Thank you very much. Good afternoon, everybody, or good morning to West Coast people. Thank you so much for joining us this morning. I'm Elizabeth Anderson. I'm the Health Care Services and Technology Analyst here at Evercore. Very excited to be joined by Sean Duffy, Co-founder and CEO of Omada Health, so maybe just to kick us off, for those of us who are new to the story. For those people who are newer to the story, your recent IPO over the summer, which was great to see. Can you talk us through the model? Just a brief overview, just to level-set everybody before we get into the questions.
Yeah, happy to. So I think, Elizabeth, hello everybody in the room, and hello everybody listening. I'm Sean Duffy, co-founder and CEO of Omada. Just kind of the one minute on what we do in the model.
Perfect.
It really starts when I founded the company in medical school, and it was one of those things where, on a daily basis, I saw in front of me that the care model of yesterday wasn't well suited for chronic disease, and you'd sit in the homes of people with obesity, with diabetes, and the health care academic would say, oh, they're under care. They have a primary care doc. They've been prescribed a med.
Yes.
It was very obvious that in order to achieve better outcomes and quality outcomes and cost outcomes, one needed a persistent longitudinal care model. So that led to the business. Omada is a provider. We describe ourselves as a between-visit care provider. And the business model is very simple. We make our case that.
Not easy, but simple.
Easy, but simple. We make our case that self-insured employers, fully insured plans, and integrated systems are not well served by the existing ecosystem through our clinical trials, our product capabilities, and they should pay for Omada services on behalf of their members or employees, and then when someone signs up, either that employee or health plan member, we start to charge, and it's a monthly membership fee that includes the whole scope of our services, so we love the model because you're aligned with your clients, and ultimately, our mission is to bend the curve of disease and help as many people as possible.
Yep. No, that's a great place to start. And when I explain to people, I always I don't know why I've come across this. You go and you get diagnosed with something, and they're like, congratulations. I mean, they'll say, congratulations. But they say, you have this. OK, see you in six months. Right? That's the care.
Here's a pamphlet.
Right, yeah.
It's long been printed in color.
Right, yeah, exactly. And photocopied in a smudgy way. So that's sort of what we're talking about for people who are newer to it. One of the things you've obviously performed very nicely in terms of continuing to add members, continuing to add new services on top of it. I thought one of the interesting things, besides the underlying strong performance in the 3Q call, was the announcement of the GLP-1 prescribing t rack that you announced around the 3Q call. How does that work operationally, and how does that complement the existing Care Track that you've already developed?
Yeah, we're very excited about it. So, for the benefit of, there's Omada's capabilities. It consists of prediabetes, obesity, diabetes, hypertension, MSK, and within the prediabetes, obesity care area, we can turn on a GLP-1 Care Track.
Yep.
That aims to support people on therapy with optimized weight loss outcomes. And for those members who say, look, I want to try getting off the med, do what we can to help them enable that goal. And we've published great data showing increased weight loss in our new Care Track to the tune of 28%, and then year-long data looking at discontinuation of weight maintenance. But we didn't have prescribing. And as we look forward to tomorrow's era of therapeutics, of potentially orals being on the market, single agonist, dual agonist, tri-agonist, we recognize that that increased complexity needed to put Omada in a position to be able to change meds for people. Because that solves a member-level value prop, but that also helps on the cost optimization side for our accounts.
That makes sense. And then for employers, I mean, you sort of talked about that that's the pain point for patients and for you. If I am an employer or a health plan, should I be viewing that like, oh, wait, are you prescribing it? Are you actually pushing up costs? How do they think about that, and sort of what are their pain points that you're addressing there?
Yeah, so the yesterday's Care Track value prop still holds, which is more value per dollar spent on the med by ideally more weight loss outcomes while on the med. And then employers are really worried about waste. They're worried they pay for the meds. People take them. They stop taking them. They regain. And so our Care Track and our ability to support beyond someone's goal of discontinuation is a key attractive value prop. The thesis is that in tomorrow's era, in any given employer, if you choose to cover GLP-1s for obesity, you're going to have diversity of med types and diversity of med price points, possibly even diversity of med price points on different doses.
And without the ability to optimize, ideally, in a clinically responsible way, to have people be on the right med that's most cost and quality optimized for them, you really can't optimize aggregate GLP spend. And so we think that's kind of a new chapter in the value proposition for employers who are like, you know what, I've decided to cover these for the reasons that they have, but I need to do it in the most responsible way. And we're excited for those capabilities to help there.
That makes sense, and that certainly jibes with some of the feedback we've gotten from the consultants and things that we've spoken to this fall, but that's sort of like an incremental push point that people are looking for.
Exactly, yeah, yeah, for sure.
Maybe from a business and operational model, I mean, you've talked about the prescribing being accretive to both revenue and margins. Can you talk about how the economics of that part of the model differs from what we think of as your core business?
Yeah, for sure. So we have the monthly fee for Omada. If a client wants to purchase the prescribing capability, that fee increases. So we haven't announced prices yet, but per some of your commentary, and we did share on the November 5 earnings call, the intention is to price that in a way that's accretive to revenue and margin. And so we've done all the work behind the scenes looking at the cost profile, the capability profile to do that. And that is the goal. So it's essentially a buy up to our Care Track that clients can turn on.
OK. And then the prescription cost, or the actual drug price, is that going to go through your revenue line, or is that going to be a separate line?
It is not. Yeah, it is not, so we'll just be in a position to support the writing of the scripts, and then that'll be sent to the patient's pharmacy of preference.
OK, got it. No, that makes sense. I think.
Not compounding, just for clarity.
Right, like the OK.
Only branded meds.
That makes sense. You've talked about 2026, I think, as an investment year to support all of this and some of the AI development that you guys have been launching. How do you think about that trade-off between growth, which obviously you saw spectacular growth this year, versus sort of the profitability ramp and sort of what you've talked about as how you sort of see the model longer term?
Yeah, so I mean, we've been very, very pleased and tend to get really kind of favorable feedback on, obviously, the growth acceleration and kind of the top line, as well as the progress on the bottom line, which we love, and the neat thing strategically is we feel it puts us in a nice position to think about Omada's place in the market. What are the ways where, yes, we feel like we have a moat? How do we make that moat even wider, and so what we've communicated is, obviously, we intend to do that, but we'll do that responsibly. We've put out our long-term targets of 20% plus operating margins. We're staying very committed to that and want to, of course, make progress toward that. Equally, we feel some neat market moment in time dynamics.
We're like, you know what, we're so happy with the leverage in the business. Let's make sure to take advantage of that leverage and really continue to differentiate Omada.
Yep, no, that makes a ton of sense. You are partnering, I believe, with a telehealth partner at this point for prescribing rather than hiring people in-house. I know you guys have a very evolved sort of care team model over time, more generally, but in this specific sense. How does that model like it adds variable costs, but how do you kind of manage the risk of that? And then at some point, does that business scale? And then you're sort of this is a stopgap measure until you hire your own providers. How do we think through that part of the?
Yeah, so for med prescription, and this is how we do it with CGMs, actually. It's a partner that'll be embedded inside the app experience.
OK, so the outside to the person, it'll look like. It's just offline.
Exactly. And so our North Star in turning on this capability is and was seamless member experience number one and just like instant path to scale. And yes, Omada could go set up all the PC infrastructure and deal with all the licensing. That's not. It's not an unknown task. We had to do that in other areas. But relative to med prescription, it's a little bit more transactional. I never say anything is easy, but it's a little easier of the tasks versus in between-visit care. And so for that, that embedded layer of a partner made the most sense because you can create that seamless member experience, and you can get scaled across the country, all 50 states, very seamlessly.
And in the background, our clinical team and quality team, of course, will govern the quality points of view and the clinical obesity points of view relative to the care plans. But yeah, that is the how. And of course, we've been able to model based on expectations on what that looked like from the cost side and structure of the relationship accordingly.
OK, that makes sense. You launched at sort of an interesting point of the year because we're sort of, I guess now we're sort of getting to the tail end of this year, the selling season for 2026. So can you talk about maybe specifically to the GLP-1 prescribing, is this really an opportunity for 2026, or should we think about it as kind of launching now, but maybe it's really more for the selling season for 2027 in terms of opportunity?
Yeah, I mean, we wanted to announce it sooner rather than later, knowing that just there's so much dynamism in the new drug kind of cascade and stack, and it's the sort of thing we're already out there with the consultants and the buyers, and we wanted to be able to talk more broadly about this future vision of where we're going. That being said, when we look at next year for the GLP-1 prescribing Care Track , we anticipate it'll follow the exact same sales rhythms of today, which is typically you build pipeline in first half, you close it in second half for deployment the next year, and so we're viewing this as really a 2027 contributor to the P&L, but obviously, we're talking about it nonstop in the market, and there may be select accounts that deploy next year, which is the usual rhythm.
Yep, that makes sense. How are you finding the overall conversations and overall sort of tenor of the selling season for next year, apart from the GLP-1 prescribing track?
Yeah, I mean, so we did make some comments on the November 5 earnings call. We provided updates there, but what we shared was really business as usual selling cycle. We always joke it's the year of the Gs, GLPs, GPTs. It was another year. We think next year is going to be another year. I mean, it's such a dynamic marketplace in metabolic and chronic right now that there's a lot of client interest in having conversations, and there's two client types here. There's those who choose to cover the meds, and they're interested in the Care Track , and that allows us to open the door to, obviously, the broader Omada suite, and then there's those who are saying, look, we just are not in a position of being able to afford covering the meds.
The conversations that we have with them are them telling us, you know what, it kind of feels a little tone deaf to not have anything.
Yeah.
And just answer to my employees, "Look, we just can't afford the meds." I'd love to just deploy Omada. And so those conversations, they were happening last year. They continue to happen this year in the selling cycle.
Got it. And are you seeing a general shift of one bucket to the other bucket? Are you seeing incremental more? Or obviously, the macro can be a little choppy at times. So are you seeing that sort of?
You know, it's funny that if you look at the Aon, Willis Towers Watson, Mercer reports on coverage, not coverage, obviously varies by segments, but you'll see like 50/50, 60/40, 55/45. That's been our observations as well, and we're relevant to multiple categories, which is nice. I'm not sure how that'll shift over the course of next year. Our goal is to recognize that the end employer buyer is an end of one. And we actually think that this prescription capability, a neat addition here, is that it enables flexibility. So maybe you want that now for your employees, but you don't later. Or it's a configurability that meets a market that has a lot of different dynamic views on covering, not covering the med, and if so, how.
Got it. That makes sense. And is that also in some ways opening up a broader set of multi-condition interest in your products? Like if we start talking about GLP-1s and we had prediabetes, is that also sort of pushing clients toward hypertension or some of the other?
Well, that's what we've tried to do. And the GLP-1 Care Track, it can be operationalized through both CVS Caremark as well as Evernorth. And we made sure to work with them to support the ability to turn on the broadened Omada product suite within those contracts. Because what happens is an employer might knock on our door and say, hey, we heard about your Care Track . We've really got some dynamic decisions to make here. We come in, and it's pretty quick where they recognize, you know what, it might not make sense to just pay for Omada for our employees on GLPs, but I should deploy it more broadly. Because maybe there's employees in my population that kind of want to try Omada before rushing to a med. Or there's those that don't want the med and want to make change.
And then that opens a conversation to diabetes, to hypertension, to MSK care. So it has benefited the multi-traction side, the multi-product traction side of Omada.
That makes sense. Speaking of CVS and some of your channel partners, how would you sort of talk about how those relationships, particularly with CVS, is sort of ramping up and sort of their help in terms of creating demand versus sort of your own character?
Yeah, I mean, what we shared is we're really pleased with how the sales cycle has gone there as of obviously November 5. And that's one where we announced it about, what, around April. And so got it in market and highlighted that we've begun closing clients. And what's typical with new channel partners is you work in the first sales cycle, build trust with corresponding our reps, their reps, get some closes, deploy them, and rinse and repeat. And so these do tend to build over time in a neat and gradual fashion. But as we shared, our perception is status lights are green. And I'm hearing and have heard great feedback in the field on that.
Got it. And it sounds like from what you're saying, there's not really a change in the length of the sales cycle with the GLP-1 prescribing versus your traditional sales cycle length. They don't need any different ROI data or that kind of thing? Or would you say that's all fairly consistent?
No, I mean, the usual patterns we've seen historically are this kind of shared first half you build pipeline, second half you close. Occasionally, you have anomalies, but the expectation is that it'd be consistent with that. And that's what we've observed with GLPs in large part.
Yep, no, that makes sense. And then maybe pivoting slightly, I mean, you have leaned into, I would say you've leaned heavily into AI, but I feel like you've done it in sort of a delicate way, right? Like you have Omada Spark, you have Meal Map. How do you sort of think about where the right places are for these AI investments, and how does that impact sort of some of the engagement and retention metrics that you have with customers?
Yeah, and the balance that we like to strike, I mean, we in equal parts encourage every single product manager at Omada to think AI first in any of the feature sets that they're responsible for. And you highlighted some of the incredible launches we've done. And it's things that a decade ago, my co-founder and I would dream that someday we could do with software. We're just able to do now. It's just so mind-blowing stuff. So that's all great. And we're seeing really promising early data with the usage of that. I mean, where members who use those tools, they're more likely to engage more. They're more likely to return to the app more. So that's starting to yield in ways that we'd hope. Equally, we are believers that in the art and science of medicine, the art's going to be the people.
The science is going to be the models. When we talk to our members, they like the accountability of a person. It's hard to find people that feel accountable to GPT-5.1 and Flash, right? So to us, it's the balance. It's making sure that people are used where they can best be used, create accountability, compassion, support, and then you delegate the science and the tasks to the models. And so I think there's a really exciting balance we can strike. And that balance is enabled because we spent the investments needed to build our entire care team platform ourselves, which was something we did early on. And that's allowed us to really be in the driver's seat of that intersection between people and AI.
Yeah. And how do you kind of think, I mean, maybe the answer is the above, but given sort of your growth focus and all the other things, is it sort of, do you see AI more as like a margin on, or sorry, a lever on the care margins, like care team efficiency side? Or do you think it's sort of like more of a cross-sell personalization type of thing? Or maybe it's something along.
What's fun is because of our revenue model, it's cost and quality, which we love, because the more engagement we can get with our members, the longer we can charge, because we bill such that people stay engaged, and so if AI enables new ways to do that, I think this is kind of a lead bullet. It's not a silver bullet thing, but over time, we have AI that enables new ways to increase engagement. That drives up, obviously, our ARPU and revenue on the same cost structure, so that's the revenue line, and obviously, it would contribute to margin, and then on the cost line, yeah, definite efficiencies, and there are things that our care teams used to do that don't need to do anymore.
I mean, imagine yesterday you have a member pinging you, be like, "Hey, I'm really interested in trying a new salmon recipe and advice." We, of course, a database. We'd get them something. But now we can just turf that to Omada's nutritional intelligence assistant. And Omada's fine.
And then it comes back to them faster, probably, too, right? And then they're happy, oh, now I can go to the rest of the.
They're happy. Everyone wins. Everyone wins. So it's about time optimization, but in a way that creates quality. And that's the beautiful thing about these technologies is you can do that. It's not simply about like, we need you to just spend less time with people. It's we need you to do different things to support your members.
Yep, no, that makes a ton of sense. Maybe in the last couple of seconds that we have left, if we're sitting here on the stage in December 2026, what are you going to be most proud of that you achieved over the course of 2026? And what are you going to look forward to in 2027?
You know, I think it's just such an exciting year of product innovation. The way I describe it, we're in the most interesting life sciences innovation with the advent of these incretin categories and all these GLPs. And there's like, what, 70-80 in the pipeline, as well as the most incredible software time in innovation. And could those two tools, in absence of any sort of interstitial layer, help the country? Of course. But will it optimally help the country? Absolutely not. And so the integration layer of Omada, we view as like taking this incredible moment in technology history and maximizing the benefits of these meds, maximizing the benefits of these technologies. And that's our job to be done. And so we'll have a number of ways that we've done that, I hope, to show off over the next year.
Nice. Well, that's a perfect place to end it. So thank you so much, Sean.
Perfect. Thank you. Thank you, everybody.