Weight loss care is leading IPO-hopeful Omada Health’s latest growth surge as Ozempic boom continues

Omada CEO Sean Duffy.

Last spring, diabetes startup Omada Health said it wanted to help employers manage patients taking a blockbuster new class of weight-loss drugs.

A year later, that business has taken off.

Omada Health’s metabolic health program has now become the entry point for most new employers considering contracts with Omada Health, Duffy said.

“The inbound that we get from benefits buyers, the first question is, tell me more about the GLP-1 care track. And that’s the thing that turns into the other conversations,” Duffy said.

Weight loss is now at the forefront of their pitches to employers “even if we don’t necessarily want it to be,” Duffy said, “because it’s the thing. There’s such a focus on metabolic care for obesity, and then they’re like, oh cool, you guys also do diabetes and hypertension.”

Launched in 2011, Omada provides virtual care for diabetes, hypertension, musculoskeletal care, and diabetes prevention, alongside obesity, to employers, health plans, and even health systems. The startup is now looking ahead to an IPO, having filed its S-1 this summer, B-17 first reported in October. Omada previously declined to comment on its IPO plans.

But as weight loss pushes Omada closer to a public market debut, Duffy said those contracts with employers haven’t looked like what he expected.

The startup had initially envisioned that employers would use Omada as a gatekeeper, choosing to pay for buzzy GLP-1 drugs only after a patient had already tried Omada’s program, or cutting off the drug coverage after a year and using Omada to help patients maintain their weight loss.

But most employers haven’t chosen those routes, Duffy said.

“That’s not a common voice. The majority of [our customers] — I actually don’t know the reason, but I think it’s much simpler — they’re choosing to cover the drugs with lifestyle support alongside,” Duffy said.

The fraught market for Ozempic

While dozens of healthtech companies, from WeightWatchers to Ro, have rushed to build online programs to prescribe Ozempic and Wegovy, as well as compounded versions of the weight-loss drugs, Omada doesn’t prescribe GLP-1s itself. Instead, the startup set out to help patients taking GLP-1s — which began as a class of diabetes drugs — make changes to their diet and exercise.

When Duffy told B-17 about these plans in May 2023, the startup was confronting a rising tide of employers panicking about the costs of the expensive drugs. The prescriptions typically cost between $8,000 and $10,000 per patient per year, according to WTW, formerly Willis Towers Watson. The firm said GLP-1 drugs for obesity account for about 10% of all pharmacy spending.

Those cost concerns haven’t abated. Most companies still don’t cover GLP-1 prescriptions for weight loss, though more pay for the drugs now than in previous years. Employers expect their healthcare costs to increase by about 8% in 2025, largely due to the explosion of GLP-1s.

But Duffy said only a small fraction of Omada’s total contracts have imposed strict limits on GLP-1 coverage with Omada as a gatekeeper.

“In the narrow network world, there’s a subcategory of enterprise GLP companies who just make it so that their employees can only get GLP with our conditions. You typically get less GLP usage there because you’re introducing a friction point,” he said.

Novo Nordisk’s Ozempic and Wegovy are

GLP-1s already come with plenty of friction points for patients. For the past two years, the drugs were in short supply, making it difficult for any patients to get their hands on the drugs, especially without a diabetes diagnosis. Those shortages are reportedly easing, with the FDA removing GLP-1 ingredient tirzepatide from its shortage list earlier this month, but many pharmacies are still dealing with empty shelves.

And GLP-1s can also produce plenty of side effects, which, in combination with their high costs and shortages, prompts most patients to stop taking the drugs within the same year. That’s a problem, since clinical data has shown that the majority of patients regain most of the weight they lost on a GLP-1 after they stop taking it.

Omada previously said it wanted to help patients keep the weight off after stopping their GLP-1 usage. The company said it isn’t yet ready to share any findings on how effective those efforts have been.

Going forward, Duffy said Omada is continuing to refine its metabolic health strategy as the business grows. He said the startup is also looking to partner with more health systems to provide Omada’s virtual solutions for conditions like diabetes and obesity to health systems’ patients.