MIAMI - Ontrak, Inc. (NASDAQ: OTRK), a behavioral healthcare company leveraging AI technology, has announced a 1-for-15 reverse stock split, scheduled to take effect at the start of trading on September 23, 2024. The reverse split is aimed at increasing the company's common stock bid price, thereby complying with the Nasdaq Capital Market's minimum bid price requirement.
The decision to implement the reverse stock split was approved by Ontrak’s stockholders during the annual meeting on September 10, 2024. The split will consolidate every 15 shares of issued and outstanding common stock into one share. This action will not alter any stockholder’s percentage of ownership or voting power significantly, except for minor changes due to the rounding up of fractional shares.
As a result of the reverse split, the total number of Ontrak’s outstanding common shares will decrease from approximately 48.0 million to about 3.2 million. Adjustments will also be made to the exercise prices and the number of shares underlying the company’s outstanding stock options, warrants, and stock incentive plans.
The reverse stock split will occur automatically and stockholders will not need to take any action. Ontrak's transfer agent, Equiniti Trust Company, LLC, will issue transaction notices to stockholders holding shares electronically in book-entry form, reflecting the post-split number of shares. Those holding shares through brokers or banks will have their positions adjusted accordingly.
This move is part of Ontrak's efforts to maintain its listing on The Nasdaq Capital Market. The company specializes in identifying and providing care pathways for individuals with behavioral health needs through its AI and technology-enabled platform.
Ontrak has cautioned that this press release contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. The information presented is based on a press release statement.
In other recent news, Ontrak Health reported a decline in year-over-year revenue for Q2 2024 but projects a return to growth in Q4 2024. This optimism is supported by a new contract with a Northeast regional health plan, potentially doubling its outreach, and 26 active prospects representing approximately 15 million members. The company ended the quarter with $7.3 million in cash, after drawing $4.5 million from its Keep Well Agreement, and carries a debt of $6.5 million. Revenue projections for Q3 2024 range between $2.4 million and $2.8 million, excluding the new customer's impact in Q4.
In addition, Ontrak shareholders approved the Amended and Restated 2017 Stock Incentive Plan and ratified the appointment of EisnerAmper LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2024. Shareholders also authorized a reverse stock split at a ratio between 1-for-2 and 1-for-15, at the board's discretion, any time before September 10, 2025.
In other developments, Ontrak has entered into a strategic partnership with MosaicVoice, an AI-powered voice technology firm, to enhance patient care. This collaboration aims to improve patient outcomes by integrating advanced voice and AI technologies into its healthcare delivery system. As the company navigates its financial challenges, it continues active discussions to secure additional capital.
InvestingPro Insights
Amidst Ontrak, Inc.'s (NASDAQ: OTRK) strategic move with a reverse stock split to maintain compliance with Nasdaq's listing requirements, recent data from InvestingPro underscores the company's current financial landscape. With a market capitalization of just $10.3 million and a negative price-to-earnings (P/E) ratio of -0.24, reflecting the company's challenges in generating profit, Ontrak's financial health is a point of concern for investors. The adjusted P/E ratio for the last twelve months as of Q2 2024 further dipped to -0.28, indicating continued profitability struggles.
InvestingPro Tips highlight that analysts are not optimistic about Ontrak's profitability in the short term, with an expectation of a sales decline in the current year and a lack of profitability over the last twelve months. Additionally, the company's stock price has been notably volatile, which could be a factor for investors to consider when assessing risk. In terms of liquidity, Ontrak has managed to maintain liquid assets that exceed short-term obligations, which is a positive sign amidst the financial challenges.
It's also worth noting that the company's price has significantly underperformed over the past year, with a year-to-date price total return of -46.43% and a staggering -77.86% over the last year. This performance is echoed by a 51.18% decline in the stock's value over the last six months alone. Ontrak's price is currently at 15.13% of its 52-week high, which could be an indicator of the market's current valuation of the company.
For those interested in a deeper analysis, InvestingPro offers additional tips that can provide more insight into Ontrak's financial health and stock performance. Currently, there are 12 more InvestingPro Tips available for Ontrak at https://www.investing.com/pro/OTRK, which can serve as a valuable resource for investors looking to make informed decisions.
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