March 2026

Investment in Omada Health

This is just a summary of the research done, if you'd like to dive in deeper please find the attached Google Doc which goes into greater depth.

Background

One theme I've been exploring is re-accelerating revenue. As you can imagine, this is hyper-relevant and seen with AI themes today: semis (Nvidia, AMD), photonics (Lumentum), power (Bloom Energy), CDN (Cloudflare). Why is this important? Most multiples (and therefore valuation) are defined by growth prospects, and re-accelerating revenue is a core indicator of that.

While outside of the core 'AI' thesis, this exploration led me to Omada Health. As a quick primer, Omada is a virtual chronic care company helping patients manage diabetes, cardiometabolic, and musculoskeletal conditions when outside a physician's office. It combines connected devices (e.g., scales, CGMs, blood pressure monitors) with remote coaching delivered through its app.

Example: John goes to his doctor and is diagnosed with type 2 diabetes. His employer-sponsored health plan (through a PBM) covers Omada as part of his benefits. He downloads Omada and receives a welcome kit in the mail with a connected scale and blood pressure cuff. From there, he's matched with a dedicated health coach. The app delivers structured lessons, tracks his weight, glucose, or blood pressure automatically, and prompts behavior changes week by week. His coach monitors his data remotely and checks in to adjust goals, reinforce habits, and keep him accountable.

Omada's revenue is very-much accelerating: revenue 38% YoY in 2024, only to re-accelerate to 51% YoY in 2025. The primary driver is the launch of its GLP-1 product. The results are quite significant, with 63% of patients having no change or decreases in weight even after taking the medication. For insurers this is a no-brainer: when the cost of GLP-1s can exceed >$1,000 per month for treatment, paying $50 a month to ensure compliance is a great trade. Omada sells into insurers and PBMs, who can then offer it to their customers in a B2B2C model, charging per seat per month.

Why Now

While there's a lot to like about the business (and the aforementioned report goes into much greater depth), I'll highlight two factors which make me excited.

The first is that I believe revenue will massively outperform analyst expectations. Street models ~$310M in 2026 revenue (+21% YoY), implying sharp deceleration in member growth. It's unclear what the exact driver of why this dropoff will occur, but my main guess is that its due to out-dated analyst forecasts. Omada is a small-cap name, and doesn't have the focus of larger companies in their coverage universe.

Qualitatively, Omada has quite a few tailwinds which make me believe this dropoff is unlikely. Namely its new partnership with CVS, one of the big three PBMs. While the initial eligible population is narrower than CVS's >100M total covered lives, 2026 represents the first full year of ramp within this channel, and we'll start seeing the impact likely in Q1 and Q2 of this year (assuming six-to-twelve month sales cycles). Street estimates this could drive at least >$70M revenue near-term, which is more than the delta between the street estimates for 2025 and 2026 revenue itself.

Omada has also launched GLP-1 administration. While it's unclear the uplift this will provide given its recency, but at the very least presents an increasing upsell opportunity and mitigates potential churn risk from cheaper oral GLP-1 solutions.

Quantitatively, this also doesn't exactly fit the bill. Assuming no growth in its subscriber base, we would already see +11% YoY revenue growth in 2026, simply due to ARR conversion to revenue. Omada is also seeing >30% app downloads in Jan 2026 than Jan 2025, implying strong new member enrollment. If this were to correlate to past years, Omada would be on-track for ~$380M in revenue, or +45% YoY revenue growth.

The second is that profitability is in-sight and raises the floor on valuation going forward. Profitability is also inflecting. In Q3 2025, Omada had its first quarter of positive adjusted EBITDA of $2M+. What's hindered Omada's profitability historically is actually its growth. Whenever a new member joins Omada, they are sent hardware (scales, blood pressure cuffs) in the mail. Despite logging this as revenue, this is a money-losing endeavor for Omada, with COGS costing twice as much as revenue. That said, as cohorts mature, and new members become less of an overall percentage of the population, their overall gross margin will increase.

This creates a 'win-win' for the business: if growth slows, Omada will see an inflection in its margins. If growth continues, Omada will see economies of scale on its OpEx. $50M+ of adjusted EBITDA looks achievable on ~15% to ~20% margins in 2026, with 30%+ margins plausible at scale (as also witnessed by its comps, DexCom and Hinge). The market is seeing Omada today as an unprofitable SaaS company, when really these margins can be achieved today, they just seem to pump the brakes on growth!

Valuation

Putting this together, the picture is painted. Omada is trading at 1.2x FY26 revenue and 9.0x FY26 EBITDA. This seems incredibly cheap for a software business growing topline >50% YoY. Especially when you factor in comps trading at ~5x FY26 revenue and ~20x FY26 EBITDA, and have historically traded at >10x NTM revenue.

Street estimates have Omada ending 2026 at $310M revenue (+21% YoY) and 4x EV / revenue multiple, which equates to a share price of $25. My base case is $350M revenue (+38% YoY) and 4x revenue multiple, which equates to a share price of $29. There is a 'dream the dream' case, where Omada sees the same growth rate as last year, and ends the year at $400M revenue (+56% YoY) and a 6X multiple, resulting in a share price of >$40.

What Gives Me Pause

While there are a lot of risks in the business (again, you can dive deeper into the report listed) the primary is the heightened churn that Omada may be seeing currently. MAUs dropped from ~300K in Oct 2025 to ~240K in Jan 2026. It's worth noting that Omada has seen temporary decreases in MAUs, especially in times of rapid enrollment (which Omada saw in Q2 and Q3 of last year). What I'll be watching for is that this normalizes in the coming months, which we're seeing. February had all-time highs for DAUs by ~30%, which should translate to higher MAU forecasts. I'll be monitoring this heavily going into earnings on March 5th.