Release Date: May 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ontrak Inc (OTRK, Financial) has expanded its outreach pool significantly, demonstrating growth with new customers like Intermountain Health and a Northeast regional plan.
- The company achieved state Medicaid provider approval, paving the way for potential revenue doubling in 2025 compared to 2024.
- Enrollment numbers exceeded expectations, with over 3,165 total enrolled members, nearly doubling year over year.
- Ontrak Inc (OTRK) received certification from the National Committee of Quality Assurance, enhancing its market credibility.
- Strategic investments in AI-driven technology have increased productivity, allowing the company to operate with fewer employees while maintaining high service levels.
Negative Points
- Revenue for Q1 2025 was $2 million, reflecting a 25% decrease compared to the same period last year due to the loss of a customer.
- The average revenue per health plan enrolled member per month decreased significantly from $500 in Q4 2024 to $254 in Q1 2025.
- Gross margin decreased to 37% from 61% in Q4 2024, primarily due to the loss of a customer and a shift in member mix.
- Cash reserves decreased to $4.1 million at the end of Q1 2025, down from $5.7 million at the end of 2024.
- The company reported negative cash flow from operations of $2.7 million for Q1 2025, although this was an improvement from previous quarters.
Q & A Highlights
Q: Can you provide more details on the significant revenue opportunity with the large Midwestern Medicaid plan?
A: Mary Osborne, President and Chief Commercial Officer, explained that they are working towards executing a statement of work with a large Midwestern Medicaid plan for their 300,000 Medicaid members. This represents a significant revenue opportunity and would strengthen Ontrak's presence in a key regional market. They are in the final stages of the sales process.
Q: What are the reasons behind the decrease in revenue per health plan enrolled member per month?
A: James Park, Chief Financial Officer, noted that the decrease in revenue per member, which averaged $254, down from $500 in Q4 2024, was primarily due to the loss of a customer and a shift in the mix of members. A larger percentage of members are now enrolled in the Engage program, which has a lower revenue per member compared to the WholeHealth+ program.
Q: How has Ontrak's operational efficiency improved over the years?
A: Brandon LaVerne, Interim CEO and COO, highlighted that Ontrak's teams are now more than twice as productive as they were in 2021. This improvement is attributed to strategic investments in technology infrastructure, particularly their AI-driven advanced engagement system, which automates routine tasks and prioritizes high-impact interventions.
Q: What is the current status of Ontrak's cash reserves and financing?
A: James Park, CFO, reported that as of the quarter end, Ontrak's cash reserves stood at $4.1 million. They borrowed $1.5 million under their Keep Well agreement and have an additional $5 million available for future draws. Furthermore, a new financing agreement provides up to $10 million of additional financing available as needed in the short term.
Q: What are the expectations for revenue growth in the upcoming quarter?
A: James Park, CFO, stated that for Q2 2025, Ontrak anticipates revenues in the range of $2.2 million to $2.6 million, representing an 8% to 22% sequential increase. The current customers under contract account for approximately $14 million to $16 million of annual revenue, with significant opportunities at the bottom of the funnel that could potentially double this revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
