Ontrak Reports 31% Revenue Decline, Operating Loss in Q3 2024

Ontrak, Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, revealing significant challenges in revenue generation and profitability. The company generated revenue of $2.57 million for the third quarter, a 31% decrease from $3.72 million in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $7.70 million, down 16% from $9.20 million in the prior year. The decline in revenue is attributed to a key health plan customer notifying Ontrak of its intent to discontinue services, which impacted both commercial and government revenue streams.

Gross profit for the third quarter was $1.59 million, a 40% decrease from $2.68 million in the prior year, while gross profit for the nine-month period was $4.91 million, down 25% from $6.51 million. The gross profit margin also declined, reflecting the reduced revenue. Operating expenses for the third quarter were $6.70 million, slightly lower than the $6.74 million reported in the same quarter of 2023. However, total operating expenses for the nine months decreased to $18.33 million from $22.43 million, indicating cost-cutting measures, including strategic headcount reductions.

Ontrak reported an operating loss of $5.11 million for the third quarter, compared to a loss of $4.06 million in the same period of 2023. For the nine months, the operating loss improved to $13.43 million from $15.92 million year-over-year. The net loss for the third quarter was $5.58 million, down from $6.42 million in 2023, while the nine-month net loss was $20.33 million, compared to $21.52 million in the previous year.

The company’s financial position showed total assets of $22.40 million as of September 30, 2024, up from $19.85 million at the end of 2023. However, total liabilities increased significantly to $10.94 million from $5.58 million, primarily due to increased current liabilities. Ontrak's cash position was $8.00 million, with a working capital of approximately $1.50 million.

Strategically, Ontrak has been pursuing growth through partnerships and expanding its sales and marketing resources. The company entered into a new customer agreement with a regional Medicaid health plan and signed another with a large regional health plan in the Northeast. However, there is substantial doubt about the company's ability to continue as a going concern, as current cash and capital sources may not be sufficient to meet obligations for the next 12 months. The company has also faced legal challenges, including ongoing investigations related to its former CEO, who was convicted of securities fraud.

In terms of capital structure, Ontrak has been primarily funded through borrowings under the Keep Well Agreement and equity offerings since April 2022. The company has also approved a reverse stock split effective September 23, 2024, to comply with Nasdaq listing requirements.