- Q2 Revenue of $2.5 million, down 17% year over year
- Q2 Operating loss of $(4.0) million, a 13% improvement year
over year
- Q2 Adjusted EBITDA of $(3.3) million, an 8% decline year
over year
- Company announces new contract with large northeast regional
health plan
- Company announces final results of a formal evaluation
showing achievement of $721 per member per month cost savings for a
prominent health plan's members
- Company announced the adoption of the Comprehensive
Healthcare Integration (CHI) framework into its care delivery
model
- Company to Host Conference Call at 4:30 pm ET Today
Ontrak, Inc. (NASDAQ: OTRK) (“Ontrak” or the
“Company”), a leading AI-powered and technology-enabled behavioral
healthcare company, today reported its expected financial results
for the second quarter ended June 30, 2024. These expected results
are subject to management completing its analysis of classification
of debt.
Management Commentary
Brandon LaVerne, Ontrak Health’s Chief Executive Officer and
Chief Operating Officer, stated, “I am thrilled about the
announcement this morning that we have secured a contract with our
newest customer, a prestigious regional health plan in the
northeast, that should approximately double our current outreach
pool for our WholeHealth+ solution once launched. This marks a
pivotal moment for Ontrak as we seek to return to a path of
sustained growth. This new partnership is a testament to our
commitment to delivering high-quality, personalized behavioral
healthcare services to members in need. With a renewed focus on
strategic growth and innovation, as evidenced by our recent
announcements regarding the Mental Health Digital Twin, our
adoption of the Comprehensive Healthcare Integration framework, and
powered by our Advanced Engagement System, Ontrak is poised for a
very successful future. I want to thank our employees, partners and
shareholders for their continued support and trust in our mission
to help improve the health and save the lives of as many people as
possible.”
Second Quarter 2024 Financial Results Highlights
(Expected)
- Revenue for the second quarter of 2024 was $2.5 million,
representing a 17% decrease compared to the same period in
2023.
- Operating loss for the second quarter of 2024 was $(4.0)
million compared to an operating loss of $(4.6) million for the
same period in 2023.
- Adjusted EBITDA for the second quarter of 2024 was $(3.3)
million compared to adjusted EBITDA of $(3.1) million for the same
period in 2023.
- Net loss for the second quarter of 2024 was $(10.3) million, or
a $(0.19) diluted net loss per common share (after deduction for
undeclared preferred stock dividends), compared to net loss of
$(6.8) million, or a $(1.84) diluted net loss per common share
(after deduction for undeclared preferred stock dividends) for the
same period in 2023.
- Non-GAAP net loss for the second quarter of 2024 was $(3.9)
million, or a $(0.09) non-GAAP diluted net loss per common share
(after deduction for undeclared preferred stock dividends),
compared to non-GAAP net loss of $(5.9) million, or a $(1.66)
non-GAAP diluted net loss per common share (after deduction for
undeclared preferred stock dividends) for the same period in
2023.
Adjusted EBITDA, non-GAAP net loss and non-GAAP diluted net loss
per common share are non-GAAP financial measures. See our
description and reconciliation of such non-GAAP measures at the end
of this release.
Second Quarter 2024 and Recent Operating Highlights
- Total enrolled members in our WholeHealth+ program numbered
1,752 at the end of Q2 2024, compared to 1,521 at the end of Q1
2024 and 1,889 at the end of Q2 2023.
- Total callable outreach pool for WholeHealth+ was 7,511 at June
30, 2024 compared to 5,057 at March 31, 2024 and 10,879 at June 30,
2023. New for Q2 2024, total callable outreach pool for Ontrak
Engage, one of the segmented solutions within WholeHealth+ which we
began offering on an à la carte basis in 2024, was 589 at June 30,
2024.
- In August 2024, the Company announced the signing of a 2-year
strategic partnership with a large, regional health plan in the
northeast, aimed at delivering a proactive, predictive and
personalized behavioral health solution to its members in New York
with chronic comorbidities and unaddressed behavioral health
utilizing our WholeHealth+ and Engage solutions.
- In July 2024, the Company announced the final results of a
formal evaluation of the impact of Ontrak WholeHealth+ program on
one of our Medicaid health plan customer's medical costs, which
showed statistically significant, difference-in-difference cost
savings of $721 per member per month for Ontrak's treated group of
members who graduated the Ontrak WholeHealth+ program compared to
matched controls. Also, for the first time, the study also
evaluated members who did not graduate the Ontrak WholeHealth+
program but were enrolled for a minimum of five months, and showed
statistically significant, difference-in-difference cost savings of
$508 per member per month compared to matched controls. This study
provides further evidence of the effectiveness of Ontrak’s
WholeHealth+ program in reducing avoidable healthcare expenditures
and improving patient outcomes.
- In July 2024, the Company announced the adoption of the
Comprehensive Healthcare Integration (CHI) framework, which
represents the most comprehensive clinical framework for
integrating physical health, behavioral health and social
determinants of health, into our care delivery model. The adoption
of the CHI framework underscores Ontrak's commitment to addressing
the complex interplay of physical health, behavioral health and
social determinants of health and championing the evolution of care
delivery, harnessing the power of integrated care to improve
patient lives.
- In May 2024, the Company announced that the Florida Agency for
Healthcare Administration approved Ontrak Health as a subcontractor
for a prominent regional Medicaid health plan for our Wholehealth+,
Ontrak Engage and Ontrak Access solutions. The Company began
initiating outreach to new eligible members of the new health plan
customer in June 2024.
- In May 2024, the Company announced the launch of its pioneering
Mental Health Digital Twin (MHDT) technology, which creates a
comprehensive virtual representation of each unique individual
enrolled in the Ontrak program by processing millions of data
points and utilizing advanced AI and machine learning models. The
MHDT technology also generates predictive insights and personalized
recommendations, which are delivered through Ontrak's Advanced
Engagement System, enabling care teams to make informed decisions
and deliver targeted interventions.
Financial Outlook
The following outlook is based on information available as of
the date of this press release and is subject to change in the
future.
For the quarter ending September 30, 2024, the Company estimates
revenue in the range of $2.4 million to $2.8 million.
Conference Call & Webcast Details
The Company will host a conference call/webcast today at 4:30 pm
ET/1:30 pm PT. Investors, analysts, employees and the general
public can access the call by registering online for dial-in
information or via live audio webcast at:
https://ontrakhealth.com/investors/presentations-events.
Participants interested in dialing in to the conference call are
requested to register a day in advance or at a minimum 15 minutes
before the start of the call to obtain a unique pin for the
call.
A replay of the call will be available via webcast for on-demand
listening shortly after the completion of the call, at the same web
link, and will remain available for approximately 90 days.
About Ontrak, Inc.
Ontrak Health (Nasdaq: OTRK) is a leading AI-powered and
technology-enabled behavioral healthcare company, whose mission is
to help improve the health and save the lives of as many people as
possible. Ontrak identifies, engages, activates and provides care
pathways to treatment for the most vulnerable members of the
behavioral health population who would otherwise fall through the
cracks of the healthcare system. We engage individuals with
anxiety, depression, substance use disorder and chronic disease
through personalized care coaching and customized care pathways
that help them receive the treatment and advocacy they need,
despite the socio-economic, medical and health system barriers that
exacerbate the severity of their comorbid illnesses. The company’s
integrated intervention platform uses AI, predictive analytics and
digital interfaces combined with dozens of care coach engagements
to deliver improved member health, better healthcare system
utilization, and durable outcomes and savings to healthcare
payors.
Learn more at www.ontrakhealth.com.
Forward-Looking Statements
This press release contains “forward-looking” statements that
are based on the Company’s beliefs and assumptions and on
information currently available to the Company on the date of this
press release and are made pursuant to the Safe Harbor provisions
of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include all statements that are not
historical facts and can be identified by terms such as “may,”
“will,” “could,” “should,” “believes,” “estimates,” “projects,”
“potential,” “expects,” “plan,” “anticipates,” “intends,”
“continues,” “forecast,” “designed,” “goal,” or the negative of
those words or other comparable words. Forward-looking statements
may include, but are not limited to, the Company’s belief that its
outreach pool of eligible members will approximately double upon
the launch of its new customer, that it will be successful in
returning to sustained growth, that its strategy will accelerate
the Company’s return to growth by converting new customers and
expand with existing customers, the Company's ability to convert
its pipeline of prospects into active customers, the Company's
ability to maximize its differentiated platform and deliver return
on investment for customers, the Company’s revenue on a per member
per month basis, gross margin estimates and the Company's estimated
revenue for quarter ending September 30, 2024. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the Company’s actual results, performance or
achievements to be materially different from those expressed or
implied by forward-looking statements, including, without
limitation, risks related to: the Company’s ability to successfully
execute on its strategy and business plan; the Company’s ability to
increase its revenue and efficiently manage expenses and achieve
profitability; the Company’s high customer concentration and the
ability of its customers to terminate their contracts for
convenience; the adequacy of the Company’s existing cash resources
and anticipated capital commitments and future cash requirements to
enable the Company to continue as a going concern; the Company’s
ability to raise additional capital when needed; difficulty
enrolling new members and maintaining existing members in the
Company’s programs; the effectiveness of the Company’s treatment
programs; lower than anticipated eligible members under the
Company’s contracts; the Company’s dependence on key personnel and
the Company’s ability to recruit and retain key personnel; the
Company’s ability to maintain the listing of its stock on Nasdaq;
the federal jury's conviction of the Company’s largest stockholder
and former Chief Executive Officer and Chairman of one count of
securities fraud and two counts of insider trading, and whether
governmental authorities will institute separate investigations or
proceedings against the Company and/or its current or former
executives and/or directors; substantial regulation in the health
care industry; changes in regulations or issuance of new
regulations or interpretations; the Company’s limited operating
history; difficulty in developing, exploiting and protecting
proprietary technologies; business disruption and related risks;
general economic conditions, nationally and globally, and their
effect on the market for our service; intense competition and
competitive pressures and trends in the Company’s industry and the
Company’s ability to successfully compete; changes in laws,
regulations, or policies; and risks related to the Company’s
ability to realize the potential benefits of and to effectively
integrate acquisitions. For a further list and description of the
risks and uncertainties the Company faces, please refer to the
Company’s most recent Securities and Exchange Commission filings
which are available on its website at http://www.sec.gov.
Forward-looking statements are current only as of the date they are
made and the Company assumes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are
prepared and presented in accordance with U.S. generally accepted
accounting principles, or GAAP, the Company has provided in this
press release and the quarterly conference call held on the date
hereof certain non-GAAP financial measures. The non-GAAP financial
measures presented include EBITDA, Adjusted EBITDA, Non-GAAP net
loss, and Non-GAAP net loss per common share, which are not U.S.
GAAP financial measures. We believe that the presentation of these
financial measures enhances an investor’s understanding of our
financial performance. We further believe that these financial
measures are useful financial metrics to assess our operating
performance from period-to-period by excluding certain items that
we believe are not representative of our core business.
EBITDA consists of net loss before interest, taxes, depreciation
and amortization expenses. Adjusted EBITDA consists of net loss
before interest, taxes, depreciation, amortization, stock-based
compensation, restructuring, severance and related costs, gain on
termination of operating lease, and gain/loss on change in fair
value of warrant liability. We believe that making such adjustments
provides investors meaningful information to understand our results
of operations and the ability to analyze our financial and business
trends on a period-to-period basis.
Non-GAAP net loss consists of net loss adjusted for debt
issuance costs expensed related to Demand Notes, Demand Warrants
expensed related to Demand Notes, stock-based compensation,
restructuring, severance and related costs, gain on termination of
operating lease and gain/loss on change in fair value of warrant
liability. Non-GAAP net loss per common share consists of loss per
share adjusted for non-GAAP net loss attributable to common
stockholders. We believe that making such adjustments provides
investors meaningful information to understand our results of
operations and the ability to analyze our financial and business
trends on a period-to-period basis.
We believe the above non-GAAP financial measures are commonly
used by investors to evaluate our performance and that of our
competitors. However, our use of the term EBITDA, Adjusted EBITDA,
Non-GAAP net loss and Non-GAAP net loss per common share may vary
from that of others in our industry. None of EBITDA, Adjusted
EBITDA, Non-GAAP net loss or Non-GAAP net loss per common share
should be considered as an alternative to net loss before taxes,
net loss, net loss per common share or any other performance
measures derived in accordance with U.S. GAAP as measures of
performance.
See the Reconciliation of Non-GAAP Measures table at the end of
this press release for a reconciliation of the Non-GAAP financial
measures to U.S. GAAP financial measures.
ONTRAK, INC.
Consolidated Statements of
Operations
(in thousands, except per
share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenue
$
2,451
$
2,960
$
5,131
$
5,489
Cost of revenue
844
804
1,819
1,651
Gross profit
1,607
2,156
3,312
3,838
Operating expenses:
Research and development
1,026
1,537
2,104
3,181
Sales and marketing
691
837
1,223
1,827
General and administrative
3,937
4,410
8,015
10,228
Restructuring, severance and related
costs
—
—
290
457
Total operating expenses
5,654
6,784
11,632
15,693
Operating loss
(4,047
)
(4,628
)
(8,320
)
(11,855
)
Other income (expense), net
5
(5
)
3
286
Debt issuance costs
(5,921
)
—
(5,921
)
—
Interest expense, net
(326
)
(2,223
)
(509
)
(3,617
)
Loss before income taxes
(10,289
)
(6,856
)
(14,747
)
(15,186
)
Income tax benefit, net
—
100
—
80
Net loss
(10,289
)
(6,756
)
(14,747
)
(15,106
)
Dividends on preferred stock -
undeclared
(2,238
)
(2,238
)
(4,477
)
(4,477
)
Net loss attributable to common
stockholders
$
(12,527
)
$
(8,994
)
$
(19,224
)
$
(19,583
)
Net loss per common share, basic and
diluted
$
(0.19
)
$
(1.84
)
$
(0.30
)
$
(4.09
)
Weighted-average common shares
outstanding, basic and diluted
66,141
4,887
63,512
4,787
ONTRAK, INC.
Consolidated Balance
Sheets
(in thousands, except share
and per share data)
June 30, 2024
December 31,
2023
Assets
(unaudited)
Current assets:
Cash
$
7,292
$
9,701
Receivables, net
946
—
Unbilled receivables
385
207
Deferred costs
138
128
Prepaid expenses and other current
assets
2,358
2,743
Total current assets
11,119
12,779
Long-term assets:
Property and equipment, net
583
913
Goodwill
5,713
5,713
Intangible assets, net
—
99
Other assets
7,689
147
Operating lease right-of-use assets
171
195
Total assets
$
25,275
$
19,846
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
224
$
563
Accrued compensation and benefits
415
442
Deferred revenue
58
97
Demand notes payable (1)
4,648
—
Current portion of operating lease
liabilities
62
56
Other accrued liabilities
2,297
2,784
Total current liabilities
7,704
3,942
Long-term liabilities:
Long-term debt, net
2,024
1,467
Long-term operating lease liabilities
134
166
Total liabilities
9,862
5,575
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value;
50,000,000 shares authorized; 3,770,265 shares issued and
outstanding at each of June 30, 2024 and December 31, 2023
—
—
Common stock, $0.0001 par value;
500,000,000 shares authorized; 47,967,725 and 38,466,979 shares
issued and outstanding at June 30, 2024 and December 31, 2023,
respectively
7
6
Additional paid-in capital
500,814
484,926
Accumulated deficit
(485,408
)
(470,661
)
Total stockholders' equity
15,413
14,271
Total liabilities and stockholders'
equity
$
25,275
$
19,846
(1)
The classification of demand notes payable
will be reevaluated at the issuance date of the Company's financial
statements as of June 30, 2024 and for three and six months ended
June 30, 2024.
ONTRAK, INC.
Consolidated Statements of
Cash Flows
(in thousands)
For the Six Months Ended
June 30,
2024
2023
Cash flows from operating
activities
Net loss
$
(14,747
)
$
(15,106
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
794
1,543
Paid-in-kind interest expense
377
1,936
Gain on termination of operating lease
—
(471
)
Depreciation expense
409
590
Amortization expense
208
2,382
Change in fair value of warrant
liability
(4
)
12
Debt issuance costs expensed related to
Demand Notes
3,262
—
Demand Warrants expensed related to Demand
Notes
2,659
—
Changes in operating assets and
liabilities:
Receivables
(946
)
691
Unbilled receivables
(178
)
89
Prepaid expenses and other assets
221
326
Accounts payable
(339
)
(371
)
Deferred revenue
(39
)
(18
)
Leases liabilities
(26
)
(142
)
Other accrued liabilities
620
(1,529
)
Net cash used in operating activities
(7,729
)
(10,068
)
Cash flows from investing
activities
Purchase of property and equipment
(74
)
(123
)
Net cash used in investing activities
(74
)
(123
)
Cash flows from financing
activities
Proceeds from Demand Notes
4,500
—
Proceeds from Keep Well Notes
—
8,000
Proceeds from warrants exercised
1,963
—
Proceeds from Keep Well Agreement held in
escrow
—
4,000
Debt issuance costs
—
(98
)
Finance lease obligations
—
(100
)
Financed insurance premium payments
(1,069
)
(1,228
)
Payment of taxes related to net-settled
stock awards
—
(2
)
Net cash provided by financing
activities
5,394
10,572
Net change in cash and restricted cash
(2,409
)
381
Cash and restricted cash at beginning of
period
9,701
9,713
Cash and restricted cash at end of
period
$
7,292
$
10,094
Supplemental disclosure of cash flow
information:
Interest paid
$
48
$
45
Income taxes paid
5
3
Non-cash financing and investing
activities:
Debt issuance costs
$
10,651
$
85
Warrants issued in connection with Demand
Notes
2,659
—
Warrants issued in connection with Keep
Well Notes
—
10,797
Loss on extinguishment of debt with
related party
521
2,153
Finance lease and accrued purchases of
property and equipment
4
28
Common stock issued to settle contingent
consideration
64
—
ONTRAK, INC.
Reconciliation of Non-GAAP
Measures
(in thousands, except per
share data)
Reconciliation of
Operating Loss to EBITDA and Adjusted EBITDA
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Operating loss
$
(4,047
)
$
(4,628
)
$
(8,320
)
$
(11,855
)
Depreciation expense
211
295
409
590
Amortization expense (1)
62
351
123
742
EBITDA
(3,774
)
(3,982
)
(7,788
)
(10,523
)
Stock-based compensation expense
442
892
794
1,543
Restructuring, severance and related costs
(2)
—
—
290
457
Adjusted EBITDA
$
(3,332
)
$
(3,090
)
$
(6,704
)
$
(8,523
)
Reconciliation of
Net Loss to Non-GAAP Net Loss; and Net Loss per Common Share to
Non-GAAP Net Loss per Common Share
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net loss
$
(10,289
)
$
(6,756
)
$
(14,747
)
$
(15,106
)
Debt issuance costs expensed related to
Demand Notes (3)
3,262
—
3,262
—
Demand Warrants expensed related to Demand
Notes (4)
2,659
—
2,659
—
Stock-based compensation expense
442
892
794
1,543
Restructuring, severance and related costs
(2)
—
—
290
457
(Gain) loss on change in fair value of
warrant liability
(6
)
(7
)
(4
)
12
Gain on termination of operating lease
(5)
—
—
—
(471
)
Non-GAAP net loss
(3,932
)
(5,871
)
(7,746
)
(13,565
)
Dividends on preferred stock -
undeclared
(2,238
)
(2,238
)
(4,477
)
(4,477
)
Non-GAAP net loss attributable to common
stockholders
$
(6,170
)
$
(8,109
)
$
(12,223
)
$
(18,042
)
Net loss per common share - basic and
diluted
$
(0.19
)
$
(1.84
)
$
(0.30
)
$
(4.09
)
Non-GAAP net loss per common share - basic
and diluted
(0.09
)
(1.66
)
(0.19
)
(3.77
)
Weighted-average common shares outstanding
- basic and diluted
66,141
4,887
63,512
4,787
_______________________
(1)
Relates to operating and financing
right-of-use assets and acquired intangible assets.
(2)
Includes one-time severance and related
benefit costs related to reduction in workforce plans announced in
February 2024 and March 2023 as part of Company's continued cost
savings measure.
(3)
Represents the proportionate amount of
deferred debt issuance costs expensed during the three and six
months ended June 30, 2024 relative to the Demand Notes that have
been issued as of June 30, 2024.
(4)
Relates to relative fair value of Demand
Warrants issued in connection with each Demand Notes issued as of
June 30, 2024.
(5)
Relates to gain realized on derecognition
of ROU operating asset and related lease liability due to early
termination of the lease of the office space located in Santa
Monica, CA in February 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808396215/en/
For Investors:
Ryan Halsted Gilmartin Group investors@ontrakhealth.com
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