The struggling ethical health firm Ontrak Inc. joined the ranks of companies that left Los Angeles County, quietly revealing on May 11 that earlier this spring it had moved its headquarters from Santa Monica to Henderson, Nevada.
The disclosure comes with Ontrak’s quarterly earnings release.
“On March 24, 2022, the company entered into a lease agreement for the new office in Henderson, Nevada, which now serves as the company ‘s new chief executive. The office space is leased to Santa. Monica, California, the company’s first chief executive, was subleared by a subtenant on April 12, 2022.
In a subsequent statement to the Business Journal, Ontrak Chief Executive Jonathan Mayhew said the relocation took place in April and provided some insight into the rationale behind the move.
“Ontrak Health has always been a virtual company, even before Covid,” Mayhew said in the statement. “Our hundreds of employees are based across the country and work together for our customers this way every day. Because we don’t typically rely on a traditional corporate headquarters, we assessed our real estate needs and made the decision to maintain a physical Nevada office for company meetings and a small footprint of employees, as happened in Santa Monica.
Mayhew did not provide a current figure on the number of employees. The company reported in its annual report that as of Dec. 31, it had 231 full-time employees.
Managing ethical health
The move ends nearly 20 years at the company’s headquarters in Los Angeles County. Ontrak was founded as Catasys Inc. in 2003. Catasys developed an artificial intelligence platform that predicts some people whose chronic illness will progress with behavior change, recommending effective care pathways that people are willing to follow, and interacting with people who do not receive care. they need.
Catasys sells this technology platform – which it calls Ontrak – to major health plans, with the aim of improving the health of their members enrolled so that expensive hospitalizations, surgical procedures and prescription medications should be avoided as much as possible. This is intended to provide significant savings for health plans, in theory more than balancing the cost of contracts signed by health plans with Catasys.
In July 2020, Catasys changed its name to the brand’s flagship offering, Ontrak. But since then, it’s been a tough trip for investors.
As of February 2021, Ontrak’s single largest customer, Aetna – a subsidiary of Woonsocket, CVS Health Corp. based in Rhode Island – suddenly announced that its contract with Ontrak was coming to an end. Under that contract, Ontrak provides analysis of ethical health standards and health guidance for 8,400 Aetna member patients.
Ontrak later confirmed that following the cancellation of the contract, it laid off about 250 of its 726 employees as of December 31, 2020.
Six months ago, Bloomfield, Conn.-based health plan giant Cigna Corp. ended its contract with Ontrak, representing a loss of revenue of $ 90 million over three years for Ontrak. Cigna moved its business to San Francisco-based on-demand mental health care startup Ginger.io, Inc.
Further layoffs must have followed the loss of the contract, as the company reported 231 full-time employees at the end of the year.
Given these customer losses, it’s hardly surprising that the remainder of the first quarter earnings report expressed bad news for Ontrak investors. The company reported first-quarter revenue of $ 5.3 million, minus 83% from the same period last year. And the company reported a loss of $ 16.9 million for the quarter, more than double the $ 7.7 million loss in the same period last year.
But the company maintained its year -round revenue guide of between $ 25 million and $ 30 million it provided three months ago. This will indicate that the company expects contract revenue to pick up significantly for the remainder of the year.
Mayhew told the Business Journal in September that Ontrak is working on a strategy to expand the ethical health services it offers. The purpose, he said, is to appeal to a wide variety of customers, including employers and physician groups.
And in a May 11 earnings teleconference call with analysts, Mayhew said Ontrak was in contract negotiations on a major health plan and was in the “data exchange” stage of discussions between the two. yet potential customer.
Investors were encouraged by the news guide, which sent the price up about 22% to end May 12 at $ 1.34. But that’s still close to penny stock territory and represents a 98% drop from the long -term for shares of Ontrak of $ 79.29 that reached just 16 months ago, early last year.
The Fintech Special Report in the May 2 issue should state that Noor Menai is the president and chief executive of CTBC Bank in downtown Los Angeles. His title as chief executive is not included in an article on page 1 titled “After the Storm” and again on page 16 in an article titled “Navigating Turmoil.”