Omada Health, Inc. Common Stock CG 46th Annual Growth Conference
Review the key takeaways and the transcript of this earnings call.
- Omada Health reported record second quarter revenue of $88 million, representing 43% year-over-year growth, with a gross margin of 74% and adjusted EBITDA of $10.8 million.
- The company has grown to 1.1 million members and expanded its product offerings from a single prevention and weight health product to include diabetes, hypertension, cholesterol, and GLP-1 programs.
- Omada bills on an engagement basis, charging only when members actively participate in the program, and holds a digital-specific CPT code allowing fee-for-service billing as a medical provider.
- Q2 growth was broad-based across all product types, with diabetes and hypertension products being the fastest growing and highest priced.
- The company’s sales model leverages channel partnerships with PBMs and health plans such as CVS, Optum, and Cigna, enabling a small direct sales force and significant sales leverage.
- Gross margin improvements are driven by product mix, reduced health coach staffing, volume discounts on devices, and AI-driven efficiencies in care delivery.
- The company’s lifetime value per member is higher in chronic conditions like diabetes and hypertension, which also have longer member tenure.
- Omada has 25 million covered lives in its addressable market and is in early stages of penetration with major channel partners CVS and Optum.
- Management transition occurred with co-founder Sean becoming executive chairman and Wei-Li, a seasoned operator, assuming the CEO role.
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Transcript
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Great. Good morning, everyone. Thanks for attending the Canaccord Genuity Growth Conference this year. We really appreciate it. I am Richard Close in equity research here at Canaccord, covering digital and tech-enabled health. We are excited to have Omada Health here. First time at the conference. From management, we have Steve Cook, CFO, and the rest of the finance team here to discuss Omada. I think I first met Omada back in 2018. It was shortly after the company rolled out diabetes and hypertension. It has really been pretty remarkable to see how the company has evolved since then and last year's IPO. Steve, maybe first, thanks for coming, but just for investors that are maybe newer to the Omada story, just walk through us the journey real quick and where the company has come from to what it is today, including maybe the programs that you guys currently address.
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.
Excellent. We're lucky enough, or maybe unlucky, but we're just exiting second quarter reporting season. Last week was crazy to say the least for us. You just reported results last Thursday. Before we go deeper into the story, it would be good to just level set in terms of what maybe you think the big takeaways are from the quarter you just reported. You also had a management change, which comes pretty quickly after the IPO last year. Just sort of talk a little bit about that as well.
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