Ontrak, Inc. (NASDAQ: OTRK) (“Ontrak” or the
“Company”), a leading AI-powered and telehealth-enabled healthcare
company, today reported its financial results for the first quarter
ended March 31, 2023.
Management Commentary
"We continue to be encouraged by market feedback to our new
modularized WholeHealth set of solutions. This, coupled with
improved cost controls and new expansion with existing customers,
have us on good footing as we work hard to sign new customers and
serve more members in need of our innovative behavioral health care
offerings," commented Chief Executive Officer, Brandon LaVerne.
First Quarter 2023 Financial Results Highlights
- Revenue for the first quarter of 2023 was $2.5 million,
representing a 52% decrease compared to the same period in
2022.
- Operating loss for the first quarter of 2023 was $(7.2) million
compared to an operating loss of $(13.1) million for the same
period in 2022.
- Adjusted EBITDA for the first quarter of 2023 was $(5.4)
million compared to adjusted EBITDA of $(9.2) million for the same
period in 2022.
- Net loss for first quarter of 2023 was $(8.4) million, or a
$(0.38) diluted net loss per common share (after deduction for
undeclared preferred stock dividends), compared to net loss of
$(14.6) million, or a $(0.81) diluted net loss per common share
(after deduction for declared and undeclared preferred stock
dividends) for the same period in 2022.
- Non-GAAP net loss for first quarter of 2023 was $(7.7) million,
or a $(0.35) non-GAAP diluted net loss per common share (after
deduction for declared and undeclared preferred stock dividends),
compared to non-GAAP net loss of $(11.7) million, or a $(0.67)
non-GAAP diluted net loss per common share (after deduction for
declared and undeclared preferred stock dividends) for the same
period in 2022.
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 2023 and Recent Operating Highlights
- Total enrolled members numbered 1,526 at the end of Q1
2023.
- In March 2023, as part of the Company’s continued cost saving
measures and to reduce its operating costs and to help align with
its previously stated strategic initiatives, the Company
implemented additional headcount reductions wherein approximately
19% of the Company’s employee positions were eliminated, which is
expected to result in a reduction of approximately $2.7 million of
annual compensation costs.
- On March 2, 2023, Terren S. Peizer resigned as a member of the
Board of Directors, as Chairman of the Board, as Executive
Chairman, and as Chief Executive Officer of the Company, effective
immediately. Mr. Peizer explained that his resignation was for the
good of the Company and to minimize any distraction from the
important work that the Company does. The Company’s Board of
Directors appointed Brandon H. LaVerne as Interim Chief Executive
Officer and Mary Louise Osborne as President. Mr. LaVerne continues
to serve as the Company’s Chief Operating Officer and Ms. Osbourne
continues to serve as the Company’s Chief Commercial Officer.
- On March 9, 2023, the Company announced its partnership with
Lyssn, an innovative software platform that uses AI and natural
language processing to enhance communication and outcomes between
healthcare professionals and their members. The partnership will
provide the Company’s care coaches real-time analysis and feedback
on the fidelity of Motivational Interviewing (MI) during coaching
calls with members.
- On March 28, 2023, the Company announced with MyndYou, creators
of an AI-powered Virtual Care Coordinator, that Ontrak will use
MyndYou's MyEleanor, an AI-powered conversational platform, to
engage with members, triage needs, and address issues pertaining to
behavioral, medical, or social care needs. The announcement comes
after a successful pilot program of Ontrak using MyEleanor in which
approximately 38% of members contacted were re-engaged with
Ontrak's evidence-based behavioral health coaching services.
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 year ending December 31, 2023, the Company estimates
revenue in the range of $12 to $14 million. The foregoing estimate
is based on existing and currently planned enrollment launches,
currently anticipated program expansions with current health plan
partners, current expectations with the Company’s existing
customers regarding outreach pool, budget considerations and timing
of expansions.
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, Inc. is a leading AI and telehealth-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, maximize
the Company’s differentiated platform, and strengthen the Company’s
position, the Company’s expectations regarding reductions in costs
resulting from its cost saving measures, and the Company’s
estimated revenue for 2023. 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 resulting from the COVID-19; 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,
acquisition related costs, and loss (gain) on change in fair value
of warrant liability and contingent 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, write-off of debt discount costs, restructuring,
severance and related costs, acquisition related costs and loss
(gain) on change in fair value of warrant liabilities and
contingent 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)
(unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
$
2,529
$
5,258
Cost of revenue
847
2,846
Gross profit
1,682
2,412
Operating expenses:
Research and development
1,644
3,428
Sales and marketing
990
1,436
General and administrative
5,818
10,693
Restructuring, severance and related
charges
457
—
Total operating expenses
8,909
15,557
Operating loss
(7,227
)
(13,145
)
Other income, net
291
—
Interest expense, net
(1,394
)
(1,400
)
Loss before income taxes
(8,330
)
(14,545
)
Income tax expense
(20
)
(100
)
Net loss
(8,350
)
(14,645
)
Dividends on preferred stock - declared
and undeclared
(2,239
)
(2,239
)
Net loss attributable to common
stockholders
$
(10,589
)
$
(16,884
)
Net loss per common share, basic and
diluted
$
(0.38
)
$
(0.81
)
Weighted-average common shares
outstanding, basic and diluted
28,115
20,723
ONTRAK, INC.
Consolidated Balance
Sheets
(in thousands, except share
and per share data)
March 31,
December 31,
2023
2022
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
7,393
$
5,032
Restricted cash - current
4,681
4,477
Receivables, net
695
973
Unbilled receivables
236
453
Deferred costs - current
160
156
Prepaid expenses and other current
assets
2,288
3,168
Total current assets
15,453
14,259
Long-term assets:
Property and equipment, net
2,241
2,498
Restricted cash - long-term
—
204
Goodwill
5,713
5,713
Intangible assets, net
820
1,125
Other assets
381
1,326
Operating lease right-of-use assets
238
632
Total assets
$
24,846
$
25,757
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
1,706
$
1,927
Accrued compensation and benefits
2,106
1,987
Deferred revenue
309
326
Current portion of operating lease
liabilities
60
653
Other accrued liabilities
4,032
4,576
Total current liabilities
8,213
9,469
Long-term liabilities:
Long-term debt, net
9,804
10,065
Long-term operating lease liabilities
209
546
Total liabilities
18,226
20,080
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, 2023 and December 31, 2022
—
—
Common stock, $0.0001 par value,
500,000,000 shares authorized; 29,320,248 and
27,167,479 shares issued and outstanding
at March 31, 2023 and December 31, 2022, respectively
3
3
Additional paid-in capital
457,708
448,415
Accumulated deficit
(451,091
)
(442,741
)
Total stockholders' equity
6,620
5,677
Total liabilities and stockholders'
equity
$
24,846
$
25,757
ONTRAK, INC.
Consolidated Statements of
Cash Flows
(in thousands,
unaudited)
For the Three Months Ended
March 31,
2023
2022
Cash flows from operating
activities
Net loss
$
(8,350
)
$
(14,645
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
651
2,911
Paid-in-kind interest expense
848
—
Gain on termination of operating lease
(471
)
—
Depreciation expense
295
651
Amortization expense
912
637
Change in fair value of warrant
liability
19
—
401(k) employer match in common shares
—
202
Common stock issued for consulting
services
—
102
Changes in operating assets and
liabilities:
Receivables
278
163
Unbilled receivables
217
(933
)
Prepaid expenses and other current
assets
836
351
Accounts payable
(258
)
789
Deferred revenue
(18
)
47
Leases liabilities
(118
)
124
Other accrued liabilities
206
(890
)
Net cash used in operating activities
(4,953
)
(10,491
)
Cash flows from investing
activities
Purchase of property and equipment
(25
)
(255
)
Net cash used in investing activities
(25
)
(255
)
Cash flows from financing
activities
Proceeds from Keep Well Notes
8,000
—
Dividends paid
—
(2,239
)
Repayments of 2024 Notes
—
(19,994
)
Finance lease obligations
(50
)
(84
)
Financed insurance premium payments
(611
)
(750
)
Payment of taxes related to net-settled
stock awards
—
(2
)
Net cash provided by (used in) financing
activities
7,339
(23,069
)
Net change in cash and restricted cash
2,361
(33,815
)
Cash and restricted cash at beginning of
period
9,713
65,946
Cash and restricted cash at end of
period
$
12,074
$
32,131
Supplemental disclosure of cash flow
information:
Interest paid
$
27
$
1,181
Income taxes refunded, net
(72
)
—
Non-cash financing and investing
activities:
Warrants issued in connection with Keep
Well Notes
$
10,797
$
—
Finance lease and accrued purchases of
property and equipment
44
187
Common stock issued to settle contingent
consideration
—
213
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
March 31,
2023
2022
Operating loss
$
(7,227
)
$
(13,145
)
Depreciation expense
295
651
Amortization expense (1)
391
395
EBITDA
(6,541
)
(12,099
)
Stock-based compensation expense
651
2,911
Restructuring, severance and related costs
(2)
457
—
Adjusted EBITDA
$
(5,433
)
$
(9,188
)
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
March 31,
2023
2022
Net loss
$
(8,350
)
$
(14,645
)
Stock-based compensation expense
651
2,911
Restructuring, severance and related costs
(2)
457
—
Loss on change in fair value of warrant
liability
19
—
Gain on termination of operating lease
(3)
(471
)
—
Non-GAAP net loss
(7,694
)
(11,734
)
Dividends on preferred stock - declared
and undeclared
(2,239
)
(2,239
)
Non-GAAP net loss attributable to common
stockholders
$
(9,933
)
$
(13,973
)
Net loss per common share - basic and
diluted
$
(0.38
)
$
(0.81
)
Non-GAAP net loss per common share - basic
and diluted
(0.35
)
(0.67
)
Weighted-average common shares outstanding
- basic and diluted
28,115
20,723
_______________________
(1)
Relates to operating and financing ROU
assets and acquired intangible assets.
(2)
Includes one-time severance and related
benefit costs related to a reduction in workforce announced in
March 2023 as part of Company's continued cost savings measure.
(3)
Represents 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005332/en/
For Investors: Ryan Halsted
Gilmartin Group investors@ontrakhealth.com
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