Omada Health, Inc. Q1 FY2026 Earnings Call

Good day, and thank you for standing by. Welcome to the Omada Health First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Craig Gracie, Chief Accounting Officer, Investor Relations.

Thank you. Good afternoon. Welcome to Amada Health's first quarter 2026 earnings conference call. Joining me today are Sean Duffy, our co-founder and CEO, Weili Hsiao, our president, and Steve Cook, our CFO. Before we begin, I'd like to note that we will be discussing non-GAAP financial measures that we consider helpful in evaluating Amada's performance. You can find details on how these relate to our gap measures, along with the reconciliations, in the press release that is available on our website. We will also make forward-looking statements based on our current expectations and assumptions, which are subject to risk and uncertainties, including factors listed in our press release and in the risk factors found in our SEC filings. Actual results could differ materially, and we assume no obligation to update these forward-looking statements. With that, I'll turn the call over to Sean.

Thank you, Craig. Good afternoon, everyone, and thank you for joining us. Q1-2026 was a milestone quarter for Omada. Here is our financial snapshot compared to a year ago. 42% revenue growth with a lower net loss and positive adjusted EBITDA with a higher gross margin and a guidance raise. Our business is largely driven by four growth leaders. Let me explain the importance of each. expanding reach, the total lives with benefits coverage for our programs through channel and employer relationships, increasing enrollment, how effectively we convert those covered lives into multi-conditioned members, deepening engagement through advancements in our member experience, including our AI-powered food and behavioral platform that includes Omada Spark and MealMap, and operational efficiency, the AI clinical model and operational investments designed to improve outcomes and margins as we scale. I'll walk through the headlines across all four levers. Wei Li will then take you inside the platform, into the operational and commercial details behind REACH, enrollment, and engagement. Steve will walk through the financial picture, including our updated outlook, and I'll come back at the end to bring it all together. The headline of the quarter is REACH. In Q1, we saw the new investments in our GLP-1 capabilities begin to demonstrate traction. OMADA is proud to join OptumRx's weight and gauge portfolio to help employers expand responsible, clinically supported access to GLP-1 and other anti-obesity medications through their existing pharmacy benefit manager. This collaboration marks OMADA's first offering of prescribing capabilities within a PVM channel, reflecting our shared commitment to improving coordinated care for employers and members. Omada now has relationships with the nation's leading pharmacy benefits managers, who serve most commercially insured lives and process 80% of prescription claims. And today, we announced that Omada is joining Eli Lilly and Companies Employer Connect to offer our GLP-1 care track, also including prescribing capabilities, directly to employers. Across these announcements, Omada can now meet employers where they are, whether they are already covering GLP-1s, exploring coverage for the first time, or looking for a lower-cost alternative through an employer-defined contribution model. And critically, our GLP-1 capabilities remain the tip of the spear for sales conversions across the broader Omada platform, which is driving growth across the full cardiometabolic suite. Turning to enrollment. In Q1, our total members grew 51% year-over-year, crossing 1 million for the first time in our history, a direct result of our expanded reach and our relentless iteration in enrollment marketing effectiveness. We continue to see strong enrollment across our GLP-1 services, but importantly, across the full suite of our cardiometabolic services like hypertension and diabetes. On engagement, member engagement continued to deepen this quarter as we scaled our nutrition experience with continued advancements in Omada Spark and MealMap. And on efficiency, we narrowed our gap loss significantly and delivered positive of adjusted EBITDA in Q1, which is historically our most cost-intensive quarter, showing the operating leverage we committed to demonstrating. Behind that result is AI showing up across our business in a structural way. In care delivery, our tooling now summarizes member data and surfaces potential next actions for care team review, reducing the administrative burden on our care teams. In engineering, AI-assisted development has accelerated our product velocity and the ability to say yes to new customer needs. And across operations and member support, we are converting routine manual processes into automated workflows that create capacity without adding cost. Taken together, these investments are not only improving the member and care team experience today, we believe they are beginning to provide a foundation for a structural tailwind to margins. The reason we have scaled this way, adding channels, adding conditions, adding capabilities like prescribing without breaking stride, is that each new relationship, each new capability plugs into a complex system that promotes a positive, durable network effect for Omada and differentiates us from our competitors. Part of what underpins our commercial success is a large set of relationships that we have built over the past 15 years. OMADA has worked to build institutional trust with many of the nation's largest employers, health plans, and PBMs, embedding our programs in benefits designs, clinical workflows, and compliance processes to create integrated partnerships that we believe many of our partners have come to rely upon. Our clients are not paying us to make their business more efficient. They are not buying software or SaaS seats. They are paying us to improve the health of their members and provide measurable outcomes in diabetes, hypertension, cholesterol, weight health, and MSK. We have worked thoughtfully for years, investing in areas like clinical sophistication, regulatory and privacy compliance, and information security to meet the exacting standards of these partners, not as a software vendor, an automated tool, or a consumer wellness solution, but instead as a HIPAA-covered entity and a recognized provider of true healthcare. We also have a rich cardiometabolic dataset, Tens of millions of care team interactions and billions of data points across weight, diabetes, hypertension, and musculoskeletal health. This data advantage is a reflection of our scale and operating history and helps us rapidly improve our care. We have published 30 peer-reviewed studies and maintain third-party accreditations from organizations like NCQA and UREC, evidencing our ability to meet their exacting standards and further differentiating our clinical, regulatory, and compliance capabilities. And we have designed our own co-intelligent care model that combines human coaching with AI tools to deliver personalized care at scale, using our unique data to power functional AI workflows for members and care teams, not just model benchmarks. That combination of enterprise-grade distribution, extensive data, clinical and accreditation depth, proven and published outcomes, and a care model refined over more than a decade of real-world deployment. That is the durable position that we work to maintain and to widen quarter after quarter. Before I turn it over to Wei Li, I want to ground this in the lives of the people we serve. One member recently shared, I've been using the Omada app for years and it truly changed my life. Through better choices, discipline, and consistency, I've lost over 60 pounds. I don't need a seat belt extender on planes anymore. My toes don't tingle. I make better choices without feeling restricted. For years, I thought food was my best friend. It was comfort. It was coping. Now I see it for what it is, fuel for the life I'm building. Exceptional stories like that are why Omana exists. Three in four American adults have at least one chronic condition, and over half have two or more chronic conditions. And the healthcare system still organizes much of their care around limited clinical touch points. OMADA puts the space between those visits at the center of care. With that, over to Wei Li.

Thanks, Sean. As Sean shared, we crossed the milestone of 1 million total members. We ended Q1 with 1,025,000 total members, up 51% year-over-year. This is 139,000 net new members in Q126 compared to 107,000 in Q125. Importantly, growth was broad-based across the cardiometabolic suite. We saw strong year-over-year growth in our hypertension and diabetes programs, reinforcing that our momentum extends well beyond GLP-1 offerings. Multi-condition close rates remain strong. Two complementary drivers are amplifying this growth. First, enhancements to our enrollment experience converted more eligible members across email and direct mail, with particularly strong gains in diabetes and hypertension. Second, we continued to transition a majority of our accounts to OMADA-led outreach, which is generating enrollment rates higher than non-OMADA-led accounts. Turning to our commercial progress. This quarter, we made meaningful strides expanding our channel and customer relationships. We now have relationships with all three of the nation's largest pharmacy benefit managers and are deepening our presence across the GLP-1 ecosystem. As Sean mentioned, we are proud to have joined OptumRx's Weight Engage portfolio. In addition to GLP-1 care, OMADA's prevention and weight health, hypertension, and musculoskeletal programs are available for OptumRx clients to purchase. And as an independent program administrator in Eli Lilly and Company's Employer Connect, We plan to support employers seeking direct GLP-1 access by pairing our clinical support and behavioral coaching model. Employers will be able to offer their members transparent, clinically guided access to anti-obesity medications alongside OMADA's wraparound care. In the corner, we also added several large nationally recognized private employers as customers, including LL Bean, Quick Trip, and Breakthrough Beverage, alongside additional public sector and regional health system wins. Together, these new and expanded relationships meaningfully extend our reach and further multi-condition penetration while giving us access to a broader and more diverse set of covered lives across PBM, health plan, and employer channels. We are still in the early innings of serving many of these newly covered populations, which can take multiple sales cycles to build into. GLP-1s have not just driven demand for medication. They have expanded how many employers think about cardiometabolic care more broadly. Whether or not they choose to cover these therapies, we find that employers are increasingly prioritizing weight and metabolic health and looking for solutions that can support their populations. This shift has played directly to our strengths. This reflects a fundamental reality. Nine out of ten people taking GLP-1s for obesity are also managing at least one other chronic condition. Since launching our GLP-1 care Track, we have supported more than 150,000 members as of the end of 2025, building proof points for our wraparound care model. Let me walk you through how our offerings map to the different ways employers approach GLP-1 benefits. For employers already covering GLP-1 through one of our PBM partners, our GLP-1 Care Track delivers companion care, including behavioral coaching, support with side effect management, and other clinical support, alongside the pharmacy drug benefit. This is now available through the three largest PBM channels. Our GLP-1 care track can also help sustain outcomes after discontinuation, with data showing just 0.8% average weight change one year after stopping therapy, compared to a percent to 12% regain in key clinical trials without ongoing support. For employers seeking clinically managed prescribing, as GLP-1 therapies evolve, employers need support navigating medication selection and titration across benefit designs intended to improve outcomes and manage cost. Prescribing is a natural extension of our model, and we are excited about our first offering of prescribing capabilities with OptumRx. Given annual enrollment cycles, we expect revenue contribution from prescribing offerings to build more meaningfully in 2027. For employers not yet covering GLP-1s who want an alternative to traditional coverage, we can support direct-to-employer pathways that give them a more flexible way to begin offering access with more predictable costs. That includes Omada GLP-1 FlexCare, which combines clinical evaluation, prescribing support, behavioral coaching, and ongoing virtual care, while eligible members access medication through vetted cash pay channels. Also includes our work with Lilly's direct-to-employer offering, which provides employers with another option for transparent net cost for ZEP bound and allows them to define contribution levels, creating a predictable cost structure for obesity medications. For members discontinuing GLP-1 therapy who need ongoing support, we provide behavioral coaching, clinical guidance, and multi-conditioned care. In published results, members who remained engaged with our care track largely sustained their outcomes at 12 months. This is where the full value of the platform becomes clear, supporting members not just during medication use, but across their broader health journey. The strategic takeaway is this. GLP-1s have increased both the demand for and the complexity of cardiometabolic care. Employers need a partner who can navigate that complexity across coverage models, clinical needs, and member journeys. And OMADA is building exactly that clinical infrastructure, connecting programs, prescribing, and support into a unified platform to help maximize the benefit of GLP-1 investments. Now turning to our evidence base. Our newest clinical analysis announced last month demonstrates that OMADA members in our GLP-1 care track on average lost 1.8 times the total weight in twice the body fat while preserving their lean muscle mass compared to a control group over a 12-week period. This is a clinically meaningful result that we believe matters to employers seeking to justify spending on GLP-1 medication. Without structured lifestyle and clinical support, employers may end up paying for poor results, funding high pharmacy spend on medication that is not providing the durable outcomes their employees seek. These results, combined with our established body of 30 peer-reviewed studies and insights from supporting 2 million members over the past 15 years, have continued to differentiate OMADA in competitive evaluations. Taken together, our expanding commercial relationships, broadening GLP-1 capabilities, and growing body of evidence reinforce a simple point. OMADA is becoming part of the connective tissue between how employers buy, how members engage, and how outcomes are delivered across the digital cardiometabolic landscape. With that, I'll turn it over to Steve.

Thank you, Waley. Hello, everyone. Q1 was the strongest first quarter in Omada's history on members, on revenue, on gross margin, and on adjusted EBITDA. Over the past year, we have been building capabilities to position Omada for durable growth, prescribing infrastructure, AI-empowered care delivery, and an expanding set of GLP-1 and cardiometabolic solutions. Revenue was $78 million, up 42% year-over-year, driven by strong GLP-1 care track adoption, increased multi-condition penetration across our cardiometabolic suite, and continued progress in enrollment effectiveness. As discussed in last quarter's call, Q4 2025 included approximately $2 million of revenue related to a one-time transaction that did not recur in Q1. Adjusting for that item, Q1 grew 6% sequentially over Q4. The strength of these results combined with early traction we are seeing across our new commercial relationships gave us the conviction to raise full-year guidance, which I will walk through in a moment. Turning to gross profit, the leverage in our business continued to show as we delivered strong year-over-year gross margin expansion. Our gap gross profit was $49 million in Q1, representing a gap gross margin of 62%, up from 58% in Q1 25. On a non-gap basis, gross margin was 64%, up from 60% in Q1 25. As we've shared, Q1 has historically been our lowest gross margin quarter due to higher enrollment volume and the related care team and device costs. The underlying drivers remain strong efficiency gains from our self-built care team platform ai power tools that enhance care team productivity and the operating leverage inherent in our multi-condition model as a result we see a path to continued gross margin expansion over time and we believe there is a path to exceed our current long-term target of 70 annual gross margin one item i want to flag briefly is the minor impact we have seen thus far from the conflict in iran which modestly increased device-related cost of revenue due to increased shipping costs. This has not been material to Q1, and we currently estimate the full-year impact at roughly $1 million. We are also evaluating selectively pre-purchasing certain devices to incur shipping costs up front as a further hedge against volatility. Let me walk through the unit economics. Total members is our headline metric, but it is a composite of members at different stages with different economic profiles, and that composition is key to understanding our business. Historically, the shape of the member curve has been largely consistent. In year one, revenue per member has generally been at its highest because enrollment, devices, and initial care activities are concentrated in that period. In years two and three, revenue per member has historically stepped down as members move into streamlined, longer-term care, but gross margin per member has stepped up as care delivery costs are meaningfully lower once the front-loaded first-year activities are behind us. The member relationship has generally become more profitable on a unit basis as it matures, even as the revenue line moderates. The takeaway in this quarter is a positive structural shift in our member base. Members have stayed with OMADA longer and each successive enrollment year has been larger than the one before it, 2025 most of all. Together, those dynamics mean a structurally higher share of our total members sits in year two and beyond entering 2026. That puts near-term pressure on blended revenue per member by design, while lifting typical longer-term gross profit per member, the more accretive phase of the curve. This is a good outcome for the business, without any change to per-program pricing or contract terms. We expect gross profit per member to remain a strength of our model and aim for it to expand further over time as new channel partnerships, our GLP-1 care options, and our prescribing programs layer incremental economics into the existing member base. Moving to operating expenses, our approach is unchanged. Invest responsibly behind key opportunities and continue driving towards profitable growth. On prior calls, we've mentioned our investments into prescribing capabilities, and it's now clear these investments are aligned to serve our new agreement with OptumRx. While building these capabilities, we also demonstrated operating expense leverage in the quarter. On a percent of revenue basis, both GAAP and non-GAAP operating expenses declined approximately five percentage points year over year. That leverage is the output of the drivers we have consistently pointed to, scaling through channel partnerships, getting more from our existing sales force and tight spending discipline across the rest of the business. The other driver, and an increasingly important one, is AI. We are not evaluating the leverage opportunity from AI in only one area of the company. The opportunity reflects a deliberate company-wide evaluation of AI tooling across every function. As AI adoption deepens, we believe it can become a tailwind to operating leverage and margin expansion as we look towards 2027 and beyond. Our gap net loss narrowed to $3 million compared to $9 million in Q125, and adjusted EBITDA was $1 million, an improvement of $5 million year-over-year. Delivering positive adjusted EBITDA in our historically highest-cost quarter reflects the structural scalability of our model playing out. The strong start to the year has led to an improved full-year adjusted EBITDA outlook that I'll discuss in a moment. Our strength and profitability profile has continued to a strong balance sheet as well. We end at Q1 with cash and cash equivalents of $212 million and continue to carry no debt, having fully repaid our term loan ahead of schedule in 2025. Now let me turn to our outlook. We are raising our full-year revenue guidance to $322 million to $330 million, up from our prior range of $312 million to $322 million. For adjusted EBITDA, we expect a range of $14 million to $20 million, dollars, up from a prior range of $7 million to $15 million. At the midpoints, revenue guidance represents approximately 25 percent growth year over year, and adjusted EBITDA reflects a nearly three-fold improvement compared to 2025. For both revenue and adjusted EBITDA, the low end of the new guidance range is approximately at the high end of our previous range, reflecting the strength of the quarter and our improved outlook for the year. The raise reflects two drivers, continued commercial momentum across our channel and pbm partnerships and sustained enrollment effectiveness across the cardiometabolic suite we believe the new and expanded commercial relationships along with the record number of planned new program launches position a model well for durable growth more diversified revenue and increasing profitability several of those programs and relationships are still in the early stages of commercial ramp and we do not expect them to contribute materially to revenue in 2026 however we are in the active selling season for 2027 and that is where we expect these relationships to begin converting to revenue we believe our growth rate and margin trajectory together demonstrate the financial profile of a durable high quality growth business with clear line of sight to the next wave of revenue from new programs and expanded commercial relationships with that i'll turn it back to sean for some closing remarks before we open it up for questions. Thank you, Steve. Let me bring it together.

Less than a year ago, we stood in front of you as a newly public company with a bold set of ambitions. We said we would invest responsibly in GLP-1 capabilities and AI, demonstrate operating leverage, and prove that clinical quality and scale are not fundamentally at odds. We feel we have delivered on those commitments every quarter since, and Q1 2026 is the latest proof point. Today, we have over 1 million total members. We have significantly expanded our commercial reach. We have an expanding multi-condition platform that includes prevention and weight health, GLP-1 support, diabetes, hypertension, cholesterol, and musculoskeletal care. We have an evidence base of 30 peer-reviewed studies and a growing body of real-world data that powers our differentiated use of AI and helps us demonstrate ROI to customers. And we have a financial profile that has tracked meaningfully ahead of where consensus expected us to be at this point in our journey as a public company. Our 2026 plans include rolling out more new offerings than in any year in the history of our company. The foundation is built, we believe the market is responding, and our team has the ambition to expand our impact from here. With that, we will open it up for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Craig Hetzenbach at Morgan Stanley.

Thank you. Weili, nice to see you stay close to your former employer. GLP-1 developments are moving fast, and you outlined a bunch of these. Can you just touch on where you're seeing the most interest from current and prospective customers?

Yeah, hi, Craig. Weili here. Good to hear your voice. Thanks for the question. In terms of where the market is moving as it relates to interest from customers for GLP-1s, we're really seeing it kind of spread fairly evenly across the spectrum. And so maybe it's worth kind of reminding people what that spectrum is. You can basically look at the GLP-1 marketplace from an employer standpoint split into two buckets. The first one is those that have leveraged the various number of GLP-1 benefit design solutions through their PBM or their health plan. And then those who have yet started, have not yet provided coverage for GLP-1s, but are actually wanting to. And that represents, you know, at least half the marketplace. And so what we're seeing across, you know, the spectrum is really interest in two categories. Again, the PBM-provided solutions that are diverse, they meet certain market needs. And then also a new segment that's taking a look at alternatives that include different benefit design solutions, different defined benefit contributions, and so on and so forth. This year is, from our perspective, the year where employers will take a look at all these different solutions, determine which one makes sense, and they'll be experiencing a wider range of benefit design solutions to meet what we see as a very diverse and wide-ranging set of needs. Having said all that, we are building traction in our GLP-1 FlexCare program. Obviously, we've just now become part of an option within the Lilly Employer Connect program, and so we'll begin building pipe there, and then obviously OptumRx as well as the relationship with CVS Caremark that we mentioned last year. So we're really seeing kind of even table growth in our pipeline across all those relationships, and we see that as reflecting the, again, diverse and wide range needs from GLP-1 coverage options

across the employer landscape. And Craig, this is Sean here. So just to pile on top, to summarize the strategy, Omada endeavors to have a version of our GLP-1 solution that meets whatever version of your strategy sits in. And we think that's strategic because it is a dynamic market. You find employers that want to cover. You find employers that can't. And the flexibility in our solutions allows us to address all of these segments.

And then just as my follow-up, any update on just the multi-conditioned sales, kind of how that's trending and implications for the operating leverage in the business?

Yeah, thanks, Greg Whaley here. In terms of multi-conditioned sales, we continue to build momentum in that direction. As you know, others know that's been a longstanding strategy for us, assistant strategy for us. We have shared in previous earnings calls that our multi-conditioned close rates or attach rates are on average between 40% to 50%. That hasn't changed. We continue to see that, which we think is a good lead indicator and reinforcer of the strategy and the momentum we will continue to experience in multi-conditioned sales.

Our next question comes from Constantine Davides at Citizens.

Thanks. Just on the PBM partnerships you've announced, obviously, ESI is furthest along, but I'd love to understand what's similar leverageable from one PBM relationship to another, and then, you know, as you look at Caremark ramping up and soon Optum, what nuances require a little bit of learning or heavy lifting on your part?

Yeah, Constantine Wadley here. Thanks for the question. You know, in general, if you're referring to the go-to-market motion with each of the PBMs, if that's the question, I would say in general the approach is similar directionally. And the way I would describe that is basically, you know, we partner with their sales teams, their account executives. They oftentimes number in the thousands, which helps us expand our share of voice in selling footprint out of the marketplace. And we're certainly doing that across CVS Caremark, OptumRx. We've begun doing that now, of course, as you might expect, and, of course, ESI or Evernorth. So that part is similar and is a scalable motion for us, given the enablement is similar, and we can do that. The other one that is similar, of course, is multiple of our products are available through each and every one of those channels. So you'll find the complement of our cardiometabolic as well as MSK programs available in addition to GLP-1. So that, too, is similar as well. The other one that I think would be reliably similar across them, which, again, speaks to the scale of the opportunity to cross all three, is that the sales motion and sales cycle is similar from a timing and what it would take, and they actually feather and layer on top of each other. So what do I mean? So, obviously, we've had a longer-standing relationship with ESI and Evernor. That's a mature business. It continues to grow nicely. We build pipe. Last year, we announced CBS Caremark. And at that time, when we announced that, I said our first order of business is to build We did that. Our second order of business in the back half of the year was to close deals. We did that, too, as well. And then the third order of business, of course, was Q1 this year, is to deploy those deals. and we've got now thousands and thousands of new members coming into our business through the CVS

channel. We expect and certainly plan to do the similar thing with OptumRx, so we'll follow that

same first, second, third order of business with material gains and contribution from OptumRx

predominantly beginning in Q1 of next year. Our next question comes from Richard Close

at Kinecord Genuity. Yes, congratulations. I'm curious on the Lilly announcement, direct to employer, how that specifically works. What's the, I guess, program offering, you're offering, and is it the employers are giving, you know, the member essentially a certain amount of money to, you know, purchase the drug directly, and then you're essentially getting paid by the employer for the companion program? Just help us better understand that.

Yeah, Richard, this is Sean. Let me just characterize which segment that sits in, and I'll pass it to Willie for the details there. So the Lilly direct program is for the employers that do not cover GLP-1s, and so it's a similar category as our GLP-1 flex care, and so it offers the chance for those employers to give their employees something, and although in that instance they're not paying for the med, they can create an employer-specific benefits contribution

to the med. Yeah, thanks, Sean. Let me follow through on terms of how it works. Obviously, Lilly would be the definitive body to talk about the entire program, but I certainly can talk about it, how it relates to OMADA. You know, the Lilly Employer Connect program is a solution that is outside the PBM. It's a carve-out, and employers will opt into the Lilly Employer Connect solution, and as part of that, have the option to actually engage and utilize OMADA should they actually choose OMADA as their clinical backbone. If they do, there are three components. The first one is the clinical part of it, which is a scaled offering of our GLP-1 prescribing solution seamlessly married up to our GLP-1 care track, which is our lifestyle wraparound solution. The second one is through Lilly in the Employer Connect program is to be able to access a net transparent cost or price for ZepBound. And then the third is, as you mentioned, an option for employers to actually reduce the out-of-pocket cost for the GLP-1, in this case ZEP-bound, through a defined benefit contribution. And employers, in partnership with the different administrators on the platform, could pick the level that they want to do so. All in all, the goal is to provide an alternative because, again, the needs for coverage and how they want to do coverage and how employers choose to do that, the needs are diverse and wide-ranging. And this represents an opportunity to meet a significant amount or a few segments in that buyer selection. And so I think I'd cap it off by saying, as Sean just said, to reinforce that we're proud and privileged to be able to be part of the Lilly Employer Connect program, but it really is about a bigger portfolio strategy in allowing employers to opt into a number of different potential benefit design solutions knowing that OMAD is the clinical backbone in the one they

would choose okay very helpful and then you know we've been hearing a lot more of employers in the face of you know these rising costs you know historically have waited to implement programs you know with January the new benefit year but we've been increasingly hearing that you know they need to do something now So I'm curious what you're hearing, what you're thinking about, like the opportunity for intra-year launches. Just any update there would be helpful.

Yeah, Richard, I take your question to me not just about GLP-1s, but writ large in the category and what its impact to OMADA is. I'll speak to GLP-1s first, then I'll speak to the broader cardiometabolic sector, obviously, that we lead in. On GLP-1s, yeah, I mean, it's true. There are a number of employers that have made their benefit design solution decision, some of which obviously are rolling them out, some of which are kind of waiting and watching and evaluating this year. Suffice it to say, I think a lot of employers, regardless of their solution, are accelerating their decision-making process, meaning they're engaging in that process sooner in the year than they normally do. Now, whether or not that leads to an acceleration for off-cycle closed deals, we're too early in the year to be able to see that. But we know that the pipeline is building nicely in that regard across the portfolio benefit design solutions. So I think there's stuff there yet to be seen, but certainly the conversations would be more active than typical, I guess is the way I would put it. Across the cardiometabolic suite, because GLP-1s is kind of the gateway to a broader cardiometabolic discussion to support clinically those employees that are not taking a GLP-1, that is kind of riding the coattails of the GLP-1 discussion. And so we find that also to be increasing in activity and is certainly contributing to pipe build. But again, too early to call as to whether or not that's going to lead to more off-cycle builds. Where we do see our off-cycle deals, where we do see more off-cycle deals coming through is when we're launching actually new programs. For instance, we announced our cholesterol program last year. We are seeing more off-cycle deal closes sooner in the year than we normally would have for a product that

may be nice for a few years. All right. Thank you. Our next question comes from David Roman

at Goldman Sachs. Thank you. Good afternoon, everybody. Steve, I wanted just to come back to your commentary around pricing, and I don't know if the right metric is revenue per member. Is that a metric that are you suggesting is going to be flat over time? Is that going to go up as we look at an increased number of multi-conditioned contracts, I'm trying to make sure I understand the direction of travel that you were pointing us to on that dynamic. Yeah, David, great to hear

from you, and thank you so much for the question. You know, for some of the prepared remarks, this is really the output of two features in the business that we actually believe to be beneficial. The first is actually we're just improving churn, and we're having members stay with us longer into their second, their third, and even their fourth year of amount of tenure. And as a result of that, what you have happen is you see a little bit more moderated revenue contribution into those second, third, and fourth years. But what's most important there is those carry very little incremental cost, as most of the cost is front-loaded into the first year of their engagement. And as such, they're driving for some of our highest margin members in our total member base. We do expect that to be relatively flat for the rest of this year, in line with Q1. But first, with the prepared remarks, we still have remaining upside across continuing to execute on some of our prescription opportunities, driving engagement initiatives. We have internal motions direct to both of those internally, and we'll potentially be able to uplift ARPU in the back half of this year, if not more, into 2027.

Very helpful. And then as we think about the profitability profile, clearly you've hit an inflection here earlier than you had expected. How are you thinking about, on a go-forward basis, opportunities to drop profitability to the bottom line, but also where there might be the potential to reinvest, whether that's organically or even inorganically, given the scope of your distribution and just the number of smaller participants that are out there?

Yeah, we think both Q1 and our full-year guidance reflect this dynamic. On a $4 million top-line beat, we dropped $4 million of EBITDA to the bottom line. And then on our guidance raise of $9 million, we're carrying forward $6 million of incremental EBITDA, so flowing through two-thirds of the revenue beat down to the bottom line as well. But that said, look, we did what we said we were going to do. We did invest in the back half of Q4 as well as in the Q1 into standing up this prescribing capability and launching OptumRx. And we believe that's going to give us the ability to drive durable revenue at really attractive margins in the years to come. So that's going to be ongoing dialogue where we're going to be looking at abilities to invest in key responsible areas that are going to benefit us in the future.

And, David, maybe I can take the back of the question there. You know, we have communicated the primary engine of growth for Armada is going to be focused on organic. I mean, we like the capabilities we have, large end markets. I think Richard's comments on, you know, the employer dynamism is going to say summarized about really what we're feeling at the level of the buyer here. That being said, you do highlight something that we think is a great competitive advantage for which are large-scale distribution channels to a complex risk-averse buying market. And we do have capabilities to sell multi-products. So, of course, we'll keep an open mind, but be selective relative to anything inorganic. Great. Thanks so much.

Our next question comes from Sean Dodge at BMO Capital Markets.

Yeah, thanks. Thanks. Good afternoon. Maybe, Steve, just going back to your comments again, just on the member curves and how revenue and margins develop as the enrollment cohorts, I'm sure. Just to make sure I understand, you said revenue declines in year two, but gross margins go up. If we think about that in terms of gross profit dollars on a per member basis, how do the absolute dollars per member compare in year two to year one? Is that also up in, if you can kind of frame for us, maybe how much?

No, that's exactly right. You hit the nail on the head. So gross margins are going up in year two. The absolute gross profit dollars do go down on a total basis because we're just recognizing overall less revenue as those folks go into their more mature years, going to the second, third, and fourth year in aggregate. And so on a margin profile, it is accretive. on a gross profit dollar perspective, it does step down in the second and third years.

Okay. Thanks for the clarification there. And then maybe just on the enrollment conversion rates. Waylee, you talked before about the work you're constantly doing to optimize those. You're always experimenting with different messages and content and channels. Maybe just to put it in context, the improvement in email conversion rates you all were able to drive in 2025, you'd talked about 24 percent improvement in that metric how does that compare to what you were able to do in years prior and maybe how does that compare to what you you hope to achieve in 2026 i guess you know how much do you think you can continue to increment up your conversion rates in in any given

year yeah thanks shot appreciate that and appreciate the reference to uh prior discussions we've all had regarding our efforts in enrollment enrollment rate uh yield rate improvements But for the others, just to rehash, you know, each year we go through an extensive process, usually commencing in the middle part of the year after we've seen, you know, the H1 results and response rates, an extensive set of A-B testing, so on and so forth. We've pretty much got this engine down pretty good. And each year for the last several years, we've been able to improve our yield rates significantly, you know, and the range is varied anywhere from the low side of 20% to the upside is 60%. We certainly did that and repeated that process last year across both direct mail, other multi-channel things, including email, as well as frequency, duration of campaigns, and so on and so forth. And we are seeing what we had expected, which is increase in enrollment yield rates in Q1. We certainly, at this particular point, and I'm disclosing numerically what it is, because, you know, we really need to see what Q2, Q3, Q4, and the remainder looks like. But we have optimism to believe that the majority of what we're seeing in Q1 should be carrying through for the rest of the year based upon the results we've seen so far.

Okay. Great. Thanks again, and congratulations on the great start to the year.

Our next question comes from Elizabeth Anderson at Evercore ISI.

Hey, guys. This is Ayushan for Elizabeth. Thanks for taking my question. Building on some of the prior questions that were asked, on your last call, you decomposed gross margin as a combination of multi-condition mix and care team labor optimization. Earlier, you mentioned the potential to go beyond the 70% long-term gross margin target. Is that mainly coming from the condition mix or labor optimization, or is it sort of a mix of both? Could you maybe just put some rough weights around that and how you kind of get to that higher margin?

Yeah, you hit the nail on the head. you got two of the three. So we're obviously really happy with the Q1 results. 64% non-GAAP gross margin is the highest in the company's history. So we have direct near-term sight into hitting our long-term target of 70% plus on an annualized basis. And we are going to be conducting our investor day later this year in September in New York, where we likely will revisit our long-term gross margin target and potentially lift it from there. The only other one that you missed was AI. That's where we're investing significantly, and that's why we're gaining additional confidence that we can actually push gross margin beyond 70% in the future. We have a ton of examples internally on really impactful use cases that are making our care teams more efficient, and so we're really excited with what we're seeing there.

Our next question comes from Saket Kela at Barclays.

Hi, you have Carly on for Saket. Thanks for taking our question here. Sean or Wei Li, maybe for you, I'd love to touch on some of the AI-related solutions you've developed, like the Nutritional AI Assistant and MealMap, which I think you've embedded into your programs. What kind of feedback have you gotten from customers and end users so far? Are you starting to see those features drive more activity in the app, or is that more of a longer-term opportunity?

Yeah, thank you for the question. I mean, it's such an exciting moment, you know, in software. And, you know, I'm stating the obvious, so the software velocity and the code creation, you know, at Omada has certainly increased. And, you know, our customers are deriving value from that and our ability to create more new things for them. But you've highlighted some of the value our members experience as well. And, you know, each and every day we really push the frontier of the intersection, you know, between what models can do and what people can do. And we've seen really heartening data, you know, with the tools we've rolled out. I mean, with MealMap, for instance, we've seen nearly a 16% relative lift in the weekly active meal tracking among new members. So for those where their job is to track and they're working with their care teams on doing that, it just makes it easier. You get a lift. And then equally, the speed upon which a model can get back to our members on something specific is just really incredible. I mean, in yesterday's world, if a member wanted, say, a recipe, they might ask their care team member and they might pull from one of our libraries. now they ask our nutritional education tool, which we've fine-tuned over 3 million foods that has context on that person's clinical status, their dietary preferences, et cetera. So it's great. The way we look at it is every single product manager across Amada is really thinking through an AI-first lens on how they can embed AI in whatever surface area they're working on. And this is an area where we're blessed in that we've built every single piece of the care team platform ourselves, the member experience ourselves. so we can embed AI really throughout.

Awesome. Thanks so much.

Our next question comes from Stan Baterenshine at Wells Fargo Securities.

Yes, hi. Thanks for taking my questions. Maybe going back to OptumRx first, I'd love for you to elaborate on the scope of this partnership. I'm curious, are there any other vendors besides Omada offering similar solutions here? I just want to get your thoughts on that.

Yeah. Hey, Sam, Wade Lee here. Regarding OptumRx, kind of a little bit more detail around that and your question about are there any other vendors there. There are two others that were preexisting inside the Wade Engage OptumRx program, and that makes us obviously the third edition there too as well. I think what's important about the OptumRx opportunity is a fewfold. First, is that it represents, you know, our first large-scale deployment around GLP-1 prescribing married seamlessly up to our GLP-1 care track, which is the Lifestyle Support Program for GLP-1s. And that's important, but it's not just about GLP-1s. Alongside that, we now have the opportunity through this relationship to expand the utilization and uptake of the rest of our cardiometabolic programs as well. So it's a really a GLP one plus, um, expansive cardiometabolic opportunity for us, uh, which obviously we like, and we see that as a, as a major value proposition advantage for, um, our buyer segments out there. That's number one. Number two, the OptumRx, uh, relationship, um, you know, singularly is important, uh, but in aggregate from a portfolio strategy is very, very important in the sense that obviously it's kind of like the last puzzle piece to crack the big three. And together now the big three across those PBMs, we have the ability to tangibly and materially realize a market that is associated with more than 70% of all patients covered by those PBMs. In the United States, 80% of all commercial prescriptions are adjudicated by those three. And so it represents an incredible material opportunity for us to realize going forward. And of course, all sites and efforts are on doing that. You know, and we'd like that too as well, because again, it feathers in on top of the CVS Caremark announcement we had last year as well. The third and last point is that with the addition of OptumRx, and of course, as I just mentioned, the other two PBMs, it's an opportunity for us to significantly diversify our business

over time. That's helpful. I appreciate the caller. Just as my follow-up, I just want to go back to the prepared remarks regarding the OMADA-led outreach, improving member adoption rates. Just, you know, if I think about benefit managers that oftentimes want to have control of the channel between themselves and their employees. If we think about the totality of your covered lives, what percentage of those lives do you have the capability to pursue directly using this

strategy? Thanks. Yeah, it is true in general, Stan, that if you were to ask any generalized or generic digital health or virtual care company out there, do their clients prefer to do their own deployments, I think the general response would be yes. I think that is increasingly not the response you would get from Omada Health. We have worked over the years to demonstrate to our employee base or employer client base that when we lead the enrollment, of course in partnership with them, but lead the enrollment efforts, you get about two to three times a better yield rate. and the overwhelming majority of our clients like that because their mission is aligned with ours which is helping as many of their employees as possible across the various programs that we deploy with them in terms of your your other part of your question in terms of i think was just overall like omada-led outreach penetration across our client base suffice it to say it's not 100 percent, but it's the majority. And so while we're being increasingly successful year over year over year, moving our clients over to a model-led outreach, we're not done yet, but it's the majority of our clients at this time. Wonderful. Appreciate the call. Thank you.

Our next question comes from Ryan McDonald at Needham & Company.

Hi, thanks for taking my questions. Congrats on a nice quarter. Waylee, maybe first for you, as you think about the new OptumRx program and the Lilly direct-to-employer program, I think, as you mentioned before, you're not sort of the only vendor within these programs. So as you join them, can you just talk about sort of the allocation of resources from a go-to-market and a marketing perspective to sort of ensure that you're getting sort of mind share within those large populations? And how much help are you getting from Lilly, or do you expect to get from Lilly and OptumRx as you sort of ramp those efforts there?

Yeah, great question, and maybe I'd frame it this way, is that you've heard Sean and I talk about our portfolio strategy for GLP-1s as it relates to benefit design solution options for the employer. That's really the strategy, get the share of voice and the mindshare of employers, and the reason is the following. When you step back and you look at the landscape today, there is a wide and diverse set of needs that employers have because every employer, for lack of better words, is in their own financial what they can afford situation related to GLP-1 coverage. Some have a different strategy to provide them, you know, at a very, very low copay. Others have a strategy that says, hey, listen, we're in a different financial situation. We can't afford as much and we need a defined benefit contribution plan where we pay only 10% of the monthly GLP-1 cost. So you have people and employers across the entire spectrum. So back to your question about mindshare and share of voice, how do you get it? Well, our strategy allows us to get it because no matter where you are on that spectrum, our strategy is to make sure that we are plugged in and part of that various and diverse set of benefit design solutions so that you as an employer can concentrate on what as financially the best coverage decision for your employees, not having to worry about what the best clinical option is because OMAD is the clinical backbone in a range and number of solutions across that spectrum. That affords us to be at the table and be called at the table when employers are considering making a GLP-1 solution because we know that we're essentially in a number of different benefit design solutions. So that really is the dominant strategy to create mindshare and share of voice. And we're seeing that work because we're building pipe across the various benefit design solutions that we talked about here on this earnings call. The second piece is that our go-to-market for OptumRx, as it is with other health plans as well as other PBMs, is very, very much to enable and partner very, very closely with their sales forces, which, of course, number in the hundreds and thousands, as mentioned before. And so really by that, we were able to extend presence and extend share of voice. And we have a number of enablement meetings coming up to drive that. That's a recipe and that's a strategy that's worked well for us. We have no reason to believe that it won't be a durable model for us. And we're going to execute like crazy on that, as you might imagine. Rounding out your last question in terms of Lilly, you know, that's probably a question you'd want to ask, Lilly, in terms of what commercial resources they're putting behind advertising that and marketing that. But we're proud to be part of that platform. And certainly as we talk to employers and lay out the spectrum of benefit design solutions that are available to them, rest assured, we will definitely be putting that up there because it's receiving great interest.

I appreciate all the color there, Whaley. And Steve, maybe a follow-up for you. Obviously, great to see the improved retention rates and the longer duration that you're seeing there. I think historically, you've talked about sort of about 55% or so of members sort of stay on, you know, past one year. How much of an uplift are we talking about in terms of, you know, the improvements off of that 55% number? And then are there any specific programs you would call out where you're seeing sort of the greatest improvements in one-year-plus retention rates?

Yeah, absolutely, Ryan. I think the first most important point here is just our ongoing success with multi-condition traction. So we've added more diabetic and hypertensive members for those chronic conditions. Those members just tend to stay in programs significantly longer. Again, recall we launched those programs in the 2019-2020 timeframe. We're actually observing some members in really their fourth and even their fifth year in a modest tenure. And so that's a big driver of where we're seeing some of the uplift there. We haven't exactly calibrated it to be apples to apples with the 55 and the 50. I will potentially release that data in the upcoming Investor Day and share some updated color from that perspective. Awesome. Thanks.

Our last question comes from Jane Manheimer at Freedom Holdings.

Thanks. Good afternoon and congrats on a good start to the year. A lot of good information here. Did you call out how many total members are now on GLP-1s, and do you break that out across your original care track versus the new FlexCare pathway? And then my follow-up on that would just be, can you or would you provide an update on your cholesterol program and whether that's still targeted for availability next year? Thank you. Yeah, Gene. Wheelie here. We disclosed just by way of reminder to folks that through the end of 2025, we had brought in a total membership around $150,000 or so. We've not yet disclosed Q1 in terms of at the product level offering, which includes, of course, our GLP-1 care track. We're likely to do so each year from an annual standpoint. But suffice it to say, the momentum and frothiness of the GLP-1 marketplace continues. In terms of cholesterol program, I think your question was about the same in terms of what the uptake and traction looks like there. We're encouraged and primarily also not surprised because, as we know, when you have diabetes, hypertension, obesity, or are at risk of diabetes, some or none or one of the above, the likelihood that you have, unfortunately, high cholesterol is very, very high, anywhere from 40 to 70%, depending on the population you're looking at. So naturally, when we talk about our cardiometabolic programs to our employer audience, they naturally gravitate towards the cholesterol program. You know, last year, when we announced late in the year, the launch of the cholesterol program, we basically had closed a couple of clients, one of which was a very large retail customer, over 300,000 global employees. We've since added to that list of deals closed, including a few more enterprise clients as well as two large jumbo clients, one in the multi-industries segment as well as energy and natural resources segment for several hundred thousand additional lives as well as some other enterprises. It's worthy to note that, pursuant to the interest that I talked about with cardiometabolic and with cholesterol, these obviously were closed off-cycle, which I think is a reflection of the value proposition in the marketplace.

Great.

This concludes the question and answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.