AP NEWS
Press release content from Business Wire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Business Wire
Press release content from Business Wire. The AP news staff was not involved in its creation.

Catasys Announces 2019 Third Quarter Financial Results

November 13, 2019 GMT

SANTA MONICA, Calif.--(BUSINESS WIRE)--Nov 13, 2019--

Catasys, Inc. (NASDAQ: CATS) (“Catasys” or the “Company”), a leading AI and technology-enabled healthcare company, today reported its financial results for the third quarter ended September 30, 2019. The Company provides big data-based analytics and predictive identification and engagement capabilities to health plans and their members through its OnTrak TM solution on the Catasys PRE TM (Predict, Recommend, Engage) platform.

Management Commentary

Mr. Terren Peizer, the Company’s Chairman and CEO, stated, “Enrollments continued to increase at a rapid pace with nearly 1,500 net new enrolled members in the OnTrak program during the third quarter of 2019. With the continued build-out of our engagement team—care coaches, outreach personnel, and community care coordinators—and with the continued technology and infrastructure investment, we are poised to deliver on our goal of helping and saving as many lives as possible. We were particularly pleased to have closed on a debt financing with Goldman Sachs, which will support the accelerated growth we expect to see in 2020 without significant dilution to shareholders. As our outreach pool of eligible members continues to grow and drive enrollments, we believe the proceeds from this financing put Catasys in a strong position to be able to generate positive cash flow by executing on our growth initiatives, including program and platform expansions and technological advancements, as we head into next year. We expect to close out 2019 with a strong fourth quarter despite encountering a few headwinds throughout the year, including one national plan freezing our launches pending a national behavioral health RFP, the onboarding of hundreds of new care team members across the country, the integration of new digital systems and the recruitment of a national commercial team, all of which are part of our investment in supporting the tremendous growth we anticipate in 2020, a year of exponential growth as reflected by our revenue guidance indicating that business will more than double. It’s important to note that had we not been frozen by one of our national health plan partners pending their company-wide behavioral health RFP, we would have significantly outperformed our 2019 guidance. Excitingly, we were the winning proposal and are awaiting the final statement of work contracts.”

Company Reiterates 2019 GAAP Revenue Guidance

2020 Guidance

2019 Third Quarter and Recent Operating Highlights

2019 Third Quarter Financial Review

Revenues

Gross Margin

Operating Expenses

Net Income (Loss)

2019 Nine Months Financial Review

Conference Call – Wednesday, November 13, 2019 – 4:30 pm ET

The Company will host a conference call/webcast on Wednesday, November 13, 2019, 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

https://78449.themediaframe.com/dataconf/productusers/cats/mediaframe/33108/indexl.html

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: 11/20/2019

About Catasys, Inc.

Catasys, Inc. is a leading AI and technology-enabled healthcare company whose mission is to help improve the health and save the lives of as many people as possible. Its Catasys PRE TM (Predict-Recommend-Engage) platform predicts people whose chronic disease will improve with behavior change, recommends effective care pathways that people are willing to follow, and engages people who aren’t getting the care they need. By combining predictive analytics with human engagement, Catasys delivers improved member health and validated outcomes and savings to healthcare payers.

Catasys’ integrated, technology-enabled OnTrak solution, a critical component of the Catasys PRE platform, is designed to treat members with behavioral conditions that cause or exacerbate chronic medical conditions such as diabetes, hypertension, coronary artery disease, COPD, and congestive heart failure, which result in high medical costs.

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.

OnTrak integrates evidence-based psychosocial and medical interventions delivered either in-person or via telehealth, along with care coaching and in-market Community Care Coordinators who address the social and environmental determinants of health, including loneliness. The program improves member health and delivers validated cost savings to healthcare payers of more than 50 percent for enrolled members. OnTrak is available to members of leading national and regional health plans in 27 states.

Learn more at www.catasys.com.

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

To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company has provided in this press release and the quarterly conference call held on the date hereof certain non-GAAP financial measures. The non-GAAP financial measure include non-GAAP net loss and non-GAAP net loss per share, which exclude, for the periods in which they are presented, one-time debt termination costs and write-off of debt issuance costs.

The Company’s management uses these non-GAAP financial measures and other key metrics internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating the Company’s ongoing operational performance and trends. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

CATASYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Revenue

$

8,845

 

$

4,369

 

$

23,337

 

$

9,553

 

Cost of revenue

 

6,119

 

 

3,237

 

 

13,511

 

 

8,465

 

Gross profit

 

2,726

 

 

1,132

 

 

9,826

 

 

1,088

 

 
Operating expenses

 

8,322

 

 

5,179

 

 

22,844

 

 

13,527

 

Operating loss

 

(5,596

)

 

(4,047

)

 

(13,018

)

 

(12,439

)

 
Other income / (expense)

 

(2,550

)

 

-

 

 

(2,536

)

 

40

 

Interest expense

 

(590

)

 

(241

)

 

(1,382

)

 

(278

)

Change in fair value of warrant liability

 

173

 

 

(65

)

 

(38

)

 

(94

)

Net loss

$

(8,563

)

$

(4,353

)

$

(16,974

)

$

(12,771

)

 
Net loss per share, basic and diluted from operations:

$

(0.52

)

$

(0.27

)

$

(1.04

)

$

(0.80

)

 
Weighted-average shares used to compute basic and diluted net loss per share

 

16,562

 

 

15,917

 

 

16,360

 

 

15,909

 

 

CATASYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

September 30,
2019

December 31,
2018

 
Assets
Current assets:
Cash and restricted cash

$

15,900

 

$

3,162

 

Receivables, net

 

2,272

 

 

1,382

 

Unbilled receivables

 

2,090

 

 

-

 

Prepaid expenses and other current assets

 

791

 

 

1,108

 

Total current assets

 

21,053

 

 

5,652

 

Long-term assets:
Property and equipment, net

 

175

 

 

263

 

Restricted cash, long-term

 

408

 

 

408

 

Right-of-use assets

 

2,814

 

 

-

 

Total assets

$

24,450

 

$

6,323

 

 
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable

$

1,111

 

$

497

 

Accrued compensation and benefits

 

1,784

 

 

1,537

 

Deferred revenue

 

3,708

 

 

4,195

 

Current portion of lease liabilities

 

359

 

 

-

 

Other accrued liabilities

 

2,551

 

 

1,501

 

Total current liabilities

 

9,513

 

 

7,730

 

Long-term liabilities:
Long-term debt, net

 

29,868

 

 

7,472

 

Long-term lease liabilities

 

2,120

 

 

-

 

Warrant liabilities

 

670

 

 

86

 

Total liabilities

 

42,171

 

 

15,288

 

 
Stockholders' 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; 16,585,199 and 16,185,146 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

2

 

 

2

 

Additional paid-in capital

 

304,906

 

 

296,688

 

Accumulated deficit

 

(322,629

)

 

(305,655

)

Total stockholders' deficit

 

(17,721

)

 

(8,965

)

Total liabilities and stockholders' deficit

$

24,450

 

$

6,323

 

 

CATASYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(in thousands)

(unaudited)

For the Nine Months Ended September
30,
 

 

2019

 

 

2018

 

Cash flows used in operating activities
Net loss

$

(16,974

)

$

(12,771

)

Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense

 

2,947

 

 

2,024

 

Write off of debt issuance costs

 

1,505

 

 

-

 

Depreciation

 

108

 

 

229

 

Amortization

 

449

 

 

95

 

Warrants issued for services

 

43

 

 

86

 

Change in fair value of warrants

 

38

 

 

94

 

Common stock issued for consulting services

 

-

 

 

112

 

Loss on disposal of fixed assets

 

-

 

 

69

 

Deferred rent

 

(26

)

 

(67

)

Changes in operating assets and liabilities:
Accounts payable

 

614

 

 

539

 

Leases liabilities

 

575

 

 

-

 

Other accrued liabilities

 

1,164

 

 

410

 

Prepaids and other current assets

 

149

 

 

3

 

Deferred revenue

 

(487

)

 

3,994

 

Receivables

 

(890

)

 

(1,880

)

Unbilled receivables

 

(2,090

)

 

-

 

Net cash used in operating activities

 

(12,875

)

 

(7,063

)

 
Cash flows provided by financing activities
Proceeds from secured promissory note

 

-

 

 

7,500

 

Proceeds from revolving loan

 

7,500

 

 

-

 

Repayment of revolving loan

 

(15,000

)

 

-

 

Proceeds from A/R facility

 

1,938

 

 

-

 

Repayment of A/R facility

 

(1,938

)

 

-

 

Proceeds from GS loan

 

35,025

 

 

-

 

Debt issuance costs

 

(2,813

)

 

(336

)

Debt termination related fees

 

(1,956

)

 

-

 

Proceeds from warrant exercise

 

1,128

 

 

-

 

Proceeds from options exercise

 

1,660

 

 

-

 

Capital lease obligations

 

69

 

 

(25

)

Net cash provided by financing activities

 

25,613

 

 

7,139

 

 
Net increase in cash and restricted cash

 

12,738

 

 

76

 

 
Cash and restricted cash at beginning of period

 

3,570

 

 

4,779

 

Cash and restricted cash at end of period

$

16,308

 

$

4,855

 

 
Supplemental disclosure of cash flow information:
Right of use asset obtained in exchange for lease obligation

$

2,574

 

$

-

 

Interest paid

 

967

 

 

-

 

Non cash financing and investing activities:
Warrant issued in connection with A/R facility

$

-

 

$

64

 

Warrant issued in connection with GS facility

 

2,354

 

 

-

 

Reclassification of warrant liability to equity upon amendment of the loan agreement

 

86

 

 

-

 

Warrants issued in connection with revolving loan

 

-

 

 

-

 

Property and equipment acquired through capital leases

 

250

 

 

-

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191113005813/en/

CONTACT: For Investors:

Catasys, Inc.

Ariel Davis

Phone: 310-444-4346

Email:ariel@catasys.com For Media:

Catasys, Inc.

Cathy Finley

Phone: 310-444-4308

Email:cfinley@catasys.com

KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: GENERAL HEALTH HEALTH TECHNOLOGY MANAGED CARE SOFTWARE

SOURCE: Catasys, Inc.

Copyright Business Wire 2019.

PUB: 11/13/2019 04:05 PM/DISC: 11/13/2019 04:05 PM

http://www.businesswire.com/news/home/20191113005813/en