GLP-1 Expansion And AI Integration Will Drive Long-Term Chronic Care Leadership

Catalysts

About Omada Health

Omada Health delivers integrated virtual care programs that help people manage and improve chronic cardiometabolic and musculoskeletal conditions.

What are the underlying business or industry changes driving this perspective?

• Scaling GLP-1 prescribing alongside the existing GLP-1 Care Track positions Omada as a key coordinator for rapidly expanding obesity therapies, supporting higher average revenue per member and sustained revenue growth.
• Deeper integration of AI tools like OmadaSpark, Meal Map and the care team platform should raise coach productivity and member engagement, improving operating leverage and supporting long term expansion in gross margin and EBITDA.
• Growing employer and payer preference for unified multi condition platforms over point solutions enables Omada to bundle programs, increase product density per customer and drive faster top line growth with lower customer acquisition cost.
• Evidence that virtual physical therapy and chronic care programs reduce medical utilization and total cost of care strengthens Omada’s value based pitch to payers, supporting pricing power and healthier net margins over time.
• Rising prevalence of chronic cardiometabolic disease and expanding coverage of anti obesity medications, including within Medicare, expands Omada’s addressable market and should support durable membership growth and higher earnings power over the long run.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Omada Health's revenue will grow by 23.2% annually over the next 3 years.
• Analysts are not forecasting that Omada Health will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Omada Health's profit margin will increase from -11.3% to the average US Healthcare industry of 5.5% in 3 years.
• If Omada Health's profit margin were to converge on the industry average, you could expect earnings to reach $23.7 million (and earnings per share of $0.33) by about December 2028, up from $-26.2 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 106.0x on those 2028 earnings, up from -31.9x today. This future PE is greater than the current PE for the US Healthcare industry at 23.6x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Omada is planning a major investment year in 2026 to build GLP-1 prescribing, AI capabilities and product enhancements. If these projects overrun or fail to generate sufficient incremental pricing power, the higher cost base could dilute operating leverage and delay the path to the 20% plus adjusted EBITDA target, pressuring earnings and net margins.
• The company’s growth is increasingly tied to GLP-1 obesity therapies and related benefit strategies. Long term shifts in payer or employer coverage decisions, changes in government reimbursement policy or aggressive low cost competitors could reduce demand for Omada’s GLP-1 solutions, slowing member additions and revenue growth.
• Omada’s model depends on employers and plans preferring integrated multi condition platforms over point solutions. If large payers, PBMs or channel partners push their own vertically integrated offerings or bundle competing services, Omada could face pricing pressure and slower upsell of additional programs, weighing on revenue and gross margin expansion.
• Although Omada has reached positive adjusted EBITDA, it still posts a GAAP net loss and is targeting 70% gross margins. Any sustained increase in care delivery costs, lower than expected AI driven productivity gains or weaker enrollment effectiveness could stall margin improvement and keep the company structurally unprofitable, limiting earnings growth.
• The long term opportunity relies on high engagement and durable outcomes for chronic cardiometabolic and musculoskeletal populations. If member engagement or clinical results deteriorate as the base scales, customers may question Omada’s real world value and renegotiate or churn, which would negatively impact revenue visibility and future earnings power.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $28.9 for Omada Health based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $33.0, and the most bearish reporting a price target of just $22.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $434.1 million, earnings will come to $23.7 million, and it would be trading on a PE ratio of 106.0x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of $14.42, the analyst price target of $28.9 is 50.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.