March 03, 2021 - An investor in shares of Ontrak, Inc. (NASDAQ: OTRK) filed a lawsuit in the U.S. District Court for the Central District of California over alleged violations of Federal Securities Laws by Ontrak, Inc. in connection with certain allegedly false and misleading statements made between November 5, 2020 and February 26, 2021.
Santa Monica, CA based Ontrak, Inc. operates as an artificial intelligence powered, virtualized outpatient healthcare treatment company that provides in-person or telehealth intervention services to health plans and other third-party payors.
On March 1, 2021, Ontrak, Inc. announced preliminary financial results for fourth quarter and full year 2020. Ontrak, Inc. reported that its annual Total Revenue rose from $35.09 million in 2019 to $82.83 million in 2020, and that its Net Loss declined from $25.65 million in 2019 to $22.71 million. Furthermore, Ontrak, Inc. stated that its largest customer had terminated its contract with Ontrak, effective June 26, 2021. The Company stated that this customer “evaluated Ontrak on a provider basis” and “[a]s such, the customer evaluated [Ontrak’s] performance based on [its] ability to achieve the lowest possible cost per medical visit, and not on [its] clinical outcomes data or medical cost savings.” The Company also stated that “the coaching model which Ontrak has pioneered for over a decade was seen by the customer to be less relevant to their performance metrics.” Shares of Ontrak, Inc. (NASDAQ: OTRK) declined from $98.90 per share on February 9, 2021, to as low as $22.13 per share on March 5, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of Ontrak, Inc. (NASDAQ: OTRK) common shares between November 5, 2020 and February 26, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between November 5, 2020 and February 26, 2021, the Defendants failed to disclose to investors that Ontrak’s largest customer evaluated the Company on a provider basis, valuing Ontrak’s performance based on achieving the lowest cost per medical visit rather than clinical outcomes or medical cost savings, that, as a result, Ontrak’s largest customer did not find the Company’s program to be effective and was reasonably likely to terminate its contract with Ontrak, that, because this customer accounted for a significant portion of the Company’s revenue, the loss of the customer would have an outsized impact on Ontrak’s financial results, and that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.