Omada Health (OMDA): Q2 2026 Earnings Review

On Thursday, OMDA reported its Q2 results.

The company continues to execute flawlessly.

If you read my Earnings Preview, you know my expectations were clear: another beat-and-raise, confirmation that Omada’s pace of growth is more durable than analysts are modeling, and further evidence of the operating leverage I’ve been expecting since I initiated my position.

Q2 delivered all three and added one piece of news I didn’t see coming but fully support: a CEO transition.

The stock reacted very positively, up 21% in yesterday’s session.

Here’s everything you need to know.

• Revenue of $87.8M vs. $80.1M est. (+43% YoY, +13% QoQ)

• GAAP Gross Margin of 73%, up from 66% in Q2 2025 (~700bps of expansion, an all-time record)

• Non-GAAP Gross Margin of 74%, up from 68% in Q2 2025 (also a record)

For context, the company had previously set a long-term gross margin target of 70%.

• GAAP EPS of $0.09 vs. $(0.02) est. (Net Income of $5.3M vs. a $5.3M loss a year ago, a $10.6M swing)

• Adj. EBITDA of $10.8M vs. $3.5M est. (a 12.3% margin and an ~$11M improvement YoY, a quarterly record)

• Total Members of 1.091M, +45% YoY

This was, once again, the strongest quarter in Omada’s history, with quarterly records for members, revenue, gross margin, adj. EBITDA, and net income. It also marked the company’s second quarter of GAAP net income profitability, following Q4 2025.

Two GAAP-profitable quarters within three quarters is no longer an anomaly, especially considering that Q1 is seasonally the company’s weakest quarter in terms of profitability due to the typical hardware costs associated with the beginning of the year. To me, this increasingly reflects the structural profitability of the model, and I doubt the company returns to a negative bottom line from here.

The number I care most about is the incremental margin. Revenue grew by $26.4M YoY, while adjusted EBITDA improved by $11M over the same period. That translates into a 41% incremental adj. EBITDA margin, delivered while the company was still absorbing the ~50 hires it front-loaded into Q1 across GTM and R&D. As I’ve said from the beginning, I believe analysts significantly underestimate the operating leverage embedded in this business model.

The OpEx trajectory is the mechanism behind it. Non-GAAP OpEx declined from 68% of revenue a year ago to 62% this quarter, while GAAP OpEx fell from 73% to 69%. Management attributed that leverage to the same drivers it has consistently highlighted: scaling through channel partnerships, getting more productivity out of the existing sales force, maintaining tight spending discipline, and increasingly leveraging AI, which the company is now evaluating across every function of the business, not just care delivery.

In my Q1 review, I wrote that Q1 is seasonally Omada’s weakest margin quarter and that, if that was what the worst quarter looked like, the margin trajectory from Q2 through Q4 should be very strong. Q2 confirmed that even faster than I expected.

Raised 2026 Guidance:

• Revenue of $334M-340M (from prior $322M-330M) vs. $328M est.

• Adj. EBITDA of $21M-27M (from prior $14M-20M) vs. $17.8M est.

At the midpoints, this represents ~30% revenue growth vs. 2025 and roughly 4x the $6.5M of adj. EBITDA Omada generated last year, an improvement of about $18M.

When I wrote my Deep Dive on the company back in December, I told you that it made little sense for analysts to model a deceleration from 53% growth in 2025 to just ~20% in 2026 and 2027. There were several tailwinds that I believed would help sustain Omada’s rapid growth, and that gap between expectations and reality was where the alpha was.

In both Q1 and Q2, revenue growth remained above 40%, so that part of my thesis has been playing out exactly as expected.

The mechanics of the raise remain telling. On an $11M revenue raise at the midpoint, management carried through $7M of incremental adjusted EBITDA, implying roughly two-thirds flow-through and consistent with what we saw after Q1. And the guidance still looks conservative: if you simply hold Q2 revenue flat through Q3 and Q4, you land at ~$341M, above the high end of the range. For context, the company has grown revenue sequentially every single quarter since the start of 2024.

An analyst made exactly this point on the call, and management didn’t push back on the math. Instead, they pointed to seasonality and tougher comps.

On that point, CFO Steve Cook clarified why the H2 trajectory looks more measured. Omada is comping against 54% revenue growth in H2 2025, when it was ramping one of its largest channel partners across several lines of business. 2026 represents a more normal seasonal cadence: Q1 is the strongest enrollment period as employers launch new benefit programs, H2 is when the company builds pipeline and closes new clients, and the next major enrollment inflection comes with the 2027 benefit cycle. The exceptionally strong Q1 also pulled enrollments forward, which management framed as a positive: those members are already in active care and generating revenue sooner.

The implied H2 adj. EBITDA margin of ~7% at the midpoints, versus 12.3% in Q2, follows the same logic. The ~50 people hired in Q1 started mid-quarter and are now hitting the P&L at a full run rate. There will be some incremental hiring in the back half, and OpEx should remain roughly flat, if not tick up slightly, against a seasonally softer revenue base. This is normal business cadence, deliberately structured to generate returns on those investments and position the company for a strong start to 2027.

Still, I have little doubt that they’ll beat and raise again next quarter. This management team is one of the best I’ve seen when it comes to managing investors’ expectations, so I certainly wouldn’t expect them to say on the call: “Yes, we’re sandbagging again.” I prefer this approach.

Balance Sheet and Cash Flow

Omada ended Q2 with $221.7M in cash and continues to carry no debt, giving it one of the strongest balance sheets you’ll find out there.

Free cash flow was positive at $2.3M in the quarter, up from $1.6M a year ago. It’s worth mentioning that Q2 still carries residual costs from the seasonal enrollment surge. The H1 FCF deficit of ~ $11M was entirely a Q1 phenomenon, while the back half of the year has historically been the strongest period for cash generation. Q4 2025 alone produced $20M of FCF.

The cash pile is also quietly contributing to the P&L. Interest income was $1.8M in the quarter, meaning roughly a third of GAAP net income currently comes from the balance sheet rather than operations. With no debt to service, that’s a pure add. Importantly, the company would still have beaten expectations across every metric even without this contribution (even with analysts including it in their models).

One item to keep an eye on is accounts receivable, which jumped from $40M to $56.6M sequentially, a $17M build that helps explain why FCF trailed adj. EBITDA in the quarter. With revenue growing 43% and large channel partners continuing to ramp, this looks more like billing timing than a collections issue, and the company’s strong H2 cash-generation seasonality should help unwind it. But it’s the one soft spot in an otherwise pristine set of financials, and I’ll be watching for it to normalize in Q3.

The headline news beyond the numbers: on January 1, 2027, Wei-Li Shao will become CEO of Omada. Founder Sean Duffy, after more than 15 years leading the company he co-founded, will move to Executive Chair, remaining part of the management team with a focus on long-term strategy, partnerships, and what he called “catalyzing opportunities that create the greatest value for Omada over the long term.”

I strongly support this decision.

Wei-Li has always been my favorite member of the management team. He joined Omada seven years ago as Chief Commercial Officer, has served as President for over four years, and brings more than a decade of experience at Eli Lilly. His responsibilities have steadily expanded from commercial leadership into R&D and long-range planning, and he consistently provides some of the most insightful commentary on earnings calls. As Sean said: “Each year, as we’ve given Wei-Li more, we’ve seen more success.”

Sean framed the transition well:

“Throughout this journey, I have tried to ask one question above all others: What does Omada need from me now? At different moments, building Omada called on me to be a product designer, fundraiser, recruiter, storyteller, operator, and public-company CEO. Each role pointed toward the same ultimate goal: to build a company that is still important 50 years from now. This transition is the next step toward that goal.”

And on Wei-Li:

“I’ve always considered Wei-Li as my co-founder for Omada’s next chapter. Omada is making this transition from a position of strength. Now it is time to raise our ambition: from having served millions of people to serving tens of millions, and from proving that between-visit care works to helping define how it is delivered.”

The “position of strength” framing is objectively true: record members, record revenue, record margins, more than 2 million lifetime members served, commercial relationships with the nation’s three leading PBMs, and a proven, profitable model.

Wei-Li, for his part, laid out the three forces he sees converging to shape Omada’s next chapter: the commercial reach the company is building, GLP-1s and adjacent therapies as powerful new tools that complement what Omada treats and how, and the rapid evolution of AI reshaping how personalized care can be delivered at scale.

Founder-led transitions always carry some risk, but in my opinion, this is the good kind: planned, internal, from strength, with the founder staying engaged on strategy and partnerships. This is succession done right.

1. Membership: 1.091M, +45% YoY, and Broad-Based

Omada added 66k net new members in Q2, bringing the total to 1.091M. Sequential adds were lower than Q1’s 139k, but that reflects the pull-forward dynamic management described: Q1’s exceptional strength brought enrollments earlier into the year, and those members are already generating revenue.

The more important point is the breadth of that growth. As in Q1, momentum was broad-based across the cardiometabolic suite, and Steve Cook quantified it: Diabetes and Hypertension were the two fastest-growing books on a year-over-year basis in Q2, both growing more than 50% and outpacing overall revenue growth of 43%. These are also some of Omada’s highest-priced products, and members in these programs tend to remain engaged for longer. GLP-1s have increasingly acted as the initial conversation that allows Omada to sell across the broader product suite, which is very attractive economically.

For anyone still viewing Omada as just a GLP-1 beneficiary, at the Q4 2025 disclosure, GLP-1 members represented ~150k out of 887k total members (~17%), and management confirmed that this ratio has remained roughly constant through Q2. The business is compounding across the entire platform, not riding a single program.

2. The Enrollment Engine

Email campaigns, the primary channel through which employees learn about and enroll in Omada’s programs, converted approximately 20% better YoY. Management described this as a leading indicator of enrollment health, driven by improved targeting, personalization, and messaging to the same audience.

This is the A/B testing engine I highlighted in my Q1 review, still compounding and still not obviously reflected in guidance.

3. Covered Lives

A reminder on seasonality: the first half of the year is when Omada builds new customer relationships, the second half is historically when it closes them, and January is when the annual benefits cycle launches. Q2 sits at the front end of that process, and commercial progress was strong.

During the quarter, Omada added new customers across food service, national retail, public-sector education, and industrial employers, with particular strength in newer products, including the GLP-1 suite and cholesterol. The breadth of industries reflects something fundamental: the need for chronic care support is broad and diverse.

Omada is building from a base of 25M+ eligible covered lives, as of December 2025 (the figure is updated annually), as it sets up for 2027.

This is something I’m constantly emphasizing: based solely on its existing partners, Omada still has a huge runway for growth, with penetration of only ~4% of current covered lives. Yet the number of covered lives continues to increase, and I wouldn’t be surprised to see it reach 30M+ in the next update.

4. The HCSC Expansion

The expansion Wei-Li seemed most excited about involved Health Care Service Corporation, one of the largest Blues plans in the country and a partner of several years across the Prevention and Hypertension programs. HCSC is expanding those programs into its fully insured book of business across three additional states, adding another 1.5M covered lives beginning in 2027.

This matters for two reasons. First, HCSC is a template for how Omada can expand with long-standing partners over time as it proves results across successive programs. Second, and more structurally, the fully insured component is embedded directly at the benefit level, meaning members can enroll without requiring a downstream employer sales cycle. That creates a faster return on deployment.

Revenue should begin hitting the books throughout H1 2027 and continue from there.

This is another catalyst for next year, reinforcing my belief that analysts are underestimating the durability of OMDA’s current growth rates and highlighting exactly the type of channel dynamic Omada is building for scale.

5. PBM Channels

The newer PBM channels continued to progress in Q2. The channel, now entering its second year, has built a strong customer pipeline into the second half and is tracking ahead of expectations. The newest one, which is also the first partner to include Omada’s prescribing program, remains in the very early stages of its sales motion but is already showing encouraging signs.

Wei-Li’s explanation of why this playbook is repeatable is worth internalizing. Omada’s own sales team is “mighty in its capability, but small in its footprint” because the company works closely with the sales teams of PBMs and health plans, significantly expanding Omada’s share of voice across an outsized number of prospects.

Layer on product-market fit (Omada sits at the center of many health benefits discussions because of GLP-1s and because cardiometabolic disease consistently ranks among the top five cost drivers for employers in America, year after year), plus a comprehensive suite spanning the cardiometabolic spectrum, and the result is a pipeline that remains healthy and diversified across programs.

He also made a point I want to highlight: channel diversification is a leading indicator of revenue diversification, which remains one of the main concerns investors have with the company. Omada has brought CVS and Optum Rx onboard with the full complement of cardiometabolic and GLP-1 programs, and that is now materializing in the pipeline that should convert throughout H2 and, even more meaningfully, next year. “We’re feeling good about how that sets us up for 2027.”

6. Cholesterol

Since the last call, Omada launched cholesterol as a standalone care track for the first time, with one of the largest retailers in America. It’s an existing multi-condition customer, which explains the short sales cycle, and meaningful enrollments are already coming through.

Management explicitly framed the rapid upsell to such a large client as a leading indicator of product-market fit and said the CRM pipeline now includes a number of cholesterol opportunities, both upsells to existing customers and new logos.

On the economics, cholesterol pricing is accretive to both revenue and gross margin, sitting comfortably within Omada’s typical $50–60 to $90 per-member monthly range and positioned similarly to the Prevention product.

The strategic logic is clear: cholesterol is often silent and undertreated at the primary-care level, and it overlaps heavily with the Diabetes and Hypertension populations Omada already serves. As a result, the program is as much a cross-sell and holistic-care opportunity as it is a new-logo opportunity.

This is consistent with what I’ve always viewed as one of the strongest characteristics of Omada’s B2B2C model: extremely low CAC, driven not only by cross-selling opportunities across different conditions, but also by how easily the company can inform target customers and covered lives about the availability of its programs through channels such as email marketing.

That’s a major driver of the operating leverage embedded in the model, and it’s not easy to replicate given that Omada has spent more than a decade building this positioning.

7. Prescribing and the GLP-1 Strategy

There were two important prescribing milestones this quarter: Omada has advanced prescribing discussions with channel partners and employers, and it closed its first prescribing customer, which will launch in 2027. That’s an early signal of market fit for the program.

On the GLP-1 coverage environment, Wei-Li’s commentary was balanced. Employers are currently in the middle of their evaluation window, and Omada is seeing both outcomes across its book: some employers are expanding GLP-1 coverage for weight loss, while others are moving away from it. He declined to predict where the market ultimately settles by year-end.

The key point is that Omada is positioned to benefit either way.

For employers that cover GLP-1s, Omada offers prescribing and wraparound support services designed to improve outcomes and the ROI on that investment, with channel penetration at the PBM and health plan level helping distribute those benefits.

For employers that do not cover them, which remains the majority of large employers, the GLP-1 Flex Care program and the Eli Lilly Employer Connect partnership allow employers to provide a clinical support layer for employees accessing the drugs directly through cash pay. Those employers also continue to face high cardiometabolic healthcare utilization, which the rest of Omada’s suite addresses regardless of the GLP-1 coverage decision.

“We’ve got product market fit in either situation... we feel like we’re hedged from an opportunity standpoint.”

8. Engagement

One Q2 signal worth highlighting is that members are remaining in active treatment with Omada nearly 10% longer than they were a year ago. This is being driven by growth in the GLP-1, Diabetes, and Hypertension programs, where members typically remain engaged for longer periods.

This builds on the company’s investments in Omada Spark, Meal Map, and the increasing personalization and clinical depth of member care.

Longer tenure means more billable months per member, higher lifetime value, and stronger margins per member over time. Combined with the mix shift toward higher-value programs, this is one of the engines behind both the durability of revenue growth and the gross margin trajectory.

9. Operating Efficiency and AI

Cost to serve, measured as cost of revenue per member on a trailing 12-month basis, declined by more than 10% YoY, driven by increased efficiency across both digital and human care delivery.

Capacity per care team member continues to rise as Omada scales, with AI and machine learning being deployed throughout care-team support: smarter tools for coaches, better prediction of member demand, and more standardized ways of working across member-facing teams.

Sean reiterated that AI is being evaluated across every function of the company and that, as adoption deepens, it can continue supporting operating leverage into 2027 and beyond.

The gross margin expansion this quarter, which already surpassed management’s previous long-term target, reflects exactly this dynamic: lower care-delivery costs, reinforced by deeper multi-condition engagement and the maturation of longer-tenured cohorts.

10. Unit Economics

TTM revenue per total member was $284 in Q2, compared with $279 a year ago. Management expects this metric to move modestly up or down in any given quarter as cohort mix, pricing mix, and seasonality shift at the margin. Its overall consistency continues to demonstrate the durability of the per-member economics.

As a reminder, a member is defined as someone enrolled in a virtual care program who generated a billing event during the preceding 12 months. As a result, comparing TTM revenue with the TTM member base is the most representative unit-economics measure for a business that bills based on care activity rather than flat subscriptions.

Zooming out to the trailing 12 months shows just how quickly the financial profile is transforming: TTM revenue of $310M is up 48% YoY, TTM non-GAAP gross margin has increased to 70% from 66%, and TTM non-GAAP OpEx has fallen from 72% of revenue to 63%.

One more line worth highlighting: management has previously said there’s a path to exceed its current long-term annual gross margin target of 70%, and Q2’s 74% is consistent with that trajectory. The long-term framework will be updated at Investor Day.

The setup heading into 2027 looks even better than it did three months ago, when it had already improved meaningfully from the prior quarter.

The catalysts, most of which tie directly into the beat-and-raise pattern I expect to continue, are clear.

September 10 Investor Day. This was confirmed on the call, as I anticipated in my preview. Management will lay out an updated long-term financial framework, including the growth, gross margin, and operating leverage trajectories that will guide the business over the next several years. With the current 70% gross margin target already being exceeded and a 41% incremental adj. EBITDA margin now in the books, I believe the medium-term margin outlook will be revised meaningfully higher. This is the key near-term catalyst for resetting expectations.

The H2 closing season. The second half is historically when Omada converts its pipeline, and the company enters it with new customer wins across a diverse range of industries, a second-year PBM channel tracking ahead of expectations, and what Wei-Li described as a healthy and diversified pipeline across the cardiometabolic suite.

“We’re excited coming into the closing season, which we’re just now opening up right now.”

The 2027 benefit cycle. Management expects millions of Americans to have the opportunity to enroll with Omada through the 2027 cycle. This represents the next major enrollment inflection.

HCSC revenue ramp. The additional 1.5M fully insured covered lives should begin generating revenue in H1 2027, with no downstream employer sales cycle required.

Prescribing ramp. The first closed prescribing customer launches in 2027, while the first PBM partner to include prescribing is only beginning its sales motion. Prescribing is priced above current program rates, making it accretive to ARPU and margins as it scales.

Cholesterol conversion. Omada now has a pipeline of both upsells and new logos behind a large retailer that’s already enrolling members, with accretive economics.

White space. As of the end of last year, Omada had penetrated roughly 8% of the Administrative Services Only (ASO) market, 10% of the fully insured market, and around 1% of Medicare Advantage. Sean said there is “plenty of white space” left to capture.

Omada has launched more new program capabilities this year than at any point in its history, while operating with the most robust channel and selling landscape it has ever had.

After 43% revenue growth in Q2 and 42% in Q1, the implied H2 guidance sits around 20%, while 2027 consensus remains in roughly the same conservative range. So far, my initial thesis continues to play out: expectations will likely keep moving higher quarter after quarter.

When I initiated my position at $15.24/share in December, with my average cost now at $14.61, the core argument was never about some mind-blowing innovation or technological moat. It was about the combination of extremely conservative analyst expectations and a business model that I believed was structurally underappreciated: Omada’s ability to grow within its existing covered population at very low incremental cost, supported by channel relationships that took fifteen years to build and cannot be easily replicated.

Q2 is another validation of that thesis.

A 43% revenue growth quarter with records across every profitability line, including a 41% incremental adjusted EBITDA margin. Another raise to both revenue and EBITDA guidance, with guidance that still looks conservative against even very simple math.

I initially thought GLP-1s would be one of the most important catalysts for growth to come in well above estimates in 2026. That actually isn’t what’s happening, and the reality is even better.

GLP-1 members have remained roughly constant as a percentage of the member base at ~17%, while Diabetes and Hypertension are growing more than 50%, and the enrollment engine, engagement metrics, and margins continue improving independently. The entire model is firing on all cylinders, and Omada is surpassing my expectations on almost every front.

$222M in cash. No debt. Record margins. Revenue and membership growing more than 40%. Multiple catalysts heading into 2027. And an Investor Day in five weeks that could reset the market’s expectations around margins.

In my opinion, the alpha remains in the same place: analysts are underestimating both the durability of the growth and the margin trajectory.

On valuation, I’ve previously framed the upside broadly around a $30+ target. Given everything the company has delivered since then, that number in my mind has already moved to $40+. I plan to publish an updated valuation after the September Investor Day, once management puts its new long-term targets on the table.

I’m a very happy shareholder and sleep well at night given the consistently strong execution this team continues to deliver. Almost no one seems to care about this stock, but those are honestly some of my favorite opportunities.

That’s it. Thanks for reading!

Best regards,
M. V. Cunha

Disclaimer: The views expressed in this article are solely my own and are based on my personal research and analysis. This content is for informational purposes only and should not be considered financial, investment, or legal advice. Always conduct your own research before making investment decisions.