The very first long-form report that Exits & Outcomes published was called Approximating Livongo Health’s S-1. That was in May 2019. Almost a year later I wrote a similar report about Livongo’s biggest rival at the time — Omada Health. I fully expected Omada to follow suit and IPO like Livongo that following year. But 2020 had other plans, of course.

Omada Health has grown considerably since E&O published its first in-depth report on the pioneering digital health company back in early 2020. Omada weathered the COVID–19 pandemic and the digital health winter that followed. It began to hit its stride as its mix of cardiometabolic and MSK care programs found buyers among employers and health plans looking to move away from single point solutions. Finally, and most recently, Omada managed to turn the existential threat of GLP-1s, a new class of weight loss drugs, into what E&O believes to be its biggest growth driver for 2024.

This report is an attempt not to retread old ground. The other Omada Health report from 2020 remains a worthwhile exploration of Omada Health’s early years and general background. This new report is a companion piece focused on recent history and near term opportunities as Omada (finally) prepares to IPO in 2025. To be clear, the company has not officially confirmed the report that it confidentially filed for an IPO over the summer, but the report is widely believed to be credible and many in the industry eagerly await an S-1 early next year. E&O first reported on signs of an imminent Omada IPO back in November 2023.

Before we dig into Omada’s recent growth drivers, let’s take a look at the company’s growth metrics. The data that follows was meticulously aggregated from public sources of information (mostly press releases and government filings) — it is not sourced from company insiders.

Growth Metrics: Estimated Annual Revenue, Customer Count, Cumulative Participants, and Net New Participants

This first chart is a helpful one to keep in mind as you review the rest. Omada has steadily increased its customer count, but it’s clear that the company has significantly increased its participants per customer in recent years.

Omada Health’s Number of Customers (2018-2024)

Omada Health’s Cumulative Participants (2015-2024)

With the exception of the last data point, these numbers were all disclosed over the years by the company. Typically, I found these numbers in press releases and government filings.

I highlighted the final line in a different color because it is speculative. Omada Health has not announced a new cumulative number for all-time patients served since October 2023 when it crossed the big milestone of 1 million.

More thoughts on this data below the chart focused on net new annual participants in Omada Health’s programs.

Omada Health’s Net New Participants (2015-2024)

With the exception of the estimated number for 2024, the data in this chart is simply subtracting the cumulative participant data points in the chart above from the cumulative number from the year prior. This net new participant number is the basis for E&O’s estimated revenue numbers in another chart below. That method is not without its flaws, but it is straightforward.

Caveat: Only tracking net news ignores multi-year participants. The biggest caveat to estimating annual revenue solely based on new new participants is that Omada Health offers programs that extend beyond the initial year of treatment. These charts ignore this fact and assume the revenue contribution from second, third and fourth year participants is negligible — but it probably isn’t. I haven’t found good intel on how many participants remain in Omada’s programs for more than one year, but I am aware the answer isn’t zero. In a recent interview, I asked Omada’s CEO and co-founder Sean Duffy if he could provide any hints about the company’s retention rates after year one, but he declined to share any specifics beyond that his company’s numbers on that front probably aren’t too different from Livongo’s.

Comparing with Livongo: With that in mind, let’s take a look at a chart that shows how Livongo’s diabetes program participants compounded year-over-year at the time of Livongo’s S-1 filing back in March 2019. This chart implies that the cumulative number of members is likely pretty close to the current active number of members, which I find hard to believe. (If you have any intel or know of any industry benchmarks for year two and year three retention rates for programs like Omada’s, I’d be curious to hear about them.)

Comparing Livongo’s Diabetes Members (2014-2019)

With all of that in mind, let’s start with a look at what Omada’s annual revenue might look like if we focus exclusively on net new participants in its programs and assume that each participant brings in an average of $650 per year (about $54 PPPM). I’ll explain the two wildly different estimates for 2024 revenue below.

Omada Health’s Estimated Annual Revenue (2015-2024)

2024 revenue caveat: The big asterisk for the 2024 data point is that this number is based on a highly speculative number of new participants for 2024. As noted above, Omada hasn’t disclosed a cumulative participants number since October 2023 when it hit the 1 million milestone. Considering Omada’s recent trendline of adding a couple thousand new participants year-over-year plus the rise of GLP-1s and the apparent success of EncircleRx (maybe contributing 320,000 or more net new participants), adding around 500,000 new participants in 2024 seems like a fair estimate.

Encircle Rx revenue lower per participant than Omada’s average? Public contracts show that Evernorth has charged at least one client $1.25 PEPM for the weight loss version of Encircle Rx. That includes a guaranteed cap of no more than 15 percent increased spending on GLP-1s in the subsequent year. We know that Evernorth has enrolled nearly 8 million into Encircle Rx, and it is likely most or all of them are enrolled in the weight loss version since that is where most of the concern is around GLP-1 costs among self-insured employers. So, we can estimate that Encircle Rx for weight loss will generate:

$1.25 x 12 months x 8 million enrollees = $120 million in contracted annual revenue for Evernorth so far.

If 4 percent of those 8 million enrollees participate in Encircle Rx because they are on GLP-1s for weight loss, then Omada might have added 320,000 net new participants in 2024 from Encircle Rx. If we assume that Omada is only charging $155 per participant per year like it did for Kaiser members at one employer (more on that in the pricing section below), then this massive influx of new Omada members only added about $50 million to Omada’s 2024 revenue. That would mean that despite the large number of new members, Omada’s revenue may not have grown very much from the year.

If, instead, we assume those 320,000 Encircle Rx participants generated about $650 per member per year (E&O’s estimate for Omada’s average revenue per participant) then Omada’s revenue for 2024 was likely much higher and approaching the $350 million figure in the chart above. (More on the Encircle Rx boon for Omada in the GLP-1 section below.)

Multi-year participant revenue: One last thought on multi-year revenue. As at least one of the pricepoints below indicates, Omada tends to charge less PPPM starting in the second year of its programs. Sometimes about half as much. If you wanted to add in revenue from multi-year participants I’d consider the pricepoint to be 50 percent less ($325 PPPY), but as I noted above I’m not sure if we’re talking about the vast majority of last year’s participants, half as many or some other amount.

During a recent call with Duffy, I asked him for some color on multi-year participants. While he couldn’t share any specific numbers, my takeaway from his comments was that there is a persistent group that continues on with Omada’s programs beyond the first year but the percentage varies from program to program. Diabetes and hypertension had higher retention rates, for example.

So, it feels too squishy to make any firm conclusions.

In case it is helpful, here’s a revision of the estimated revenues from the chart above that adds in 50 percent of the prior year’s net new participants priced at $325 each. So, while it assumes half the new participants from the year before continued on for the second year at half the price, it also assumes none continued on to year three.

2016: $37 million
2017: $41 million
2018: $47 million
2019: $81 million
2020: $83 million
2021: $81 million
2022: $146 million
2023: $228 million
2024: $374 million

Omada’s simplified pricing strategy plus some PMPM numbers for its various offerings

Omada has simplified its pricing strategy: During a podcast interview back in August 2023, Omada’s CEO and co-founder Sean Duffy discussed how the company’s pricing strategy had evolved in recent years. If you revisit the original E&O report about Omada Health, which I wrote back in January 2020, you can dig into some of the more intricate machinations Omada went through with its early attempts at outcomes-based pricing. Duffy shared in the 2023 interview that the company has largely moved away from those in favor of a more straightforward structure:

In that same interview, Duffy explained how Omada’s early decision to contract as a provider helped it overcome the longstanding objection from benefits leaders that anything but PEPM pricing was too variable for their budgeting. Here’s Duffy:

2021 pricing for Omada’s programs via the Express Scripts Digital Health Formulary. These prices are few years old so they may be outdated but they help demonstrate the variability in pricing between some of Omada’s programs. (Check out E&O’s pricing database for other Omada price points that I’ve collected over the years.) The key program missing from the below is Omada’s weight management program, which is similar to its diabetes prevention program but sometimes priced even lower (as discussed below). The Omada program that includes GLP-1 support is likely most similarly priced to this weight management program or to Omada’s Diabetes Prevention program.

• Omada’s Diabetes Management Program (Express Scripts Digital Health Formulary pricing) $82 per participant per month – 3 months minimum billed per activation
• Omada’s Diabetes Prevention Program (Express Scripts Digital Health Formulary pricing) $50 per participant per month in year one. $28 PPPM thereafter. 3 months minimum billed per activation
• Omada’s Hypertension Program (Express Scripts Digital Health Formulary pricing) $53 per participant per month – 3 months minimum billed per activation
• Omada’s Diabetes and Hypertension Management Program (Express Scripts Digital Health Formulary pricing) $91 per participant per month – 3 months minimum billed per activation
• Omada’s Musculoskeletal Care (Express Scripts Digital Health Formulary pricing) Prevention: $0. Self-guided recovery: $175 PT visit fee then $0 PPPM. PT-guided recovery: $175 visit fee then $225 PPPM (three months max). Post-care: $0.

The least expensive pricing for Omada’s weight management program: $155 per participant per year. I found the least expensive pricing for an Omada program in early 2024 — so this is also one of the most recent prices I’ve come across. This was for Omada’s weight management program offered via Kaiser Permanente’s health plan. The program itself is likely very similar to the program that Omada has bundled into Express Scripts Encircle Rx offering. This low $155 per participant per year price covers the cost of the cellular-enabled weight scale and the program itself. As I discuss more in-depth below, this price may be a hint as to what Omada charges per participant in the Encircle Rx program. Given the likely scale of EncircleRx, I imagine Express Scripts gets a volume discount on participants from Omada.

Growth in 2021: Evernorth replaces Livongo with Omada as preferred vendor in its digital formulary

At the end of 2021, Evernorth (which is owned by Cigna along with Express Scripts) announced that it would replace Livongo with Omada as its preferred cardiometabolic program vendor in its digital formulary.

Two years later E&O learned that the preferred vendor status isn’t exclusively based on cost-savings and clinical outcomes. Evernorth sales materials revealed that Omada’s preferred status was because of its cellular-enabled weight scale, peer support groups, pricing, and more robust performance guarantees.

As the preferred vendor, Evernorth’s sales team helped sell Omada when discussing options with potential customers, but if customers wanted to buy a competitive offering listed on the digital formulary they still could. According to one set of benefits marketing materials that E&O has reviewed in the wake of this change, at least one employer messaged the change in preference as a straightforward replacement along the lines of “Our PBM has replaced Livongo with Omada.”

Given Express Scripts’ market penetration as one of the big three PBMs, it is likely this preference was one of the key drivers of Omada’s accelerated growth the following year and beyond. In addition, the very public vote of confidence from Express Scripts/Cigna may have helped buoy Omada’s sales conversations with other customers while also potentially dampening the prospects of Livongo. These vendor preferences aren’t typically such a public spectacle. It’s rare to hear about a PBM’s new preferred vendor, but rarer still to read an announcement that a PBM no longer prefers a former partner.

Multi-product deals accelerated Omada’s recent growth (2022-2023)

It’s obvious but worth mentioning here that Omada kicked off 2022 with a massive $192 million Series E funding round led by Fidelity Management & Research Company with contributions from aMoon, Perceptive Advisors, Wellington Management, Civilization Ventures, and others. That funding certainly helped Omada break out from a few years of slowed growth and kick off the growth that is clearly visible in the years after this raise.

When I asked Duffy why the company seemed to hit its stride in 2022 after a few flat years for growth, he pointed to an increase in the number of deals that Omada inked with existing customers for more than one of its programs, or multi-product deals. While Duffy didn’t confirm that Omada’s growth was relatively flat in 2020 and 2021, his suggestion that recent growth was kickstarted by multi-product deals lines up with comments he made at an industry conference in early 2021.

Back then Duffy noted that during the first quarter of 2020, Omada’s deals with customers only included more than one program 5 percent of the time. By the fourth quarter of 2020 multi-product deals accounted for 22 percent of its customer agreements. At the time, Duffy said that increasing multi-product deals was a key goal for 2020 as it significantly reduced CAC. Duffy said Omada’s second and third product lines were like new rocket boosters that the company was just starting to feel kick on in early 2021.

By the end of that year, 32 percent of Omada’s 2021 contracts included multiple programs. In my recent call with Duffy, he said he couldn’t disclose an updated figure, but it is probably safe to assume that percentage was higher in 2022 and 2023.

If you compare the number of Omada’s customers to the increase in net new participants during these years, it’s clear that even as the number of new customers slows down the number of participants ramps up. That’s more confirmation that multi-product contracts have been a key growth driver for Omada these past few years.

Omada’s 2024 growth driven by GLP-1s

Duffy has said publicly that Omada’s weight loss business is driving its current surge of growth. E&O believes that Omada’s deal with Evernorth for its Encircle Rx program is the key driver for the company in 2024. Duffy has said that sales conversations about Encircle Rx with new customers has led to conversations about its other programs as well — so the urgency created by GLP-1 spend may also by fueling Omada’s multi-product contracting too.

Omada decided early on that it would not prescribe GLP-1s as part of its programs, but it would position itself as a lifestyle program to help support patients taking GLP-1s to help them build the skills needed to eventually transition off the medications and maintain their weight loss.

In August 2023 Omada announced that it had teamed up with Express Scripts (a subsidiary of Omada’s longtime partner and investor Cigna) to power the lifestyle program component of a new program called Encircle Rx, which aimed to help employers concerned about the rising costs of covering GLP-1s.

Here’s an excerpt from a benefits newsletter that an employer sent to its employees that includes a detailed description of the program:

Another large employer had an additional requirement that the one block quoted above does not seem to have in place (but may):

Most GLP-1 prescriptions are for a 90-day supply, so I assume that 5 percent threshold has to be hit within the first 90 days.

As noted above, the EncircleRx program includes both patients on GLP-1s for diabetes as well as patients on GLP-1s for weight loss. It is fair to assume that most of the growth in the program is driven by the weight loss cohort of patients, but we can only speculate how many participants in the EncircleRx program are in that cohort and, thus, required to be in the Omada program.

The chart below is based on data points disclosed by Cigna in press releases or on quarterly earnings calls. Note that I used the term “covered lives” instead of Cigna’s preferred term of “enrollments”, which I found confusing. These are not people on GLP-1s in the Encircle Rx program, these are the number of covered lives on plans that have decided to implement the Encircle Rx program. Below the chart, I’ll some speculation about how these numbers could help up estimate how many new Omada participants Encircle Rx has contributed in 2024 so far.

Number of Covered Lives in Evernorth’s Encircle Rx

Estimating participants in Omada’s program from Encircle Rx: The non-profit KFF (formerly known as The Kaiser Family Foundation) published survey results back in May 2024 that found that 6 percent of US adults were currently taking a GLP-1 either for diabetes or weight loss. The most recent data we have about Encircle Rx’s adoption is from the end of October 2024 — five months have passed since the KFF survey results and adoption of GLP-1s for weight loss have definitely risen since the spring. Still, let’s take a conservative approach and assume that of the almost 8 million covered lives in the Encircle Rx program as of October, just 6 percent of them are actually participants on GLP-1s. Some portion of them are on GLP-1s for diabetes and not for weight loss, which means that group is not required to be an active participant in Omada’s Prevent program. Again, to be conservative, let’s estimate that 4 percent of the 8 million are taking GLP-1s for weight loss and 2 percent are on GLP-1s for diabetes.

8 million x 4 percent = 320,000 GLP-1 patients for weight loss required to participate in Omada

Pushback on that estimate: Sure, that number could be lower but for all the reasons stated above I think that’s a conservative estimate. It is likely to be higher. One pushback on this estimate, however, is that it takes time for Encircle Rx to require these patients to abide the requirements. The number of covered lives is growing very quickly and it would take as many as 90 days for all the current GLP-1 patients to hit their refills timestamp and have to enroll in Omada.

Future growth: Will Omada ever secure Medicare reimbursement for its flagship diabetes prevention program?

One major opportunity for Omada that the company will surely point to in its S-1 is future reimbursement from Medicare. Omada has lobbyied to secure Medicare reimbursement for its flagship diabetes prevention program since its earliest days and it almost succeeded back in 2016. In fact, as I recounted in the previous Omada Health Report, Omada all but declared victory back then.

During the Obama administration, specifically on March 23, 2016, HHS Secretary Sylvia Burwell announced that Medicare would begin the process of reimbursing providers for delivering the diabetes prevention program to at-risk beneficiaries. The plan was to reimburse for both in-person and digital programs. The day of the announcement, Omada CEO Sean Duffy wrote:

By May 2016, Omada Health had posted a job opening for a Senior Manager of Medicare Development.

However, when the Trump administration took office in 2017, the new leadership at HHS and CMS reviewed the plans to reimburse for DPP. By July 2017, CMS proposed that the reimbursement program should not include digital or virtual programs. Since the original DPP study did not include digital programs, CMS argued they did not have the statutory authority to include them in the reimbursement policy. The new leadership also had concerns about providing potentially valuable devices, like cellular-enabled weight scales, to Medicare beneficiaries as incentives to sign up. CMS also raised concerns around fraudulently billing for weight loss not verified by an in-person coach.

During the Biden administration CMS continued to hold the position that it lacked the statutory authority to change course, and Omada eventually acknowledged that CMS wouldn’t change its position even though the company disagreed. As Omada wrote in a September 2024 letter to CMS:

In both 2023 and 2024 Omada Health, working with various advocacy groups and other companies that offer virtual diabetes prevention programs, lobbied a handful of members of Congress to introduce the Prevent Diabetes Act, which would give CMS the explicit statutory authority to reimburse for virtual DPP:

However, with the imminent arrival of the second Trump administration and Republican majorities in both houses of Congress, prospects for expanding Medicare reimbursement for virtual programs like diabetes prevention seem dim.

How Omada has rebuffed PHTI criticism

Omada is likely thankful that the somewhat recently formed Peterson Health Technology Institute started publishing its health technology assessments before Omada became a public company. The organization, however, has emerged as one of the company’s biggest critics. So far, PHTI has published reports on digital diabetes management programs, digital physical therapy programs, and digital hypertension programs. Two of these reports offer negative assessments of programs offered by Omada Health (diabetes and hypertension), while the assessment focused on MSK called for broader adoption of programs like Omada’s.

Here’s what E&O wrote about the diabetes report when it first came out:

Omada raised an interesting argument about why it should not have been included in the PHTI assessment focused on diabetes management programs.

Remember: Omada is first and foremost a company focused on diabetes prevention. When it added a diabetes management program it specifically chose to based its program’s content on an established framework called Diabetes Self-Management Education & Support (DSMES). Because DSMES is so well-studied, Omada didn’t conduct a lot of studies to support its diabetes management programs — as it did for its more novel intervention in diabetes prevention. Instead it sought (and secured) accreditation like every other DSMES service provider.

As Omada’s Chief Medical Officer Dr. Carolyn Bradner Jasik wrote in response to the PHTI report:

It is true that Omada often points to its accreditations in its lobbyist letters to the federal government. Here’s a recent example:

Yes, Omada has an AI strategy too

I didn’t ask Duffy about Omada’s AI strategy on our recent call, but he included it at the top of his list of things that I should have asked about. Omada Health has been remarkably consistent in its plans for AI. In its early years, Omada pointed to machine learning and big data as opportunities to personalize the member experience at Omada. Back in 2018, a director of product design at Omada wrote a blog post that provided advice to others working in behavior change based on his experience at Omada:

Duffy laid out a similar vision for what today’s generative AI can help Omada do, but first he explained why Omada is well-positioned to execute on the company’s AI plans:

Duffy gave me one example that was already live. Care teams at Omada receive insights gathered by generative AI that has combed through the past few weeks worth of food history, activity history, messaging history with a particular member. The LLM then presents the insights about a particular pattern it sees in the data for the care team to review and then pass along to the member if they agree with it and believe the member would find it helpful. Duffy said the LLMs are great at this kind of context gathering and it allows the experience to feel more personalized for the member.

That wasn’t possible before with non-generative AI and older machine learning models, Duffy said.

Conclusion: Is now the right time for an Omada IPO?

An Omada IPO seems very likely: As I mentioned in the introduction of this report, E&O first reported on Omada’s imminent IPO plans after I spotted a job post for a VP of Investor Relations. The job ad made clear that this post was for a company that would soon be public. About four months later E&O reported that Omada Health had tapped a 21-year veteran of Cerner, Allan Kells, to lead its investor relations. Kells joined Cerner when it was generating about $400 million in revenue and was with the company when it was acquired by Oracle for $28 billion. So, E&O readers knew that an Omada IPO was in the works about a year before the news broke that Omada had confidentially filed for an IPO later in 2024.

Digital health macro isn’t great: Omada Health is currently a larger and more mature company than Livongo was when it IPO’d back in 2019. Digital health has also been through a lot since then. Livongo’s time on Wall Street culminated in its eye-popping $18.5 billion acquisition by Teladoc in the summer of 2020. Most digital health stocks hit their peak around then — at the height of the pandemic — and have since crashed. With enthusiasm for digital health waning, Omada needs to tell a very different story than the one Livongo told back in 2019.

Is Omada actually a GLP-1 company? As it begins its roadshow, Omada Health is much more likely to focus on the meteoric rise of GLP-1s and the company’s role in helping people make the most of their weight loss outcomes in the longterm. If Omada Health’s success with the Encircle Rx program is as significant as it appears to be, the company’s other problem is assuring Wall Street that its business is not overly dependent on its relationship with Cigna (parentco of Express Scripts and Evernorth). Omada might also be able to make the case that it has a GLP-1 strategy beyond weight loss, if its PBM partners and other channel partners see an opportunity to pair Omada’s lifestyle programs with future GLP-1s indicated for other chronic diseases.

Final thought: One other issue that I know the Omada Health team heard about incessantly back in 2019 around the time Livongo went public was that Omada’s CEO Sean Duffy was significantly younger than Livongo’s — maybe too young to lead a public company? At the time Duffy was in his mid-30s while Livongo’s founder Glen Tullman was about 60. Since then Omada has built out its executive bench and — thanks to the passage of time — Duffy is now around 40 years old. I can’t say I’ve heard anyone mention it.