Good day, and thank you for standing by. Welcome to Omada Health's third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone, and then you will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Craig Gracey, chief accounting officer and investor relations. Please go ahead.

Thank you. Good afternoon. Welcome to AMADA Health's third quarter 2026 earnings conference call. Joining me today are Sean Duffy, our co-founder and CEO, Wei-Li Shao, our president, and Steve Cook, our CFO. Before we begin, I'd like to note that we will be discussing non-GAAP financial measures that we consider helpful in evaluating AMADA's performance. You can find details on how these relate to our GAAP measures along with the reconciliations in the press release that is available on our website. We will also make forward-looking statements based on our current expectations and assumptions, which are subject to risk and uncertainties, including factors listed in our press release and in the risk factors found in our filings with the SEC. Actual results could differ materially, and we assume no obligation to update these forward-looking statements. With that, I'll turn the call over to Sean.

Thank you, Craig. Good afternoon, everyone, and thank you for joining us. We just reported our strongest quarter ever, and we are raising our full-year 2026 financial outlook. Q3 was another solid quarter of execution. We delivered our highest quarterly revenue, gross margin progression, and our most profitable quarter to date. Revenue grew 34% year-over-year to $91 million, and gross margin was 76% on a gap basis and 78% on a non-gap basis, up from 66% and 68% a year ago. We also delivered quarterly record net income of nearly $7 million and adjusted EBITDA of $12 million. Our diabetes and hypertension programs had another productive quarter, leading all programs in year-over-year growth. Strong enrollments early in the quarter and a mixed shift toward our higher-valued programs helped revenue exceed our expectations. The cardiometabolic platform we have built continues to deliver for our members and for our customers. I also want to spend a moment to share a member quote that highlights what matters most to us here at Omada, and that's the people we serve. I'm so excited. I have changed what I am eating and the way I'm exercising differently. My new labs today are improved and my A1c is 6.6% down from 7.3% three months ago. My cholesterol also improved. I have more information about diabetes and how to monitor and manage it. I'm confident using the tools, including taking my blood glucose, and I have really benefited emotionally from being able to ask questions of my health coach and the diabetes coach. Stories like that are why we exist. As we talk about our strong financial performance, I want to remind everybody that behind those numbers is someone working to live healthier, avoid disease progression, and get the support they need between visits with their physician. That's the mission that continues to drive us. Lastly, as we announced last quarter, on January 1, 2027, Wei-Li Shao will become OMADA's Chief Executive Officer, and I will become Executive Chair. I look forward to remaining closely involved, focused on our long-term mission, key partnerships, and strategic initiatives. Fifteen years ago, I started OMADA with a simple belief that the space between doctor's visits, where health is won or lost, deserved real care. When I look at what this team has built, I am humbled. My commitment to this mission remains the same, even with my evolving position in this company. I have extraordinary confidence in Wei-Li and this team. The foundation is strong, and I'm excited to keep building on it together. With that, I'll hand things over to Wei-Li.

Thanks, Sean. And hello, everyone. Sean, thank you for seven years of partnership, for the foundation you built, and for continuing to lead Omada alongside me as executive chair. I am proud of what we've accomplished this quarter. We ended Q3 with over 1.1 million total members, up 36% year-over-year, reflecting continued demand for our cardiometabolic platform. Our diabetes and hypertension programs continued to lead our growth, members stayed with us longer, and our ability to provide personalized care at scale reached a new level of efficiency. As we shared last quarter, we deepened our work with Healthcare Services Corporation, or HCSC, one of the largest blues plans in the country, through an agreement to extend our prevention and hypertension programs into its fully insured book in three additional states, which is expected to potentially reach an additional estimated $1.5 In the fully insured business, the program is embedded at the benefit level, so clinically eligible numbers can enroll directly once it launches without a downstream employer sales cycle. On the PBM side, we have commercial relationships with the three largest PBMs in the country, which together processed an estimated 80% of prescription claims in 2025. Our prescribing program is in the market now with Optum. These relationships give us the broadest distribution in OMADIS history for our programs. Our work across a diverse set of partners and channels also gives us insight into a range of employer needs and priorities. I want to share what we are seeing in the marketplace and how it is shaping our outlook. The GLP-1 market remains dynamic. A number of employers have been spending more time making GLP-1 coverage and obesity care decisions, given the size of the commitment, the range of solutions, and the importance of getting these decisions right. Healthcare costs are also rising, creating pressure across health plans, PBMs, and employers. The importance of outcomes and ROI is top of mind for buyers, even more so than before. Omada has a history and reputation of publishing peer-reviewed research on both our outcomes and ROI. This kind of evidence has always been central to Omada's approach, and we believe it has been important in this year's selling cycle. We observed both of these factors, extending the selling season deeper into Q4. Covered Lives are the foundation, and enrollment is how they become members. Two things shaped enrollment and growth this quarter. The first and most important is the strength of our cardiometabolic core. Our diabetes and hypertension programs, along with the broader suite around them, delivered strong results again in Q3. The mixed shift toward these programs contributed to our revenue growth. These are programs where members have tended to stay engaged with us longer because of the chronic nature of the disease, which supports higher lifetime value for OMADA. The second is the pace of enrollment. Strong enrollments in July and August contributed to our record Q3 revenue. As we have discussed, new enrollments have typically been strongest in the first quarter when employers launch new benefits and moderate it as the year progresses. We expect new enrollments to decline sequentially in Q4, consistent with that pattern. The comparison with last year is different. In H2 2025, we added a significant number of new customers and members as part of a new GLP-1 offering from an existing channel partner that included our prevention and weight health program, which supported unusually strong enrollments during a period of time that does not reflect our typical seasonal pattern. Member engagement is where the durability of our model shows up. As we shared at Investor Day in September, member retention has improved to 58%, up from 43% in Q4 of 2024. That improvement is largely driven by our mix toward diabetes and hypertension, where members have tended to stay with us longer, as well as continued enhancements to our member experience and app. At the end of Q3, average tenure in our program reached a record of roughly two years and four months, up 10% year-over-year and over 30% compared with three years ago. That represents an increase of roughly two and a half months compared with a year ago. Longer engagement gives members time to turn early progress into lasting improvements in their health. We provide more intensive clinical care early on to help members establish strong habits and continue to adapt their care as their habits take hold. When members can sustain their progress with less frequent and less intensive support, our cost to serve declines and margins improve while billing remains tied to the care we continue to provide. We also have new evidence of the clinical value of our care. Recently, published peer-reviewed research found that members in our GLP-1 care track lost nearly twice as much weight as GLP-1 users in non-OMADA care at 12 weeks, a 6% average weight loss compared with 3.3%, with about twice the reduction in body fat and greater preservation of muscle mass on average. These results speak to the value of pairing medication with the type of care our GLP-1 care track provides. Delivering these outcomes consistently requires continued development of our care model and the technology that supports it. We previously said that 2026 was shaping up to be what we feel is our most innovative year. Many of this year's enhancements launched in Q3. We improved onboarding to help members start care sooner with goals tailored to their circumstances. As care continues, personalized reminders and the recommendations help them get timely guidance and stay on track. We also strengthen nutrition support and meal reviews that combine human and AI feedback, helping members build healthier eating habits that can support lasting improvements in their health. Our work in cholesterol management, GLP-1 prescribing, and FlexCare are aimed at further deepening engagement in 2027. Our focus is on bringing personalized care As we shared at Investor Day, automation and AI have given our care teams more capacity to apply their clinical expertise and tailor care to each member's needs. That has helped to support more members per care team while continuing to deliver even more personalized care. Our cost of care, as measured by non-GAAP cost of revenue per total number on a trailing 12-month basis, reached an all-time low of $81 in Q3, down from $85 in Q2 and $94 in Q3 2025. This quarter shows what we have built at Omada. Our commercial relationships give us broad reach, and our cardiometabolic programs have driven growth. Our program mix has supported longer member tenure, and our cost to serve has decreased, all of which contributed to another solid quarter's performance. Our platform gives customers a choice of programs to meet the needs of their covered populations. Recently published research suggests that roughly 188 million insured American adults have a condition we treat, and one-third of our customers already work with us across more than one condition. This year, we added prescribing offering and cholesterol as a condition area, further broadening the options available to our customers. This quarter also strengthened our financial position. We have been profitable for two straight quarters. We have had a strong balance sheet and no debt. And that gives us real flexibility in how we deploy capital. We plan to continue to invest in our care model, technology, and commercial reach, while remaining open to other opportunities that strengthen the business. As I step into the CEO role, my focus is simple. Execute with discipline, stay close to our partners and members, accelerate innovation, and keep pushing on our mission to bend the curve of chronic disease. Sean, thank you again, and to our teams across Omada and our channel partners, thank you for everything you do. Together, we are making a difference in people's lives. With that, I'll turn it over to Steve to discuss Q3 financial performance in more detail.

Thank you, Wei-Li. Hello, everyone. I'll start with revenue. Q3 revenue reached $91 million, up 34% year-over-year and approximately 4% sequentially from $88 million in Q2. Revenue exceeded our expectations for three reasons. First, strong enrollments early in the quarter meant those new members contributed revenue for more of the period. Second, the mix shifted towards programs that carry higher value. And third, engagement increased across our member base. Together, these drove the quarter's outperformance and support our higher full-year revenue outlook. As we look to Q4, we expect new enrollments to moderate sequentially, consistent with historic seasonality. On a trailing 12-month basis, revenue per total member was $294 in Q3, compared with $280 in Q3 of last year and $284 in Q2. That reflects the shift toward our higher-priced diabetes and hypertension programs, partially offset by lower billing frequency among longer tenured members. This measure can move modestly up or down in any given quarter. We entered approximately 43,000 net new members in Q3, bringing our total member base to a record 1,134,000, up 36% year-over-year. To support continued growth, our commercial teams are focused on building our pipeline and closing new business for the next benefit year as the selling season continues. Turning to profitability, GAAP gross margin for Q3 was 76%, up from 66% in Q3 of last year. On a non-GAAP basis, gross margin was 78%, up from 68%. Gross margin expansion this quarter reflects a lower cost to serve our members, driven by lower care team delivery costs and the maturation of our longer-tenured cohorts. It also reflects seasonality, since enrollment volume drives care team and device costs, and the first quarter has historically been when those costs are highest. Next, we'll cover operating expenses. On a GAAP basis, operating expenses were 71% of revenue compared with 70% a year ago. On a non-GAAP basis, they were 64% compared with 65%. The improvement in non-GAAP operating expenses reflects the drivers we have consistently pointed to, including scaling through channel partnerships, getting more from our existing sales force, tight spending discipline across the rest of our business, and AI. The timing of headcount additions in Q3 benefited the Corps' expenses. We expect R&D expenses to increase in Q4 as we add staff to support development of our platform. That brings us to the bottom line. Gap年 income for Q3 was nearly $7 million compared with a gap net loss of approximately $3 million in Q3 of last year, an improvement of approximately $10 million. Adjusted EBITDA for Q3 was $12 million, an improvement of approximately $10 million year-over-year, and a quarterly record for OMADA, representing an adjusted EBITDA margin of approximately 14%. These results reflect revenue growth and a lower cost to serve, as well as seasonal cost and the timing of hiring I just discussed. Our strength and profitability profile has continued to contribute to a strong balance sheet. We ended Q3 with cash and cash equivalents of approximately $243 million and continue to carry no debt. Now let me turn to our full year outlook. Our Q3 performance and our visibility into the fourth quarter give us the confidence to raise our full year 2026 revenue and adjusted EBITDA outlook. We expect full-year revenue to range from $344 million to $346 million, up from our prior guidance of $334 million to $340 million. At the midpoint, this represents approximately 33% revenue growth compared with 2025. We are also raising full-year adjusted EBITDA guidance to $32 million to $34 million, up from prior guidance of $21 million to $27 million. At the midpoint, this represents an improvement of approximately $27 million compared with 2025, or roughly 5.5 times our 2025 adjusted EBITDA. A few factors shape our expectations for the fourth quarter. Our outlook anticipates Q4 revenue below our Q3 level, reflecting the lower new enrollment and engagement activity we have historically seen during the holidays. We expect revenue to come primarily from continued engagement among existing members. On adjusted EBITDA, our higher outlook reflects our performance year to date and the operating leverage in our model. We expect fourth quarter adjusted EBITDA to moderate from Q3 as we add R&D headcount to support development of our platform and RAMP care team staffing for the 2027 benefit launch. In summary, Q3 is a strong quarter for Omada with 34% revenue growth, our highest gross margins, and our most profitable quarter to date. We are raising our full year outlook on the strength of those results. With that, we'll open the call for questions.

Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ryan McDonald from Needham and Company. Ryan, your line is now open.

Hi, thanks for taking my questions and congrats on a great quarter. Wei-Li, maybe to start with you and Sean, sorry, both of you. You talked about sort of selling season activity about GLP-1 coverage decisions top of mind with with buyers right now, but that's sort of maybe pushing or extending the selling season deeper into fourth quarter relative to last year. Can you just talk about, as you think about sort of coverage adoption or adding GLP-1 coverage versus discontinuing, is there one scenario versus the other which is more favorable to Omada, and sort of where are you within those discussions with your clients? Thanks.

Hi, Ryan. Great to hear your voice. Thanks for the question. Regarding the GLP-1 marketplace, you're correct. The market still for GLP-1s is dynamic, and certainly our employer clients are taking the time they need to make those particular decisions. We've seen, per your question, you know, some reports come out regarding GLP-1 coverage in the employer marketplace seemingly to decrease heading into 2027. It's hard to think about or hard to characterize exactly the quantitative degree that that's happening. So I guess we'll have to see after the turn of the new year exactly where the numbers actually fall, but it seems to be happening. Per your question in terms of favorability for Almada, the way I would put it is that we've carefully constructed our go-to-market or GLP-1 product strategy to actually straddle both sides of the coverage decision, meaning If employers are covering GLP-1s, we have a suite of prescribing of lifestyle support GLP-1 care track solutions that are covered in a number of PBMs and health plans. And so we can serve those employer clients that way. For the employers that are actually deciding not to cover GLP-1s, you know, a couple years ago, we thought about this particular scenario and anticipated that this could actually be the case. And we concepted at that time that our GLP-1 FlexCare products, which we actually announced and launched earlier this year in March. And that particular program is interesting in the sense that it provides the same level of prescribing, clinical expertise, services as well as lifestyle support for GLP-1 users. But in an environment where the employer is not covering the GLP-1, the employer is realizing that regardless of coverage decision, their employees are increasingly seeking GLP-1s from elsewhere. And so that's interesting fact point number one. Interesting fact point number two is the reaction as we are educating and selling the GLP-1 FlexCare product into the marketplace, employers are understanding potential upside for ROI and merits to the program for a couple of reasons. The first is that you get amplified weight loss. The second is that weight loss is of higher quality, meaning more fat loss and preservation of lean mass. The third is greater adherence on GLP-1s for the patients or employees that should be on it. And then the fourth, of course, is that if you stop a GLP-1, literally a little to no weight regain as proven by our data at 12 months. And they're looking at that data and saying that, gosh, we're not covering GLP-1s, but might there be a potential ROI providing OMADA as clinical services and support for our employees on GLP-1s to get that ROI? And that interest seems to be growing. and so even though it's been a partial selling year for us as an example and proof point, we closed a relatively large financial institution mid-year and they've actually decided to accelerate and launch in-year and the feedback we're getting from members is trending positive. So we're really looking forward to 2027 in the sense that being able to service and help create value for our employers that are covering and not covering. And we look forward to a full selling year cycle for our GLP-1 FlexCare program.

I appreciate all the comment on there, Wei-Li. And then maybe just as a follow-up, Steve, can you just clarify the comment on total member count for fourth quarter implied in the guidance? I think early on, I think Wei-Li might have said in his prepared remarks, declines. You said moderation. Can you just flush that out for us a bit? Thanks.

Yeah, that's exactly right, Ryan. You know, compared to last year, we did see acceleration in the back half of last year as we were launching our new GLP-1 product with one of our new channel partners. 2026 is more typical of our normal seasonality, where we see a big influx of members in the first quarter, and then that starts to moderate as you go throughout the year. The current implication is that we will step down slightly going into the fourth quarter on a total member basis. and we're really focused on just execution, building a pipeline with our employer clients, our health plan and PBM partners to make sure that we get off to a strong start going into 2027. Awesome.

Appreciate the color. Thanks.

Thank you. Our next question comes from the line of Saket Kalia from Barclays. Your line is now open.

Hi. You have Carly on for Saket. Thanks for taking our question here. Steve, if we think about the growth drivers in 2027 and beyond in the context of your 20% plus growth target, there's a ton to talk about with the white space available in the market, a growing amount of platform, greater adoption of higher price programs, and more commercial partnerships. So can you break down that 20% plus growth for us a bit? How much could come from member growth versus ARPU growth, and what are some of the puts and takes that could make that growth formula look different year to year as different products and commercial partnerships ramp?

Yeah, Carly, thank you for the question. You know, where we spent a lot of time, namely at Investor Day, was really focusing across the three main growth levers with our business. Continue to expand covered lives, continue to drive improved enrollment rate, as well as continuing to focus on engagement and making sure that folks are staying in program longer. So as it pertains of the distribution of the three, we're going to be focusing next year on driving all three. We really mentioned up top, you know, an addition of 1.5 million cover lives with HCSC. And then we have a lot of investment bets going into next year to continue to drive improved enrollment rate efficacy across our email channel, as well as continue to leverage direct marketing. That's a channel that's continued to drive incremental enrollments for us, where we've just, we've done over 100 plus email, 100 plus million emails over the last 12 months. So we continue to A-B test with that medium, getting more folks in the door on our Covered Lives basis and enrolling more folks on aggregate as we go quarter by quarter. And Wei-Li also mentioned up top in the prepared remarks, now we're seeing folks on average in our programs for two years and four months. That's up 10% on a year-over-year basis. That's a result of continuing to drive multi-product adoption, having more folks who are diabetic and hypertensive in our programs. Those are some of our highest-priced products. They have the strongest LTV as folks stay in program longer. And as we go into next year, we're going to continue to focus on pushing our prescribing capabilities. That's going to be our highest-priced product. And as you see more of those members start to roll through our base, you're going to see an increase in expectation in overall trailing 12-month revenue per member. So it's really the core drivers that we laid out in the investor day that we're going to be focused on next year. Thank you.

Very helpful. Thank you.

Thank you. Our next question comes from the line of David Larson from BTIG. David, your line is now open.

Hey, congratulations on the great quarter. Can you maybe just talk a little bit about the MSK business, behavioral health, and women's health? Obviously, there's a lot of demand for obesity health and GLP-1s, but those seem to be like very important markets. So thanks a lot.

Yeah. Hi, David. Wei-Li here. Thanks for the question. As it relates to each of those three different categories, they are very, very different. And let me provide a little bit of context around some of them. Regarding MSK, it's true we've been in the MSK business for several years now. It makes up a relatively small proportion of our revenue by percent, but it's a strategically important asset for our cardiometabolic strategy. What do I mean by that? Our strategy is less about standalone MSK and more about how do we continuously serve with a greater experience and greater outcomes in ROI for our cardiometabolic segment. We know, for example, that people with diabetes, about 40% of them have a bonafide MSK condition, which may not be surprising when we think about what's going on metabolically. Oftentimes, people with diabetes are overweight or obese, and as a result, there's a lot of weight on hips, backs, and knees, and that creates an MSK condition. And that's important because if there's reduced mobility or reduced ability to exercise, it's one lever that is taken away from the patient or the member to improve their diabetes condition. And so our strategy really with MSK is to fully integrate that with our cardiometabolic platform for the aforementioned reasons. And we're going to continue to invest in integration. We have some new things coming next year that we hope to talk to you about after the turn of the year. but rest assured that that is one particular area that were main continued investment.

In terms of the other areas like menopause, this one's kind of interesting in terms of women's health.

Obviously, when you take a look at the GLP-1 utilization, the demographics just writ large across the United States, the majority of the users are women that are falling into a particular age group that is perimenopausal. We're acutely aware of that. We actually have outreach campaigns specifically towards the perimenopausal, menopausal segment. specifically because whether they're on GLP-1s or not, there's a lot of basically biochemical changes going on and hormonal changes in the body that people are wanting to learn about. And so that's been resonating strongly with our customers. And then we also, as part of that, have women's health or menopause learning tracks to help the female population within our GLP-1 and non-GLP-1 programs. So suffice it to say is that when we see these things overlap significantly with our cardiometabolic segment as well as our strategy, we fold them in as necessary to best serve the outcomes in ROI for our members and our clients.

Thanks very much. Great quarter. Congratulations.

Thank you. Our next question comes from the line of Elizabeth Anderson from Evercore ISI. Elizabeth, your line is now open.

Hey guys, this is Ayush on for Elizabeth. Thanks for taking my question and congrats on the quarter. You called out in your prepared remarks that there was a strong July and August enrollment and you saw improvements to onboarding launch during Q3. Just curious, did faster onboarding materially shorten the time from enrollment to the first billing event and maybe contribute to any of the revenue outperformance this quarter? Or was the benefit primarily more people enrolling?

No, that's exactly right. You know, we made a tactical shift earlier in the quarter to be able to enroll folks instead of in weekly groupables as they sign up. And as a result of that, we just saw immediate more pickup and conversion to our enrollment rate improvements. And so that translated into us just realizing immediate conversions, especially earlier in the quarter, and that's what partially led to the revenue beat in quarter.

Got it. Thank you.

Thank you. Our next question comes from the line of Sean Dodge from BMO Capital Markets. Sean, your line is now open.

Yeah, thanks. Maybe just going back to the selling season and just thinking about across like all of Omada, so inclusive of the GLP-1 and your other offerings, I know you have a number of your larger kind of initial PVM relationships that are still continuing to mature, but just any updates you can share on like how the selling season overall has progressed or is progressing, just any preliminary dimensioning you can do on how much you'd expect covered lives to expand heading into next year?

Yeah, hi, Sean. Wei-Li here. Thanks for the question. Yeah, a couple of things I'll comment on covered live as we are finishing out the closing season. But before that, let me provide a little bit of reframing in context. As mentioned in the prepared remarks, you know, we're observing and keeping a close eye to a couple of things in the external market. One is the dynamism in the GLP-1 marketplace and the Financial decisions that employer clients have to make. And the second one, of course, is the overall rate of rising health care costs and how health plan buyers or health services buyers are deliberating a little bit more. The reason that's important is because both those factors are extending the selling season later in Q4. This is something that we typically don't see, which is why we brought that up. But it's important to note because it's hard to quantify or characterize exactly where we're ending the year at this point in time because we still have a significant amount of pipe yet to close because of the extension of the buying, selling, and closing season. So I can't characterize the actual amount. Obviously, as we turn over past the new year, we'll come back to this and create a little bit more color on that. But I understand and appreciate the question in terms of what it means for 2027. So maybe in lieu of providing a quantitative answer, I can provide maybe some color on exactly what's happening Q3 and how Q4 is shaping up as it relates to selling season or a pipeline. We headed into the selling season, or actually the selling year this year, with two primary objectives aligned to our strategy. So not surprisingly, number one is multi-condition sales, and number two is diversifying our channel mix strategy. Thank you for joining us. because people with cardiometabolic disease oftentimes suffer from two or more conditions. And so we're just able to provide a better seamless care experience. On the channel mix side of things, if you look at kind of our pipeline in Q3 and obviously our later stage deals in Q4 that we're still actioning against, It's a pretty even distribution. And again, that reflects CVS and Optum coming up a little bit more than in previous periods, as well as our pre-existing channels that we're still selling into. So pretty even distribution across the channels, across our pipe. and really both our performances on that channel mix as well as multi-condition is reflection of the intention as well as the execution by the sales force. So more to come. Stay tuned on how the pipe shapes up in the finality as we turn the new year.

Okay. That's great. Thanks for all the color there. And then you highlighted again the win into HCSC's fully insured book where your offerings are embedded at the benefit level. I know it's still early there, but How much do you think being embedded like that can push your enrollment or conversion levels higher? And are they the only pair you have this type of relationship with at this point? And just kind of what's the pipeline like for adding more of those?

Yeah, I think it'll help to maybe characterize the dynamics of the deal in terms of how we're going in market. I think maybe that'll help answer the question as it relates to 2027 and what we can expect. So yeah, so basically roughly about 1.5 million lives expansion into three additional states across our hypertension and prevention programs. We'll begin going live directly in January 1, which means that we'll start working in partnership with HCSC to outreach directly to the members and the covered lives within that 1.5 million. Matt, we won't do it all at once. It'll phase throughout the entire year, so we don't expect all the lives to come into the marketplace immediately. They'll be, again, phased throughout the year, and we should yield results from that next year, and we look forward to reporting on that. In terms of other lines of business, your question of do we have other kind of direct-to-member-like arrangements like fully insured books of business elsewhere? The answer is yes. We have those across some other fairly large-scale partners. So it's a motion that we're familiar with and that we have had success with in executing and can certainly follow up with more details if you like, but we do have those in other books of business as well.

Okay. No, that's great. Thanks again.

Thank you. Our next question comes from the line of John Penny from Canaccord Genuity. John, your line is now open.

Hi, John Penny. I'm for Richard Close. Thanks for the questions and congrats on the quarter. I guess I just want to dig in more on the better in-year enrollments that you had here. You said it benefited a bit from, you know, real-time enrollment rather than this weekly batching. But I guess, is there anything different that you've done this year as far as outreach to the Covered Lives base that has helped with that mid-year? Anything that you've done a little bit better than last year that led to these better results in enrollment?

Yeah, hi, John. Wei-Li here. Thanks for the question regarding enrollment performance. Regarding, like, what are we doing differently? Are we doing something differently? Maybe let me share with you a little bit of historical context in terms of year-to-date performance. We've seen the yield rate or enrollment rate year-to-date grow about 10% compared to last year, and we certainly saw that carry through in Q3 as well, so it was good to see that persistent effect. and that certainly has helped some of the tailwinds into the Q3 performance. Regarding are we doing anything differently and what does that mean for the go forward, each year we undergo a fairly extensive A-B testing optimization process. It usually begins in H2 after we see kind of the enrollment and yield performance in H1. We've done that this year too as well. We've run dozens of tests, both in email, direct mail, as well as other channels. We have been doing more in the social channel. We're seeing some moderate uptake and improvement there and performance there, but nothing of significant material to note. But it is represents an area where we are experimenting with and seeing some green shoots. So in terms of overall optimization of our campaigns, like I said, that's an exercise that we've started in H1 or H2, rather, and will continue throughout the end of the year. And so we'll look to characterize a little bit more about that enrollment yield improvement next year at the appropriate time.

The only build I would just offer there is across our 25 million covered lives, we are using direct mail on a very selective basis. We can directly track the ROI and the CAC LTV on these campaigns. So for some subpopulations where they might not have email access, We've seen some efficacy on using direct mail to get more folks in the door. And we'll specifically target the higher acuity conditions, especially the diabetic and hypertensive populations, where we can reach out to them directly and get those folks in the door. So that's been another tool in the toolkit where we've seen some progress across 2026 as well.

All right. Thanks for the color. I guess one follow-up here. Steve, you mentioned with, you know, it's a yearly occurrence that you kind of gear up for, you know, care team headcount going into the new year. But I guess I'm just kind of curious of where you're at with your care team right now. Like, do you feel like you're kind of hitting capacity and you need to actually gain more capacity or is this just like, you know, typical getting ready for the new benefit year? Or just any commentary you can provide there would be great.

No, I mean, on a year-over-year basis, we've realized so much efficiency across core operations, across standardized work. Jennifer Becker, our Chief Care Delivery Officer, has done an amazing job at making that organization very efficient. And now that we're leveraging more AI, we've actually seen net headcount decrease on a year-over-year basis there. So we do plan to potentially gear up just a little bit for the Q1 because we do see a spike in Q1 in terms of net new enrollments. but that's all in support of hitting our longer-term gross margin target of 80%. And we really believe that over the better part of the last five years, we've really optimized the way we stack that organization and be able to match the supply and demand really optimally over time and feel good about the setup going into next year.

Great. Thanks. Congrats again.

Thank you. Our next question comes from the line of Craig Heddenbach from Morgan Stanley. Craig, your line is now open.

Hi, this is Jay. I'm for Craig Heddenbach. Thanks for taking my question. So with some competitors marketing like 100% fees at risk for cardiomedicabolic programs starting next year, I was wondering if you're seeing a higher proportions of RFPs mandate those outcome-based risk sharing. And for your existing book of business, can you remind us What share of revenue today is tied to clinical performance guarantees versus like baseline engagement milestone fees? Thank you.

Yeah, hi, Jay. Wei-Li here. Thanks for the question. I think it's an important question, and the reason being is that, obviously, as healthcare costs accelerate and rise, employers, health plans, and PBMs, you know, have to do their jobs and are looking very, very closely at the value in terms of return on investment or savings that any healthcare provider program can provide. And certainly, OMADA is in those negotiations and discussions, too, as well. Directly answering your question, are we seeing more performance guarantees, outcome guarantees, ROI guarantees? I would answer it by saying that for, I'd say for probably the last three or four years, they have been probably more and more prevalent in our negotiations and discussions. And that's something we've been contending with, you know, over that period of time. I think it's also noteworthy to also set the stage in the frame that, you know, we have a reputation in the marketplace for being evidence-based and doing a lot of clinical trials and other types of observational trials. We've got 30-plus-some-odd publications that have been peer-reviewed, taking a look at not only the outcomes of our programs but also the economics. And I raise that because when we approach these negotiations, if there's a need to undergo some sort of performance or ROI or outcomes guarantee, we really stand on our data and it allows us to take the appropriate risk relative to the outcomes that we can deliver, which our aim, of course, is to meet the expectations of our buyer clients. It's not a new thing. It's not a fixture. Obviously, with growing health care costs, we see a little bit more, but we're standing pretty firm on our outcomes and our economics, and we feel like we're having some success there.

Thank you. Our next question comes from the line of Gene Mannheimer from Freedom Holdings. Gene, your line is now open.

Thanks. Good afternoon, and congrats on the good quarter. I just want to dig in a little bit more on that gross margin, which was really strong. So you made the comment, I think it might have been Steve, but as your members continue to mature, and assuming duration stays around the same level or improves as it has been, is it fair to say that the gross margin then will continue to trend higher? And I'm assuming that's one of the elements to get to your 80% longer term target. And I'm wondering if that's the main driver of their other components. Thank you.

Thank you for the question. There's certainly a multitude of drivers. I'll start with the top line. Most importantly on the top line is continuing to push multi-product adoption, getting more folks who are diabetic and hypertensive and now getting in market with our prescribing capabilities as we improve the mixture of those conditions in our overall member base. that lifts gross margin and overall LTV gross profit dollars through time. On the cost side of the equation, then you have three levers. You have our care teams making them more efficient, which we covered a little bit earlier. You have us continue to negotiate across our supply chain with our devices as well as our shipping partners. And then you have more recently us using AI to make our care teams more efficient and more effective. So it's those four are the main components that directly drive it. And then to your point, The longer folks stay in program, we're seeing folks in their fifth and sixth years with the MADA, they're further out on the engagement curve. They don't bill as much revenue when they're that far out, but they're some of our highest gross profit members because there's very little incremental cost when you're that far out on the tenure curve. So we really like those members because we're still taking care of them. We're making sure they're healthy, but they're driving incremental dollars that are going directly to the bottom line. Got it. Got it. Thank you.

Thank you. Our next question comes from the line of Stan Berenstein from Wells Fargo Securities. Stan, your line is now open.

Hi, this is Corey DeVito on for Stan. Thanks for taking my questions. You had credited diabetes and hypertension for the growth in Q3. Did GLP-1 care track members grow from Q2? How many employers signed up for 2027 through FlexCare or Lilly Employer Connect?

Hi, Corey. Wei-Li here. Let me tackle the second question on 2027 and how many employers are signed up. So on and so forth. As mentioned before, the closing and selling season is extending further into Q4 than normal. And so it probably wouldn't be prudent for me to actually characterize quantitatively what the total cover lives are heading into 2027 with a good amount of late-stage deals being actioned as we speak. So can't comment there. I look forward to characterizing more after 2027, and that would be the case for any program as well as the GLP-1s as well.

Thank you. This concludes the question and answer session. Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.