- Q4 2018 Record Revenue of $5.6
Million, up 85.3% Year over Year and Up 28.7% from Q3 2018
- YE 2018 Record Revenue of $15.2
Million, Up 96.7% from YE 2017
- Outreach Pool of Eligible Members
Increased to approximately 75,000 Members at March 1, 2019 (up 97%
from 38,000 at Q3 2018) as a Result of Significant Expansion within
Existing Plans
- Reiterates 2019 GAAP Revenue
Guidance of $35 Million
- Company to Host Conference Call at
4:30 pm ET on March 14, 2019
Catasys, Inc. (NASDAQ: CATS), a leading AI and
technology-enabled healthcare company, today reported its financial
results for the fourth quarter and year ended December 31, 2018.
The Company provides big data-based analytics and predictive
modeling driven healthcare services to health plans and their
members through its OnTrak™ solution.
Management Commentary on Current Status of Business and
Outlook for 2019
Mr. Terren Peizer, Chairman and CEO, stated, “Catasys has had a
strong start to 2019, as continued expansions with existing health
plan partners significantly accelerated our outreach pool of
eligible members to record levels. The signing of contracts with
new health plans, launches in new states, and program expansions
led to solid enrollment growth for the Company in 2018. We are
reiterating our previous guidance of $35 million of revenues for
2019, which we believe is a conservative estimation of this
enrollment trend given the sizable increase in our outreach
pool.”
Catasys’ outreach pool of eligible members continued its rapid
ramp, increasing to current levels at March 1, 2019 of 75,000 due
to significant expansion within existing contracts, an increase
from approximately 41,000 at December 31, 2018 and up from 38,000
at the end of the third quarter of 2018. New customer launches
continue to take approximately 12 months to ramp up to an
approximate 20% yearly enrollment rate. One year after launch, the
Company generally enrolls more than 20% of its outreach pool over a
year. Catasys generally receives approximately $6,500 net per
enrolled member.
Mr. Peizer continued, “The Company continues to re-invest in our
infrastructure to ensure that we are able to properly scale
operations in anticipation of pending enrollment growth. We are
technologically preparing to handle additional volume, and will be
hiring and training additional care coaches to ensure that members
of the OnTrak program continue to receive the best care while still
optimizing our own productivity. Finally, we intend to devote
continued time and resources to new products that utilize our
existing platform and data driven analytics to widen Catasys’
potential outreach population even further. Given these positive
indicators and our ability to capitalize on growth opportunities,
we remain confident that our provided guidance is a conservative
floor for this year.”
2019 Guidance
- Catasys expects to report revenues of
at least $35 million in 2019. The Company anticipates that this
revenue increase will be supported through accelerating enrollment
growth during the remainder of this year, with the largest portion
of the revenue increase to occur in the second half of 2019.
- This guidance solely represents
existing enrollment launches with current health plan partners and
program expansions with existing customers
- Annual guidance does not include new
contracts and subsequent launches, initial launches of existing
contracts, and new expansions within existing contracts that may
increase its outreach pool throughout the year. As a result of
these subsequent developments, the Company may revise guidance at
that time.
Fourth Quarter 2018 Operating Highlights
- Catasys new enrollment for the quarter
ended December 31, 2018 increased 126% year over year.
- OnTrak program is currently available
through eight health plans in 22 states across the United
States.
Management Commentary on Fourth Quarter and Year-end
2018
Mr. Rick Anderson, President and COO, stated, “We are very
pleased with our enrollment growth trends, which led to the Company
achieving its previously announced guidance for 2018 billings and
record revenue for both the quarter and the year. This was largely
due to our continued success at identifying, engaging and treating
those suffering from co-occurring behavioral and medical health
conditions. We have seen additional launches and notable
programmatic expansion in recent months which have driven increases
in our eligible members, and we expect will drive enrollment in
2019. The Company is focused on continuing to expand its
infrastructure through increased hiring and training, as well as
through the development and implementation of machine-learning AI
and predictive analytics. We believe this will help support our
growth and expansion efforts throughout 2019.”
Fourth Quarter and Year-end 2018 Financial Review
Revenues
- Revenue was $5.6 million for the
fourth quarter of 2018, compared to $3.0 million during the same
period in 2017. There was a net increase in the number of members
enrolled in our OnTrak solution during the fourth quarter of 2018
compared with the same period in 2017. Enrolled members as of
December 31, 2018, was 126% greater than December 31, 2017.
- Revenue was $15.2 million for the
year ended December 31, 2018, an increase of 96.7% compared to $7.7
million in 2017.
Gross Margin
- Gross Margin, which consists of Cost of
Healthcare Services as a percentage of revenue, increased to 52.8%
for the fourth quarter of 2018, compared to 33.1% in the prior year
period.
- Cost of Healthcare Services consists
primarily of salaries related to Catasys’ care coaches, outreach
specialists, healthcare provider claims payments to its network of
physicians and psychologists, and fees charged by third party
administrators for processing these claims.
- The costs for such staff are included
in Cost of Healthcare Services during training and ramp-up periods,
margins will be impacted by the hiring of staff in preparation for
anticipated future customer contracts and corresponding increases
in members eligible for OnTrak.
- Gross Margin was 26.7% for the year
ended December 31, 2018, compared to 17.2% in 2017.
Operating Expenses
- Operating expenses in the fourth
quarter of 2018 were $6.8 million, compared to $5.8 million in the
prior-year period. This increase was mainly due to higher expenses
in the fourth quarter of 2018 related to servicing contracts and
investments in key personnel to support future growth compared to
the prior-year period.
- Operating expenses for the year ended
December 31, 2018, were $28.8 million, compared to $18.4 million in
the prior year.
Net Income (Loss)
- For the fourth quarter of 2018, net
loss was $1.4 million, or $0.09 per diluted share, compared to a
net loss of $2.7 million, or $0.17 per diluted share, in the
prior-year period.
- For the year ended December 31, 2018,
net loss was $14.2 million, or $0.89 per basic and diluted share,
compared to a net loss of $13.6 million, or $0.99 per basic and
diluted share, in the prior year.
Conference Call – Thursday, March 14, 2019 – 4:30 pm
ET
The Company will host a conference call/webcast on Thursday,
March 14, 2019, at 4:30 pm ET/1:30 pm PT.
Investors, analysts, employees and the public are invited to
listen to the conference call via:
Conference Call
877-705-2969 (domestic) or 201-689-8868 (international)
Webcast
https://78449.themediaframe.com/dataconf/productusers/cats/mediaframe/29077/indexl.html
Those who are unable to attend the conference call live can use
the following information to hear a replay version:
Conference ID#: 13672721 Conference Call
Replay: 877-660-6853 (domestic) or 201-612-7415 (international)
Expiration Date: 3/21/2019
About Catasys, Inc.
Catasys, Inc. harnesses proprietary big data predictive
analytics, artificial intelligence and telehealth, combined with
human intervention, to deliver improved member health and cost
savings to health plans through integrated technology enabled
treatment solutions. It is our mission to provide access to
affordable and effective care, thereby improving health and
reducing cost of care for people who suffer from the medical
consequences of behavioral health conditions; helping these people
and their families achieve and maintain better lives.
Catasys' OnTrak solution--contracted with a growing number of
national and regional health plans--is designed to treat members
with behavioral conditions that cause or exacerbate co-existing
medical conditions such as diabetes, hypertension, coronary artery
disease, COPD, and congestive heart failure, which result in high
medical costs.
Catasys 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 matched with data driven engagement
technologies.
OnTrak integrates evidence-based medical and psychosocial
interventions along with care coaching in a 52-week outpatient
solution. The program is currently improving member health and, at
the same time, is demonstrating reduced inpatient and emergency
room utilization, driving a more than 50 percent reduction in total
health insurers' costs for enrolled members. OnTrak is available to
members of several leading health plans in California, Connecticut,
Florida, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana,
Massachusetts, Missouri, Nebraska, New Jersey, North Carolina,
Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia,
West Virginia and Wisconsin.
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. 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 treatment programs might not be
effective, difficulty in developing, exploiting and protecting
proprietary technologies, intense competition and substantial
regulation in the health care industry, 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. You are urged to consider
statements that include the words "may," "will," "would," "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. 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.
CATASYS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Twelve
Months Ended (In thousands, except per share amounts)
December 31, December 31, 2018 2017
2018 2017 Revenues Healthcare services
revenues $ 5,624 $ 3,035 $ 15,177 $ 7,717
Operating expenses Cost of healthcare services
2,654 2,030 11,119 6,391 General and administrative 4,097 3,667
17,395 11,811 Depreciation and amortization 59
115 288 246 Total operating
expenses 6,810 5,812 28,802 18,448
Loss from
operations (1,186 ) (2,777 ) (13,625 ) (10,731 ) Other
income - 88 40 132 Interest expense (292 ) (1 ) (570 ) (3,409 )
Loss on conversion of note - - - (1,356 ) Loss on issuance of
common stock - - - (145 ) Change in fair value of warrant liability
38 11 (56 ) 1,778 Change in fair value of derivative liability
- - - 132
Loss from operations before provision for income taxes
(1,440 ) (2,679 ) (14,211 ) (13,599 ) Provision for income taxes
1 2 1 6
Net loss $ (1,441 ) $ (2,681 ) $ (14,212 ) $ (13,605 )
Basic and diluted net loss per share: ($0.09 )
($0.17 ) ($0.89 ) ($0.99 )
Basic weighted number of
shares outstanding 16,091 15,889
15,995 13,751
CATASYS,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except for
number of shares) December 31, December 31,
2018 2017 ASSETS Current assets Cash,
cash equivalents and restricted cash $ 3,162 $ 4,779 Receivables,
net of allowance for doubtful accounts of $0 and $476, respectively
1,382 511 Prepaids and other current assets 942
366 Total current assets 5,486 5,656
Long-term
assets Property and equipment, net of accumulated depreciation
of $1,801 and $1,542, respectively 263 612 Restricted cash, long
term 408 - Deposits and other assets 166 336
Total Assets $ 6,323 $ 6,604
LIABILITIES AND STOCKHOLDERS' (DEFICIT)/EQUITY Current
liabilities Accounts payable $ 497 $ 980 Accrued compensation
and benefits 1,537 1,177 Deferred revenue 4,195 2,914 Other accrued
liabilities 1,501 578 Total current
liabilities 7,730 5,649
Long-term liabilities Long term
debt, net of discount of $478 and $0, respectively 7,472 - Deferred
rent and other long-term liabilities - 25 Capital leases - 2
Warrant liabilities 86 30
Total
Liabilities 15,288 5,706
Commitments and
contingencies (note 9) Stockholders'
(deficit)/equity Preferred stock, $0.0001 par value; 50,000,000
shares authorized; no shares issued and outstanding - - Common
stock, $0.0001 par value; 500,000,000 shares authorized; 16,185,146
and 15,889,171 shares issued and outstanding at December 31, 2018
and December 31, 2017, respectively 2 2 Additional paid in capital
296,688 294,220 Accumulated deficit (305,655 )
(293,324 )
Total Stockholders' (deficit)/equity
(8,965 ) 898
Total Liabilities and Stockholders'
(Deficit)/Equity $ 6,323 $ 6,604
CATASYS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS Year
Ended (In thousands) December 31, 2018
2017 Operating activities: Net loss $ (14,212 ) $
(13,605 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 288 246
Amortization of debt discount and issuance costs included in
interest expense 187 3,082 Loss on disposal of fixed asset 70 -
Warrants issued for services 86 252 Provision for doubtful accounts
- 590 Deferred rent (91 ) (81 ) Share-based compensation expense
2,056 465 Common stock issued for services 112 181 Loss on
conversion of convertible note - 1,356 Loss on issuance of common
stock, related party - 145 Fair value adjustment on warrant
liability 56 (1,778 ) Fair value adjustment on derivative liability
- (132 ) Changes in current assets and liabilities: Receivables
(871 ) (49 ) Prepaids and other current assets (311 ) 54 Deferred
revenue 3,163 1,389 Accounts payable and other accrued liabilities
893 517 Net cash used in operating
activities $ (8,574 ) $ (7,368 )
Investing
activities: Purchases of property and equipment $ (9 ) $ (448 )
Deposits and other assets 71 35 Net
cash provided by (used in) investing activities $ 62 $ (413 )
Financing activities: Proceeds from the issuance of
common stock and warrants $ - $ 16,458 Proceeds from prom issuance
of bridge loan, related party - 1,300 Payments on convertible
debenture - (4,363 ) Proceeds from loan 7,500 - Transactions costs
- (1,667 ) Capital lease obligations (30 ) (19 ) Debt issuance
costs (317 ) - Proceeds from warrant exercise 150
- Net cash provided by financing activities $ 7,303 $
11,709
Net (decrease) increase in cash, cash equivalents
and restricted cash $ (1,209 ) $ 3,928
Cash, cash
equivalents and restricted cash at beginning of period
4,779 851
Cash, cash equivalents and
restricted cash at end of period $ 3,570 $ 4,779
Supplemental disclosure of cash paid Interest $ 363 $
106 Income taxes $ - $ 40
Supplemental disclosure of non-cash
activity Common stock issued for services $ - $ 181 Warrants
issued for consulting services $ - $ 252 Common stock issued for
conversion of debt and accrued interest $ - $ 7,163 Common stock
issued upon settlement of deferred compensation to officer $ - $
1,122 Warrants issued in connection with A/R Facility $ 64 $ -
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Catasys, Inc.Ariel Davis, 310-444-4346
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