Santa Monica Behavioral Health Firm Ontrak Moves HQ to Nevada – Los Angeles Business Journal

Struggling behavioral well being firm Ontrak Inc. has joined the ranks of corporations leaving Los Angeles County, quietly disclosing on Could 11 that earlier this spring it had relocated its headquarters from Santa Monica to Henderson, Nevada.
The disclosure got here in Ontrak’s quarterly earnings launch.

“On March 24, 2022, the corporate entered right into a lease settlement for brand new workplace area in Henderson, Nevada, which now serves as the corporate’s new headquarters. The workplace area underneath lease in Santa Monica, California, the corporate’s prior headquarters, has been subleased to a subtenant on April 12, 2022.”

In a subsequent assertion to the Enterprise Journal, Ontrak Chief Govt Jonathan Mayhew stated the relocation came about in April and offered some perception into the rationale behind the transfer.

“Ontrak Well being has at all times been a digital firm, even earlier than Covid,” Mayhew stated within the assertion. “Our tons of of workers are primarily based all around the nation and collaborate on behalf of our prospects this manner on daily basis. Having not usually relied on a standard company headquarters, we now have evaluated our actual property wants and made the choice to keep up a bodily workplace in Nevada for firm conferences and a small footprint of workers, as was the case in Santa Monica.”

Mayhew didn’t present a present determine for the variety of workers. The corporate reported in its annual report that as of Dec. 31, it had 231 full-time workers.

Managing behavioral well being

The transfer ended practically 20 years of the corporate’s headquarters in Los Angeles County. Ontrak was based as Catasys Inc. in 2003. Catasys had developed a synthetic intelligence platform that predicts sure folks whose continual illness will enhance with conduct change, recommends efficient care pathways that individuals are keen to comply with, and engages people who find themselves not receiving the care they want.

Catasys marketed this expertise platform – which it known as Ontrak – to main well being plans, with the intention of bettering well being for his or her enrolled members in order that costly hospitalizations, surgical procedures and prescription drugs could possibly be averted as a lot as attainable. This was supposed to ship substantial financial savings for the well being plans, in concept greater than offsetting the price of the contracts that well being plans signed with Catasys.

Buyer defections

In July 2020, Catasys modified its identify to its major model providing, Ontrak. However since then, it’s been a really bumpy journey for traders.
In February 2021, Ontrak’s single largest buyer, Aetna – a subsidiary of Woonsocket, Rhode Island-based CVS Well being Corp. – abruptly introduced it was ending its contract with Ontrak. Below that contract, Ontrak had offered evaluation of behavioral well being patterns and well being steerage for 8,400 affected person members with Aetna.

Ontrak later confirmed that after that contract cancellation, it laid off about 250 of the 726 workers it had as of Dec. 31, 2020.
Six months later, Bloomfield, Conn.-based well being plan big Cigna Corp. ended its contract with Ontrak, representing a income lack of $90 million over three years for Ontrak. Cigna switched its enterprise to San Francisco-based on-demand psychological well being care startup Ginger.io, Inc.

Extra layoffs should have adopted that contract loss, because the firm reported 231 full-time workers by yr’s finish.
Given these buyer losses, it’s little shock that the remainder of the primary quarter earnings report conveyed dismal information for Ontrak traders. The corporate reported first quarter income of $5.3 million, down 83% from the identical interval final yr. And the corporate reported a lack of $16.9 million for the quarter, greater than twice the $7.7 million loss for a similar interval final yr.

However the firm caught by the full-year income steerage of between $25 million and $30 million that it offered three months in the past. This is able to point out the corporate expects contract income to select up considerably for the rest of the yr.
Mayhew informed the Enterprise Journal in September that Ontrak was engaged on a technique to broaden the behavioral well being providers it provides. The objective, he stated, was to attraction to extra kinds of prospects, together with employers and doctor teams.

And in a Could 11 earnings teleconference name with analysts, Mayhew stated Ontrak was in contract negotiations with one main well being plan and was within the “information alternate” section of discussions with two different potential prospects.
Traders had been heartened by the steerage information, sending the share worth up 22% to shut Could 12 at $1.34. However that’s nonetheless near penny inventory territory and represents a drop of 98% from the all-time excessive for Ontrak shares of $79.29 reached simply 16 months in the past, early final yr.

Correction

The Particular Report on Fintech within the Could 2 problem ought to have stated that Noor Menai is president and chief govt of CTBC Financial institution in downtown Los Angeles. His title as chief govt was omitted in an article on web page 1 headlined “After the Storm” and once more on web page 16 in an article headlined “Navigating Turmoil.”