Ontrak 2025 Q1 Earnings Misses Targets as Net Income Falls 54.6%

Ontrak (OTRK) reported its fiscal 2025 Q1 earnings on May 20th, 2025. Ontrak's results missed expectations, with a notable decline in net income. The company reported a widened net loss of $6.89 million from $4.46 million year-over-year. Despite ongoing financial challenges, Ontrak remains optimistic about future growth, citing new partnerships and technology investments. Guidance for Q2 2025 anticipates a revenue increase, with projections between $2.2 million and $2.6 million, suggesting potential improvement in performance.

Revenue
The total revenue for Ontrak in 2025 Q1 fell significantly, marking a 24.7% decrease from the previous year, down to $2.02 million compared to $2.68 million in 2024 Q1.

Earnings/Net Income
Ontrak's earnings per share (EPS) remained stable at $-1.65, while the company's net loss increased by 54.6% to $-6.89 million in 2025 Q1. This ongoing loss reflects challenging financial conditions.

Post-Earnings Price Action Review
Investors experienced considerable losses following Ontrak's Q1 revenue miss, particularly those adhering to a strategy of buying the stock and holding for 30 days. This approach resulted in a staggering -99.95% return, significantly underperforming the benchmark by 188.20%. The strategy's poor risk-reward profile is further highlighted by a Sharpe ratio of -0.54 and a maximum drawdown of -99.99%, indicating high volatility and substantial losses. The performance underscores the inherent risks associated with investing in companies facing prolonged financial difficulties.

CEO Commentary
Brandon LaVerne, CEO, expressed optimism for Ontrak's trajectory, citing growth in outreach and new customer implementations. He highlighted partnerships with Intermountain Health and others, emphasizing nearly doubled enrollment and strategic investments in technology improving productivity. LaVerne pointed to advancements in Medicaid provider models and NCQA certification as enhancing the company's market credibility.

Guidance
For Q2 2025, Ontrak projects revenue between $2.2 million and $2.6 million, indicating an 8% to 22% sequential increase. Successful conversions of opportunities could yield approximately $15 million in additional revenue, potentially doubling current customer revenue. Current contracts are expected to contribute $14 million to $16 million annually.

Additional News
Ontrak has secured a $10 million financing commitment from Acuitas Capital, LLC, supporting growth and innovation in behavioral healthcare solutions. This funding aims to expand the customer base and enhance AI and digital capabilities. Furthermore, Ontrak achieved recertification by the National Committee for Quality Assurance (NCQA) as a Credentials Verification Organization, reaffirming its commitment to maintaining high standards in healthcare quality. Additionally, the company announced an extension of its strategic partnership with Sentara Health Plans for three more years, expanding the reach of its healthcare solutions to a larger commercial membership and addressing both physical and behavioral health needs.