Ontrak Health Announces 2024 First Quarter Financial Results
Ontrak Health (NASDAQ: OTRK) reported Q1 2024 financial results, showing a 6% year-over-year revenue increase to $2.7 million. The operating loss decreased by 41% to $4.3 million, and adjusted EBITDA improved by 38% to a loss of $3.4 million. Net loss for the quarter was $4.5 million, or $0.11 per share. The company secured approval from Florida's AHCA to serve Community Care Plan's adult Medicaid population. Enrollment in the WholeHealth+ program was 1,521 by the end of Q1. In recent developments, Ontrak partnered with Acuitas Capital for potential funding up to $12 million and announced the expansion of its WholeHealth+ program. The company's revenue outlook for Q2 2024 is between $2.4 million and $2.8 million.
- Q1 revenue increased 6% year-over-year to $2.7 million.
- Operating loss improved by 41% year-over-year to $4.3 million.
- Adjusted EBITDA loss improved by 38% year-over-year to $3.4 million.
- Net loss of $4.5 million, showing significant improvement from the previous year.
- Approval by Florida AHCA to serve Community Care Plan's adult Medicaid population.
- Expansion of WholeHealth+ program to a larger commercial population.
- Potential funding up to $12 million through partnership with Acuitas Capital.
- Net loss of $4.5 million or $0.11 per share.
- Decrease in WholeHealth+ program enrollment from 1,758 in Q4 2023 to 1,521 in Q1 2024.
- Revenue outlook for Q2 2024 remains flat at $2.4 million to $2.8 million.
Insights
Ontrak Health's first quarter results show some signs of improvement, but there are also elements that need careful attention. The company's revenue of
Adjusted EBITDA showed a similar positive trend, improving by
The announcement of onboarding a new regional Medicaid health plan customer and the anticipated growth in the outreach pool are positive developments. This could potentially drive revenue growth and help Ontrak scale its operations. However, achieving profitability remains paramount.
The introduction of the Recovering Quality of Life Assessment (ReQoL) into their WholeHealth+ suite reflects Ontrak's commitment to improving patient outcomes, which could enhance the company's value proposition in the long term.
As a company that relies heavily on delivering measurable health outcomes, Ontrak Health's inclusion of the Recovering Quality of Life Assessment (ReQoL) in its WholeHealth+ suite is a noteworthy development. ReQoL focuses on understanding the overall well-being of patients rather than just their clinical diagnosis, which aligns well with modern, patient-centered approaches in mental health care. This could significantly bolster their value proposition to clients, particularly Medicaid programs and health plans focused on holistic patient care.
Additionally, the improvement in clinical outcomes such as GAD-7 and PHQ-9 scores by
However, the efficacy of these innovations still needs to be validated over a larger sample size and extended time frame. Investors should be aware that while the clinical improvements are encouraging, their translation into sustained financial gains is yet to be fully realized.
Ontrak's recent agreement with a regional Medicaid health plan and the subsequent state approval is a strategic move that could expand their market reach. This partnership is expected to grow the outreach pool by
From a market perspective, Ontrak's expansion efforts are noteworthy, especially with the health plan customer in the U.S. Mid-Atlantic and Southeast. The growth in eligible members for the WholeHealth+ program by over 6.5 times is a significant scale-up, potentially bringing in a steady stream of revenue. However, the company's ability to effectively manage and support this expanded user base will be important for realizing these benefits.
Another market observation is the additional financing through the issuance of senior secured convertible promissory notes. While this provides necessary liquidity, the associated warrants and potential dilution could pose a risk to existing shareholders. The company's stock performance in the short term will likely reflect investor sentiment on these financial maneuvers.
-
Q1 Revenue of
$2.7 million 6% year over year -
Q1 operating loss of
$(4.3) million 41% improvement year over year -
Q1 adjusted EBITDA of
$(3.4) million 38% improvement year over year - Company announces state approval of a new customer agreement with a prominent regional Medicaid health plan for our full suite of solutions
- Company to Host Conference Call at 4:30 pm ET Today
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
First Quarter 2024 Financial Results Highlights
-
Revenue for the first quarter of 2024 was
$2.7 million 6% increase compared to the same period in 2023. -
Operating loss for the first quarter of 2024 was
$(4.3) million $(7.2) million -
Adjusted EBITDA for the first quarter of 2024 was
$(3.4) million $(5.4) million -
Net loss for the first quarter of 2024 was
$(4.5) million $(0.11) $(8.4) million $(2.26) -
Non-GAAP net loss for the first quarter of 2024 was
$(3.7) million $(0.10) $(7.7) million $(2.12)
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
- Total enrolled members in our WholeHealth+ program numbered 1,521 at the end of Q1 2024, compared to 1,758 at the end of Q4 2023 and 1,526 at the end of Q1 2023.
- The Company's effective outreach pool was 5,057 at March 31, 2024 compared to 2,161 at December 31, 2023.
-
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 expects to initiate outreach to new eligible members of the new health plan customer in the next 30 to 60 days and that the Company's overall outreach pool of eligible members for our Wholehealth+ program is expected to grow by upwards of
10% with the addition of these new eligible members. -
In March 2024, the Company and Acuitas Capital entered into a Sixth Amendment to the Master Note Purchase Agreement, as amended (the "Sixth Amendment"). In accordance with the Sixth Amendment, on April 5, 2024 and May 8, 2024, the Company issued and sold to Acuitas Capital, and Acuitas Capital purchased from the Company, senior secured convertible promissory notes, each with a principal amount of
$1.5 million $12.0 million 200% warrant coverage. Each Demand Warrant will have a term of five (5) years. The initial exercise price of each Demand Warrant will be (a) in the case of the Demand Warrant issued in connection with the Initial Demand Note and in respect of the next$3.0 million $0.34 42$0.12 -
From January 1, 2024 through the date of this report, the Company received a total of
$2.0 million -
On February 29, 2024, the Company announced the expansion of Ontrak's WholeHealth+ program to a larger commercial population with a health plan customer, one of the largest health systems in the
U.S. Mid-Atlantic and Southeast. On March 12, 2024, the Company announced a continuing expansion of its strategic partnership with the same health plan customer to offer its program to eligible self-insured groups. The expanded partnership initially represents more than 6.5 times increase in the number of this customer's members who are eligible for the Ontrak WholeHealth+ program. - In February 2024, the Company announced the introduction of Recovering Quality of Life Assessment (ReQoL) into its cutting-edge WholeHealth+ Product and Solutions Suite. ReQoL assessments can be used in healthcare and research settings to evaluate the impact of mental health conditions, psychological interventions, and healthcare interventions on patients' lives because they focus on understanding the person over the diagnosis, consistent with recovery strategies.
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
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
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with
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
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
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, |
|
— |
|
|
|
— |
|
Common stock, |
|
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 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514957690/en/
For Investors:
Ryan Halsted
Gilmartin Group
investors@ontrakhealth.com
Source: Ontrak, Inc.
FAQ
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