8-K: Ontrak Health Announces Expected Q2 2024 Financial Results and New Health Plan Contract

Ontrak Health reported a 17% year-over-year revenue decrease for Q2 2024, alongside a new contract with a large northeast regional health plan.

Summary

• Ontrak Health announced its expected financial results for the second quarter of 2024, showing a revenue of $2.5 million, which is a 17% decrease compared to the same period last year.
• The company's operating loss for the quarter was $(4.0) million, a 13% improvement year-over-year.
• Adjusted EBITDA was $(3.3) million, an 8% decline year-over-year.
• Net loss for the quarter was $(10.3) million, or $(0.19) per diluted share, compared to a net loss of $(6.8) million, or $(1.84) per diluted share, in the same period of 2023.
• Non-GAAP net loss was $(3.9) million, or $(0.09) per diluted share, compared to $(5.9) million, or $(1.66) per diluted share, in the same period of 2023.
• The company secured a new contract with a large northeast regional health plan, expected to double the outreach pool for their WholeHealth+ solution.
• A formal evaluation showed cost savings of $721 per member per month for members who graduated the WholeHealth+ program, and $508 per member per month for members enrolled for at least five months.
• Ontrak adopted the Comprehensive Healthcare Integration (CHI) framework into its care delivery model.
• Total enrolled members in the WholeHealth+ program were 1,752 at the end of Q2 2024, compared to 1,889 at the end of Q2 2023.
• The total callable outreach pool for WholeHealth+ was 7,511 at June 30, 2024, compared to 10,879 at June 30, 2023.
• The total callable outreach pool for Ontrak Engage was 589 at June 30, 2024.
• The company estimates revenue for the quarter ending September 30, 2024, to be in the range of $2.4 million to $2.8 million.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the revenue decline and increased net loss, but there are positive aspects such as the new contract and cost savings. The company is showing some progress but still faces significant challenges.

Positives

• The operating loss improved by 13% year-over-year, indicating better cost management.
• The company secured a new contract with a large northeast regional health plan, which is expected to significantly increase their outreach pool.
• The formal evaluation demonstrated substantial cost savings per member per month through the WholeHealth+ program.
• The adoption of the CHI framework shows a commitment to integrated care.
• The launch of the Mental Health Digital Twin (MHDT) technology indicates innovation in their approach to behavioral healthcare.

Negatives

• Revenue decreased by 17% year-over-year, indicating a decline in sales.
• Adjusted EBITDA declined by 8% year-over-year, suggesting a decrease in operational profitability.
• Net loss increased from $(6.8) million to $(10.3) million year-over-year.
• The total enrolled members in the WholeHealth+ program decreased from 1,889 to 1,752 year-over-year.
• The total callable outreach pool for WholeHealth+ decreased from 10,879 to 7,511 year-over-year.

Risks

• The company's revenue is declining, which could impact its ability to achieve profitability.
• The company is experiencing losses, which could affect its financial stability.
• The company's outreach pool has decreased year-over-year, which could impact future growth.
• The company's financial results are subject to management completing its analysis of classification of debt.
• The company's forward-looking statements are subject to various risks and uncertainties.

Future Outlook

The company estimates revenue for the quarter ending September 30, 2024, to be in the range of $2.4 million to $2.8 million. The company also expects the new health plan contract to approximately double their outreach pool.

Management Comments

• Brandon LaVerne, Ontrak Health's CEO and COO, stated that the new contract with a northeast regional health plan should approximately double their current outreach pool.
• LaVerne also mentioned that this marks a pivotal moment for Ontrak as they seek to return to a path of sustained growth.
• He highlighted the company's commitment to delivering high-quality, personalized behavioral healthcare services.
• LaVerne expressed confidence in the company's future success due to strategic growth and innovation.

Industry Context

The announcement reflects the ongoing challenges and opportunities in the behavioral healthcare sector, where companies are striving to integrate technology and personalized care to improve outcomes and reduce costs. The focus on cost savings and integrated care aligns with industry trends towards value-based healthcare.

Comparison to Industry Standards

• The reported revenue decline of 17% year-over-year is concerning, as many digital health companies are experiencing growth in the current market.
• The operating loss improvement of 13% is a positive sign, but the company still needs to achieve profitability.
• The cost savings of $721 per member per month is a significant achievement, and is higher than many other similar programs.
• The adoption of the CHI framework is in line with industry best practices for integrated care.
• Companies like Teladoc Health and Amwell are also focusing on integrated care models, but Ontrak's specific approach with the MHDT technology is a differentiator.

Stakeholder Impact

• Shareholders may be concerned about the revenue decline and increased net loss.
• Employees may be encouraged by the new contract and the company's focus on innovation.
• Customers may benefit from the cost savings and integrated care approach.
• Suppliers may be impacted by the company's financial performance.
• Creditors may be concerned about the company's losses and debt.

Next Steps

• The company will launch the new contract with the northeast regional health plan.
• The company will continue to implement the CHI framework into its care delivery model.
• The company will continue to develop and refine its Mental Health Digital Twin (MHDT) technology.
• The company will host a conference call to discuss the results.

Key Dates

Keywords

behavioral healthcare, AI-powered, technology-enabled, WholeHealth+, mental health, cost savings, EBITDA, revenue, operating loss, digital twin, health plan, outreach pool, CHI framework