Key Takeaways:
(P1) Virtual care provider Omada Health saw its revenue jump 42 percent in the first quarter, a sign of the booming demand for services supporting patients on GLP-1 weight-loss drugs.
(P2) "GLP-1s have not just driven demand for medication—they have expanded how many employers think about cardiometabolic care more broadly," Omada Health President Wei-Li Shao said during the company's Q1 earnings call.
(P3) The company reported Q1 revenue of $78 million, up from a year earlier, with membership growing 51% to 1.02 million. Omada also narrowed its net loss to $3 million from $9 million in the same period last year. The growth is fueled by its GLP-1 Care Track, a program providing support to patients using medications like Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy.
(P4) The strong results from Omada highlight a new front in the "GLP-1 wars." While Eli Lilly and Novo Nordisk battle for market share with their blockbuster drugs, a secondary market for support and management services is rapidly emerging, offering a different way to invest in the 1 in 8 Americans now using these treatments.
The competition between Eli Lilly and Novo Nordisk remains the main event in the GLP-1 space. Novo Nordisk gained a first-mover advantage, launching its injectable Wegovy 17 months ahead of Lilly's Zepbound. According to a recent Barron's report, this has put pressure on Lilly's stock, which is down over 10% year-to-date, while the broader State Street Health Care Select Sector SPDR ETF is down 7%.
Novo also beat Lilly to the market with an oral version of its drug. "Feedback on the oral GLP-1 market remains frequent with still many more LLY enthusiasts despite NVO eating its proverbial lunch,” Mizuho healthcare sector specialist Jared Holz said in a note.
Companies like Omada Health are carving out a niche by providing the support services that patients on GLP-1s need. A survey by Omada found that 68% of patients wanted more nutrition guidance and 66% wanted exercise support.
Omada's model is gaining traction. The company recently announced it would be an independent program administrator for Eli Lilly's Employer Connect program, a direct-to-employer channel. This adds to existing partnerships with the nation's three largest pharmacy benefit managers, including Optum Rx and CVS Caremark.
"Employers continue to tell us they want to better support their employees’ health but face real challenges in providing coverage for obesity management medicines like Zepbound®,” said Kevin Hern, Senior Vice President at Lilly Employer.
This strategy of providing a "clinical backbone" for GLP-1 usage is proving to be a powerful growth driver. Omada raised its full-year revenue guidance to a range of $322 million to $330 million, up from a prior estimate of $312 million to $322 million.
The expansion of support services signals a maturing market. For investors, the GLP-1 story is no longer just about the drug manufacturers. The ecosystem of companies providing care, managing costs, and improving outcomes is becoming a significant growth area. Investors will be closely watching the Q2 earnings from Lilly, Novo, and Omada to see how these trends develop.
This article is for informational purposes only and does not constitute investment advice.
