Q2 2025 Omada Health Inc Earnings Call

August 7, 2025

Mode.

After the Speakers' presentation, there'll be a question and answer session.

I ask a question during the session you will need the westar one one on your telephone you will then hear automated message advising Yohan is reyes. Please.

Please note that today's conference maybe recorded.

I'll now hand, the conference over to your Speaker host Alan <unk>, Vice President of Investor Relations. Please go ahead.

Thank you good afternoon, welcome to <unk> second quarter 2025 earnings call. Joining me today are Shawn Duffy, our co founder and CEO, Wally Hsiao, our president and Steve Cook, Our CFO before we begin I want to note that we will be discussing non-GAAP financial measures that we consider helpful. In evaluating our model helps.

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You can find details on how these relate to our GAAP measures along with reconciliations in the press release it is available on our website.

We will also be making forward looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in the risk factors found in our filings with the SEC.

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 Alan good afternoon, everyone and thank you for joining us for our modern health first earnings call as a public company.

More than a decade ago, we set out to deliver between visit cure a model of health care delivery that we believe is fit for purpose and helping to address today's cost and quality challenges and chronic disease.

Our results this quarter reflect continued and steady progress towards our long term mission of bending the curve of chronic diseases.

In the second quarter.

Total members increased 52% year over year to 752000.

Revenue rose, 49% year over year to $61 million.

The operating leverage in our business model continued to shine with a 66% Q2, 'twenty five GAAP gross margin.

And a 68% non-GAAP gross margin, both improving significantly year over year.

We narrowed our GAAP net loss to $5 million compared.

Compared to $11 million in Q2, 24. Finally, we are very pleased to share that our Q2 25, adjusted EBITDA loss was $200000 compared to a $7 million loss in Q2 24.

We Lee and Steve will to characterize the details and the drivers of these results, but I wanted to take this opportunity on our first call to do two things.

First I want to share a member quote as these inspire our teams and my hope is that it will inspire you whether you are a current or prospective shareholder.

As one member told US a motto has changed my life.

Diagnosed as pre diabetic a year ago I began taking a G. L. P. One and quickly lost wait a few months later I'm offered at Freescale and an app from a modest so I signed up true game changer.

I'm 49 years old and have not weighed the flow since I was a freshman in high school and I feel great.

Lost more weight with a modest than without.

But it's not just the weight loss, it's the fact that I am truly healthier and happier.

The second thing I'd like to do is to provide a brief overview of our monarch recognize that many of you on this call may be new to our story.

Well not a healthy between visit care provider, we support patients we call them members with pre diabetes obesity diabetes hypertension and musculoskeletal disease.

I was in medical school Eisai problem right in front of me on a daily basis.

That too much of the care delivered in the U S occurs in those one or two visits a year you might have with your doctor.

That's not enough and that's not the right kind of care, especially for the approximately 156 million Americans suffering from chronic disease.

And I believe that's one reason why America is getting sicker.

So what can we do to change that.

When my co founders and I started on amount of health, we first sat in the homes of people struggling with chronic conditions. We heard many stories that highlighted a glaring gap in the U S health care system, the lack of per active day to day support.

Too often people with chronic disease, we are left with little more than a pamphlet and some well intended advice from their health care providers.

Meanwhile, the cost to the country or a crisis.

Diabetes and cardiovascular disease alone have been responsible for approximately 526 billion in U S healthcare spend per year.

This realization fueled our vision to bring a different care model to the market we call. It between visit cure and deliver it through a combination of technology and people that we call a compassionate intelligence.

I don't want a health, we bring together different types of health care professionals.

Ray of third party connected devices and a personalized software experience that blends both people and artificial intelligence to deliver multi condition contextually relevant care to our members between their doctors' visits.

<unk> member journey starts for their care teams, which are composed of skilled professionals like health coaches certified diabetes care and education specialists and licensed physical therapist with support from licensed clinical social workers. Our care teams get to know all motto members personally helped them develop detailed actionable care plans.

Encouraging and advising them when they struggle and keeping an eye out for health heading in the wrong direction.

We also equip our members with seamlessly connected third party hardware such as digital scales blood pressure cuffs and continuous glucose monitors. We then tie the experience together with software that can leverage data science advances artificial intelligence and machine learning technology.

As we built our model. We also recognized that we needed to build trust within the clinical community through rigorous research and accreditation efforts. We spent a decade funding and publishing peer reviewed research and we're proud to have 29 publications showcasing our clinical and economic impact.

Our efforts have yielded results. We're deeply proud of center inception, we've enrolled over 1 million members in a modest care programs, we forged partnerships with over 2000 employers health plans and pharmacy benefits managers, achieving high levels of customer satisfaction and retention. These customers increasingly trust <unk> to do more for them.

Over time, we've expanded a new care areas and we're proud that as the end of last year, approximately 31% of our customers are covering programs with a moderate across multiple conditions signaling the growing demand for comprehensive integrated care solutions.

<unk>, we feel we're at the very beginning of our journey, but we're proud of our success as of the end of last year 2024, we'd only penetrated approximately 14% of the self insured lives in the U S, 9% of fully insured and 1% of Medicare advantage, we estimate our total addressable market to be more than one.

135 billion and we believe there is ample white space ahead.

We're proud to be offering our new enhanced GOP wound care track in the midst of a broader <unk> revolution, our clients have asked us decisively to support their members on <unk>, reflecting the reality that in injection doesn't get to know you and a medication alone does not support behavior change.

We believe that the answer to the dynamic <unk> landscape our services alongside the medicines and we work with two of the three major pbms, providing just that.

Publishing peer reviewed research and we're proud to have 29 publications showcasing our clinical and economic impact.

Lastly, the world is experiencing a revolution in artificial intelligence and AI technology stands to benefit our members and customers alike.

Our efforts have yielded results we're deeply proud of.

Inception, we've enrolled over 1 million members in a modest care programs, we forged partnerships with over 2000 employers health plans and pharmacy benefits managers, achieving high levels of customer satisfaction and retention. These customers increasingly trust o'meara to do more for them.

We're in the first chapter of leveraging these incredible innovations to support our members' success and to add personalization and efficiency for our care teams.

I'm also proud that we're part of an emerging category of next generation digital health companies that seek to differentiate based on greater convenience better clinical outcomes and lower cost care models that include both telehealth and AI enabled care designed to deliver meaningful returns on investment.

Over time, we've expanded and new care areas and we're proud that as the end of last year, approximately 31% of our customers are covering programs with armada across multiple conditions signaling the growing demand for comprehensive integrated care solutions.

At our company town halls, I always tell our teams that our hope is that one day Tomorrow's epidemiologists will notice a bend in disease curves wonders what might be happening and conclude that part of that impact has been our motto.

Equally we feel we're at the very beginning of our journey.

So we're proud of our success as of the end of last year 2024, we'd only penetrated approximately 14% of the self insured lives in the U S, 9% to fully insured and 1% of Medicare advantage.

That's our explicit mission Edo motto to bend, the curve of disease, and we look forward to pursuing it alongside our new and our prospective shareholders with that I will turn the call over to Wally.

We estimate our total addressable market to be more than 135 billion.

Thanks, Sean Hello, everyone to start I'd like to Echo what Sean started with I am extremely proud of our teams and how they've executed against our strategy and how they've delivered strong results. It's an exciting time to be in a modern and I consider a privilege to discuss progress against our strategy and our second quarter performance some highlights <unk>.

And we believe there is ample white space ahead.

We ended the quarter with 752000 active numbers, which is up 52% compared to Q2 2020 for.

We believe that the answer to the dynamic <unk> landscape our services alongside the medicines and we work with two of the three major pbms, providing just that.

This includes adding 73000 net new members during the second quarter and 180000 year to date.

Lastly, the world is experiencing a revolution in artificial intelligence and AI technology stands to benefit our members and customers alike. We're.

This is 71% more numbers than we added in the first half of 2024.

This member growth reflects continued multi condition adoption strong sales of our <unk> offerings and strong execution by our teams.

We're in the first chapter of leveraging these incredible innovations to support our members' success and to add personalization and efficiency for our care teams.

I believe our strong topline results and member growth are the result of a go to market strategy that has long been anchored on three pillars. We believe that these three pillars in combination with our market scale have driven our strong performance in Q2 and a reason to believe in a modest continued success, let me take a moment to reinforce the underpinnings of our strategy.

At our company town halls, I always tell our teams that our hope is that one day Tomorrow's epidemiologists will notice a bender disease curves wonders what might be happening and conclude that part of that impact has been our motto.

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Our first pillar is innovation, which we deliver by investing in program features and experiences to strengthen our differentiation and support our growth and help numbers achieved outcomes across conditions that our buyers care about our GOP one care track and our recent released a modest spark AI agent are great. Examples of this.

And I will share more about both in just a moment.

Second we strive to create programs that work or modest programs are rooted in clinical best practices and a persistent empathetic support from our care teams fosters trust and accountability to promote sustained engagement and meaningful clinical results are programs are focused on some of the conditions that our buyers care about.

Thanks, Sean Hello, everyone to start I'd like to Echo what Sean started with I am extremely proud of our teams and how they've executed against our strategy and how they have delivered strong results. It is an exciting time to be in a modern and I consider it a privilege to discuss progress against our strategy and our second quarter performance. Some highlights include.

Most and their employees and members often suffer from the most which can drive the most cost these conditions, our obesity and weight health diabetes hypertension and M. S. K. These diseases are highly prevalent in the combined Tam is substantial.

We ended the quarter with 752000 active numbers, which is up 52% compared to Q2 2020 for.

This includes adding 73000 net new members during the second quarter and 180000 year to date.

Third our multi condition platform versus point solution approach has become a key differentiator in our sales process, many customers and channel partners experienced point solution fatigue and recognize that their members suffer from multiple conditions, they see value in having a single reliable scaled partner because it simplify.

This is 71% more numbers than we added in the first half of 2024.

This member growth reflects continued multi condition adoption strong sales of our <unk> offerings and strong execution by our teams.

I believe our strong topline results and member growth are the result of a go to market strategy that has long been anchored on three pillars. We believe that these three pillars in combination with our market scale have driven our strong performance in Q2, and our reasons to believe in a modest continued success, let me take a moment to reinforce the underpinnings of our strategy.

Contracting account management implementation member outreach and most importantly, the number of experience. It has helped us both win new business and expand relationships with existing customers.

These three strategic pillars have resonated with buyers in numbers, which has allowed us to achieve our current scale combined with our disciplined focus our scaled go to market model gives us confidence that we are well positioned to achieve durable growth.

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Now when we talk about scale, we're referring to the following.

The population of covered lives, we reach through our channel relationships.

The selling and marketing efficiencies gained by partnering with large payers and pbms to offer our programs broadly to employers.

And I will share more about both in just a moment.

Second we strive to create programs that work well modest programs are rooted in clinical best practices and are persistent empathetic support from our care teams fosters trust and accountability to promote sustained engagement and meaningful clinical results are programs are focused on some of the conditions that our buyers care about.

And our data driven marketing initiatives, which included nearly $100 million targeted E. Mails across 5000 campaigns in 2024, driving enrollment while supporting continuous optimization through a b testing.

While our estimated total addressable market of over $135 billion across all of the conditions. We serve represents significant opportunity over the long term. We think it's useful to look at the more near term opportunity we have already established channel relationships.

At the end of 2024, our existing health plan partners provided health insurance for 156 million lives across their networks that population combined with our other current customers represented an estimated 20 plus million individuals with benefit coverage for one or more home auto programs just within these 20 plus million dollars.

<unk> covered lives we have today, we have significant growth opportunities and we are focused on generating additional revenues from these existing covered lives through efforts to increase enrollment rates enhanced member engagement and outcomes drive higher multi condition solution adoption and capitalize on our opportunities to provide <unk> companion support.

Contracting account management implementation member outreach and most importantly, the number of experience has helped us both win new business and expand relationships with existing customers.

In addition, we have relationships with two of the nation's largest pbms that as of March 2024, collectively offered pharmacy benefits to over 200 million individuals, which represents a significant opportunity for us to increase the number of covered lives we serve.

Now when we talk about scale, we're referring to the following.

The population of covered lives, we reach through our channel relationships.

While we are proud of our progress our work is far from finished our ongoing momentum has continued to attract new customers, including our relationship with recently established with a leading health navigation platform through this partnership we replaced an incumbent diabetes vendor to become this partners preferred provider of diabetes care.

The selling and marketing efficiencies gained by partnering with large payers and pbms to offer our programs broadly to employers.

Within a matter of months, we together closed and launched a new health plan client we've.

We view this competitive win is a clear example of sophisticated buyers turning to our model to deliver scalable evidence based care.

This level of scale, which we are focused on continuing to expand works with three strategic pillars I mentioned before with that in mind, Let me take a few moments to update you on our progress with each of these pillars.

With regard to innovation, we recently launched a modest spark a number of facing AI agent that works directly with our members and alongside our human care teams.

Our members ask for food imaging, and we delivered but I think we delivered in an incredible way that can wow. Our members with just a single image of your meal. Our AI powered tracker identifies the ingredients and estimates macronutrient information, including protein fiber added sugars and saturated SaaS.

These are the nutrients that we believe are most important to consider improving health outcomes, especially for members who have taken the <unk> will have diabetes hypertension and or obesity.

Now we've trained on modest spark on over 3 million foods from more than 150 countries to support numbers and tracking even the most culturally specific dishes. Additionally, members can talk or text with a modest part to get real time nutrition information a modest spark can recommend alternative foods and answer questions regarding <unk>.

Tricia education in the moment because your AI agent is informed by key member demographics. It provides responses with numbers like you in mind.

Within a matter of months, we together closed and launched a new health plan client we've.

So modest spark has the ability to help you focus on your goals in this context. Its job is to have conversations with you to help you understand your motivations and help you create a plan to navigate motivational challenges that work for you. This.

We view this competitive win is a clear example of sophisticated buyers turning to our model to deliver scalable evidence based care.

This is the power of motivational interviewing and empathetic technique that can strengthen your intrinsic motivation for change a modest spark can help you articulate why and how you want to adopt healthier habits and help you make changes along with help from our care team.

With regard to innovation, we recently launched a modest spark a number of facing AI agent that works directly with our members and alongside our human care teams.

Our goal is to leverage artificial intelligence and machine learning to support our scale enhance the experience of our members and amplify the impact of our programs.

Our members ask for food imaging, and we delivered but I think we delivered in an incredible way that can wow our members.

Now we take a human led AI empowered approach using AI insights to support our care team by providing instant context, and synthesizing number of data points to enable more efficient and productive interactions with our members.

Just a single image of your meal, our AI powered tracker identifies the ingredients and estimates macro nutrient information, including protein fiber added sugars and saturated SaaS.

We also continuously strive to deliver programs of work the second of our three strategic pillars. Our GOP one support strategy aims to enable the success of our members before during and after <unk> therapy, and we have demonstrated that numbers can achieve significant results by coupling behavior change alongside the med.

These are the nutrients that we believe are most important to consider improving health outcomes, especially for members who have taken the <unk> will have diabetes hypertension and or obesity.

Acacia now.

These capabilities have contributed to our GOP, one companion program being available through two of the largest pbms and in both relationships are full cardio metabolic suite is also available.

Tricia education in the moment because your AI agent is informed by key member demographics. It provides responses with numbers like you in mind.

We believe some of the key drivers of our success in GOP, one companion support our member engagement and clinical outcomes results, notably numbers on our enhanced GOP. One care track included in a retrospective analysis experienced 28% greater weight loss on average after the first four months compared to <unk>.

On <unk> that enrolled in our motto programs without enhanced GOP one care track.

In a separate retrospective analysis members, who can discontinued their <unk> and opted into the care track embedded in our cardio metabolic programs maintained their weight loss on average at four months post discontinuation.

Our goal is to leverage artificial intelligence and machine learning to support our scale enhance the experience of our members and amplify the impact of our programs.

Representing by an average weight change of minus 0.1%.

This compares to estimated average weight gain of approximately 6% to 7% at four months and two third party randomized controlled trials.

We take a human led AI empowered approach using AI insights to support our care team by providing instant context, and synthesizing number of data points to enable more efficient and productive interactions with our members.

In addition, we recently released new data demonstrating that a modest enhanced <unk> care track significantly improved persistence rates for G opioid medications.

Members in the analysis of our enhanced GOP wound care track achieved 94% persistence through 12 weeks and 84% through 24 weeks with those staying on medication for 24 weeks experiencing an average weight loss of 12, 1%, which closely aligns with clinical trial results.

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This is important because in the real world factors like non persistent medication.

Now these capabilities have contributed to our GOP, one companion program being available through two of the largest pbms and in both relationships are full cardio metabolic suite is also available.

Mean that many of those who use <unk> for weight management may not see the results reflected in clinical trials. This.

We believe some of the key drivers of our success in GOP, one companion support our member engagement and clinical outcomes results.

This highlights our program's effectiveness in helping members to overcome real world barriers and achieve weight loss comparable to what's seen in clinical trials, which helps with cardio metabolic disease reduction.

Notably numbers on our enhanced GOP one care track included in a retrospective analysis experienced 28% greater weight loss on average after the first four months compared to numbers on <unk> that enrolled in our motto programs without enhanced GOP one care track.

These results demonstrate the benefits of a modest clinical rigorous approach to behavior change in sponsoring a publishing research we seek to demonstrate outcomes bolster credibility and strengthen our position in the market. We believe our clinical leadership differentiates us amidst a crowded market of digital health solutions.

And a separate retrospective analysis members, who can discontinued their <unk> and opted into the care track embedded in our cardio metabolic programs maintained their weight loss on average at four months post discontinuation.

Our focus on innovation in programs that work also support our multi condition platform versus point solution strategy, which is our third strategic pillar because of our broad evidenced based multi condition platform. We've had success in growing the percent of clients that offer multiple amato programs. We ended 2020.

Represented by an average weight change of minus <unk>, 1%.

This compares to estimated average weight gain of approximately 6% to 7% at four months and two third party randomized controlled trials.

Four with approximately 31% of our existing clients, having multiple products installed up from 26% in 2023, we are encouraged by our progress in the first half of 2026 and are optimistic as we head into the second half of the year, which has historically been our key closing season, where many buyers make benefits decision.

In addition, we recently released new data demonstrating that a modest enhanced <unk> care track significantly improve persistent rates for <unk> medications.

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At the root of this multi condition success is the realization that most Americans with a chronic condition have not just one but two or more comorbidities. For example, approximately 58% of people with diabetes also have in MMS take condition and Oman is the only digital provider among our largest competitors to have solutions for both conditions.

This is important because in the real world factors like non persistent medication.

Mean that many of those who use <unk> for weight management may not see the results reflected in clinical trials. This.

To close I'd like to reiterate how pleased I am with our results, which I believe were a direct result of both our resolve to execute our strategy and our go to market scale with that I will turn the call over to Steve.

Thank you really hello, everyone today, I'm going to walk through our results margin progress and our outlook for 2025, Sean really mentioned our members grew 52% in Q2 at 752000 <unk> revenue in Q2 was $61 4 million up 49% year over year.

The primary factors driving our member and revenue growth include increased penetration of multi condition customers strong adoption of our <unk> programs and increased effectiveness of our marketing campaigns.

Moving to gross profit our Q2 GAAP gross profit was $40 million up 62% compared to Q2 dollars 24, and our GAAP gross margin was 66% compared to 60% in Q2 24.

Q2, adjusted gross profit was $42 million, representing 61% growth year over year. Adjusted gross margin was 68% an improvement of approximately 500 basis points year over year, and 700 basis points sequentially.

For those new to <unk> I'd like to note that historically, our gross margins have typically been lower in the first quarter than the rest of the year due to elevated enrollments in Q1 our.

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At the root of this multi condition success is the realization that most Americans with a chronic condition have not just one but two or more comorbidities. For example, approximately 58% of people with diabetes also have an EMS take condition and Oman is the only digital provider among our largest competitors to have solutions for both conditions.

Enrollments feature frontloaded costs related to device shipment and early program care driving lower initial gross margins that typically have increased over the lifetime of the members program life.

As such historically, we typically observed higher gross margins after Q1, which is consistent in Q2, this year, where the significant sequential improvement.

To close I'd like to reiterate how pleased I am with our results, which I believe were a direct result of both our resolve to execute our strategy and our go to market scale with that I'll turn the call over to Steve.

More broadly our gross margin expansion has been driven by natural leverage in our business that historically has occurred as the revenue from our expanding member base has grown faster than the cost to support the members.

We have also gained efficiencies through our self built care team platform, which we continue to enhance by adding capabilities such as in AI care team tool that helped to synthesize member data points to support more efficient and productive interactions with our members.

Up 49% year over year.

Moving to operating expenses, our GAAP operating expenses were 28% year over year to $45 million in Q2 and included $22 million of sales and marketing $10 million of R&D and $13 million of G&A.

Moving to gross profit our Q2 GAAP gross profit was $40 million up 62% compared to Q2 dollars 24, and our GAAP gross margin was 66% compared to 60% in Q2 24.

Our adjusted operating expenses were $42 million in Q2 also up 28% year over year. The breakdown of our adjusted operating expenses included sales and marketing of $21 million up 48% year over year, primarily reflecting higher administrative fees that we pay channel partners for services, they provide and supportive member enrollment.

Historically it has been typical for these fees to increase when we have strong member growth.

For those new to <unk> I'd like to note that historically, our gross margins have typically been lower in the first quarter than the rest of the year due to elevated enrollments in Q1.

I'd also like to note that year over year growth rate in Q2 was higher because the prior period. In Q2 24 included a onetime reversal of administrative fees that reduced sales and marketing expense in that period, resulting in a typically lower prior year comparable this is a onetime occurrence that did not repeat in Q3 or Q4 of 2024.

Our enrollments feature frontloaded costs related to device shipment and early program care driving lower initial gross margin that typically have increased over the lifetime of the membership program life as such historically, we typically observed higher gross margins. After Q1, which is consistent in Q2 this year with a significant sequential improvement.

And so those prior year quarters should not cause the same increase in year over year comparisons of sales and marketing expense later this year.

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Moving to R&D, which was $10 million up 11% year over year G&A of $11 million was up 12% year over year with the increase primarily driven by public company costs.

In summary, 28% growth in total GAAP and non-GAAP operating expenses supported 49% revenue growth, reflecting strong operational leverage.

We have also gained efficiencies through our self built care team platform, which we continue to enhance by adding capabilities such as in AI care team tool that helps synthesize member data points to support more efficient and productive interactions with our members.

This progress has been driven by leverage created by offering multiple conditions on one platform that can be sold by a single sales force.

Moving to operating expenses, our GAAP operating expenses were 28% year over year to $45 million in Q2 and included $22 million of sales and marketing $10 million of R&D and $13 million of G&A.

<unk> created by our relationship with channel partners and our <unk> go to market approach and spending discipline as we focus on making progress toward profitability.

Moving to our progress toward profitability, our GAAP net loss in Q2 was $5 million compared to an $11 million loss in Q2, 24, representing net loss margin of negative nine and negative 26% respectively.

Our GAAP loss per share in Q2 was 24 <unk> compared to a loss of $1 <unk> in Q2 24.

Adjusted EBITDA in Q2 was a loss of $200000.

Historically it has been typical for these fees to increase when we have strong member growth.

Which compares to a loss of $7 million in Q2, 2000 and for our Q2 adjusted EBITDA margin was negative <unk>, 3% compared to negative 16% in Q2 24.

We're very pleased with our progress through Q2 towards reaching profitability, which has been achieved through a lot of focus by our team on building a scalable business in a disciplined manner.

Moving to our balance sheet, we ended Q2 with cash and equivalents of $223 million compared to $59 million in Q1 25.

And so those prior year quarters should not cause the same increase in year over year comparisons of sales and marketing expense later this year.

Moving to R&D, which was $10 million up 11% year over year G&A of $11 million was up 12% year over year with the increase primarily driven by public company costs.

With the increase being driven by our net IPO proceeds.

Our total debt at the end of Q2 was $31 million note.

Note that subsequent to the end of the second quarter, we paid off our debt, which we believe was a prudent use of IPO proceeds given the interest rate on our debt.

In summary, 28% growth in total GAAP and non-GAAP operating expenses supported 49% revenue growth, reflecting strong operational leverage.

Moving to guidance, we expect 2025 revenue in the range of $235 million to $241 million. This range represents 38% to 42% growth over 2024.

This progress has been driven by leverage created by offering multiple conditions on one platform that can be sold by a single sales force scale created by our relationship with channel partners and our <unk> go to market approach and spending discipline as we focus on making progress toward profitability.

We expect full year adjusted EBITDA in the range of negative $9 million to negative $5 million. The midpoint of this range reflects an improvement of approximately $22 million compared to 2024.

In summary, we are pleased with our strong Q2 performance and outlook, which reflect our business momentum and scalability of our business model with that we'll now open the call for questions.

Thank you, ladies and gentlemen, if you'd like to ask a question at this time you will need to press star one on you touched on the telephone and lead claiming to be announced.

Our GAAP loss per share in Q2 was 24 <unk> compared to a loss of $1 <unk> in Q2 24.

As a reminder, in order to accommodate all participants in the queue. We ask that you. Please limit yourself to one question and one follow up.

Adjusted EBITDA in Q2 was a loss of $200000.

Which compares to a loss of $7 million in Q2, 2000 and for our Q2 adjusted EBITDA margin was negative <unk>, 3% compared to negative 16% in Q2 24.

Our first question coming from the line of Greg <unk> with Morgan Stanley. Your line is now open.

Yes. Thank you and appreciate all the details in the prepared remarks I just building on the topic of kind of AI in Tech can you just expand on just how you're leveraging technology to scale. The platform any anecdotes in terms of capturing efficiencies and the ability to continue to do that moving forward.

We're pleased with our progress through Q2 towards reaching profitability, which has been achieved through a lot of focus by our team on building a scalable business in a disciplined manner.

Moving to our balance sheet, we ended Q2 with cash and equivalents of $223 million compared to $59 million in Q1 25.

Absolutely Craig this is Sean great to hear your voice.

So we of course talked a lot about <unk>.

With the increase being driven by our net IPO proceeds our total debt at the end of Q2 was $31 million.

I'll say, we're equally excited about gpt's. So it really is a year of the G as Hubert Amato.

Note that subsequent to the end of the second quarter, we paid off our debt, which we believe was a prudent use of IPO proceeds given the interest rate on our debt.

And I'll just kind of there was so much internal enthusiasm on how these technologies can benefit three aspects of what we do.

<unk> had the benefit of our members.

Moving to guidance, we expect 2025 revenue in the range of $235 million to $241 million. This range represents 38% to 42% growth over 2024.

Number one how they benefit our care teams for not just more leverage, but more personalization and impact and number three how they benefit the business.

We have an innovation showcase that we call horizon day here, what amount of that happened in May and way Lee's prepared remarks, you talked about a modest spark and so that consists of AI capabilities for our members.

We expect full year adjusted EBITDA in the range of negative $9 million to negative $5 million. The midpoint of this range reflects an improvement of approximately $22 million compared to 2024.

Enhanced food tracking capability that enables AI enabled photo recognition and identifies the ingredients and estimates macro nutrient information like protein fiber added sugars.

In summary, we are pleased with our strong Q2 performance and outlook, which reflect our business momentum and scalability of our business model with that we'll now open the call for questions.

We really have a wow factor for our members as well as reducing that barrier to inputting food.

Thank you, ladies and gentlemen, if you'd like to ask a question at this time you will need to press star one on you touched on the telephone and lead claiming to be announced.

Launched a nutrition education agent, which surfaces realtime nutrition information, which helps us through decisions and.

As a reminder, in order to accommodate all participants in the queue. We ask that you. Please limit yourself to one question and one follow up.

And importantly, this was fine tuned on over 3 million foods for more than 150 countries.

Our first question coming from the line of Greg <unk> with Morgan Stanley. Your line is now open.

Modest Park also has a version that is a motivational interviewing agent that supports guided conversation to help members identify their own barriers. So really exciting we're liking what we see in the data thus far.

And then per your comment on the care teams. This is a moment to remind those newer to our model.

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We chose in the early <unk> to build our entire proprietary platform for care teams ourself.

Yes, absolutely Craig this is Sean great to hear your voice, though we of course talked a lot about <unk>.

And so this has enabled us to speedily embed AI technologies natively into a number of feature sets.

I will say we are equally excited about gpt's. So it really is a year of the <unk> and I'll just kind of there was so much internal enthusiasm on how these technologies can benefit three aspects of what we do.

But one that we're particularly excited about allows our care teams to get quicker contest context on member behavior messages data trends.

And in 2024, we launched this tool the pilots indicate.

Number one have the benefit of members.

Number one how they benefit our care teams for not just more leverage, but more personalization and impact and number three how they benefit the business. So.

Some great data at the coaches, we're able to spend 23% less time during the first week of a member joining wow seeing a seven percentage point increase in the rate of substantive member replies. So really this represents quality at higher efficiency.

We have an innovation showcase that we call horizon day here, what amount of that happened in May and way Li's prepared remarks, you talked about a modest spark and so that consists of AI capabilities for our members and.

Which is in essence, the Holy Grail of these technologies. So we're excited about them.

As you might imagine even internally, we're leveraging them for business operations, our engineering and product teams are having a blast coding with AI assistance tools.

An enhanced food tracking capability that enables AI enabled photo recognition and identifies the ingredients and estimates macro nutrient information like protein fiber added sugars that really had a wow factor for our members as well as reducing that barrier to and putting food.

And then we love our datasets, which we feel blessed about because we have tens of millions of free text messages that give us the latitude to experiment in the context, where the most valuable data for an LLM could be argued to be free text message as well as a biometric.

Launched a nutrition education agent, which surfaces realtime nutrition information, which helps us through decisions.

This was fine tuned on over 3 million foods for more than 150 countries.

No data points so net.

We're excited by it we think we're at early innings, but we like the promise and the Horizons ahead.

And a modest park also has a version that is a motivational interviewing agent that's imports guided conversation to help members identify their own barriers. So really exciting we're liking what we see in the data thus far.

Craig I would just add from a.

From an upside perspective, we've been very judicious in terms of how we're.

Underwriting the upside from AI and so while we're still in the early innings of AI, we're not really attributing to a ton of upside from a gross margin perspective.

And then per your comment on the care teams. This is a moment to remind those newer to our motto.

Current long term target gross margin of 70% so to the extent we start to see some early wins here and either higher member engagement or coach coach efficiencies will continue to underwrite that here towards the end of the year and going forward into our long term targets.

We chose in the early <unk> to build our entire proprietary platform FERC care teams ourself.

And so this has enabled us to speedily embed AI technologies natively into a number of feature set.

But one that we're particularly excited about allows our care teams to get quicker contest context on member behavior messages data trends.

That's helpful and then just as a follow up.

<unk> on the <unk> the <unk> ones I think on the <unk> you had like around 50000 members any update in terms of how that's trending and just kind of traction youre seeing in terms of growth for that program.

And in 2024, we launched this tool the pilots indicate.

Some great data the coaches, we're able to spend 23% less time during the first week of a member joining while seeing a seven percentage point increase in the rate of substantive member replies. So really this represents quality at higher efficiency.

Yes, Hi, Craig this is Wally thanks for the question regarding <unk> traction.

We continue to be pleased with the momentum of our <unk> care track.

As we've seen significant.

Total overall number growth quarter to quarter H, one to H, one previous to last year and if you can give.

Which is in essence, the Holy Grail of these technologies. So we're excited about them.

As you might imagine even internally, we're leveraging them for business operations, our engineering and product teams are having a blast coding with AI assistance tools.

Significant driver or contributor that Hasnt been our <unk> business.

So we're really pleased to see that it is important to note that the GOP one care track as it relates to total revenue as well as total number is still is a minority.

And we love, our datasets, which we feel blessed about because we have tens of millions of free text messages that give us the latitude to experiment in a context, where the most valuable data for an LLM could be argued to be free text message as well as a biometric.

The volume of new numbers that are coming into our business.

And so <unk>, we're pleased with progress we're seeing momentum.

But the broader part of our growth still is coming from our core cardio metabolic platform across <unk>.

No data points so net.

We're excited by it we think we're at early innings, but we like to promise and the Horizons ahead.

Diabetes prevention weight health.

<unk> itself management, as well as hypertension and MSA.

Craig I would just add from it.

From an upside perspective, we've been very judicious in terms of how we're underwriting.

Got it thanks really.

Underwriting the upside from AI, so while we're still in the early innings of AI, we're not really attributing to a ton of upside from a gross margin perspective in that in our <unk>.

Thank you.

Our next question coming from the line of Dave.

David Roman with Goldman Sachs. Your line is now open.

Thank you good afternoon, everyone.

I wanted just to start on the member growth side, and maybe you could help us with the two things one is maybe just deconstruct a little bit the strength that youre seeing continue here in the second quarter and I think that brings four quarters of very strong growth in membership.

That's helpful and then just as a follow up.

<unk> on the Gs the <unk> ones I think on the <unk> you've had like around 50000 members any update in terms of how that's trending and just kind of traction you're seeing in terms of growth for that program.

In into play here and then and then secondly, just remind us the way you think about members I think in the case of about a membership is actually a good proxy for utilization based on how you define it and then I had one P&L follow up.

Yes, Hi, Craig this is Wally thanks for the question regarding <unk> traction.

We continue to be pleased with the momentum of our <unk> care track.

Yes, Thanks, a lot for the question regarding number growth.

As we've seen significant.

As just mentioned as well as in the prepared remarks.

Total overall number of growth quarter to quarter H, one to H, one previous to last year and if you can give.

A nice driver of member growth year over year has been our <unk> care track, but it still represents a minority of our of our total total membership.

Significant driver or contributor of that Hasnt been our <unk> business.

So we're really pleased to see that it is important to note that the GOP one care track as it relates to total revenue as well as total number is still is a minority.

We continue to see broader growth in our total membership across our cardio metabolic suite and so we'd like to see that.

In terms of what's driving the actual growth is not only our continued success in up selling and bringing on new clients with multi condition, where our multi condition strategy. We continue to see success there.

The volume of new members that are coming into our business.

And so <unk>, we're pleased with progress we're seeing momentum.

But the broader part of our growth still is coming from our core cardio metabolic platform across <unk>.

But I would add onto that last year in 2024, we managed to improve member outreach productivity and effectiveness by over 60% year over year. So a lot of that improvement that we saw last year is converting and bringing in carrying over into this year.

Diabetes prevention weight health.

<unk> itself management, as well as hypertension and M. S K.

Got it thanks really.

Thank you.

Our next question coming from the line of Dave.

And also we continue to optimize our outreach not only across email, but multi channels and we're seeing continued improvement on the productivity front there too as well. So it's really a combination of continued closed more deals up selling more deals, bringing new covered lives into the funnel.

David Roman with Goldman Sachs. Your line is now open.

Thank you good afternoon, everyone.

Then once we have those covered lives in the funnel continuously improving on the productivity of our outreach that's really kind of the underpinning of what we're seeing on the robust growth.

In into play here and then secondly, just remind us the way you think about members I think in the case of amount of membership is actually a good proxy for utilization based on how you define it and then I had one P&L follow up.

We're reporting out Yeah, and then David just on the second part of your question with regard to definitely Ashley our members are someone who who are actively billing on that somebody that we build on a at least once in the prior 12 months and then you had a little bit of a question there around utilization. So historically speaking we have we've demonstrated to keep 55% of our <unk>.

Yes, Thanks, a lot for the question regarding number growth.

As just mentioned as well as in the prepared remarks.

A nice driver of member growth year over year has been our <unk> care track, but it still represents a minority of our total total membership.

Members engage at the end of year, one and then we see a very slight drop off but not much of a drop off by the time, we get to 24 months, where we still have 50% of that same population.

We continue to see broader growth in our total membership across our cardio metabolic suite and so we'd like to see that.

Continuing to stay engaged in the program that's a weighted average across all of our programs, obviously folks who are diabetic hypertensive tend to stay in a little bit longer or is the folks on the prevention of wait outside tend to stay a little bit a little bit less.

Very helpful. And then maybe on the P&L appreciate the progress on profitability that you showed here in the second quarter. As you look forward. How are you thinking about the balance between reinvesting for future growth subsequent to the proceeds coming in from the IPO and and achieving.

Fairly rapid.

Our profitability and where are some of the incremental areas of investment you might deploy those resources.

And also we continue to optimize our outreach not only across email, but multi channels and we're seeing continue to improvement on the productivity front there too as well. So it's really a combination of continued closed more deals up selling more deals, bringing new covered lives into the funnel.

Thank you for the question, we're extremely happy with the quarterly performance here again.

Growing 49% and we saw a large portion of that drop dropped directly to the bottom line again.

Then once we have those covered lives in the funnel continuously improving on the productivity of our outreach that's really kind of the underpinning of what we're seeing on the robust growth.

Related to the comments that that really just mentioned as we think about the back half of this year, we really want to get to to making some very strategic and targeted investments, we're feeling a tremendous amount of market opportunity within the <unk> landscape.

We're reporting out Yeah, and then David just on the second part of your question with regard to definitely actually are members or someone who are actively billing on that somebody that we build on a at least once in the prior 12 months and then you had a little bit of a question there around utilization. So historically speaking we have we've demonstrated to keep 55% of our <unk>.

<unk> some investments in the front half of this year, we will continue to make more investments in the back half of the year as well we talked about AI, obviously, a very dynamic moment in the market, we're going to continuing to invest in AI in the back half of the year as well to really set us up for 2026, and then on the on the IPO side and the public company side of the equation.

Members engage at the end of year, one and then we see a very slight drop off but not much of a drop off by the time, we get to 24 months, where we still have 50% of that same population.

We are carrying some more additional costs in the back half of the year in G&A associated with increased cost for D&O insurance as well as we made some investments and the accounting team to make sure that we can operate as a public company but.

Right now about to enter the back half of the year, where we enter our annual planning process and we're really attempting to balance growth and profitability. So we're going to be really adjudicating over the next couple of months, making sure we make targeted and strategic investments to continue to grow the topline while also having a lens to continue to run the business profitably.

Yeah.

Thank you.

Our next question coming from the lineup second Kelly with Barclays. Your line is now open.

Fairly rapid.

After profitability and where.

Or are some of the incremental areas of investment you might deploy those resources.

Okay.

Okay, Great Hey, guys. Thanks for taking my questions here and congrats on your first quarter as a public company.

No no. Thank you for the question, we're extremely happy with the quarterly performance here again.

Thank you. Thank you.

Sure.

Sean are we Lee maybe for both of you I was wondering if you could talk about the landscape a little bit there's great secular adoption within your existing customer base, but I'm curious what you're seeing competitively.

Growing 49% and we saw a large portion of that drop dropped directly to the bottom line again really related to the comments that that really just mentioned as we think about the back half of this year, we really wanted to get you to making some very strategic and targeted investments.

With new customers.

Yes, Thanks, a lot for the question obviously.

Feeling a tremendous amount of market opportunity within the GOP one landscape we've motion some investments in the front half of this year, we will continue to make more investments in the back half of the year as well we talked about AI, obviously, a very dynamic moment in the market, we're going to continuing to invest in AI in the back half of the year as well to really set us up for 2020.

As we approach the closing season, which really is an H two we're really really focused on the competitive dynamics.

We're continuing to see really is can be characterized them into two buckets. The first one of course as mentioned in prepared remarks in earlier answers to some questions is continued momentum around the <unk> care track, we like what we see there, especially as it relates to the high levels of engagement, we're seeing in the program as well as the clinical outcomes that we're posting.

And then on the on the IPO side and the public company side of the equation. We are carrying some more additional costs in the back half of the year in G&A associated with increased cost for D&O insurance as well as we made some investments and the accounting team to make sure that we can operate as a public company, but right now about to enter the back half.

Not only <unk>, but also after a number of discontinue the GOP. One continued efficacy in terms of when it comes to maintaining weight loss and that is a big differentiator in the marketplace right now as it relates to any competitive situation, where we're trying to sell through our <unk> care track.

For the year were reenter our annual planning process, and we're really attempting to balance growth and profitability. So we're going to be really adjudicating over the next couple of months, making sure we make targeted and strategic investments to continue to grow the topline while also having a lens to continue to run the business profitably.

The other category of competitiveness that I would talk about in dynamics is related to really our the rest of our portfolio regarding our cardio metabolic.

Thank you.

Business as well as M S K.

Next question coming from the line of second Kelly <unk> with Barclays. Your line is now open.

It comes back to kind of the strategy, we just been methodically executing on I feel like the teams and super disciplined on over the last several years around the dimensions of competitiveness that.

Yeah.

Okay, Great Hey, guys. Thanks for taking my questions here and congrats on your first quarter as a public company.

Thank you. Thank you.

Continued to resonate with our buyers not only against our existing customers have been in the marketplace for a while.

Sure.

Sean Lee maybe for both of you I was wondering if you could talk about the landscape a little bit there's great secular adoption within your existing customer base, but I'm curious what you're seeing competitively.

But also maybe even newer competitors that are trying to gain some traction in the marketplace and as a reminder, they are pretty straightforward and that's what you know our model for but they are the following the first one is a human led proactive care approach of course are enabled by technology and the latest generative AI features for instance.

New customers.

Yes, Thanks, a lot for the question obviously.

As we approach the closing season, which really is an H two we're really really focused on the competitive dynamics.

Modest spark AI agent that we launched and then secondly, our.

What we're continuing to see really is can be characterized them into two buckets. The first one of course as mentioned in prepared remarks in earlier answers to some questions is continued momentum around the <unk> care track, we like what we see there, especially as it relates to the high levels of engagement, we're seeing in the program as well as the clinical outcomes that we're posting.

Our commitment to clinical evidence.

Demonstrating healthy return on investment that continues to be important.

And then also on top of that of course is.

Our multi condition platform and strategy approach.

There are other factors like post sale experience, which is really important to get that additional second third fourth product upsell, but we find that still to continue to resonate in the marketplace very very competitively.

Not only <unk>, but also after a number discontinue the GOP one continued efficacy in terms of when it comes to maintaining weight loss and that is a big differentiator in the marketplace right now as it relates to any competitive situation, where we're trying to sell through our <unk> care track.

In our particular marketplace. There are no really reliable or there are no real market share reports.

So one of the questions oftentimes as well how do you know and can you give us a sense for how that is resonating and translating into sales performance.

The other category of competitiveness that I would talk about in dynamics is related to really our the rest of our portfolio regarding our cardio metabolic.

And we think that maybe a decent surrogate is looking at global App downloads Theres a company called sensor tower that provides global app load down data.

Business as well as M S K and it really comes back to kind of the strategy. We just been methodically executing on I feel like the teams and super disciplined on over the last several years around the dimensions of competitiveness that continue to resonate with our buyers not only against our existing customers have been in the marketplace.

And we've been tracking that for quite some time.

And for sequential quarters and months, we find that's a pretty big gap between total global App downloads for Armada versus any number of competitors within our sector and that continues to be true even though the latest updated data. So we feel like theres a good translation of not only our <unk> care tracking what we've done there but also.

For a while.

Kind of just a strategy around competitive positioning that we've been executing for years continuing to resonate in the marketplace with our buyers and secondly, this is Sean the only build I would offer on top is the vast majority.

<unk> deals we closed do consistently white space I shared in my remarks that motto has penetrated 14% of self insured, 9% fully insured 1% of Medicare advantage.

Modest spark AI agent that we launched and then secondly, our.

It is quite common that we meet clients that don't have anything.

Our commitment to clinical evidence and demonstrating healthy return on investment that continues to be important.

Equally in <unk> prepared remarks, we talked about the takeover of an incumbent diabetes vendor. So that that's a that's equally something that we're seeing with increased frequency.

And then also on top of that of course is.

Our multi condition platform and strategy approach.

And watching for opportunities to progress more of that as we.

Enter closing season.

Understood very helpful.

Maybe for the follow up for you Steve Great.

Great to hear.

About more DLP one care track adoption can you just remind us how pricing there looks versus the other modules just as we maybe think about blended <unk> over time as presumably GOP care characterize becomes a bigger and bigger portion of the mix yes.

In our particular marketplace. There are no really reliable or there are no real market share reports.

So one.

One of the questions oftentimes as well how do you know and can you give us a sense for how that is resonating and translating into sales performance.

And we think that maybe a decent surrogate is looking at global App downloads Theres a company called sensor tower that provides global app load down data.

Yes, no great question, if I could.

Just a reminder, <unk> are still currently in the minority of our total enrollees so their ability to move our weighted average or who is going to take some time as you know we still have a lot of our total enrollees in the core cardio metabolic offerings in terms of where it sits within our in our pricing structures, it's priced at a premium to our prevention and weight health products, but still.

And we've been tracking that for quite some time.

Hello, hypertension and below diabetes. So it's really the relative growth rate that we'll see in GOP wants to the extent it over performs in outpaces prevention and health. It does have the ability to lift our blended <unk> overtime, so to diabetes and hypertension as well and that's why we're extremely focused on on those condition areas.

Not only are <unk> care tracking what we've done there, but also kind of just a strategy around competitive positioning that we've been executing for years continuing to resonate in the marketplace with our buyers.

This is Sean the only build I would offer on top is the vast majority of deals we closed do consistently white space I shared in my remarks that motto has penetrated 14% of self insured, 9% fully insured 1% of Medicare advantage.

Very helpful. Thanks, guys.

Thank you.

Next question coming from the lineup.

Understood with Evercore ISI. Your line is now open.

It's quite common that we meet clients that don't have anything.

Hi, guys. Congrats on your first quarter out in the market, it's great to see the results here.

Equally in <unk> prepared remarks, we talked about the takeover of an incumbent diabetes vendor. So that that's a that's equally something that we're seeing with increased frequency.

Just a question about the.

Selling season, obviously, you signed Cvs, which gives you sort of access to it.

And watching for opportunities to progress more of that as we.

I've mentioned their members is there anything you could specifically call out that sort of resonating with that client bucket just any progress on the early selling ourselves there.

Inter closing season.

Understood very helpful.

Maybe for the follow up for you Steve Great.

Great to hear.

And then maybe as a follow up.

About more DLP one care track adoption can you just remind us how pricing there looks versus the other modules just as we maybe think about blended <unk> overtime as presumably GOP care contract becomes a bigger and bigger portion of the mix.

Obviously, Steve was just talking about the sort of.

Our industry, leading retention results in terms of.

Users on the platform one to two years later.

How do you think about how the evolution of that.

As we move through the next couple of years that number has obviously been high in coming up over time, but how do we think about sort of incremental nudges or the use case of AI that you guys are mentioning on the food side, maybe as an example.

Yes, no great question.

Just a reminder, <unk> are still currently in the minority of our total enrollees so their ability to move our weighted average <unk>, who is going to take some time as you know we still have a lot of our total enrollees in the core cardio metabolic offerings in terms of where it sits within our in our pricing structures, it's priced at a premium to our prevention and weight health products, but still.

Yes, Hi, Elizabeth this is Wally great to hear from you and thanks for your question regarding selling season, you also mentioned Cvs, yes.

Yes.

We went to markets and have a relationship with Cvs. So all of our products, including our <unk> are listed on their platform.

Hello, hypertension and below diabetes. So it's really the relative growth rate that we'll see in <unk> to the extent it over performs in outpaces prevention and health. It does have the ability to lift our blended <unk> overtime, so to diabetes and hypertension as well and that's why we're extremely focused on on those condition areas.

We went to market.

Through Cvs earlier this year.

And we're kind of pleased with the.

The early signs obviously.

Obviously in 2025 because of the enterprise motion usually takes 12 to 18 months to kind of gaining attraction. We don't expect any material contribution of total membership growth in 2025, but we do look for growth in our pipe as it relates to closing new deals.

Very helpful. Thanks, guys.

Thank you.

Next question coming from the lineup.

Understood with Evercore ISI. Your line is now open.

As it relates to Cvs as well as across our portfolio our pipe is building nicely.

Hi, guys. Congrats on your first quarter out in the market, it's great to see the results here.

Just a question about the.

But as we all know we're just entering the selling and closing season literally just right now and so we're gonna be excited and anxiously awaiting to see how those deals convert into closed one.

Selling season, obviously, you signed Cvs, which gives you should have access to.

I've mentioned their members is there anything you could specifically call out that sort of resonating with that client bucket just any progress on the early selling ourselves there.

Towards the end of the end of the year. So nothing to share right now in terms of total progress on closed one deals our pipe, but we do like.

And then maybe as a follow up.

Obviously, Steve was just talking about the sort of.

What we're seeing and again, we'll be tracking it very very closely over here in the back half of this particular year.

Our industry, leading retention results in terms of.

Users on the platform one to two years later.

As far as.

How do you think about how the evolution of that.

Other traction on.

And on gauge them into our membership.

We continue to see.

Continued engagement of our membership.

Going to be tracking very very closely obviously, the <unk> care track numbers are newer to our business just over the last maybe 18 24 months and so we're going to continue to track how that engagement goes, but we again like what we see there and we're gaining momentum.

Yes, Hi, Elizabeth this is Wally great to hear from you and thanks for your question regarding selling season, you also mentioned Cvs, yes.

Yes.

We went to markets and have a relationship with Cvs, So with all of our products, including our <unk> are listed on their platform.

So this is one thing we love about our pricing model I mean, as you know and for those who perhaps don't we charge when people sign up and we continue to build such that they are engaged so the better product experience becomes the more engagement ideally we can get the more revenue will capture and ultimately it's about the outcomes and bending the curve.

We went to market.

Through Cvs earlier this year.

And we're kind of pleased with the.

The early signs obviously.

So advances like AI or just one one additional.

Error in our quiver to just build experiences that numbers absolutely love that.

Youll personalized to them.

That's still there.

Let them feel that theyre getting just incredible support for modern optimally that'll be reflected engagement progress over time.

As it relates to Cvs as well as across our portfolio our pipe is building nicely.

We'll be one of the levers of growth for the probiotics.

But as we all know we're just entering the selling and closing season literally just right now and so we're going to be excited and anxiously awaiting to see how those deals convert into closed one.

Great that's super helpful and I'm interested personally and this is again I think two so let me know.

I'll, let you try it it's pretty funny.

Thank you.

Towards the end of the end of the year. So nothing to share right now in terms of total progress on closed one deals our pipe, but we do like.

Our next question coming from the line of Richard close with Canaccord. Your line is now open.

Yes, thanks for the questions congratulations on a very strong start.

What we're seeing and again, we'll be tracking it very very closely over here in the back half of this particular year.

Maybe a question for Steve here.

As far as.

Just curious if you could talk a little bit about the gross margin progression through the rest of the year obviously.

Other traction on.

And on gauge them into our membership.

Performed us by a significant amount here in the second quarter and just curious if we should assume.

We continue to see.

Continued engagement of our membership.

Gonna be tracking very very closely obviously, the <unk> care track numbers are newer to our business just over the last maybe 18 24 months and so we're going to continue to track how that engagement goes, but we again like what we see there and we're gaining momentum.

Sort of that typical continued stair step in the back half that.

You have done in the past I'll start there rich.

Richard Yes. Thank you so much for the question, obviously I'm extremely proud of what we did in Q2 ending at 68% gross margin, maybe just to reorient, everyone. We do observe gross margin seasonality in our business Q1, historically has been our lowest gross margin quarter, that's associated with it being our largest quarter for net new enrollment volume associated.

With the annual benefit cycle. So what you have happened. There is we have increased care team cost because our care teams are ramping up our new members and then we're also shipping.

So advances like AI or just one one additional.

Aaron a waiver to just build experiences that numbers, absolutely love that youll personalized to them.

Higher amount of hardware in the first quarter to make sure that folks are setup on the program. While we've typically observe historically is that you then see a tick up from Q2 and then the rest of the year. If you look back to 2024, when we started the year at 52% gross margin and we exited the year at 69% gross margin. So we really like the setup that we currently.

Steel there, let them feel that theyre getting just incredible support for modern optimally that'll be reflected engagement progress over time, which will be one of the levers of growth for the probiotics.

That's super helpful and I'm interested personally in this food scanner thing too. So let me, let you try it it's pretty funny.

For the back half of the year going from 60% in Q1, and then increasing to 68% in Q2, we really like how Thats currently being set up or we're not commenting on how that's going to build for the back half. Thank you.

Thank you.

Question coming from the line of Richard close with Canaccord. Your line is now open.

Yes, thanks for the questions congratulations on a very strong start.

Okay and then my follow up is to maybe better understand.

Maybe a question for Steve here.

The member progression through the year.

I'm just curious if you could talk a little bit about the gross margin progression through the rest of the year, obviously outperformed us by a significant amount here in the second quarter and just curious if we should assume.

You sell during the year as the benefit year launches you get a lot of.

Members signing up in that first quarter.

Obviously in the second quarter, you significantly outperformed and I'm just curious are the dynamics changing a little bit.

Sort of that typical continued stair step in the back half that you.

Have done in the past I will start there.

Now that you have the GOP won't care track, how should we think about membership in the back half in terms of new members coming on.

Yes, Hi, Richard let me comment on that regarding number kind of volume progression I think theres a couple of things to note I think the first one is that as we continue.

To study, our member outreach and optimize and do all the AB testing that we've been doing for several years now.

Associated with the annual benefit cycle. So what you have happened. There is we have an increased care team cost because our care teams are ramping up our new members and then we're also shipping.

That could influence.

Higher amount of hardware in the first quarter to make sure that folks are setup on the program, but we've typically observed historically is that you then see a tick up from Q2 and then the rest of the year. If you look back to 2024, and we started the year at 52% gross margin and we exited the year at 69% gross margin. So we really like the setup that we currently have for <unk>.

Changes in number of volume that may look a little bit different compared to last year, so better enrollment rate or member outreach effectiveness, obviously won't it will influence quarter to quarter sequentially and they show up with some differences there and as mentioned a little bit earlier, we continue to optimize there and we continue to see some improvement year over year as.

The back half of the year going from 60% in Q1, and then increasing to 68% in Q2, we really like how that is currently being set up or we're not commenting on how that's going to build for the back half. Thank you.

We did in 24 compared to 2023, the second thing to think about that you brought up in terms of <unk>. This space is still relatively new to everybody. It's dynamic it's unsettled and we need to continue to monitor exactly what the annual flow will be for <unk> numbers.

Okay and then my follow up is to maybe better understand.

But one of the things that we do need to watch carefully is that the GOP one prescription volume continues to grow across the.

Remember progression through the year.

You sell during the year or does the benefit year launches you get a lot of.

Health category.

Physicians continue to prescribe in so as physicians continue to prescribe and as our utilization and support for <unk> Companion program continues to grow we're going to have to watch how that changes number volume sequentially from quarter to quarter.

Members signing up in that first quarter.

Obviously in the second quarter, you significantly outperformed and I'm just curious are the dynamics changing a little bit.

Alright, thank you.

Now that you have the GOP one care track.

Thank you.

Our next question coming from the line of Ryan Macdonald with Needham <unk> Company. Your line is now open.

Should we think about membership in the back half in terms of new members coming on.

Yes, Hi, Richard let me comment on that regarding number kind of volume progression I think theres a couple of things to note I think the first one is that as we continue.

Hi, Thanks for taking my questions and congrats on a great first quarter out I understand youre, obviously, not quantifying sort of GOP one care track success, but maybe qualitatively. If you look at sort of the buckets are sources of where you might be getting the member adds from can you talk about what youre seeing in terms of the magnitude of success within circle Rx.

To study, our member outreach and optimize and do all the AB testing that we've been doing for several years now.

Program versus sort of the.

That could influence.

Broader DLP one care track adoption in terms of member adds thanks.

Yeah, Hi, Ryan Wally here.

Yes, sure I mean of course, we're proud to be a partner for the inner circle Rx program, which is part of the ESI ever North the business there.

They show up with some differences there and as mentioned a little bit earlier, we continue to optimize there and we continue to see some improvement year over year.

We worked very very closely with them. They work closely with us and we have a pretty good large scaled go to market there.

As we did in 24 compared to 2023, the second thing to think about that you brought up in terms of <unk>. This space is still relatively new to everybody. It's dynamic it's unsettled and we need to continue to monitor exactly what the annual flow will be for <unk>.

Certainly that is a part of the increasing growth attribution of <unk> care track numbers to our total overall membership growth in terms of other other types of business. We continued to sell through our <unk> per track. Most recently of course, we launched.

But one of the things that we do need to watch carefully is that the GOP one prescription volume continues to grow across the.

With the Cvs on the largest pbms in.

In the entire marketplace here in the United States not only our <unk>, but also our other programs and we continue to closely partner with with.

Health category.

Physicians continue to prescribe in so as physicians continue to as prescribed and as our utilization and support for our GOP. One companion program continues to grow we're going to have to watch how that changes number volume sequentially from quarter to quarter.

With their sales teams to build pipe.

We don't anticipate a significant volume this year from that relationship because of the enterprise motion takes a little bit while we do anticipate contribution across the portfolio, including <unk> more so to hit next year. So that's what I would say in terms of <unk> membership progression.

Alright, thank you.

Thank you.

Our next question coming from the line of Ryan Macdonald with Needham <unk> Company. Your line is now open.

It is also important to note that.

Even clients that don't have the <unk> care track doesn't preclude numbers, who decided to come into our program, either with diabetes or hypertension or with weight health.

That might be on a <unk> and so we certainly support those numbers and kind although.

Program versus sort of the.

Broader DLP one care track adoption in terms of member adds thanks.

Not with the enhanced <unk> services that are associated with <unk> and Ryan building. This is Sean building upon lately just a couple of observations on the end market for <unk>. So we find that there are really two customer types.

Yeah, Hi, Ryan Wally here.

Yes, sure I mean of course, we're proud to be a partner for the circle are X program, which is part of the ESI ever North business there.

There is an employer who covers <unk> for their population. They may have interest in are modest GOP wound care track.

We work very very closely with them. They work closely with us and we have a pretty good large scaled go to market there.

Equally our contracts with both Cvs caremark and ever north allow them to deploy our broader solution. So it's quite often that they look at the care track and think it makes a lot of sense to just deploy <unk> prevention and Wade helped more broadly or other solutions given that they know that a minority of their population.

That has cardio metabolic challenges and wants to lose weight may be on a G. L. P. One so that's customer type a.

With the Cvs on the largest pbms in.

Really lifts all boats equally there's customer type beef.

In the entire marketplace here in the United States, not only our GOP wound care track, but also our other programs and we continue to closely partner with with.

Which are employers, who just are not in a financial position to be able to cover.

<unk> for obesity. That's also a conversation we can have.

With their sales teams to build pipe.

But because those HR leaders are getting emails from their employees, saying how come GOP ones are not on our benefit design.

And it's a nice thing for them to be able to say look look at this point, we can't afford GOP ones.

But we'd like you to meet our model so theres really two buyer personas there.

In many ways GOP, one has become a tailwind for the broader business writ large which is just a dynamic I wanted to make sure to punctuate.

It is also important to note that.

Even clients that don't have the <unk> care track doesn't preclude numbers, who decided to come into our program, either with diabetes or hypertension or with weight health.

Yes Super helpful color, there and I appreciate all of that and as we think about the selling season. We're still obviously early in that but we hear a bit of cross wins in terms of obviously heavy demand at looking at potential DLP, one companion solutions because of the heavy costs and how that's driving of health care costs, but then also a lot of uncertainty.

That might be on a <unk> and so we certainly support those numbers and kind although.

Not with the enhanced <unk> services that are associated with Kerr tracked and Ryan building. This is Sean building upon lately just a couple of observations on the end market for <unk>. So we find that there are really two customer types.

Around decision, making because of the tariff situation and the macro.

Is that playing out are shaking out in terms of the conversations that youre, having and are you seeing any signs at all in terms of delayed decision, making or is it too early to tell.

There is an employer who covers <unk> for their population. They may have interest in are modest GOP wound care track.

Yes.

Year to date, we're not seeing really any influence or material difference and pipe development pipe movements.

As you've noted we are clearly early in the season.

And just like every year as we approach the closing and selling season will watch things very very closely in terms of how things accelerate through the pipeline.

That has cardio metabolic challenges and wants to lose weight, maybe on <unk>, so that that customer type a.

Really lifts all boats equally there's customer type beef.

But here to date, we've not seen any any particular influence in terms of customers churning or.

Which are employers, who just are not in a financial position to be able to cover.

<unk> for obesity. That's also a conversation we can have.

Or slowing down their decision, making or being interested in our portfolio of programs that we have but again, we will be watching of course this very very closely over the second half of the year.

But because those HR leaders are getting emails from their employees, saying how come GOP ones are not on our benefit design.

Chronic diseases very topical right now I mean, you've got obviously the administration's focus on chronic disease, you've got GOP ones, it's creating a nice spotlight on.

And it's a nice thing for them to be able to say look look at this point, we can't afford GOP ones.

But we'd like you to meet our model so theres really two buyer personas there.

Just metabolic care generally and I think that's reflected in what we see what we see in the pipeline.

In many ways GOP, one has become a tailwind for the broader business writ large which is just a dynamic I wanted to make sure to punctuate.

I appreciate the color and congrats again.

Thank you.

Our next question coming from the line of Jin Manheimer with Freedom capital markets. Your line is now open.

Oh, Thanks, good afternoon, and congrats on the IPO and the great results I just wanted to.

Really two part question just building on the last one.

Around decision, making because of the tariff situation the macro.

Understanding that you are seeing nice growth in the GOP one track.

Is that playing out are shaking out in terms of the conversations that youre, having and are you seeing any signs at all in terms of delayed decision, making or is it too early to tell.

Would you intend to kind of maintain your edge there.

In weight management, given that competitors that do offer GOP. One treatments are beginning to integrate <unk> support in there and their programs and then the second question is really more on.

Yes.

Year to date, we're not seeing really any influence or material difference and pipe development type movements.

The.

And the narrowing losses, which have been.

As you've noted we are clearly early in the season.

And just like every year as we approach the closing and selling season will watch things very very closely in terms of how things accelerate through the pipeline.

Presses.

Even as you incur public company costs and you scaled your investments what what level of revenue you think the company can achieve positive.

But year to date, we've not seen any any particular influence in terms of customers churning or.

Positive operating margins. Thanks.

Yes hygiene. Thank you. This is Wally I appreciate the question I'll tackle the one regarding GOP, then Steve I'll hand, it over to you to talk about the second question.

Or slowing down their decision, making or being interested in our portfolio of programs that we have but again, we will be watching of course this very very closely over the second half of the year.

It's a good question, we've often said and even if it said on this call that the <unk> marketplaces dynamic. It's unsettled. It has not reached a steady state and that would be certainly the case.

Chronic diseases very topical right now I mean, you've got obviously the administration's focus on chronic disease, you've got GOP ones, it's creating a nice spotlight on.

For enterprise buyers looking for solutions.

Just metabolic care generally and I think that's reflected in what we see what we see in the pipeline.

Thank the antidote for that is continued innovation.

And as Steve had indicated earlier in some of those other comments that we have the investments are continuing investments in our <unk> space.

Appreciate the color and congrats again.

Thank you.

Our next question coming from the line of Jin Manheimer with Freedom capital markets. Your line is now open.

Even slated for the back half of this year.

One of the things that I think is important to note and I think is.

Oh, Thanks, good afternoon, and congrats on the IPO and the great results I just wanted to.

Important to reinforce is that one of the key aspects, we believe that our our purchasers are buyers our clients care about is around our results.

Really two part question just building on the last one.

Understanding that you are seeing nice growth in the GOP one track.

Do people engage in your program in <unk>, I think our results, which show and indicate that they do you in at various points in time several months out 80% to 90% of people are.

Would you intend to kind of maintain your edge there.

In weight management, given that competitors that do offer GOP. One treatments are beginning to integrate <unk> support in there and their programs and then the second question is really more on.

Still persistent in their <unk> compared to probably 30 percentage points less than that in the wild and we attribute that.

Potentially to the support that they receive from their coach.

The.

And the narrowing losses, which have been.

Dynamic and engaging nature of our application and ongoing support they get across the entire journey from the point that they start on their <unk> and to the point that potentially at the member decides to stop their GOP one at that point and then well beyond the second part of it of course are the outcomes.

Presses.

Even as you incur public company costs and you scaled your investments what what level of revenue you think the company can achieve positive.

Positive operating margins. Thanks.

Yes hygiene. Thank you. This is Wally I appreciate the question I'll tackle the one regarding GOP, then Steve I'll hand, it over to you to talk about the second question.

As we all know buyers.

We're trying to make decisions about whether or not they recover and reimbursed DLP ones because of the cost and for those that have decided they're still worried about the cost and certainly the price tag is something that they are worried about the total impact of that price tag times. The number of potential people that are worried about that impact, but they are increasingly concerned.

It's a good question, we've often said and even if it said on this call that the <unk> marketplaces dynamic. It's unsettled. It has not reached a steady state and that would be certainly the case.

For enterprise buyers looking for solutions.

Thank the antidote for that is continued innovation.

About potential waste and so what do I mean by that and so what I mean by that is that as many as one third to two thirds of people, but at the end of the year that Orange <unk> will decide to come off their <unk>. They don't want to be on it for a lifetime and we know from the data that the overwhelming majority of people gained two thirds, maybe even more than two thirds of their.

And as Steve had indicated earlier in some of those other comments that we have the investments are continuing investments in our <unk> space.

Even slated for the back half of this year.

One of the things that I think is important to note and I think is.

Important to reinforce is that one of the key aspects, we believe that our our purchasers are buyers our clients care about is around our results.

Wait back once they stop there <unk>, one and so they're really looking for not only companion program, while you're on a G. L. P. One but one after the program after a <unk> one that reduces weight gain and we've shown compelling data.

Do people engage in your program in <unk>, I think our results, which show and indicate that they do you in at various points in time several months out 80% to 90% of people are.

To suggest at 16 weeks.

You actually don't experience any weight regain on average and in fact, a minus 0.1%.

Still persistent on their <unk> compared to probably 30 percentage points less than that in the wild and we attribute that.

The decrease in actual wait and so that becomes an important dialogue, we're going to continue to follow numbers beyond the 16 weeks. We didn't go out six months nine months 12 months.

Potentially to the support that they receive from their coach.

And we look forward to sharing that data when it becomes available. So that's an important part of doubling down on the data to make sure that everybody understands the effectiveness of our programs as far as other investments nothing to share today, but when the time comes will be more than happy to do that.

As we all know buyers.

Jean Ann Yes regarding the second part of your question, obviously, we're very happy with the quarterly progression here growing 49% a large majority of that topline performance dropped directly to the bottom line and we continue to see operating leverage in three main areas.

We're trying to make decisions about whether or not they recover and reimbursed DLP ones because of the cost and for those that have decided they're still worried about the cost and certainly the price tag is something that they're worried about the total impact of that price tag times. The number of potential people that are worried about that impact, but they are increasingly concern.

The first and probably most important is our care delivery platform. This is the tooling and the platform that our care teams use every day to serve our members we've been investing in the care delivery platform for the better part of our decade tens of millions of dollars and as we've needed to add new features and new products.

Product features we haven't needed to deploy a ton of incremental investment to spin those up we lost our GOP <unk> on our existing tech stack and just a couple of months.

Wait back once they stop there <unk>, one and so they're really looking for not only a companion program, while you're on a G. L. P. One but one after the program after a <unk> one that reduces weight gain and we've shown compelling data.

The next part is we're feeling a tremendous amount of operating leverage across our sales force. Prior to 2019, we are in market with our prevention and weight health product now we're in market with diabetes with hypertension with MSA and now with <unk> with our <unk> product offering. So our sales force has become more efficient because they can now sell across a suite of products and then.

To suggest at 16 weeks.

You actually don't experience any weight regain on average and in fact, a minus 0.1%.

Lastly, as our marketing outreach last year we.

The decrease in actual wait and so that becomes an important dialogue, we're going to continue to follow numbers beyond the 16 weeks. We didn't go out six months nine months 12 months.

Just out of over 100 million E mails across 5000 different campaigns across our 2000 customers. That's the primary medium that we get folks in the doors through E mail marketing and it's a.

Very cost effective channel for us as we think about continuing to grow but we're not going to need to invest disproportionately in that team to scale with the demand that we're seeing on the other end of it I don't want to cite a specific level of revenue at this time as to when we're going to be breakeven exactly we're going to continue to look at the back half of this year and determined where we can make strategic investments acute.

To continue to grow but we do think Q2 was a great barometer narrowing our adjusted EBITDA loss to just 200 K on on $61 million quarter. Thank you.

Great color. Thank you.

Got it.

Thank you.

And I'm showing no further questions in the county queue at this time, ladies and gentlemen that does conclude our conference for today. Thank you all for your participation and you may now disconnect.

Product features we haven't needed to deploy a ton of incremental investment to spin those up we lost our GOP <unk> on our existing tech stack and just a couple of months.

The next part is we're feeling a tremendous amount of operating leverage across our sales force. Prior to 2019, we are in market with our prevention and weight health products that were in market with diabetes with hypertension with M. S. K and now with <unk> with our <unk> product offering. So our sales force has become more efficient because they can now sell across a suite of products and then.

Lastly, as our marketing outreach last year, we just.

Just out of over 100 million E mails across 5000 different campaigns across our 2000 customers. That's the primary medium that we get folks in the doors through E Mail marketing.

We continue to grow but we do think Q2 was a great barometer narrowing our adjusted EBITDA loss to just 200 K on on $61 million quarter. Thank you.

Great color. Thank you.

Okay.

Thank you.

And I'm showing no further questions in the Q&A queue at this time, ladies and gentlemen that does conclude our conference for today. Thank you all for your participation and you may now disconnect.

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Yes.

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Q2 2025 Omada Health Inc Earnings Call

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