Ontrak, Inc. (NASDAQ: OTRK) (“Ontrak” or the “Company”), a leading AI-powered and telehealth-enabled, virtualized healthcare company, today reported its financial results for the fourth quarter and year ended December 31, 2020.
Management Commentary
“While we are extremely disappointed by the upcoming loss of our Ontrak-A contract in June 2021, we are focused on the growth opportunities ahead of us with existing and new customers," said Terren Peizer, Ontrak Chairman and CEO. “During the fourth quarter, expanded programs with existing health plans and signed contract renewals with current customers resulted in strong enrollment rates which we expect to see continue through 2021. The tailwinds to our financial performance as we enter 2021 are:
Mr. Peizer continued, “As a market leader in telemental health with a high-quality network of over 11,600 behavioral health provider contractual relationships in 40 states plus Washington DC, Ontrak is uniquely positioned to deliver positive and durable outcomes for not only care avoidant but also care neutral and care seeking members of our health plan partners. We have a total addressable market opportunity of over $30 billion.”
Fourth Quarter 2020 Financial Results Highlights
Fiscal Year 2020 Financial Results Highlights
Fourth Quarter 2020 and Recent Operating Highlights:
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. This outlook solely represents existing and planned enrollment launches, and program expansions with current health plan partners.
For the year ending December 31, 2021, the Company provides the following outlook:
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 dialing (833) 519-1269 for U.S. participants or (914) 800-3841 for international participants, and referencing conference ID #4174875. A live and archived webcast of the event will be available at https://www.ontrak-inc.com/investors.html.
About Ontrak, Inc.
Ontrak, Inc. (f/k/a Catasys, Inc.) is a leading AI and telehealth enabled, virtualized healthcare company, whose mission is to help improve the health and save the lives of as many people as possible. The company’s PRE™ (Predict-Recommend-Engage) platform predicts people whose chronic disease will improve with behavior change, recommends effective care pathways that people are willing to follow, and engages people who are not getting the care they need. By combining predictive analytics with human engagement, Ontrak delivers improved member health and validated outcomes and savings to healthcare payers.
The company’s integrated, technology-enabled Ontrak™ programs, a critical component of the PRE platform, are designed to provide healthcare solutions to members with behavioral conditions that cause or exacerbate chronic medical conditions such as diabetes, hypertension, coronary artery disease, COPD, and congestive heart failure, which result in high medical costs.
Ontrak has a unique ability to engage these members, who do not otherwise seek behavioral healthcare, leveraging proprietary enrollment capabilities built on deep insights into the drivers of care avoidance.
Ontrak integrates evidence-based psychosocial and medical interventions delivered either in-person or via telehealth, along with care coaching and in-market Community Care Coordinators who address the social and environmental determinants of health, including loneliness. The company’s programs improve member health and deliver validated cost savings to healthcare payers of between 40 and 50 percent for enrolled members.
Learn more at www.ontrak-inc.com
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this press release are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements may include for example statements regarding: growth and market opportunities; expansions with existing customers for new contracts and renewals; rapid enrollment rates; tailwinds, including statements of our expectations related to rapid enrollment under our Ontrak-CI contract, growth in, and value of, our provider contractual relationships, momentum in our pipeline and expansions and related health plan customers’ confidence in our programs and proven savings and associated ROI, the effect of our record high member satisfaction levels, the anticipated 2021 launch of our Ontrak tiered care programs and their ability to meet the needs of 100% of those with undiagnosed and untreated behavioral health conditions, the anticipated 2021 launch of an expanded suite of behavioral health programs and their scalability to serve more members, and recently signed contract expansions for our LifeDojo solutions; and statements regarding revenue growth in 2021 and our strategy to regain the Ontrak-A business. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control, which may cause actual results to differ materially from stated expectations. These risk factors include, among others, changes in regulations or issuance of new regulations or interpretations; limited operating history; our inability to execute our business plan; increase our revenue and achieve profitability; lower than anticipated eligible members under our contracts; our inability to recognize revenue; lack of outcomes and statistically significant formal research studies; difficulty enrolling new members and maintaining existing members in our programs; the risk that the treatment programs might not be effective; difficulty in developing, exploiting and protecting proprietary technologies; intense competition and substantial regulation in the health care industry; business disruption and related risks resulting from the outbreak of the novel coronavirus 2019; high customer concentration; dependence on key personnel and the ability to recruit, retain and develop a large and diverse workforce; the risks associated with the adequacy of our existing cash resources and our ability to continue as a going concern; our ability to raise additional capital when needed and our liquidity; and risks related to our ability to realize the potential benefits of and to effectively integrate acquisitions. You are urged to consider statements that include the words “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 to be uncertain and forward-looking. Forward looking statements may include statements regarding potential additional spending on behavioral health, our path towards profitability, our momentum, anticipation of 2020 headwinds becoming 2021 tailwinds, surging demand for “telemental” health services, revenue from new launches, nationwide contracts upon which to expand, significant progress towards contracting with our increasing pipeline of potential partners, our confidence in our growth strategy for 2021 and beyond, and our outlook for future revenues and Adjusted EBITDA. For a further list and description of the risks and uncertainties we face, please refer to our most recent Securities and Exchange Commission filings which are available on its website at http://www.sec.gov. Such forward-looking statements are current only as of the date they are made, and we assume 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, Adjusted EBITDA Margin, Non-GAAP net loss, and Non-GAAP net loss per common share, which are not U.S. GAAP financial measures, and clarifies and enhances an understanding of our past performance. 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, acquisition related costs, (gain) loss on change in fair value of warrant liability and write-off of debt issuance costs. 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 stock-based compensation, acquisition related costs, (gain) loss on change in fair value of warrant liability and write-off of debt issuance costs. 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, Adjusted EBITDA Margin, Non-GAAP net loss and Non-GAAP net loss per common share may vary from that of others in our industry. Neither EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Non-GAAP net loss nor 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.
ONTRAK, INC. Consolidated Statements of Operations (in thousands, except per share data) | ||||||||||||||||
| Three Months Ended |
| Year Ended | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
Revenue | $ | 29,251 |
|
| $ | 11,758 |
|
| $ | 82,837 |
|
| $ | 35,095 |
| |
Cost of revenue |
| 13,426 |
|
|
| 6,897 |
|
|
| 43,603 |
|
|
| 20,408 |
| |
Gross profit |
| 15,825 |
|
|
| 4,861 |
|
|
| 39,234 |
|
|
| 14,687 |
| |
|
|
|
|
|
|
|
| |||||||||
Operating expenses: |
|
|
|
|
|
|
| |||||||||
Research and development |
| 4,908 |
|
|
| 1,463 |
|
|
| 12,923 |
|
|
| 5,439 |
| |
Sales and marketing |
| 1,423 |
|
|
| 1,286 |
|
|
| 4,525 |
|
|
| 4,735 |
| |
General and administrative |
| 11,318 |
|
|
| 9,109 |
|
|
| 36,709 |
|
|
| 24,527 |
| |
Total operating expenses |
| 17,649 |
|
|
| 11,858 |
|
|
| 54,157 |
|
|
| 34,701 |
| |
Operating loss |
| (1,824 | ) |
|
| (6,997 | ) |
|
| (14,923 | ) |
|
| (20,014 | ) | |
|
|
|
|
|
|
|
| |||||||||
Other income (expense), net |
| 13 |
|
|
| (21 | ) |
|
| (1,213 | ) |
|
| (2,598 | ) | |
Interest expense, net |
| (2,063 | ) |
|
| (1,665 | ) |
|
| (7,219 | ) |
|
| (3,047 | ) | |
Loss before income taxes |
| (3,874 | ) |
|
| (8,683 | ) |
|
| (23,355 | ) |
|
| (25,659 | ) | |
Income tax benefit |
| 645 |
|
|
| — |
|
|
| 645 |
|
|
| — |
| |
Net loss |
| (3,229 | ) |
|
| (8,683 | ) |
|
| (22,710 | ) |
|
| (25,659 | ) | |
Dividends on preferred stock - declared and undeclared |
| (1,523 | ) |
|
| — |
|
|
| (1,987 | ) |
|
| — |
| |
Net loss attributable to common stockholders | $ | (4,752 | ) |
| $ | (8,683 | ) |
| $ | (24,697 | ) |
| $ | (25,659 | ) | |
|
|
|
|
|
|
|
| |||||||||
Net loss per common share - basic and diluted | $ | (0.27 | ) |
| $ | (0.52 | ) |
| $ | (1.44 | ) |
| $ | (1.56 | ) | |
|
|
|
|
|
|
|
| |||||||||
Weighted-average common shares outstanding - basic and diluted |
| 17,472 |
|
|
| 16,590 |
|
|
| 17,112 |
|
|
| 16,418 |
|
ONTRAK, INC. Consolidated Balance Sheets (in thousands, except share and per share data) | ||||||||
| December 31, | |||||||
| 2020 |
| 2019 | |||||
Assets |
|
|
| |||||
Current assets: |
|
|
| |||||
Cash and cash equivalents | $ | 86,907 |
|
| $ | 13,610 |
| |
Restricted cash - current |
| 9,127 |
|
|
| — |
| |
Receivables, net |
| 16,682 |
|
|
| 3,615 |
| |
Unbilled receivables |
| 4,426 |
|
|
| 2,093 |
| |
Deferred costs - current |
| 2,352 |
|
|
| 341 |
| |
Prepaid expenses and other current assets |
| 4,144 |
|
|
| 733 |
| |
Total current assets |
| 123,638 |
|
|
| 20,392 |
| |
Long-term assets: |
|
|
| |||||
Property and equipment, net |
| 2,273 |
|
|
| 528 |
| |
Restricted cash - long-term |
| 7,176 |
|
|
| 408 |
| |
Goodwill |
| 5,727 |
|
|
| — |
| |
Intangible assets, net |
| 3,561 |
|
|
| — |
| |
Other assets |
| 367 |
|
|
| 112 |
| |
Operating lease right-of-use asset |
| 1,959 |
|
|
| 2,415 |
| |
Total assets | $ | 144,701 |
|
| $ | 23,855 |
| |
|
|
|
| |||||
Liabilities and stockholders' equity (deficit) |
|
|
| |||||
Current liabilities: |
|
|
| |||||
Accounts payable | $ | 1,287 |
|
| $ | 1,385 |
| |
Accrued compensation and benefits |
| 4,723 |
|
|
| 3,640 |
| |
Deferred revenue |
| 20,954 |
|
|
| 5,803 |
| |
Current portion of operating lease liability |
| 434 |
|
|
| 374 |
| |
Other accrued liabilities |
| 9,012 |
|
|
| 2,205 |
| |
Warrant liabilities |
| — |
|
|
| 691 |
| |
Total current liabilities |
| 36,410 |
|
|
| 14,098 |
| |
Long-term liabilities: |
|
|
| |||||
Long-term debt, net |
| 45,719 |
|
|
| 31,597 |
| |
Long-term operating lease liability |
| 1,403 |
|
|
| 1,836 |
| |
Long-term finance lease liabilities |
| 418 |
|
|
| 233 |
| |
Total liabilities |
| 83,950 |
|
|
| 47,764 |
| |
Commitments and contingencies |
|
|
| |||||
|
|
|
| |||||
Stockholders' deficit: |
|
|
| |||||
Preferred stock, $0.0001 par value; 50,000,000 shares authorized; 3,770,265 and no shares issued and outstanding at December 31, 2020 and 2019, respectively |
| — |
|
|
| — |
| |
Common stock, $0.0001 par value, 500,000,000 shares authorized; 17,543,218 and 16,616,165 shares issued and outstanding at December 31, 2020 and 2019, respectively |
| 2 |
|
|
| 2 |
| |
Additional paid-in capital |
| 414,773 |
|
|
| 307,403 |
| |
Accumulated deficit |
| (354,024 | ) |
|
| (331,314 | ) | |
Total stockholders' equity (deficit) |
| 60,751 |
|
|
| (23,909 | ) | |
Total liabilities and stockholders' equity (deficit) | $ | 144,701 |
|
| $ | 23,855 |
|
ONTRAK, INC. Consolidated Statements of Cash Flows (in thousands ) | ||||||||
| Year Ended December 31, | |||||||
| 2020 |
| 2019 | |||||
Cash flows from operating activities |
|
|
| |||||
Net loss | $ | (22,710 | ) |
| $ | (25,659 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
| |||||
Stock-based compensation expense |
| 8,126 |
|
|
| 5,210 |
| |
Write-off of debt issuance costs |
| — |
|
|
| 1,505 |
| |
Paid-in-kind interest expense |
| 3,500 |
|
|
| — |
| |
Depreciation |
| 303 |
|
|
| 133 |
| |
Amortization |
| 1,624 |
|
|
| 696 |
| |
Deferred taxes |
| (654 | ) |
|
| — |
| |
Warrants issued for services |
| — |
|
|
| 43 |
| |
Change in fair value of warrants |
| 1,233 |
|
|
| 60 |
| |
Change in fair value of contingent consideration |
| (20 | ) |
|
| — |
| |
401(k) employer match in common shares |
| 691 |
|
|
| — |
| |
Deferred rent |
| — |
|
|
| (26 | ) | |
Changes in operating assets and liabilities: |
|
|
| |||||
Receivables |
| (13,014 | ) |
|
| (2,233 | ) | |
Unbilled receivables |
| (2,333 | ) |
|
| (2,093 | ) | |
Prepaid and other assets |
| (5,677 | ) |
|
| (246 | ) | |
Accounts payable |
| (175 | ) |
|
| 888 |
| |
Deferred revenue |
| 15,057 |
|
|
| 1,608 |
| |
Lease liabilities |
| (373 | ) |
|
| 684 |
| |
Other accrued liabilities |
| 8,140 |
|
|
| 2,529 |
| |
Net cash used in operating activities |
| (6,282 | ) |
|
| (16,901 | ) | |
|
|
|
| |||||
Cash flows from investing activities |
|
|
| |||||
Purchases of property and equipment |
| (1,757 | ) |
|
| — |
| |
Acquisition of LifeDojo, net of cash acquired |
| (2,881 | ) |
|
| — |
| |
Net cash used in investing activities |
| (4,638 | ) |
|
| — |
| |
|
|
|
| |||||
Cash flows from financing activities |
|
|
| |||||
Proceeds from issuance of preferred stock |
| 87,359 |
|
|
| — |
| |
Preferred stock issuance costs |
| (806 | ) |
|
| — |
| |
Dividends paid |
| (1,241 | ) |
|
| — |
| |
Proceeds from revolving loan |
| — |
|
|
| 7,500 |
| |
Repayment of revolving loan |
| — |
|
|
| (15,000 | ) | |
Proceeds from A/R facility |
| — |
|
|
| 36,527 |
| |
Repayment of A/R facility |
| — |
|
|
| (1,938 | ) | |
Proceeds from loan |
| 10,000 |
|
|
| 1,938 |
| |
Debt issuance costs |
| (128 | ) |
|
| (2,813 | ) | |
Debt termination related fees |
| — |
|
|
| (1,956 | ) | |
Proceed from warrant exercise |
| 133 |
|
|
| 1,128 |
| |
Proceed from options exercise |
| 6,171 |
|
|
| 1,894 |
| |
Finance lease obligations |
| (186 | ) |
|
| 69 |
| |
Financed insurance premium payments |
| (1,190 | ) |
|
| — |
| |
Net cash provided by financing activities |
| 100,112 |
|
|
| 27,349 |
| |
|
|
|
| |||||
Net change in cash and restricted cash |
| 89,192 |
|
|
| 10,448 |
| |
Cash and restricted cash at beginning of period |
| 14,018 |
|
|
| 3,570 |
| |
Cash and restricted cash at end of period | $ | 103,210 |
|
| $ | 14,018 |
| |
|
|
|
| |||||
Supplemental disclosure of cash flow information: |
|
|
| |||||
Interest paid | $ | 2,961 |
|
| $ | 870 |
| |
Right of use asset obtained in exchange for lease obligation |
| — |
|
|
| 2,574 |
| |
Non-cash financing and investing activities: |
|
|
| |||||
Stock issued in acquisition of LifeDojo | $ | 5,035 |
|
| $ | — |
| |
Financed insurance premiums |
| 3,344 |
|
|
| — |
| |
Warrant issued in connection with 2024 Note |
| — |
|
|
| 2,354 |
| |
Reclassification of warrant liability to equity |
| 1,924 |
|
|
| 86 |
| |
Finance lease and accrued purchases of property and equipment |
| 500 |
|
|
| 250 |
| |
Contingent consideration and cash holdback relating to acquisition of LifeDojo |
| 605 |
|
|
| — |
|
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 |
| Year Ended | ||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Operating Loss |
| $ | (1,824 | ) |
| $ | (6,997 | ) |
| $ | (14,923 | ) |
| $ | (20,014 | ) |
Depreciation expense |
|
| 125 |
|
|
| 25 |
|
|
| 303 |
|
|
| 133 |
|
Amortization expense (1) |
|
| 392 |
|
|
| 138 |
|
|
| 874 |
|
|
| 246 |
|
EBITDA |
|
| (1,307 | ) |
|
| (6,834 | ) |
|
| (13,746 | ) |
|
| (19,635 | ) |
Stock-based compensation expense |
|
| 2,327 |
|
|
| 2,263 |
|
|
| 8,126 |
|
|
| 5,210 |
|
Write-off of debt issuance costs (2) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,505 |
|
Acquisition related costs (3) |
|
| 1,153 |
|
|
| — |
|
|
| 1,329 |
|
|
| — |
|
Adjusted EBITDA |
| $ | 2,173 |
|
| $ | (4,571 | ) |
| $ | (4,291 | ) |
| $ | (12,920 | ) |
Adjusted EBITDA Margin |
|
| 7 | % |
|
| (39 | )% |
|
| (5 | )% |
|
| (37 | )% |
Reconciliation of Net Loss to Non-GAAP Net Income (Loss); and Net Loss per Common Share to Non-GAAP Net Loss per Common Share | ||||||||||||||||
|
| Three Months Ended |
| Year Ended | ||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Net loss |
| $ | (3,229 | ) |
| $ | (8,683 | ) |
| $ | (22,710 | ) |
| $ | (25,659 | ) |
Stock-based compensation expense |
|
| 2,327 |
|
|
| 2,263 |
|
|
| 8,126 |
|
|
| 5,210 |
|
Loss on change in fair value of warrant liability |
|
| 16 |
|
|
| 22 |
|
|
| 1,233 |
|
|
| 60 |
|
Write-off of debt issuance costs (2) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,505 |
|
Acquisition related costs (3) |
|
| 1,153 |
|
|
| — |
|
|
| 1,329 |
|
|
| — |
|
Non-GAAP net income (loss) |
| $ | 267 |
|
| $ | (6,398 | ) |
| $ | (12,022 | ) |
| $ | (18,884 | ) |
Dividends on preferred stock - declared and undeclared |
|
| (1,523 | ) |
|
| — |
|
|
| (1,987 | ) |
|
| — |
|
Non-GAAP net loss attributable to common stockholders |
| $ | (1,256 | ) |
| $ | (6,398 | ) |
| $ | (14,009 | ) |
| $ | (18,884 | ) |
|
|
|
|
|
|
|
|
| ||||||||
Net loss per common share - basic and diluted |
| $ | (0.27 | ) |
| $ | (0.52 | ) |
| $ | (1.44 | ) |
| $ | (1.56 | ) |
Non-GAAP net loss per common share - basic and diluted |
|
| (0.07 | ) |
|
| (0.39 | ) |
|
| (0.82 | ) |
|
| (1.15 | ) |
Weighted-average common shares outstanding - basic and diluted |
|
| 17,472 |
|
|
| 16,590 |
|
|
| 17,112 |
|
|
| 16,418 |
|
__________________________
(1) Relates to operating and financing ROU assets and acquired intangible assets.
(2) Relates to the repayment and termination of our 2022 Loan in September 2019.
(3) Includes external legal, accounting, and advisory costs, as well as gain on change in fair value of continent liability related to a stock price guarantee, associated with an acquisition.
Last Trade: | US$1.82 |
Daily Change: | -0.13 -6.67 |
Daily Volume: | 48,543 |
Market Cap: | US$5.820M |
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