Omada Health, Inc. Common Stock CG 46th Annual Growth Conference

Yeah, absolutely. Good morning, everyone. So yeah, back in 2010, Sean and Adrian founded the business with the explicit intent to bend the curve on cardiometabolic disease. Their future state vision is a day where the epidemiologists can actually see the bending of the curve because Omada itself is actually making an impact on everyone in the country. At the beginning, Sean and Adrian, they literally sat in the homes of people struggling with obesity, struggling with a lot of these disease states, and just wanted to understand how we could best serve them. As of today, we are now at 1.1 million members. We are partnered with all three of the major PBMs, multiple of the largest health plans across the world. Per your point, a big part of our strategy was up until 2018, we just had a single product. It was Prevention & Weight Health.

In the 2018, 2019 timeframe, we entered diabetes, we entered hypertension, then we acquired into MSK through our Physera acquisition in 2020. Now we have recently released our cholesterol program as well as our GLP-1 product offering. Our intent and the way we have been really just realizing a lot of economic benefit is selling across the entire condition type. We listen to our customers. Costco is probably our most brand name example. We started with them in 2013. They work with us across all of our product categories, and every time we have released a new product, we have gone back to them and they have picked it up, or they have asked us to go into some of the categories sometimes. We always start with listening to our customers, and if they want us to go into a specific area, then we really take that seriously.

We underwrite an investment protocol and then determine if we want to go in there. The future is bright right now.

Yeah. Maybe I'll start there and then we can go back into the quarterly performance. Sean, our Co-Founder CEO, announced a transition last week. He's going to become our Executive Chairman. Wei Shao, who's been his predecessor for some time. He's been with the company for the better part of 7 years. He became President 4 years ago, is going to take the CEO mantle. Wei Shao is a very seasoned operator, was at Eli Lilly and Company for 2-plus decades, and just an amazing execution vehicle through him. Sean's still going to be super actively involved in the business. He's going to be the rainmaker, so to speak. He wants to be out there really going and talking to all the big health plans, making sure he's just on the front face and really building up the Omada story externally.

I think this has been a natural progression evolution in our business. I'm really excited about that. From Q2, a record quarter for us. Highest-ever revenue, $88 million, 43% growth on a year-over-year basis. Highest ever gross margin, 74%. We then printed $10.8 million of adjusted EBITDA. We've really been, especially in this digital healthcare category, trying to demonstrate the durability of these assets. I think a lot of investors got burned in that 2021 time frame with false promises. We've just been quarter in, quarter out, trying to keep the growth high, but then also really display margin expansion across both gross margin and EBITDA. Q2 was a really good proof point there. I think Q2, most notably, it wasn't any single thing that carried the day. It was a broad-based win across all product types.

Diabetes and hypertension, which are our highest priced products, and they actually have the strongest LTV. We're the fastest-growing. I think a lot of investors, they think it's like we're just riding this GLP-1 tailwind oftentimes, and that's really not the case. The GLP-1 conversation is acting as a tip of the spear, and then we can go and cross-sell across our entire product suite, which is really how we've been winning in market for the past couple of years. Yeah, just awesome quarter overall.

Yeah, look, I think we have had a couple different pricing models through time, but the most important thing, and the way Sean envisioned billing when we started this business, was to always make our revenue connected to some sort of economic outcome. Either it be clinical or activity, something that is actually driving health change. I think the billing models of past were like PEPMs. Ryan and I dealt with this at One Medical for years, where you have this weird incentive kind of conflict where your incentive as the provider of that benefit is actually to lower your performance as much as possible to then increase margin. Our flavor of billing is we only charge people when they are actively engaged in our program. It is very simple. It is very simple to contract with plans and employers. If they stop using the program, we stop charging for it.

We have a direct incentive to make our product experience as compelling as possible so that folks are staying actively engaged with that. That is the most common flavor that we have sold exclusively for the past six or seven years is, that could be engaging with your coach, it could be utilizing your devices, it could be joining a community. These are all logged as activities, and then if you trip that billing threshold, we then in turn file a claim and recognize revenue for that.

Yeah. We bill as a full-covered entity. Sean took our trials to the American Medical Association, I think this is early teens, and was issued the first ever digital specific CPT code. It is a Category III code. That is what allows us to bill on fee-for-service rails just like we are a provider. That is really how the entire business model works. The end cost to our end users is zero. We bypass HDHP, bypass deductible, and do everything through the plans and then through the employers.