MIAMI / May 14, 2024 / Business Wire / Ontrak, Inc. (NASDAQ: OTRK) (“Ontrak” or the “Company”), a leading AI-powered and technology-enabled behavioral healthcare company, today reported its financial results for the first quarter ended March 31, 2024.
Management Commentary
“We are thrilled to announce our approval by the Florida Agency for Health Care Administration (AHCA) as a subcontractor for our new customer, Community Care Plan, a South Florida-based Health Plan to serve its adult Medicaid population,” said Brandon LaVerne, the Company's Chief Executive Officer and Chief Operating Officer. “We are proud of our value proposition and ROI generation capabilities, including our NPS score of 77, improved GAD-7 and PHQ-9 scores of 41%-64% after nine months in our program, medical cost savings reduction of 43% and inpatient admissions reduction of 62%. We continue to innovate our solutions and are excited to generate incremental value by delivering these evidenced-based health outcomes for the members we serve and cost reduction to our customers.”
First Quarter 2024 Financial Results Highlights
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.
First Quarter 2024 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.
For the quarter ending June 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 and technology-enabled 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 strategy will accelerate the Company’s return to growth by converting new customers and expand with existing customers, maximize the Company’s differentiated platform and deliver return on investment for customers, and the Company’s estimated revenue for quarter ending June 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 outcomes of ongoing legal proceedings brought by the U.S. Department of Justice and the Securities and Exchange Commission against the Company’s largest stockholder and former Chief Executive Officer and Chairman, 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 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 | ||||||
|
| 2024 |
| 2023 | ||||
Revenue |
| $ | 2,680 |
|
| $ | 2,529 |
|
Cost of revenue |
|
| 975 |
|
|
| 847 |
|
Gross profit |
|
| 1,705 |
|
|
| 1,682 |
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
| ||||
Research and development |
|
| 1,078 |
|
|
| 1,644 |
|
Sales and marketing |
|
| 532 |
|
|
| 990 |
|
General and administrative |
|
| 4,078 |
|
|
| 5,818 |
|
Restructuring, severance and related charges |
|
| 290 |
|
|
| 457 |
|
Total operating expenses |
|
| 5,978 |
|
|
| 8,909 |
|
Operating loss |
|
| (4,273 | ) |
|
| (7,227 | ) |
|
|
|
|
| ||||
Other (expense) income , net |
|
| (2 | ) |
|
| 291 |
|
Interest expense, net |
|
| (183 | ) |
|
| (1,394 | ) |
Loss before income taxes |
|
| (4,458 | ) |
|
| (8,330 | ) |
Income tax expense |
|
| — |
|
|
| (20 | ) |
Net loss |
|
| (4,458 | ) |
|
| (8,350 | ) |
Dividends on preferred stock - undeclared |
|
| (2,239 | ) |
|
| (2,239 | ) |
Net loss attributable to common stockholders |
| $ | (6,697 | ) |
| $ | (10,589 | ) |
|
|
|
|
| ||||
Net loss per common share, basic and diluted |
| $ | (0.11 | ) |
| $ | (2.26 | ) |
|
|
|
|
| ||||
Weighted-average common shares outstanding, basic and diluted |
|
| 60,882 |
|
|
| 4,686 |
|
ONTRAK, INC. Consolidated Balance Sheets (in thousands, except share and per share data) | |||||||
| March 31, |
| December 31, | ||||
Assets | (unaudited) |
|
| ||||
Current assets: |
|
|
| ||||
Cash | $ | 6,400 |
|
| $ | 9,701 |
|
Receivables, net |
| 241 |
|
|
| — |
|
Unbilled receivables |
| 232 |
|
|
| 207 |
|
Deferred costs |
| 119 |
|
|
| 128 |
|
Prepaid expenses and other current assets |
| 2,439 |
|
|
| 2,743 |
|
Total current assets |
| 9,431 |
|
|
| 12,779 |
|
Long-term assets: |
|
|
| ||||
Property and equipment, net |
| 757 |
|
|
| 913 |
|
Goodwill |
| 5,713 |
|
|
| 5,713 |
|
Intangible assets, net |
| 50 |
|
|
| 99 |
|
Other assets |
| 10,589 |
|
|
| 147 |
|
Operating lease right-of-use assets |
| 183 |
|
|
| 195 |
|
Total assets | $ | 26,723 |
|
| $ | 19,846 |
|
Liabilities and stockholders' equity |
|
|
| ||||
Current liabilities: |
|
|
| ||||
Accounts payable | $ | 667 |
|
| $ | 563 |
|
Accrued compensation and benefits |
| 756 |
|
|
| 442 |
|
Deferred revenue |
| 244 |
|
|
| 97 |
|
Current portion of operating lease liabilities |
| 59 |
|
|
| 56 |
|
Other accrued liabilities |
| 1,982 |
|
|
| 2,784 |
|
Total current liabilities |
| 3,708 |
|
|
| 3,942 |
|
Long-term liabilities: |
|
|
| ||||
Long-term debt, net |
| 1,617 |
|
|
| 1,467 |
|
Long-term operating lease liabilities |
| 151 |
|
|
| 166 |
|
Total liabilities |
| 5,476 |
|
|
| 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 March 31, 2024 and December 31, 2023 |
| — |
|
|
| — |
|
Common stock, $0.0001 par value; 500,000,000 shares authorized; 43,950,678 and 38,466,979 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively |
| 7 |
|
|
| 6 |
|
Additional paid-in capital |
| 496,359 |
|
|
| 484,926 |
|
Accumulated deficit |
| (475,119 | ) |
|
| (470,661 | ) |
Total stockholders' equity |
| 21,247 |
|
|
| 14,271 |
|
Total liabilities and stockholders' equity | $ | 26,723 |
|
| $ | 19,846 |
|
ONTRAK, INC. Consolidated Statements of Cash Flows (in thousands) | ||||||||
| For the Three Months Ended | |||||||
| 2024 |
| 2023 | |||||
Cash flows from operating activities |
|
|
| |||||
Net loss | $ | (4,458 | ) |
| $ | (8,350 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
| |||||
Stock-based compensation expense |
| 352 |
|
|
| 651 |
| |
Paid-in-kind interest expense |
| 112 |
|
|
| 848 |
| |
Gain on termination of operating lease |
| — |
|
|
| (471 | ) | |
Depreciation expense |
| 198 |
|
|
| 295 |
| |
Amortization expense |
| 100 |
|
|
| 912 |
| |
Change in fair value of warrant liability |
| 2 |
|
|
| 19 |
| |
Changes in operating assets and liabilities: |
|
|
| |||||
Receivables |
| (241 | ) |
|
| 278 |
| |
Unbilled receivables |
| (25 | ) |
|
| 217 |
| |
Prepaid expenses and other current assets |
| 365 |
|
|
| 836 |
| |
Accounts payable |
| 104 |
|
|
| (258 | ) | |
Deferred revenue |
| 146 |
|
|
| (18 | ) | |
Leases liabilities |
| (13 | ) |
|
| (118 | ) | |
Other accrued liabilities |
| 99 |
|
|
| 206 |
| |
Net cash used in operating activities |
| (3,259 | ) |
|
| (4,953 | ) | |
Cash flows from investing activities |
|
|
| |||||
Purchase of property and equipment |
| (37 | ) |
|
| (25 | ) | |
Net cash used in investing activities |
| (37 | ) |
|
| (25 | ) | |
Cash flows from financing activities |
|
|
| |||||
Proceeds from Keep Well Notes |
| — |
|
|
| 8,000 |
| |
Proceeds from warrants exercised |
| 523 |
|
|
| — |
| |
Finance lease obligations |
| — |
|
|
| (50 | ) | |
Financed insurance premium payments |
| (528 | ) |
|
| (611 | ) | |
Net cash (used in) provided by financing activities |
| (5 | ) |
|
| 7,339 |
| |
Net change in cash and restricted cash |
| (3,301 | ) |
|
| 2,361 |
| |
Cash and restricted cash at beginning of period |
| 9,701 |
|
|
| 9,713 |
| |
Cash and restricted cash at end of period | $ | 6,400 |
|
| $ | 12,074 |
| |
Supplemental disclosure of cash flow information: |
|
|
| |||||
Interest paid | $ | 30 |
|
| $ | 27 |
| |
Non-cash financing and investing activities: |
|
|
| |||||
Warrants issued in connection with Keep Well Notes | $ | — |
|
| $ | 10,797 |
| |
Debt issuance costs |
| 10,495 |
|
|
| — |
| |
Loss on extinguishment of debt with related party |
| — |
|
|
| 2,153 |
| |
Finance lease and accrued purchases of property and equipment |
| 4 |
|
|
| 44 |
| |
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 | ||||||
|
| 2024 |
| 2023 | ||||
Operating loss |
| $ | (4,273 | ) |
| $ | (7,227 | ) |
Depreciation expense |
|
| 198 |
|
|
| 295 |
|
Amortization expense (1) |
|
| 61 |
|
|
| 391 |
|
EBITDA |
|
| (4,014 | ) |
|
| (6,541 | ) |
Stock-based compensation expense |
|
| 352 |
|
|
| 651 |
|
Restructuring, severance and related costs (2) |
|
| 290 |
|
|
| 457 |
|
Adjusted EBITDA |
| $ | (3,372 | ) |
| $ | (5,433 | ) |
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 | ||||||
|
| 2024 |
| 2023 | ||||
Net loss |
| $ | (4,458 | ) |
| $ | (8,350 | ) |
Stock-based compensation expense |
|
| 352 |
|
|
| 651 |
|
Restructuring, severance and related costs (2) |
|
| 290 |
|
|
| 457 |
|
Loss on change in fair value of warrant liability |
|
| 2 |
|
|
| 19 |
|
Gain on termination of operating lease (3) |
|
| — |
|
|
| (471 | ) |
Non-GAAP net loss |
|
| (3,714 | ) |
|
| (7,694 | ) |
Dividends on preferred stock - undeclared |
|
| (2,239 | ) |
|
| (2,239 | ) |
Non-GAAP net loss attributable to common stockholders |
| $ | (5,953 | ) |
| $ | (9,933 | ) |
|
|
|
|
| ||||
Net loss per common share - basic and diluted |
| $ | (0.11 | ) |
| $ | (2.26 | ) |
Non-GAAP net loss per common share - basic and diluted |
|
| (0.10 | ) |
|
| (2.12 | ) |
Weighted-average common shares outstanding - basic and diluted |
|
| 60,882 |
|
|
| 4,686 |
|
_______________________ | ||
(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) | 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. |
Last Trade: | US$1.82 |
Daily Change: | -0.13 -6.67 |
Daily Volume: | 48,543 |
Market Cap: | US$5.820M |
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