Health Tech, Startups, Health Services

Omada Health raises $73M Series D led by Wellington Management Company

The round also included participation from previous investors including Cigna Ventures, Andreessen Horowitz, Kaiser Permanente, Sanofi Ventures and Norwest Venture Partners, reportedly values the company at $600 million.

Sean Duffy, CEO of chronic disease management company Omada Health, lays out his vision of the future of the healthcare system with the bold claim that in 20 years the biggest provider in the country will be digital.

The theory stems from the idea that much of the care that is currently provided in person can be more effectively and efficiently delivered through technology.

“The more that I see the ask from our customers and our participants, the more I think about how we can optimize great outcomes, experiences and cost savings, the more the I believe the answer is digital,” Duffy said.

His effort to make that philosophy a reality has gotten a major cash infusion with a new $73 million Series D financing round led by Wellington Management Company that reportedly values the San Francisco company at $600 million.

The round also included participation from previous investors including Cigna Ventures, Andreessen Horowitz, Kaiser Permanente, Sanofi Ventures and Norwest Venture Partners.

While Duffy said part of the capital will go toward accelerating the company’s commercialization efforts across its health plan and employer customers, the majority of the funding will directed at deeping existing customer relationships through expansion into new indications and feature sets.

Likely candidates include efforts targeting more aspects of cardiac or respiratory health, as well as programs that combat major risk factors like smoking.

Omada uses a combination of health coaching, connected devices, peer support and digital interventions as part of its programs, creating a “more holistic” approach that Duffy said differentiates the company from competitors like Livongo, Vida Health and Lark Health.

Omada has raised a total of $200 million since its founding in 2011. From its initial focus in developing a tech-enabled diabetes prevention program, Omada has branched out into diabetes self-management, hypertension and – through the acquisition of Lantern’s assets earlier this year – behavioral health.

The company says it has more than 550 employer clients and works with more than 35 health plans. Omada’s partners include large employers like Lowe’s, health plans like Blue Cross Blue Shield of Minnesota and managed care organizations like Kaiser Permanente.

Even with momentum, significant headwinds exist, including pushback from regulators and traditional healthcare stakeholders. CMS has thus far refused to fund digital diabetes prevention programs and plans can be skeptical of emerging digital health tools.

Duffy pointed  company has received inbound interest from MA plans which were recently given more flexibility in providing supplemental benefits to manage chronically ill patients. He added that the company is in contract with 17 Medicaid organizations and is working on a clinical trial to determine the impact of the company’s platform on the Medicaid population.

He compared the company’s larger strategy to a famous scene in the Hollywood blockbuster Apollo 13 where the group of astronauts are forced to jury-rig a solution to fit a round filter in a square filter box.

In the Omada analogy that means using healthcare’s existing business models and payment schemes to integrate the company’s innovative digital solutions.

For example, the company’s status as health services provider and its associated CPT codes, which allow it to bill payers through the existing medical claims process.

“There’s a system in place designed for a different operating model and as an entrepreneur you can’t pretend to think you can rewrite the system. You have to study it as a student of history and figure out how you fit in,” Duffy said.

Picture: Feodora Chiosea, Getty Images