect that to be relatively flat for the rest of this year, in line with Q1. But first, from the prepared remarks, we still have remaining upside across continuing to execute on some of our prescription opportunities, driving engagement initiatives. We have internal motions directed at both of those internally, and we will potentially be able to uplift ARPU in the back half of this year, if not more into 2027.

Very helpful. And then as we think about the profitability profile, clearly, you've hit an inflection here earlier than you had expected. How are you thinking about on a go-forward basis opportunities to drop profitability to the bottom line, but also where there might be the potential to reinvest, whether that's organically or even inorganically given the scope of your distribution and just a number of smaller participants that are out there?

Yes. We think both Q1 and our full year guidance reflect this dynamic. On a $4 million top line beat, we dropped $4 million of EBITDA to the bottom line. And then on our guidance raise of $9 million, we're carrying forward $6 million of incremental EBITDA. So flowing through 2/3 of the revenue beat down to the bottom line as well. But that said, look, we said -- we did what we said we were going to do. We did invest in the back half of Q4 as well as into Q1 into standing up this prescribing capability and launching Optum Rx. And we believe that's going to give us the ability to drive durable revenue at really attractive margins in the years to come. That's going to be ongoing dialogue where we're going to be looking at abilities to invest in key responsible areas that are going to benefit us in the future.

And David, maybe I can take the back of the question there. We have communicated the primary engine of growth for Omada is going to be focused on organic. I mean we like the capabilities we have, large end markets. I think Richard's comments on the employer dynamism summarized really what we're feeling at the level of the buyer here. That being said, you do highlight something that we think is a great competitive advantage for Omada, which are large-scale distribution channels to a complex risk-averse buying market. And we do have capabilities to sell multi-product. And so of course, we'll keep an open mind, but be selective relative to anything inorganic.

Our next question comes from Sean Dodge at BMO Capital Markets.

Maybe, Steve, just going back to your comments again, just on the member curves and how revenue and margins develop as the enrollment cohorts mature. Just to make sure I understand, you said revenue declines in year 2, but gross margins go up. If we think about that in terms of gross profit dollars on a per member basis, how do the absolute dollars per member compare in year 2 to year 1? Is that also up? And can you kind of frame for us maybe how much?

No, that's exactly right. You hit the nail on the head. So gross margins are going up in year 2. The absolute gross profit dollars do go down on a total basis because we're just recognizing overall less revenue as those folks go into their more mature years going to the second, third and fourth year in aggregate. And so on a margin profile, it is accretive. On a gross profit dollar perspective, it does step down in the second and third years.

Okay. And then maybe just on the enrollment conversion rates. Wei-Li, you talked before about the work you're constantly doing to optimize those. You're always experimenting with different messages and content and channels. Maybe just to put it in context, the improvement in e-mail conversion rates you all were able to drive in 2025, you talked about 24% improvement in that metric. How does that compare to what you're able to do in years prior? And then maybe how does that compare to what you hope to achieve in 2026? I guess, how much do you think you can continue to increment up your conversion rates in any given year?

Yes. Thanks, Sean. I appreciate that, and I appreciate the reference to prior discussions we've all had regarding our efforts in enrollment rate, yield rate improvements. But for the others, just to rehash, each year, we go through an extensive process, usually commencing in the middle part of the year after we've seen H1 results and response rates, an extensive set of A/B testing, so on and so forth. We've pretty much got this engine down pretty good. And each year for the last several years, we've been able to improve our yield rate significantly. And the range is varied anywhere from the low side of 20% to the upside of 60%.

We certainly did that and repeated that process last year across both direct mail, other multi-channel things, including e-mail as well as frequency, duration of campaigns and so on and so forth. And we are seeing what we had expected, which is increased enrollment yield rates in Q1. We certainly, at this particular point, not disclosing numerically what it is because we really need to see what Q2, Q3, Q4 and the remainder looks like. But we have optimism to believe that the majority of what we're seeing in Q1 should be carrying through for the rest of the year based upon the results we've seen so far.

Our next question comes from Elizabeth Anderson at Evercore ISI.

This is Ayush on for Elizabeth. Building on some of the prior questions that were asked, on your last call, you did compose gross margin as a combination of multi-condition mix and care team labor optimization. Earlier, you mentioned the potential to grow beyond the 70% long-term gross margin target. Is that mainly coming from the condition mix or labor optimization or is it sort of a mix of both? Could you maybe just put some rough weights around that and how you kind of get to that higher margin?

Yes. You hit the nail on the head. You got 2 of the 3. So we're obviously really happy with the Q1 results. 64% non-GAAP gross margin is the highest in the company's history. So we have direct near-term sight into hitting our long-term target at 70% plus on an annualized basis. And we are going to be conducting our Investor Day later this year in September in New York, where we likely will revisit our long-term gross margin target and potentially lift it from there.

The only other one that you missed was AI. That's where we're investing significantly, and that's why we're gaining additional confidence that we can actually push gross margin beyond 70% in the future. We're using -- we have a ton of examples internally on really impactful use cases that are making our care teams more efficient. And so we're really excited with what we're seeing there.

Our next question comes from Saket Kalia at Barclays.

You have Carly on for Saket. Sean or Wei-Li, maybe for you. I'd love to touch on some of the AI-related solutions you've developed like the nutritional AI assistant and Meal Map, which I think you've embedded into your program. What kind of feedback have you gotten from customers and end users so far? Are you starting to see those features drive more activity in the app or is that more of a longer term opportunity?

Yes. Thank you for the question. It's such an exciting moment in software, and stating the obvious, the software velocity and the code creation at Omada has certainly increased. And our customers are driving value from that and our ability to create more new things for them, but you've highlighted some of their members -- some of the value our members have experienced as well. And each and every day, we really push the frontier of the intersection between what models can do and what people can do. And we've seen really heartening data with the tools we've rolled out.

I mean with Meal Map, for instance, we've seen nearly a 16% relative lift in the weekly active meal tracking among new members. So for those where their job is to track and they're working with their care teams on doing that, that just makes it easier, you get a lift. And then equally, the speed upon which a model can get back to our members on something specific is just really incredible. I mean in yesterday's world, if a member wanted to say a recipe, they might ask their care team member and they might pull from one of our libraries. Now they ask our nutritional education tool, which we've fine-tuned over 3 million foods that has context on that person's clinical status, their dietary preferences, et cetera. So it's great.

The way we look at it is every single product manager across Omada is really thinking through an AI-first lens on how they can embed AI in whatever surface area they're working on. And this is an area where we're blessed, in that we've built every single piece of the care team platform ourselves, the member experience ourselves so we can embed AI really throughout.

Our next question comes from Stan Berenshteyn at Wells Fargo Securities.

Maybe going back to Optum Rx first, I'd love for you to elaborate on the scope of this partnership. I'm curious, are there any other vendors besides Omada offering similar solutions here? I just want to get your thoughts on that.

Yes. Stan, Wei-Li here. Regarding Optum Rx, kind of a little bit more detail around that and your question about are there any other vendors, there are 2 others that were preexisting inside the Weight Engage Optum Rx program, and that makes us obviously the third addition there, too, as well.

I think what's important about the Optum Rx opportunity is a few-fold. First is that it represents our first large-scale deployment around GLP-1 prescribing married seamlessly up to our GLP-1 Care Track, which is the lifestyle support program for GLP-1s. And that's important. But it's not just about GLP-1s. Alongside that, we now have the opportunity through this relationship to expand the utilization and uptake of the rest of our cardiometabolic programs as well. So it's really a GLP-1 plus expansive cardiometabolic opportunity for us, which obviously we like, and we see that as a major value proposition advantage for our buyer segments out there. That's number one.

Number two, the Optum Rx relationship singularly is important, but in aggregate from a portfolio strategy is very, very important in the sense that, obviously, it's kind of like the last puzzle piece to crack the big 3. And together now the big 3 across those PBMs, we have the ability to tangibly and materially realize a market that is associated with more than 70% of all patients covered by those PBMs in the United States, 80% of all commercial prescriptions are adjudicated by those 3. And so it represents an incredible material opportunity for us to realize going forward. And of course, all sites and efforts are on doing that. And we like that too as well, because again, it feathers in on top of the CVS Caremark announcement we had last year as well.

The third and last point is that with the addition of Optum Rx, and of course, as I just mentioned, the other 2 PBMs, it's an opportunity for us to significantly diversify our business over time.

That's helpful. I appreciate the color. Just as my follow-up, I just want to go back to the prepared remarks regarding the Omada-led outreach, improving member adoption rates. Just if I think about benefit managers that oftentimes want to have control of the channel between themselves and their employees. If we think about the totality of your covered lives, what percentage of those lives do you have the capability to pursue directly using this strategy?

Yes. It is true in general, Stan, that if you were to ask any generalized or generic digital health or virtual care company out there, do their clients prefer to do their own deployments? I think the general response would be yes. I think that is increasingly not the response you would get from Omada Health. We have worked over the years to demonstrate to our employee base or employer client base that when we lead the enrollment, of course, in partnership with them, but lead the enrollment efforts, you get about 2x to 3x better yield rate. And the overwhelming majority of our clients like that because their mission is aligned with ours, which is helping as many of their employees as possible across the various programs that we deploy with them.

In terms of your other part of your question in terms of, I think it was just overall like Omada-led outreach penetration across our client base. Suffice it to say, it's not 100%, but it's the majority. And so while we're being increasingly successful year-over-year-over-year moving our clients over to Omada-led outreach, we're not done yet, but it's the majority of our clients at this time.

Our next question comes from Ryan MacDonald at Needham & Company.

Congrats on a nice quarter. Wei-Li, maybe first for you. As you think about the new Optum Rx program and the Lilly direct-to-employer program, I think as you mentioned before, you're not sort of the only vendor within these programs. So as you join them, can you just talk about sort of the allocation of resources from a go-to-market and a marketing perspective to sort of ensure that you're getting sort of mind share within those large populations? And how much help are you getting from Lilly or do you expect to get from Lilly and Optum Rx as you sort of ramp those efforts there?

Yes. Great question. And maybe I'd frame it this way is that you've heard Sean and I talk about our portfolio strategy for GLP-1s as it relates to benefit design solution options for the employer. That's really the strategy to get the share of voice and the mind share of employers. And the reason is the following. When you step back and you look at the landscape today, there is a wide and diverse set of needs that employers have because every employer, for lack of better words, is in their own financial, what they can afford situation related to GLP-1 coverage. Some have a different strategy to provide them at a very, very low co-pay. Others have a strategy that says, hey, listen, we're in a different financial situation, we can't afford as much and we need a defined benefit contribution plan where we pay only 10% of the monthly GLP-1 cost. So you have people and employers across the entire spectrum.

So back to your question about mind share and share of voice, how do you get it? Well, our strategy allows us to get it because no matter where you are on that spectrum, our strategy is to make sure that we are plugged in and part of that various and diverse set of benefit design solutions so that you as an employer can concentrate on what is financially the best coverage decision for your employees, not having to worry about what the best clinical option is because Omada is the clinical backbone in a range and number of solutions across that spectrum. That affords us to be at the table and be called at the table when employers are considering making a GLP-1 solution because we know that we're essentially in a number of different benefit design solutions. So that really is the predominant strategy to create mind share and share of voice. And we're seeing that work because we're building pipe across the various benefit design solutions that we talked about here on this earnings call.

The second piece is that our go-to-market for Optum Rx as it is with other health plans as well as other PBMs is very, very much to enable and partner very, very closely with their sales forces, which of course, number in the hundreds and thousands, as mentioned before. And so really by that, we were able to extend presence and extend share of voice, and we have a number of enablement meetings coming up to drive that. That's a recipe and that's a strategy that's worked well for us. We have no reason to believe that it won't be a durable model for us, and we're going to execute like crazy on that, as you might imagine.

Rounding out your last question in terms of Lilly. That's probably a question you'd want to ask Lilly in terms of what commercial resources they're putting behind advertising that and marketing that. But we're proud to be part of that platform. And certainly, as we talk to employers and lay out the spectrum of benefit design solutions that are available to them, rest assured, we will definitely be putting that up there because it's receiving great interest.

Appreciate all the color there, Wei-Li. And Steve, maybe a follow-up for you. Obviously, great to see the improved retention rates and the longer duration that you're seeing there. I think historically, you've talked about sort of about 55% or so of members sort of stay on past 1 year. How much of an uplift are we talking about in terms of the improvements off of that 55% number? And then are there any specific programs you would call out where you're seeing sort of the greatest improvements in 1-year plus retention rates?

Yes, absolutely, Ryan. I think the first most important point here is just our ongoing success with multi-condition traction. So we've added more diabetic and hypertensive members for those chronic conditions. Those members just tend to stay in program significantly longer. Again, recall, we launched those programs in the 2019, 2020 time frame. So we're actually observing some members in really their fourth and even their fifth year in a modest tenure. And so that's a big driver of where we're seeing some of the uplift there. We haven't exactly calibrated it to be apples-to-apples with the 55% and the 50%. We'll potentially release that data in the upcoming Investor Day and share some updated color from that perspective.

Our last question comes from Gene Mannheimer at Freedom Holdings.

Congrats on a good start to the year. A lot of good information here. Did you call out how many total members are now on GLP-1s? And do you break that out across your original Care Track versus the new Flex Care pathway? And then my follow-up on that would just be, can you or would you provide an update on your cholesterol program? And whether that's still targeted for availability next year?

Yes, Gene, Wei-Li here. We disclosed just by way of reminder to folks that through the end of 2025, we had brought in a total membership of around 150,000 or so. We've not yet disclosed Q1 in terms of at the product level offering, which includes, of course, our GLP-1 Care Track. We're likely to do so each year from an annual standpoint. But suffice it to say, the momentum and frothiness of the GLP-1 marketplace continues.

In terms of our cholesterol program, I think your question was about the same in terms of what the uptake and traction looks like there. We're encouraged and primarily also not surprised, because as we know, when you have diabetes, hypertension, obesity or are at risk of diabetes, some or one of the above, the likelihood that you have unfortunately high cholesterol is very, very high, anywhere from 40% to 70% depending on the population you're looking at. So naturally, when we talk about our cardiometabolic programs to our employer audience, they naturally gravitate towards the cholesterol program.

Last year, when we announced late in the year the launch of the cholesterol program, we basically had closed a couple of clients, one of which was a very large retail customer, over 300,000 global employees. We since added to that list of deals closed, including a few more enterprise clients as well as 2 large jumbo clients, one in the multi-industry -- industries segment as well as energy and natural resources segment for several hundred thousand additional lives as well as some other enterprises.

It's worthy to note that pursuant to the interest that I talked about with cardiometabolic, with cholesterol, these obviously were closed off cycle, which I think is a reflection of the value proposition in the marketplace.

This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Omada Health Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Allan Kells, Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon. Welcome to Omada Health's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Sean Duffy, our Co-Founder and CEO; Wei-Li Shao, President; and Steve Cook, CFO.

Before we begin, I'd like to note that we'll be discussing non-GAAP financial measures that we consider helpful in evaluating Omada's performance. You can find details on how these relate to our GAAP measures along with the reconciliations in the press release available on our website. We'll also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties including factors listed in our press release and in the risk factors found in our filings with the SEC. Actual results could differ materially, and we assume no obligation to update these forward-looking statements. With that, I'll turn the call over to Sean.

Good afternoon, everyone, and thank you, Allan. 2025 was a milestone year for Omada. We became a public company delivered 53% revenue growth for the year and achieved GAAP profitability for the first time in Q4. We also significantly outperformed initial expectations from the time of our IPO and we believe we are entering 2026 with momentum, with ambition and with a clear plan for what's next. Here are the highlights from Q4 and the full year.

Total members reached 886,000 at year-end, up 55% compared to 2024. Revenue grew 58% in Q4 and 53% for the full year to $260 million. Gross margins expanded to record levels. We achieved our first quarter of positive GAAP net income in Q4 at $5 million, and we delivered positive full year adjusted EBITDA of $6 million. We believe these results reflect the impact of strong market tailwinds, combined with a decade of investments.

Omada technology and operational platform, our clinical programs, our peer-reviewed research, productive distribution channels and more than a decade of rich and unique data are strongly suited for this exact moment. for when customer demand for chronic solutions, a rapidly evolving GLP-1 marketplace and AI-driven innovation converge.

We believe that 2025 demonstrated how we can capture that momentum. But the real story is at the level of the person we're supporting as a GLP-1 Care track member recently told us. The Omada program in collaboration with my doctor and the use of GLP-1 meds has been life-changing. I learned real skills needed to lose weight and be healthy for a lifetime. The beauty of the Omada plan was that I did not just jump in with all of these changes on day 1.

The plan guided me to focus on different lessons each week and then select a goal for the coming week. When I was stuck, my coaches were there to make suggestions and help guide me along the way knowing that someone cared and took the time to check my meal log and comment about a recipe or a new meal idea I put together that looks good, helped me feel that I was not doing it alone. Stories like that get to the heart of what we do.

Omada is on a mission to bend the curve of obesity-related disease. 40% of adults have obesity and nearly 2/3 have at least on [indiscernible] risk factor such as obesity, diabetes, hypertension or cardiovascular disease. We believe the health care system is structurally unable to address this at scale without a fundamentally different care model. A person's disease trajectory is determined largely outside the doctor's office through nutrition, movement, sleep medications and care plan adherence Yet the broader health care system still organizes around infrequent 15-minute visits.

Omada puts the space between those visits at the center of care through an integrated multi-condition care model refined over more than a decade. We've built a member experience that brings together care teams, AI, connected devices and a custom care platform designed for quality at scale. We've expanded into a multi-condition platform spanning weight health, diabetes, hypertension, musculoskeletal care, GLP-1 companion care, GLP-1 prescribing and our newly launched cholesterol program. giving employers the convenience of a single partner for multiple highly prevalent conditions.

We've accumulated a large and growing body of peer-reviewed evidence and accreditations, which we believe is a key reason, employers and health plans choose Omada. We help the market understand that Omada delivers true clinical quality health care, which enables us to contract and bill as a health care provider, allowing our fees to be treated as medical spend. We've established thousands of customer relationships across a broad web of distribution channels, spanning an estimated more than 25 million covered lives and in operating for over a decade, we've amassed a robust and unique data set, tens of millions of care team messages and billions of data points that underpin our product, strengthen our AI capabilities and allow us to innovate more quickly on the back of significant scale. These investments form the foundation of everything ahead. They allow us to look through the windshield with optimism, ambition and excitement.

2025 served as a significant launch pad for our next chapter. And I want to touch on 3 areas where we're particularly proud. First, we believe 2025 was the year we solidified our position as a leader in enterprise GLP-1 companion care, while reinforcing that our opportunity expands well beyond GLP-1s. Employer demand to maximize the value of their GLP-1 investment and reduced waste drove significant adoption of our GLP-1 care track. As we've scaled to over 150,000 members on GLP-1, we've seen what we believe these members need most, support to stay on therapy, manage side effects, build sustainable habits and maintain results if and when they discontinue. Our results have shown that GLP-1 [indiscernible] members on average achieved greater weight loss compared with published real-world evidence and critically largely maintained their weight on average, 1 year after discontinuing GLP-1 therapy. These outcomes challenge the narrative of inevitable weight rebound and underscore the power of behavior change layered on top of medication.

In November, we announced our GLP-1 prescribing capability. As the landscape grows more complex with oral and injectable options, variant doses and emerging maintenance therapies, employers are asking us to help them navigate it all. Adding prescribing strengthens our position by helping ensure that the right member is on the right medication at the right time while also delivering lifestyle support designed to improve outcomes and minimize waste. At the same time, the broader spotlight on GLP-1 has increased attention on cardiometabolic disease overall. Because Omada supports weight health with or without GLP-1s and helps members manage diabetes, hypertension and now cholesterol, we've also seen strong growth among members not on GLP-1s.

For customers that choose not to cover GLP-1s, our weight health programs support their employees, and new options like our GLP-1 [indiscernible] create flexible path for employers to offer meaningful support even when they are not in a position to afford the medicines. Second, we made meaningful progress with AI in 2025, and I am particularly excited about our potential for AI innovation going forward. We've embedded AI throughout Omada.

For members, we launched Omada Spark, our AI-powered assistant that works alongside human coaches for real-time nutritional support, motivational challenges and have it building. We launched that in Q2 of last year and followed with enhancements in Q4 with Meal map, an AI-driven experience focused on food quality, not just calories. For our care teams, AI-enabled tools like summarization let coaches spend less time on administration and more time on personalization. And 100% of our engineers are equipped with AI-assisted coating tools to improve development speed and output. What makes AI Omada different from a typical software business is what sits underneath. In caring for members, we've received tens of millions of care team messages, billions of data points and more than a decade of specific clinical outcomes, comprising what we believe is one of the most exciting cardiometabolic data sets in digital health. That data can improve our AI tools and overall member experience such that interactions with today's members make the experience better for tomorrow's.

The last area I'm proud of in 2025 is our commercial success. As we leave will share, in 2025, we closed significant additional covered lives, which we believe positions us well going forward. Our between visit care model and multi-condition platform continue to resonate as we closed contracts in the second half of 2025. Employers and health plans increasingly the advantage of working with a single scaled evidence-based partner and our year-end results reflect buyers leaning into that vision. In 2026, we plan to maintain our focus on the pillars that power or modest growth, expanding covered lives through new customers and channel partnerships increasing enrollment effectiveness so that more eligible people become active members and driving deeper engagement and retention through AI in a continually improving member experience. Across these pillars, we're expanding capabilities.

GLP-1 prescribing, cholesterol and [indiscernible], greater personalization in content through AI and the use of AI to drive efficiency across engineering, operations and care delivery. These investments are intentionally designed to balance growth and profitability as we continue to move toward our long-term ambition of 20% plus percent adjusted EBITDA margins. We accomplished a great deal in 2025 for Omada's mission, and we are entering 2026 with bold ambitions to bend the curve of disease. That's what we're here for, and that's why we do what we do. With that, I'll hand things over to Wei-Li.

Thanks, Sean, and hello, everyone. I'm proud of our teams and what they accomplished in 2025. It's an exciting time to be at Omada, and I'm pleased to walk through our results and progress. As Sean shared, we ended the year with 886,000 numbers, up 55% year-over-year. This includes 55,000 net new member additions in Q4, nearly double the net adds in Q4 of 2024. For the year, we added 314,000 net new members compared to $182,000 in 2024. Growth continues to be driven by both multi-condition adoption and demand for our GLP-1 support capabilities. which together position Omada as a broad integrated partner for cardio metabolic care.

We also benefited from improvements in marketing effectiveness, which drove higher enrollment rates across both new and existing customers. Key performance drivers in 2025 included estimated covered lives grew by more than $5 million, and we ended the year with over 25 million estimated eligible lives with strong performance across multiple channels, including the successful launch of a large new channel partner.

Our e-mail enrollment rate improved significantly with the average percentage of a customer's population that receives our outreach and then in rolls increasing by 24% year-over-year. Member engagement remains strong as well. As of December 2025, more than 55% of our members in their 12-month of cardiometabolic programs engaged with the platform at least once during the month and more than 50% of members in their 24th month engaged at least once during the month. Our focus on outcomes also remain consistent across our programs.

Taken together, we strengthened funnel conversion at multiple layers, which gives us confidence heading into 2026. We ended the year having supported over 150,000 members on GLP-1s, adding more than 100,000 in 2025 alone. And as Sean mentioned, we continue to see growth beyond GLP-1s across our cardiometabolic suite Substantial white space remains and our penetration across combined self-insured and fully insured lives is below 10% with a total addressable market that we estimate at over $138 billion.

We have also been pleased to see developments in government-funded health care such as the passage of the Prevent Diabetes Act, which cemented Medicare coverage for virtual diabetes prevention programs. And while it's early and details are still developing. We are closely watching emerging programs like balance and [indiscernible] from CMS. This government activity reinforces that virtual first prevention is increasingly recognized as essential to expanding access to quality care. Our strategy is organized around 3 pillars: Innovation, programs that work and our multi-condition platform. The results we delivered in 2025 are a direct reflection of progress across each.

Beyond the AI capabilities Sean described, our innovation agenda in 2025 extended across several additional fronts. With respect to GLP-1 prescribing since sharing our plans, we've had many discussions with interested customers and channel partners who are looking for help managing GLP-1 complexity. As GLP-1s evolve across oral and injectable forms, different doses and new mechanisms, employers need to manage switching, titration and benefit design in ways that improve ROI, not just increased spend prescribing is a natural extension of our model, allowing Omada to active GLP-1 value maximizer across the entire journey from informing prescription decisions to supporting numbers on therapy to safely discontinuing medication when appropriate.

We look forward to providing updates as we build out this capability. In addition to prescribing, we also have plans to support more flexible GLP-1 access models, including the GLP-1 FlexCare option we announced today. The need for alternative GLT-1 benefit in design solutions is underappreciated and we believe this could represent a significant opportunity. The GLP-1 market for large commercially insured employers is currently split, roughly 45% covering GLP-1s for obesity and roughly 55% that dot within this segment that covers 2 of the country's largest PBMs have built GLP-1 solutions that include or offer Omada programs. One offers employers financial reassurance through a spend guarantee. And Omada has been a successful partner in that solution.

The other expanded its GLP-1 offerings last year and Omada programs are an option there as well. But the 55% that aren't covering GLP-1s needs something different before moving from waiting and watching to confidently cover it. That's where GLP-1 [indiscernible] comes in. It gives employers a structured way to connect eligible employees with clinical evaluation, prescribing an ongoing medical oversight for GLP-1 alongside Omada's lifestyle behavioral support. Employers pay for the doctors' visits, labs and behavioral support, employees purchased branded GLP-1s out-of-pocket through credible cash pay channels.

We believe the future for GLP-1 coverage will include multiple benefit design solutions addressing diverse employer needs, including robust clinical services, broad GLP-1 access, lifestyle support and financial reassurance. Our strategy is to be part of that spectrum, so employers can access the clinical benefits of our programs regardless of the benefit design they choose. We've also recently expanded our cardiometabolic offerings by adding a cholesterol program. This is a risk area that is often underserved in traditional cardiometabolic offerings despite the fact that up to 70% of adults on obesity have high cholesterol Evidence from our existing programs has shown that virtual behavior first interventions can drive an average 39-point reduction in total cholesterol in 4 months among participants with diabetes and high cholesterol.

Omada for cholesterol will build on that foundation, connecting behavior change, lab awareness and ongoing guidance from clinical specialists to cholesterol risk becomes visible and actionable within everyday wire. We recently completed an initial commercial launch with a large enterprise customer that has more than 300,000 employees and then we expect a broader rollout in 2027. In summary, our innovation allows us to broaden how we support the management of cardiometabolic risk, leverage AI as a differentiator and deepen our relevance across a wide range of benefit strategies, making Omada a more flexible long-term partner for employers and health plans.

Our second pillar is programs that work. solutions grounded in evidence and behavior change science that deliver measurable durable outcomes. In 2025, we expanded our body of research on GLP-1 support. One analysis showed that members in our GLP-1 care track who discontinued medication largely maintained their weight 1 year later with an average weight change of only 0.8% compared to 11% to 12% average weight regain reported in key clinical trials without ongoing lifestyle support. A separate analysis found that members in our enhanced GLP-1 care track who remained in the program and persisted on the medication for 12 months, achieved average weight loss of 18% and compared to 12% in real-world evidence without structured support.

We also published our 30th peer-reviewed manuscript, focused on our joint and muscle health program, which showed that patients using a modest virtual physical therapy have lower total health care utilization and reduced MSK related costs and encounters on average at 6 and 12 months compared to in-person PT even after accounting for program costs. These results demonstrate that our human-led digitally enabled model can drive outcomes that matter to members and customers. Our third pillar is the power of our multi-condition platform relative to Point Solutions Customers increasingly recognize the advantage of working with a single scale partner across multiple conditions.

Our ability to support obesity and weight health, diabetes, hypertension, cholesterol and MSK conditions, and GLP-1 Care as 1 provider continues to be a key differentiator and the growth across our cardiometabolic suite reflects this. Revenue from our weight health program, which increasingly includes numbers on GLP-1s for weight loss, grew more than 50% in and revenue from both our diabetes and hypertension programs grew at rates 45% or more year-over-year. That broad-based growth across conditions reflects employers and health plans leaning into a bottom as their integrated cardio metabolic partner, not just a single condition solution.

In summary, our progress across innovation, programs that work, and our multi-condition platform helped to drive our strong 2025 results and provide tangible proof that customers are buying into this vision. We believe we're well positioned for 2026 and beyond. And with that, I'll turn it over to Steve.

Thank you, Wei-Li. Hello, everyone. I'll walk through our Q4 and full year 2025 results, discuss the key drivers and provide our outlook for 2026. Let me start with top line results. Members grew 55% year-over-year to $886,000. Revenue in Q4 was $76 million, up 58% year-over-year. For the full year, revenue was $260 million, up 53% compared to 2024. The primary factors driving growth include a broad industry focus on cardiometabolic conditions, deeper penetration of multi-condition customers strong adoption of our GLP-1 programs and more effective enrollment campaigns.

As these strong results in macro trends feed into our business model, they are creating a durable, visible revenue stream with meaningful operating leverage, which I'll discuss in a moment. I'd also like to note that in Q4, we had a onetime transaction that resulted in approximately $2 million of additional revenue, gross profit and adjusted EBITDA. While relatively small and immaterial to full year results, I wanted to note it for any impact on sequential modeling from Q4 to Q1. Turning to gross profit. We saw significant margin expansion in both Q4 and the full year. Q4 GAAP gross profit was $54 million, up 67% year-over-year with GAAP gross margin of 71% versus 67% in the prior year. For the full year, GAAP gross profit was $171 million, up 66% and GAAP gross margin was 66% versus 61% in 2024. We Q4 adjusted gross profit was $55 million, up 65% compared to Q4 '24, and adjusted gross margin reached 73% in Q4, an all-time high and a 320 basis point improvement year-over-year. demonstrating our ability to operate above our long-term 70% plus adjusted gross margin target for the first time. For the full year, adjusted gross profit increased 64% to $176 million outpacing our 53% revenue growth by 11 points and driving adjusted gross margin up 450 basis points over 2024 to 68% in 2025.

Over the past 4 years, we've nearly quadrupled revenue and expanded adjusted gross margins by more than 1,600 basis points, a trajectory that underscores the leverage in our business -- this has been driven by our growing member base and multi-condition expansion with spreads fixed costs across a larger revenue base as well as care team efficiencies enabled by our platform, AI-powered tools and optimized staffing models. We believe these drivers can continue contributing margin expansion as we pursue our long-term target of 70% plus full year adjusted gross margins. Moving to operating expenses.

We continue to demonstrate strong leverage below the gross profit line. Q4 GAAP operating expenses increased 28% year-over-year to $50 million -- for the full year, GAAP operating expenses were up 25% to $183 million. Adjusted operating expenses grew 27% to $47 million in Q4 and 24% for the full year to $170 million. That 24% annual growth supported 53% revenue growth with strong operating leverage across all 3 operating expense lines. Key drivers included scale from our channel partnerships and BA B2C go-to-market approach, sales force leverage from selling multiple conditions with 1 sales force R&D efficiency from a flexible program architecture and spending discipline as we work towards sustained profitability. Our steadfast commitment and multiyear focus on achieving profitability paid off in 2025 as we reached positive adjusted EBITDA a full year ahead of expectations, a milestone driven by financial discipline, strong growth and the operating leverage I've just described. We're proud of this accomplishment. Notably, Q4 also marked our first quarter of GAAP net income profitability. Specifically, we delivered GAAP net income of $5 million in Q4, which was a $13 million improvement compared to a net loss of $8 million in Q4 of 2024. For the full year, GAAP net loss was $13 million, an improvement of $34 million compared to a loss of $47 million in 2024.

Adjusted EBITDA in Q4 was $8 million with an 11% margin, an improvement of $12 million and 18 margin points compared to a loss of $4 million and a negative 7% margin in Q4 '24. We Full year adjusted EBITDA was $6 million with a 2% margin, an improvement of $35 million and '19 margin points compared to a loss of $29 million and a negative 17% margin in 2024.

Notably, we converted 40% of incremental revenue to the adjusted EBITDA line in 2025, which continues to highlight the scalability of our business. To wrap the discussion of our P&L, I'd like to provide some additional perspective after we went public in June, initial consensus estimates were approximately $222 million of revenue and a $19 million adjusted EBITDA loss for 2025. We delivered $260 million of revenue and $6 million of adjusted EBITDA, with the positive adjusted EBITDA occurring a year ahead of projections. We're pleased with that performance, and we believe it reflects our strong market position, solid execution and the strength of our business model.

Specific to our balance sheet, we ended 2025 with $222 million of cash and cash equivalents, up from $199 million at the end of Q3. We generated positive operating cash flow for the full year, a significant milestone. We have no debt outstanding having repaid our $30 million credit facility earlier in 2025. This gives us a strong financial position to invest in initiatives aimed at driving incremental growth and ROI while also maintaining flexibility. As for our guidance, we expect 2026 revenue in the range of $312 million to $322 million, with the midpoint reflecting 22% growth over 2025.

We expect 2026 adjusted EBITDA in the range of $7 million to $15 million with the midpoint reflecting a $5 million increase compared to last year. Similar to our 2025 performance, our 2026 guidance is significantly above initial post-IPO consensus expectations. With our revenue midpoint approximately $50 million higher and adjusted EBITDA approximately $15 million higher, reflecting continued strong execution. Let me provide context on how we've approached guidance and on our growth trajectory. Our guided revenue of 22% at the midpoint comes on top of a 53% growth year that included a strong first wave of GLP-1 adoption and significant commercial momentum. This is an exceptional baseline to build from. We built our guidance, starting with our year-end base of 886,000 members and over 25 million estimated covered lives. Then we layer in historical enrollment conversion rates and observed engagement and retention trends with no significant improvement assumed. This allows us to anchor to what we consider our more highly visible level of revenue. Just as important is what's not in the guide. We have not embedded meaningful contributions from GLP-1 prescribing, GLP-1 FlexCare or our cholesterol program, and we have not assumed further improvement in enrollment conversion rates or significant revenue from contracts not yet signed.

Our adjusted EBITDA guidance reflects the revenue outlook combined with the investments we've discussed. If we achieve revenue upside, we would expect a portion to contribute to a stronger adjusted EBITDA. We believe this approach reflects appropriate prudence for initial guidance and positions us to build on our track record of execution. Stepping back from the specifics of our guidance, we believe the most important story is the quality of our growth in 2025.

As I shared, we converted 40% of incremental revenue to EBITDA. We achieved our first quarter of GAAP profitability, and we generated positive cash flow for the year. We continue to believe in the long-term scalability and profitability of our business. In closing, we are very pleased with our 2025 results, which reflected outperformance across all key metrics.

Looking ahead, we believe our market position, strategic investments and scalable business model position us well for durable profitable growth. With that, we'll open the call for questions.

[Operator Instructions] Our first question comes from David Roman with Goldman Sachs.

Steve, I really appreciate the detail on the guidance basis as you think about 2026. So maybe I could just push you a little bit on the assumptions there. And very specifically, I just want to make sure that we're hearing the [indiscernible] correctly that effectively the guidance contemplates only contribution from the existing business and not necessarily some of the new opportunities -- and if that is the case, I just want to make sure that we're not misreading this, and it looks like the guidance suggests some of the base business starting to hit a wall or markedly decelerates. So just to make sure that we're interpreting that correctly, and that's how you're intending to frame the guidance.

Yes, David, thank you for the question. Firstly, we're obviously extremely proud of the results in 2025 per some of the prepared remarks, growing 53% in 2025 was well ahead of expectations. And when we look back at your commitments from just 6 months plus ago during the IPO, we're trending meaningfully above that path at $50 million ahead on revenue and $15 million ahead on EBITDA. So we're carrying a tremendous amount of momentum, and we're a full year ahead of expectations that we set at that time. It's also worth noting that from the get-go, we have been communicating externally that we intend to grow this business for the foreseeable future at, at least a minimum commitment of 20-plus percent. And we think that the guidance reflects commitment against those projections. As we think about some of the inputs there, you're exactly -- you're correct in that we're basing it off of 886,000 exit members we're looking back. We're coming through all of our historical trends on enrollment rate conversion on engagement rate and assuming that there's no material improvement across those metrics throughout the course of the year. have a lot of internal investments and initiatives focused on improving those metrics to the extent we're able to capitalize on those throughout the course of the year, that would be incremental revenue compared to our guide. And then person of your commentary, we spent some time in talking about our prescribing capabilities FlexCare cholesterol. These are also not materially in our guidance numbers. Are we going to be launching a lot of those in market this year and as those gain market traction, and we have more of our customers purchasing those, those will be reflected in potential upside to the guide.

Super helpful. And maybe just a follow-up. As you kind of think about the what you've observed in January and February from conversions off of the 2025 -- sorry, excuse me, 2026 selling season. Can you just give us some flavor of maybe a little more detail how that tracked? And then how we should think about just the cadence of revenue and profitability throughout the year to make sure we have the phasing of the year, correct.

This is Wei-Li. Let me talk a little bit about how we close the end of the year and to the extent that I can cast a little bit of high-level color on what we've seen this year in just the first couple of months. We're pretty pleased with how we closed the end of the selling season. I mean, we're up over 5 million additional eligible covered lives across our business. We've also seen continued momentum in terms of multi-condition product sales. And as mentioned earlier, last year, we improved our enrollment rate yield, our enrollment rate performance. more than 20%, 24% to be precise. And so we're pleased with the overall funnel developments, if you want to put it that way or funnel conversion improvements. And as mentioned by Steve, that's going to be carried on into how we think about this year's performance. I won't go into too much quantitative characterization of January and February. But suffice it to say that things are tracking, and we like what we see there. As you might expect, as it is every year, the additional covered lives that we closed in the prior year, oftentimes are going live at the beginning of the year, it's the heavy enrollment season. and that certain pattern or that seasonality certainly exists to as well.

And David, I'll just add a little bit of color on some of the revenue and the EBITDA progression per your question. We do expect -- we had an extremely strong Q4. We saw 11% sequential growth quarter-over-quarter. That's stronger compared to what we've observed historically. If you looked at 2024, we only saw a 5% increase there. So we don't expect as big of a jump on Q4 revenue -- on Q1 revenue basing off of we exited the year, and we also did have that onetime $2 million adjustment, which we don't intend to repeat going through the year. So Q1 should roughly be -- expect to be flat relative to Q4 win accounting for that $2 million, and then we'll sequentially grow revenue throughout the course of the year. And then as you're aware, Q1 is our largest net new enrollment volume quarter. It carries additional costs associated with increased device shipments as well as increased cost for our care teams as there's more labor in the first quarter. And then we'll steadily climb out of that as we go throughout the year, improving gross margin and improving EBITDA margin throughout the remainder of the year.

Our next question comes from Sean Dodge with BMO Capital Markets.

I just want to start maybe understanding a little bit better the mechanics of the new GLP-1 flex care program. It sounds like the existing GLP-1 care track, but now just building connections for the member to get a script and actually buy the drug. Does building that in, does that change the economics of the program for you at all? Do you get compensated for facilitating those connections? Or is this just more about kind of broadening the appeal and kind of the utility, the program to more employers.

This is Sean here. Happy to talk about Flex. Let me just start with the characterization on the segments. -- in the employer market specific to GLP-1s for [indiscernible] because there are 2 primary groups. The first is those who cover. So that's roughly 45% of the market. They cover GLP-1s for obesity. Historically, when we talked about our care track that, that was targeted towards. Those are folks who want to maximize the value of that investment. It's actually a bigger segment. And that's -- roughly 55% of the large employers and those that just do not cover GLP-1s for obesity yet. But equally, they do want a way to support their employees. And that is what the GLP FlexCare solution is targeted toward because it gives these employers a structured model, where, yes, your comments, they do pay Omada and would pay Omada more for the GLP-1 FlexCare offering because that includes clinical evaluation, prescribing lab ordering and Omada lifestyle and behavioral support while eligible employees can purchase the branded GLPs out of pocket through vetted cash pay channels, of course, with a focus on accessing the lowest available price. So this, in turn, allows that segment of the market to still offer their employees a chance for high-quality GLP-1 care with strong oversight without immediately taking on that full drug spend risk.

Okay. That's super helpful. And then, Wei-Li, you mentioned having improved enrollment yield. I think you said 24% last year, so driving significant efficiencies on the marketing front. Is there anything you can -- anything more you can share on just like how you've been able to do that? I think you mentioned AI playing a role there. And then just maybe how much runway you see being left when it comes to driving kind of incremental margin or marketing efficiencies?

Yes, sure, Sean. Let me address that. In terms of how we were able to achieve that -- as you and others may recall, we do a lot of digital marketing. And as a result of that, we actually have the ability to do dozens if not hundreds of AB tests. Those AB tests can switch out concepts, creative, language, call to action, you name it, across the spectrum of what one would think about optimizing in our campaign outreach. And so that certainly is a component of that, and we did that last year. We did that in 2024. We did that in 2023. We're going to do it again in 2026. And we still think that there's runway to optimize those campaigns in that outreach. The other component, of course, is a multichannel component. And when we say multichannel or omnichannel we mean about digital signage on-site at an employer, especially if they have a large distribution center with a large warehouse, for instance, employees that are on site. And then other forms, including direct mail, other types of flyers, so on and so forth. And even in those particular channels, we can then optimize, again, the frequency, how often we send what is the depth of the content, the copy, the creative. And then we can actually look across entire campaigns and how we define a campaign is really a combination of all those things in a multichannel approach to understand how we stack them on each other. And so there's multiple dimensions upon which we can actually optimize and improve yield rates or employee enrollment rate. And we think, again, that there's still a runway to improve that in 2026, and that certainly is on the docket for us to do so.

Our next question comes from Craig Hettenbach with Morgan Stanley.

Sean, just going back to AI. [indiscernible] debate on the impact, including potential disruption to business models. So against the backdrop of some of the concerns in the marketplace -- where do you see Omada is most insulated? And what are some of the things you're doing to benefit from AI as opposed to be disrupted?

Craig, thank you for the question. It is one that I and we think about a lot. Pulling that beyond Omada, I believe we are on the frontier of just a remarkably innovative moment in the history of health care. And this is the moment where, in our view, it's being propelled by AI. And so against that, there are a number of things that, I think, frankly, any innovative company can do. that these include leveraging AI coding assistance, using AI to improve member support using exciting frontier models within their app. So Omada is doing these. We're already seeing signs of how this impacts the business on a day-to-day basis, our members on a day-to-day basis, and that is, of course, an important part of ongoing improvements to margin. That being said, those are perhaps table stakes. I mean yes, there is one thing that we believe that is true today and will be true tomorrow. And that is the value of unique data sets that, in many cases, take years to build. We have tens of millions of care team conversations, hundreds of millions of biometric data points and billions of real-world data points. And so what that allows us to do and what we're excited is allows us to customize and personalize care in a way that's unique and in a way that's valuable. So it will take time to prove this out, and it will take time because we are in health care. We're regulated. We have devices, hardware, a supply chain, a complex web of distribution relationships and we're dealing with people's lives, which we take very seriously. So when I'm asked that question, I don't tend to view it as if AI will disrupt health care or disrupt Omada, rather, I view it as a question of who is going to build it in the right way in health care. And I believe we have the unique foundations to do just that here [indiscernible].

Helpful. And as a follow-up, I wanted to focus in on just the hypertension diabetes programs. I feel like they tend to get overshadowed just by all the excitement and interest in GLP-1. So -- can you talk about the traction you're seeing in those programs and just how you see the runway for growth in the coming years?

Yes. Craig, this is Wei-Li, and you get extra points for asking a non-GLP-1 question. So I appreciate that. Yes, we've always said that the GLP-1 moment is actually a cardiometabolic moment. insofar as meaning that the discussion is a gateway into the broader cardiometabolic kind of condition question and challenge that our customers face. And in fact, when you look at the cardiometabolic landscape, the overwhelming majority of people who suffer from those conditions are not taking a GLP-1. So it actually represents a TAM that is as, if not larger than the current GLP-1 accessible market. So what does that mean in terms of our performance. We've always said from the get-go that a pillar of our strategy is to understand and realize that people who suffer from, let's say, obesity also have diabetes also have hypertension. As we all know, and that's why we provide a multi-condition platform. In multi-condition sales continues to be something that is strategically important and a huge strategic focus for us. And we talked about our progress on that. It continues -- we continue to make progress on that, and we're happy with that. But maybe a way to talk about the results in our portfolio products is that we [indiscernible] metabolic suite, but across the individual programs. And so prevention or weight health, obesity grew more than 50% in both diabetes and hypertension group 45% or more year-over-year. And we think that breadth of growth really reflects the customers increasingly using Omada as their integrated cardiometabolic partner excuse me, and not just for a single condition. So we're seeing growth in summary, in both diabetes and hypertension, almost directionally similar to the overall growth rate that we saw last year overall in revenue.

Our next question comes from Ryan MacDonald with Needham & Company.

Congrats on a quarter. Steve, maybe first for you, just so as we're thinking through the 2026 guidance. So obviously, you mentioned sort of no material changes or improvements in sort of enrollment yields and rates from there. So should we sort of take the guidance as sort of you grew covered lives 25% on a year-over-year basis. And so if you assume that sort of same conversion rate that sort of member count grows about that 25% rate. And then you see then some declines in average revenue per member. And if that's the case, can you help us understand what you're seeing from a program mix perspective that may be driving sort of this continued sort of ARPU declines.

Yes, absolutely right. Happy to provide some color there. Again, per some of the prior comments, just to recalibrate on what's in our baseline assumptions. It's just starting with that 886,000 members and then layering on some historical assumptions around enrollment conversion as well as engagement rate. I think the easiest way to think through the [indiscernible] next year is that ARPU stays relatively flat Historically, it's been roughly just shy of $300 per ending member. And so -- and then building up your total member base off of that growing roughly in line with revenue guidance at 22%. What's important is what's not in the guide. And we talked a little bit about this, all which have the ability to drive incremental ARPU throughout the year. The first being some of the new product categories we're entering to the extent we're able to layer on GLP-1 FlexCare prescribing cholesterol. These are all accretive to ARPU throughout the year. we are creating internally some investments around driving more engagement through increased product and feature enhancement. The longer we can keep folks in program that also has the ability to drive additional ARPU with a little incremental cost as we go throughout the year. So the really way to just take the basis is to grow the member count by 22% and keep revenue roughly flat.

Super helpful. I appreciate the finer point on that. And then maybe a secondary question for Wei-Li or Sean. Earlier this week, we had a benefits conference and what the conversation really standard around sort of for this year was -- so this idea that your average employee benefits portfolio is about 28 different point solutions today and that the conversation is really around in the current budgetary environment with health care costs continuing to rise at accelerating rates, as more of a consolidation, looking to see where there are duplicate solutions and then optimizing for outcomes would love to know if this is something you're seeing sort of in the early stages of the 2026 selling season and how maybe this could potentially favor your multi-condition platform relative to sort of individual point solutions providers.

Thank you for the question. I mean if you serve as the head of benefits and we're on LinkedIn, you'd have about 50 messages a week coming in from point solution providers. And that does grow tiring, and that's a message we hear frequently about and it's 1 that we respond to. It's been a recurring theme that customers love the fact that they can get quality care across multiple care areas from Omada. We see that across our portfolio suite. And even we see that within GLP-1s, where one buyer is one buyer that and equally, they recognize that tomorrow strategy, specific to their GLT1 may not be the same as today's. And so we are thrilled with that. In fact, I think we have a proof of concept of this approach right in front of us in cholesterol.

We announced Omada for cholesterol. That's a natural extension of our cardametabolic suite. We like that, high cholesterol, often as shared in remarks, coexist with [ obesity ], diabetes, hypertension. And one of the reasons that we got excited to do it is we heard about it from our largest customers. who said this is a clinical area where I care about Omada, we trust you, we'd love if we could work together on it. And then we're starting out of the gate with the customer line for motor cholesterol.

And if I were just to tag on a little bit to that and add and what really drove that particular situation, and we're seeing is repeated across a number of opportunities is exactly what you mentioned around a fatigue around single-point solutions, imagining somebody who suffers from obesity, diabetes, hypertension and now, of course, some [indiscernible] or high cholesterol, they could be on as many 4 different applications in the consolidation into one multiproduct company, Omada, that has proven evidence-based results and outcomes and ROI, certainly is attracted to buyers, and we're seeing that play through, which is why we continue to see momentum in multiproduct sales and growth across the portfolio of programs. The last that I would also mention is that we happen to be in the actual therapeutic areas or disease areas that HR benefits company CEOs, CFOs understand are actually the biggest drivers of their health care spend cardiovascular events, cholesterol, heart attacks, diabetes, obesity, MSK, they always register small company, big company always to the top of the top 5, top 6 areas that are driving spend. And so as employers and benefit solution providers decide to consolidate away from "you said [indiscernible] different point solution providers". Obviously going to think about Omada, they're going to think about multi-condition platforms, but they're also going to think about those providers that are in the sweet spots that are driving most of their year-over-year health care spend and it happens to be the ones we're in.

Our next question comes from Elizabeth Anderson with Evercore ISI.

Improving gross margins. Steve, obviously heard what you said about the contribution to gross margins from the $2 million, but still improved quite nicely even without that. So can you talk about that and how you see those flowing through into 2026. I understand that, obviously, you guys have seasonality that will impact the 1Q numbers, but just sort of how to think about that incrementally. And then if there's any more color you can provide on sort of what that adjustment was in the fourth quarter, that would also be super helpful.

Yes. Maybe I'll start there with the adjustment in the fourth quarter. We did have a $2 million onetime true-up. This was a negotiation that was cascading throughout the year with one of our larger partners real to resolve that in the fourth quarter and as such release that revenue. If we had negotiated it and resulted earlier in the year, you would have seen that revenue recognized ratably throughout the course of the year. We don't expect that to recur on a go-forward basis. With regard to gross margin, again, tremendously proud of our performance in Q4, hitting 73% gross margin. As we've communicated consistently, our terminal annualized target. It continues to be 70% plus. So we believe Q4 really demonstrates our ability to hit to March towards that target in the long term. Two main drivers here: the first being ongoing traction with multi-condition customers. So the more diabetes and hypertension revenue that we drive through, those are coming through at our -- those are our highest priced products. and they drive incremental gross margin dollars and gross profit dollars for us. That was a large contributor. And then the second piece is just [indiscernible] labor costs across our care teams. We've experimented with dozens of staffing malls, and we really feel like we fine-tune that over the course of the past several years, which led to additional margin expansion as well as some of the prepared remarks, us continuing just to use AI and using a contact summarization, making our care teams more effective and more efficient. And we're going to be planning to roll some of those -- that momentum throughout the course of the next year. and we envision 2026 being another key stepping stone on our path to getting to a 70-plus percent gross margin.

Our next question comes from Stan Berenshteyn with Wells Fargo.

First on retention dynamics, I know you commented that they're pretty steady over 12 and 24 months. I'm curious whether the new products of Komodo Spark and map, whether they've demonstrated any measurable improvement in engagement that you can point to?

Wei-Li here. Let me take this one around modest park. So we launched this in the first half of last year and then fast followed with some enhancements to Omada Spark. And so we're proud of that, and it allows our members to essentially have a nutritional AI assistant. Food is such an important part of the behavior change process. And then, of course, the meal map allows individuals to either dictate their food, snapshot their food with their camera, long winter food in a number of different ways and then the nutritional density the food is actually registered very accurately, and then that information then translates into what meaningful changes can they make. And so I kind of recourse all of that because you can imagine the value that numbers have in seeing this knowing that nutrition in food and food quality and nutritional density is such an important part of generating a positive outcome, not just in obesity and [indiscernible] but across diabetes, hypertension and now cholesterol and believe it or not, even in MSK as well. We're encouraged by the early results, members who interact with a lot of Spark, our Health AI assistant, along with meal [indiscernible] demonstrating higher levels of ongoing engagement. And in fact, because they are returning to the app more frequently compared to those who haven't yet used the tools. And so we're seeing that lift. Now specifically, the meal map, which is the part and parcel of understanding what you eat, and then matching the behavior change. We're also seeing meaningful lifts in actual food tracking behavior, which is one of our strongest predictors of sustained weight management. And so all of these, of course, drive more activity in the app. And because we bill based upon activity for the majority of our business, we do believe over the long haul, and over time that this should potentially create some meaningful improvement in terms of financial performance.

And then I just want to follow up on the cover lives. I think you mentioned $25 million. That's about $5 million incremental from your prior disclosures can you share with us what is the mix of self-insured versus fully insured within those $5 million that you onboarded.

Yes, sure. Right. So of the $5 million that we closed, the way to think about it and characterize that is that it was driven by strength across multiple commercial channels and across the product portfolio. So it wasn't densely concentrated in 1 significantly over the other. But if you were to look at the mix, our PBM channel is the largest contributor followed by strong performance in our self-insured fully insured and ASO business. Thank you.

[Operator Instructions] Our next question comes from Richard Close with Canaccord Genuity.

Great and all the success this year. Sean, maybe on GLPs, welcome your perspective on how you think about GLP prices coming down and how that impacts the growth opportunity for Omada I do think there's some fears out there as those prices come down, maybe demand for programs like Omada gets impacted?

Yes, Richard, thank you for the question. It's certainly an important one. And within that, it's also important to share that the way our accounts and customers view Omada is not a cost on top of their medication spend but rather a value maximizer of their decision to cover GLP-1s for obesity. And so again, right now, the accounts that cover GLP-1s for obesity, it's roughly 45% of the market. they know the cost of that decision and what they're after is reduced waste. And so Omada care tracking capabilities allow us to support them across the entire journey from helping inform prescription decisions with our new prescribing capabilities to supporting realized outcomes well on therapy and, of course, to safely discontinue when appropriate. And so net relative to the price of the meds, we believe these lower price points actually have the potential to increase GLP-1 utilization, which increases access to the medicines and thus, increases the need for care track services like Omada. And equally, for the market where employers say, look, I just can't afford these meds. I mean that's where a new GLP-1 Flex care offering comes in, and that's the 55% of the employer market segment specific to GLP-1s.

Okay. And then, Steve, maybe as a follow-up. I think you mentioned all the new programs are accretive. Can you put that into perspective in terms of ARPU?

Yes. That's a great question. We have priced across prescribing cholesterol and our GLP-1 Flex care above our current rates. So for cholesterol, specifically, that's roughly priced in line with hypertension. But as we view -- as we observe more customers in taking these products, all the potential to uplift ARPU above where our current run rates are at $300 per year per average member. So as we get more traction in market, again, these are very nascent products. We're just starting out with them. We'll be able to provide more specific guidance on the exact measure of uplift that we're observing as we get traction with some clients.

And our final question comes from Carly Becker with Barclays.

You have [indiscernible] here. If we look back to 2018, when Omada launched its diabetes and hypertension programs, can you walk us through what the adoption curve looks like for those programs over time as we think about kind of a parallel to help frame the launch of the cholesterol program. How long did it take to roll out the diabetes and hypertension modules more broadly? And when did you start to see adoption really pick up steam and drive incremental revenue?

Yes, I can start because again, those are good examples of how we love to innovate, which is on the back of really listening deeply to customer needs and a and ideally finding kind of one or multiple that marquee customers to start the innovation journey with you. And so that was a couple of long-standing customers that had said, you know what Omada, we love what you do in prevention and it will be in obesity and weight health would you consider diabetes. And so that started the journey, and then we did highlight the growth rates which are comparable to prevention, which I think a statement on how that journey has gone. And so we're hoping to rinse and repeat with, of course, cholesterol, hoping to rent and repeat with that same process of listening intently on things like GLP-1 prescribing GLP-1 FlexCare because we know based on how those grow, how they can be accretive over time. But I don't know, Wei-Li, if you have any comments on top of what I've shared.

Yes. The only thing I would share on top of would be kind of qualitative and just imagining kind of the intent of the question. That was 6, 7 years ago in the Omada that was then in 2018 we're a very, very different Omada today. Our capabilities are far more evolved across the entire conversion funnel starting with closing lives with channels and then employers in the course enrollment rate and engagement and so on and so forth, activation through the numbers. All that to say to mean that, I think what would have taken us 3, 4 years to eventually sell through a payer or a and then build a book of business to employers and then begin to enroll. I think we've gotten better at that. I know we've gotten better at that. And so we certainly think that we can beat those time curves in terms of full-scale adoption. The last thing I'd also remind everyone to as well is that our approach over the last few years in innovating and expanding new programs, has not really just been looking at TAM. But as Sean mentioned, really listening to our customers and oftentimes, the trigger for us, which accelerates adoption is actually when a customer says, boy, if you do this, we'll buy it and we're seeing that reflected with our cholesterol program, where a large customer came to us and said, "Hey, we're seeing this being a cost driver in our health care spend. We'd love to partner with you all, and we built that and immediately winded contracting and launched that customer earlier this year. And so the approach there is as such. And then last thing here. So just stepping back, what's fun is if you look at all these launches, we believe they really add up. I mean, between GLP-1 prescribing, GLP-1 Flexcare Omada for cholesterol, as I reflect on the journey we've been on, we are on pace to roll out more new offerings in 2026 than in any year in the history of our company. And so what this translates into, of course, is the opportunity set transits into new ways to support specific customer needs and we believe a solid foundation for durable growth.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning, everyone. My name is Lisa Gill, and I head up Health Care Services here at JPMorgan. This morning, with great pleasure, I have with us Omada Health. This is actually Omada Health's first time as a public company presenting. I know you've been here many times as a private company. Presenting for the company will be Sean Duffy, and then we will have a little fireside chat afterwards with Wei-Li and Steve Hooks. So with that, let me turn it over to you, Sean.

Super. Well, thank you, Lisa. Good morning, everybody. So I'm Sean Duffy. I'm the Co-Founder and CEO of Omada Health. And Omada Health is a between visit provider. So excited to share over the course of 20, 25 minutes what we do and the big mission of the business. I'll start with, obviously, the most beautiful slide, which is our disclaimers. These can be found on our website. So reading material for tonight.

Omada's explicit mission is to bend the curve, and that's to bend the curve of disease and epidemiology. When I was a medical student at Harvard, I saw a problem on a daily basis in front of me, which is that many patients, especially with today's disease realities, have the wrong kind of care. And this was especially true for the 156 million Americans suffering from chronic disease.

And so I sat in the homes of people with obesity with diabetes and asked them, what has the health care system offered to you? And the usual answer was, well, I got a medicine and my doc said come back in 6 months. And it became very obvious that to move the needle clinically, an entirely different care model was needed and a model that supported the patient on a daily basis, longitudinally over the course of time, critically between visits. And that is that, in our view, was the solution. That is how to bend the curve of disease.

So that's been the mission from the beginning. And again, we do that by supporting the medical home, delivering care between doctors' visits in a simple, elegant and seamless way, which are the themes that you'll hear from me and have been the themes really from the beginning of Omada.

So just some of the operating highlights and punchlines here. So Omada's go-to-market is to ask and kind of make the case for employers, plans and systems who bear the financial cost for our members to pay for the program for their constituents. And so there are now over 20 million Americans in the U.S. and individuals that have benefit coverage for one or more of Omada's programs.

The constitution of that is over 2,000 customers as shared, that's typically employer plan and integrated health system. And if you've heard me speak or studied the business at all, there's a couple of strategic themes that I typically highlight. One is supporting our customers more broadly.

So Omada began our journey with prediabetes and obesity care services. We expanded to diabetes to hypertension to MSK care. And on our earnings call and many of the one-on-ones, I talk about 2025 and have talked about 2025 as the year of the Gs, GLP, which my wife doesn't think I know any other acronym besides that one and then GPT. So that was kind of the theme of 2025.

In reflecting on the year, I began to realize I left off 2 more Gs. Ready for it. Great growth. Starting with a little humor. So we announced on Monday our preliminary unaudited results. The midpoint on the revenue was $257 million. That is 52% year-over-year revenue growth. We think that's a reflection of a differentiated capability, meeting a market need. And then we're proud that we now support 886,000 members.

And so these are individuals that we're actively supporting. We're actively building on. Omada only charges when people sign up. So when we say members, those are individuals that are under our care, and we're charging for them with our monthly recurring membership fee. So a little bit more on kind of the problem set and the why. I shared a bit of what I saw in people's homes while in medical school. But the truth is, if you unpack what actually can move the needle in chronic disease, it doesn't happen in that 15-minute visit with a doctor. I think that's no surprise. It's very ineffective to hand someone a pamphlet. It's very ineffective to say, hey, come back in 6 months. Don't forget to take your medicines, lose weight, eat differently, exercise more, check your sugars, that doesn't work.

And so that's the area -- that's the white space that Omada felt burdened with the privilege of filling on behalf of our patients. And there are many carriers that fit this rubric where yesterday's care model of being handcuffed in the visits just doesn't work. It will not get us to the promise land of better outcomes and value.

The carriers we're in of metabolic risk, prediabetes, obesity, diabetes, hypertension, MSK, they fit that clinical rubric, and we've expanded into them. When I talk about our expansion, what I always remind folks is this was really customer-driven. It wasn't Omada seeking new TAM. When we talk to the Costcos of the world and our customers, they'd ask us you know Omada, it'd be so convenient and beneficial to our employees if you did a little bit more. Any chance you do diabetes, any chance you consider hypertension, any chance you consider MSK care.

They recognize the convenience because it's kind of nice to work with one partner across multiple care areas. But equally, they know that their employees have comorbidities amongst these condition sets. I mean even 58% of people with diabetes also have a musculoskeletal disorder. So there was really kind of a strategic customer reason for the expansion as well as a really important reason to organize and support coordinated care for our members.

So then that brings us to the how. Equally, when I was in the homes of people before writing a single line of code, I recognized that there wasn't going to be a silver bullet here. We really had to take a full stack approach, and that approach had to combine people and technology. And the people side is the compassion, the care, the feeling of accountability and Omada has that people component, and we're known for it.

The technology side is not only how you scale those individuals, but how you leverage these incredible technologies to add efficiency, to add personalization to create a dynamic experience that's delightful, that's interesting, that feels differently than the care models they may or expect. And so that intersection, it's a very difficult. It's an artful intersection that requires a lot of thought, a lot of nuance and a lot of substance. And that's what excites us about the capabilities we've built and where they're headed.

Just to quickly give you kind of a feel for how it works, imagining perhaps you're an employee of Costco. Step one is to find out that we're a brand-new benefit. Typically, the way we do this is announce that Omada exists through e-mail campaigns, through generalized marketing campaigns. We've got sometimes what I think of as a little mini ad agency inside of Omada that listens to the customer, listens to the demographics of the employers, kind of looks at our library and patterns of what we've done before to create kind of campaigns that we know will work.

Then from there, there's a quick application process, confirming clinical and coverage eligibility. Then we ship any needed connected devices. So in our device arsenal, we have a cellular connected scale, cellular connected blood pressure kom monitor and CGM. So these are critical because that allows the biometric feedback to come not only to the care teams, but the individual. And then you meet your care teams.

All too often in health care, we forget that we should ask for what patients' goals are. get to know them, ask what brings them joy, really ask. Understand them as people and cultivate that trust because trust is the currency for improvement in health. And so the care teams are real people. They get to know you. We're proud of who we hire and how we manage that organization.

And from there, it brings you to the product. Within the product experience, there's kind of a goal-setting infrastructure where you align with your care team on what the next couple of weeks should look like for you.

Against that, there's a curricular pathway and paths that mirror appropriately the goals that you're on. We've got these really neat community layers that provide social support against a specific topic, against a specific thing that you as a member may be up against. And then there's a progress layer that includes food, activity tracking, biometric tracking in a very elegant sophisticated way. And throughout the member experience, you're supported on a daily basis from your care teams because we want to create is a feeling that one of Omada's members has someone in their corner in their pocket, supporting them on a daily basis that doesn't tend to happen in care.

Equally, we recognized early that we kind of had to build all of the pieces of technology, including what we call our care team platform. Think of this as our EHR. This allows us to manage the operations of our care team, hit our margin targets, manage the performance of that organization, but even more importantly, add a lot of personalization and care and proactive care to our members.

So this is -- sometimes I think of this is the crown jewel behind the scenes that nobody gets to see, how privileged are you, you get to see it. But this was purpose-built over the span of many, many years to support our care teams. And having been our very first health coach, I know how blind I was flying when I first supported my first member, just looking at a chart and kind of praying what to do, not having any data insights or sophistication.

So the first question, when we show the Omada experience we get from folks is do people use it? We're very proud of the engagement stats. For any of you who've cited consumer engagement curves, I think you'll be equally impressed by these numbers. So at the end of 12 months, you take 100 people, more than 55 will still be engaging with Omada. You cast that out to 2 years, 50 of those original 100 will be engaging with Omada. So these are individuals where the goal is to become part of their life and create the sense of like, well, now interesting, Omada is now my care partner. I think of them in support of my health and they're here for the long haul.

So that's step 1. And step 2 is, does it work clinically? We've invested millions of dollars, many, many years in developing a robust arsenal of clinical literature. We have 30 peer-reviewed publications. These range from observational studies to multimillion-dollar academic medical center-led randomized controlled trials.

And critically, we look at clinical outcomes, we publish that. We look at economic outcomes. We published those. So every HE that you see on the slide here, that's a health economic publication showing the financial value of what we do, and we're proud of these data. I won't give the punchlines in each care area, but we're proud in all of them. And equally, one thing that we've decided to do is lean into accreditations, attaining things like NCQA accreditation for diabetes.

That was an industry first, remains an industry only. In fact, NCQA had not accredited a digital organization before Omada, but we came to them and said, you know what, digital health is the underdog. We need to show and prove that we can and should be part of existing care models. We need accreditation to do that. So we're proud of the investments required to attain that.

And then on the health economic literature and modeling here, when buyers look at Omada and ask us, well, how can we and should we think about savings in metabolic over the course of 3 years, you're looking at a 3x to 6x ROI in MSK, we tend to look at a year or so time horizon, $1,000 to $1,500 gross health care savings So does the program engage people?

Yes, does it work clinically? Yes. Does it save money? Yes. Those are the 3 assets that we need that to go to market. And the go-to-market for Omada is through 3 primary routes, 2 are the majority. The first is self-insured employers. So we will contract directly with the Costco, large jumbos that self-insure that are looking at their cost of diabetes, looking at the health of their employees and saying, you know what, the existing network is not working. I need something new. And that's where Omada comes in.

We're fine doing the direct contracts equally oftentimes, when we ask the employer, would you prefer to bring us through procurement? Or would you prefer to work through your plan or your PBM? The answer is the plan or the PBM as the contracting entity.

That tends to be our preference, too, because you get a lot of scale there. And so we can work with an employer through our contracts with the Blue Cross Blue Shield of Minnesota, Cigna, increasingly a PBM. So that's one of the routes to the employer market.

And oftentimes, these health plans, when they see savings, when they see clinical outcomes, they'll write us into their fully insured benefit as well. And those are the dollars that they're paying on their fully insured lines of business.

And then we do a modest amount of work with these systems that are integrated. So the Intermountains of the world, where we are a care partner between visit care partner for Intermountain. Just to give you kind of a sense of the various lines of business and the penetration, these are as of the end of 2024, about 13.1 million self-insured lives.

Again, those are self-insured employers that bear the cost of their care. 5.3 million fully insured lives. We're particularly proud of that. It's really an honor for a company in our position when the plan says, hey, this is looking great on my ASO line. I'm going to go ahead and write you into my fully insured line of business as well.

And then Medicare Advantage government sponsored, that's increasingly a growth opportunity as more MA plans out there recognize that the changing population that they serve requires digital strategies in ways that it hadn't before. And then PBMs have been an increasing route to market, and many of you may have heard of it. Within our metabolic suite, we launched a GLP-1 Care track. I'll talk about that.

We can bring that in our entire suite of services to market through PBMs as the contracting entity. So if you're an employer and use Express Scripts, great. You can get the full suite of Omada through Express Scripts. If you're an employer and you use CVS Caremark, great. You can get the full suite of Omada through your CVS Caremark contract. So that adds efficiency to the buyer and the employer, and it's a great way to deploy all of our capabilities and an even better way to deploy our GLP-1 care track, which again, we will talk about. And in the market, when we ask our customers, well, why you pick Omada? What the highlight is, look, we like that you're multiproduct.

And even if they started with us in one carrier, they like the fact that at time, they could consider a broader offering with us. They love our evidence. They love the accreditations. They find that to be unique. They like the approach of people plus technology and that when we talk about AI, which we're leaning heavily into, there's substance behind it, there's use cases, there's a job to be done for that specific member.

And they love the fact that we've worked with customers like them, and we're scaled and we're reliable and we're SOC 2 type 2 accredited, and there's a sense that they can trust working with us from an implementation standpoint.

So we're proud of that. And a couple of years ago, these accounts that we'd earned trust with started to come to us and saying, you know what, GLPs, what do I do? I've chosen to cover the meds, and I'm looking at the cost profile and I see what feels like a vertical line. Clearly, these meds work, how do I think about this? And this led us to launch our GLP-1 care track.

And within those capabilities, we find that there's 2 kind of archetypes of customers. There's the first set of employers, roughly 43% of the kind of 5,000 market that just -- that choose to cover GLP-1s for obesity. And by doing that, they're saying, you know what, these meds work, but they're also worried. What they're worried about is people not getting the behavioral support alongside the med. An injection doesn't get to know you, an oral medication doesn't get to know you.

They're worried that GLPs can help on the quantity side, but not the quality side. So they lean on us to deliver that behavioral support to maximize the potential of these medicines and support their employees who want to try getting off the medicine.

In many ways, they view us as a GLP-1 maximizer. Like, look, if I'm going to cover these meds, I need to do it with sophistication, and I need to maximize the investment dollars and avoid waste. So that's category 1.

And they'll work with us on GLPs, but they'll also cover the broader solutions. Category 2, they just don't cover. Now employers by disposition, they want to find a way to say yes, but there are employers out there that look at the cost profile, and that's 57% of the market that say, I can't. I want to, but I can't.

And they look at the core Omada offerings, our clinical outcomes, our economic outcomes, and that's a buying decision. And what's helpful as well is it's an answer to their employees who are e-mailing them saying, you know what, my friend at their company, their company covers that bound.

Now they can offer something. It's like, look, we can't afford that now, but we're going to introduce you to Omada. And they like that we have the GLP-1 care check because they know that today's strategy in this market is not going to be tomorrow's. So if they do start to put the toe in the water to covering the medicines, they know Omada has longitudinal value as a partner to them.

And from a member side, the Care Track is all about taking these medicines, leveraging the inertia that these medicines can offer. When someone has a BMI of 43, you can create a really positive psychology of rolling the boulder down the hill, creating success. And our job is to seize that, work with them to maximize on therapy weight loss and listen to their goals if they want to get off the med, have an honest conversation that look, that's going to be hard, but it's not your destiny.

We need to work together in the on-therapy window to help enable your chance of success in doing that. And so that is the Care Track. Thousands of little details make up the Care Track because every member journey is unique. And we're proud of the results.

For enhanced Care Track, we're seeing 28% greater weight loss than without the enhanced Care Track. And looking at discontinuation, we're watching the members that have told us, hey, I'm going to get off the med. I want your support in keeping the weight off.

We've published 12-month data showing a weight change of 0.8% at 12 months. If you look at the real -- the RCT evidence on what should have happened in med discontinuation and absence of support, they should have regained about 11% to 12%. So this is about listening to patients' goals, saying, perfect, let's work together. That doesn't have to be your destiny to regain. If that's your goal, let's do what we can to support that.

So this is a really neat opportunity. I mean if I think of one of the many marks that Omada wants to leave on humanity, it's making sure that we best leverage these incredible tools in the toolkit and support our customers with the complexity in the space there.

And we think that, that capability and that depth of capability is really reflected in the progress and what's now the 4Gs here. So again, preliminary unaudited results that we put out on Monday, $257 million in revenue. That's 52% year-over-year revenue growth. So that's -- I think that's -- yes, us being proud, but equally, that's our customers saying, we trust Omada and Omada is offering something that we really need.

And then we're making progress across the P&L. I mean if you look at adjusted gross margin percent, LTM 3Q '25 at the upper 60s. You can look at the progress from 2022 being in the 50s. That's the care team platform that's leveraging technology. That's some of the promising early signs of AI, and we're committed to our long-term margin target of 70% plus.

And then progress on the bottom line, too, adjusted EBITDA margin percent of LTM 3Q '25 minus 2.4%, whereas in 2022, it was nearly a negative 70%. And then we posted our first adjusted EBITDA positive quarter in the third quarter of 2025 to the tune of $2.4 million. So proud of the revenue, proud of the leverage we're seeing across the cost of revenue and proud of the OpEx leverage as reflected in the gross margin progress here.

And so looking forward, there are 3 categories, if you will, of a growth algorithm for Omada. And so just to kind of explain because this is how we think about the business. This is how we underwrite any investment relative to growth. The first is covered lives. And so what that means is the 4 care areas, which of those can you sell or which lines of business? It's kind of a matrix, 4 care areas, self-insured employers, fully insured lines, government-sponsored is kind of the primary.

So efforts and unique strategies in each. The second is, great, you now have -- this is a benefit. How do you just continue to year-over-year, effort over effort, deepen your sophistication in sharing that this is a benefit that people should sign up for, and this is enrollment effectiveness because the more people, obviously, that enroll in any given deal, the better you're leveraging the sales and marketing resources that you've put forward to close that account, which is where the lion's share of the costs lie relative to the CAC.

So that's enrollment effectiveness. And then the third is engagement. How do we leverage these incredible technologies like AI. We launched an entire feature set called Omada Spark. Each year, we think how do we dream bigger, how do we leverage the scale that we have to ensure that every member that joins makes the program better for that next member.

And so that's engagement, where is the North Star of how engaging Omada can be and how we can best build trust for those members, deepen their engagement, deepen the value that we can provide to them, not just for today, but ideally for the life of that member. So those are the growth categories. And it's a wonderful moment in time.

I mean, if you pull up, there is a spotlight on chronic disease. There's a recognition that yesterday's care models do not best support patients in the spirit of improving their outcomes, in the spirit of improving the financial health of the country. And within that landscape, we feel great about the decade plus of investments we've made in building a differentiated care model. This is a de novo care model. This is a recognition that fee-for-service was just not unfortunately going to cut it for today's diseases. It works for yesterday's but not today's.

And then against that care model, we found a business model where our customers win, we win, we're aligned financially, and we're getting leverage with that business model. And I'm deeply proud as well of the leadership team we've brought in. I was in medical school of Shared at Harvard when I founded the company, prior to that worked in technology at Google. And the #1 remit I have is to pull 2 worlds that don't often sit together, get them in the same room and think how do we leverage the best of each to innovate on behalf of our core mission, which is, of course, to bend the curve of disease.

So that's Omada. Happy to be here at the first conference, proud of the progress, and we're dreaming big about what could be ahead of us here. So thank you so much.

Great. Thank you so much, obviously, the pre-announcement was very nice on Monday, 52% revenue growth, 886,000 members. As I think about back to the IPO, exceeding all of the expectations, can you maybe just spend a couple of minutes around what actually drove the outsized growth versus your expectation? And then how does that set you up going into '26?

Yes, sure. So similar to some of the themes I shared, it starts with a differentiated capability. That's kind of step one. Multiproduct GLP-1 care track that met the need 3 years ago ahead of the market, 30 peer-reviewed publications. And then a market that's fed up with yesterday's care reality. So I think those 2 really supported the growth. And then frankly, our 2024 investments in the 3 growth pillars that we underwrote supported 2025. And that's how we thought about the investments in 2025 for the next year.

One of the announcements you made on the third quarter was the decision to start prescribing GLP-1s. Can you maybe just walk us through why you decided to do it at this time? What the customer demand has been?

Yes. Why don't I start and then Wei-Li you pile on. So I think if we were to remain in a therapeutic landscape of 2 injectables, roughly the same price point, similar efficacy, we wouldn't need to prescribe. But that's not the era that we've just entered. If you fast forward, obviously, subject to approvals, we're likely to see single agonist, dual agonist, tri agonist, orals, multiple orals. In fact, if you were at Lilly's presentation yesterday, they highlighted 24 incretins in development.

That therapeutic landscape creates new questions and complexity for our buyers. They're thinking, well, it's not just how do I optimize these simple med regimens for lifestyle, it's how do I make sure that the right med is being applied to the right member at the right value.

And in order to provide that optimization, provide what they're asking us for, which is GLP-1 maximization of the value that those meds are providing, we needed to prescribe.

And maybe if I can add on to that, Sean, is we've always said also that what drives our road map for development across product is also a factor of what our customers are actually asking for. And what happened out throughout 2025 is we made headwinds, we made headway into the GLP-1 companion products market space with our Care Track. Our customers actually were asking us, hey, can you start prescribing? And it was a little bit befuddling for us, to be honest with you, because we were saying, gosh, the last thing that the market needs is another commoditized GLP-1 prescriber. There are thousands of them out there. And so as we began to hear more and more noise towards us about once you get in prescribing, we started talking to our customers about it.

And what they said is actually what we really, really want is for our employees and our members from the first prescription of their GLP-1 to basically have no gap getting into your GLP-1 companion Care Track. Because if you think about the journey of a member and an employee, they may get a prescription from their doctor that they've been seeing for years and years and years, and they may never find Omada and the support that they need to get the maximum outcomes and adherence and persistence support they need.

And so our customers are saying, can you put these things together? Can you close the gap? And certainly, we've responded to that, which led to the announcement of prescribing. But strategically also, we see that the prescribing and utilization of GLP-1s become far more nuanced and targeted over the coming years. And so there's both a short-term and medium-term strategic need for this.

Wei-Li, when I think about just different chronic conditions, and you're obviously talking about GLP-1 specifically, but do you see prescribing for other areas as well within chronic conditions where you could close that gap in care as well?

I mean, certainly, we've talked about this. We've been -- in our long-term strategy process, we always talk about, okay, what more value can we actually create for our members and our buyers and our customers. And we've talked about this one. We certainly are not here to announce anything broader from an expansion standpoint into other chronic conditions.

But it's probably not hard to understand that if we have success here, and we think we will, that it might be something that we consider in the future. But again, we look to our customers. And if they're pounding on their proverbial desks asking us to do it, we'll listen and we'll consider it.

So coming back to the Gs, we'll come back to GLP-1s for a minute here. How do you think about the drivers of long-term margin expansion and how GLP-1 prescribing plays into that?

Steve?

Yes, I can absolutely take that. As we've disclosed, we intend to price our GLP-1 offering, our prescribing offering at a premium to our current offerings in market. So as more employers uptake that product and they attach that, we're going to see weighted average ARPU lift across our book of business.

But with that, we're still seeing a tremendous amount of opportunity across our cost profile. There's still a lot of efficiencies to gain from our cost of revenue across making our care teams more efficient, continuing to leverage within our supply chain across our device ecosystem. And then really, I think next year in 2026 and '27, we'll be able to really start to harness AI and make the cost profile more efficient the board.

So let's spend a minute there when we think about artificial intelligence, that's been brought up pretty much at every single presentation here this year. Can you maybe talk about where you would see the efficiencies with artificial intelligence and what potential cost savings you could see?

Yes. I can start with maybe the member experience. I mean we've launched a number of AI features that are member forward. The umbrella name for that is Omada Spark. And we're proud of a lot of them. I mean they include nutrition, motivational interviewing Yesterday's Omada Care team member, if they got a member saying, hey, any idea for a healthy fish recipe. We have a library.

They think about the context of how they work with that member and provide something. Today, we leverage our nutritional intelligence agent. They almost delegate that work. There's no reason that a person needs to be doing that work. In that nutritional intelligent agent, it's been trained and fine-tuned over 3 million foods, 150 countries, and it has context of that person's clinical status, their dietary preferences already.

And so that adds not only efficiency, which is important, but the trap with efficiency is you can't do it if it doesn't increase personalization, especially with the model for the more engagement you get, the more revenue you get. And so that's one example. And the goal is to take hundreds of those little tiny products, features and use cases and add them up to a differentiated experience for our members.

On the third quarter, you talked about 2026 being an investment year, and we should expect a slower ramp in EBITDA post the positive results on EBITDA in the third quarter. Can you maybe just walk us through what some of the investments are and how we should think about them going into '26?

Yes. I think Sean teed it up really nicely at the beginning. It's the year of the Gs. So you're going to see a lot of investment across the AI initiatives and then as well as standing up our prescribing capabilities. We think both of these areas are like critical like moments in time to make these investments so they can drive further durability in our revenue growth long term. What I want everyone to just take away is like we remain extremely committed to hitting our 70% gross margin target.

We did 68% in Q2, another 68% in Q3. So we're getting pretty close to that and then hitting our 20% plus adjusted EBITDA margin target in the years to come. And 2026 and '27 will be stepping stones along that path.

Yes. You've heard us in the company say, look, the core compass here in the North Star is balance and progress, and those are the 2 words to emphasize.

You've talked a lot about the crucial effective behavior management and program adherence to the long-term success for people on GLP-1s for weight loss and especially as people want to try to get off the drug or wean themselves from the drug.

In your customer conversations, are you seeing a cohesive process in combining prescribing, behavioral management into a single offering? And do you actually see people in their ability to come off the drug?

Yes. Maybe I'll take that one. So there's a couple of things in that question around do we see a cohesive offering? Do we see success in people coming off GLP-1s? So let me kind of parse it out a little bit. As mentioned, our customers see an opportunity and a need to actually combine prescribing just alongside a GLP-1 Care Track, and we feel positioned well to be able to do that. And because they see it that way, it's probably not surprising or not hard to think about maybe there'll be a bundled offering there because they want to buy them together. They synergistically work.

We believe we'll be able to demonstrate better outcomes, persistence and engagement for patients or members. So we haven't disclosed pricing or anything like that. I look forward to maybe doing some of that a little bit later in a few months. But again, not hard to imagine that there's some sort of bundling offering there too as well.

I think it's also probably an important time to reinforce also that while we're certainly expanding the foundations around our GLP-1 offering with prescribing in a companion care track program, it really is continuing to serve as a gateway to actually talk about the rest of our cardiometabolic platform offering to as well. And so we continue to see momentum in both those particular areas as the broader cardiometabolic landscape begins to take center stage with our buyers.

Sean, you touched on what Lilly talked about and the number of different iterations of GLP-1s that will come to market. Obviously, one that everybody seems to be very excited about is the recent launch of an oral GLP-1, right? We're only 11 or 12 days into that now. How do you think that, that changes the landscape in the market? I know a lot of times people don't like the injection. If you travel per se, work, carrying around has to be refrigerated. Does that really change the opportunity in the marketplace?

Yes. I mean more tools, we believe, correlate with more demand and more GLP use. And I mean, we ran a panel on Monday and one of the panel participants, she runs the pharmacy practice for Willis Towers Watson. And she was talking about her customers and what they feel and what they're thinking about with orals. And this is like, wow, increased demand for my employees and increased spend and an increased need to find paths to support them.

And if I am going to cover them, maximize the benefit of that. So it's fascinating. I mean, at the end of the day, I think more tools, the better. Equally, what we need to do per prescribing has helped rationalize some of the complexity there. Like when specifically should an oral be the right medicine? It could be lifestyle, it could be travel. It could be biology, it could be what's working for you. It could be side effect profile. And that's a job that I think we need to do to serve.

Yes. And maybe if I can add on to that, sometimes when people ask us, hey, Omada, what is the effect and impact of orals on your own business in terms of your GLP-1 Care Track demand? Well, certainly, we perceive every new formulation, every new modality of administration to kind of be a growth driver for the overall GLP TAM.

I think they said yesterday, both Novo and Lilly said about 10% of people that are probably clinically eligible are using GLP-1. So I think the headroom there is still significant. So we certainly consider that to see continued momentum and growth for us. But I think the other thing that they're sometimes asking about is if the price of orals continues to come down, what is the willingness for employers and payers to continue to pay for a GLP-1 Care Track or service like Omada?

And the best way to maybe understand it is I think maybe the question is a little bit misplaced. Because it misunderstands what employers are actually trying to achieve and what they're actually trying to pay for. And so instead of seeing Omada as an additional service cost on top of a falling price, the better way to understand the value proposition is that the GLP-1 care track by Omada is actually a GLP-1 maximizer. It's an amplifier. We just released 12-month outcomes as well as persistent results, persistency results. And what you basically see is that we exceed basically what you see in real life on both of those dimensions.

And so when our buyers see that, they begin to see us as an enabler and a reduction of waste. And what that means to them is a reduction in the medium, long term in cost of care, ROI. And that equation is beginning to compute quite sensibly within our buyers. And so that's kind of how our buyers are going to understand what is that we're doing as prices...

Our understanding is in talking to employers, they want to cover these drugs. But at the end of the day, they would do what's best for their employees. But to your point, they want a return on their investment. They don't want to just pay for an expensive drug and not get that return. Really, the hope is that you're going to lower a lot of other metabolic conditions, right, not just the weight loss, but cardiovascular...

It's a cascade compounding ROI over the long term. And of course, health care costs for employers are growing astronomically year-over-year. They're seeing that and they're like, gosh, okay, how do I get the biggest return from my investment.

Yes. No, I agree. Let's move in the last couple of minutes to talk about your selling season for 2026. Through the third quarter, you've closed multiple clients, representing 180,000 eligible lives with double-digit year-over-year growth in deal volume. Can you give an update on your conversations as you closed out the year? And where do you expect the momentum kind of going into next year?

Right. Certainly, lots of curiosity, getting lots of questions about that throughout the conference, understandably so. Obviously, in our Q4 kind of full year '25 earnings call in March, we'll disclose more details about that. So mark that on your calendars. We look forward to talking to you.

I guess I'd reinforce what we said during Q3, we're seeing momentum. We like what we see in terms of the deals in pipe. We ended the last year basically closing more both on deals and covered lives we did in the year before. So that's good. We continue to see progress in our multiproduct sales percent closing. So we feel like the momentum was good in '25, and that's really important because it sets the foundation for 2026.

And talking just about the multi-signings, I think you've talked about 75% of new signing clients offered more than one of the conditions. Is that -- can you just give us a baseline of what you've seen historically? Is that unusual for what you've been able to sign in '25?

So certainly, we continue to make that a particular focus, again, because of the comorbidities of people unfortunately diabetes have hypertension, obesity, so on and so forth. And so what I can characterize is what we said before, it's been pretty consistent, 40%, 50% of our new deals that we close oftentimes on average are multi-program sales, and we certainly continue to see those multiproduct sales manifest in the closing of the year as well.

You talked a little bit on the different relationships you have from a payer perspective, and you touched a little bit on Medicare Advantage. Can you spend just a minute talking about the current administration who seems to be really focused on make America healthy again. We're looking at them covering GLP-1s, right, going into 2026 this year. What are the opportunities you see there? And if there's any conversations that you're having with the administration that you could share?

Well, they've certainly given us a lot of reading material, and I'm sure you all do in December with balance, Access, Tempo, 5 other programs. So I love the spirit more broadly, there is more of a focus on chronic disease in the care areas that we serve right now from the government than ever in my decade plus of leading the organization. And so that's exciting.

There may be opportunities to seize with CMS. Obviously, there are a lot of details forthcoming even with access, the price has not been announced. So we've rolled up our sleeves. We've learned. We positioned ourselves for that if there is some to do there, we're excited to do it, but there's details forthcoming. But more broadly, the conversation is helpful. The conversation and dialogue on chronic is really at a high.

And my guess would be when I just look at that small percentage of Medicare Advantage and I look at what's happening with cost trend in Medicare Advantage and how much is tied to chronic conditions, do you see those opportunities? Because I mean, a lot of them are the same payers that you see in the commercial market.

Yes, absolutely. I mean the earlier 5, 6 years ago conversations I'd had with MA is like, I don't really know if the tech environment for our seniors is there. Today, it's yes, our seniors need technology, and we can imagine care services that are digital that work for them. So it's a different nature of conversations, and we view it as a growth driver.

Sean, we only have 1 minute left went very quickly. Just if we're sitting here together next year, what do you hope that investors will appreciate about Omada that maybe they don't today?

Yes. I mean I think it's us continuing to lead in innovation, innovation across GLPs, recognizing that it's a very complex landscape, both in how you cover them, how you best support the member and that complexity requires sophistication and somewhat of an operating layer. And I think I like what Wei-Li said, it was called you GLP. What my colleague GLP said, what Li said, GLP-1 maximizer. And so like we are ambitious. We feel good about the lead there.

And sometimes when you're in the lead, the goal is to make the moat even deeper. And so I'm excited to share a lot of updates at the next conference on that strategy.

All right. Great. Thank you very much, everybody.

Super. Thank you all.

Good day, and thank you for standing by. Welcome to the Omada Health Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Allan Kells, Head of Investor Relations for Omada Health. Please go ahead.

Thank you. Good afternoon. Welcome to Omada Health's Third Quarter 2025 Earnings Call.

Joining me today are Sean Duffy, Co-Founder and CEO; Wei-Li Shao, our President; and Steve Cook, our CFO.

Before we begin, I'd like to note that we will be discussing non-GAAP financial measures that we consider helpful in evaluating Omada's performance. You can find details on how these relate to our GAAP measures, along with the reconciliations in the press release that is available on our website.

We'll also make forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in the risk factors found in our filings with the SEC. Actual results could differ materially, and we assume no obligation to update these forward-looking statements.

With that, I'll turn the call over to Sean.

Good afternoon, everyone, and thank you, Allan, for the introduction. I appreciate all of you for taking the time to join us today.

Let me begin with highlights from our third quarter, which was another strong step forward for Omada. Total members climbed 53% year-over-year to 831,000. Revenue grew 49% year-over-year to $68 million. GAAP gross margin reached 66% with non-GAAP at 68%, both up sharply from Q3 last year. We tightened the bottom line, reducing our net loss to $3 million versus $9 million in Q3 '24. And for the first time, we delivered a positive adjusted EBITDA quarter with Q3 landing at $2 million compared with a $5 million loss at Q3 a year ago.

These numbers are encouraging, but the real story is the impact behind them. One of our GLP-1 Care Track members recently told us, having struggled with weight for most of my life, I realize there is no quick fix. GLP-1 medicines are helpful, no doubt, but I needed to develop tools and a mindset geared toward my long-term success. Omada has been very helpful in giving me thinking about what I can do to better my life now and in the future. Stories like that remind us why we're here to deliver evidence-based care between doctors' visits, care that weaves together clinical services, wraparound support for next-generation therapeutics such as GLP-1s and cutting-edge AI-driven experiences.

Our long-term mission at Omada is simple but bold, bend the curve for the more than 150 million Americans living with chronic conditions, such as prediabetes and obesity, diabetes, hypertension and musculoskeletal disease. We pursue this mission on behalf of employers and health plans that seek healthier populations at lower costs. And during the third quarter, I believe, we demonstrated meaningful progress towards this mission.

First, innovation remains front and center. Today, we announced prescribing for anti-obesity medications within our GLP-1 Care Track as a planned option for our clients. We believe it addresses many of today's market needs and positions us to better support the next wave of oral and injectable GLP-1 therapies, which, we believe, will span various price points in the future.

As those therapies evolve, so will questions employers face, chief among them, in addition to lifestyle support, how do we help ensure the right member is on the right medication at the right time. Our answer at Omada combines behavioral intelligence, which are learnings from health metrics, readiness and engagement data from serving more than 100,000 GLP users, behavioral support to drive outcomes well on the medicines and sustainability well not and flexibility that enables employers to tailor their GLP-1 benefit strategies against their unique needs.

The customer conversations we've had as we've shaped this offering have been clear. Many customers want help thoughtfully managing GLP-1 spend while preserving clinical value. They want a partner that can be configurable and flexible as they evolve their benefit strategies year-over-year, and they want a partner who is built for scale. Our new capability squarely targets these customer needs.

Beyond product innovation, in Q3, we deepened our research. August marked our 30th peer-reviewed publication, highlighting significant savings from our joint and muscle health program. We also published data from our weight health program, showing members in the analysis largely maintained weight on average 1 year after discontinuing GLP-1 therapy, evidence that challenges the narrative of inevitable rebound weight gain.

We are also proud that the business has been scaling efficiently. Through the first 9 months of 2025, revenue is up 51% and membership is up 53% versus the same period last year, while operating expenses rose only 24% and cost of revenue only 31%. That gap shows our ability to grow on top of strong foundations. Key drivers of that operating leverage include years of investment in technology, clinical research and streamlined operations, plus a deliberate multiproduct approach. One sales team currently sells 4 programs, so clients can work with a single trusted partner instead of managing different point solutions. The result is leverage for Omada and often loyalty from our customers.

As we look into 2026, we're excited about the path ahead. Our annual planning has surfaced 2 clear investment themes, making 2026 what I like to call the year of the Gs. The first G is GLP-1s. We plan to invest in both the prescribing offering announced today as well as other improvements that can deepen our solutions across the GLP-1 life cycle. The second G is GPTs and broader AI. We plan to keep weaving AI into many layers of our program, including more tools for members and the care team experience as well as leveraging these tools to drive internal productivity amongst our teams. We believe these investment areas can add value as we seek to widen our competitive moat and fuel sustainable, responsible growth.

Lastly, we were honored to welcome Dr. Tom Tsang as Omada's Chief Medical Officer. Tom is a physician, innovator and seasoned operator. More recently, Tom was the CEO and Co-Founder of Valera Health. He also sits on the boards of NCQA and Blue Cross Blue Shield of Kansas City. His expertise in clinical quality, value-based care and telehealth perfectly aligns with our next chapter.

In short, I believe the stage is set for an exciting moment at Omada. We're proud of this quarter's results and even more energized by what lies ahead. We have the privilege and the responsibility to dream big on behalf of the more than 150 million Americans living with chronic disease. And as we execute, we believe that one day, we can truly bend the curve.

With that, I'll hand things over to Wei-Li, who will walk through the quarter in more detail.

Thanks, Sean. Hello, everyone.

I'm pleased to share more details on our results and provide an update on our progress against our strategic pillars. Some highlights from Q3 include: we ended the quarter with 831,000 members, up 53% compared to Q3 of last year. This includes 79,000 net new members during the quarter and 259,000 year-to-date, which is more than any full year in our history. This number growth reflects continued multi-condition adoption, strong demand for our GLP-1 offerings and solid execution by our teams.

During the current selling season, we have seen healthy activity and continued interest in Omada's programs, especially our GLP-1 Care Track, which we believe can position us well for success in 2026 and beyond. This activity includes early sales traction through a large new channel partner that supports our full suite of current offerings. In 6 months, we have already closed multiple planned launches through this channel with new and upsold customers, representing an estimated 180,000 individuals and closing season isn't yet over. It's also noteworthy that 75% of these customers have chosen to offer multiple Omada programs to their employees, underscoring the appeal and value of our integrated multi-condition platform.

Now I'd like to share our progress in the areas we view as our strategic pillars: innovation, programs that work and our multi-condition platform versus point solution approach. These pillars guide how we innovate, engage members and partner with customers. Starting with our first pillar, innovation. We invest in innovation to enhance the member experience, strengthen our competitive position and scale the impact of our care teams.

Earlier this year, we introduced OmadaSpark, our AI-powered agent that interacts directly with members alongside our human coaches. We are pleased with how it's been received so far and early observations showed that members who interacted with the nutrition assistant demonstrated higher levels of ongoing engagement and were more likely to return to the Omada app compared to those who had not yet used the tool.

We've now built on that foundation with Meal Map, an AI-driven nutrition experience launched last month. Meal Map combines instant nutrient feedback with personalized guidance from our care teams to help members understand the quality of their food choices, not just the calories. It helps members move beyond restrictive dieting towards sustainable evidence-based habits that promote energy, digestive health and cardiometabolic benefits. Early observations include signs of higher engagement and more consistent meal tracking compared to traditional approaches with positive feedback both from members and clinicians. Together, OmadaSpark and Meal Map show how we're using AI to deliver more personalized and actionable educational experiences.

As Sean indicated, we also view our incremental investment in GLP-1 prescribing as an innovative way to address customer needs and potentially widen our moat. The next era of obesity therapeutics may be defined by a continuum of options, oral and injectable, first-line and maintenance, single and dual agonist in multiple indications, thus creating more complexity for employers, providers and members alike. Managing that complexity requires more than just prescribing. It demands coordination and support to help ensure people start the right therapy, stay on it and transition smoothly as their needs evolve.

Our prescribing offering will be built for that environment with an integrated approach that considers the full journey of a patient from the time of prescription to the everyday moments. We will leverage behavioral intelligence to support prescribing decisions and medication management, helping ensure the right members start, stay on or safely discontinue therapy. Prescribing will be delivered through an integrated program experience that supports our members across all 50 states.

For more than a decade, Omada has focused on the moments that often matter most, the time between doctors' visits where real life happens. By integrating prescribing with our between visit care model, we aim to close the gap that often exists between a doctor's guidance and a member's daily actions and help to ensure that every part of the care plan continues where it matters most. Increasingly, we believe our customers recognize this, too. Many are asking for prescribing, not because they need another vendor that can write prescriptions, but because they know what happens after prescribing.

Omada's engagement, data-driven coaching and human connection is often where real behavior change happens. By aligning clinical care and behavior change, our approach to prescribing will bring these forces together and aim to deliver lasting metabolic improvement and help bend the curve of chronic disease. We look forward to sharing more as we approach its planned launch in the first half of next year.

Our second pillar, programs that work, focuses on programs grounded in clinical evidence and behavior change science that are designed to produce measurable and lasting results. A clear example of this is our GLP-1 Care Track, which supports members before, during and after GLP-1 therapy. In September, we released results from a 12-month discontinuation analysis showing that members in the analysis who stopped GLP-1 medications but stayed in the Omada program largely maintained their weight 1 year after GLP-1 discontinuation.

Participants in the analysis experienced a mere 0.8% average weight change 1 year after discontinuation with 63% maintaining or continuing to lose weight during that period. That compares to the 11% to 12% average weight gain seen in key clinical trials without ongoing lifestyle support. This analysis was completed as part of the Omada Insights Lab ANSWERS initiative, which examines and shares real-world data from Omada's behavior change weight health programs. These findings highlight the value of Omada's human-led and digitally enhanced care model and demonstrate our ability to deliver outcomes that extend beyond medication use.

We also reached another important milestone this quarter, publishing our 30th peer-reviewed manuscript. The research analyzed our Omada for joint and muscle health program and found that members using Omada's virtual physical therapy on average had lower medical utilization and costs compared to in-person physical therapy, even after accounting for program costs. In this analysis, median per member per month savings exceeded $100 in the first 6 months and the total MSK-related savings topped $1,000 per member at both 6 and 12 months, delivering an approximately 1.8x ROI. This research adds to our growing body of evidence showing that virtual integrated care can drive both clinical and financial value for our customers.

Our third pillar is the power of an integrated multi-condition platform. We believe customers increasingly recognize the limitations of point solutions and the advantages of a single scalable partner. We continue to see growth in multi-condition adoption. In addition to the early multi-condition success I mentioned with our new large channel partner, another good example from Q3 was our expansion with a consultant partner through which employers representing approximately 110,000 benefit-eligible employees will now have the ability to provide those employees with access to Omada's full cardiometabolic suite. This partner expanded from offering only our MSK program to embedding our full cardiometabolic suite into the offering they make available to their clients.

In summary, our performance this quarter reflects the strength of our strategy and our ability to execute.

And with that, I'll turn it over to Steve to discuss the financial results in more detail.

Thank you, Wei-Li. Hello, everyone.

Today, I'm going to walk through our results and our updated outlook. Fundamentally, Omada makes money by demonstrating the value of our solutions to employers, health plans, PBMs and other payers who then pay for Omada on behalf of their employees or members. As individuals enroll in our programs, we begin charging a monthly membership fee based in part on member engagement. This model can create an enduring revenue stream with good visibility, and we saw that reflected in our Q3 performance.

As Sean and Wei-Li mentioned, our members grew 53% to end Q3 at 831,000. Revenue in Q3 was $68 million, up 49% year-over-year. The primary factors that drove our member and revenue growth include strong adoption of our GLP-1 programs, increased penetration of multi-condition customers and increased effectiveness of our marketing campaigns.

Moving to gross profit. Our Q3 GAAP gross profit was $45 million, up 58% compared to Q3 '24, and our GAAP gross margin was 66% compared to 63% in Q3 '24. Q3 adjusted gross profit was $46 million, representing 56% growth year-over-year. Adjusted gross margin was 68%, an improvement of approximately 300 basis points year-over-year. A key driver of our gross margin progress was the efficiency gained through our self-built care team platform, which we have continued to enhance by adding capabilities such as an AI care team tool designed to help our care teams provide more efficient and effective care.

Moving to operating expenses. Our GAAP operating expenses were up 28% year-over-year to $47 million in Q3. Adjusted operating expenses were $44 million in Q3, up 26% year-over-year. This growth supported 49% revenue growth, demonstrating strong operating leverage that has been driven by operating multiple conditions on one platform that can be sold by a single sales force, scale created through our channel partners in our B2B2C go-to-market model and spending discipline as we focus on profitability. As a result of this leverage, we have made good progress towards sustained profitability.

Our GAAP net loss in Q3 was $3 million compared to a $9 million loss in Q3 '24, representing net loss margins of negative 5% and negative 20%, respectively. Our GAAP loss per share in Q3 was $0.06 compared to a loss of $1.18 in Q3 '24. Adjusted EBITDA in Q3 was $2 million, which compares to a loss of $5 million in Q3 '24. Our Q3 adjusted EBITDA margin was 4% compared to negative 11% in Q3 '24. We are very pleased with our narrowing net loss and our first quarter of positive adjusted EBITDA in Q3, which has been achieved through our focus on building a scalable business in a disciplined manner.

As Sean discussed, we are making investments heading into 2026 while remaining focused on managing spending and continuing our progress towards sustained profitability and our 20% plus long-term adjusted EBITDA target. We aim to meet an important moment in a dynamic market by investing responsibly in areas such as prescribing, additional GLP-1 support, AI and other product enhancements that have potential to widen our moat, deepen our differentiation and position us for durable growth in the years ahead.

Moving to our balance sheet. We ended Q3 with cash and cash equivalents of $199 million compared to $223 million in Q2 '25. The decrease was driven by us paying off our $30 million of debt, partially offset by our positive cash flow in the quarter.

Moving to guidance. We expect 2025 revenue in the range of $251.5 million to $254.5 million, up from a prior range of $235 million to $241 million. The midpoint of this range reflects 49% growth over 2024. We expect 2025 adjusted EBITDA in the range of negative $2 million to breakeven, up from a prior range of negative $9 million to negative $5 million. The midpoint of this range reflects an improvement of approximately $28 million compared to 2024.

In summary, we are pleased with our Q3 performance, which demonstrated continued momentum in our business and the scalability of our model.

With that, we'll now open the call for questions.

[Operator Instructions] Our first question comes from the line of Lisa Gill from JPMorgan.

Congrats on the great results. Can you spend a few minutes just talking about prescribing of GLP-1 around, one, the fulfillment price? Will you actually be fulfilling the drug? Will it be -- they'll be bringing the coupon or the prescription to the pharmacy? Just if you can talk about this new initiative that you have today and how that will play out.

Yes. Certainly, Lisa, this is Sean. Thank you for the question. Good to hear your voice. Let me just first share, we're very excited about this. We view it as a next evolution of our GLP-1 Care Track. So let me just describe a little bit more on the why behind prescribing, and we can answer some of the tactical details you highlighted here. First and foremost, any time we do something new to Omada, we listen to customers, we listen to members.

And at the customer level, they're seeing what we're seeing and what we highlighted in the opening remarks, which is a new era of obesity therapeutics, different medicines, different form factors, different price points. And this creates a new need to support our clients and our members with managing the complexity of medication optimization alongside the lifestyle support that they know Omada to be great at. So we think this creates a new world where Omada can serve to support the right GLP for the right person to deliver additional client and member value, and that's really germane to the mission to bend the curve.

Specific to some of the tactics, actually, this will be an integrated experience within the Omada care program, but these will not be compounded meds. They'll be branded meds fulfilled by the pharmacy of the member's choice, and it will be an enterprise model working specifically with clients and plans. And I don't know, Wei-Li, you have anything to comment on top.

Yes, Sean, just to add on top of that, I believe, Lisa, you also asked a question about pricing in there, too as well. As we just only announced the capability today, there's nothing to share regarding pricing. But what I can say about that is that it will be incremental pricing on top of our monthly chronic condition management fee. The strategic intent, of course, is to make this pricing not only accretive on the top line for revenue, but also accretive to margin as well.

Just as a quick follow-up there. I mean, we saw Trump making an announcement on TrumpRx talking about GLP-1s in roughly the $149 range. Should I be thinking that you're going to have the opportunity to offer these at a pretty substantial discount?

Look, on the announcement, we believe that today's announcement is really a neat moment and perhaps a transformational moment for the field of obesity. And it's almost a serendipitous that it occurred on the day that we launched a prescribing solution because as shared, we've been looking toward a world with different meds, different price points, perhaps even different price points at different doses with different indications. That world creates a lot of complexity for buyers. That world creates an opportunity to simplify that for buyers and members. And so that's germane to the news we announced today. And we're thrilled by it. I mean, at the end of the day, lower prices enables broadened access. And we think that's a great thing for the world and are really heartened with seeing that news.

Yes. Lisa, thanks. And maybe I'll just add on to that a little bit just because all this news, of course, is just fresh off the page. And as it relates to will we be able to direct patients towards this price. It always has been, as we've been over the last year, talking to customers and developing our prescribing plus behavior change lifestyle intervention program, which we again announced today, always has been the intent that we would help patients or what we call members find the best price because we know access and affordability is important.

But again, all this information is fresh off the newswire. And so we're going to have to see exactly how the price follows through from Medicare fee-for-service over to Medicare Advantage over to the commercial segment. That's typically the flow, but we'll have to see if indeed it pans out that way. And we feel incredibly fortunate that we are poised in this position to be able to leverage what we think could be a transformative moment in obesity care.

Our next question comes from the line of Craig Hettenbach from Morgan Stanley.

Just following up on that and understand you said it could be accretive to revenue and margin. Can you just talk even high level about just kind of investments that maybe you need to make to kind of get this off the ground and how you think about that implications for 2026?

Craig, this is Steve. Absolutely, thank you for the question. We're not talking through specific numbers at this point. We're just at the tail end of our or the end of our 2026 annual planning process. Obviously, to stand this up, it's going to require some investment, namely across our engineering and our product organization as well as our sales and marketing teams. So as we think through the go forward here, we're going to plan to provide more specific guidance once we get into the March call and to be able to stand up this functionality. But this has been on the back of our health plan customers, our PBM customers asking us to stand up this functionality. So we do realize that it's going to be an investment that we're going to need to make in 2026.

Got it. And then just separately, a question on the selling season. Last year, I think 50% of new customers started with 2 conditions or more. Just trying to get a sense in terms of is that still the trend in terms of this year? And anything that's standing out 1 year to the next in terms of what's really resonating most with customers this year?

Yes. Craig, this is Wei-Li. Thanks for the question regarding the multiproduct penetration. You're correct. We've said historically that we've seen quarters where closed deals for new business and upsell have far exceeded 50%. We continue to press on that, as you might imagine, and we continue to make progress on it. The results in the selling season so far, I mean, we're a little more than halfway through.

But if you look at Q3, we're pleased with the progress, and we continue to make traction against our multiproduct sales. And maybe I'll comment too a little bit on the pipeline, some of you probably are wondering about that, too as well. In Q3, we're seeing double-digit volume deal growth Q3 to Q3 last year. So we like what we see. But of course, the selling season is not over yet. And our sales teams, you can bet, are busy closing out the year as strong as possible.

Our next question comes from the line of Richard Close from Canaccord Genuity.

Yes. A couple of questions here. First, congratulations on the strong results. Just maybe a follow-up on the GLP-1 and maybe, Steve, how you're thinking about those investments? Should we assume that you're able to, with some of the AI initiatives and whatnot, keep gross margins in the ZIP code of 68% even with rolling out this new offering or prescribing?

Yes. No, absolutely, Richard. Thank you for the question. As we've committed to, our goal in the future is to get to 70% annualized gross margins. And a lot of the investment that we intend to complete next year is actually going to hit in operating expenses across sales and marketing and R&D. And on that front, we remain committed to hitting a 20% plus EBITDA margin, which we're going to stair step into over the coming years.

We do view 2026 as a key investment year for us. Again, we're feeling a tremendous amount of demand to stand up this prescribing ability to stand up additional functionality within our GLP-1 offering as well as, per your comments, continuing to invest in AI, which not only has the ability for our care teams to become more efficient, but also drive additional ARPU and revenue as it has the ability to enhance product personalization and keep our members in program longer term.

Okay. That's helpful. And then just on the recent large partnership or CVS launch. Those clients that you talked about, are those launching January 1 and then the consulting would that arrangement launch January 1 as well?

Richard, this is Wei-Li. I won't comment specifically to the performance with CVS. We have built pipeline. We have closed deals. And yes, because it's a closing season, as with deals that we closed this year, including ones that we may be closing with CVS, you can expect that most of them, the overwhelming dominant majority of them will be launching in the January time frame consistent with what normally happens there.

Our next question comes from the line of Elizabeth Anderson from Evercore ISI.

Congrats on the quarter. I was just wondering, maybe to piggybacking on the back of that one a little bit. You're obviously -- you're talking about these investments, and that makes very -- a ton of sense in terms of the opportunities available to you. Can you remind us sort of if we think about the typical seasonality, does that change with any of these new initiatives that you're -- you've been talking about and launched and are planning to launch? Because as I'm thinking about it, if I kind of flow through some of the margin outperformance year-to-date with some of the typical seasonality, I can get sort of well above your guidance range. So I just want to make sure I have that down correctly.

Yes. Elizabeth, good to hear from you. This is Wei-Li. Regarding some of the new investments and the announcements, specifically, for instance, around prescribing and how we're going to integrate that with our GLP-1 Care Track. Regarding the typical seasonality on selling, of course, again, we've only just announced it. We will begin -- commence selling in the early part of next year. And we anticipate that like any other new offering that is as significant potentially as this one, it will follow the normal selling cycle. And so that selling cycle in the enterprise world, B2B world could be anywhere from 6 months, 12 months, 18 months depending upon the client. So you would expect that as we do that, we'll follow that normal selling cycle. And so they're unlikely to be immediate sales because we've got to move through that motion.

Elizabeth, I would just add in terms of specifically on your guidance question and seasonality. Historically speaking, Q4 is a little bit slower as we get towards the holidays. So we're -- while revenue is sequentially increasing up from $68 million to $69 million on an implied level, that's mostly due to just going into that back half into Q4 and getting into the holiday season. So we're going to spend the rest of that Q4 really building that pipeline and make sure that we hit 2026 strong out of the gate.

Our next question comes from the line of Saket Kalia from Barclays.

Congrats on these results. Sean and Wei-Li, maybe for you folks, specifically on going back to sort of the GLP-1 mechanics. Maybe the question is, is this really geared towards existing subscribers of your life cycle management tools? Or is this something that's really meant to pull through new subscribers of those tools? So certainly understand that the economics for the new offering is still very much TBD. But I'm kind of curious what the strategy was with sort of the core business.

Yes, for sure. So thank you so much for the question. This is Sean here. So this will be a new capability that can be turned on and, of course, offered to existing clients. So clients that offer our current GLP-1 Care Track solutions, obviously, this is something we're going to discuss with them against the value prop that we described to simplify their members, their employees' experience. And equally, it's something that we'll work to bring forward to net new clients as well. So it's going to be a combination.

Equally, I commented in my opening remarks on the importance of configurability, and I just want to punctuate that. What you find in the employer landscape relative to decisions around paying for or not paying for GLP-1s is a lot of diversity. You have various benefit strategies, you have various goals. We think enabling a lot of flexibility for these clients becomes a strategic differentiator. So if you want to support Omada without prescribing, you want to add prescribing, we have flexibility there and a number of permutations within. So we're excited to really meet this unique moment where there's a lot of dynamism at the client level relative to discussions and strategies, and we expect it to continue to change and to have flexible capabilities alongside that, we feel really meets the needs of today.

Got it. Got it. That makes sense. Maybe for my follow-up for you, Steve. It was another quarter of accelerating member growth year-over-year. And maybe it's tough to break out, but if you can, can you just talk about sort of how that member growth looks like for the GLP Care Track versus your other offerings? And maybe relatedly, I mean, I think going back to the IPO, we kind of all assumed sort of a very consistent engagement rate. Maybe just to mark-to-market, has the engagement rate changed at all given all the new offerings that you have?

Saket, this is Wei-Li. Let me take that one as it relates to kind of demand volume across the multi-condition platform. Certainly, GLP-1s in terms of our GLP-1 Care Track has been a tailwind in our growth. We have seen significant growth year-over-year with that. So that is part of the growth story in Q3. But it's equally important, if not more important to say that we have experienced significant growth across the entire multi-condition platform.

As folks may recall, we think that's been driven by a couple of things. The first one of which is that we've always said strategically, our approach to the marketplace with GLP-1s, given GLP-1s is a gateway to the broader cardiometabolic conversation is that the discussion around GLP-1s is a tide that will lift all shifts, meaning that it opens up the door to also upsell or sell the new logos, the rest of our cardiometabolic programs in diabetes prevention, weight health, hypertension and diabetes management. And we're seeing that happen.

The second one is we've been committed to a multi-condition, multiproduct platform sales approach now for years. We've noted in previous disclosures, the progress we've made against that strategy last year. And what we're really seeing is that, that selling or that multiproduct penetration that we achieved last year through the selling season is really pulling through into 2025 this year, and we're seeing that materialize in the healthy growth and performance that we've seen in Q3.

Now as it relates to engagement patterns and how that's changed, we've always said historically that we've got 55% engagement still at the end of year 1. And then if you make it to year 1, you're highly likely to stay engaged with us at year 2, 50% are still engaged at year 2. And we're seeing that trend continue, and we're quite pleased with that progress. So hopefully, that answers your question and backs into a little bit of kind of what explains the accelerated growth in Q3.

Our next question comes from the line of Ryan MacDonald from Needham & Company.

Congrats on a great quarter. Maybe this one is for Wei-Li. Completely understand that and it's great to see sort of the demand across multiple conditions. But I guess during the current selling season, I'm curious, we're hearing a lot of conversations around basically GLP-1 sort of starting a lot of conversations and sort of enabling sort of broader multi-condition conversations. But I guess as a starting point, are you seeing more demand? Or are more of the conversations focused on using Omada as a GLP-1 companion solution or perhaps an alternative to solution to covering GLP-1s amongst your client base?

Yes. Thanks for the question. The short answer to that is we are actually seeing both. So when we look at the marketplace, what we observe are different segments of buyers with different needs. And once explained, I think, will be quite understandable. Certainly, there are a class of buyers or a segment of buyers who have chosen to reimburse or cover GLP-1s for obesity with their employees. And oftentimes, there is demand and interest not only in our GLP-1 Care Track, but also to make sure that they're supporting others within -- with cardiometabolic conditions that are not on a GLP-1, aka diabetes, hypertension, diabetes prevention and weight health. And that's where we're seeing demand and interest for a significant multiproduct sale opportunity.

However, there still is a large segment of buyers out there, both small and very, very large, that are sitting on the sidelines regarding their decision to cover and reimburse GLP-1s. Some of them have said no. Some of them are still actively considering it. And in those particular situations, their employees are still having demand to be supported for their weight health journey. And in those particular cases, of course, they're not purchasing or buying our GLP-1 Care Track, but they are interested to understand how the rest of our cardiometabolic suite can be helpful for them. And so we're seeing traction in both of those segments per se across our selling season.

And as I mentioned before, that has been our strategic intent and bet that GLP-1s, whether they're covered or not, is a tide that will lift our multi-condition platform shifts. And we're seeing that materialize. And again, we're seeing that in the closing season as well as our Q3 performance.

And Ryan, this is Sean here. Just this is a good moment to remind that our PBM partners, the contracts that we have with them enable the employers that work with them to deploy the broad suite of Omada solutions. And that's actually true for the employers that work with those PBMs that choose to cover GLP-1s. Equally, that's true for the employers that work with those PBMs who choose not to cover GLP-1s. So it really is a rising tide lifts all boats scenario.

And then sometimes we get asked, well, we are seeing some, although it's the exception rather than the rule, clients choosing to stop coverage of GLPs, that's an area that we have some active conversations as well because oftentimes, those clients really feel obligated to make sure that they don't leave their employees in alert here, and we can come in and really shine light on our support and our capabilities to support people having stopped the med. So again, all that stems back to the comments I made a bit earlier in that there's lots of different client demands and voices here and the configurability and the scale we have to meet a multitude of those demands, we believe, is a differentiator.

Super helpful color. Maybe as a follow-up, and I recognize we only had probably 4 to 5 hours to process sort of the Trump administration announcement here. But obviously, Omada has always been sort of very focused on the commercial side of the market. But part of the announcement today, obviously, is sort of the acceptance in terms of Medicare coverage for these drugs starting, I believe, in April of next year. That's -- I think there's about 40% of sort of the 65-plus population that would be clinically eligible for GLPs. Does that sort of size of opportunity sort of create an opportunity for Omada to sort of expand beyond commercial into potentially looking for a solution for Medicare over time?

Yes. Ryan, Wei-Li here. Super insightful question. You're correct in the sense that it could potentially represent an expansion opportunity for us. As a refresher to folks, we are heavily penetrated or focused on the commercially insured segment. Over the recent years, we have received significantly more interest and fast-growing interest in our Medicare Advantage book of business which continues to grow across our multi-condition platform. And of course, then there's Medicare fee-for-service, which is the most pertinent for today's White House announcement regarding the price reduction for GLP-1s.

It's interesting. We'll have to see how this evolves. But if history is any indicator, usually, when there's a policy announcement or change, in this case, we perceive to be very positive policy improvement or change with Medicare fee-for-service, that Medicare Advantage then takes note and follows suit. And then after that, the commercially insured segment then also follows suit watching Medicare Advantage. So it's early days to tell whether or not that cascade will actually occur. There's a lot of details to be worked out. Obviously, the pharmaceutical manufacturers probably will have a very clear position on this. That's just not clear yet, at least to me or to us. But if that's the case, rest assured, we'll be ready to catalyze and capitalize upon that opportunity.

Our next question comes from the line of David Roman from Goldman Sachs.

I wanted just to go a little bit broader here. There's clearly a ton of focus on GLP-1s. But maybe you could talk about how you're seeing GLP-1s drive pull-through in the rest of the portfolio? And anything you could do to help us break down the contributors to member growth this quarter. The math we're getting to is about 2/3 of the growth coming from your established franchise, about 1/3 coming from GLP-1. So any perspective you could provide there would be helpful.

Yes. David, Wei-Li here. I won't comment to the proportional or fractional split of the 1/3, 2/3. But what I can say or will say is that GLP-1, for instance, the GLP-1 Care Track volume still is a minority of our total new member as well as total member number. So hopefully, that gives you and others some indication. So the majority of our growth in volume is still coming from our non-GLP-1 business spread across MSK, prevention and weight health, diabetes and hypertension. And again, we don't think at least that, that is by happenstance or by coincidence. It is, we believe, a result of our strategy around multiproduct sales, which is, again, something we've been working on and pursuing for years now and is materializing well in the Q3 performance.

David, just one other key driver of overperformance in the quarter. Very consistent with Q2 is our efficiencies on the marketing front. We've been -- this has been a tailwind for us throughout the entire course of the year. And as we disclosed at the end of last year, we saw a 60% increase in marketing efficacy on the campaigns that we were sending as we just go out to more customers and are more targeted with our enrollment campaigns, we've been able to become just more effective at getting more folks in the door. So that -- we saw that momentum also continue in Q3.

That's super helpful. And I know you talked a little bit about growing engagement in response to an earlier question. But if you look at the trend in members, one of the things that I think is unique about what you've seen in the past 2 years is for a lot of businesses like yours, you see a big uptick in Q1 in members when you expand into new contracts. And then it kind of like peters off throughout the year as people try something, they don't repeat utilization. But you're sort of seeing the opposite effect of a big step-up and then actually continued incremental growth from there in members. So Steve, is that -- obviously, there's a dynamic there with product value proposition, but also marketing effect. Maybe help us understand a little bit better what's helping you diverge from what we normally see in businesses of sort of similar structure?

Yes. To make sure I understand the question, I think you're asking -- this is Wei-Li, by the way, asking about, hey, listen, most companies, and you could see this in the global app download data, especially with the Sensor Tower data have strong performance in Q1 and then just a downward slant to Q4 and then a strong repeated cyclical performance in Q1. We have -- it's true. It appears that maybe we have a little bit of a different trend. I think that what we've seen are a few drivers that have led to Q3 performance. The first one, of course, is back to the multiproduct. I mean this is a classic example of what you do in the previous year will either hurt you or help you in the following year, depending on how well you do, which means of the multi-condition kind of product penetration success that we've had in previous years, including last year's selling cycle paying off now in the back half of this year.

The second piece is what you mentioned that I'll pick up on, and we feel like you're correct, is on the marketing outreach or marketing enrollment rate performance side of things. As Steve alluded to a little bit earlier, we have, in 2024, saw a 60% improvement in enrollment rate performance. We committed back then that we'd continue to work on that, and we have, and we're seeing continued improvement in enrollment rate performance through the year, and that certainly has been a contributor as well.

The third and last piece I'd say is that we, for many, many years now, have been working on a, what we call a multi-campaign digital outreach strategy, complemented by a multichannel outreach strategy, for instance, digital signage on site as well as direct mail and all the other things you might imagine. And we feel like we've got a decent rhythm and cadence that not only supports at least we saw this year, a strong Q1, but also supports continued performance throughout the year as opposed to just cyclically just in Q1. And so we continue to experiment in that particular area. We're seeing some success, and we believe that, that also has been a contributor to what we've seen in Q3.

And David, this is Sean here. One other thing to just highlight is Q3 was a very innovative quarter relative to the member experience. We talked about Meal Map. We talked about building on top of OmadaSpark. We really took a big step forward in what we're able to offer to members. And we found that when we launch really exciting new product capabilities, that's, of course, attractive to the members that are already using Omada. Equally, that's interesting and attractive to folks that are just learning about Omada for the first time. So oftentimes, it gives us more to talk about in that first outreach, and you can really turn the product innovation into something that helps pull more people into your experience.

Our next question comes from the line of Gene Mannheimer from Freedom Capital Markets.

Congrats on the great results. Do you guys publish or disclose a product density number? Or said differently, you talk about the percent of members that are engaged in multi-condition programs and how that has trended, say, the last couple of quarters?

Yes, Gene, thank you for the question. What we have disclosed in the past is the percent of customers who are working with us in a multiproduct fashion. So at the end of last year, we had 31% of our total customers working with us across more than one product. And when we looked across the 2024 selling season, over 50% of our net new business started with us in a multiproduct fashion. So that's a metric that we're going to evaluate if we want to continue to disclose on a go-forward basis, but we'll potentially be updating that after we close out 2025.

Thank you. At this time, I'm showing no further questions. This concludes Omada Health's Third Quarter 2025 Earnings Conference Call. Thank you for participating. You may now disconnect.

Great. Well, good afternoon, everyone. I'm Craig Hettenbach. I cover the health tech and provider space for Morgan Stanley. Thanks for being here, day 2 at the conference. And we'll close out, I think, on a strong note here with Omada. So very pleased to have CEO, Sean Duffy; and CFO, Steve Cook. So welcome.

Thank you.

Just before I kick off here, I do have to read some disclosures for the Morgan Stanley. Morganstanley.com/researchdisclosures. With that, and again, on the heels of the IPO and your first quarterly earnings report, I think people are familiar with the story, but still love to just kind of high level, set the stage in terms of a brief overview of Omada, and then we'll dig into some more detailed questions. Perfect. Well, thank you.

Yes. Thank you so much, Craig, everybody, Sean Duffy, Co-Founder and CEO of Omada. Saving the best for last. Obviously, I hope you guys had a good day and enjoy the rest of your evening after we wrap here. So for those of you less familiar with Omada, just tell the quick story here. Omada is a between-visit provider. And that's in response to what I recognized while in medical school, while founding the company that the vast majority of the 156 million Americans with chronic disease are kind of stuck in this visit-by-visit model. And I hear my friends, practice and clinicians say like, look, I send these patients out of my clinic with diabetes, and I say, lose weight, take your medicines, exercise, eat differently, check your sugars. And I only -- I know that there aren't any support.

And that void is what we aim to solve and we asked, well, what is the solution to that void and a proactive day-to-day longitudinal care with a different care model, different reimbursement structure kind of ground up was really the answer. And so -- and that's what we endeavor to build in day 1. The care areas we're in are prediabetes, obesity, diabetes, hypertension, musculoskeletal care. And then we're proud of the progress, and we're here as a public company, just had our first earnings call and some key stats to give you a sense of the business. We have north of 2,000 customers for us that's either an employer, a health plan, an integrated health system in our PBM.

The -- when we use the word member at Omada, that means someone that's actively under support and that we're building on. And at the end of we had 752,000 members. And so the Q2 results was a $61 million quarter, which we're proud of, and that represented 49% year-over-year growth. So we like what we see in the business. We're in this remarkable moment not only in digital health, but in metabolic care. And I'm sure at some point, you'll ask about the 2Gs, GLPs and GPT because both have a lot of relevance for us.

For sure. We will get there. And great to see the good start kind of right off the bat from earnings. You mentioned the 4 programs, weight and prevention kind of furthest along and still some good growth there. Can you maybe just kind of tick through kind of the programs, kind of where they're at and just kind of the growth prospects that you see there?

Yes. So for everyone's reference point, our journey began in prediabetes and obesity or we call it weight health sometimes. Later in roughly 2019, we expanded the diabetes to hypertension and MSK care from there. So we have had a strategy of selective breadth. We recognize that if you are to expand, you need to do a great job. Equally, when we talk to our benefits buyers and share that, look, you could have 1 account manager versus 4, you could have 1 company organizing marketing campaigns to your employees and then your employees have multiple disease conditions, that's attractive. So the order upon which they're represented the business roughly mirrors the order which we've rolled them out.

And now we have over 31 as of the end of last year, over 31% of Omada's customers overall work with us in a multi-condition fashion. So we're proud of the progress in each.

Great. Can we touch on just the TAM in terms of across self-insured, fully insured and MA. You most furthest along in self-insured, but there's still a long runway for growth. So what are some of the strategies to continue to penetrate that TAM and drive growth?

Yes. So the -- within the Omada growth algorithm, you're highlighting the first bucket, which is who pays. And within that, you can think of it as kind of a matrix of which type of insurance and then which programs we offer. We got our start in the commercial space with about 14% penetration in self-funded lives, about 9% fully insured. And so obviously, in the U.S., if you're a large enough employer, you self-insure. That led to many relationships with payers that then looked at what they saw there and started to write us into their fully insured lines of business where they want to capture some of the outcomes and the savings as well.

And then more recently, Medicare Advantage has become productive for model. We're still very, very early there, about 1% of that market. But that's actually in response to some of our existing payers telling us that, look, we'd love to put you into MA. And so we're happy to work with and able to work with really any entity that carries the risk of medical or pharmaceutical claims for that person.

All right. I won't keep the 2Gs waiting any longer. We'll get to GLP-1s now, and then we'll follow up with some ChatGPT. But on GLP-1 Care Track, can you just kind of give us an update in terms of that program? I know that was released yesterday, a new study. I know that's important to your selling motion. So how it's resonating with your customers and members?

Yes. So our Omada's metabolic offering has a care track. We call it our GLP-1 Care Track. And so the overall Omada experience involves us marketing to you, making sure that your coverage eligible, giving you connected devices, pairing with the care team, working with you on goals, content, creating communities, having tracking. We updated all the pieces of the surface area to be responsive to the needs of someone on a GLP-1. And so that's the care track.

So we turn that on in our technology stack when someone is on a GLP if the customers purchased it. And it's been just wonderful to see. I mean, most important is, of course, the patient and the member. I mean the stories that we hear are inspiring. We bring these members into our town hall to help our employees remember why we're here. And what we see is this really remarkable thing where these meds can actually serve to get the ball rolling as a behavioral catalyst. But at the end of the day, an injection is not getting to know you as a person. A pill doesn't understand your goals and help encourage different ways of eating your physical activity. So the goal is to really grab that, ideally attain higher quality and more on therapy progress.

And if the person's goal is to discontinue the med, which we try to ask right upfront to help enable their success. And so we've got this. This is great. This is scaled with 2 of the 3 nation's largest PBMs such that their clients can, with the push of a button, turn it on as well as our other products. And then what we announced yesterday is 12-month data of weight maintenance. So post discontinuation, if you look at the randomized studies, someone should have regained about 11% of their weight back. The change that we saw was 0.8%. So a night and day difference. And so that helps counter what if you look at the real-world evidence might be a truth that someone's destiny is to retain the weight.

And what we found is if you talk to someone upfront and you ask them, what are your goals for the medicine? The answer that we usually get is, oh, I can't wait to have an injectable for the rest of my life. The goal is usually I'd love to like see if I can get success and keep it off. And that puts us in a position to have an honest conversation and say, love that, it's going to be hard. Your body will try to fight the weight and get it back on, but it's not your destiny.

So what we need to do while you're on the medicine is work extra closely together on food, what's a week in your life look like relative to eating behaviors on activity. Let us design you an exercise and strength plan that's an end of one plan that helps support your specific goals to accommodate your constraints to try to retain as much muscle as possible. And so that dynamic has enabled success for our members. And of course, that translates into us being able to communicate that value to clients and potential clients.

Great. And as with any large market, there's, I'm sure, competition. And so what are some of the things that differentiate Omada? I know we can maybe touch on some of the PBM partnerships.

Yes. So I think it's in 4 vectors. I mean, one, just the capabilities. Omada has taken a really a build-every-piece approach to the business, including our -- what we call as our care team platform. This is our version of an EHR that our care teams use to engage with the members, and that's enabled ops efficiency, our margin profile and progress, but equally a really personalized member experience that supports those longitudinal interactions that today's EHRs are not set up to do. And importantly, we blend those technologies with people. And so we call this approach compassionate intelligence.

We're doubling down on, of course, all these incredible AI-enabled features. Sometimes I think of like the art and science of medicine that tomorrow's horizon is the people of the art and the models are the science, but you need both. And so that unique capability of kind of tying all the pieces together is quite operationally complex, and it's something that's hard to do even at 1,000, really hard to do at north of 1 million members. And so I think customers appreciate that, and we're differentiated on it. And then outcomes. From day 1 at Omada, we just started publishing. I was in medical school at Harvard when I founded Omada and thought, well, what would my classmates need to see to trust that the solution works and like we better start getting some literature out there.

And we've done observational studies. We've done multimillion dollar like academic medical center led therapeutics grade like Level 1 RCTs.

We now have 30 with our newest MSK trial that we've published 30 peer-reviewed publications, and that allows us to earn trust with the market, which is great. And I'd say like last, the multiproduct expansion has been a differentiator. I mean there have been deals where they're like that's just great. I would love to just start with you across multiple products. That solves the big thing on my mind, which is I have a team of 30 people to implement solution by solution by solution. And equally, I recognize that my employees probably have obesity and hypertension or diabetes and hypertension or diabetes and musculoskeletal.

Got it. So clearly, a very important theme for the broader market in health care in terms of GLP-1s. Any way to contextualize in terms of the tailwind to the business? I know you've seen an acceleration this year of a couple of points in growth. I don't know if it's that simple in terms of it's just GLP-1. But just what type of impact is it having on the business today? And then as you segue into 2026, you'll have CVS coming on. So how should investors think about the trajectory?

Well, so we did in the data that you mentioned, share that the primary goal of this press release is to look at the 12-month discontinuation data. Equally, we did share that we're north of 100,000 a lot of members that we're supporting that are on a GLP-1. What's happening is a dynamic that's creating 2 customer personas. There's the employers that cover and there's that's A and those that don't and B. In the A, they may have heard about our [indiscernible] and they're thinking, well, I've got this cost picture that looks pretty harrowing. Yet equally, I believe these meds are effective. What I don't want is waste. I don't want my employees to lose weight and regain it. I paid thousands and thousands of dollars. How do I think about different ways to perhaps cover this? And that's where our Care Track becomes relevant and opens the door.

Equally, we've structured our contracts with our partners to enable the full Omada suite of solutions. So it's very quick that an employer says, "Oh, why would I just cover Omada for my employees on a GLP-1 it makes sense to offer it in absence of maybe they'll try that first. There's certainly employees who are overweight in my organization that aren't ready for a medicine or don't want a medicine. And I like peer 30 peer-reviewed publications, including your health economic studies. And so what it's really doing is it's a gateway to a broader sale, and we're seeing that. Equally in those who aren't covering because there is quite a financial consequence of doing so for these accounts.

We're finding that their employees are still asking these benefit leaders. How come my friend who works for Acme Inc. has that down covered and we don't hear. And how come Wegovy not on our benefit design. And those are pretty persistent asks. It's an easier message to say, look, we can't afford GLP-1s for obesity right now. But I'd like to introduce Omada, then we can't afford GLP-1s for obesity right now, but I don't have anything for you. And so we found relevance in both. And so the way we started to think of it is just an enormous floodlight on metabolic disease is a big problem area that's kind of creating the deepened customer conversations.

Great. All right. We'll segue to the second G in terms of technology and AI. How are you utilizing at this stage kind of AI to help improve member experience? Are there anything that you're kind of measuring in terms of, okay, this is taking hold. This is a starting point.

Yes. it's a very fun moment. I think the -- not just our engineers, but if you're an engineer out there in the world, you're able to do some of those things you only dreamed about. I mean prior to going to med school, I worked at Google and you talk about this future vision where the technology could do things like we're all witnessing in our pockets every day, and it felt impossible. And so we've launched this umbrella capability called Omada Spark with some specialization relative to some agents that support our members, ranging from being able to take a picture of your food and have it pull apart the different ingredients, look at the macro nutrients, help orient toward our food philosophy, which is not one of restriction, and it's one of nutrient density to give our members deeper insights in what they're eating more efficiently.

We launched a nutritional agent, similar in the art and science question. Our care team's primary job is compassionate, accountability, feelings of empathy. The future vision is not them helping shape that specific salmon recipe that accommodates that specific dietary preference or perhaps restriction for that member. Like that the models need to do that. And this agent is just incredible at contextually offering nutrition advice based on data patterns, the demographics, the preferences of the person.

And then we trained the model to do a motivational interview, which is a technique in the '80s that helps a patient unpack some of the, perhaps, barriers to their goals and find solutions themselves, which is really neat and our health coaches can say, hey, Craig, that's -- like I love the way you're thinking. You're giving me a favor. Just spend 10 minutes tomorrow with a modest Spark on that same line of thinking. As you'll see when it tells you, it's going to summarize that conversation with me. And then I want to know how it goes, and I'm going to check in with you the next day. And so it's interesting. So the care teams are almost starting to delegate either some of the esoteric like items like that recipe or like the motivational interview in this beautiful combination of people and tech, which I think stands to differentiate.

And one thing we did share on the earnings call is a feature set within our care team platform that summarizes the context to our care team member of what's happening with their member. kitchen employee. Whereas before, they'd have to scroll through, try to identify patterns themselves, really poke to gain insights and come up with a point of view on what they might want to address. Now we send that out to the models, of course, all on our secure infrastructure. The model suggests based on the context, some of the areas that they might think about using to have their next dialogue with the member.

And we've seen like in some of the pilot data last year, roughly 20% efficiency gains within the first weeks, but increased quality. And that's where like the sweet spot is where you can get efficiency and higher quality, which is some of the magic of these technologies. So I mean, we're trying to encourage every single product manager in Omada to have an AI-first mindset, whether they're responsible for content or the community layer or the tracking layer or the onboarding or the care teams, because there may not be relevance in every feature to leverage AI, but there may be.

And this is one of those -- it's not going to be a silver bullet. It's -- our view is there's a bunch of lead bullets that are going to add up to just that experience we want to create where the member feels like, wow, for the first time in my life, I have like someone in my corner that the tool I want to use. It's an enjoyable care experience. It feels like it's built for me, it's proactive. And there's a huge innovation road map ahead to work to enable that goal.

Great. And because it's early days, I think the way the company has framed the potential from a financial perspective is your long-term gross margin target is 70% plus, perhaps it can drive upside there. How should investors think about that in terms of how this technology scales and financially like longer term?

Yes. No, happy to take that. For those of you who haven't met. Steve Cook, CFO here at Omada Health. We have direct line of sight to getting to 70% gross margin on just what we're already doing. That's more multi-condition traction. That's more traction with GLP-1s, that's increasing our marketing effectiveness. We're early days with Omada Spark. We're early days with contact summarization and underwriting those into our future margin targets. I think one -- to punctuate what Sean said, one unique and differentiating feature of our business is we only bill for those folks who are actively engaged in our program. If they stop using it, we stop billing. If they stay actively engaged, we continue to bill. So AI has this really neat dual benefit where there is a cost layer where we can make our care teams more efficient, they can end up serving more members, but increasing personalization and having folks stay in program longer is also going to drive more revenue with very little incremental cost.

Great. Maybe we'll stick with you, Steve, in terms of -- I do want to touch on just the operating leverage in the business. You're kind of right on the verge of profitability growing -- expected to grow 40% this year. So what are some things the organization is doing just to control costs, maybe some of these things that you've done private before you came public. But just what gives you the confidence in the operating leverage in the business?

Yes. I mean it's been a tremendous focus for us, especially over the last couple of years to demonstrate operating leverage within the business. We grew the past 2 calendar years at 38%, as you mentioned, this year, guiding currently 40% revenue growth. And we're realizing operational leverage across a couple of main areas. Our sales team, we often -- we contract with a lot of the major PBM partners as well as dozens of health plans. And so we were able to leverage the sales force through our distribution channels to go and distribute Omada. As a result of that, our sales team is very moderately to small in size relative to the amount of revenue we're doing.

On the marketing side of the equation, the main medium for getting folks in the door is e-mail marketing. We did 100 million e-mails last year, 5,000 distinct campaigns across our 2,000 customers. So as we think about future scale, when we have to do 200 million e-mails, we're not going to need to double the size of that team. It's a very cost-effective medium for us to get folks in the door. And then Sean alluded to this a little bit earlier, but it's really the crown jewel of Omada, which is our care delivery platform. This is our homegrown EHR. It's the platform that our care teams use every day to engage with our members. Over the course of the past decade, we've invested tens of millions of dollars into our care delivery platform, and we can continue to intake hundreds of thousands of more members without needing to disproportionately invest into our care delivery platform.

I think we talked a little bit about our GLP-1 care track. We spun that up in 3 months on our existing tech stack. So we really approach development there with modularity with flexibility in mind. So across those dimensions of sales, marketing and then the R&D side of the equation, we feel we have a lot of operational scale.

Got it. And if you think through the EBITDA long-term target of 20% plus, again, maybe some of the things we just discussed, but what are some of the things you're most confident in terms of being able to drive towards those type of margins?

Yes. I think it's -- I don't think we need to absolutely sprint there. I think we want to take a measured approach. We like the growth. We like that we've grown 38% 2 years in a row. And this year, we're at 40%. So I think continuing to have an eye towards investment and being assertive on the GLP-1 landscape, continuing to invest in AI, as we talked about. And then we really feel like those existing levers are going to continue to benefit us in the future as those are the main vectors of OpEx burn.

Great. I would like to touch on we're kind of right in the heart of the selling season kind of underway. And just frankly, from a year-to-year basis, and I know whether it's the recent study you just put out yesterday, like what are you most excited about as you get in front of prospective customers this year? How does that compare to just a year ago?

Well, we gave some qualitative remarks on the earnings call, and I'll just kind of reemphasize those that we like what we see. The pipeline is progressing in a way that we expect. And then this cost crisis of GLPs is really opening doors. I mean that's not a new thing this year. It's cost pressure for accounts we've observed in past increases knocking on Omada's door to say, well, clearly, the existing system is not working for me. I might need to do something. I think the thing that is just exciting for us is what I already shared, which is the fact that GLPs are really spot level metabolic, and that's needed.

I mean if you add up all the member success we've had, all the member success the entire competitive set has had, like are we even near the 156 million Americans that are being poorly served by the existing health care system like now. Like Omada's explicit mission is to bend the curve. And it's exciting that like the cost pressure of GLP is shining light on this broader need to support new ways of thinking in metabolic disease. And of course, as we've seen in the administration, there's just an increasing focus on chronic disease. And I feel like we've been having this megaphone for a decade, and now the megaphone is being amplified in so many different ways.

At a moment where Omada is a skilled partner, we've enrolled over 1 million members. We're on strong foundations for their channel partnerships. Buyers can -- especially in a somewhat turbulent last 2 or 3 years from digital health can be confident that we're going to be here to stay when they look at our progress. They can go to look at our -- listen to earnings calls, look at our balance sheet, which is neat. And I still to this day, I always do new hire CEO welcome. So I have a chance by Zoom in a group setting, at least to meet every single Omadan that comes in the doors. And over the last couple of weeks, what I've been sharing is the talent that joins is like if you're joining Omada, in an era where we can actually aspire to achieve our mission of bending the curve. In the early days, we're just setting us up for that.

Like you got to get to the many, many tens of millions, obviously, to do that. But like great, it's day 1. Like my ask is to run as hard as we can together to do that. And that's a really inspiring thing for an entrepreneur where you feel like you've just got the foundations laid to be able to finally dream big and accomplish what you set out to do from day 1.

Got it. How about just the macro backdrop today? Does it come up through customer discussions? And then we can build on that in terms of kind of platform versus point solution and topical.

Yes. I mean the -- it's not a fun year from a renewal standpoint. It's like -- even myself in my seat, I was bracing. We came in a little bit better. I like thank your benefits broker. But as shared, the -- what we're observing in our customer conversations is the cost pressure, which is for many self-insured, it might be kind of an upper single-digit benefits renewal year or more. That's what leads them to be like, well, clearly, something needs to be done differently. And so that allows us to stay high. And then on balance, my general sentiment relative to how others feel about their businesses is pretty positive. I mean it's -- so there are a lot of conversations happening in the pipeline.

Got it. We touched a little bit before on just multi-condition sales, and that's very powerful from an operating lever. You mentioned 31% of customers today. I think last selling season was over 50%. So directionally moving the right way. How important is that when you think about kind of the business model? And then also just to dig into just the platform and multiple ways you can kind of approach it versus just kind of a point solution.

Yes. So I mean we like our strategy. You hear point solution versus platform all the time. Obviously, you can build big businesses in both. At the end of the day, my belief is the buying preference, especially at the level of [indiscernible] platform. And we see that. I mean we didn't expand just because we wanted to. We expanded because our customers specifically told me, Sean, could you please do type Bs? Sean, any chance you thought about hypertension? Sean, have you ever thought about MSK. And that's because they know us, they're thinking, do I really want to have another contract, another account manager. Equally, they recognize that their employees have multiple comorbidities. That being said, in absence of a company that can deliver excellence in each of those, they'll buy point solution. Of course, because they need the problem solved.

So we're very cautious in expansion. If anything, our bias is to not. We're to do it when we feel like we've earned the right to do it. So there is a pretty high bar of we think that there's a clinical need, you can deliver virtual care. It fits between the care model, and most importantly, there's buyer demand. And if you look at the average like Willis Towers Watson, Mercer, Aon report, they pull these benefits leaders and ask what are the things you're concerned about, what do you care about? They'll get a pretty consistent look back. And it tends to be obesity, prediabetes, diabetes, hypertension, musculoskeletal care, behavioral health, maturing fertility and cancer. That's kind of the big ones.

And so relative to ones that have relevance for between visit care, we feel like we're in the right areas for now. And then to your point, you get operating leverage from it. It's great because you're solving a customer problem. Your members love it because it's like you don't have a different app for hypertension or diabetes. And then you don't need 4 sales reps to sell for condition areas. And we also happen -- there's a nuance here. Relative to the price points in the market, one is able to garner somewhat higher ARPU for diabetes and hypertension and MSK than prevention obesity. Probably we just like the prevention obesity price. We're very, very happy with at a unit level, everything we feel good about.

But we're selling -- we're upselling into higher ARPU areas. And so that's one of the factors that led to the acceleration in growth in the back-to-back 38%. And I shared our August 7 guide midpoint is at 40%.

I think Costco is a great example of this. We signed them up in 2013 on our prevention and weight health products. Once we released diabetes and hypertension and MSK kind of around that 2019 period, they ended up adding all of those products in kind of subsequent years to one another. So our CSMs or kind of post sales reps are always really excited to go back to our existing installed base and then cross-sell and upsell across our product suite. And to Sean's point, added a ton of leverage as well as revenue tailwind to the business.

Great. And I feel like MSK doesn't get as much attention. It's small today, but it kind of fits really well in terms of multi conditions and comorbidities. Just can you just maybe touch on that kind of offering, kind of where it's at and how you see that in the marketplace?

Yes. I mean we're really proud of the solution. It's, of course, our newest capability. That was an acquisition, found a small company that had just an extraordinary product, not too many customers. But we looked at it, this is literally written on the same tech stack, like we felt we could derisk the product integration, which is where oftentimes these things fall short and very proud of the experience. You get a licensed doctor of physical therapy, do a video visit. They -- we have an animated library of like 400 exercises, precurated care plans that will be loaded up. There's all these cool computer vision technologies that help look at like functional testing over time, messenger PT, it's really neat.

And increasingly, what we're helping the buyer market to realize is the connection between obesity and especially chronic MSK, knee, back and hip, which are some of the biggest cost drivers, those tend to be the most obesity driven. So it's an asset we really like to have. It's also like when we made the expansion, similar to our existing model, there were enough clients they were asking us to do it, but it was kind of like the investment in doing it felt pretty derisked because you have a -- we always try to ask our customers, you're on your strategy desk. Like what -- guide us as our Chief Strategy Officer, what would you want us to do? Where would you want us to go? How could we better serve you? And that answer came back on us. I think this would make sense.

Great. In the last couple of minutes here, I'd love to kind of wrap up and just talk about kind of investor feedback. I know you were here the last 1.5 days with meetings, maybe some things that are really resonating with investors to the story and then also some things where investors are trying to dig in and learn a little bit more about Omada.

Yes, for sure. I mean it's a lot of the themes that we covered. The conversations tend to usually start with like the GLPs, how do I think about it? Is that all of your membership? Is it a tiny amount? Is it like what -- and then once I explain the selling dynamics we found folks can wrap their heads around it. And then of course, putting out some data helps with that as well, which is exciting. Sometimes we get asked, can AI replace your entire care team? It's like, no, you need the accountability, and it's hard to find a member that says, I feel accountable to my large language model. Equally, in art and science, they should be doing the -- model should be doing the science. So that's been a key theme.

One of the ahas that sometimes happen specific to your questions is once they realize that like we contract as a provider and bill into real medical spend, which is, I think, a material difference in this next generation of digital health companies that have matured. I mean these are companies like Omada that are actually delivering the care. It's not incremental technology solutions on top of the existing system. It's like actually the care. Through -- with peer-reviewed studies.

The -- I remember early conversations with benefits leaders recognizing that, wow, success will not be trying to like get them to put us in their admin budget, which is miniscule relative to their medical pharmaceutical spend. And that's where -- I mean, that's where our market cap is. It's in the medical and pharmaceutical spend. And so Omada contracts with a covered entity. We filed claims ages ago, I took our trials to the American Medical Association actually got them to create the first ever digital-specific CPT code, like a CAT III code, serves as billing infrastructure.

So even in our direct contracts with employers, we file claims through their TPA on our monthly recurring revenue model when someone signs up, such that it's in the medical spend. Which is a super exciting difference. It's like we're a provider that's not anchored to having to use fee-for-service billing models. That's not anchored to having to put the CapEx needed to build out clinics and can equally deploy in Alaska as your U.S. Virgin Islands, which is a very material difference in my view, in this next view -- this next chapter of digital health companies.

Great. Well, with that, I think we're right on time. So Sean and Steve, thank you so much for spending the time with us today.

Yes, thank you for joining, and enjoy the rest of your evening and safe travel home for those of you who are visiting.

Good day. Thank you for standing by. Welcome to Omada Health's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference may be recorded.

I will now hand the conference over to your speaker host, Allan Kells, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Amada Health's Second Quarter 2025 Earnings Call. Joining me today are Sean Duffy, our Co-Founder and CEO; Wei-Li Shao, our President; and Steve Cook, our CFO.

Before we begin, I want to note that we will be discussing non-GAAP financial measures that we consider helpful in evaluating Omada Health's performance. You can find details on how these relate to our GAAP measures, along with reconciliations in the press release that is available on our website.

We'll also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in the risk, factors found in our filings with the SEC. Actual results could differ materially, and we assume no obligation to update these forward-looking statements.

With that, I'll turn the call over to Sean.

Thank you, Allan. Good afternoon, everyone, and thank you for joining us for Amada Health's first earnings call as a public company.

More than a decade ago, we set out to deliver between visit care, a model of health care delivery that we believe is fit for purpose in helping to address today's cost and quality challenges in chronic disease. Our results this quarter reflect continued and steady progress towards our long-term mission of bending the curve of chronic diseases.

In the second quarter, total members increased 52% year-over-year to 752,000. Revenue rose 49% year-over-year to $61 million. The operating leverage in our business model continued to shine with a 66% Q2 '25 GAAP gross margin and a 68% non-GAAP gross margin, both improving significantly year-over-year. We narrowed our GAAP net loss to $5 million compared to $11 million in Q2 '24. Finally, we are very pleased to share that our Q2 '25 adjusted EBITDA loss was $200,000 compared to a $7 million loss in Q2 '24.

Wei-Li and Steve will soon characterize the details and the drivers of these results, but I wanted to take this opportunity on our first call to do 2 things. First, I want to share a member quote as these inspire our teams and my hope is that it will inspire you, whether you're a current or prospective shareholder.

As one member told us, "Omada has changed my life. Diagnosed as prediabetic a year ago, I began taking a GLP-1 and quickly lost weight. A few months later, I'm offered a free scale in an app from Omada so I signed up, true game changer. I am 49 years old and have not weighed the flow since I was a freshman in high school, and I feel great. I have lost more weight with Omada than without. But it's not just the weight loss, it's the fact that I am truly healthier and happier. "

The second thing I'd like to do is to provide a brief overview of Omada, recognize that many of you on this call may be new to our story. Omada Health is a between visit care provider. We support patients, we call them members, with prediabetes, obesity, diabetes, hypertension and musculoskeletal disease.

When I was in medical school, I saw a problem right in front of me on a daily basis. It's that too much of the care delivered in the U.S. occurs in those 1 or 2 visits a year you might have with your doctor. That's not enough, and that's not the right kind of care, especially for the approximately 156 million Americans suffering from chronic disease. And I believe that's one reason why America is getting sicker. So, what can we do to change that?

When my co-founders and I started Omada Health, we first sat in the homes of people struggling with chronic conditions. We heard many stories that highlighted a glaring gap in the U.S. health care system, the lack of proactive day-to-day support. Too often, people with chronic disease were left with a little more than a pamphlet and some well-intended advice from their health care providers.

Meanwhile, the cost to the country are a crisis. Diabetes and cardiovascular disease alone have been responsible for approximately $526 billion in U.S. health care spend per year. This realization fueled our vision to bring a different care model to the market. We call it between visit care and deliver it through a combination of technology and people that we call compassionate intelligence.

At Omada Health, we bring together different types of health care professionals, an array of third-party connected devices and a personalized software experience that blends both people and artificial intelligence to deliver multi-condition, contextually relevant care to our members between their doctors' visits.

The Omada member journey starts with their care teams, which are composed of skilled professionals like health coaches, certified diabetes care and education specialists and licensed physical therapists with support from licensed clinical social workers. Our care teams get to know Omada members personally, help them develop detailed actionable care plans, encouraging and advising them when they struggle and keeping an eye out for health heading in the wrong direction.

We also equip our members with seamlessly connected third-party hardware such as digital scales, blood pressure cuffs and continuous glucose monitors. We then tie the experience together with software that can leverage data science advances, artificial intelligence and machine learning technology.

As we built Omada, we also recognized that we needed to build trust within the clinical community through rigorous research and accreditation efforts. We spent a decade funding and publishing peer-reviewed research, and we're proud to have 29 publications showcasing our clinical and our economic impact.

Our efforts have yielded results we're deeply proud of. Since our inception, we've enrolled over 1 million members in Omada's care programs. We forged partnerships with over 2,000 employers, health plans and pharmacy benefits managers, achieving high levels of customer satisfaction and retention. These customers increasingly trust Omada to do more for them.

Over time, we've expanded in new care areas, and we're proud that as the end of last year, approximately 31% of our customers are covering programs with Omada across multiple conditions, signaling the growing demand for comprehensive integrated care solutions.

Equally, we feel we're at the very beginning of our journey, though we're proud of our success. As of the end of last year, 2024, we've only penetrated approximately 14% of the self-insured lives in the U.S., 9% of fully insured and 1% of Medicare Advantage. We estimate our total addressable market to be more than $135 billion, and we believe there is ample white space ahead.

We're proud to be offering our new enhanced GLP-1 Care Track in the midst of a broader GLP-1 revolution. Our clients have asked us decisively to support their members on GLP-1s, reflecting the reality that an injection doesn't get to know you and a medication alone does not support behavior change. We believe that the answer to the dynamic GLP-1 landscape are services alongside the medicines, and we work with 2 of the 3 major PBMs providing just that.

Lastly, the world is experiencing a revolution in artificial intelligence and AI technology stands to benefit our members and customers alike. We're in the first chapter of leveraging these incredible innovations to support our member success and to add personalization and efficiency for our care teams.

I'm also proud that we're part of an emerging category of next-generation digital health companies that seek to differentiate based on greater convenience, better clinical outcomes and lower cost care models that include both telehealth and AI-enabled care designed to deliver meaningful returns on investment.

At our company town halls, I always tell our teams that our hope is that one day, tomorrow's epidemiologists will notice a bend in disease curves, wonders what might be happening and conclude that part of that impact has been Omada. That's our explicit mission at Omada, to bend the curve of disease. and we look forward to pursuing it alongside our new and our prospective shareholders.

With that, I'll turn the call over to Wei-Li.

Thanks, Sean. Hello, everyone. To start, I'd like to echo what Sean started with. I'm extremely proud of our teams and how they've executed against our strategy and how they've delivered strong results. It's an exciting time to be in Omada, and I consider it a privilege to discuss progress against our strategy and our second quarter performance.

Some highlights include we ended the quarter with 752,000 active members, which is up 52% compared to Q2 2024. This includes us adding 73,000 net new members during the second quarter and 180,000 year-to-date. This is 71% more members than we added in the first half of 2024. This member growth reflects continued multi-condition adoption, strong sales of our GLP-1 offerings and strong execution by our teams.

I believe our strong top line results and member growth are the result of a go-to-market strategy that has long been anchored on 3 pillars. We believe that these 3 pillars in combination with our market scale have driven our strong performance in Q2 and our reasons to believe in Omada's continued success. Let me take a moment to reinforce the underpinnings of our strategy.

Our first pillar is innovation, which we deliver by investing in program features and experiences to strengthen our differentiation, support our growth and help members achieve outcomes across conditions that our buyers care about. Our GLP-1 Care Track, and our recent released OmadaSpark AI agent are great examples of this, and I will share more about both in just a moment.

Second, we strive to create programs that work. Omada's programs are rooted in clinical best practices and our persistent empathetic support from our care teams fosters trust and accountability to promote sustained engagement and meaningful clinical results.

Our programs are focused on some of the conditions that our buyers care about most and their employees and members often suffer from the most, which can drive the most cost. These conditions are obesity and weight health, diabetes, hypertension and MSK. These diseases are highly prevalent, and the combined TAM is substantial.

Third, our multi-condition platform versus point solution approach has become a key differentiator in our sales process. Many customers and channel partners experience point solution fatigue and recognize that their members suffer from multiple conditions. They see value in having a single, reliable, scaled partner because it simplifies contracting, account management, implementation, member outreach and most importantly, the member experience. It's helped us both win new business and expand relationships with existing customers.

These 3 strategic pillars have resonated with buyers and members, which has allowed us to achieve our current scale. Combined with our disciplined focus, our scaled go-to-market model gives us confidence that we are well positioned to achieve durable growth.

Now when we talk about scale, we're referring to the following, the population of covered lives we reach through our channel relationships, the selling and marketing efficiencies gained by partnering with large payers and PBMs to offer our programs broadly to employers, and our data-driven marketing initiatives, which included nearly 100 million targeted e-mails across 5,000 campaigns in 2024, driving enrollment while supporting continuous optimization through A/B testing.

While our estimated total addressable market of over $135 billion across all of the conditions we serve represents significant opportunity over the long term, we think it's useful to look at the more near-term opportunity we have through already established channel relationships.

At the end of 2024, our existing health plan partners provided health insurance for 156 million lives across their networks. That population, combined with our other current customers, represented an estimated 20-plus million individuals with benefit coverage for one or more Omada programs.

Just within these 20-plus million estimated covered lives we have today, we have significant growth opportunities, and we are focused on generating additional revenues from these existing covered lives through efforts to increase enrollment rates, enhance member engagement and outcomes, drive higher multi-condition solution adoption and capitalize on our opportunities to provide GLP-1 companion support.

In addition, we have relationships with 2 of the nation's largest PBMs that as of March 2024, collectively offered pharmacy benefits to over 200 million individuals, which represents a significant opportunity for us to increase the number of covered lives we serve.

While we are proud of our progress, our work is far from finished. Our ongoing momentum has continued to attract new customers, including a relationship we recently established with a leading health navigation platform. Through this partnership, we replaced an incumbent diabetes vendor to become this partner's preferred provider of diabetes care.

Within a matter of months, we together closed and launched a new health plan client. We view this competitive win as a clear example of sophisticated buyers turning to Omada to deliver scalable evidence-based care.

This level of scale, which we are focused on continuing to expand, works with 3 strategic pillars I mentioned before. With that in mind, let me take a few moments to update you on our progress with each of these pillars.

With regard to innovation, we recently launched OmadaSpark, a member-facing AI agent that works directly with our members and alongside our human care teams. Our members ask for food imaging, and we delivered. But I think we delivered in an incredible way that can wow our members. With just a single image of your meal, our AI-powered tracker identifies the ingredients and estimates macronutrient information, including protein, fiber, added sugars and saturated fats.

These are the nutrients that we believe are most important to consider when improving health outcomes, especially for members who have taken GLP-1s or have diabetes, hypertension and/or obesity. Now we've trained OmadaSpark on over 3 million foods from more than 150 countries to support members in tracking even the most culturally specific dishes.

Additionally, members can talk or text with OmadaSpark to get real-time nutrition information. OmadaSpark can recommend alternative foods and answer questions regarding nutrition education in the moment. Because your AI agent is informed by key member demographics, it provides responses with members like you in mind.

OmadaSpark has the ability to help you focus on your goals. In this context, its job is to have conversations with you to help you understand your motivations and help you create a plan to navigate motivational challenges that work for you.

This is the power of motivational interviewing, an empathetic technique that can strengthen your intrinsic motivation for change. OmadaSpark can help you articulate why and how you want to adopt healthier habits and help you make changes along with help from our care team.

Our goal is to leverage artificial intelligence and machine learning to support our scale, enhance the experience of our members and amplify the impact of our programs. Now we take a human-led AI-empowered approach using AI insights to support our care team by providing instant context and synthesizing member data points to enable more efficient and productive interactions with our members.

We also continuously strive to deliver programs of work, the second of our 3 strategic pillars. Our GLP-1 support strategy aims to enable the success of our members before, during and after GLP-1 therapy, and we have demonstrated that members can achieve significant results by coupling behavior change alongside the medication.

Now these capabilities have contributed to our GLP-1 companion program being available through 2 of the largest PBMs and in both relationships, our full cardiometabolic suite is also available.

We believe some of the key drivers of our success in GLP-1 companion support are our member engagement and clinical outcomes results. Notably, members on our enhanced GLP-1 Care Track included in a retrospective analysis, experienced 28% greater weight loss on average after the first 4 months compared to members on GLP-1s that enrolled in Omada programs without the enhanced GLP-1 Care Track.

In a separate retrospective analysis, members who can discontinue their GLP-1s and opted into the Care Track embedded in our cardiometabolic programs maintained their weight loss on average at 4 months post discontinuation, represented by an average weight change of minus 0.1%. This compares to estimated average weight gain of approximately 6% to 7% at 4 months in 2 third-party randomized controlled trials.

In addition, we recently released new data demonstrating that Omada's enhanced GLP-1 Care Track significantly improved persistent rates for GLP-1 medications. Members in the analysis of our enhanced GLP-1 Care Track achieved 94% persistence through 12 weeks and 84% through 24 weeks, with those staying on medication for 24 weeks experiencing an average weight loss of 12.1%, which closely aligns with clinical trial results.

This is important because in the real world, factors like nonpersistent medication mean that many of those who use GLP-1s for weight management may not see the results reflected in clinical trials. This highlights our program's effectiveness in helping members to overcome real-world barriers and achieve weight loss comparable to what's seen in clinical trials, which helps with cardiometabolic disease reduction.

These results demonstrate the benefits of Omada's clinically rigorous approach to behavior change. In sponsoring and publishing research, we seek to demonstrate our outcomes, bolster credibility and strengthen our position in the market. We believe our clinical leadership differentiates us amidst a crowded market of digital health solutions.

Our focus on innovation and programs that work also support our multi-condition platform versus point solution strategy, which is our third strategic pillar. Because of our broad evidence-based multi-condition platform, we have had success at growing the percent of clients that offer multiple Omada programs.

We ended 2024 with approximately 31% of our existing clients having multiple products installed, up from 26% in 2023. We are encouraged by our progress in the first half of 2026 and are optimistic as we head into the second half of the year, which has historically been our key closing season where many buyers make benefits decisions.

At the root of this multi-condition success is the realization that most Americans with a chronic condition have not just 1, but 2 or more comorbidities. For example, approximately 58% of people with diabetes also have an MSK condition, and Omada is the only digital provider among our largest competitors to have solutions for both conditions.

To close, I'd like to reiterate how pleased I am with our results, which I believe were a direct result of both our resolve to execute our strategy and our go-to-market scale.

With that, I'll turn the call over to Steve.

Thank you, Wei-Li. Hello, everyone. Today, I'm going to walk through our results, margin progress and our outlook for 2025.

As Sean and Wei-Li mentioned, our members grew 52% to end Q2 at 752,000. Revenue in Q2 was $61.4 million, up 49% year-over-year. The primary factors driving our member and revenue growth include increased penetration of multi-condition customers, strong adoption of our GLP-1 programs and increased effectiveness of our marketing campaigns.

Moving to gross profit. Our Q2 GAAP gross profit was $40 million, up 62% compared to Q2 '24, and our GAAP gross margin was 66% compared to 60% in Q2 '24. Q2 adjusted gross profit was $42 million, representing 61% growth year-over-year. Adjusted gross margin was 68%, an improvement of approximately 500 basis points year-over-year and 700 basis points sequentially.

For those new to Omada, I'd like to note that historically, our gross margins have typically been lower in the first quarter than the rest of the year due to elevated enrollments in Q1. Our enrollments feature front-loaded costs related to device shipment and early program care, driving lower initial gross margins that typically have increased over the lifetime of the member's program life. As such, historically, we typically observed higher gross margins after Q1, which is consistent in Q2 this year with a significant sequential improvement.

More broadly, our gross margin expansion has been driven by natural leverage in our business that historically has occurred as the revenue from our expanding member base has grown faster than the cost to support the members. We have also gained efficiencies through our self-built care team platform, which we continue to enhance by adding capabilities such as an AI care team tool that helps synthesize member data points to support more efficient and productive interactions with our members.

Moving to operating expenses. Our GAAP operating expenses were 28% year-over-year to $45 million in Q2 and included $22 million of sales and marketing, $10 million of R&D and $13 million of G&A. Our adjusted operating expenses were $42 million in Q2, also up 28% year-over-year.

The breakdown of our adjusted operating expenses included sales and marketing of $21 million, up 48% year-over-year, primarily reflecting higher administrative fees that we pay channel partners for services they provide in support of member enrollments. Historically, it has been typical for these fees to increase when we have strong member growth.

I'd also like to note that year-over-year growth rate in Q2 was higher because the prior period in Q2 '24 included a onetime reversal of administrative fees that reduced sales and marketing expense in that period, resulting in an typically lower prior year comparable. This was a onetime occurrence that did not repeat in Q3 or Q4 of 2024. And so those prior year quarters should not cause the same increase in year-over-year comparisons of sales and marketing expense later this year.

Moving to R&D, which was $10 million, up 11% year-over-year. G&A of $11 million was up 12% year-over-year, with the increase primarily driven by public company costs.

In summary, 28% growth in total GAAP and non-GAAP operating expenses supported 49% revenue growth, reflecting strong operational leverage. This progress has been driven by leverage created by offering multiple conditions on one platform that can be sold by a single sales force, scale created by our relationship with channel partners in our B2B2C go-to-market approach and spending discipline as we focus on making progress toward profitability.

Moving to our progress toward profitability. Our GAAP net loss in Q2 was $5 million compared to an $11 million loss in Q2 '24, representing net loss margins of negative 9% and negative 26%, respectively. Our GAAP loss per share in Q2 was $0.24 compared to a loss of $1.40 in Q2 '24.

Adjusted EBITDA in Q2 was a loss of $200,000, which compares to a loss of $7 million in Q2 '24. Our Q2 adjusted EBITDA margin was negative 0.3% compared to negative 16% in Q2 '24. We are very pleased with our progress through Q2 towards reaching profitability, which has been achieved through a lot of focus by our team on building a scalable business in a disciplined manner.

Moving to our balance sheet. We ended Q2 with cash and equivalents of $223 million compared to $59 million in Q1 '25, with the increase being driven by our net IPO proceeds. Our total debt at the end of Q2 was $31 million. Note that subsequent to the end of the second quarter, we paid off our debt, which we believe was a prudent use of IPO proceeds given the interest rate on our debt.

Moving to guidance. We expect 2025 revenue in the range of $235 million to $241 million. This range represents 38% to 42% growth over 2024. We expect full year adjusted EBITDA in the range of negative $9 million to negative $5 million. The midpoint of this range reflects an improvement of approximately $22 million compared to 2024.

In summary, we are pleased with our strong Q2 performance and outlook, which reflect our business momentum and scalability of our business model.

With that, I'll now open the call for questions.

[Operator Instructions] Our first question coming from the line of Craig Hettenbach with Morgan Stanley.

I appreciate all the details in the prepared remarks. Just building on the topic of kind of AI and tech, can you just expand on just how you're leveraging technology to scale the platform? Any anecdotes in terms of care team efficiencies and the ability to continue to do that moving forward?

Yes, absolutely, Craig. This is Sean. Great to hear your voice. So, though we, of course, talk a lot about GLPs, I will say we're equally excited about GPTs. So, it really is the year of the Gs here at Omada.

And I'll just comment, there's so much internal enthusiasm on how these technologies can benefit 3 aspects of what we do. Number one, how they benefit our members. Number one, how they benefit our care teams for not just more leverage, but more personalization and impact; and number 3, how they benefit the business.

So, we have an innovation showcase that we call Horizon Day here at Omada that happened in May in Wei-Li's prepared remarks, he talked about OmadaSpark. And so that consists of AI capabilities for our members, an enhanced food tracking capability that enables AI-enabled photo recognition. It identifies the ingredients and estimates macro nutrient information like protein, fiber, added sugars and really has a wow factor for our members as well as reducing that barrier to inputting food.

We launched a nutrition education agent, which surfaces real-time nutrition information, which helps with food decisions. And importantly, this was fine-tuned on over 3 million foods for more than 150 countries. And OmadaSpark also has a version that's a motivational interviewing agent that supports guided conversation to help members identify their own barriers. So really exciting. We're liking what we see in the data thus far.

And then per your comment on the care teams, this is a moment to remind those newer to Omada that we chose in the early Omada days to build our entire proprietary platform for our care teams ourselves. And so, this has enabled us to speedily embed AI technologies natively into a number of feature sets.

One that we're particularly excited about allows our care teams to get quicker context on member behavior, messages, data trends. And in 2024, we launched this tool. The pilots indicate some great data. The coaches were able to spend 23% less time during the first week of a member joining while seeing a 7-percentage point increase in the rate of substantive member replies. So really, this represents quality at higher efficiency, which is, in essence, the holy grail of these technologies. So, we're excited about them.

As you might imagine, even internally, we're leveraging them for business operations. Our engineering and product teams are having a blast coding with AI assistance tools. And we love our data sets, which we feel blessed about because we have tens of millions of free text messages that give us the latitude to experiment in the context where the most valuable data for an LLM could be argued to be free text message as well as a biometric data point. So net, we're excited by it. We think we're in early innings, but we like the promise and the horizons ahead.

Craig, I would just add, from an upside perspective, we've been very judicious in terms of how we're underwriting the upside from AI. So, while we're still in the early innings of AI, we're not really attributing a ton of upside from a gross margin perspective in that in our current long-term target gross margin of 70%. So, to the extent we start to see some early wins here and either higher member engagement or coach efficiencies, we'll continue to underwrite that here towards the end of the year and going forward into our long-term targets.

That's helpful. And then just as a follow-up, maybe I'll do 2 for on the Gs, the GLP-1s. I think on the Care track, you've had like around 50,000 members. Any update in terms of how that's trending and just kind of traction you're seeing in terms of growth for that program?

Yes. Craig, this is Wei-Li. Thanks for the question regarding GLP-1 traction. We continue to be pleased with the momentum of our GLP-1 Care Track as we've seen significant total overall member growth quarter-to-quarter H1 to H1 previous to last year. And a significant driver, a contributor of that has been our GLP-1 business. So, we're really pleased to see that.

It is important to note that the GLP-1 Care Track as it relates to total revenue as well as total numbers still is a minority of the volume of new members that are coming into our business. And so GLP-1s, we're pleased with the progress. We're seeing momentum, but the broader part of our growth still is coming from our core cardiometabolic platform across diabetes prevention, weight health, diabetes itself management as well as hypertension and MSK.

Our next question coming from the line of David Roman with Goldman Sachs.

I want just to start on the member growth side. And maybe you could help us with 2 things. One is maybe just deconstruct a little bit the strength that you're seeing continue here in the second quarter, and I think that brings 4 quarters of very strong growth in membership into play here.

And then secondly, just remind us the way you think about members. I think in the case of Omada membership is actually a good proxy for utilization based on how you define it. And then I had one P&L follow-up.

Yes. Thanks a lot for the question regarding member growth. As just mentioned, as well as in the prepared remarks, a nice driver of member growth year-over-year has been our GLP-1 Care Track but still represents a minority of our total membership. We continue to see broader growth in our total membership across our cardiometabolic suite, and so we like to see that.

In terms of what's driving the actual growth is not only our continued success in upselling and bringing on new clients with our multi-condition strategy. We continue to see success there. But I would add on to that, last year, in 2024, we managed to improve member outreach productivity and effectiveness by over 60% year-over-year.

So, a lot of that improvement that we saw last year is converting and bringing and carrying over into this year. And also, we continue to optimize our outreach not only across e-mail but multichannel, and we're seeing continued improvement on the productivity front there, too, as well.

So, it's really a combination of continued closed more deals, upselling more deals, bringing new covered lives into the funnel. And then once we have those covered lives in the funnel, continuously improving on the productivity of our outreach. That's really kind of the underpinning of what we're seeing on the robust growth that we're reporting out.

And then, David, just on the second part of your question with regard to [indiscernible], actually, our members are someone who we are actively billing on. That's someone that we built on at least once in the prior 12 months. And then you had a little bit of a question there around utilization.

So historically speaking, we've demonstrated to keep 55% of our members engaged at the end of year 1. And then we see a very slight drop off, but not much of a drop off by the time we get to 24 months where we still have 50% of that same population continuing to stay engaged in the program. That's a weighted average across all of our programs. Obviously, folks who are diabetic and hypertensive tend to stay in a little bit longer, whereas the folks on the prevention weight health side tend to stay a little bit less.

Very helpful. And then maybe on the P&L, I appreciate the progress on profitability that you showed here in the second quarter. As you look forward, how are you thinking about the balance between reinvesting for future growth subsequent to the proceeds coming in from the IPO and achieving a fairly rapid path to profitability? And where are some of the incremental areas of investment you might deploy those resources?

Yes. No, thank you for the question. We're extremely happy with the quarterly performance here, again, growing 49%, and we saw a large portion of that beat drop directly to the bottom line, again, really related to the comments that Wei-Li just mentioned.

As we think about the back half of this year, we really want to continue to making some very strategic and targeted -- we're feeling a tremendous amount of market opportunity within the GLP-1 landscape. We've mentioned some investments in the front half of this year. We'll continue to make more investments in the back half of the year as well. We talked about AI, obviously, a very dynamic moment in the market. We're going to be continuing to invest in AI in the back half of the year as well to really set us up for 2026.

And then on the IPO side and the public company side of the equation, we are carrying some more additional costs in the back half of the year in G&A associated with increased cost for D&O insurance as well as we made some investments in the accounting team to make sure that we can operate as a public company.

But we're right now about to enter the back half of the year where we enter our annual planning process, and we're really attempting to balance growth and profitability. So, we're going to be really adjudicating over the next couple of months, making sure we make targeted and strategic investments to continue to grow the top line while also having a lens to continue to run the business profitably.

Our next question coming from the line of Saket Kalia with Barclays.

Congrats on your first quarter as a public company. Sean or Wei-Li, maybe for both of you. I was wondering if you could talk about the competitive landscape a little bit. There's great secular adoption within your existing customer base. But I'm curious what you're seeing competitively with new customers?

Yes. Thanks a lot for the question. Obviously, as we approach the closing season, which really is in H2, we're really, really focused on the competitive dynamics. What we're continuing to see really is -- can be characterized into 2 buckets. The first one, of course, as mentioned in prepared remarks and earlier answers to some questions, is continued momentum around the GLP-1 Care Track.

We like what we see there, especially as it relates to the high levels of engagement we're seeing in the program as well as the clinical outcomes we're posting not only while on a GLP-1, but also after a number discontinues the GLP-1 continued efficacy in terms of when it comes to maintaining weight loss. And that is a big differentiator in the marketplace right now as it relates to any competitive situation where we're trying to sell through our GLP-1 Care Track.

The other category of competitiveness that I would talk about in dynamics is related to really the rest of our portfolio regarding our cardiometabolic business as well as MSK. And it really comes back to kind of the strategy we've just been methodically executing on, and I feel like the team has been super disciplined on over the last several years around the dimensions of competitiveness that continue to resonate with our buyers, not only against existing customers that have been in the marketplace for a while, but also maybe even newer competitors that are trying to gain some traction in the marketplace.

And as a reminder, they're pretty straightforward, and that's what you know Omada for, but they are the following. The first one is a human-led proactive care approach, of course, enabled by technology and the latest generative AI features, for instance, OmadaSpark AI agent that we launched. And then secondly, our commitment to clinical and demonstrating healthy return on investment. That continues to be important.

And then also on top of that, of course, is our multi-condition platform and strategy approach. There are other factors like post-sale experience, which is really important to get that additional second, third, fourth product upsell. But we find that still to continue to resonate in the marketplace very, very competitively.

In our particular marketplace, there are no really reliable or there are no real market share reports. And so, one of the questions oftentimes is, "Well, how do you know? And can you give us a sense for how that is resonating and translating into sales performance?" And we think that maybe a decent surrogate is looking at global app downloads. There's a company called Sensor Tower that provides global app load down data.

And we've been tracking that for quite some time. And for sequential quarters and months, we find that a pretty big gap between total global app downloads for Omada versus any number of competitors within our sector, and that continues to be true even with the latest updated data.

So, we feel like there's a good translation of not only our GLP-1 Care Track and what we've done there, but also kind of just the strategy around competitive positioning that we've been executing for years, continuing to resonate in the marketplace with our buyers.

And Saket, this is Sean. The only build I'd offer on top is the vast majority of deals we close do consist in the white space. I shared in my remarks that Omada has penetrated 14% of self-insured, 9% of fully insured, 1% of Medicare Advantage. So, it's quite common that we meet clients that don't have anything.

Equally, in Wei-Li's prepared remarks, we talked about the takeover of an incumbent diabetes vendor. So that's equally something that we're seeing with increased frequency and watching for opportunities to progress more of that as we enter closing season.

Very helpful. Maybe for a follow-up for you, Steve. Great to hear about more GLP1 Care Track adoption. Can you just remind us how pricing there looks versus the other modules? Just as we maybe think about sort of blended ARPU over time as presumably GLP Care Track becomes a bigger and bigger portion of the mix?

Yes. No, great question, Saket. And just a reminder, GLPs are still currently in the minority of our total enrollees. So, their ability to move our weighted average ARPU is going to take some time. As you know, we still have a lot of our total enrollees in the core cardiometabolic offerings.

In terms of where it sits within our pricing structures, it's priced at a premium to our prevention and weight health products, but still below hypertension and below diabetes. So, it's really the relative growth rate that we'll see in GLP-1s to the extent it overperforms and outpaces prevention and weight health, it does have the ability to lift blended ARPU over time, so do diabetes and so to hypertension as well. And that's why we're extremely focused on those condition areas.

Our next question coming from the line of Elizabeth Anderson with Evercore.

Congrats on your first quarter out in the market. It's great to see the results here. I had just a question about the selling season. Obviously, you signed CVS, which gives you sort of access to some of a bunch of their members. Is there anything you could specifically call out that's sort of resonating with that client book and just any progress on the early selling or sales there?

And then maybe as a follow-up, obviously, Steve was just talking about the sort of industry-leading retention results in terms of users on the platform 1 to 2 years later. How do you think about how the evolution of that as we move through the next couple of years? That number has obviously been high and coming up over time. But how do we think about sort of incremental nudges or the use case of AI that you guys are mentioning on the food side, maybe as an example?

Yes. Elizabeth, this is Wei Li. Great to hear from you. Thanks for your question. Regarding selling season, you also mentioned CVS. Yes, we went to market and have a relationship with CVS, all of our products, including our GLP-1 Care Track are listed on their platform. We went to market through CVS earlier this year. And we're kind of pleased with the early signs.

Obviously, in 2025, because of the enterprise motion usually takes 12, 18 months to kind of gain any traction, we don't expect any material contribution to total membership growth in 2025. But we do look for growth in our pipe as it relates to closing new deals.

As it relates to CVS as well as across our portfolio, our pipe is building nicely. But as we all know, we're just entering the selling and closing season literally just right now. And so, we're going to be excited and anxiously awaiting to kind of see how those deals convert into closed one towards the end of the year.

So, nothing to share right now in terms of total progress on closed deals or our pipe, but we do like what we're seeing. And again, we'll be tracking it very, very closely over here in the back half of this particular year.

As far as other traction on engagement of our membership, we continue to see continued engagement in our membership. We're going to be tracking very, very closely. Obviously, the GLP-1 Care Track members are newer to our business just over the last maybe 18, 24 months. And so, we're going to continue to track how that engagement goes. But we, again, like what we see there, and we're gaining momentum.

And Elizabeth, this is one thing we love about our pricing model. I mean, as you know, and for those who perhaps don't, we charge when people sign up and we continue to build such that they're engaged. So, the better product experience becomes, the more engagement ideally, we can get, the more revenue we'll capture. And ultimately, it's about the outcomes and bending the curve.

So, advances like AI are just one additional air in the quiver to just build experiences that members absolutely love that feel personalized to them, that feel that they -- that let them feel that they're getting this incredible support for Omada. And optimally, that will be reflected in engagement progress over time, which will be one of the levers of growth for Omada.

Great. That's super helpful. And I'm interested personally in this food scanner thing, too. So let me know...

We'll let you try it. It's pretty funny.

Our next question coming from the line of Richard Close with Canaccord.

Congratulations on a very strong start. Maybe a question for Steve here. Just curious if you could talk a little bit about the gross margin progression through the rest of the year. Obviously, outperformed us by a significant amount here in the second quarter. And just curious if we should assume sort of that typical continued stair step in the back half that you have done in the past. I'll start there.

Richard, yes, thank you so much for the question. Obviously, extremely proud of what we did in Q2, ending at 68% gross margin. Maybe just to reorient everyone, we do observe gross margin seasonality in our business. Q1 historically has been our lowest gross margin quarter. That's associated with it being our largest quarter for net new enrollment volume associated with the annual benefit cycle.

So, what you have happened there is we have increased care team costs because our care teams are ramping up our new members. And then we're also shipping a higher amount of hardware in the first quarter to make sure that folks are set up on the program. What we've typically observed historically is that you then see a tick up from Q2 and then the rest of the year. If you look back to 2024, we started the year at 52% gross margin. We exited the year at 69% gross margin.

So, we really like the setup that we currently have for the back half of the year, going from 60% in Q1 and then increasing to 68% in Q2. We really like how that's currently being set up, but we're not commenting on how that's going to build for the back half.

Okay. And then my follow-up is to maybe better understand the member progression through the year. You sell during the year, that's the benefit year launches, you get a lot of members signing up in that first quarter. Obviously, in the second quarter, you significantly outperformed. And I'm just curious, are the dynamics changing a little bit now that you have the GLP-1 Care Track? And how should we think about membership in the back half in terms of new members coming on?

Yes. Richard, let me comment on that regarding member kind of volume progression. I think there's a couple of things to note. I think the first one is that as we continue to study our member outreach and optimize and do all the A/B testing that we've been doing for several years now.

That could influence changes in member volume that may look a little bit different compared to last year. So better enrollment rate or member outreach effectiveness, obviously, will influence quarter-to-quarter sequentially and may show up with some differences there. And as mentioned a little bit earlier, we continue to optimize there, and we continue to see some improvement year-over-year as we did in '24 compared to 2023.

The second thing to think about that you brought up in terms of GLP-1s, this space is still relatively new to everybody. It's dynamic. It's unsettled, and we need to continue to monitor exactly what the annual flow will be for GLP-1 numbers. But one of the things that we do need to watch carefully is that the GLP-1 prescription volume continues to grow across the weight health category as physicians continue to prescribe.

And so, as physicians continue to prescribe and as our utilization and support for our GLP-1 companion program continues to grow, we're going to have to watch how that changes number volume sequentially from quarter-to-quarter.

Our next question coming from the line of Ryan MacDonald with Needham & Company.

Congrats on a great first quarter out. I understand you're obviously not quantifying sort of GLP-1 Care Track success. But maybe qualitatively, if you look at sort of the buckets or sources of where you might be getting the member adds from, can you talk about what you're seeing in terms of the magnitude of success within EncircleRx program versus sort of the broader GLP-1 Care track adoption in terms of member adds?

Yes. Ryan, Wei-Li here. Yes, sure. I mean, of course, we're proud to be a partner for the EnCircleRx program, which is part of the ESI Evernorth business there. We work very, very closely with them. They work closely with us, and we have a pretty good large-scale go-to-market there. And certainly, that is a part of the increasing growth attribution of GLP-1 Care Track members to our total overall membership growth.

In terms of other types of business, we continue to sell through our GLP-1 Care Track. Most recently, of course, we launched with CVS, the largest PBM in the entire marketplace here in the United States, not only our GLP-1 Care Track, but also our other programs. And we continue to closely partner with their sales teams to build pipe.

We don't anticipate significant volume this year from that relationship because the enterprise motion takes a little bit while, but we do anticipate contribution across the portfolio, including GLP-1s, more so to hit next year. So that's what I would say in terms of GLP-1 Care Track membership progression.

It is also important to note that even clients that don't have the GLP-1 Care Track doesn't preclude members who decide to come into our program, either with diabetes or hypertension or with weight health that might be on a GLP-1. And so, we certainly support those numbers in kind, although not with the enhanced GLP-1 care services that are associated with Care Track.

And Ryan, building -- this is Sean. Building upon Wei-Li, just a couple of observations on the end market for GLPs. So we find that there are really 2 customer types. There is an employer who covers GLP-1s for their population. They may have interest in Omada's GLP-1 Care Track. Equally, our contracts with both CVS Caremark and Evernorth allow them to deploy our broader solution.

So, it's quite often that they look at the Care track and think, "You know what, it makes a lot of sense to just deploy Omada's prevention and weight health more broadly or other solutions." Given that they know that a minority of their population that has cardiometabolic challenges and wants to lose weight may be on a GLP-1. So that's customer type A. It really lifts all those.

Equally, there's customer type B, which are employers who just are not in a financial position to be able to cover GLP-1s for obesity. That's also a conversation we can have because those HR leaders are getting e-mails from their employees saying, "How come GLP-1s are not on our benefit design?" And it's a nice thing for them to be able to say, like, "Look, at this point, we can't afford GLP-1s, but we'd like you to meet Omada."

So there's really 2 buyer personas there. In many ways, GLP-1 has become a tailwind for the broader business at large, which is just a dynamic I wanted to make sure to punctuate.

Yes. Super helpful color there, and I appreciate all of that. And as we think about the selling season, we're still obviously early in that, but we hear a bit of crosswinds in terms of, obviously, heavy demand at looking at potential GLP-1 companion solutions because of the heavy costs and how that's driving up health care costs, but then also a lot of uncertainty around decision-making because of the tariff situation, the macro. How is that playing out or shaking out in terms of the conversations that you're having? And are you seeing any signs at all in terms of delayed decision-making? Or is it too early to tell?

Yes. We -- year-to-date, we're not seeing really any influence or material difference in pipe development, pipe movement. As you've noted, we're clearly early in the season. And just like every year as we approach the closing and selling season, we'll watch things very, very closely in terms of how things accelerate through the pipeline.

But here to date, we've not seen any particular influence in terms of customers churning or slowing down their decision-making or being interested in the portfolio of programs that we have. But again, we'll be watching, of course, this very, very closely over the second half of the year.

Yes. And I mean chronic disease is very topical right now. I mean you've got, obviously, the administration's focus on chronic disease. You've got GLP-1s. It's creating a nice spotlight on just metabolic care generally, and I think that's reflected in what we see in the pipeline.

Our next question coming from the line of Gene Mannheimer with Freedom Capital Markets.

Congrats on the IPO and the great results. I just want to -- really a 2-part question, just building on the last one. Understanding that you're seeing nice growth in the GLP-1 track, how would you intend to kind of maintain your edge there in weight management given that competitors that do offer GLP-1 treatments are beginning to integrate GLP-1 support in their programs?

And then the second question is really more on the narrowing losses, which have been impressive even as you incur public company costs and you scale your investments, what level of revenue you think the company can achieve positive operating margins?

Yes. Gene, thank you. This is Wei-Li. Appreciate the question. I'll tackle the one regarding GLP, then Steve, I'll hand it over to you to talk about the second question.

It's a good question. We've often said and even have said on this call that the GLP-1 marketplace is dynamic. It's unsettled. It has not reached a steady state, and that would be certainly the case for enterprise buyers looking for solutions. We think the antidote for that is continued innovation. And as Steve had indicated earlier in some of his other comments that we have investments or continued investments in the GLP-1 space even slated for the back half of this year.

One of the things that I think is important to note and I think is important to reinforce is that one of the key aspects, we believe that our purchasers, our buyers, our clients care about is around results. Do people engage in your program in the Omada GLP-1 Care Track? I think our results would show and indicate that they do. At various points in time, several months out, 80% to 90% of people are still persistent on their GLP-1 compared to probably 30 percentage points less than that in the wild.

And we attribute that potentially to the support that they receive from their coach, the dynamic and engaging nature of our application and ongoing support that they get across the entire journey from the point that they start on their GLP-1 and to the point that potentially if a member decides to stop their GLP-1 at that point and then well beyond.

The second part of it, of course, are the outcomes. As we all know, buyers are trying to make decisions about whether or not they cover and reimburse GLP-1s because of the cost. And for those that have decided, they're still worried about the cost. And certainly, the price tag is something that they're worried about the total impact of that price tag times the number of potential people they're worried about that impact, but they're increasingly concerned about potential waste.

And so, what do I mean by that? And so, what I mean by that is that as many as 1/3 to 2/3 of people at the end of the year that are on GLP-1s will decide to come off their GLP-1. They don't want to be on it for a lifetime. And we know from the data that the overwhelming majority of people gain 2/3, maybe even more than 2/3 of their weight back once they stop their GLP-1. And so, they're really looking for not only a companion program while you're on a GLP-1, but one after -- a program after your GLP-1 that reduces weight gain.

And we've shown compelling data to suggest at 16 weeks that you actually don't experience any weight regain on average and in fact, a minus 0.1% decrease in actual weight. And so that becomes an important dialogue. We are going to continue to follow members beyond the 16 weeks. We're going to go out 6 months, 9 months, 12 months. And we look forward to sharing that data when it becomes available. So that's an important part of doubling down on the data to make sure that everybody understands the effectiveness of our programs.

As far as other investments, nothing to share today, but when the time comes, we'll be more than happy to do that.

Gene, yes, regarding the second part of your question, obviously, we're very happy with the quarterly progression here, growing 49%. A large majority of that top line performance dropped directly to the bottom line. And we continue to see operating leverage in 3 main areas.

The first and probably most important is our care delivery platform. This is the tooling and the platform that our care teams use every day to serve our members. We've been investing in the care delivery platform for the better part of our decade, tens of millions of dollars. And as we've needed to add new features and new product features, we haven't needed to deploy a ton of incremental investment to spin those up. We launched our GLP-1 Care Track on our existing tech stack in just a couple of months.

The next part is we're feeling a tremendous amount of operating leverage across our sales force. Prior to 2019, we are in market with our prevention and weight health product. Now we're in market with diabetes, with hypertension with MSK and now with our GLP-1 product offering. So, our sales force has become more efficient because they can now sell across a suite of products.

And then lastly is our marketing outreach. Last year, we sent just over 100 million e-mails across 5,000 different campaigns across our 2,000 customers. That's the primary medium that we get folks in the doors through e-mail marketing, and it's a very cost-effective channel for us. So, as we think about continuing to grow, we're not going to need to invest disproportionately in that team to scale with the demand that we're seeing on the other end of it.

I don't want to cite a specific level of revenue at this time as to when we're going to be breakeven exactly. We're going to continue to look at the back half of this year and determine where we can make strategic investments to continue to grow. But we do think Q2 was a rick barometer narrowing our adjusted EBITDA loss to just $200,000 on a $61 million quarter.

Thank you. And I'm showing there are no further questions in the Q&A queue at this time. Ladies and gentlemen, that does conclude our conference for today. Thank you all for your participation, and you may now disconnect.