Ontrak(US:OTRK)2020-08-07 06:16Financial Data and Key Metrics Changes - The company reported record revenue of $17.2 million for Q2 2020, representing a 124% increase from the previous year [7] - The gross margin improved to 42.7% in Q2 2020 from 41.4% in Q1 2020 [28] - The cash balance at the end of the quarter increased by approximately $650,000 from Q1 2020 [31] Business Line Data and Key Metrics Changes - Total active enrolled members grew to nearly 12,000 by the end of the quarter, with a current total of over 13,200 members [8] - The company enrolled 6,723 new members during the quarter, resulting in a net new enrollment of 3,389 members [23] - The average revenue per active enrolled member for the quarter was approximately $1,673, annualizing to just under $6,700 per year [21] Market Data and Key Metrics Changes - The effective outreach pool ended the quarter at 141,000, a slight decline from 145,000, but has since increased to 149,000 [8] - The company experienced a decrease in its outreach pool of 49,000 members due to lower utilization and loss of health plan coverage during the pandemic [10] Company Strategy and Development Direction - The company has signed a three-year $90 million minimum contract with Cigna for the accelerated expansion of its OnTrak solution [13] - The company aims to leverage technology in its product offerings to expand its footprint within health plan partners and address care-avoidant populations [35][46] - The company is focused on enhancing its algorithms and expanding its outreach pool, with a robust pipeline of new customer opportunities [12][27] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic has disproportionately impacted vulnerable populations, and the company is working to address cultural trauma [6] - The company expects a rebound in hospital utilization in the second half of 2020 or Q1 2021 [9] - Management remains confident in achieving a $90 million target for the year despite a $36 million loss of revenue due to delays in the Cigna expansion [17][18] Other Important Information - The company plans to ramp up hiring, targeting approximately 700 team members in cost of sales by year-end [29] - The company is investing in operations, sales, and support functions, including R&D, to handle expected rapid growth [30] Q&A Session Summary Question: Details on the Cigna contract and pilot performance - Management explained that the original contract had a maximum billing limit, which was exceeded by 57% during the pilot phase due to high enrollment rates [37][38] Question: Technology rollout details - Management discussed plans to incorporate virtual care and digital interventions into their offerings to expand their reach to care-avoidant populations [41][46] Question: Expansion discussions and new logos - Management confirmed ongoing discussions to expand target populations and geographies, with over 35 new opportunities identified in the sales pipeline [51][55] Question: Timeline for pilots and rollouts - Management indicated that past experiences with pilots could lead to accelerated rollouts for new opportunities, especially with familiar clients [60] Question: Cigna launch impact on outreach pool - The Cigna launch is expected to add approximately 15,000 individuals to the outreach pool, with a higher enrollment rate anticipated for this population [64] Question: Path to profitability and EBITDA expectations - Management reiterated that they expect to achieve positive adjusted EBITDA in the next two to three quarters, with no changes to previous guidance [67] Question: Future enrollment rates and outreach pool targets - Management expects the outreach pool to grow significantly, targeting 200,000 by year-end, despite recent losses due to lower utilization [84]