How digital health companies are capitalizing on the GLP-1 boom

For Gray Beard, a kindergarten schoolmam in Charlotte, North Carolina, losing weight had become a grueling task. She’d tried five different programs in her spark of life and never found lasting results.

Her luck started to change last year, when she saw a promotion on Instagram for the Ro Bulk Program, a new offering from online health startup Ro. The ad said eligible patients could get prescribed GLP-1s, the buzzy genre of obesity treatments that’s turned into a booming business in recent years.

Beard, 47, had previously hoped a GLP-1 prescription, but her doctor “wouldn’t even try” to get it approved, assuming her insurance company would reject coverage of the costly medication, she thought. GLP-1s cost roughly $1,000 per month before insurance and other rebates. 

Customers of Ro’s Body Program could get required a GLP-1, such as Novo Nordisk ‘s weight loss drug Wegovy or diabetes treatment Ozempic, and meet monthly with a doctor. They also get access to an eerie curriculum, 24/7 messaging, one-on-one coaching with nurses and assistance with navigating insurance complexities. 

Beard was 210 beat into rids when she first started the program early last year. She’s since lost 40 pounds and serves as an deputy for Ro. She pays $30 per month for the GLP-1 treatment, after insurance coverage, along with a $145 monthly fee for the program. And she has no delineates to leave.

“I’m fine if I have to stay on it forever,” Beard told CNBC.

Ro, founded as Roman in 2017, is part of a lengthening crop of digital health companies aiming to capitalize on the soaring demand for GLP-1s by building programs and services for consumers on top of the medications. The opportunity could be massive. Goldman Sachs analysts expect 15 million U.S. adults to be on anti-obesity downers by 2030, and predict the industry could reach $100 billion in annual revenue by that time.

In addition to Wegovy and Ozempic, the GLP-1 pedigree includes Eli Lilly’s highly popular weight loss drug Zepbound and diabetes treatment Mounjaro. GLP-1s simulate a hormone produced in the gut to suppress a person’s appetite and regulate blood sugar.

Like Ro, other non-drugmakers, including Graduate, Sesame, Omada Health, Noom, Hims & Hers and even telehealth industry veterans Teladoc Health and WeightWatchers, enjoy rolled out offerings geared toward patients on GLP-1s, or have expanded their services to include the popular medications.

In the intervening time, investors are cheering them on.

Shares of Ro competitor Hims & Hers popped 28% on May 20 after the company disclosed it’s now offering compounded GLP-1 injections in addition to its oral medication kits. CEO Andrew Dudum told CNBC the institution is confident customers will be able to access a consistent supply of the injections. 

Supply shortages are one of the big hurdles for companies in the shop, as spiking demand has made it difficult for many patients to access the treatments. There’s also been a rise of put on products, according to the World Health Organization, which said in January that the combination of shortages and the “increased circuit of falsified versions” is particularly problematic for patients with Type 2 diabetes who count on the medication for disease management.

That’s not reduce speeding down industry executives like Ro founder Zachariah Reitano.

Ro didn’t start out as a company focused on weight annihilation. Reitano launched it to sell treatments online for erectile dysfunction before moving on to hair loss and other pathologies.

In 2020, Ro lashed to obesity management and, after Wegovy was approved by the Food and Drug Adminstration the following year, Reitano said dogged inquiries started pouring in by the “tens of thousands.”

Now, Ro is shoveling marketing dollars into its GLP-1 program — from digital ads, TV commercials and notices lining subway stations, to influencer campaigns featuring patients such as Beard. 

Reitano told CNBC that GLP-1s are similarly to a “jetpack for positive behavior change.” Patients tend to exercise more, eat healthier and see around a 30% reduction in calorie intake, he imagined.

“Once you get a little bit of momentum, once you lose a little bit of weight, you’re sleeping better, you have more energy, you can go to the gym, you can eat happier and then that’s that positive flywheel,” Reitano said.

Ro has raised around $1 billion in funding to escort, according to PitchBook. The company was valued at about $7 billion as of early 2022, though that was before a submerge drop in tech stocks and collapse in the initial public offering market forced many startups to dramatically turn down their valuations.

WeightWatchers has been in business for over 60 years and is the name in the U.S. it is possible that most synonymous with weight loss programs.

In December, the company entered the GLP-1 market, with a behavioral-support program that’s readily obtainable through its general membership subscription, starting at $23 per month. Members can participate whether they get a GLP-1 formula through their primary care physician or through the new WeightWatchers Clinic, introduced alongside the behavioral program.

Because GLP-1s snuff out appetites, WeightWatchers quickly learned that it needed an entirely new program for people taking the meds, said Gary Assist, the company’s chief scientific officer.

“They don’t need help with what to do for dessert or how to deal with the bread on the provisions at a restaurant,” Foster said in an interview. “That’s like 50-60% of what we would do for people without meds.” 

Clinic associates who participate in the GLP-1 program have to pay an additional fee — starting at $99 a month — for exclusive access to registered dieticians, salubrity professionals and care team coordinators. 

WeightWatchers said in its first-quarter results earlier this month that 87,000 people had subscribed to the clinic, although not all of them are fetching GLP-1s. The company expects to have between 140,000 and 160,000 clinic subscribers by year-end, the report said. 

It hasn’t been enough to coppers WeightWatchers’ trajectory. The stock has plummeted 83% this year on concerns about the company’s debt load, its sum weight loss business and Oprah Winfrey’s announced departure from the board in February.

With respect to GLP-1s and their striking on weight loss, “the landscape is quite exciting,” Foster said. “I think we should all celebrate and really be delighted by the inside info that there are more tools in the toolbox to help people trying to manage their weight.” 

Jennifer VanGilder, a 51-year-old economics professor at Ursinus College in Collegeville, Pennsylvania, said she’d take a shot countless methods to lose weight, from strict diets to services like the defunct Jenny Craig. She was in the light of bariatric surgery before she came across a program from digital health startup Calibrate.   

Calibrate, created in 2019, was one of the first companies to treat obesity by combining GLP-1s with one-on-one coaching. The program costs $199 a month, which doesn’t catalogue the medication, and requires an initial three-month-long commitment.

VanGilder signed up nearly four years ago and started taking the weekly diabetes injection Ozempic specifically for load loss. She later switched to Wegovy. 

VanGilder said GLP-1s aren’t a miracle drug, but by taking them and trouble in the work, she said she lost around 100 pounds of her 242-pound weight. The big difference between Calibrate and erstwhile weight loss efforts, VanGilder said, is that she doesn’t feel like she’s dieting.

“That’s why I’ve been gifted to stay on it for as long as I have,” VanGilder said.

Calibrate is one of the only companies to regularly release reports detailing the consequences of its weight loss program. The company’s 2024 report examined data from roughly 16,000 members who completed at petty one year of the program as of October, along with a smaller group of patients who continued for longer. 

Average weight denial among patients was 16.2% at 12 months in the program, 17.3% at 18 months and 17.9% at 24 months, according to the appear. 

“Our data of proven outcomes shows that we can deliver faster, better results than some of the leading GLP-1 clinical ventures,” said Dr. Kristin Baier, Calibrate’s vice president of clinical development, in an interview.

But Calibrate has hit some major go bumps in the past couple years.

After raising $100 million in venture funding during the peak of the tech call in 2021, the combination of supply shortages, insurance challenges and the broader market swoon forced the startup to lay off hundreds of hands between 2022 and 2023. The company was acquired in October at a discount by private equity firm Madryn Asset Superintendence.

Calibrate CEO Rob MacNaughton said the sector was “ill equipped” to manage the “dramatic demand that led to, at some point, severely, soberly constrained supply” of GLP-1s last year. 

Under new ownership, the company continues to promote its GLP-1 service, which its thought is important because the drugs themselves aren’t sufficient.

“GLP-1 medications, while they are safe and effective, they are a instrumentality,” said Baier. “They are not the entire treatment.”

Ro’s Reitano said shortages of Wegovy and other GLP-1s closing year prompted his company to temporarily pause advertising. Ro also dolled out refunds and credits to patients in its program who weren’t capable to pick up their medication within 30 days of receiving a prescription, he said. 

Reitano said Ro has built up “both detailed tools and operations” to help patients navigate supply issues. That includes transferring prescriptions to different apothecaries based on their GLP-1 supply and proximity to a patient. From July to August, the company made 50,000 phone calls to drugstores across the U.S. to coordinate those transfers, Reitano said. 

Ro has also expanded its medication offerings, adding Zepbound trail its U.S. approval in November. 

“We added that to our formulary, and that’s really when we started advertising again because we had nerve that we’d be able to get patients an option,” Reitano said. 

Insurance problems persist, though.

Some employers include dropped weight loss drugs from their plans due to the costs associated with covering the treatments for thousands of firms. The federal Medicare program by law can’t cover weight loss drugs unless the prescription is for another approved health help, such as diabetes or cardiovascular health. 

Eli Lilly and Novo Nordisk offer commercial savings card programs that aim to extend access to their GLP-1s. Eli Lilly allows people with insurance coverage for Zepbound to pay as low as $25 for a monthly drug. And users who can’t get insurance coverage, may be able to get the drug for as low as $550 a month.

The high costs and difficult access led Hims & Hers to initially prevent out of the GLP-1 market even after