Covid-19 concerns have led to wild market gyrations — on Monday, the Dow lost 2000 points before gaining 1100 points Tuesday — and the future is uncertain.
While cognizant of the very real economic and societal toll the disease is causing everywhere, let’s for a moment consider life-after-corona and the future of digital health. And more specifically the future of one digital health company — Omada Health. After Sean Duffy, co-founder and CEO of this San Francisco-based company penned a thoughtful post on digital therapeutics, and following growing buzz over rival Livongo’s reception in the public markets, it seemed a good time as any to pick Duffy’s brain about the future of digital health as well as the company he leads.
With the Rise of AI, What IP Disputes in Healthcare Are Likely to Emerge?
Munck Wilson Mandala Partner Greg Howison shared his perspective on some of the legal ramifications around AI, IP, connected devices and the data they generate, in response to emailed questions.
Here’s a quick refresher on Omada — Founded in 2011, Omada began life as a digital intervention tool aimed at preventing prediabetes patients from becoming fully diabetic. It was one of the early adopters of the philosophy that generating clinical evidence for digital health tools is a must to proving their value. Since then, the company has expanded to be a digital care provider for chronic diseases like Type 2 diabetes, hypertension and behavioral health. Omada has raised nearly $200 million since inception and is apparently valued at $600 million. A spokesman said that the company has more than 1,000 customers, most of whom are employers and payers, and 350,000 enrolled participants using its technology.
And now back to Duffy and our conversation and here’s the biggest takeaway: He has no “news yet” [emphasis added] of an Omada Health IPO though he has prepared for it ever since the company started. Also, analysts have — since the Livongo IPO — peppering the company for requests to cover it, an indication that investment banks paying attention to digital health trends are noticing the company although Omada won’t say which analysts or how many are covering the company currently. But perhaps most interestingly, although IPOs are routinely described as exits, Duffy views this seminal event in the life of a startup as not an end, but the start of a new chapter.
Here’s an edited version of the relevant section of our Q&A:
MedCity News: Livongo has been getting a lot of buzz. Is it just because of the IPO? What’s your take?
A Personalized Approach to Medication Nonadherence
At the Abarca Forward conference earlier this year, George Van Antwerp, managing director at Deloitte, discussed how social determinants of health and a personalized member experience can improve medication adherence and health outcomes.
Duffy: I believe we have gotten a fair amount of buzz too (laughs).
Their spotlight has benefited us. For example, you look at the sell-side research on Livongo, it all basically talks about Livongo and Omada. I would say if anything that inquiries to cover Omada have picked up as Livongo’s been out there.
Some of the buzz is natural. When a company goes public, it’s a very public event. You have more spotlights on you. There are more moments for public communications — earnings calls, you know the works.
It’s more of a response to the growth that I think this market is having generally. Obviously they are in the public eye, so the growth is more publicly visible. It shows that digital health is here to stay and that companies are getting maturity.
It shows that there’s value to be captured in solving the reality of [how to support] type 2 diabetes in new ways. That’s where Omada fits in and [Livongo fits], in just in different ways. And it is like rising tide lifts all boats. We care enormously about our point of view, our approach and believe in it. Both companies will be successful. We are entering a 2-3-winner world … It’s a good thing for the space. I think they are to be applauded for their financial growth and it’s a sign that the world needs solutions in the space and I think that it’s important that many companies take different approaches to solving needs.
MedCity News: What’s the next chapter for Omada?
Duffy: What I will share is the advice that I share with every single entrepreneur.
My belief is that any business should build and aim to build the sort of business that — should you feel is the right decision for the company and your mission — could subsist on the public markets as an independent company.
And the reason for that is, there is an operating hygiene and discipline that you get when you are imagining the world of the rigor that’s going to be required from the public markets. I think if done right, that could be beneficial. If done wrong, it’s very problematic, but if done right, I think it could benefit a business.
In terms of CEO camps, there’s like the Reed Hastings [CEO of Netflix] camp. Reed Hastings thinks it’s extraordinarily valuable to be a public company in the sense access to capital, it’s way easier to do M&A, you get more public attention. Now there’s Michael Dell [CEO of Dell] who’s very publicly in saying that being a public company is the worst thing in the world.
It’s kind of like your own personal philosophy. As an entrepreneur, I tend to be more in the Reed Hastings camp. I think it’s a good thing for the business when done right but it’s a hard thing. It tests everybody’s muscle, but I think it’s a good thing.
The reality that sometimes people forget is — even if let’s say you wanted to deviate and explore an acquisition — if you have the sort of business that could go public, you are a far better acquisition [target] because you are reliable [as a public company]. My view is that almost no matter what you should plan for a world where you can be independent. And that’s been what we have been planning from day one at Omada. Obviously, no news yet, but that’s what we’ll continue to plan for.
MedCity News: Okay, good. I am going to try and read between those lines.
Duffy: (Laughs loudly)
And so the answer to the question posed in the headline if one believes that Duffy is earnet, is “Yes, Omada will go public” assuming the market recovers. But will it stay an independent public company or go public and be an attractive acquisition target — think what Foundation Medicine did (in a totally different market, however) — is a question that cannot be answered today. Perhaps the digital health market needs to mature further for the latter question to be answered.
Meanwhile, let’s hope for an abatement of the pain and suffering brought on by Covid-19 that in turn will help to return to economic stability.
