Nutrition counseling startups are seeing an increase in demand from employers due to the use of high-cost weight loss drugs.

• Workers on GLP-1 medications are increasingly being required by employers to participate in nutrition and lifestyle coaching programs.
• Last year, Virta Health experienced a 60% increase in revenue, reaching $100 million, due to the high demand for its employer-focused weight loss program.
• Omada Health collaborated with Evernorth, Cigna's division, on the EncircleRx program, resulting in a 4-fold increase to 8 million covered lives.
• Speculation is rising that Virta and Omada could go public in 2025 due to their rapid growth.

Currently, when Sami Inkinen, the founder and CEO of Virta Health, presents the company's nutrition-focused digital diabetes program as a solution for obesity-related weight loss to employers, many are hesitant to make a commitment.

Employers are increasingly turning to nutritional counseling and coaching as they seek to reduce healthcare costs associated with diabetes and weight loss medications such as Ozempic, Wegovy, Mounjaro, and Zepbound.

Inkinen stated that our objective is not to maximize GLP-1 prescriptions, but we are the preferred telemedicine company for employers who use these drugs responsibly and help members maintain weight loss and nutrition.

A year ago, the company published a peer-reviewed study showing that patients on Virta's nutrition-counseling programs maintained weight loss one year after stopping GLP-1s. However, Inkinen reveals that only less than 10% of the company's weight loss enrollees use GLP-1s, with most opting for nutrition counseling alone and still losing an average of 13% of their weight over a year.

"In fact, even though the pharmaceutical companies may suggest otherwise, most people prefer not to remain on these medications indefinitely if given the option and resources," he stated.

Inkinen reported that Virta experienced a 60% revenue growth in 2024, exceeding $100 million, due to the high demand for their services.

The 10-year-old startup is projected to achieve profitability in the second half of this year, as stated.

More employers require weight loss engagement

According to the Purchaser Business Group on Health, 96% of companies surveyed stated that glucagon-like peptide medications, commonly known as GLP-1 drugs, are now a leading contributor to employer plan drug costs, with concerns about the long-term cost implications.

Nutrition counseling and coaching services are increasingly being sought after by employers for utilization management purposes.

Randa Deaton, vice president of purchaser engagement with Purchaser Business Group on Health, stated that while most employers desire their plan members to have access to weight-management medication options like GLP-1s, they also prioritize clinical appropriateness and the provision of medical and lifestyle modification supports to guarantee long-term safety and efficacy for the individual.

Deaton observes that using certain programs can sometimes create new pricing challenges for GLP-1s in pharmacy benefits plans.

Employers have been facing challenges in implementing effective lifestyle management programs for their workers and family members due to the reduction of rebates by PBMs and drug manufacturers when lifestyle interventions are required as part of the drug criteria.

Omada Health, a competitor of Virta Health, is experiencing increased demand for its GLP-1 weight loss management program after partnering with Evernorth pharmacy benefits division on EncircleRx. Enrollment for the program grew from 2 million covered lives in the second quarter of 2024 to 8 million in the third quarter, according to Cigna CEO David Cordani.

Cordani informed analysts on the Q3 earnings call that the market is facing challenges with the affordability of GLP-1 drugs and is seeking a more value-based approach.

He stated that clients and physicians are observing the start-and-stop dynamic that is occurring for some patients, which does not produce the desired or intended outcome.

2025 IPO speculation

If market conditions are suitable, there is speculation that both Virta and Omada, which are over a decade old, could go public this year due to their GLP-1 growth dynamic.

Last summer, Omada Health allegedly filed a private registration with the Securities and Exchange Commission to become public, as reported by Business Insider. The company has refused to confirm the report.

Inkinen founded Virta Health, which was valued at $2 billion after its last funding round in 2021. He is also the founder of Trulia, an online real estate firm that went public in 2012 and was later acquired by a competitor.

Currently, Inkinen is concentrating on expanding the company rather than pursuing an IPO for Virta.

Scaling your thing, team, and culture is 1,000 times easier when you have something that's already working, he stated.