OTRK - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to the Ontrak Health Second Quarter '24 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Ryan Halsted.

Ryan Halsted

Thank you, operator, and thank you all for participating in today's call.

Officer. Brandon Lou Executive Commercial Osborne, James Chief are Operating and Officer; call Park, Mary Officer; President Financial the LaVerne, Officer Chief Chief and Joining and Chief the Earlier quarter today, financial Ontrak results ended XX, XXXX. released June for is A on website. the available copy press company's the of release

Therefore, forward-looking other words other Before some we statements. uncertainties, and obligation factors the and in than outcomes intend, subject results projects typically expressly are are statements. Ontrak's are guarantees forward-looking these The concerning targets, confidence, historical believes, like Form statements risks estimates, performance forward-looking in XX-K as guidance, filed the include, implied the other are that following to facts results, any expressed actual these which limited condition of are statements. and begin, described All make XX-Q this forward-looking anticipate, identify expects, risk factors to materially I update business, remarks section with expressions involve These operating not and Form or may intent financial but from used to Factors other would certain and not statements. disclaims to, by statements. and conference statements forward-looking but Risk affect Ontrak call the or forward-looking those to may of future SEC. the differ may

to like Brandon. With the over that, I'd to call turn

Brandon LaVerne

Northeast. with news customer, like the shared thank prestigious regarding you, our start earlier Ryan, and being contract exciting in health our plan a of today. Thank for we a newest signing the regional to you, on call with the everyone, I'd today

engagement WholeHealth+ our outreach approximately and suggests solution an that our yet for system. our agreement a support with advanced outreach providing launched, thousands while health recently and their new eligibility Our customer deliver of current Engage initial to is pool needs. of This once other enrollment pool with will of analysis also opportunity double data enhanced another behavioral in for X-year members collaborate

care announced adopted newly We will we health incorporate quarter. the comprehensive framework integration that also last

will quarter pipeline and financial outcomes respective are traction progressing As their with same to around redeterminations and discuss new and quarter, members. last and time, still dealing that sales gaining nicely of many Care launched At and challenges Lou this our the our Mary the face more plans prospects end detail, expected solutions among the deliver Medicaid cycle. this proven of With through plan launch the customer and fallout pandemic. prospects clinical of is utilization in Community our are post funding customers our

these Our our solution helps address customers. problems for

costs final months medical we with result just XX completed cause existing demonstrated per our Medicaid significant month difference-in-difference our member for and of customer example, all savings For in members of study that per $XXX announced an full program. statistically over

impact driving on the our Additionally, $XXX and savings the to that results make enrollment cost in our underserved holistic medical study approach from These did our results of difference-in-difference our an program. strength graduate demonstrate of members solidify resulted month customers. per per not for significant short for in ability statistically period a populations member

seeking at our to and in growth beginning convert are point expansion. We to customers is where inflection prospects existing an customers are significant

We scale. are company prepared for operate at the to

and allowing use. First, seamless the technological may to that for integration flexible, be our customers with is systems our technology infrastructure designed diverse

the services, advanced care platform. throughout integration incorporated and systems and physical models our and effectively implementation inpatient This AI health us other facilitating to have combine enhance value-based of components behavioral engagement. comprehensive enables We entire

data-driven fuses insights earlier delivery. integrate announced human with Mental technology the Twin example, this empathy our Health Digital seamlessly For help we to that quarter care

tangible in members benefits our care adopted and outcomes ultimately This ensures clinical and health comprehensive care financial for integration which plan we for health Second, our the customers. prioritizes the framework, serve approach. we value-based

for and Action as improved with Engine the and with in organize staff tasks completed to case our prioritize frontline of tools as Best have we across our to engage how efficiency Third, the well leveraging members loads as Next system AI integration such calls. care our various summarize

these year geographic operational we enhancements efficiently. numerous markets at implemented lines well come, business equipped and With to we across are and several over other to all operate more past the and believe scale

Chief and will progress. to more who like about I'd speak our to Osborne, Mary our the turn call Lou Now Commercial over President pipeline Officer,

Mary Louise Osborne

Brandon. Thanks,

that plan I'm mentioned, announced row, signed Brandon and for health to a we share we new morning As excited customer. quarter in a this second the

customer quality to with while that focus and in care, members wellness care also health goals. health empower with to support access newest Our providing their this behavioral is integrates resources on achieving and physical improving

including We Engage with our lines and Only over the go live are launching to our Coaching next XX Medicaid, to commercial. and working businesses, HARP days, customer WholeHealth+ program their members multiple the in of solution

conditions. advanced members solution our risk identified, tools combined with interaction, offered human engaged to chronic of As members personal unique proactively high-cost, support. but underlying blend a uses behavioral a analytics WholeHealth+ coaching are unaddressed and data reminder, health Once identify and and with complex assessment care augmented comorbidities intelligence through

clinical to circumstances, is evidence-based Our visits and as produce specific designed outcomes advanced significant clinical coupled each behavioral improve engagement provides system, provider to including with savings. care model member's tailored health and needed an coaching

Engage behavioral benefit them for is Our coaching needs a members help intervention. without care for solution the to coaching challenges from and and for WholeHealth+ would physical ongoing not social alternative need address health who eligible specific provider

future expect desired this in of guarantee customer. While to a financial for ourselves put the growth there achieve position to is with we and clinical outcomes no expansions, future

contracting the customer XX,XXX phase exciting we remain in prominent system new with approximately final lives. to the addition contract, Advantage In Medicare representing this in another health West,

in received have review. of is approval financial work statement the and of our We proposal final

membership achieved, financial lines multiple intent representing to of is system their larger partnership Medicare lives. our over the are cohort X million expand to clinical is an and across Advantage outcomes health business, seeking once the This start for opportunity engagement to a members, and

all Our lives addition pipeline representing there mentioned remains of with members one moved have bottom to Of government lines feel active that the million in in near funnel lines across pipeline business. over representing XX business. of XX X XXX,XXX these, strong earlier the I approximately prospects are our we about of

Finally, we are progress relationships. expanding current happy customer in with our continued

following Our plans Florida. we them implementation of the in with and plans award expanded regions work across to the membership community for state been successful, now with care has of are XXXX, on additional preparing their

also other lines on into additional expansion continue productive customers opportunities our with of each We business. existing to have conversations of

call like James Officer, to Park. our Chief the over would And now I Financial to turn

James Park

Thanks, Mary Lou.

the recorded primarily quarter, being month decrease quarter quarter, compared million, month and enrolled equates the per to per in plan we per $X.X $XXX X% to total enrolled QX year-over-year health a $XXX from plan member customer. same new decrease well which of the XXXX the of as member about lower quarter of a to decrease was enrolled health enrolled in per members, end member. towards due a from per the will enrolled Engage revenue as percentage second decrease XX% During of the to a period members XXXX of revenue XXXX. during decrease average a of with X,XXX in At beginning program, of second due the a Of the the in members with are our members this quarter members, end the and ended average enrolled X,XXX simple which our of we X,XXX. launched Engage enrolled at quarter had quarter, new a we for the enrolled for XX $XXX a XXXX. of The QX This addition the members primarily of our revenue large have in of

month to members. Through and an the we a year, the a year-over-year be pricing integrate revenue Engage per of lower increase mix new on per of remainder we basis member in as expect strategies

compared enrollments We an nicely to second quarter XX% in X,XXX XXXX. prior by member the Dividing XXX XXXX the members we ended of XXX rate year the the to increase of QX to to QX of and for of total enrolled pool of Regarding in the and averaged QX It a gross in therefore, during as XXXX of QX X,XXX and rate to quarter a QX of compared our XX% outreach XXX% member XXXX. expect year the metrics, which our quarter. enrollment compared pool, with outreach enrollment annualizes and X,XXX half in in sequentially. enrollments QX

current of enrolled of XX%. equates that XXXX. which of The about to net than enrollment This the the all of the at in QX disenrollment XXX slightly XX% Our XX% the to the compared disenrollment during was quarter, beginning had customer The XXXX the graduated impact members a in quarter. would periods. monthly increase prior average at the of higher program members members XX% XXX contract due in enrolled was quarter is this during quarter. prior higher otherwise expiring in rate normalized we Further, XX% quarter QX and of to have

margin XXXX, and for XX.X%, from of first of which quarter a increased the year. quarter QX slightly the decrease was last XX.X% second XX.X% in gross Our in from

our expect gross can expansions new we as hire levels, advance. when at in decrease slightly employees to current member-facing customer margins We but remain we launch periods in

flow. and to Turning cash the sheet balance

second negative cash $X.X ended end last of the and from $X.X negative from of second at in $X.X with down last Our $X.X flow cash quarter million year We million quarter million operations the million in XXXX. QX negative of was in the million, $X.X of to compared quarter the year.

that completed the we gives to is drawdowns the access in up subject to $XX announced of monthly up as Well QX of previously time the an set million us demand approval next the As year, senior to Keep Agreement at draw. XXXX, to amendment notes, which secured of over

we notes, $X.X to future approval. quarter, available of subject During drew total $XX.X a demand million for draws million the down of leaving

to quarter, pipeline. from proceeds on warrants, exercise In million addition, the build of execute $X cash our second received our which capital of we continues during to

cash. remaining we and the predict warrants the amount exercise when million of their would be to if $XX.X additional price warrants While an will at total in can't exercised, equate

$X.X For expect as customers member anticipate the range this and revenue revenues QX of discussed we in we customer early $X.X million, enrollments for million doesn't which include in commence new for we any new to the XXXX, QX.

member revenue view our health for current historical it eligible members with of in average applying plan rates, program, and model, typically assumptions to per total other line of equates that annual the customers, WholeHealth+. past high-level approximately enrollment our our population of we target and our a enrollment $XX that to provide $XX are for for revenue percentage To period

$X.X customer million of a our for would equate $X XXX,XXX example, with product. to revenue WholeHealth+ recurring lives to total For approximately annual million

we Thank Now open will you. for up questions.

Operator

question The first Jonathan comes line of Aschoff Partners. of ROTH Capital from the

Jonathan Aschoff

same exact deal do Or quarter? you fourth The the is guidance quarter questions same having in quarter-over-quarter the middle I quarter? last the revenue quickly, still Congrats just expect for in and fourth have, you that announced the risk currently you just at of the kind the starting revenue on for of that of gave day. this gave growth quarter

James Park

it start for question. Jonathan, revenue but ramping contribution that do thanks at We in to will time. up be still the expect QX,

And so likely kicking the will earlier foray year. next in start

Jonathan Aschoff

Okay.

that there was Let's Keep said you see, drew down $XX.X you that withdraw, million $X.X Well said you is million accurate? from you to had and that left

James Park

Yes. The $XX correct. total. million was amount original That's in

So...

Jonathan Aschoff

Okay.

And your millions? debt pro X-something so like forma what is

James Park

Yes.

Jonathan Aschoff

quarter? $X.X the what X after million from straight since drawdown? July including pro the balance is forma nothing extra sheet, Or

James Park

we've and million change of bit little for accrued. $X.X that interest a

Jonathan Aschoff

Okay. How about number of warrants? total the outstanding

James Park

million roughly. outstanding that's $XXX Total --

Jonathan Aschoff

that for close have enough. had off more? XX do had we assuming prior the XX. is did. you I'm Northeast in prospective I clients it you a knock you note That's can that or deal many But one do have Okay. future you How now?

Mary Louise Osborne

we Jonathan, Osborne. XX. Yes, Lou at Mary it's are

active XX have prospects We lives XX that. with million associated and about

the is list, all prospects. And off customer the so customers coming we're time, adding as new our new

Jonathan Aschoff

reaching to that? eligible yet you already Great. Or doing out started you Florida? in Have started have members CCP's not

Mary Louise Osborne

know, I'll very But a we on also, successful implementation. jump you just we Yes, so have. James And in to ask Jonathan, had this.

Medicaid regions We previous great customer. the our was about from recent this you talked results awarded we in satisfaction as most RFP. earnings in got call, X also And new customer our know, our

where projected So are currently. to grow are above they they

over more. it of some that's to and the turn background, James to talk I'll So

James Park

before right you Actually, do that.

one -- CCP thought? region? did Or it is still X? So at anywhere you or Or is ever X

Mary Louise Osborne

one currently January they they the one that including region, and and in Yes, are they will start awarded in were have, XXXX. X regions,

Jonathan Aschoff

Yes. towards one time. Start at a growing X,

Mary Louise Osborne

in across will January be begin the X They will state regions Florida. It live of X.

Jonathan Aschoff

James? then And

James Park

successfully we members. launch started Yes. did enrolling And and

launch. don't we many, think I disclose successful it how exactly but So a was

Jonathan Aschoff

one... And Okay.

Brandon LaVerne

enrolled just solution. would with on I forecast in we And as add, much the both pretty WholeHealth+ members we're as well Engage the

So launched good, both and far of those so so very were successful.

Jonathan Aschoff

Okay.

raised since have you me plus, what have help cash, end of forma you with quarter? the pro can $X.X Lastly, out you million the

James Park

you asking have. how we So much

Jonathan Aschoff

the million cash much pro raise to the you is How since cash. to forma total of add that did a gives $X.X quarter end you

James Park

the we access Well the Well, Keep to, $XX.X the we we the have the of access, have to, access of $XX have that still million warrants. million that

open in capital as well we're discussions as for amounts the currently. So active that those up and to other for -- sources

Operator

I question-and-answer CEO, it This session. to concludes Brandon turn would to now the LaVerne, remarks. for closing back like

Brandon LaVerne

you. I a us call great today. thank And joining you our with right. Thank All have everyone, you, day. hope for

Operator

Thank you for does participation This program. in conference. the your conclude today's

You may now disconnect.

Ontrak (OTRK) 8 Aug 242024 Q2 Earnings call transcript