Executive Summary / Key Takeaways

• Omada Health (NASDAQ:OMDA) is rapidly transforming chronic disease management through an integrated virtual care platform, demonstrating significant growth in members and revenue, driven by multi-condition adoption and strategic investments in AI and GLP-1 support.
• The company's innovative "Compassionate Intelligence" approach, combining human-led clinical care with AI-driven experiences like OmadaSpark and Meal Map, enhances member engagement and care team efficiency, contributing to expanding gross margins.
• A pivotal strategic move is the planned launch of GLP-1 prescribing within its Care Track in H1 2026, positioning Omada to capitalize on the evolving anti-obesity medication market by offering comprehensive medication management alongside its proven behavioral support.
• Strong Q3 2025 financial performance, including 49% revenue growth, 53% member growth, and the first quarter of positive adjusted EBITDA, underscores the scalability of Omada's multi-condition platform and its disciplined path towards sustained profitability.
• While facing an increasingly competitive digital health landscape and regulatory shifts, Omada's clinical validation, strategic partnerships (e.g., Cigna (CI)), and focus on integrated, evidence-based outcomes provide a distinct competitive advantage.

The Integrated Approach to Chronic Care: Omada's Foundational Strength

Omada Health is a virtual care provider dedicated to inspiring and enabling lasting health changes for the over 150 million Americans living with chronic conditions such as prediabetes, obesity, diabetes, hypertension, and musculoskeletal (MSK) disease. The company's mission is to "bend the curve" of these conditions, delivering evidence-based care that integrates clinical services, wraparound support for next-generation therapeutics like GLP-1s, and cutting-edge AI-driven experiences. This "Compassionate Intelligence" approach combines human-led clinical care with purpose-built technology to personalize the member experience and achieve results at scale.

The company's journey began in 2011, launching its first program, Omada for Prevention Weight Health, in 2012 to address prediabetes and weight management. Recognizing the significant overlap across chronic conditions, Omada expanded its offerings in 2018 to include Omada for Diabetes and Omada for Hypertension, forming its cardiometabolic suite. Further diversification came in 2020 with Omada for MSK, connecting individuals to licensed physical therapists virtually. This historical evolution underscores Omada's strategic commitment to an integrated, multi-condition care platform, moving beyond single point solutions to provide comprehensive support.

Omada's business model centers on selling its programs to customers—employers, health plans, health systems, and pharmacy benefit managers (PBMs)—who cover the costs for eligible individuals. Revenue is generated from services, providing access to virtual care programs, and hardware, from connected third-party devices supplied upon enrollment. The company's go-to-market strategy employs a business-to-business-to-consumer (B2B2C) motion, leveraging a single sales team to sell multiple programs, which enhances efficiency and customer loyalty. This integrated platform approach is a core differentiator, allowing clients to work with one trusted partner rather than managing disparate solutions.

Technological Edge: AI and Data-Driven Care

Omada's technological differentiation is central to its investment thesis, enabling both enhanced member experience and operational efficiency. The company's core technology integrates data analytics and virtual tools to deliver personalized care. This includes a self-built care team platform, continuously enhanced with AI capabilities.

Recent innovations highlight this commitment. Omada introduced OmadaSpark, an AI-powered agent that interacts directly with members alongside human coaches. Early observations indicate that members interacting with the nutrition assistant demonstrated higher levels of ongoing engagement and were more likely to return to the Omada app. Building on this, the company launched Meal Map, an AI-driven nutrition experience that combines instant nutrient feedback with personalized guidance from care teams. Meal Map focuses on nutrient quality rather than just calorie counting, aiming to foster sustainable healthy habits. Early results show signs of higher engagement and more consistent meal tracking compared to traditional approaches.

These AI tools offer tangible benefits. They increase the efficiency and productivity of Omada's Care Teams by surfacing helpful templates and insights in frequently recurring scenarios, termed "Care Team message support." This expanded use of supporting technologies directly contributes to lower personnel costs per member, a key driver of gross margin expansion. For investors, this technological edge translates into a stronger competitive moat, improved operational leverage, and a clear path to enhanced financial performance through cost efficiencies and potentially higher average revenue per user (ARPU) as personalization keeps members engaged longer.

Looking ahead to 2026, Omada plans significant investments in "GPTs and broader AI," aiming to weave AI into many layers of its program. This includes developing more tools for members and the care team experience, as well as leveraging these tools to drive internal productivity across its teams. These initiatives are designed to deepen Omada's differentiation and fuel durable, responsible growth.

Financial Momentum and Strategic Investments

Omada Health demonstrated strong financial momentum in the third quarter of 2025, reflecting the scalability of its model and strategic execution. Total revenue for the three months ended September 30, 2025, increased by 49% year-over-year to $68.03 million, with services revenue growing 49.5% to $62.94 million and hardware revenue up 49.0% to $5.09 million. For the nine months ended September 30, 2025, total revenue surged 51% to $184.36 million compared to the same period in 2024.

This revenue growth was primarily fueled by a substantial increase in its member base. Total members climbed 53% year-over-year to 831,000 as of September 30, 2025, including 79,000 net new members in Q3 alone and 259,000 year-to-date, marking the highest full-year net new member growth in the company's history. This expansion is attributed to continued multi-condition adoption, strong demand for GLP-1 offerings, and increased effectiveness of marketing campaigns, which saw a 60% increase in efficacy on enrollment campaigns.

Profitability also saw significant improvement. Omada Health achieved its first quarter of positive adjusted EBITDA, reaching $2 million in Q3 2025, a notable turnaround from a $5 million loss in Q3 2024. The adjusted EBITDA margin improved to 4% from negative 11% year-over-year. The GAAP net loss narrowed considerably to $3.18 million in Q3 2025, down from $9.23 million in Q3 2024. Gross margin expanded by 3.50 percentage points in Q3 2025 and 5.50 percentage points for the nine months ended September 30, 2025, primarily driven by lower personnel costs per member due to Care Team efficiency initiatives and the expanded use of supporting technologies. Operating expenses for the first nine months of 2025 rose only 24%, while revenue and membership were up 51% and 53% respectively, demonstrating strong operating leverage.

The company's liquidity position is robust, with cash and cash equivalents of $198.60 million and working capital of $184.80 million as of September 30, 2025. A significant portion of this liquidity stems from its Initial Public Offering (IPO) on June 9, 2025, which generated $151.60 million in net proceeds. A portion of these proceeds was used to fully repay $30 million of outstanding debt under the MidCap Term Facility and MidCap Revolving Facility on July 31, 2025, significantly reducing interest expense.

The GLP-1 Opportunity and Evolving Competitive Landscape

The GLP-1 treatment landscape represents a significant opportunity and strategic focus for Omada. Combined global sales of Ozempic, Rybelsus, Wegovy, and Mounjaro reached approximately $41.40 billion in 2024, a 73% increase over 2023, highlighting the immense market growth. These therapies, however, present a substantial cost burden to employers, often exceeding $1,000 per month. Omada's GLP-1 Care Tracks, initially launched in 2023, provide crucial behavioral and lifestyle support, which FDA-approved labels guide should be concurrent with GLP-1 prescriptions for obesity or chronic weight management.

In a significant strategic announcement, Omada plans to launch a new prescribing offering for anti-obesity medications within its GLP-1 Care Track in the first half of 2026. This move is a direct response to customer feedback regarding the increasing complexity of medication optimization. The offering will be an integrated experience, leveraging behavioral intelligence to support prescribing decisions and medication management across all 50 states, with branded medications fulfilled by the pharmacy of the member's choice. This is expected to be incrementally priced and accretive to both revenue and margin. Research from Omada has already demonstrated the value of its GLP-1 companion program, showing that members who discontinued GLP-1 medications but remained in Omada's program largely maintained their weight one year post-discontinuation, contrasting with typical rebound weight gain.

The competitive landscape in digital health is rapidly evolving and intense. Omada faces direct competition from companies offering cardiometabolic programs such as Hello Heart, Lark Technologies, Livongo (Teladoc Health), Onduo, Vida Health, and Virta Health. In MSK, competitors include Hinge Health and SWORD Health, while DarioHealth (DRIO) offers both. Larger enterprise companies and point solution providers also compete, some with greater resources or lower pricing.

Compared to Teladoc Health (TDOC), Omada offers a more specialized, clinically validated approach to chronic condition management, potentially leading to higher user engagement through its data-driven programs. While TDOC boasts a broader telehealth platform and wider market reach, Omada's strength lies in its holistic behavioral health integration and evidence-based outcomes. OMDA's latest TTM Gross Profit Margin of 44.77% and Operating Profit Margin of -9.62% indicate a focus on efficiency, though TDOC's scale may allow for broader revenue streams.

Against Amwell (AMWL), Omada's condition-specific programs for cardiometabolic care provide a tailored user experience. Amwell's strength is in its technological interoperability and enterprise health services, potentially leading to faster market penetration. Omada's emphasis on clinically validated outcomes differentiates it through perceived quality, while Amwell's financial performance has shown variable cash flow generation.

GoodRx Holdings (GDRX) primarily focuses on prescription drug savings and telehealth, offering cost-effective access. Omada, in contrast, provides comprehensive virtual programs with greater depth in clinical support and a focus on preventive and behavioral aspects. While GoodRx has widespread adoption due to its affordability focus, Omada's specialized clinical programs aim for superior health outcome tracking. GDRX's TTM P/E ratio of 32.50, compared to OMDA's -49.04, highlights the differing profitability profiles and market perceptions.

Omada's strategic response to this competition is its integrated multi-condition platform, which allows for a single sales force to address multiple client needs, fostering loyalty and scale. The company's clinical validation, evidenced by its 30th peer-reviewed publication demonstrating significant cost savings and ROI from its Joint & Muscle Health program, further strengthens its competitive position.

Outlook and Risks

Omada Health's outlook for 2025 reflects continued strong growth and a clear path to profitability. The company expects 2025 revenue in the range of $251.5 million to $254.5 million, an increase from its prior guidance, with the midpoint representing 49% growth over 2024. Adjusted EBITDA for 2025 is projected to be in the range of negative $2 million to breakeven, a significant improvement from the prior range and approximately $28 million better than 2024.

Management has designated 2026 as "the year of the Gs," signaling significant investments in GLP-1s (including the new prescribing offering) and GPTs (broader AI). These investments are aimed at widening Omada's competitive moat and driving sustainable, responsible growth. The company remains committed to achieving 70% annualized gross margins and a long-term adjusted EBITDA target of over 20%.

Despite the positive outlook, Omada faces several risks. A substantial portion of its sales comes from a limited number of customers and channel partners, with top five partners, including Cigna affiliates, accounting for 76% of Q3 2025 revenue. This concentration creates dependency. The evolving GLP-1 treatment landscape, while an opportunity, also presents volatility and regulatory uncertainty. The rapid evolution of AI technologies and the changing regulatory framework for AI could require significant resources for compliance and program modification. Public perception of obesity treatments, including GLP-1s, could also impact demand. Furthermore, the company has identified material weaknesses in its internal control over financial reporting, which it is actively remediating.

Conclusion

Omada Health stands at a pivotal juncture, poised to capitalize on the accelerating demand for virtual chronic care and the transformative potential of GLP-1 therapies. Its integrated multi-condition platform, coupled with a strategic emphasis on AI-driven innovation, positions the company as a compelling player in the digital health sector. The strong financial performance in Q3 2025, marked by robust revenue and member growth and the achievement of positive adjusted EBITDA, validates its scalable business model and disciplined approach to growth.

The planned launch of GLP-1 prescribing capabilities represents a significant strategic expansion, enabling Omada to offer a more comprehensive solution that aligns medication management with its proven behavioral support. This, alongside continued investment in AI to enhance both member experience and operational efficiency, is expected to widen its competitive moat and drive long-term value. While challenges such as competitive pressures and regulatory complexities persist, Omada's commitment to clinical validation, strategic partnerships, and a clear technological roadmap underscores its potential to not only achieve sustained profitability but also to profoundly impact chronic disease management.