Omada Health is applying technology to disease prevention and healthcare cost-cutting…starting with type 2 diabetes

A Q&A with Omada Health co-founder and CEO Sean Duffy. The San Francisco-based company raised $4.7 million in Series A funding in late March. The round was led by U.S. Venture Partners, with participation from The Vertical Group, Founder Collective, NEA, TriplePoint Capital, Kapor Capital, and Angels. Omada previously raised $800K in Seed funding.

SUB: Please describe Omada Health and your value proposition.       

Duffy: Omada Health builds evidence-based programs for disease prevention and health promotion. A majority of chronic diseases are proven to be preventable through lifestyle change, and given the astronomical costs of these diseases, investing in prevention in a strategic manner can provide significant near-term savings. Our first product, Prevent, is a 16-week program for people with prediabetes to help them lose weight and reduce their risk of type 2 diabetes.

SUB: Who are your target markets and users?

Duffy: Our target user is anyone who finds out that they are at risk for type 2 diabetes and would like to take the steps needed to reduce the chance of progressing to the disease. Our target customer, however, is any entity that carries the costs of diabetes. In the U.S., this includes self-insured employers, risk-bearing providers, and health plans. For these entities, investing in diabetes prevention yields significant near-term savings.

SUB: Who do you consider to be your competition?

Duffy: In health care, some of your ‘competitors’ can actually be channel partners, so it’s a bit complicated, but generally, we compete against wellness providers, disease management companies, and weight loss companies.

SUB: What differentiates Omada Health from the competition?

Duffy: We’re the only online program that matches individuals into small groups and kicks them off together on a timeline. We’ve found this approach to be quite effective, and we incorporate very neat technology to pull it off, including a bathroom scale with a GSM cellular chip that automatically transmits the user’s weight to our systems.

SUB: When was the company founded and what were the first steps you took in establishing it?

Duffy: We were founded in May, 2011. My colleague Adrian James and I were exploring entrepreneurial opportunities while inside a design consultancy. Once we felt confident that we wanted to build something to help people with prediabetes, we set out on a trip to interview as many people with the condition as possible. This helped us solidify our confidence in the product-user fit, and once we did a little diligence on the B2B health care market for these sorts of products, we felt that there was a business to be built.

SUB: What was the inspiration behind the idea for Omada Health? Was there an ‘aha’ moment, or was the idea more gradual in developing?

Duffy: The ‘aha’ moment for me came from learning that type 2 diabetes is absolutely preventable, and that the evidence that demonstrates this hadn’t really been brought to the web.

SUB: How did you come up with the name? What is the story behind it?

Duffy: Omada means ‘team’ in Greek. Given that our programs are group-based, we felt that this was a perfect fit. And it rung a lot better than other alternatives we were considering, like Pinwheel Health!

SUB: What have the most significant obstacles been so far to building the company? 

Duffy: Building any company is enormously hard, with all sorts of ups and downs. But I’d say the most significant obstacle for us was really growing to understand the mechanics of our health system. At first it felt like we were swimming in acronym soup, surrounded by TPAs, PBMs, ASOs, HRAs, and HSAs. Our health system is enormously complicated, and we’re still learning a lot every day.

SUB: You just raised $4.7 million in Series A funding. What are your plans for the funds?

Duffy: The bulk of the funds will go directly to into commercializing Prevent. 

SUB: Why was this a particularly good time to raise outside funding?

Duffy: As we all know, our health care system is undergoing an enormous transformation. Any time segments of economies shift, it opens up opportunities, and my sense is that investors in digital health are recognizing this and moving to take advantage of these trends.

SUB: How does the company generate revenue or plan to generate revenue?

Duffy: We have a performance-based pricing model for self-insured employers, risk-bearing providers, or plans to bring their employees, patients, or members through our program. The cost savings for avoiding the progression from prediabetes to type 2 diabetes is quite significant, so working with us presents a good opportunity to promote health and reduce medical spend.

SUB: What are your goals for Omada Health over the next year or so?

Duffy: My primary goal is to hire an outstanding commercial team and continue to beef up our already great product team. We’re just now beginning our first major deployments, and that’s extremely exciting for us.

Omada Health – www.omadahealth.com