Omada HealthOMDA

Key highlights

• Profitability outlook raised: Management raised its full year revenue forecast to a midpoint of $337 million and now expects adjusted EBITDA, which is a measure of core business profit, to reach up to $27 million. This new profit range is a significant jump from the previous $20 million ceiling, showing the company is finding ways to grow much more efficiently than it originally planned.
• Margins hit record levels: Gross margin reached 73% this quarter, up from 66% a year ago, which means the company is keeping more of every dollar earned after paying for its health coaches and hardware. This record performance helped the company turn its first ever quarterly net profit of $5 million, compared to a $5 million loss at this time last year.
• Member growth acceleration: The total number of people using the platform grew 45% compared to last year, which is a faster pace than the 43% revenue growth. While signing up 1.5 million more potential users through a partnership in Illinois and other states is a win, the company needs to ensure these new members eventually spend as much as older ones to keep its profit momentum.
• Strategic leadership transition: Co-founder Sean Duffy will move to the role of executive chair on January 1, 2027, while the current president, Wei-Li Shao, takes over as chief executive. Having the former Eli Lilly executive take the lead suggests a shift toward scaling the business as a major healthcare provider rather than just a startup.
• Expansion into new care: Omada launched its first cholesterol management program in July and signed its first customer for a new program that lets its staff prescribe medication. Adding these services is vital because revenue per member only grew 2% to $284 this year, so the company needs more ways to provide value to its existing users.

Our take: This was an excellent quarter that proved the business can finally make money while growing quickly. The jump to a 73% gross margin is the standout fact, as it shows the platform is becoming far more profitable as it scales. It significantly strengthens the long term case for the stock.