Catasys, Inc. (NASDAQ:CATS), a leading AI and technology-enabled healthcare company, today reported its financial results for the first quarter ended March 31, 2018. The Company provides big data-based analytics and predictive-modeling-driven healthcare services to health plans and their members through its OnTrak™ solution.
First Quarter 2018 and Recent Business Highlights
2018 Guidance
Management Commentary
Mr. Rick Anderson, President and COO of Catasys, stated, “Enrollment trends continued their positive trajectory as we entered 2018, resulting in higher billings in the first quarter. With our outreach pool of eligible members continuing to increase, we anticipate steady growth in enrollments in the coming quarters. During the three months ended March 31, 2018, we expanded and launched several of our programs with existing and new health insurance partners. Our expansions of OnTrak in Illinois further validate this program’s ability to improve member health and lower healthcare costs for our health plan partners. During the quarter, we also launched enrollment of the OnTrak solution specifically addressing substance use disorders with a leading national health plan partner in 16 states, further increasing our outreach pool of eligible members. We expect to see additional program expansions with existing health plan partners, as well as enrollment launches with new partners as we progress further into 2018. We anticipate these expansions and launches to provide the Company’s primary business growth drivers in 2018.”
Outlook for 2018
Mr. Terren Peizer, Chairman and CEO of Catasys, stated, “Billings for the first quarter of 2018 were in line with our expectations, and in April, we significantly exceeded our internal projections, as a result of strong enrollment. With ongoing program expansions and enrollment launches, we are cautiously optimistic that our outreach pool of eligible members will expand significantly throughout the year. Commensurate with this outreach expansion, we expect enrollment growth will continue to accelerate as the year progresses. We will continue to invest in the expansion of our platform, as well as data-driven analytics and artificial intelligence capabilities, to effectively serve a growing customer base, further driving revenue growth.”
First Quarter 2018 Financial Review
Billings
Revenues
Deferred Revenue
Operating Expenses
Net Income (Loss)
Conference Call – May 15, 2018 – 4:30 pm ET
The Company will host a conference call/webcast on Tuesday, May 15, 2018, at 4:30 pm ET/1:30 pm PT. Investors, analysts, employees and the public are invited to listen to the conference call via:
Conference Call: | 877-705-2969 (domestic) or 201-689-8868 (international) | ||||
Webcast: |
|||||
Those who are unable to attend the conference call live can use the following information to hear a replay version:
Conference ID#: | 13672721 | |||
Conference Call Replay: | 877-660-6853 (domestic) or 201-612-7415 (international) | |||
Expiration Date: | 5/22/2018 | |||
About Catasys, Inc.
Catasys, Inc. harnesses proprietary big data predictive analytics, artificial intelligence and telehealth, combined with human intervention, to deliver improved member health and cost savings to health plans through integrated technology enabled treatment solutions. It is our mission to provide access to affordable and effective care, thereby improving health and reducing cost of care for people who suffer from the medical consequences of behavioral health conditions; helping these people and their families achieve and maintain better lives.
Catasys' OnTrak solution--contracted with a growing number of national and regional health plans--is designed to treat members with behavioral conditions that cause or exacerbate co-existing medical conditions. Catasys has a unique ability to engage these members, who do not otherwise seek behavioral healthcare, leveraging proprietary enrollment capabilities built on deep insights into the drivers of care avoidance matched with data driven motivational and consumer engagement technologies.
OnTrak integrates evidence-based medical and psychosocial interventions along with care coaching in a 52-week outpatient solution. The program is currently improving member health and, at the same time, is demonstrating reduced inpatient and emergency room utilization, driving a more than 50 percent reduction in total health insurers' costs for enrolled members. OnTrak is available to members of several leading health plans in Connecticut, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Massachusetts, Missouri, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wisconsin.
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this press release are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control, which may cause actual results to differ materially from stated expectations. These risk factors include, among others, changes in regulations or issuance of new regulations or interpretations, limited operating history, our inability to execute our business plan, increase our revenue and achieve profitability, lower than anticipated eligible members under our contracts, our inability to recognize revenue, lack of outcomes and statistically significant formal research studies, difficulty enrolling new members and maintaining existing members in our programs, the risk that treatment programs might not be effective, difficulty in developing, exploiting and protecting proprietary technologies, intense competition and substantial regulation in the health care industry, the risks associated with the adequacy of our existing cash resources and our ability to continue as a going concern, our ability to raise additional capital when needed and our liquidity. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plan," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words to be uncertain and forward-looking. For a further list and description of the risks and uncertainties we face, please refer to our most recent Securities and Exchange Commission filings which are available on its website at http://www.sec.gov. Such forward-looking statements are current only as of the date they are made, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
The Company makes reference in this press release to billings, a non-GAAP financial measure, as a supplemental measure to review and assess our operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. We define billings as the amount invoiced in a particular period pursuant to existing contracts based on enrolled members. We use billings as a measure of operating performance to assist in comparing performance from period to period on a consistent basis.
We believe that the use of this non-GAAP financial measures facilitates investors’ assessment of our operating performance from period to period and from company to company by backing out potential differences caused by variations in the applicable performance requirements contained in the relevant contracts, which may be different from other companies in our industry.
Billings is not defined under GAAP and is not presented in accordance with GAAP. This non-GAAP financial measure has limitations as an analytical tool, and when assessing our operating performance, investors should not consider it in isolation, or as a substitute for revenue prepared in accordance with GAAP. A reconciliation from this non-GAAP financial measure to the GAAP financial measure is included at the end of this release.
CATASYS, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
(In thousands, except per share amounts) | March 31, | |||||||||
2018 | 2017 | |||||||||
Revenues | ||||||||||
Healthcare services revenues | $ | 1,911 | $ | 1,822 | ||||||
Operating expenses | ||||||||||
Cost of healthcare services | 2,287 | 1,365 | ||||||||
General and administrative | 3,786 | 2,629 | ||||||||
Depreciation and amortization | 85 | 39 | ||||||||
Total operating expenses | 6,158 | 4,033 | ||||||||
Loss from operations | (4,247 | ) | (2,211 | ) | ||||||
Other income | 40 | 14 | ||||||||
Interest expense | (1 | ) | (2,867 | ) | ||||||
Loss on conversion of note | - | (926 | ) | |||||||
Change in fair value of warrant liability | (10 | ) | (5,181 | ) | ||||||
Change in fair value of derivative liability | - | (10,596 | ) | |||||||
Loss from operations before provision for income taxes | (4,218 | ) | (21,767 | ) | ||||||
Provision for income taxes | - | 1 | ||||||||
Net Loss | $ | (4,218 | ) | $ | (21,768 | ) | ||||
Basic and diluted net loss from operations per share: | ($0.27 | ) | ($2.35 | ) | ||||||
Basic and diluted weighted number of shares outstanding | 15,898 | 9,246 | ||||||||
Note: The financial statements have been retroactively restated to reflect the 1-for-6 reverse-stock split that occurred on April 25, 2017.
CATASYS, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(unaudited) | ||||||||||
(In thousands, except for number of shares) | March 31, | December 31, | ||||||||
2018 | 2017 | |||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 1,354 | $ | 4,779 | ||||||
Receivables, net of allowance for doubtful accounts of $0 and $476, respectively |
1,211 | 511 | ||||||||
Prepaids and other current assets | 354 | 366 | ||||||||
Total current assets | 2,919 | 5,656 | ||||||||
Long-term assets | ||||||||||
Property and equipment, net of accumulated depreciation of $1,627 and $1,542, respectively |
527 | 612 | ||||||||
Deposits and other assets | 336 | 336 | ||||||||
Total Assets | $ | 3,782 | $ | 6,604 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 734 | $ | 980 | ||||||
Accrued compensation and benefits | 1,036 | 1,177 | ||||||||
Deferred revenue | 1,689 | 2,914 | ||||||||
Other accrued liabilities | 1,200 | 578 | ||||||||
Total current liabilities | 4,659 | 5,649 | ||||||||
Long-term liabilities | ||||||||||
Deferred rent and other long-term liabilities | - | 25 | ||||||||
Capital leases | - | 2 | ||||||||
Warrant liabilities | 40 | 30 | ||||||||
Total Liabilities | 4,699 | 5,706 | ||||||||
Stockholders' equity/(deficit) | ||||||||||
Preferred stock, $0.0001 par value; 50,000,000 shares authorized; no shares issued and outstanding |
- | - | ||||||||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 15,913,171 and 15,889,171 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively |
2 | 2 | ||||||||
Additional paid-in-capital | 294,746 | 294,220 | ||||||||
Accumulated deficit | (295,665 | ) | (293,324 | ) | ||||||
Total Stockholders' Equity/(Deficit) | (917 | ) | 898 | |||||||
Total Liabilities and Stockholders' Equity/(Deficit) | $ | 3,782 | $ | 6,604 | ||||||
CATASYS, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
(In thousands) | March 31, | |||||||||
2018 | 2017 | |||||||||
Operating activities: | ||||||||||
Net loss | $ | (4,218 | ) | $ | (21,768 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||
Depreciation and amortization | 85 | 39 | ||||||||
Issuance costs included in interest expense | - | 2,622 | ||||||||
Warrants issued for services | 86 | - | ||||||||
Provision for doubtful accounts | - | 149 | ||||||||
Deferred rent | (22 | ) | (20 | ) | ||||||
Share-based compensation expense | 328 | 127 | ||||||||
Fair value adjustment on derivative liability | - | 10,596 | ||||||||
Fair value adjustment on warrant liability | 10 | 5,181 | ||||||||
Shares issued for services | 112 | 117 | ||||||||
Loss on conversion of note | - | 926 | ||||||||
Changes in current assets and liabilities: | ||||||||||
Receivables | (700 | ) | (360 | ) | ||||||
Prepaids and other current assets | 12 | (176 | ) | |||||||
Deferred revenue | 652 | 418 | ||||||||
Accounts payable and other accrued liabilities | 239 | 534 | ||||||||
Net cash used in operating activities | $ | (3,416 | ) | $ | (1,615 | ) | ||||
Investing activities: | ||||||||||
Purchases of property and equipment | $ | - | $ | (49 | ) | |||||
Net cash used in investing activities | $ | - | $ | (49 | ) | |||||
Financing activities: | ||||||||||
Proceeds from bridge loan | $ | - | $ | 1,115 | ||||||
Capital lease obligations | (9 | ) | (11 | ) | ||||||
Net cash (used in)/provided by financing activities | $ | (9 | ) | $ | 1,104 | |||||
Net decrease in cash and cash equivalents | $ | (3,425 | ) | $ | (560 | ) | ||||
Cash and cash equivalents at beginning of period | 4,779 | 851 | ||||||||
Cash and cash equivalents at end of period | $ | 1,354 | $ | 291 | ||||||
Supplemental disclosure of cash paid | ||||||||||
Income taxes | $ | - | $ | 39 | ||||||
Supplemental disclosure of non-cash activity | ||||||||||
Common stock issued for investor relations services | $ | 112 | $ | 117 | ||||||
Warrants issued for investor relations services | $ | 85 | $ | - | ||||||
CATASYS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) | |||||||||||||||||||||||||||
Additional | |||||||||||||||||||||||||||
(Amounts in thousands, except for number of shares) | Common Stock | Paid-In | Accumulated | ||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||||
Balance at December 31, 2017 |
15,889,171 |
|
$ |
2 |
|
$ |
294,220 |
|
$ | (293,324 | ) | $ | 898 | ||||||||||||||
Adoption of accounting standard | - | $ | - | $ | - | $ | 1,877 | $ | 1,877 | ||||||||||||||||||
Balance at January 1, 2018 | 15,889,171 | 2 | 294,220 | (291,447 | ) | 2,775 | |||||||||||||||||||||
Common stock issued for outside services | 24,000 | - | 112 | - | 112 | ||||||||||||||||||||||
Warrants issued for services | - | - | 86 | - | 86 | ||||||||||||||||||||||
Share-based Compensation Expense | - | - | 328 | - | 328 | ||||||||||||||||||||||
Net loss | - | - | - | (4,218 | ) | (4,218 | ) | ||||||||||||||||||||
Balance at March 31, 2018 | 15,913,171 | 2 | 294,746 | (295,665 | ) | (917 | ) | ||||||||||||||||||||
CATASYS, INC. AND SUBSIDIARIES | |||||||||||
GAAP TO NON-GAAP RECONCILIATION | |||||||||||
(unaudited) | |||||||||||
For the Three Months Ended | |||||||||||
March 31, | |||||||||||
(in thousands) |
2018 |
2017 |
|||||||||
Revenues | $ | 1,911 | $ | 1,822 | |||||||
Add: | |||||||||||
Estimate of Q1 Uncollectable Billings* | $ | 287 | $ | - | |||||||
Net Change in Deferred Revenue** | 794 | 432 | |||||||||
Billings, non-GAAP | $ | 2,992 | $ | 2,254 |
*Represents one customer who we bill over a limited number of provider
visits
**Net change in deferred revenue associated with Q1 billings
View source version on businesswire.com: https://www.businesswire.com/news/home/20180515006398/en/
Catasys, Inc.
Marianne Acosta, 310-444-4346