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Ontrak Q3 Earnings: Can NasdaqGM:OTRK Hit Its -$0.40 EPS Target?

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Ontrak, Inc. (NasdaqGM:OTRK) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of -$0.40/share on revenue of $23.789 million. The consensus earnings per share (EPS) of -$0.40/share is based on a poll of 3 analysts and represents a decline in eps of -11.1% over the same quarter last year, when the company reported earnings of -$0.36/share.

The revenue forecast of $23.789 million based on a poll of 6 analysts implies a year-over-year (YoY) growth in revenue of 169.0%. Last year the company reported $8.845 million in revenue for the quarter.

Expected to report EPS of -$0.40/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $23.79 $8.85 169.0%
EPS -$0.40 -$0.36 -11.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, and missed expectations 5 quarters.

What are your expectations from Ontrak, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.31 -$0.37 -18.6% Missed
Q1, 2020 -$0.37 -$0.45 -22.7% Missed
Q4, 2019 -$0.34 -$0.39 -16.4% Missed
Q3, 2019 -$0.32 -$0.36 -12.5% Missed
Q2, 2019 -$0.30 -$0.34 -14.3% Missed
Q1, 2019 -$0.26 -$0.18 −31.4% Beat
Q4, 2018 -$0.25 -$0.09 −64.5% Beat
Q3, 2018 -$0.28 -$0.27 −5.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 56.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $36 $56.47 56.9% Increase
May 7, 2020 $23.53 $22.23 −5.5% Decline
March 12, 2020 $13.17 $10.56 −19.8% Decline
November 13, 2019 $15.09 $15.60 3.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −5.15, the model suggests that the company is not likely to be an earnings manipulator. A value of −5.15 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Ontrak, Inc. is currently trading at $61.24/share, down −3.7% for the day. The company is trading at approximately 73.5% of its 52-week high of $83.34/share. The company’s stock price is up 8.4% since the last earnings report and down −2.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 46.10 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGM:OTRK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −34.28 and a forward P/E multiple of −42.12.

Ontrak, Inc.’s current share price also implies a price-to-book (P/B) multiple of −35.44. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $61.24
P/E Ratio −34.3x
P/E Ratio (Fwd) −42.1x
PEG Ratio 0.3
Total Debt / Total Capital 3.3%
Levered Free Cash Flow -$15.11 million
EV / EBITDA −54.7x

Finbox

Ontrak, Inc. is a small-cap stock with a market capitalization of $1.065 billion and a total enterprise value of $1.089 billion. The company operates in the Healthcare sector and the Healthcare Providers & Services industry.

Ontrak, Inc. operates as an artificial intelligence powered, virtualized outpatient healthcare treatment company that provides in-person or telehealth intervention services to health plans and other third-party payors. Its Ontrak PRE (Predict-Recommend-Engage) platform predicts people whose chronic disease will improve with behavior change, recommends care pathways that people are willing to follow, and engages people who aren’t getting the care they need. The company’s technology-enabled, OnTrak, program is designed to treat health plan members with unaddressed behavioral health conditions that cause or exacerbate chronic medical diseases, such as diabetes, hypertension, coronary artery disease, COPD, and congestive heart failure. The OnTrak integrates evidence-based psychosocial and medical interventions delivered in-person or via telehealth along with care coaching and in-market community care coordinators who address the social and environmental determinants of health. The company was formerly known as Catasys, Inc. and changed its name to Ontrak, Inc. in July 2020. The company was founded in 2003 and is headquartered in Santa Monica, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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