Omada Health (OMDA) Q3 2026 earnings review
Omada Health's profit margins jump, but member growth slows again
Omada Health is earning much more on each patient even as its overall member growth cools down. The virtual chronic-care provider grew third-quarter revenue 34% to $91 million, while lower coaching and device costs lifted gross margin by 10 percentage points to 76%. Chief executive Sean Duffy raised the full-year outlook again, though by our math the new plan points to revenue growth slowing to about 19% in the fourth quarter excluding a one-time item from last year.
| Revenue | $91.3M +34% from a year ago |
|---|---|
| GAAP gross margin | 76% up from 66% a year ago |
| Total members | 1.1M +36% from a year ago |
| Full-year profit outlook | Raised $9M Adjusted EBITDA middle of range: $33M |
⚖️ Verdict: 🟢 Bullish
The story got better because rising profit margins and higher revenue per member are proving durable, not because the quarter beat a cautious second-half plan. Longer stays in diabetes and blood pressure programs lifted annual revenue per member to $294, and collecting first-half customer bills turned cash flow strongly positive. One caution: member growth slowed for a third straight quarter, and one partner group still provides almost two-thirds of revenue.
The question now is whether the fourth-quarter slowdown in the outlook is just another cautious target or a real cooling in demand before new 2027 health plan contracts start. Either Omada beats its fourth-quarter plan and steps up in January as new pharmacy channels launch, or slowing member sign-ups pull growth down toward the high teens. First-quarter 2027 member additions and the year-end covered-lives count will settle it.
🐂 Bull Case
Lower Service and Device Costs Lifted Gross Margin
Omada provides virtual care between doctor visits for chronic conditions like diabetes and high blood pressure. “Omada Health delivered its strongest quarter yet, with revenue growing 34% year over year, Total Members increasing 36% and a GAAP gross margin of 76%,” chief executive Sean Duffy said. That gross margin rose nearly 10 percentage points from 66% a year ago, pushing profit well past what the prior full-year plan implied.
- Cost of delivering care services: 14.4% of total revenue, down 4.2 percentage points from a year ago by our math
- Cost of connected health devices: 9.7% of total revenue, down 5.5 percentage points from a year ago by our math
- Hardware gross loss: narrowed to $2.7 million from $5.2 million a year ago
- Adjusted EBITDA (profit before interest, taxes, depreciation, and stock pay): $12.4 million, or 14% of sales, up from $2.4 million a year ago
Both cost lines shrank as a share of sales despite earlier worries about shipping and tariff costs on health devices. Because each member costs less to serve and equip, Q3 Adjusted EBITDA alone topped the $12.3 million middle of the range that the prior outlook left for the entire second half.
What to watch: fourth-quarter gross margin when full-year results arrive. Holding above 70% during the winter shipping season for new employer launches would show these lower device and coaching costs are permanent.
Longer Member Stays Lifted Revenue per Person
A standing concern has been that members who stay past their first year or join lower-priced prevention plans would drag down average revenue per person. Instead, revenue over the past 12 months per member rose 5% from a year ago to $294, stepping up from $284 in the second quarter.
The virtual care group cited “strong enrollment momentum across diabetes and hypertension programs” and noted that average member stay rose 10% from a year ago to roughly two years and four months. That adds about two and a half months of billing per person, so multi-condition care and longer stays are outweighing any price drag from older cohorts.
What to watch: trailing 12-month revenue per member in the fourth quarter. A reading that holds near $294 will confirm that growing diabetes and blood pressure enrollment keeps average member pricing rising.
Customer Collections Turned Cash Flow Positive
In the first half of 2026, uncollected customer bills built up on the balance sheet and left operating cash flow negative at minus $7.8 million even though the business was profitable. In the third quarter, the healthcare provider collected those bills and brought net accounts receivable down by $8.4 million to $48.2 million.
By our math, subtracting the first six months from the nine-month cash flow statement shows Omada generated $15.1 million of operating cash flow and $13.5 million of free cash flow in the third quarter alone. That lifted cash on hand to $243.2 million with no debt, proving the first-half bill build was normal billing timing rather than a collection problem.
What to watch: fourth-quarter accounts receivable and operating cash flow. Another quarter of cash collection in line with profit will show that billing timing stays predictable as the customer base grows.
🐻 Bear Case
Member Growth Slowed for a Third Quarter
Duffy called the third quarter the company's strongest yet as total members — people enrolled in a care program who triggered a bill in the past year — reached 1.1 million. While the total is a record, the pace of member growth has slowed every quarter this year.
- Total member growth from a year ago: 36% in Q3, down from 45% in Q2, 51% in Q1, and 55% in Q4 2025
- Quarterly member additions: moved from 1.091 million in Q2 to roughly 1.1 million in Q3
- Fourth-quarter revenue growth implied by the full-year outlook: 15.8% at the middle of the range by our math, or 18.9% excluding last year's $2 million one-time billing adjustment
Because Omada counts anyone billed in the past 12 months as an active member, the member total rarely drops, so the slowing year-over-year rate is the true read on new sign-ups. The updated full-year outlook also points to fourth-quarter sales of about $87.8 million at the middle of the range, which is below third-quarter sales of $91.3 million.
What to watch: first-quarter 2027 member additions and the annual covered-lives update at year-end. Because new employer health plans start in January, the first quarter will show whether new pharmacy partner channels reverse the three-quarter slowdown.
One Partner Group Still Drives Most Sales
Omada sells its care programs through health plans and pharmacy benefit managers, and one related-party partner group — affiliates of Cigna, which is also a major shareholder — dominates its business. Footnotes in the release show that this single partner group accounted for $57.7 million of the quarter's $91.3 million in total revenue.
By our math, that is 63.2% of third-quarter sales and 60.2% of net accounts receivable ($29.0 million out of $48.2 million), barely changed from roughly 64% of sales in the second quarter. Adding new pharmacy benefit partners earlier this year has not yet reduced this reliance because those new contracts mostly start with the 2027 benefit year.
What to watch: the related-party revenue footnote in the first half of 2027. As the expanded Health Care Services Corporation contract and the Optum Rx channel launch in 2027, that share needs to fall below 60% to ease single-partner risk.
Risks this quarter didn't answer
Four standing questions from prior quarters received no new numbers in the third-quarter earnings release.
- GLP-1 weight-loss program members: withheld since the year-end 2025 figure of 150,000; the quarterly filing or call remarks are needed to see if employer coverage changes slowed sign-ups.
- 2027 selling-season bookings: the release gives no count of newly signed covered lives or prescribing customers ahead of the January benefit launch, which management updates after year-end.
- Long-term target dates: the release does not state whether the September Investor Day attached target years to management's long-term margin goals.
- Chief executive transition: President Wei-Li Shao takes over from Sean Duffy on January 1, 2027, so the first reading under his leadership arrives in early 2027.
💲 Other KPIs
Fell 4.9% from a year ago and 6.7% from the second quarter, even as total sales grew 34.2%. Deferred revenue is cash billed ahead of service delivery; its decline over the past two quarters reflects a shift toward billing customers after members use the programs rather than upfront at enrollment.
Rose 16.4% from a year ago and 5.0% from the second quarter's 63.9 million shares. The virtual care company does not buy back shares; the count is rising from employee stock option exercises ($20.0 million in proceeds over nine months) and stock-based pay, which rose 65.5% from a year ago to $5.9 million.
🔮 Guidance
Raised. The middle of the range moved up $8 million to $345 million, or about 33% growth for the year. By our math, that leaves $87.8 million for the fourth quarter — down from $91.3 million in Q3, and up 15.8% from a year ago (18.9% excluding last year's $2 million one-time billing adjustment). It is the third raise this year: +$9M, +$11M, +$8M.
Raised. The middle of the range rose $9 million to $33 million, about five and a half times last year's $6.5 million. By our math, that leaves $8.9 million for the fourth quarter, or a 10.1% margin, down from $12.4 million (13.6% margin) in Q3. It is the third raise in three quarters, and each raise has grown larger: +$6M, +$7M, +$9M.
❓ Key Questions
How many members are in the GLP-1 weight-loss program?
Management has not updated the 150,000 GLP-1 member count from year-end 2025. Without a current figure or a split across Care Track, FlexCare, and prescribing, investors cannot tell if employer coverage cuts are slowing weight-loss sign-ups.
Why does the outlook imply lower fourth-quarter sales and profit?
By our math, the full-year outlook leaves $87.8 million in sales and $8.9 million in Adjusted EBITDA for Q4, both below Q3 levels. Last year, revenue and profit rose from Q3 to Q4 even without the $2 million billing adjustment.
How many covered lives signed up for the 2027 launch?
Most new employer contracts close in the second half for a January start. Investors need to know how many covered lives and prescribing customers closed through the new Optum Rx and Eli Lilly channels.
What target dates were set at the September Investor Day?
GAAP gross margin hit 76% in Q3, already above the old 70% long-term goal. The release does not disclose the updated multi-year margin targets or timelines presented at the September 10 Investor Day.