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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ontrak Inc | NASDAQ:OTRK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.0056 | -2.11% | 0.2604 | 0.2522 | 0.2604 | 0.27 | 0.252 | 0.27 | 257,611 | 23:47:36 |
Ontrak, Inc. (NASDAQ: OTRK) (“Ontrak” or the “Company”), a leading AI-powered and telehealth-enabled healthcare company, today reported its financial results for the third quarter ended September 30, 2023.
Management Commentary
“I believe the enhancements we have made to our product strategy with our WholeHealth suite of behavioral health solutions has played a major role in the business momentum we are seeing. Operating efficiencies and a commitment to customer success have also contributed to our improved top-line and bottom-line results. All of us at Ontrak Health are deeply grateful to our new and existing customers for their support and shared commitment to helping improve the health and save the lives of as many members as possible,” said Brandon LaVerne, the Company's Interim Chief Executive Officer and Chief Operating Officer.
Third Quarter 2023 Financial Results Highlights
All common share and per share amounts presented herein for all prior periods have been retroactively adjusted to reflect the impact of the previously announced reverse stock split (see below for more information).
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.
Third Quarter 2023 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 year ending December 31, 2023, the Company reaffirms its estimate of 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 expectations around state approval and timing of launch of the new customer contract, 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; 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, write-off of debt issuance costs, 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, write-off of debt issuance costs, 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)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Revenue
$
3,715
$
2,843
$
9,204
$
12,004
Cost of revenue
1,040
1,436
2,691
6,488
Gross profit
2,675
1,407
6,513
5,516
Operating expenses:
Research and development
1,552
2,833
4,733
9,113
Sales and marketing
822
1,151
2,649
3,893
General and administrative
4,365
7,552
14,593
27,694
Restructuring, severance and related charges
—
934
457
934
Total operating expenses
6,739
12,470
22,432
41,634
Operating loss
(4,064
)
(11,063
)
(15,919
)
(36,118
)
Other income (expense), net
38
(1,241
)
324
(3,213
)
Interest expense, net
(2,392
)
(440
)
(6,009
)
(2,996
)
Loss before income taxes
(6,418
)
(12,744
)
(21,604
)
(42,327
)
Income tax (expense) benefit
—
(20
)
80
(140
)
Net loss
(6,418
)
(12,764
)
(21,524
)
(42,467
)
Dividends on preferred stock - declared and undeclared
(2,239
)
(2,239
)
(6,716
)
(6,716
)
Net loss attributable to common stockholders
$
(8,657
)
$
(15,003
)
$
(28,240
)
$
(49,183
)
Net loss per common share, basic and diluted
$
(1.76
)
$
(3.70
)
$
(5.85
)
$
(13.42
)
Weighted-average common shares outstanding, basic and diluted
4,905
4,056
4,827
3,666
ONTRAK, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
September 30,
December 31,
2023
2022
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
3,227
$
5,032
Restricted cash - current
6,000
4,477
Receivables, net
212
973
Unbilled receivables
351
453
Deferred costs - current
203
156
Prepaid expenses and other current assets
2,691
3,168
Total current assets
12,684
14,259
Long-term assets:
Property and equipment, net
1,769
2,498
Restricted cash - long-term
—
204
Goodwill
5,713
5,713
Intangible assets, net
210
1,125
Other assets
186
1,326
Operating lease right-of-use assets
206
632
Total assets
$
20,768
$
25,757
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
1,139
$
1,927
Accrued compensation and benefits
743
1,987
Deferred revenue
300
326
Current portion of operating lease liabilities
53
653
Other accrued liabilities
8,921
4,576
Total current liabilities
11,156
9,469
Long-term liabilities:
Long-term debt, net
14,060
10,065
Long-term operating lease liabilities
181
546
Total liabilities
25,397
20,080
Commitments and contingencies
Stockholders' (deficit) equity:
Preferred stock, $0.0001 par value; 50,000,000 shares authorized; 3,770,265 shares issued and outstanding at each of September 30, 2023 and December 31, 2022
—
—
Common stock, $0.0001 par value, 500,000,000 shares authorized; 4,916,963 and
4,527,914 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
3
3
Additional paid-in capital
459,633
448,415
Accumulated deficit
(464,265
)
(442,741
)
Total stockholders' (deficit) equity
(4,629
)
5,677
Total liabilities and stockholders' (deficit) equity
$
20,768
$
25,757
ONTRAK, INC.
Consolidated Statements of Cash Flows
(in thousands, unaudited)
For the Nine Months Ended September 30,
2023
2022
Cash flows from operating activities
Net loss
$
(21,524
)
$
(42,467
)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense
2,340
6,282
Write-off of debt issuance costs
—
3,334
Write-off of other asset
100
—
Paid-in-kind interest expense
3,110
—
Gain on termination of operating lease
(471
)
—
Depreciation expense
876
2,222
Amortization expense
3,924
1,946
Change in fair value of warrant liability
(26
)
(121
)
401(k) employer match in common shares
—
528
Common stock issued for consulting services
—
102
Changes in operating assets and liabilities:
Receivables
761
1,348
Unbilled receivables
102
2,823
Prepaid expenses and other current assets
917
2,966
Accounts payable
(736
)
758
Deferred revenue
(27
)
(153
)
Leases liabilities
(154
)
(160
)
Other accrued liabilities
(1,074
)
(1,928
)
Net cash used in operating activities
(11,882
)
(22,520
)
Cash flows from investing activities
Purchase of property and equipment
(196
)
(1,004
)
Net cash used in investing activities
(196
)
(1,004
)
Cash flows from financing activities
Proceeds from Keep Well Notes
8,000
11,000
Proceeds from Keep Well Agreement held in escrow
6,000
—
Repayments of 2024 Notes
—
(39,194
)
Proceeds from issuance of common stock
—
4,000
Common stock issuance costs
—
(706
)
Dividends paid
—
(2,239
)
Debt issuance costs
(449
)
(792
)
Finance lease obligations
(126
)
(226
)
Financed insurance premium payments
(1,830
)
(2,325
)
Payment of taxes related to net-settled stock awards
(3
)
(6
)
Net cash provided by (used in) financing activities
11,592
(30,488
)
Net change in cash and restricted cash
(486
)
(54,012
)
Cash and restricted cash at beginning of period
9,713
65,946
Cash and restricted cash at end of period
$
9,227
$
11,934
Supplemental disclosure of cash flow information:
Interest paid
$
55
$
2,307
Income taxes paid
3
210
Non-cash financing and investing activities:
Warrants issued in connection with Keep Well Notes and 2024 Notes
$
11,034
$
780
Loss on extinguishment of debt with related party
2,153
—
Common stock issued in connection with Keep Well Agreement
—
1,249
Financed insurance premium
284
352
Finance lease and accrued purchases of property and equipment
23
31
Common stock issued to settle contingent consideration
—
293
Accrued debt issuance costs
266
138
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 September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Operating loss
$
(4,064
)
$
(11,063
)
$
(15,919
)
$
(36,118
)
Depreciation expense
286
798
876
2,222
Amortization expense (1)
332
412
1,074
1,217
EBITDA
(3,446
)
(9,853
)
(13,969
)
(32,679
)
Stock-based compensation expense
797
1,219
2,340
6,282
Restructuring, severance and related costs (2)
—
934
457
934
Adjusted EBITDA
$
(2,649
)
$
(7,700
)
$
(11,172
)
$
(25,463
)
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 September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Net loss
$
(6,418
)
$
(12,764
)
$
(21,524
)
$
(42,467
)
Stock-based compensation expense
797
1,219
2,340
6,282
Write-off of debt issuance costs
—
1,311
—
3,334
Restructuring, severance and related costs (2)
—
934
457
934
Gain on change in fair value of warrant liability
(38
)
(70
)
(26
)
(121
)
Gain on termination of operating lease (3)
—
—
(471
)
—
Non-GAAP net loss
(5,659
)
(9,370
)
(19,224
)
(32,038
)
Dividends on preferred stock - declared and undeclared
(2,239
)
(2,239
)
(6,716
)
(6,716
)
Non-GAAP net loss attributable to common stockholders
$
(7,898
)
$
(11,609
)
$
(25,940
)
$
(38,754
)
Net loss per common share - basic and diluted
$
(1.76
)
$
(3.70
)
$
(5.85
)
$
(13.42
)
Non-GAAP net loss per common share - basic and diluted
(1.61
)
(2.86
)
(5.37
)
(10.57
)
Weighted-average common shares outstanding - basic and diluted
4,905
4,056
4,827
3,666
_______________________
(1)
Relates to operating and financing ROU assets and acquired intangible assets.
(2)
Includes one-time severance and related benefit costs related to reduction in workforce plans announced in March 2023 and August 2022 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 in February 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231114572567/en/
For Investors:
Ryan Halsted Gilmartin Group investors@ontrakhealth.com
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