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Virta Health is a high-profile, digital health company that is on a mission to “reverse” Type 2 diabetes in 100 million people by 2025. As the deadline draws nearer, E&O dug into Virta Health’s progress to date in this 8,000-word report. Read on for Virta Health’s estimated annual revenues, patients treated, pricing, performance guarantees, and much, much more.

In the summer of 2014, one month before the future founder and CEO of Virta Health, Sami Inkinen, rowed a boat 2,400 miles halfway across the Pacific — KetoThrive, the company that would become Virta, applied for a trademark on the name “Dr. Newbody”.

The trademarked name was likely the first crack at a brand for an app that would, as Inkinen would often say later, put a doctor in the pocket of people with Type 2 diabetes. Wisely, the Virta Health team shelved the name “Dr. Newbody” and eventually landed on Virta. The “doctor in your pocket” framing stuck though, and they weren’t going to manage diabetes. Virta claimed it could help them “reverse” their diabetes via a “well-formulated” ketogenic diet.

When Inkinen started rowing from San Francisco to Hawaii, however, he hadn’t yet fully committed to the company that would become Virta Health. (He took turns rowing with his wife on the 45-day journey. It was just the two of them out there, and they had no other outside help.)

Halfway to their destination, however, Inkinen received a text message on his satellite phone about the last company he had co-founded, real estate tech co Trulia. Trulia had already IPO’d and Inkinen was no longer involved in the company’s day-to-day, but he was still on its board. The message informed Inkinen that Trulia’s biggest competitor, Zillow, had just made a $3.5 billion offer to merge the two companies. The board asked him to sign off on the deal — whenever he found a minute to stop rowing.

Inkinen summed up the episode during a podcast interview years later:

“But in the middle of the ocean, to get that kind of a question. It was sort of bitter-sweet. Obviously, we decided to do the deal and the companies merged. But, you know, as a founder, it is also kind of your child. Somebody else buys the company, and it is in somebody else’s hands. It was a very emotional moment… I would say it was like a new beginning for me. That’s the one thing. Consequently, after we finished the row, I made the 100 percent decision to not just found Virta but to go and scale it. To go all-in. … From that point on it was like, alright, that chapter of my life is 100 percent over.”

Inkinen’s long-distance row garnered headlines around the world. He and his wife, Meredith Loring, set out on the voyage to raise awareness about the dangers of eating sugar. The trip was sponsored by half a dozen food brands, including a new one developed by Inkinen and Loring named Native Life. Native Life sold snack-sized bags of grain-free, protein-packed granola clusters that had no added sugar. It encouraged fans to sign up for its newsletter with the call to action: “Join the movement against sugar!”

Native Life’s online shop shuttered about a year after the couple stepped ashore safely in Hawaii — sometime in late 2015. By then, Inkinen was committed full-time to Virta Health as its co-founder and CEO. Loring also joined Virta as a senior marketing director.

In hindsight, the headline-grabbing 2,400-mile Pacific Ocean row might seem like a wasted publicity stunt for the newly incubated KetoThrive brand. However, despite its mission to raise awareness about the dangers of sugar consumption, the trek was also (obviously) an epic feat of strength and endurance, or, to put it plainly, a month-and-a-half-long bout of exercise.

One of the selling points of Virta Health’s food-as-medicine, diabetes reversal program? No exercise required.

So, the grueling expedition probably wasn’t a good vehicle for promoting Inkinen’s next big project. As it happened, Virta Health didn’t officially announce itself to the world for another two-and-a-half years. Instead of going to market right away, Virta took a beat and first conducted a clinical trial. That’s not a common course of action for most new digital health startups.

Virta Health’s 5-year Non-randomized Study

If you work in or around digital health and have already formed an opinion about Virta Health, then it is more than likely about the company’s flagship clinical trial.

More on some of the specifics of the trial in a minute, but first I want to share what Inkinen told me when I asked him if there was anything he would change about it if he could go back in time:

“I’m happy we invested the time, money, and effort for a 5-year controlled, prospective trial. It was a huge decision for us at the time, and almost no digital health company made that kind of commitment given there was no need for drug-like FDA approval. Many questioned my decision at the time, but now these published results form the foundation of everything we do.”

“If I were to go back to 2015, I might make sure the study design had three letters: ‘RCT’. I learned the hard way that many journalists and even scientists discount your findings even with well-designed and controlled trials, unless they are randomized. Other than that, I’d do everything exactly as we did, again and again.”

In March 2017, Inkinen officially launched Virta Health with results from the trial. Virta’s press release summed up the topline findings of the study like so:

“The company’s debut comes on the heels of a new peer-reviewed study that demonstrates Virta was successful in reversing type 2 diabetes in half of its clinical trial patients and eliminating or reducing insulin in 87 percent of patients in just 10 weeks.”

While bariatric surgery and some studies focused on extremely low-calorie diets had made similar claims about “reversing” Type 2 diabetes, Virta’s claim (and word choice) were controversial. That said, the launch announcement clearly intended to be disruptive:

“Virta Health is an online specialty medical clinic that reverses type 2 diabetes safely and sustainably, without medications or surgery—shifting the focus from diabetes management to reversal.”

As Inkinen mentioned in the block quote above, Virta continues to use the first-year results of its clinical trial as the basis of its program today. Compare these three key outcomes from the trial to Virta’s three performance guarantees:

“After 1 year, patients [in the Virta Health program], on average, lowered HbA1c from 7.6 to 6.3 percent, lost 12 percent of their body weight, and reduced diabetes medicine use. 94 percent of patients who were prescribed insulin reduced or stopped their insulin use, and sulfonylureas were eliminated in all patients.”

So, to sum up, the trial showed a 1.3 point drop in A1c, a 12 percent drop in body weight, and a 63 percent Rx cost reduction. Virta’s performance guarantees (which we will dedicate a whole section to later on) vs its one-year trial results can be summed up like so:

Guaranteed 1.0 A1c reduction vs. 1.3 A1c drop in the trial
Guaranteed 5 percent weight loss vs 12 percent weight loss in the trial
Guaranteed 40 percent cost reduction in diabetes medications vs 63 percent diabetes Rx cost reduction in the trial

You can see how these guarantees help Virta to overcome any objections from a potential customer who wonders if the results from the non-randomized study are truly generalizable to their own population. A more recent study from Virta that focused on the program’s results during COVID vs pre-pandemic acknowledged this limitation in a way that I’d argue applied to the original study too:

“A limitation of this study is that the results may not be generalizable to a broader population of people with uncomplicated obesity, as it is possible that high prevalence of people with T2D who enroll in this intervention have different underlying characteristics and may be more motivated.”

A webinar intended for potential Virta customers, however, probably gives us a glimpse of how the company brushes off questions about whether or not their clinical trial participants are extraordinarily motivated. Here’s what Virta Health’s former Chief Medical Officer Dr. Robert Ratner said when asked about this on the webinar in June 2021:

“Selection bias is always an issue. Just as a comparison, if you look at individuals who have had a heart attack. A myocardial infarction. The recommendation is that all of those patients should go home on an asipirin and a statin. Six months later, only 50 percent are taking them despite the acuteness of a myocardial infarction and the medical severity. So, we can’t control what people do when they leave. In terms of assessing the value of the intervention, one of the ways that I would look at it is, what is our retention rate? In those individuals who opt into Virta, how many stick around? In our clinical trial, our one year retention rate was 83 percent on a nutritional intervention. Our two-year retention rate was 74 percent. Clearly, patients are finding something acceptable. I can’t tell you what it would have been if we had taken a large, unselected patient population and randomized them. But there aren’t a whole lot of randomized trials of nutrition, because it is hard to do and it is never blinded.”

As Ratner implies, the bigger question for Virta is enrollment. How large is the subsegment of people with Type 2 diabetes who are willing and motivated to enroll in a longterm ketogenic diet? If these performance guarantees are successful in helping potential customers suspend disbelief around the efficacy of the program, I’m still not sure how Virta convinces customers that a large enough group will enroll in its diabetes reversal program. Were the participants in its original trial unusually motivated? How many people are like that in any given employer’s population? If the answer is very few, then at what point is it not worth the trouble?

This is the big hurdle for Virta Health, and yet the company’s north star metric addresses this head-on. Even back in 2015 when it was still named KetoThrive, the company had the same mission as it does today: Reverse Type 2 Diabetes in 100 million people by 2025.

Before we dig into Virta’s go-to-market more, let’s try to figure out how far along it is now, eight years after its founding (and about two years before its 2025 deadline).

Growth Metrics

App downloads indicate the number of patients treated

* 2017 data includes downloads from April through December of that year since Virta’s app first appeared in AppStores in April 2017.

** 2022 data includes downloads from January through September, which is the most recent data available at the time of this report’s publication.

Why app downloads: In previous reports, E&O has collected user numbers, download figures, or “number of patients treated” claims that company executives let slip in interviews, keynotes, investor decks, or sales pitches. Virta Health is surprisingly disciplined on this front, so I turned to a new source of data, app data company SensorTower, which agreed to let me publish the data above.

In Virta’s case app downloads are a good indicator of patients treated. Downloading the app is a requirement for the Virta program, so the numbers above are likely maximums for the cumulative number of patients treated by Virta each year.

Caveats: While the Virta app has little utility for those not enrolled in the program, anyone can download the app. So, there is some noise there. Also, Virta sometimes encourages those interested in enrolling in Virta to download the app and submit their application that way, but I suspect few go through the trouble vs just applying on Virta’s site.

Virta’s annual revenues from 2017-2022

Just to be clear: The annual revenue figures above are estimates calculated by E&O. They are not sourced from the company or any of its proxies. It’s also important to note that this report was published in late October 2022. The annual revenue estimate for 2022 is based on data from the first three quarters of the year and then extrapolated out linearly. Virta maintains it needs to be on an exponential growth path right now.

Methodology: I used net new app downloads per year as a starting point for estimating Virta Health’s annual revenues. For the company’s first four years of existence (2017-2020), the calculation is much simpler because Virta only offered its Type 2 diabetes reversal program at the time. Here are the relevant numbers for those years:

Price for year one: We’ll get into more specifics for pricing (and guarantees) in a later section, but for these calculations, I used the second lowest price I could find for Virta’s reversal program, which was $234 per participant per month, or about $2,808 per participant for year one.
Price for year two: For those Virta patients that stick with the program into the second year, the price per month is around $199 or $2,388 for the year. While Virta has said it supports patients for two to three years on average, I only factored in year one and year two participants in these calculations.
Retention rate: This is a tricky one. Virta wrote in a letter to CMS recently that its retention rate is “generally comparable” to the numbers it posted in its flagship clinical trial. (“Importantly, real-world data collected from Virta’s participation in more than 200 health plans appears to be generally comparable to the trial results.”) That study showed 83 percent of participants who enrolled made it through the program’s first year. By the end of year two, 74 percent of the original participants were still in the program.
Money-back guarantees: For the majority of its customers, Virta issues refunds if participants in the program don’t lose a certain amount of weight, don’t reduce spend on their diabetes-related medications, and don’t reduce A1C by an average of 1.0. More on these guarantees is in a dedicated section below, but I ended up not including them in these calculations. (I don’t believe Virta has to refund its fees often enough for it to matter here.)

2021 and 2022: The calculations get a little more complicated for estimating revenues in 2021 and 2022. Virta launched new programs beyond its diabetes reversal program, and each of them had different price points. A major unknown here is how many of Virta’s net new app downloads were from participants in its reversal program vs. the others. The company gave me a little color on that, which helped me make an educated guess. Finally, as noted above, the 2022 revenue figure also includes an extrapolation based on net new app downloads during the first three quarters of the year to get to an estimate for the year in full.

Pricing for other programs: While they were announced in 2020, Virta began rolling out new programs for reversing prediabetes, managing Type 2 diabetes, and losing weight (obesity). While I could find pricing information for obesity — $75 per participant per month or $900 per year — and Type 2 diabetes management — $79 per participant per month or $950 per year, I couldn’t find specific pricing info for prediabetes reversal. As a result, I just assumed it was the same price as the original diabetes reversal program.
Percent mix of programs: I ask Virta if its diabetes reversal program still accounts for the majority of its patients currently enrolled, and the company confirmed that it did. All current contracts include the reversal program, Virta added. With little to go on, I made the assumption that diabetes and prediabetes reversal programs accounted for 60 percent of the participants in 2021 and 2022, while the obesity program accounted for 20 percent and the diabetes management program accounted for the remaining 20 percent.
Year two for newer programs? Finally, I don’t know whether the new programs typically last longer than one year and, if they do, what the discounted pricing is for their second years, so I made the decision not to include any additional revenue in 2022 for possible year two participants in obesity or diabetes management.

So, that may be much more information than you need, but that’s how I put together the estimated revenues above. If you tweak the percent mix of programs, add in more 2022 revenue for second-year participants of the non-reversal programs, or choose a higher average selling price for the programs, you can swing some of the numbers up. If you believe the app download data has more noise in it than I do, you could easily make the case to dial down the net new participants figures too.

Virta Health’s mentions of cumulative patients served: As I wrote above, Virta is unusually disciplined about not sharing company growth metrics. I did, however, find a handful of mentions over the years that added some backing to the app download data from SensorTower:

In February 2018, Virta CEO Sami Inkinen tweeted that the company had “already treated thousands of patients.” Despite being less than a year out from its commercial launch, this was a common line from Virta. I believe that figure refers to Virta’s protocol, which Virta co-founders Jeff Volek and Dr. Stephen Phinney had used to treat thousands of patients by this time. The app data from SensorTower shows that Virta had only 1,300 total downloads as of February 2018, not quite enough to make the “thousands” claim.
In 2019 the company would make the claim that it “currently serves thousands in commercial deployments,” which might help put its 2018 claims in a clearer light.
In late 2020, Virta stated that “Over the last four years at Virta, for example, we have seen our model of continuous remote care — near real-time access to dedicated physicians and health coaches — help thousands of patients transform their metabolic health, eliminate the need for medications, and reverse their condition, especially type 2 diabetes.”
In March 2021, Virta wrote in a company blog that it now treated “thousands on a daily basis.” The app download data shows more than 12,000 cumulative downloads at this point.
In August 2021, a job post pointed to the company’s ambitions (while also revealing that it hadn’t scaled to hundreds of thousands yet): “The Director of Clinical Training & Development Senior Manager will be responsible for creating & executing a strategy to efficiently & effectively onboard & train our staff of front-line employees (coaches, enrollment advisors, physicians & nurse practitioners) as we scale to safely improve hundreds of thousands of patients’ metabolic health.”
In March 2022, a blog post by Virta’s partner Google Cloud revealed that “Since first launching in 2015, Virta has grown from a small healthcare startup to an established business that has treated tens of thousands of patients with a goal of reversing type 2 diabetes in 100 million people by 2025.” By then, app downloads topped 30,000.
Finally, in July 2022 Inkinen said during a podcast interview that the company next needed to “scale to millions” and added, “we are in the middle of that now.”

So, if you compare these vague mentions of patients treated from officially sanctioned sources to the app download numbers from SensorTower — they track. Apart from the early years where Virta seemed to include patients treated outside of its commercial deployments, the company never claims to have treated more people than the data I have now show. (That said, I believe frequently pointing to the 100 million reversals goal probably leads people to believe that Virta has treated many more patients than it has since 2025 is just two short years away.)

In any case, the number of patients that Virta Health has treated is lower than I expected.

Remember: Digital health companies like Omada Health and Hinge Health have already treated hundreds of thousands of patients. As far as I can tell, Virta has yet to hit 100,000. And it’s possible that it may not have treated half that number yet.

Virta’s customer base growth

*2022 data is not for the full year — it’s only through the third quarter (this report was published in October).

One of the only growth metrics that Virta Health shares publicly is its number of customers. Once Virta crossed the 100-customer mark sometime toward the end of 2020, it began sharing actual numbers. Prior to that, the company would share a year-over-year customer base growth percentage, which is how I calculated numbers for 2019, 2018, and 2017. By the end of 2021, Virta had signed up 20 national and regional health plans, but Virta rarely breaks out the number of employers vs. government entities (like the VA) vs health plans it works with. It usually just shares an overall number of customers.

Patients per customer: It’s striking how low the number of patients treated per customer ratio is when you compare those two charts above. If we assume that the cumulative number of patients treated in one year is a result of the number of total customers signed by the end of the previous year, that would mean there were about 240 patients treated per customer in 2021. By the end of 2021 (the most recent year we have complete data for) a cumulative 24,000 or so patients had downloaded Virta’s app. By the end of 2020, the company had about 100 customers.

Enrollment rate: A few E&O readers asked me to dig into Virta Health’s enrollment rate. I believe the 240 patients treated per customer is a good metric to keep in mind and might be more instructive than anything else I found. However, Virta has made many passing comments on its enrollment rate, which it sometimes calls its activation rate, over the years. More on those in a minute. When I asked Virta for an average enrollment rate, they told me:

“We’ll hold off on citing exact numbers, but one thing we’ll say is that even internally we tend not to focus on the average across our entire book of business, and rather focus on rates by payer type. This goes back to what we mentioned earlier, that activation can vary between employers, health plans, government, unions, etc. As a guideline, employers typically have the highest activation rates (correlated to strong marketing access), although that’s not always the case.”

Inkinen told me recently that enrollment rates can be north of 35 percent with some employers who are willing to work with Virta to use various channels for outreach. Here’s a look at what Virta pitched as the ideal enrollment timeline in its early years:

In other interviews, Inkinen has said that enrollment is in the “double digits” for employers on average and “not 1 percent or 5 percent”. Moda, a health plan partner of Virta’s, listed the company’s “percent engagement” at 10 percent in a pitch to a potential customer back in 2020. (I’m assuming that’s a synonym for enrollment?)

We would have to know the number of eligible people with Type 2 diabetes who have access to Virta Health’s programs before we could estimate the company’s average enrollment across its book of business.

In many of Virta Health’s webinars for new and potential customers, the company discusses early results from rollouts with existing customers. Most of the case studies include enrollment numbers at large employers that are between 100 and 200 people. A few examples of larger deployments that Virta has made public:

During a webinar presentation last year, JLL, a large company in the real estate industry that provides medical benefits for its 30,000 employees in the US along with their dependents, shared results 18 months after rolling out Virta Health. The results showed that 183 people had been enrolled at that time for at least six months and 139 had been in the program for at least a year.
A webinar in mid-2020 shared results from a Virta Health rollout across a number of Blues plans. After 90 days the company had enrolled just north of 200 patients.
The Veterans Administration enrolled about 400 participants into Virta Health for its original pilot. This seems to be one of the company’s largest deployments to date.
Virta’s internal analysis of its reversal program’s cost savings used outcomes “from three commercial deployments from 2017 to 2020,” which Virta described as their “early large commercial group deployments.” The analysis included 465 Virta patients.

In other words, the various case studies that Virta presents to future potential customers all seem to back up the analysis above that shows Virta has enrolled a couple of hundred people on average in each of its customer deployments so far.

Coach-to-patient ratio: Of course, one common and important metric for companies like Virta is its coach-to-patient ratio. As far as I can tell, Virta has never officially shared how many coaches it employs. I asked the company if it could give me a figure, and while it wouldn’t share an exact number, it did confirm the company has more than 400 part-time and full-time employees in total, and that its coaching group is its largest. My guess is that Virta employs around 200 part-time and full-time coaches. So, currently, coaches are likely handling between 100 and 200 Virta patients. If that’s accurate, the company is likely on the cusp of having to figure out how to scale its coaches to handle much larger panels of patients over the next two years. Inkinen has said that Virta will not be hiring 1 million coaches to support the company’s mission of reversing diabetes in 100 million people worldwide. (More on this at the end of this report.)

Virta’s Pricing and Guarantees

I mentioned a few price points for Virta’s programs above, but this section will dig into the various prices I’ve seen in Virta’s contracts over the years along with how they structure their money-back guarantees.

Reversal pricing: Virta’s flagship program, which it describes as diabetes reversal for Type 2, is usually priced between $225 and $269 PPPM for the first 12 months. For months 13 and up, the price drops to between $175 and $199 PPPM. Virta typically treats patients for between two and three years, and at least one of the contracts I’ve found ended 38 months after signing. (As noted above, I have yet to see a price point for the prediabetes reversal program, which makes me wonder if it is the same price as this one?)

Obesity pricing: Virta’s obesity management program, however, is usually priced between $75 and $99 PPPM. The aim of this program is “clinically significant weight loss” for people with BMIs over 30. For this program, the weight loss performance metric guarantee outlined below typically applies.

Diabetes management: Virta’s diabetes management program seems to be priced at its lowest price point, but I only have one data point for this one: $79 PPPM. This program promises to help employees monitor and control their blood sugar, while Virta provides behavioral counseling and nudges toward diabetes reversal.

For diabetes reversal, all fees at-risk: For Virta’s flagship program, typically all of its fees are at-risk. Virta confirmed to me in an email that nearly all of its customers opt for this at-risk pricing. Virta’s contracts include performance targets and corresponding refunds for calculations related to decreases in A1c, weight, and diabetes management prescription costs. (Sometimes the contracts only include targets for the first two categories and don’t get into Rx costs.) When the contract includes targets for all three buckets they each account for 33.33 percent of the at-risk fees.

Virta’s Three Performance Guarantees

HBA1c Reduction Performance Metric

([A] – [B])/ [C];

where [A] = the sum of each Attributed Patient’s Treatment HBAlc,
[B] = the sum of each Attributed Patient’s Baseline HBAlc,
and [C] = the total number of Attributed Patients.

For example: if there are 5 Attributed Patients with Treatment HBAlc levels of 5, 6, 7, 8, and 9 and Baseline HBA1c levels of 7, 8, 9, 10 and 11:

[A] will equal [5 + 6 + 7 + 8 + 9] = 35
[B] will equal [7 + 8 + 9 + 10 + 11] = 45
[C] equals [5]

HBA1c Reduction will equal (35 – 45) / 5 = -1.0 points (or a reduction of one point in HBA1c). So, Virta will not owe the customer a refund. For this guarantee, as long as Virta can show one point reduction or better it does not have to refund any of this 33.33 percent of the fees. Showing fractions of one point in reduction will allow it to hold on to some of its fees on a sliding scale, but a reduction of zero (or any increase in HBA1c) results in a full refund of this 33.33 percent of fees.

Real-world example: Virta often shares that it helped one of its first customers, US Foods, reduce A1c by 0.9 points. Since that is 10 percent less than the guarantee, I’d imagine that would mean that Virta refunded 3.33 percent (10 percent of 33.33 percent) of its monthly fees back to US Foods. (This example also makes clear why I decided to not factor in the impact these refunds might have had on my revenue estimates for the company.)

Weight Loss Performance Metric

(([A] – [B])/ [B]) * 100;

where [A] = the sum of each Attributed Patient’s Treatment Weight,
and [B] = the sum of each Attributed Patient’s Baseline Weight.

“For example: if there are 50 Attributed Patients each with an average Treatment Weight of 200lbs and average Baseline Weight of 225lbs: [A] will equal [ 10,000 (50*200) [B] will equal [11,250] (50*225) The Weight Loss will equal (10,000 – 11,250) / 11,250*100= 11.1%, and Virta will not owe Customer a Refund.”

In this case, 5 percent or more would result in no refund while anything less than that approaches a full refund (zero percent or less) of 33.33 percent of the at-risk fees.

Diabetes Management Rx Cost Reduction Performance Metric

(([A] – [B])/ [B])*[1+C]* 100;

where [A] = the Treatment Monthly Rx Claims Cost,
and [B]= the Baseline Monthly Rx Claims Cost.
And [C] = Trend

“For example, if [A] equals $400 per Attributed Patient per month [B] equals $1,200 per Attributed Patient per month [C] equals 6% The DM Rx Cost reduction will be: ($400-$1200)/$1200) * (1+ 0.06) * 100 = 70.67% and Virta will not owe Customer a Refund.”

Again, it’s a sliding scale, but if the percentage ends up being 40 percent or higher, Virta does not owe its customer a refund. Zero percent or worse results in a full refund of 33.33 percent of the fees.

Important to note: Virta requires a minimum threshold of active participants for the guarantees to stay in place: 50 participants.

How Virta Health sells, bills, and contracts

Remarkably, Virta’s go-to-market and positioning are more or less the same today as they were when it launched five-and-a-half years ago.

Virta’s at-risk fees are a key part of its go-to-market that has already been covered in two of the sections above, so I won’t get back into the specifics there again. However, during an interview a few years ago, Inkinen explained that Virta had to go at-risk to break into the market:

“When we made Virta commercially available, a couple of things were happening in the marketplace, particularly among self-insured employers. But to some extent also health plans. One, there was the point solution explosion. There were all kinds of diabetes, this and that. And a lot of employers that kind of burnt their fingers and said that, ‘Well, we deployed this, but not quite sure if diabetes is going to go away.’ Obviously, it hasn’t gone away. [Second,] for us to come to the market, and basically, make what sounded like an outrageous promise that you can reverse Type 2 diabetes… We had a lot of… disbelief. So the truth is we kind of had to… ‘Let’s do this. We are so confident about these results, that you’re going to pay nothing unless we deliver a type 2 diabetes reversal at scale.’ That’s the truth, we were kind of forced to.”

Initially, Virta only offered a diabetes reversal program, so its pitch was that its program was the missing piece of the self-insured employer’s diabetes strategy:

The image (and hindsight) make clear that this was a wedge strategy. More on this below, but after a few years, Virta said its customers demanded that it too offer its own Type 2 diabetes management program, prediabetes reversal program, and obesity treatment.

Virta, the medical practice: While it’s not unique today, Virta’s decision to set up as a medical practice back in 2015 was pioneering. The company probably deserves more recognition for being one of the pioneers of virtual-first medical practices that are set up using the now much more common, so-called “Friendly PC” MSO model. Virta isn’t a “health educator” with an NPI, it’s a medical practice, which enables a number of components of the company’s GTM, but, perhaps most importantly, it unlocks Virta’s ability to de-prescribe diabetes medications like insulin as patients go through the program.

However, an online medical clinic wasn’t the plan on Day One. This is partly speculation, but it seems that prior to the official announcement and in the early days of the clinical trial, Inkinen and his clinician co-founders Stephen Phinney MD PhD and Jeff Volek PhD RD, toyed with the idea of selling the Virta Health program to healthcare providers, but the team decided early on that they needed to create the provider structure to scale the program. Inkinen tweeted recently about this decision:

“I’m glad we learned the lesson quickly and built a full-stack company ourselves (also, Uber didn’t sell software to taxi cos and Airbnb wasn’t selling tools to Marriott … for a good reason).”

Virta turned that decision into a key selling feature in its sales decks. A common line in the company’s presentations to customers is that the company “bills through claims”:

“Virta is a medical provider, so we can work with your health plan to bill through claims. Because of this, we do not affect your administrative budget.”

Here’s how Inkinen described the decision to structure the company as a Friendly PC-MSO along with more details on how Virta contracts with payers and self-insured employers:

“I’d say everything we’ve built and designed is around patient outcomes and safety. Our entire mission and business model is around outcomes (T2 diabetes reversal and overall patient satisfaction). It’s the same reason we operate a medical practice (or Virta P.C: Virta Professional Corporation). That is necessary for delivering outstanding and safe patient care. All the other ‘benefits’ that come with having a P.C. are just secondary reasons.”

“We typically become in-network providers for health plans (whether fully insured or ASO/TPA) and employers we work with, but our contracting model is value-based where we get paid for certain outcomes in a bundled way (not individual transactions on a traditional fee-for-service basis). In other words, our go-to-market is not to just become an in-network provider and start billing standard CPT billing codes on our own after enrolling a patient. Our reason for this approach is simple: We believe in value-based care and getting paid for results, not maximizing transactions. It could be tempting to take the fee-for-service approach, but I think that could incentivize behavior and business models I don’t want to promote.”

Virta didn’t share the specific code (or bundle of codes) it uses, but the company added a little more color in a follow-up email:

“We do use a CPT code to bill through claims, but that code captures all of our bundled services. This makes for easy integration when we onboard a new payer. Then, once we start enrolling people, we put fees at risk for health and economic outcomes. If we don’t reach certain milestones, we don’t get paid. This is what value-based care is supposed to be: fees tied to outcomes and value, not how much ‘stuff’ we can do or bill for.”

Hard cost savings vs soft: As I mentioned above, as an online medical clinic Virta Health is able to de-prescribe medications. That is arguably one of the key selling points of Virta Health’s program to payers. Digital health companies pitching the cost savings of their digital health programs are more often than not pitching soft cost savings, but Virta is promising self-insured employers short-term, hard cost savings when they guarantee a greater than 40 percent reduction in diabetes medication costs. Virta often words this like so:

“2:1 ROI over 24 months: Cost savings are direct and realized rapidly due to removal of costly diabetes medications.”

Virta’s own actuarial analysis of its program’s cost savings showed that the largest savings came from de-prescribing. Here’s how it breaks down, according to the company:

What you’re not paying for: Virta’s sales decks also focus on what the customer won’t be paying for with Virta Health since the company doesn’t charge for implementation, non-participants, or engagement.

Easy button: This may not be unique, but Virta also often describes its customer service team and program implementation as an “easy button” for their clients:

“Virta does the heavy lifting unlike wellness program setups. We require very little involvement from your team, requesting a single, Virta-supplied content push up-front to alert your workforce of Virta availability. Virta handles patient marketing, intake, treatment and reporting. You show up to one 30 min weekly call.”

Direct-to-consumer: Virta doesn’t mention its direct-to-consumer payment option too often in interviews or during company presentations. (Given the price tag, I suspect it is a negligible contributor to the company’s revenue, but I have no data on that.) On an introductory webinar with providers, a member of Virta’s team pointed to the DTC price of the program — about $5,000 for the first year — when asked about the out-of-pocket cost. It came up one other time when Inkinen mentioned that having a DTC option allows him and others at the company to easily comp the program to someone in need. He can just hand them a business card with a coupon code and a URL on it, and they can onboard themselves.

What’s included in Virta’s programs

Virta typically introduces its offerings as having two core components: nutritional therapy and advanced telehealth.

Most companies in digital health are working to scale something similar to what Virta calls its “advanced telehealth” component. Virta is part of a smaller subset of companies working in digital health that is also trying to scale the adoption of a relatively new and still not widely accepted therapeutic program. In other words, Virta needs to convince payers to accept both ketogenic diets as a therapy for diabetes reversal as well as accept telehealth as an effective and safe care delivery channel.

Back in 2020 during a Virta webinar, Steve Martin, the former CEO of Blue Cross Blue Shield Nebraska, who personally went through the Virta program, explained Virta’s uphill battle with payers to convince them to consider nutritional therapy for diabetes:

“There is a very strong commitment [at health plans] to [the conventional wisdom that] the only way to treat diabetes is with medication and a diet that still is very high in carbohydrates. Slowly… that is changing in the literature, but it is still not widely adopted. It is in the nature of a health plan to follow, if you will, the golden mean of practice instead of trying to lead that. That explains their sluggishness in entering. I think there are huge flaws in existing diabetes maintenance programs, which I experienced, because, again, most recommend diets that are not preventive yet and don’t follow the latest data from the [American Diabetes Association] on glucose restriction. And don’t provide the kind of support and guidance that Virta can on how to make that leap.”

This slide below is the best summation I’ve found from the company that describes Virta Health’s operation. It also serves as a fair summary of what patients can expect from the experience of Virta Health’s reversal program:

The slide above does include a quick list of what’s included in Virta Health’s starter kit, but it is actually quite a bit more extensive than the few items listed there. Here’s a rundown of the full list, which includes a few surprises (bouillon?):

Glucose & Ketone Meter with Strips — Your glucose (blood sugar) and ketone measurements will help you understand the effect of food and other factors.
Body Weight Scale — Stepping on the scale daily will help you capture true weight changes over time.
Note: Readings will automatically sync to the Virta app.
Bouillon — Getting enough sodium is important for your health. Once started, you’ll learn about your sodium needs and how bouillon can help you meet your individual needs.
Kitchen Food Scale — Your food scale will help you meet your personalized daily protein target. It is helpful to weigh your portions of protein-containing foods, such as nuts, meat and tofu. Note: The scale is especially helpful in the beginning for accurately estimating portion sizes and will help with spot protein checks along the way.
Magnesium — This mineral helps with muscle cramps and spasms, which are common, and can be corrected by getting enough magnesium. Your care team will help you decide if magnesium supplementation is right for you.
Lancets
Alcohol Swabs
Recipe Book — Recipes to help you get started with keto-friendly meals.

Does the Virta program ever end? One of the aspects of Virta Health’s program that is not often discussed is how it ends. Is Virta Health’s food as medicine intended to be a lifelong therapy? Yes, but Virta doesn’t expect payers to pay for it for more than a few years.

The company says that it typically treats patients for between two and three years. (The contracts I’ve seen from Virta back this up too.) But by the end of that treatment period, Virta recommends patients continue to make the same dietary choices they made in the latter months of their treatment. This is also why Virta uses the term “reversal” and not “cure.”

Virta’s former Chief Medical Officer Dr. Robert Ratner summed it like so on a webinar:

“We have kind of adopted some of the language from the oncology world where ‘cure’ requires five years of no therapy, in order to say you have been cured of cancer. We are always treating patients with therapy, even if it is food as medicine. We don’t take people off food as medicine. So, we talk about remission as being defined as glucose levels under the threshold for diabetes with no meds for at least three months. That’s the international consensus. What they also said was that ‘reversal’ was the process by which you normalize glucose. So, our reversal process is this well-formulated ketogenic diet.”

Virta Health’s Expansion Beyond Diabetes Reversal

There has been no bigger change in Virta Health’s eight-year existence than the company’s decision to expand beyond its flagship Type 2 diabetes reversal program. It was probably inevitable that Virta would add prediabetes reversal, obesity treatment, and Type 2 diabetes management. The key to the last program, however, is that it gently nudges participants to consider moving into the reversal program.

Virta often describes the management program as something of an onboarding program for reversal — for those who aren’t ready yet:

At the end of 2020, Inkinen made clear that Virta is not going to expand beyond the diabetes spectrum. Here’s what he said during a Q&A on a company webinar at the time:

“We don’t want to be jack-of-all-trades and master-of-none. We really want to be — and what we have been since day one — and that is the diabetes experts. It is complicated. It is difficult. Reversing Type 2 diabetes is not trivial. It takes a lot of hard work. We absolutely want to, and have been, and will continue to be the diabetes experts. When I say that I mean the whole continuum of obesity to prediabetes to type 2 diabetes. It’s very important to do this well and not try to branch out into other things.

The second reason is why did we expand in the first place? Very simply: Overwhelming customer and partner demand… While we talk about obesity and diabetes, we treat the whole patient every single time. If you look at our clinical trial results, obesity and diabetes drive two or three other chronic comorbidities… blood pressure comes down, improvement in dyslipidemia, and improvement in inflammation… We address the underlying root cause instead of playing whack-a-mole with these different symptoms of chronic disease driven by obesity and diabetes.”

As noted above in the metrics section, Virta confirmed to me that the majority of its current patients are in the Type 2 diabetes reversal program, and all of its current contracts include the reversal program.

Discounts and guarantees for new programs: In some cases, Virta has helped drive the uptake of the new programs by offering discounts. For one contract, the employer received 10 percent off its current two Virta programs because it added the obesity treatment program. Performance guarantees for the new programs are usually just one of the guarantees in place for the reversal program. The diabetes management program, for example, may only have a guarantee focused on A1c reduction. The obesity program typically just has a guarantee related to weight loss.

What’s next: Future research, internationalization, and the path to 100M reversals

The deadline for Virta Health’s long-held mission of reversing diabetes in 100 million people by the year 2025 is drawing near. The company told me it has no plan to abandon the mission. Here’s what Inkinen wrote to me in a recent email:

“We are scaling our business exponentially, so it’s tough to say where exactly we’ll end up in the next few years. The most important thing is that we’ve now pretty well proven that what we do works. It makes clinical, economic and ethical sense. We have a business model that scales. Now we just need to keep scaling and doubling our impact every so often. This work and scaling won’t end in 2025 no matter what numbers we put on the scoreboard!”

Virta needs to continue to grow its base of patients in the United States while also launching its program into multiple international markets, in the next year to have any chance of hitting its mark. Expanding in the US likely requires more of the work that Virta has already undertaken in recent years as well as new clinical evidence that its program can work for populations who don’t work at large self-insured employers.

Virta’s next steps: More clinical trials, superpowered coaches, and internationalization.

Notably, Virta Health has already begun work on a randomized control trial that will assess the acceptability and effectiveness of Virta’s intervention in a rural population of 60 participants served by community health centers. The study will use a delayed referral mechanism as part of its control.

Virta’s former Chief Medical Officer Dr. Robert Ratner mentioned the study during a webinar earlier this year:

“One of the concerns people have, including me, is whether or not you can reach individuals who are not tech-savvy, who may have problems with broadband access and cell coverage, who may have health literacy issues. We are currently working with the University of Colorado, looking at individuals who live in rural areas and are exclusively served by Federally Qualified Health Centers. So, it is a low-income population. It is predominantly Hispanic. Most of these people are on either Medicare or Medicaid. They live 60 miles from the nearest provider.”

The Virta Health Report