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Omada Health, which has raised more than $120 million, lays off 20 people in bid for profits

  • Omada Health has raised more than $120 million in financing, making it one of the best-funded digital health start-ups.
  • The layoffs comes just months after its most recent funding round, led by insurance giant Cigna.
Omada Health CEO Sean Duffy.
Omada Health CEO Sean Duffy.

Omada Health, one of the most highly funded digital health companies in Silicon Valley, has laid off about 20 people in departments across the organization.

Omada has developed a diabetes prevention program that is geared to roughly 1 in 3 Americans at high risk for the disease. What makes it a tech company is that it leverages things like health tracking and online coaching to help its users avoid chronic illnesses.

The start-up sells its service to self-insured employers and other payers that see it as an investment in long-term cost savings, if users can avoid getting expensive illnesses.

It has grown to about 250 people since its launch in 2011, so the layoffs hit just shy of 10 percent of the workforce.

In a statement to CNBC, the company said that it raised its most recent round of funding -- $50 million, led by Cigna -- with the goal of becoming "sustainable and profitable."

"During this process, it became clear we had to focus on Omada's core business and expertise, while orienting the company for long-term success," the statement reads. "Today we took the difficult but necessary steps that will allow Omada to continue its maturation as a leader in the digital health industry."

The company said it provided severance packages to all departing employees.

Omada has raised more than $120 million in venture funding from Andreessen Horowitz and other firms.

Earlier this week, Fast Company reported layoffs from the marketing team at Headspace, another venture-backed digital health startup.