Omada Health Inc(OMDA) - 2025 Q2 - Quarterly Report

Part I - Financial Information Item 1. Financial Statements The unaudited financial statements show a significant cash increase post-IPO, strong revenue growth, and a narrowing net loss, reflecting the conversion of preferred stock Condensed Consolidated Balance Sheets The balance sheet reflects a substantial increase in assets and a shift to positive stockholders' equity, driven by IPO proceeds Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $223,146 | $76,392 | | Total current assets | $271,105 | $113,059 | | Total assets | $302,971 | $150,892 | | Total current liabilities | $57,988 | $53,953 | | Total liabilities | $88,757 | $86,261 | | Total stockholders' equity (deficit) | $214,214 | $(384,403) | Condensed Consolidated Statements of Operations and Comprehensive Loss The company achieved strong revenue growth and a significantly narrowed net loss in Q2 2025, demonstrating improved operational efficiency Statement of Operations Summary (in thousands, except per-share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $61,371 | $41,212 | +49% | $116,334 | $76,307 | +52% | | Gross Profit | $40,306 | $24,834 | +62% | $72,206 | $42,182 | +71% | | Operating Loss | $(4,344) | $(10,037) | +57% | $(12,740) | $(28,030) | +55% | | Net Loss | $(5,311) | $(10,692) | +50% | $(14,759) | $(29,661) | +50% | | Net Loss Per Share | $(0.24) | $(1.40) | +83% | $(0.98) | $(3.92) | +75% | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity became positive due to the IPO proceeds and the conversion of all redeemable convertible preferred stock - The company received net proceeds of $151.6 million from its Initial Public Offering (IPO) in Q2 2025[30] - In connection with the IPO, all outstanding redeemable convertible preferred stock, valued at $452.1 million, was converted into common stock[30][84] Condensed Consolidated Statements of Cash Flows Cash flow from operations improved, and financing activities, driven by IPO proceeds, substantially increased total cash reserves Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,260) | $(28,748) | | Net cash used in investing activities | $(2,499) | $(1,826) | | Net cash provided by (used in) financing activities | $162,513 | $(898) | | Net increase (decrease) in cash | $146,754 | $(31,472) | - The company received $160.5 million in proceeds from its IPO, net of underwriting discounts and commissions, during the first six months of 2025[33][209] Notes to the Condensed Consolidated Financial Statements The notes detail key events including the IPO, a reverse stock split, significant customer concentration, and a subsequent debt repayment - The company completed its IPO on June 9, 2025, raising net proceeds of $151.6 million after deducting underwriting discounts and offering expenses[44] - A one-for-three reverse stock split of the company's common stock was effected on May 27, 2025[43] - Two significant channel partners, both affiliates of The Cigna Group, accounted for 32% and 33% of revenue, respectively, for the three months ended June 30, 2025[49] - As a subsequent event, on July 31, 2025, the company fully repaid its outstanding MidCap Term Facility and MidCap Revolving Facility debt, with principal and accrued interest balances of $31.0 million and $0.4 million, respectively[107] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong revenue and member growth, improved gross margins from efficiency initiatives, and a strengthened liquidity position following the IPO and subsequent debt repayment Overview and Business Model Omada provides virtual care programs for chronic conditions via a B2B2C model, serving over 752,000 members as of June 30, 2025 - Omada offers virtual care programs for cardiometabolic conditions, musculoskeletal (MSK) conditions, and provides support for members taking GLP-1 agonists[110][113] - The company operates on a B2B2C model, selling primarily to employers, health plans, and PBMs[112][121] - Total members enrolled reached over 752,000 as of June 30, 2025[114] Key Factors Affecting Performance Performance hinges on acquiring and retaining customers, expanding program adoption, and driving member enrollment and engagement - Key growth strategies include acquiring new customers and channel partners, retaining existing relationships, and expanding the number of programs used by each customer[126][128][129] - Member enrollment and engagement are crucial for revenue, as most customer fees are based on these metrics, and some contracts include performance guarantees tied to clinical outcomes or cost savings[130][131] Key Metric The primary performance metric, Total Members, grew 52% year-over-year to 752,000 as of June 30, 2025 Total Members Growth | As of | Total Members | | :--- | :--- | | June 30, 2024 | 496,000 | | March 31, 2025 | 679,000 | | June 30, 2025 | 752,000 | Results of Operations Q2 2025 revenue grew 49% YoY to $61.4 million, with gross margin improving to 65.7% due to operational efficiencies Revenue Comparison (in thousands) | Period | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $61,371 | $41,212 | $20,159 | 49% | | Six Months Ended June 30 | $116,334 | $76,307 | $40,027 | 52% | Gross Profit and Gross Margin Comparison | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | | | | Gross Profit (in thousands) | $40,306 | $24,834 | | Gross Margin | 65.7% | 60.3% | | Six Months Ended June 30 | | | | Gross Profit (in thousands) | $72,206 | $42,182 | | Gross Margin | 62.1% | 55.3% | - Gross margin expansion was primarily driven by lower personnel costs per member due to strategic efficiency initiatives and the use of supporting technologies for the Care Team[171][172] Liquidity and Capital Resources The company's liquidity was significantly enhanced by $151.6 million in net IPO proceeds, enabling the full repayment of its $31.0 million debt facility post-quarter - As of June 30, 2025, the company's principal sources of liquidity were cash and cash equivalents of $223.1 million[197] - The company completed its IPO on June 9, 2025, receiving net proceeds of $151.6 million[202] - On July 31, 2025, the company fully repaid its outstanding debt under the MidCap Term Facility and MidCap Revolving Facility, totaling $31.0 million in principal[203] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are identified as interest rate fluctuations affecting its cash and debt, and inflation impacting operating costs - Interest Rate Risk: The company is exposed to interest rate risk from its cash equivalents and its variable-rate financing arrangements, though a hypothetical 10% change was not expected to have a material impact[221] - Inflation Risk: The company believes that inflation is impacting customer spending decisions and could increase its own costs for labor, sales, marketing, and cloud hosting, potentially harming results if not offset by price increases[222] Controls and Procedures Management concluded that disclosure controls were not effective due to material weaknesses in internal control over financial reporting, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to ongoing material weaknesses in internal control over financial reporting[223] - The material weaknesses relate to: (i) inadequate segregation of duties, (ii) insufficient personnel with appropriate technical accounting knowledge, and (iii) inadequate formalized financial close and reporting processes[225] - A remediation plan is underway, which includes hiring additional resources, implementing new controls, and formalizing business processes[226][231] Part II - Other Information Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently party to any material legal proceedings[233] Risk Factors The company faces risks from its history of net losses, customer concentration, competition, regulations, and internal control weaknesses - Financial and Operational Risks: The company has a history of net losses and may not achieve or maintain profitability, with growth dependent on managing expansion effectively and retaining customers[238][240] - Customer Concentration Risk: A substantial portion of sales comes from or through a limited number of customers and channel partners, with affiliates of The Cigna Group being particularly significant[260] - Regulatory and Compliance Risks: The business is subject to extensive healthcare regulations, including HIPAA, state privacy laws, consumer protection laws, and state laws prohibiting the corporate practice of physical therapy[345][347][361] - Internal Control Risk: The company has identified and is remediating material weaknesses in its internal control over financial reporting related to segregation of duties, technical expertise, and formalized processes[237][405][406] Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of its $151.6 million in net IPO proceeds, a portion of which was used to repay outstanding debt - The company completed its IPO on June 9, 2025, receiving net proceeds of approximately $151.6 million after deducting underwriting discounts and offering expenses[440] - A portion of the net proceeds from the IPO was used to repay outstanding borrowings under the MidCap Credit Agreement[442] Defaults Upon Senior Securities The company reports no defaults upon senior securities - Not Applicable[444] Mine Safety Disclosures This item is not applicable to the company's business - Not Applicable[445] Other Information No director or officer trading plans were adopted, modified, or terminated during the quarter - No director or officer trading plans under Rule 10b5-1 were adopted, modified, or terminated during the quarter[446] Exhibits This section provides an index of exhibits filed with the report, including governance documents and required officer certifications - The report includes an index of all exhibits filed, such as corporate governance documents, material agreements, and required CEO/CFO certifications[448][449][450]