Catasys Reports 2017 Fourth Quarter and Year-end Financial Results
Fourth Quarter 2017 and Recent Business Highlights
- Catasys enrollment increased 31% year over year at December 31, 2017.
- Catasys’ outreach pool of eligible members continued its rapid ramp due to the commencement of launches and expansion with two large insurers in early 2018. At the beginning of March 2018, the Company’s current outreach pool was approximately 30,000, 20% higher than at the end of 2017.
- New customer launches continue to take approximately 12 months to ramp up to the yearly 20% enrollment rate. One year after launch, the Company generally enrolls in excess of 20% of its outreach pool over a year. Catasys generally receives approximately $6,500 per enrolled member.
- January 2018 – Expanded OnTrak-HC to Illinois with the fourth largest health insurance plan in the country, representing the second state with this customer
- February 2018 – Launched enrollment of OnTrak-Ci program in Tennessee with top 10 health insurer, representing the fourth national health plan to launch OnTrak
- OnTrak program is currently available in 19 states across the United States.
- Reiterates expectation to report annual billings (amount invoiced in a particular period pursuant to existing contracts based on enrolled members) of $20.0 million based solely on the current outreach pool of eligible members, finishing the year at an approximate $25.0 million billings annual run rate.
- This guidance does not include additional new contracts and subsequent launches or additional new expansions within existing contracts. Based on customer indications and timelines, the Company anticipates outreach pool expansion will exceed the current 30,000 by the end of 2018.
Mr. Rick Anderson, President and COO of Catasys, stated, “We are very pleased with our enrollment growth trends, which have led to, and we anticipate will continue to lead to higher billings. We are also rapidly ramping up our outreach pool of eligible members. In January 2018, Catasys expanded OnTrak for the treatment of anxiety, depression and substance use disorders into Illinois with the fourth largest health insurance plan in the nation. This followed the successful launch of this program in Oklahoma in August 2017. We also announced in January 2018 the signing of a contract with a top 10 health insurer for our OnTrak solution program for certain members with anxiety, depression and substance use disorders, and launched the OnTrak-Ci program to eligible Medicare Advantage members in February 2018. With this contract, Catasys is now partnering with six of the eight largest health plans in the U.S. We have seen a notable acceleration in launches in recent months and expect this, as well as our expanding book of business, to continue to increase our total outreach pool, which will subsequently drive enrollment throughout 2018.”
Outlook for 2018
Mr. Terren Peizer, Chairman and CEO of Catasys, stated, “We remain on track to achieve our previous guidance of $20.0 million of billings for 2018, and have set conservative enrollment growth trend guidelines in order to reach this estimate. We have had a strong start to 2018 and expect to continue increasing enrollments in existing programs and expanding programs for existing customers to new states. We also anticipate launches of our OnTrak solution with new customers in the first half of 2018 and beyond. Finally, we intend to devote continued time and resources to new products that utilize our existing platform and data driven analytics to widen Catasys’ potential outreach population. Given these positive indicators and our ability to capitalize on growth opportunities, we remain confident that our provided guidance is a conservative floor for this year and that billing totals will stand to benefit from these developments in 2018.”
Fourth Quarter and Year-end 2017 Financial Review
- Catasys’ billings increased 33% to $2.8 million for the fourth quarter of 2017 from $2.1 million in the prior-year period and were up approximately 40% sequentially from $2.0 million in the third quarter of 2017. Catasys contracts are generally designed to provide cash fees on a monthly basis based on enrolled members. To the extent its contracts may include a performance guarantee, the Company reserves a portion of the monthly fees that may be at risk until the performance measurement period is completed.
- Billings for the year ended December 31, 2017 increased 33% to $9.1 million, compared to $6.9 million in the prior year. The Company is providing billings guidance for the full year 2018 of $20.0 million.
- Revenue was $3.0 million for the fourth quarter of 2017, compared to $3.8 million during the same period in 2016. The decrease was driven by a larger portion of billings being subject to deferred revenue. There was a net increase in the number of members enrolled in our OnTrak solution during the fourth quarter of 2017 compared with the same period in 2016. Enrolled members as of December 31, 2017, was 31% greater than December 31, 2016.
- Revenue was $7.7 million for the year ended December 31, 2017, an increase of 9% compared to $7.1 million in 2016.
- When fees are received in advance, deferred revenue is recognized over the period the member is enrolled. Any fees subject to performance guarantees are deferred until such time as those performance standards are met, generally calculated annually or semi-annually. Catasys has historically been able to record its deferred revenue as actual revenue during the course of the business cycle, except for limited cases where members terminated from the program early.
- Deferred revenues were $2.9 million at December 31, 2017, an increase of 91% from $1.5 million at December 31, 2016.
- Operating expenses in the fourth quarter of 2017 were $5.8 million, compared to $3.6 million in the prior-year period. This increase was mainly due to higher expenses in the fourth quarter of 2017 related to servicing contracts and investments in key personnel to support future growth compared to the prior-year period.
- Cost of healthcare services consists primarily of salaries related to Catasys’ care coaches, outreach specialists, healthcare provider claims payments to our network of physicians and psychologists, and fees charged by third party administrators for processing these claims. In addition, the Company hires staff in preparation for anticipated future customer contracts and corresponding increases in members eligible for OnTrak. The costs for such staff are included in Cost of Healthcare Services during training and ramp-up periods.
- Operating expenses for the year ended December 31, 2017, were $18.4 million, compared to $13.6 million in the prior year.
Net Income (Loss)
- For the fourth quarter of 2017, net loss was $2.7 million, or $0.17 per diluted share, compared to a net loss of $1.5 million, or $0.16 per diluted share, in the prior-year period.
- For the year ended December 31, 2017, net loss was $13.6 million, or $0.99 per basic and diluted share, compared to a net loss of $17.9 million, or $1.95 per basic and diluted share, in the prior year.
Conference Call – March 7, 2018 – 4:30 pm ET
The Company will host a conference call/webcast on Wednesday, March 7, 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)|
Those who are unable to attend the conference call live can use the following information to hear a replay version:
|Conference Call Replay:||877-660-6853 (domestic) or 201-612-7415 (international)|