Breaking Down Ontrak, Inc. (OTRK) Financial Health: Key Insights for Investors

You're looking at Ontrak, Inc. (OTRK) and seeing a classic high-risk, high-reward setup, so let's cut through the noise: the financial health is precarious, but the operational pivot is showing traction. The near-term risk is clear with Q1 2025 revenue dropping 25% year-over-year to just $2.0 million, which drove the net loss to a painful $(6.9) million. Still, the company is fighting for runway, securing a crucial $10.0 million financing commitment from Acuitas Capital LLC, plus they're seeing real operational momentum, with enrolled members nearly doubling, up 98% year-over-year to 3,165. Management is defintely betting on their AI-driven Advanced Engagement System to convert pipeline opportunities and is guiding for Q2 revenue between $2.2 million and $2.6 million, but the question is whether that growth can outrun the burn rate before their cash position-which was only $4.1 million at the end of Q1-forces another dilutive move. It's a race against the clock.

Revenue Analysis

You're looking at Ontrak, Inc. (OTRK) because you see the potential in AI-driven behavioral healthcare, but the revenue numbers look volatile. The direct takeaway is this: Ontrak's Q1 2025 revenue was down significantly due to a customer loss, but the underlying business model is shifting toward a high-growth pipeline that management believes can nearly double its annual revenue run-rate.

The company's revenue streams are straightforward, coming almost entirely from contracts with health plans-specifically Medicare Advantage and Medicaid-for its AI-powered engagement solutions. These solutions, primarily WholeHealth+ and the à la carte Ontrak Engage program, are designed to identify and engage members with chronic conditions and behavioral health issues, aiming to reduce overall medical costs for the payor (health plan). This is a value-based model, meaning revenue is tied to successful engagement and, ultimately, outcomes.

Here's the quick math on the near-term volatility. Ontrak, Inc. reported Q1 2025 revenue of $2.0 million (or $2.02 million), which was a -25% decrease year-over-year. That drop was a direct consequence of a major customer disenrollment at the end of 2024. Still, the operational metrics show a different story that points to future revenue growth.

• WholeHealth+: Comprehensive care management solution.
• Ontrak Engage: À la carte solution seeing significant growth.
• Ontrak Quality: New service aimed at improving healthcare quality measures.

The significant change in the revenue picture is the pipeline and member growth. While revenue was down, total enrolled members reached 3,165 by the end of Q1 2025, a jump of 98% year-over-year. That's a huge operational win that hasn't fully translated to the top line yet. The quarterly revenue per health plan enrolled member per month averaged approximately $254 in Q1 2025.

Management is defintely optimistic about an inflection point. The current customers under contract represent an annual revenue run-rate of approximately $14 million to $16 million. The sales pipeline, if successfully converted-especially a major Midwestern Medicaid plan-could add another $15 million in annual revenue. That's why the company is guiding Q2 2025 revenue to be between $2.2 million and $2.6 million, signaling a sequential increase.

What this estimate hides is the time lag between signing a contract and full member enrollment, which is critical in this business. Anyway, the potential to double the current run-rate revenue in 2025 is the central opportunity for investors to track. For a deeper dive into who is betting on this turnaround, you should read Exploring Ontrak, Inc. (OTRK) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking at Ontrak, Inc. (OTRK) and asking the right question: can this company make money? The short answer for the near-term is no. The Q1 2025 results show a significant contraction in profitability, driven by a major customer loss at the end of 2024 and a shift in member mix toward lower-revenue programs.

For the first quarter of 2025, Ontrak, Inc. reported revenue of only $2.0 million, a 25% decrease year-over-year. This revenue decline, coupled with sticky operating costs, translated directly into deeply negative margins. Honestly, the numbers are stark.

• Gross Margin: Plunged to 37% in Q1 2025, down sharply from 61% in Q4 2024.
• Operating Margin: Was approximately -295% in Q1 2025.
• Net Profit Margin: Was approximately -345% in Q1 2025.

Trends and Operational Efficiency

The gross margin drop from 61% to 37% is the clearest sign of operational stress. This wasn't just a revenue problem; it was an efficiency problem. The company cited the loss of a key customer and a product mix shift-more members enrolling in the lower-revenue 'Engage' program-as the primary drivers. This means the cost of delivering the service (Cost of Goods Sold) didn't fall as fast as the revenue did.

Here's the quick math on the operating loss: Q1 2025 saw an operating loss of $(5.9) million, a 37% increase in the loss compared to the same period in the prior year. This is a classic sign of poor operational leverage (operating expenses growing faster than revenue), and it's why the operating margin is so severely negative.

Industry Comparison: A Sobering View

When you compare Ontrak, Inc.'s profitability to other players in the virtual behavioral health space, the challenge becomes clearer. While many health-tech companies are still unprofitable, the magnitude of Ontrak, Inc.'s losses is an outlier.

For context, let's look at another virtual care provider, LifeMD, which also includes behavioral health services. Their trailing twelve months (LTM) data up to Q3 2025 shows a robust gross margin of 87.57%, with an LTM net margin of -2.41% and an operating margin of -0.83%. That company is nearly breaking even on an operating basis, while Ontrak, Inc.'s LTM operating margin is a staggering -190.19%.

What this estimate hides is the potential for a massive turnaround if the company can successfully convert its pipeline, which management believes could double its run-rate revenue in 2025. But that's a bet on future sales, not current efficiency. For now, the profitability metrics are a major red flag.

For a detailed breakdown of the balance sheet and cash flow, you can check out the full post: Breaking Down Ontrak, Inc. (OTRK) Financial Health: Key Insights for Investors.

Next step: Dig into the new contracts and pipeline to see if the revenue doubling is defintely achievable by year-end.

Debt vs. Equity Structure

You need to know how a company finances its operations, and for Ontrak, Inc. (OTRK), the story of its debt and equity mix in 2025 is a stark lesson in financial leverage and risk. The short takeaway is that the company relied heavily on debt and new equity infusions to stay afloat, a strategy that ultimately failed in the face of operational setbacks.

As of the first quarter of 2025, Ontrak, Inc.'s total debt stood at approximately $9.67 million. This debt load was heavily skewed toward near-term obligations, with short-term debt and capital lease obligations totaling about $7.109 million, compared to $2.568 million in long-term debt and capital lease obligations. That short-term pressure meant a constant scramble for cash, a huge red flag for liquidity.

The Debt-to-Equity Imbalance

The company's debt-to-equity ratio is the clearest signal of its financial health. In Q1 2025, Ontrak, Inc.'s Debt-to-Equity Ratio was a high 2.08. Here's the quick math: this means for every dollar of shareholder equity, the company had over two dollars of debt. This level of financial leverage is extremely aggressive, especially for a company in the volatile Healthcare Providers & Services sector. A ratio this high signals that creditors, not shareholders, bore the majority of the financial risk. To be fair, a high ratio can boost returns when things go well, but it catastrophically amplifies losses when they don't.

• Debt-to-Equity: 2.08 in Q1 2025.
• Total Debt: $9.67 million as of March 2025.
• Short-Term Debt: $7.109 million, driving immediate cash needs.

The Near-Term Financing Scramble

The company's financing strategy was a continuous balancing act between debt and equity funding, driven by its need for working capital. The near-term risks were mapped directly to its ability to raise fresh capital. In May 2025, Ontrak, Inc. announced securing a $10.0 million financing commitment from Acuitas Capital LLC. This was a crucial lifeline, but it was debt-based, adding to the leverage. Shortly after, the company pivoted to equity, announcing the pricing of a $4 million public offering in late June 2025, and completing a $3.24 million public offering in early July 2025. This dual-track approach-using both debt and dilutive equity offerings-shows a company desperate to fund its operations and growth initiatives.

What this estimate hides is the ultimate limit of this strategy. Following the loss of a major sales prospect, the board of directors determined in late July 2025 that they lacked realistic prospects to continue funding operations. The company ceased operations on July 31, 2025, and filed for Chapter 7 liquidation on August 29, 2025. The aggressive debt-to-equity balance, coupled with reliance on a 'Keep Well Agreement' with Acuitas Capital LLC, proved unsustainable.

For more on the shareholder side of this equation, you should check out Exploring Ontrak, Inc. (OTRK) Investor Profile: Who's Buying and Why?

The lesson here is defintely that aggressive leverage only works if the core business delivers, and when the core business failed, the financing structure offered no cushion. The risk was too concentrated.

Liquidity and Solvency

The liquidity position for Ontrak, Inc. (OTRK) is defintely strained, showing significant reliance on external financing to cover operating expenses. The company's current and quick ratios, along with persistent negative operating cash flow, signal substantial near-term risk for investors.

Assessing Ontrak, Inc. (OTRK)'s Liquidity

When we look at the balance sheet, the core liquidity metrics are concerning. The Current Ratio, which measures the ability to cover short-term liabilities with short-term assets, sits at a low 0.72 for the last twelve months (LTM) as of November 2025. This means for every dollar of current liabilities, Ontrak, Inc. has only $0.72 in current assets to pay it back. The Quick Ratio, which excludes less-liquid inventory, is even tighter at 0.58. Both ratios are well below the healthy 1.0 benchmark, showing a clear working capital deficit.

Here's the quick math on the short-term position:

• Current Ratio (LTM): 0.72 (Below 1.0 signals risk)
• Quick Ratio (LTM): 0.58 (Even less liquid assets available)
• Cash on Hand (Q1 2025): $4.09 million

Working Capital and Cash Flow Trends

The working capital trend is negative, as evidenced by the company's need to constantly secure new capital. As of March 31, 2025, the cash balance was just $4.09 million, which is a small cushion against the Q1 2025 operating loss of $(5.9) million. This cash position forced the company to execute a $4 million public offering and secure a $10.0 million financing commitment from Acuitas Capital in May 2025 to fund operations beyond the second quarter of 2025. That's not a sign of a self-sustaining business; it's a lifeline.

The Cash Flow Statement overview confirms the underlying issue: a lack of internal cash generation. For the LTM period, the Operating Cash Flow was a negative -$12.90 million.

The Financing Cash Flow is where the company has been active, borrowing $1.5 million in Q1 2025 and securing the additional financing commitment. This is a classic financing-driven model, where debt or equity sales fund losses, not growth from operations.

Near-Term Liquidity Concerns and Action

The primary liquidity concern is the company's ability to continue as a going concern (a business that can meet its financial obligations and continue operating for the foreseeable future). The low liquidity ratios and the consistent negative operating cash flow mean Ontrak, Inc. must successfully convert its sales pipeline and sign new contracts to reduce its cash burn and reliance on dilutive financing. The loss of a major customer at the end of 2024, which accounted for a large portion of revenue, only heightens this pressure.

If you're looking for a deeper dive into the company's strategy to mitigate these risks, you can read the full post: Breaking Down Ontrak, Inc. (OTRK) Financial Health: Key Insights for Investors. Still, the immediate action for any investor is to monitor the Q2 and Q3 2025 financial reports for signs of a sustained positive shift in Operating Cash Flow and a decrease in the reliance on financing activities.

Valuation Analysis

You're looking at Ontrak, Inc. (OTRK) and trying to figure out if the stock is a bargain or a value trap. Honestly, the valuation picture is complex right now, and the headline numbers tell a story of significant risk. As of November 2025, the stock is trading around $0.0601 per share, which is a staggering -99.99% drop over the last 52 weeks.

Here's the quick math on the core valuation metrics, which point to a company in a deep restructuring phase, not a typical growth story. The Enterprise Value (EV) is roughly $6.19 million, but the traditional ratios are distorted by losses.

• Price-to-Earnings (P/E) Ratio: This is practically not applicable (n/a) or negative because Ontrak, Inc. is not profitable. A negative P/E ratio is a red flag, signaling the company is losing money.
• Price-to-Book (P/B) Ratio: The P/B ratio is near 0.00. This suggests the market values the company's equity close to zero, which is common for companies facing significant operational challenges or bankruptcy risk.
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric is also n/a, as the company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is likely negative, making the ratio meaningless for comparison.

What this estimate hides is the true risk of continued dilution or further operational distress. You can't value this like a profitable company; you have to look at the cash burn and the path to positive cash flow. For a deeper dive into the company's long-term strategy, you should review the Mission Statement, Vision, & Core Values of Ontrak, Inc. (OTRK).

Stock Trend and Dividend Reality

The stock price trend over the last year is brutal. The 52-week price range has been between a low of $0.0503 and a high of $2.07. That kind of volatility, coupled with the -99.99% annual loss, means any investment here is highly speculative. That's not investing; that's gambling.

On the income side, there's no relief for investors. Ontrak, Inc. does not currently pay a dividend, so your dividend yield is 0%. The last recorded payout was back in February 2022. Given the current financial state and losses, the dividend payout ratio is irrelevant because there are no earnings to pay out, and there is minimal likelihood of dividends being initiated defintely soon.

Analyst Consensus vs. Market Reality

Here's where things get interesting, and frankly, confusing. Despite the near-zero stock price and massive losses, a single analyst has a consensus rating of Strong Buy for Ontrak, Inc. as of November 2025. This analyst has set a 2025 price target of $3.

To be fair, a $3 price target against a current price of $0.0601 suggests an incredible potential return, but you must treat this with extreme caution. This is a classic case of a high-risk, high-reward call that relies entirely on a massive, successful turnaround. The analyst's view is a best-case scenario; the market's price action shows the worst-case scenario is currently playing out. Your action here is simple: do your own due diligence and don't blindly follow a single, outlier rating.

Risk Factors

You need to look past the marketing and focus on the cold, hard numbers, especially with a company like Ontrak, Inc. (OTRK) that is still in a high-burn growth phase. The direct takeaway is that while their operational efficiency is improving, the company faces an immediate, critical liquidity risk tied to customer concentration and the recent failure to close a major deal.

Ontrak, Inc. is operating in a highly competitive, yet rapidly evolving, behavioral health market. The biggest near-term risk is simply maintaining enough cash to reach profitability, which is a common challenge for growth-stage healthcare technology firms, but the recent news makes it acute. They have been unprofitable since inception, and the Q1 2025 net loss was $(6.9) million, up from $(4.5) million in the same period last year. That's a significant cash drain.

Near-Term Financial and Sales Volatility

The core financial risk is the reliance on a few large health plan customers, which creates extreme revenue volatility. The Q1 2025 revenue of only $2.0 million was a 25% decrease year-over-year, primarily due to the loss of a single customer whose members disenrolled at the end of 2024. That's a huge hit from one contract.

This risk was compounded in July 2025 when a significant prospect-one of the largest in their sales pipeline-decided not to proceed with a partnership. Here's the quick math: that single lost deal represented up to 9,000 potential members for the Wholehealth+ program and up to 20,000 for the Engage program. Losing that many potential members directly impacts their goal of doubling run-rate revenue in 2025.

What this estimate hides is the ripple effect. The prospect paused their review to evaluate Ontrak, Inc.'s financial stability, and the decision not to partner could signal that their financial condition is a concern for other potential clients, too.

Liquidity and Capital Access Concerns

The financial runway is short. As of Q1 2025, Ontrak, Inc. had cash of only $4.1 million. To be fair, they did secure a $10.0 million financing commitment from Acuitas Capital LLC. But, the loss of the major prospect in July 2025 triggered a board review of their ability to even draw on that commitment, as a condition for funding is that there must be no Material Adverse Change (MAC) in the company's business prospects. This is a defintely a high-stakes situation.

Operational efficiency is a bright spot, though. They are serving more members-3,165 enrolled members at the end of Q1 2025, which is up 98% year-over-year-with less than half the employees they had in late 2021. Still, that efficiency is not enough to offset the revenue decline and mounting losses.

• Customer Concentration: Single customer loss caused 25% Q1 2025 revenue drop.
• Financing Risk: $10.0 million commitment is subject to a Material Adverse Change (MAC) clause.
• Operational Pressure: Revenue per member per month dropped to about $254 in Q1 2025 from $500 in Q4 2024, due to a mix shift to lower-revenue Engage members.

Mitigation Strategies and External Headwinds

Management is clearly aware of the capital risks and is focused on a multi-pronged mitigation strategy. They are pursuing cost optimization initiatives and expanding sales to acquire new customers across Medicare Advantage, Medicaid, and Commercial populations. The strategic extension of their partnership with Sentara Health Plans through December 2027 is a positive sign of client retention and stability.

However, external risks remain, including the highly competitive landscape and the ever-present threat of new regulatory requirements, which can increase compliance costs. The company is leveraging its AI-driven Advanced Engagement System to improve identification and outreach, which is their attempt to gain a competitive edge and drive the growth needed to hit their target of $14 million to $16 million in annual revenue from current contracts. For more on their long-term vision, you can review their Mission Statement, Vision, & Core Values of Ontrak, Inc. (OTRK).

The next concrete step is to watch for the Q2 2025 earnings report and the accompanying 10-Q filing. The CEO needs to clearly articulate how they plan to meet the conditions of the Acuitas financing and what the revised plan is for replacing the lost major prospect revenue. The market will be looking for Q2 revenue to hit the projected range of $2.2 million to $2.6 million to show sequential growth.

Growth Opportunities

You're looking at Ontrak, Inc. (OTRK) and trying to map out a path to profitability, which is smart because the Q1 2025 operating loss was still a hefty $(5.9) million. The direct takeaway is that the company's growth hinges on converting its strong sales pipeline, especially the large Medicaid prospect, and continuing to monetize its AI-driven platform. Management is aiming to double its run-rate revenue in 2025 compared to 2024, which would be a massive step toward financial stability.

The AI and Product-Driven Edge

The core of Ontrak, Inc.'s competitive advantage is its proprietary Advanced Engagement System, which uses artificial intelligence (AI) and predictive analytics to find and engage the most vulnerable behavioral health members-the ones who typically fall through the cracks. This isn't just tech for tech's sake; it's about delivering personalized care coaching that helps individuals with complex issues like anxiety, depression, and substance use disorder. Plus, the company now offers a flexible, multi-solution approach, including the comprehensive WholeHealth+ program and the à la carte Ontrak Engage solution, which has seen its enrolled members nearly double year-over-year to over 3,165 total members by the end of Q1 2025.

• AI drives higher engagement rates.
• WholeHealth+ and Engage serve a broader member base.
• NCQA re-certification confirms quality standards.

Near-Term Revenue Projections and Pipeline

The near-term revenue picture shows a gradual climb. Ontrak, Inc. estimates Q2 2025 revenue will be in the range of $2.2 million to $2.6 million, up from the Q1 2025 revenue of $2.0 million. The real upside comes from converting the sales pipeline, which management believes provides a path to doubling the run-rate revenue this year. Here's the quick math: if their Q4 2024 revenue was $3.1 million, doubling the run-rate implies a significant jump in the back half of 2025. This is a classic 'show me' moment for a growth stock.

Strategic Moves and Market Expansion

Ontrak, Inc. is making concrete moves to expand its market reach and shift its business model. They secured official Medicaid designation in two new states in April 2025, which allows them to operate as a direct value-based provider. This is a crucial shift because it gives them access to the more substantial medical spend budgets of payors, rather than just the smaller administrative cost pools. They also extended their strategic partnership with Sentara Health Plans for an additional three years through December 2027, which provides a stable base of business. Plus, the new partnership with Intermountain Health for Medicare Advantage members in Nevada is expected to add about 2,000 members to the outreach pool, showing expansion in the senior market. They even secured a $10.0 million financing commitment from Acuitas Capital LLC in May 2025 to fuel this growth. To be fair, this is a capital-intensive strategy, but it's defintely focused on high-value, government-backed healthcare segments. For a deeper dive into the company's financial foundation, you can check out Breaking Down Ontrak, Inc. (OTRK) Financial Health: Key Insights for Investors.