Issue 080

Welcome back to E&O’s Selling to Employers, the enrollment-focused digital health newsletter from Exits & Outcomes — for paying subscribers only. This newsletter digs into digital health companies that sell to self-insured employers, fully insured plans, and other payers. It’s digital health as an employee benefit.

 E&O: Employers

In this issue of E&O: Selling to Employers… more details from the Omada Health’s many draft S-1 filings, which it started submitting to the SEC back in June 2024.

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New details from Omada filings: Lost customers, NPS decrease, multi-program customer growth, care platform data capture decreasing, headcount up, and more

Omada Health is expected to IPO next week so I took the time the past few days to dig into the various versions of its S-1 filing (seven in total) to piece together a number of details, metrics, and financials that haven’t been reported elsewhere. Omada’s very first draft S-1 filing was confidentially filed in June 2024 — almost a year ago — so the way the company describes itself, its growth metrics, and the threats facing the company have all changed since this first filing. Here’s a round-up of a few things I found interesting after comparing all of the various drafts for changes. Some of these changes were made between drafts that were filed months ago and others are more recent. This analysis provides a number of new data points that can help us track Omada’s progress to date and see which numbers are trending up or down. The biggest change in Omada’s newest S-1 filing was the news that you already know: It plans to price its shares between $18 and $20 each. The IPO could raise around $158 million if all of the shares Omada is offering sell for $20. That would value the company at about $1.1 billion. Omada actually made very few changes to the filing otherwise, but they did delete a mention of one of their big customers:

Deleted Alaska from its customer list: One curious change, however, was that it deleted the State of Alaska from its short list of representative customers. Did Alaska ask it to remove the mention? Did Omada lose Alaska as a customer? Is it possible that it may churn soon and Omada is getting ahead of it now by scrubbing a short list of customers that is likely to end up in much of its press coverage on its IPO day? Here’s the blurb where Alaska previously got a mention: “Representative customers include Costco, Intermountain Health, Honda, Louisiana Office of Group Benefits, and the State of Alaska. Our channel partner strategy also includes health plans, such as Cigna Healthcare, and two of the largest PBMs in the U.S., including Express Scripts by Evernorth.”

Customer growth seems slow as Omada keeps it at “more than 2,000”: One number that didn’t change at all in the past year of draft S-1 filings was Omada’s customer count even as its number of members went up: “and as of March 31, 2024, we had more than 2,000 customers and over 460,000 total members enrolled in one or more programs that were billable in the preceding 12 months.” “As of June 30, 2024, we had more than 2,000 customers, over 490,000 total members enrolled in one or more programs, and had served over one million members since launch.” Omada disclosed in 2019 that it had crossed 1,000 customers as a major milestone event. In early 2022 Omada posted a press release that stated it had more than 1,700 customers. In early 2024 a press release from the company said it had more than 1,900 customers. Based on that slowing customer growth, it follows that Omada hasn’t cleared 2,500 customers yet.

Here’s a bright spot. Customers with multiple Omada programs deployed increased between 2023 and 2024: The percentage of Omada customers with more than one of its programs deployed went up between 2023 and 2024 by five percent: “As of December 31, 2023, approximately 26% of our customers covered more than one Omada program, which leaves sizable opportunities to sell additional programs.” “As of December 31, 2024, approximately 31% of our customers offered more than one Omada program, which leaves a sizable opportunity to sell additional programs.”

Covered lives also continue to hover at around 20 million. (Important to note that Omada only counts covered lives as people with coverage for Omada who qualify as a possible participant in one of its programs.) “As of December 31, 2023, we estimate that 20 million individuals had benefits coverage for one or more Omada programs through their employers, health plans, PBMs, health systems, or other customers, where they have a clinical need. Having served over one million members since launch, there is still significant opportunity to enroll more members, and future efforts in a number of areas could increase enrollment rates.” “As of December 31, 2024, we estimate that 20 million individuals had benefits coverage for one or more Omada programs through their employers, health plans, PBMs, health systems, or other customers, where they have a clinical need. Having served over one million members since launch, there is still significant opportunity to enroll more members, and future efforts in a number of areas could increase enrollment rates.” In one of its more recent S-1 draft filings, Omada pointed to the massive opportunity it has working even more closely with its existing PBM partners, which don’t offer Omada programs to all of their customers yet: “In addition, according to the two large PBMs with which we partner, those PBMs provided pharmacy benefits to over 200 million individuals as of March 2024. Those PBMs currently cover our programs for only a small portion of this population, and although the populations covered by our various channel partners may overlap, we believe there is significant opportunity for us to increase the number of covered lives we serve through PBM partnerships. Together, these lines of business present a large opportunity for us to expand within current channels by selling to more self-insured and fully insured employers and expanding to new lines of business.” It’s also worth noting that Omada’s channel partners are (already) increasingly important to its business. This group represented more than 85 percent of Omada’s customer base in 2023 and more than 90 percent in 2024: “As of December 31, 2023, customers accessing our programs via a channel partner represented more than 85% of our customer base.” “As of December 31, 2024, customers accessing our programs via a channel partner represented more than 90% of our customer base.”

Omada’s customer net promoter score decreased: While the company has a high (and steady) customer satisfaction rate and customer retention rate, its NPS score actually dipped a bit between year-end 2023 and mid-2024. “The strength of our customer relationships is evidenced in our three-year average customer retention rate of over 90%, our customer satisfaction rate of over 90%, and our customer net promoter score of 75, each as of December 31, 2023.” “The strength of our customer relationships is evidenced in our three-year average customer retention rate of over 90% and our customer satisfaction rate of over 90%, each as of December 31, 2024, and our customer net promoter score of 71, as of June 2024.”

Omada lost one of its Fortune 500 customers in 2024: “These employer customers are highly diversified across industry, size, and geography, and, as of December 31, 2023, included 86 Fortune 500 companies.” “These employer customers are highly diversified across industry, size, and geography, and, as of December 31, 2024, included 85 Fortune 500 companies.”

Omada clarified its role in GLP-1s: In more recent S-1 draft filings, Omada added numerous clarifications that it does not make GLP-1s or prescribe them. Here’s an example of one of those paragraphs where Omada added a clarification: “Additionally, while Omada does not develop or prescribe GLP-1 therapies, we expect the attention and focus that GLP-1s bring to our industry, along with the launch of our GLP-1 Care Track to support individuals who take GLP-1 therapy alongside those who do not, will help accelerate our growth.”

New GLP-1 track: Omada added a new mention of a newer GLP-1 offering that was not on offer back in June 2024 when Omada first filed a draft document of its S-1: “While the initial version of our GLP-1 Care Track is embedded in each of our cardiometabolic programs, customers and channel partners are also able to purchase an enhanced version (the ‘Enhanced GLP-1 Care Track’), which includes more specialized programming and support.”

Omada’s headcount growth from December 2023 until March 2025 was 699 to 849 full-time employees, respectively. “As of December 31, 2023, we employed 699 full-time employees, which includes our health coaches and other Care Team members as well as individuals across sales and marketing, research and development, and general and administrative functions.” “As of December 31, 2024, we had 720 full-time employees, which includes our health coaches and other Care Team members as well as individuals across sales and marketing, research and development, and general and administrative.” “As of March 31, 2025, we employed 849 full-time employees, which included our health coaches and other Care Team members as well as individuals across sales and marketing, research and development, and general and administrative functions.”

Omada added its CFO Steve Cook to its shortlist of particularly important execs: “We are highly dependent upon our senior leadership, particularly our Co-Founder and Chief Executive Officer, Sean Duffy, our President, Wei-Li Shao, and our Chief Financial Officer, Steve Cook, as well as our senior clinical, scientific, and technology employees and other service providers and other members of our senior management team.”

New risks include AI, tariffs, and PBM regulation: Omada added lots of new mentions of AI in the past year, but it was also featured in the original version of its S-1 back in mid-2024. Omada also added in potential risks around government regulation of PBMs, which are Omada’s key channel partners, and tariffs on imported devices like the ones it used in some of its programs. Here’s one addition about the risk of AI that Omada added to a more recent version of its S-1: “In particular, the rapid pace of innovation in AI and machine learning can lead to the development of new, improved, or more cost-effective solutions that could render our programs and offerings less competitive or obsolete.”

Member to coach ratio increases last few years: Omada didn’t give exact numbers of a member to coach ratio, but a comparison of its S-1 draft filings show improvement between 2022 and 2023 as well as 2023 and 2024: “For example, improvements in both the efficiency and effectiveness of our platform have yielded a 24% increase in total members per coach from full year 2022 to full year 2023, while maintaining comparable 6-month weight loss outcomes.” “For example, improvements in both the efficiency and effectiveness of our platform have yielded a 32% increase in total members per coach from full year 2023 to full year 2024, while maintaining comparable 6-month weight loss outcomes.”

Meanwhile, Omada’s care team platform is receiving fewer data points per hour? “Our Care Team Platform receives more than 100,000 data points every 30 minutes, as of June 2024.” “Our Care Team Platform receives more than 50,000 data points every 60 minutes, as of December 31, 2024.” What caught your eye from Omada’s S-1 filings?

Estimating Omada Health’s CAC and ARPU

Here’s my quick math on two metrics that Omada Health didn’t disclose in its S-1: customer acquisition cost (CAC) and average revenue per user/member (ARPU). ARPU is a bit more straightforward, so here’s what I came up with:

2023 total revenue: $122.8 million

2023 total members: 391,000

2023 estimated ARPU (E&O calculation): $314.07 in annual revenue per member 2024 total revenue: $169.8 million 2024 total members: 572,000

2024 estimated ARPU (E&O calculation): $296.85 in annual revenue per member

Cost of acquiring a customer/member (CAC)

2022 total members: 299,000

2023 total members: 391,000

2024 total members: 572,000

We know that about 55 percent of Omada’s members stay with the program for their second year, but we don’t actually have enough information to know exactly how many of the total members above for each year are new members that year, which is the number we need to calculate CAC. Just to get close, I’m going to subtract 55 percent of the prior year’s total member number to estimate net new members. (This isn’t precisely correct because we don’t know how many members are still in the program three or more years later.)

2023 estimated new members: 391,000 – (299,000 * 0.55 = 164,450) = 226,550 estimated net new

2024 estimated new members: 572,000 – (391,000 * 0.55 = 215,050) = 356,950 estimated net new

The latest S-1 filing lists out Omada’s sales and marketing expenses for the following years as: 2023 sales and marketing expenses: $66.2 million 2024 sales and marketing expenses: $68.1 million Is it fair to assume sales and marketing expenses in a given year are the relevant expenses for CAC in that same year? Or should they apply to next year’s new members? For this thought rough estimate, I’m going with same year expenses matched to same year estimated new members:

So, we can get a rough estimate of CAC: 2023 CAC is $66.2 million divided by 226,550 = $292 per new member 2024 CAC is $68.1 million divided by 356,950 = $191 per new member Am I missing anything? Is my math correct?

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