Memorandum

Omada raises $48 million in Series C funding led by Northwest Venture Partners – September 16, 2015

Omada announced a $48 million round of Series C funding today led by Northwest Venture Partners. In a clear vote of confidence, two Omada customers have also invested: juggernaut payer Humana and Providence Health & Services, a large non-profit health system. Highly respected VC Andreessen Horowitz returned for the round following its lead investment in Omada’s $23 million Series B round in April 2014. The funding will help scale Prevent, which Omada is now more broadly calling a “digitally-based lifestyle intervention that helps individuals reduce their risk for obesity-related chronic diseases such as diabetes and heart disease.” Since its founding, the company has enrolled more than 20,000 Prevent participants, is on track to add another 10,000 before the end of the year, and plans to be in the “hundreds of thousands” by the end of 2016. Notably, Prevent is coming to Medicaid and safety net populations “soon.” The digital health company has built encouraging momentum in the past year: (i) the staff has grown from 75 to 185 employees; (ii) Fast Company named it one of the 50 most innovative companies in the world; (iii) Prevent became one of three digital programs to receive pending recognition from the CDC; and (iv) Omada published peer-reviewed two-year results in April, a first for a digital health company with this kind of program. While some might criticize the efficacy of Omada’s digital diabetes prevention program (~4-6% weight loss), it’s hard to argue with the company’s pay-for-outcomes pricing model – Omada is on the hook to show results or it doesn’t get paid! And certainly, payers like Humana and self-insured employers (Lowe’s, Costco, Iron Mountain) are seeing value here. Diabetes prevention is unquestionably tough from a cost-effectiveness perspective, and we like the way Omada is trying to scale clinically proven (and historically expensive) approaches. Prevent won’t be for everyone, but no drug or device ever is, particularly for the unfathomably vast population of people at risk for obesity-related chronic conditions. We love this company’s leadership (it’s an IDEO spin out) – Sean Duffy is a drop out of Harvard Medical School and Harvard Business School and Omada was one of the very first healthcare companies ever spun out by IDEO (now there are over a dozen) – Sean went for a summer position several years ago, hired key IDEO employees (blessed by management) and never looked back!