March 2026

Investment in Omada Health

Not investment advice. For informational purposes only.

Background

Omada Health 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.

The model is B2B2C: Omada sells into self-insured employers and health plans under multi-year contracts, generating recurring per-member-per-month revenue (~$50 PMPM).

For payers, Omada lowers total cost of care without adding fixed infrastructure. By intervening early in high-risk populations, it prevents expensive downstream events while remaining a variable expense.

In FY2025, Omada has $258M revenue (+52% y/y) and had its first quarter of adjusted EBITDA profitability in Q3 2025. At $11 per share, it trades at 1.2x EV/FY26 revenue at 9x EV/FY26 EBITDA.

The Set-Up

Omada IPO'd in June 2025 at $19. Despite beating initial coverage estimates, shares have fallen to $11 amid the broader software selloff and concerns that falling GLP-1 prices compress ROI.

There are a few reasons why Omada should outperform in the coming years:

1. Revenue will continue to re-accelerate and largely outperform street consensus: Street models ~$310M in 2026 revenue (+21% YoY), implying sharp deceleration in member growth despite GLP-1 tailwinds and the first full year of CVS Caremark partnership ramp. With embedded distribution across two of the largest PBMs and January enrollment data tracking >30% YoY, a ~$350M to $370M 2026 revenue outcome requires continuity, not hero assumptions.
2. 20% adjusted EBITDA margins in short-term, path to 30%+ adjusted EBITDA margins possible in long-term: Margins are temporarily masked by upfront hardware costs tied to member growth, but as cohorts mature, revenue shifts toward 80%+ gross margin services, driving natural expansion. Street estimates appear overly punitive on CAC and OpEx despite PBM leverage and AI-driven efficiency gains. $50M+ of adjusted EBITDA looks achievable on ~15-20% margins in 2026, with 30%+ margins plausible at scale.
3. Temporary multiple dislocation creates buying opportunity: At ~1.2x FY26 revenue / ~9x FY26 EBITDA, Omada trades at a steep discount to chronic care and digital health peers despite stronger growth and newly demonstrated profitability. If 2026 guidance shows durable mid-20%+ growth with expanding EBITDA, the narrative shifts from "digital health overhang" to "profitable chronic care platform," supporting multiple re-rating.

Example of Omada in practice

Taking a step back, it's helpful to understand how Omada Health actually works.

Imagine John goes to his doctor and is diagnosed with type 2 diabetes. His employer-sponsored health plan (through PBM) covers Omada as part of his benefits. Instead of just being told to "eat better and exercise," John is invited to enroll in Omada's program.

He downloads the Omada app and receives a welcome kit in the mail — typically a connected scale or blood pressure cuff depending on his condition. 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.

B2B2C model with >90% of sales through channel partners, namely insurers and PBMs

Omada runs a pure B2B2C model, contracting with employers, insurers and PBMs, who embed the program into their health plans.

In practice, essentially all of Omada's revenue is driven through insurer distribution, with >90% flowing through channel partners like Cigna (insurer), Express Scripts (insurer-owned PBM), and CVS Caremark (insurer-owned PBM). These partners embed Omada into their health plans and distribute it downstream to employer clients and covered members.

Going through PBMs is particularly strategic: the top three PBMs (of which Omada has partnerships with two) control >80% of prescription drug spend in the US and have >200M covered lives. Cigna in particular has a deep relationship with Omada, owning >5% of the company and being an early investor since the 2010s. More recently, Omada landed a partnership with CVS Caremark, materially expanding its distribution footprint. It's worth noting that Omada has >90% customer retention in the last three years.

Revenue is primarily generated through per-member-per-month (PMPM) service fees paid by employers, insurers, or PBMs for active members enrolled in the program. In addition, Omada generates one-time revenue from connected devices shipped to members (e.g., scales or blood pressure cuffs), though the core value lies in the recurring service component.

Retention is strong for a behavior-change program: approximately 55% of members remain active through year one, and roughly 50% through year two. As members persist, unit economics improve due to operating leverage and lower incremental servicing costs.

Value prop to channel partners: lower medical costs

Because of the channel, Omada's value proposition is straightforward: modest PMPM spend in exchange for meaningful multi-year medical savings.

Over a three-year period, Omada reports average gross medical savings per enrolled member of:

• $3,128 for weight management
• $3,947 for diabetes
• $3,138 for hypertension

Against an average annual program cost of roughly $320 per member (or $960 over three years), the ROI math is compelling. In diabetes, for example, ~$960 in program spend drives nearly ~$3,947 in gross savings, a ~4x return before accounting for productivity gains or downstream risk reduction.

For employers and insurers managing large at-risk populations, this is economically intuitive: a low-fixed, variable PMPM investment that reduces high-cost events, medication escalation, and long-term complications. The result is improved outcomes with favorable unit economics — particularly in a world where cardiometabolic drug costs (e.g., GLP-1s) can exceed $10,000 per year per member.

>$100B market across all treatment areas

Zooming out, Omada operates in enormous markets — MSK, prediabetes, hypertension, diabetes — affecting tens of millions of Americans. As healthcare shifts from reactive, outcome-based care toward preventative, continuous management, Omada effectively becomes the always-on layer sitting between doctor visits, helping members like John change behavior before small problems turn into very expensive ones.

Across the four tracks it focuses on, Omada is attacking a massive market with $135B of potential revenue:

All-in-one chronic care platform vs. point solution competition

Historically, the most visible public comp in digital cardiometabolic care was Livongo, which was acquired by Teladoc Health in 2020. The strategic vision was to combine chronic condition management with virtual care into a single platform. In practice, integration proved more complex. Growth decelerated, cross-sell synergies fell short of expectations, and Teladoc ultimately took a significant impairment charge on the Livongo acquisition.

Two structural differences are worth calling out:

First, Livongo's pricing model was often closer to a "pay-for-access" PMPM structure, where employers paid for eligible lives regardless of actual engagement levels. That created some misalignment between utilization and revenue, particularly when employers scrutinized ROI. In contrast, Omada Health generally ties revenue more directly to active participation and services delivered. This tighter linkage between engagement and billing can make ROI conversations cleaner — especially in an environment where employers and PBMs are focused on cost containment.

Second, as PBMs became more central to GLP-1 reimbursement workflows, distribution shifted. Omada has strengthened relationships with major PBMs like Cigna (via Express Scripts/Evernorth) and more recently CVS Caremark, while Livongo/Teladoc lost share in certain PBM channels. As PBMs increasingly dictate which behavioral programs are paired with high-cost medications, winning those contracts becomes structurally important — and Omada has been the primary beneficiary.

On the product side, Omada's advantage is breadth. Rather than operating as a single-condition point solution, Omada offers an integrated platform across diabetes, hypertension, weight management, and MSK. That matters for two reasons:

• Procurement simplicity: Employers prefer fewer vendors. Buying one cardiometabolic + MSK platform is operationally cleaner than stitching together multiple point solutions.
• Cross-sell leverage: Once a member is enrolled for prediabetes, it is easier to expand into hypertension support or GLP-1 behavioral tracks within the same app, coach infrastructure, and data layer.

Compared to point solutions like Hinge Health, which focuses primarily on MSK, Omada's ARPU per condition may be lower. However, the total lifetime value per employer can be higher if multiple conditions are managed under a single contract. In other words, while a single-condition vendor may monetize more aggressively within its niche, Omada's multi-condition platform can capture a broader share of wallet — and do so with stronger retention and easier upsell over time.

Strategically, this positions Omada less as a feature and more as infrastructure: a durable, cross-condition behavioral layer embedded in reimbursement workflows rather than a standalone digital tool competing for budget each renewal cycle.

Thesis #1: Revenue will continue to re-accelerate and largely outperform street consensus

Drivers of recent revenue re-acceleration

After a period of normalization in 2023, revenue growth bottomed in early 2024. Q2–Q3 2024 marked a clear inflection. The main driver of this was GLP-1 adoption surging.

Given the high cost of GLP-1s, payers were increasingly pairing these drugs with structural behavioral support, which surged enrollment into Omada's weight programs. Especially when GLP-1s cost >$1,000 per month, an extra $50 per month to ensure payee compliance is worth the cost. What this looks like in practice is patients using GLP-1s will often have to weigh in and track their habits with Omada >4x a month to maintain coverage.

As a result, Omada saw its GLP-1 track increase from an estimated 50K members at the end of 2024 (9% of total members) to an estimated 125K members in 2025 (17% of total members).

What's also encouraging is even if we were to strip out the GLP-1 track, Omada would have seen 39% YoY growth in 2025 (vs. 52% YoY actuals with GLP-1 members). This shows that the core business is strong and continues to grow outside of just GLP-1s.

2026 tailwinds for continued revenue re-acceleration

There are several tailwinds that are anticipated to continue to re-accelerate revenue in 2026, namely:

• Partnership with CVS Caremark: The CVS Caremark relationship embeds Omada within one of the largest PBMs in the U.S., expanding distribution beyond Evernorth and reducing customer concentration risk. 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. Even modest penetration across participating plans should drive incremental member growth above consensus assumptions. Street estimates this could drive at least >$70M revenue near-term.
• Omada expanding into GLP-1 administration: while this was just announced in late 2025, this does provide cross-sell opportunities for both GLP-1 and other tracks. It's unclear the uplift this will provide given its recency, but at the very least presents an increasing upsell opportunity. This also mitigates potential churn risk from cheaper oral GLP-1 solutions (more in later sections).

Street consensus estimates for 2026 imply growth plummeting, which seems unrealistic

Taking the above into consideration, it's interesting to look at the street consensus estimates, which imply Omada's growth will significantly plummet in the coming months. The street consensus guide for 2026 is $310M in revenue, which implies that Omada's member count will only grow ~10% in 2026.

This seems incredibly bearish, especially when taking into consideration Omada's historical YoY member growth: 31% in 2023, 46% in 2024, and 55% in 2025, and the tailwinds highlighted above for future growth.

Now part of this might be small-cap coverage not being up-to-date — many have not updated estimates following Omada's unofficial year-end announcement. That said, it does present an opportunity for significant re-write of the name. It's also not unreasonable to assume that Omada will see growth slow a bit in 2026 by proxy of it becoming larger in size, but given the above tailwinds and current breakneck growth, this seems highly unlikely.

Even if we were to assume the worst-case scenario — no more GLP-1 track adoption given oral GLP-1 release (to be discussed in Risks section) and Omada halves new member adoption — we would still get to existing street estimates of $312M.

If we were to assume the same net new members added as last year, we would get to revenue estimates of $362M, $50M above street and 40% YoY growth. Given the tailwinds above there is a non-zero chance we see growth above that, in which case a $400M revenue target is not unlikely.

Early app download data suggests that Omada will add 400K+ net new members this year, vs. 100K for street consensus estimates

Based on early app download data, Omada is seeing >30% downloads in Jan 2026 than Jan 2025, which is the most relevant time period given its new enrollment season.

If we were to look at this against prior years, this would imply ~415K net new members this year, in-between our Base and Bull cases. While this is not a perfect indicator, it does provide a strong proxy and R² value for comparison for total-year adoption. Again, this is against street estimates of ~100K net new members for this year.

Lastly, two other factors could be relevant data points as we look to 2026 revenue forecasts:

• Omada crushed initiating coverage estimates: initial initiating coverage had estimates closer to ~$220M, which Omada beat thoroughly (expected to end the year at ~$255M). Despite this the stock has traded from $25 down to $11.
• Hinge Health (closest comp) ups guide: Hinge Health raised its 2026 revenue guide to $732M to $742M, up from prior expectations closer to $700M, reflecting stronger-than-expected growth. A positive indicator for Omada Health, since rising confidence in subscription-based digital care models suggests expanding market appetite and growth opportunities for peers like Omada.

Thesis #2: Path to 20% adjusted EBITDA margins near-term, 30%+ long-term

20% adjusted EBITDA margins are obtainable today; hardware investment to support fast new member growth temporarily masks underlying profitability

As discussed, Omada operates with two revenue streams: services (recurring SaaS subscriptions that include coaching and digital care) and hardware (connected devices such as scales, glucose monitors, and blood pressure cuffs). Services carry high gross margins (80%+), while hardware is intentionally negative gross margin (-90%). On a blended basis, gross margins have historically ranged between 65–70%.

Importantly, hardware costs are largely incurred upfront when Omada enrolls new members, as devices are shipped at the start of the program. As a result, periods of accelerated new member growth mechanically lower gross margin due to a higher mix of unprofitable hardware revenue.

However, this dynamic reverses over time. As the installed member base grows, new enrollees represent a smaller percentage of total members, reducing hardware intensity as a share of revenue. The model naturally shifts toward high-margin recurring services, driving gross margin expansion as the business scales.

This nuance creates a "win-win" setup. If new member growth moderates, hardware intensity declines and gross margins expand more quickly. If new member growth exceeds expectations, Omada delivers faster topline growth today, with margin expansion deferred to future periods as the cohort matures.

If we look at the range of outcomes, we can indeed see that gross margin is inversely correlated with revenue growth: if we see revenue growth fall to ~20% YoY, gross margins will expand from 67% to 77%. If we see similar member growth to this year, gross margins will stay the same or only slightly expand.

Interestingly, if we also look at street estimates for next year, they fail to capture this dynamic: analysts assume the same hardware revenue, despite assuming that new member growth falls >65%. Should new member growth actually fall, we should assume that Omada will see a large decrease in hardware revenue, and a corresponding increase in gross margin.

AI could bolster services gross margin to 85%+

Lastly, AI has been cited in earnings calls as a potential beneficiary to improving gross margins. As more member interactions shift from fully human to AI-assisted or AI-initiated touchpoints, the blended cost to serve declines. Management has cited this several times on earnings calls as a potential tailwind for the business. We could see additional uplift on gross margin from this.

As an anecdote, Hinge Health cited this as a large driver of their last earnings call, stating:

"First, our AI-powered tools are transforming the efficiency of our care delivery while also improving member experience. We've rolled out improvements that help our clinicians work more effectively and handle more members without compromising care quality. The results have been remarkable. In 2025, we served 47% more members while keeping care team costs flat.

One major driver of this improvement was our successful rollout of automated AI-powered communications for routine messaging, freeing up our care team to focus on higher-value human interaction where they can make the biggest difference. This led to the average time our care team spends in asynchronous sessions supporting members falling by 28% in just one quarter, from Q3 to Q4 2025."

Hinge Health has been able to achieve 85%+ gross margins in the last year, which could be a north star goal for Omada in the future.

Street consensus overly punitive on operating expenses, specifically CAC

The other discrepancy with street estimates is that operating costs are increasing more than revenue growth next year, highly unusual for SaaS companies of this profile. Over the last two years, Omada has seen a ~30% increase in operating expenses vs. a ~110% increase in revenue. The street is estimating a ~25% increase in operating expenses vs. a ~22% increase in revenue next year. This most notably shows up in S&M, where the street is implying a ~4x increase in CACs vs. historical averages.

Now management has cited that they expect investments to increase next year, most notably in R&D and S&M, but the increases implied are quite unrealistic with what we'd anticipate.

Note: CAC is estimated by taking total S&M spend and applying it against estimated acquired members (excluding churn). While this is not how one would normally calculate it, it's a strong proxy for directional S&M spend.

Putting it all together, a path to $50M+ in adjusted EBITDA this year

When we look at these figures in tandem (better gross margin profile and more realistic operating expense figures) the profile of the business looks radically different, with $50M+ in adjusted EBITDA becoming achievable next year.

30% adjusted EBITDA margins seem in reach when looking at comps

More mature comps such as Hinge (~28%) and DexCom (~34%) demonstrate the operating leverage inherent in scaled digital health models. For Omada, hardware mix normalization, improving sales efficiency through PBM distribution, and AI-driven reductions in coaching cost per member should drive incremental margin expansion.

Given the capital-light model and modest capex requirements, 30% EBITDA margins would likely translate to strong EBITDA-to-FCF conversion, creating a structurally high cash-generative profile.

Thesis #3: Temporary multiple dislocation creates buying opportunity

Omada trades at a severe discount to direct comps, despite inflecting EBITDA and faster topline growth

If we start with comps, the current valuation simply does not line up with OMDA's growth profile.

Direct digital health peers are trading ~4–5x forward revenue at mid-teens growth rates, while slower-growth healthtech names cluster around 2–3x. OMDA, by contrast, is growing closer to ~35–40% with EBITDA inflecting positive, yet it trades far closer to the slower-growth bucket.

If the stock were valued at just 4.0x 2026 revenue — still below the direct comp median — that would imply roughly $29 per share in my base case. That's not assuming exuberance or peak multiples; it's simply assuming normalization toward where comparable businesses trade.

Range of outcomes: ~$20 for a downside case, ~$30 for base case, $40+ for upside

From there, it's helpful to frame the range of outcomes.

On a revenue-based framework, even a more conservative scenario holds up reasonably well. In a bear case where revenue reaches ~$311M and the multiple compresses to 3.0x, the stock implies roughly $20 per share. In my base case — ~$357M of revenue at 4.0x — the value moves to ~$29. And in a more optimistic scenario, where revenue reaches ~$403M and the multiple expands toward 6.0x (more in line with higher-growth digital health peers), the stock implies ~$46. The asymmetry becomes clear: the downside assumes multiple contraction and slower growth, while the upside requires only execution plus partial convergence with peers.

On an EBITDA-based framework, it just reinforces the point. As OMDA turns sustainably profitable, valuation begins to shift toward earnings power rather than just revenue. Even using relatively modest EBITDA multiples — 16x in a bear case, 24x in a base case — implied values cluster in the mid-$20s. In a more bullish case where margins expand and the company earns a premium multiple (40x), the valuation pushes toward ~$40 per share. Importantly, OMDA is still early in its margin expansion curve, so EBITDA in 2026 likely understates normalized profitability if margins ultimately move toward the 25–30% range seen at more mature peers.

Averaging both approaches produces a range of roughly $20 on the downside, high-$20s in a normalized base case, and low-to-mid $40s in a more constructive scenario. What stands out is not just the upside, but how much pessimism appears embedded in the current price. The market seems to be valuing OMDA closer to a slow-growth healthtech company, despite growth that materially exceeds that cohort and profitability that is just beginning to inflect. If the business executes even moderately well, valuation has room to close that gap.

Other consideration worth noting: Omada's capital structure

It's also worth briefly noting the balance sheet. OMDA carries no debt and holds ~$200M in cash, representing a meaningful portion of its current enterprise value. That clean capital structure matters. It lowers financial risk, provides flexibility to invest through volatility, and effectively backstops the equity in downside scenarios. In other words, the bear case is not being evaluated against a levered balance sheet or liquidity pressure — it's a net-cash business with operating leverage beginning to emerge.

Risks

Oral GLP-1 usage causes adoption to slow

To date, GLP-1 adoption has largely been driven by injectable therapies, which can exceed $1,000 per month. Against that backdrop, Omada's ~$50 per member per month offering is an obvious economic complement — behavioral support improves adherence and protects payer ROI. However, as oral GLP-1s enter the market and potentially reduce cost and friction, payers may perceive less need for structured behavioral programs, which could moderate incremental enrollment into Omada's GLP-1 track.

• Mitigant #1: Omada is increasingly positioning itself alongside prescription management rather than separate from it. By integrating into the GLP-1 workflow, Omada can bundle behavioral support with medication management, reinforcing its role rather than displacing it.
• Mitigant #2: Oral therapies may meaningfully expand the overall addressable population. Even if attachment rates per patient modestly decline, the total number of eligible lives could increase, potentially offsetting any per-member softness through overall market expansion.
• Mitigant #3: GLP-1 remains a sub-20% contributor to total revenue. A slowdown in GLP-1–related enrollment would temper growth but would not structurally break the model, given Omada's diversified chronic care tracks.

Cigna revenue concentration

In the last few years, >50% of Omada's revenue has been tied to Cigna / Express Scripts–related channels, creating perceived customer concentration risk and negotiating leverage.

• Mitigant: Cigna is not just a channel partner but also a meaningful shareholder, owning >5% of the company ($50M+ position). That ownership alignment reduces the likelihood of abrupt disruption and aligns incentives around long-term value creation. Additionally, Omada's expansion into other major PBMs — most notably CVS Caremark — should progressively diversify revenue streams and reduce concentration over time.

Recent software selloff (from AI)

In recent months, capital has rotated aggressively toward AI-native software, compressing multiples across digital health and broader growth SaaS. Omada's share price decline (from $16 to $11 in FY2026) appears more correlated with sector-wide multiple contraction than with company-specific deterioration in fundamentals.

• Mitigant: Omada's model is not purely discretionary software. Its hardware integration, human coaching layer, and clinical positioning embed it within payer workflows and tie it directly to medical cost savings. That combination makes it less easily disintermediated by pure AI solutions and more durable than typical IT budget-driven SaaS. In a repricing cycle, structurally embedded healthcare cost-saving platforms should ultimately re-rate ahead of consumer or workflow software.