- Record Quarterly Revenue of $29.3 million in Q4 2020, up
149% year over year and up 22% from Q3 2020
- Operating loss of $1.8 million in Q4 2020, a 74% improvement
year over year
- Record Quarterly Adjusted EBITDA of $2.2 million in Q4 2020,
achieving positive quarterly Adjusted EBITDA for the first
time
- Full Year Revenue of $82.8 million, up 136% year over
year
- 2021 Outlook revenue of $100 Million
- Raised $44.9 million in Q4 2020, $41.4 million net of
related fees, by completing a follow-on offering of Non-Convertible
Cumulative Perpetual Preferred Stock
- Acquired LifeDojo Inc. in Q4 2020
- Company to Host Conference Call at 4:30 pm ET Today
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:
- Very rapid enrollment of members under our Ontrak-CI contract,
which expanded in October 2020 and already tops 5,100 members.
- A severe shortage of quality behavioral health providers which
has heightened the value of our contractual relationships with over
11,600 high quality behavioral health providers whom we train and
from whom we receive valuable member progress reports. We
anticipate this number to grow to approximately 15,000 in Q2,
resulting in the largest qualified behavioral health provider
network in the industry.
- Continued momentum in our pipeline and expansions driven by
health plan customer confidence in our member engagement,
evidence-based care programs and proven savings and associated ROI.
Our other existing customers besides Ontrak-A have either already
signed extensions or expansions with us, or are expected to in the
next month.
- Record high member satisfaction levels demonstrated by an
industry leading Q4 2020 Net Promoter Score of 80 for our Ontrak
program versus an NPS of 74 in Q3 2020.
- The anticipated 2021 launch of Ontrak tiered care programs for
the full spectrum of behavioral health needs from high to low
acuity, designed to meet 100% of the behavioral health needs of
those with undiagnosed and untreated behavioral health
conditions.
- The anticipated 2021 launch of an expanded suite of digital
programs including mobile-first depression and anxiety modules that
build upon the LifeDojo platform and scale our ability to serve
more members in the rapidly growing behavioral health
marketplace.
- Recently signed contract expansions for LifeDojo solutions with
a subsidiary of Berkshire Hathaway and Dolby.”
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
- Revenue for the fourth quarter of 2020 was $29.3 million,
representing a 149% increase compared to the same period in 2019
and a 22% increase from the prior quarter.
- Operating loss for the fourth quarter of 2020 was $(1.8)
million, yielding an operating loss margin of (6)% compared to an
operating loss of $(7.0) million for the same period in 2019,
yielding an operating loss margin of (60)%. Operating loss improved
39% from an operating loss of $(3.0) million in the third quarter
of 2020.
- Adjusted EBITDA for the fourth quarter of 2020 was $2.2 million
compared to adjusted EBITDA of $(4.6) million for the same period
in 2019. Adjusted EBITDA improved sequentially by an average of
$1.7 million in each of the quarters in 2020.
- Net loss for the fourth quarter of 2020 was $(3.2) million, or
a $(0.27) diluted net loss per common share (after deduction for
declared and undeclared preferred stock dividends), compared to net
loss of $(8.7) million, or a $(0.52) diluted net loss per share for
the same period in 2019. Net loss and diluted net loss per common
share improved 43% and 25% from net loss of $(5.7) million and
$(0.36) diluted net loss per share in the third quarter of 2020,
respectively.
- Non-GAAP net income for the fourth quarter of 2020 was $0.3
million, or a $(0.07) non-GAAP diluted net loss per common share
(after deduction for declared and undeclared preferred stock
dividends), compared to non-GAAP net loss of $(6.4) million, or a
$(0.39) non-GAAP diluted net loss per share for the same period in
2019. Non-GAAP net loss and non-GAAP diluted net loss per common
share improved 109% and 65% from $(2.9) million non-GAAP net loss
and $(0.20) non-GAAP diluted net loss per common share in the third
quarter of 2020, respectively.
Fiscal Year 2020 Financial Results Highlights
- Revenue for the full year of 2020 was $82.8 million,
representing a 136% increase from prior year.
- Operating loss for the full year of 2020 was $(14.9) million,
yielding an operating loss margin of (18)% compared to an operating
loss of $(20.0) million for the prior year, yielding an operating
loss margin of (57)%.
- Adjusted EBITDA for the full year of 2020 was $(4.3) million
compared to adjusted EBITDA of $(12.9) million for the prior
year.
- Net loss for the full year of 2020 was $(22.7) million, or a
$(1.44) diluted net loss per common share (after deduction for
declared and undeclared preferred stock dividends), compared to net
loss of $(25.7) million, or a $(1.56) diluted net loss per share
for the prior year.
- Non-GAAP net loss for the full year of 2020 was $(12.0)
million, or a $(0.82) non-GAAP diluted net loss per common share
(after deduction for declared and undeclared preferred stock
dividends), compared to non-GAAP net loss of $(18.9) million, or a
$(1.15) non-GAAP diluted net loss per share for the prior
year.
Fourth Quarter 2020 and Recent Operating Highlights:
- Total enrolled members, including Ontrak-A members, increased
to 15,702 at the end of Q4 2020 and to 15,524 as of the date of
this release.
- Gross enrollment for the two-month period ended February 28,
2021, excluding the Ontrak-A customer, was 2,683, reflecting a 60%
annualized enrollment rate.
- The Company renewed its contract with one of the nation's
leading health insurance providers for its Ontrak-C solution in
Texas.
- The Company launched Ontrak-CI Program for a national health
plan in 13 states for the three-year contract awarded in June.
- The Company launched a new 3-year partnership with the Veterans
Health Administration to transform suicide prevention care in the
U.S.
- The Company raised $44.9 million ($41.4 million net of
underwriting fees and other offering expenses) through the issuance
of 1,815,265 of 9.50% Series A Cumulative Perpetual Preferred Stock
("Series A Preferred Stock"). The non-convertible Series A
Preferred Stock trades on the Nasdaq Global Market under the symbol
"OTRKP."
- The Company's Board of Directors appointed Robert I. Newton as
its General Counsel and Secretary.
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:
- Revenue of $100 million. Initially, we were going to guide to
100% growth with revenues of $165 million. In light of Ontrak-A, we
believe we are being conservative with our $100 million revenue
guidance. Of that number, over $88 million is from customers with
existing contracts or in the signature phase and those health plan
partners remaining with us are already contemplating further
expansions. Moreover, we see tremendous upside with large plans in
our pipeline. Furthermore, we are continuing to develop our
strategy to regain the Ontrak-A business emphasizing our validated
medical cost savings and ROI, our NPS of 80, and our clinical
outcomes.
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 December
31,
Year Ended December
31,
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 December
31,
Year Ended December
31,
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 December
31,
Year Ended December
31,
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210309005986/en/
For Investors: Caroline Paul
Gilmartin Group investors@ontrak-inc.com
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