Omada Health, Which Pioneered Digital Therapeutics, Raises $48 Million In Series C Round

Omada Health, which provides a digital program based on the landmark NIH diabetes prevention study, raised $48 million, bringing total funding to $77.5 million. The series C round was led by Norwest Venture Partners, and includes returning investors Andreessen Horowitz and US Venture Partners, among others. Accelerator-turned venture fund Rock Health which nurtured Omada in its first class of digital health startups, also reinvested.

In a significant vote of confidence, two of Omada’s customers, Humana and Providence Health & Services also joined the round. The two health plans started offering Omada’s Prevent program less than a year ago to their employees and members. Those who enrolled registered a weight loss of 4% to 6%. “It’s one if the key reasons that sparked their interest; they were thrilled with the results,” says Omada’s co-founder and CEO Sean Duffy. (Kaiser Permanente is another customer/investor.)

 Participants who are at risk of developing diabetes enroll in a 16-week program that focuses on healthy eating and exercise. They are placed in groups of 10 to 12, based on age, body mass index (BMI) and residence, and work with a “health coach” who tracks their progress and lends extra support. After completing Prevent, participants can continue to receive support.

 According to the Centers for Disease Control and Prevention, one in three adults in the U.S. has higher than normal blood sugar, raising the risk of diabetes. This can be reversed. Data from the 2002 NIH study showed that diabetes can be prevented with lifestyle changes—a healthy diet and exercising.

Omada has also buttressed its program with its own clinical studies—something that more digital health startups should do. In April, it published the results of a two-year study (single arm) in the Journal of Internet Medical Research. Participants registered a 4.7% average weight loss after one year, and maintained a 4.2% average weight loss after two years.

Those results enable Omada to confidently tie compensation to outcomes—another thing that few digital health startups do (one exception is data warehousing and analytics firm Health Catalyst). More than half of its fees are based on milestones, namely weight loss. “We hold our feet to the fire,” says Duffy.

 So far 20,000 people from 30 companies, such as Costco and Stanford Health Care, are enrolled in Prevent. One challenge is getting people to sign up through screenings and awareness campaigns.

 Duffy plans to use the funds to further expand Prevent, which addresses other chronic diseases, since obesity can also lead to hypertension and heart disease.