Is OTRK's Q3 2024 EPS decline a concern?

**Ontrak's Q3 2024 EPS decline is a concern.** Here's a detailed analysis: 1. **Significant EPS Decrease**: The EPS for Ontrak in Q3 2024 was -$1.77, which is a substantial decrease from the previous year's EPS of -$1.66. This indicates a worsening financial performance, which is a red flag for investors. |code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code| |---|---|---|---|---|---|---| |OTRK|OTRK.O|Ontrak|2024 Q1|95.13274336283186|-0.11|186| |OTRK|OTRK.O|Ontrak|2024 Q2|89.67391304347827|-0.19|186| |OTRK|OTRK.O|Ontrak|2024 Q3|93.31318473743862|-1.77|186| 2. **Revenue Decline and Missed Estimates**: Ontrak has experienced a decline in revenue compared to the previous year, missing analyst estimates in several quarters. This trend of declining revenue raises concerns about the company's financial health and its ability to generate income. 3. **Cash Flow and Financial Stability**: Ontrak's cash position has declined, with a decrease from $9.7 million at the end of the previous year to $7.3 million. This reduction in cash, along with a negative net margin of 186.35% and a negative return on equity of 304.29%, suggests that the company is facing financial strain. 4. **Operational Challenges and Outlook**: Despite the challenges, Ontrak has secured a new contract with a regional health plan, which could potentially double its outreach. However, the company's pipeline of active prospects does not yet reflect significant revenue potential. The anticipated return to revenue growth in Q4 2024 is a positive sign, but it may not fully address the concerns surrounding the Q3 EPS decline. 5. **Market Sentiment and Analyst Ratings**: The price target cut from $4.00 to $3.00 by Roth Mkm reflects bearish sentiment among analysts, which could persist until there is a clear improvement in Ontrak's financial performance. The buy rating from Roth Mkm suggests that some analysts still see potential in the stock, but this is tempered by the recent negative earnings surprises. In conclusion, while Ontrak has some positive developments, such as the new contract and potential revenue growth, the significant EPS decline in Q3 2024, combined with revenue declines and financial strain, warrants close monitoring by investors. The company's ability to turn around its financial performance in the coming quarters will be crucial in determining the long-term outlook for OTRK.