Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Ontrak, Inc. (NASDAQ:OTRK)
Q4 2020 Earnings Call
Mar 09, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Ontrak's fourth-quarter 2020 earnings call. [Operator instructions] I will now hand the conference over to your speaker today, Caroline Paul, with investor relations.

Caroline Paul -- Investor Relations

Thank you, and thank you all for participating in today's call. Joining me today are Terren Peizer, chairman and chief executive officer; Brandon LaVerne, chief financial officer; and Curt Medeiros, president and chief operating officer, who will join us for the question-and-answer portion of the call. Earlier today, Ontrak released financial results for the quarter ended December 31, 2020. A copy of the press release is available on the company's website.

Before we begin, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are forward-looking statements. The words anticipate, believes, estimates, expects, intend, guidance, confidence, targets, projects and some other expressions typically are used to identify forward-looking statements. These forward-looking statements are not guarantees of future performance but may involve and are subject to certain risks and uncertainties, other factors that may affect Ontrak business, financial condition and operating results, which include, but are not limited to, the risk factors described in the Risk Factors section of the Form 10-K and Form 10-Q as filed with the SEC.

Therefore, actual outcomes and results may differ materially from those expressed or implied by these forward-looking statements. Ontrak expressly disclaims any intent or obligation to update these forward-looking statements. With that, I'd like to turn the call over to Terren.

Terren Peizer -- Chairman and Chief Executive Officer

Thank you. Good afternoon, everyone, and thank you for joining us today. As we outlined in our pre-announcement last week, we had a solid performance in 2020 despite the unprecedented headwinds that we faced with lower medical utilization and rising unemployment, and the Aetna data freeze, pending the compliance review and ultimately an executed contract. Of course, the nation faced far worse challenges with the pandemic, rising mental health issues and cultural trauma.

Our results were overshadowed by the news that we shared last Monday about the termination of our Ontrak-A Aetna contract, effective June 26, 2021. We remain committed to ensuring quality care for all this plan's members through the transition, and we are engaging with the health plan to better understand their not for cause termination decision. Moreover, we have a solid strategy for regaining Aetna's business with our third-party validated medical cost savings and associated ROI, our clinical outcomes and our Q4 NPS of 80. NPS is a proven indicator of member retention.

The average NPS for our health plan is in single digits, which creates continued opportunities for Ontrak to heighten member satisfaction with our health plan customers. You may recall that we were predominantly addressing substance use disorder with Aetna. Our strategy includes the larger opportunity to address anxiety and depression and the full continuum of utilization care. While the recent news about our Aetna contract was certainly both a surprise and a disappointment, we'd like to reflect that our team's recent accomplishments and the momentum within our customer base as we exited 2020.

Amid the growing mental health crisis, Ontrak continues to play an instrumental role in engaging care-avoidant individuals with a healthcare system to reduce their medical expense and create lasting clinical outcomes. In the next month, we will have recently extended or expanded with every customer. Aetna was the exception to this trend. We finished the year strongly despite the previously mentioned headwinds with revenue of $83 million, reflecting a 136% growth from last year -- the last year.

Our total active enrolled members grew rapidly as well, totaling 15,702 members at the end of the quarter. Our effective outreach pool ended the quarter at 152,000 and increased sequentially from 144,000. As we push forward into 2021, our overall outlook for the year recognizes headwinds and tailwinds to achieve revenue of $100 million. We continue to believe that this guidance is conservative in light of the over $88 million from customers with existing contracts or in the signature phase.

Furthermore, we remain confident that in 2022, we return to revenue growth run rate of 100%. We are only scratching the surface of our $33 billion opportunity. With that as a backdrop, let me provide a few updates on the headwinds and tailwinds we're seeing. Let's start with the headwinds.

The most significant headwind is the Aetna contract termination in June. We will continue to graduate and disenroll members through the end of June. While we are engaged with the health plan in determining specific next steps, our guidance does not contemplate services for these members beyond the end of June. Turning to utilization.

Growth of our outreach pool in Q4 was naturally impacted by lower utilization of non-COVID-19 healthcare services, especially in the latter part of the quarter. As we have previously discussed, this lower utilization during the pandemic caused high cost members to drop below the medical expense threshold for inclusion in our outreach pool. The resulting loss of individuals from the outreach pool was partially offset by members added to our outreach pool through health plan expansions and the enhancements we made to our algorithms. Over the course of 2021, as vaccinations increase and healthcare resources are less constrained, we expect normal utilization patterns will resume.

This headwind will become a tailwind that is expected to accelerate the growth of our outreach pool. Now let's now review the five tailwinds that will be important to our growth trajectory. First, we have seen very rapid enrollment of Medicare Advantage members under our Cigna contract, which expanded in October 2020 and already tops 100 members. This contributed to our fourth-quarter revenue growth.

We've been helping these members access critical behavioral healthcare in 13 states and anticipate demand for broader engagement with Cigna's members. Second, the nation faces a severe shortage of quality behavioral health providers, which has heightened the value of our contractual relationships with over 11,600 high-quality behavioral health providers whom we train and from whom we receive valuable member progress reports. Our customers value our ability to help members navigate the complex provider landscape, coordinate member care and close the loop with respect to clinical outcomes. We anticipate this number to grow to approximately 15,000 in Q2, giving Ontrak the largest qualified behavioral health network in the industry.

Third, we are pleased to have received record high member satisfaction levels demonstrated by an industry-leading Q4 2020 Net Promoter Score of 80 for our Ontrak program versus an NPS of 74 in Q3. This puts our product rated higher than the most popular brand names, Netflix, Apple, Starbucks, Amazon, etc. Fourth, the anticipated 2021 launch of Ontrak tiered care programs for the full spectrum of behavioral health needs from high to low acuity, positions us to meet 100% of the behavioral health needs of those who suffer from the medical consequences of undiagnosed and untreated behavioral health conditions. This significantly increases our total addressable market.

Fifth, we see continued momentum in our pipeline and customer expansions are off to a great start. We were recently awarded a significant expansion with one of our health plan partners. This contract includes Medicaid and Medicare populations and will now be sent to the state for final review. We have been advised that the state typically approves these contracts within 30 days.

Lastly, we are focused on the possibility of regaining Aetna's business by appealing to those benefiting from our third-party-validated value proposition of medical cost savings, associated ROI, clinical outcomes and the industry-leading NPS of 80. As part of our growth plan for 2021, we continue to find ways to strengthen our position by expanding our addressable market and investing in our Ontrak platform. Last quarter, we announced the acquisition of LifeDojo, a science-backed behavioral change platform that combines digital modules with coaching support through a single mobile application. The integration has been progressing well.

We have recently signed a three-year contract extension at a higher billing rate with a subsidiary of Berkshire Hathaway and another contract extension with Dolby, and we have received encouraging feedback on our product road map that we have presented to our major health plan customers. A new suite of digital programs, including mobile-first depression anxiety modules that build upon the LifeDojo platform, will scale our ability to serve more members. I'm also very pleased that Chris Cutter, former founder and CEO of LifeDojo, is now leading our product program. He brings a deep understanding of customer needs and operates at start-up speed, which is exactly what is needed in such a rapidly growing marketplace.

The solid results that we produced in 2020 and our recent capital raising activities mean that Ontrak remains in a strong financial position despite the loss of Aetna. This strength allows us to invest in growth opportunities while still maintaining capital to deploy for other strategic opportunities that may develop, including acquisitions and, importantly, partnerships. I will now turn the call over to Brandon LaVerne, our chief financial officer, and will return with closing comments.

Brandon LaVerne -- Chief Financial Officer

Thank you, Terren. During the fourth quarter, we recorded revenue of $29.3 million, most of which was received on a per enrolled member per month basis. For our Cigna expansion, which is handled on what we called a case rate, we built for the entire program upon initial enrollment with proportionate credits back for any disenrollments during the first six months. As a result, this increased our deferred revenue at the end of the year to $21 million.

At the beginning of the quarter, we had 14,345 enrolled members with 15,702 at the end of the fourth quarter, an increase of 1,357 and a simple average of 15,023. That equates to revenue of about $1,947 per enrolled member for the quarter or annualized at approximately $7,800 per enrolled member per year. This compares to our third-quarter average of about $7,300 per enrolled member per year and also to our full-year average of about $7,200 per year as well. Breaking down the Q4 enrollment a bit more, we enrolled a total of 6,714 members during Q4, compared to 7,192 in Q3 or a 7% decrease sequentially, reflecting the ongoing stale outreach pool data related to the Aetna customer and 73% more than the 3,870 gross enrollments in Q4 last year despite the headwinds mentioned by Terren earlier.

Dividing Q4 gross enrollment by our outreach pool, which averaged 147,000 during Q4, it annualizes to an 18% enrollment rate during the fourth quarter slightly lower than the 20% annualized rate we saw in Q3, but again impacted by the stale outreach pool data related to Aetna. With this customer representing 58% of our revenues in 2020, we will review the impact of these metrics as we think ahead to 2021. Our disenrollment rate averaged between 8% to 9% per month during the fourth quarter resulting in us disenrolling a total of 3,911 enrolled members during the quarter. Further, we graduated 1,446 enrolled members during the quarter, which equates to about 11% of the enrolled members in the program at the beginning of the quarter.

The net impact of all that was a net enrollment increase of 1,357 in the fourth quarter. Our gross margin in the fourth quarter of 54.1% increased sequentially from 45.6%, and compared to 41.3% in the fourth quarter of last year and increased sequentially each quarter this year. For the full year, our gross margin was 47.4%, compared to 41.8% last year. We ended the quarter with 486 team members included in our cost of sales, up 7% sequentially from 455 at the end of Q3 and up 50% from 257 at the same time last year, primarily made up of care coaches and member engagement specialists.

We, of course, are extremely proud we're able to say we had positive adjusted EBITDA throughout the fourth quarter. Turning to the balance sheet and cash flow. Our cash flow used in operations for the fourth quarter was nearly breakeven at just $100,000 use of cash and ended the year with $6.2 million cash used in operations, as compared to $16.9 million used in operations last year. On the balance sheet, we ended the quarter with cash and cash equivalents of $86.9 million.

But including restricted cash associated with our preferred stock dividend payments through August 2022, total cash was $103 million. Our cash balance increased primarily as a result of the net proceeds of $41.4 million generated from the follow-on offering of our nonconvertible Series A preferred stock. We remain confident that we have sufficient capital and access to future capital to manage our operations and execute on the strategic initiatives we've outlined. As Terren indicated, we now expect revenue of $100 million, of which over $88 million is from customers with existing contracts or in the signature phase.

Of this amount, we currently anticipate approximately $18 million will come from the Aetna members prior to the currently notice termination date at the end of June 2021. Further, note that we already have $21 million already billed sitting in deferred revenue on the balance sheet as of year-end. In light of the pending termination of the Aetna contract in June, I wanted to provide some information that may help with understanding the business going forward. In 2020, Aetna represented 58% of total revenue.

At the end of 2020, they represented approximately 82% of the outreach pool and 61% of members. During the fourth quarter, the revenue was also 58% of total revenue, yet represented 66% of the average member count. What this demonstrates is that our average revenue per member during the quarter was less for this customer than the remainder of the business. As I said before, the revenue per member for all of 2020 was $7,200.

Yet excluding Aetna members, it was nearly $9,500. While the outreach pool will be significantly impacted by the loss of this customer, the remaining outreach pool should have a significantly increased enrollment rate. For example, if we look at 2020 as a whole, the annualized enrollment rate for the whole company was 17%. And but it was 40%, excluding this customer, and accelerated to 53% in the fourth quarter and is trending at 60% in the first quarter of 2021, reflecting the expansion launch with Cigna.

As we continue into the coming quarters, we will continue to update this information as our other health plan customers become a higher percentage of revenue and impact these statistics going forward. I'll now turn the call back over to Terren for his closing remarks. Terren?

Terren Peizer -- Chairman and Chief Executive Officer

Thank you, Brandon. Overall, I am very pleased with the headway we made in 2020 in spite of the difficult utilization environment and other headwinds, which is a testament to our team's tireless efforts and the investments we have made in our technology over a number of years. As I reflect on the progress we have made, I'm continually reminded that Ontrak programs are highly differentiated from any other solutions in the market because of our health plan expertise, unique engagement methodologies, the significant impact on Medicare and Medicaid populations, and the deep intelligence that we have amassed on care-avoidant populations. The tremendous gaps in care for care-avoidant populations are enduring, and I'm confident in our positioning and the value we deliver.

You may recall that we highlighted the Milliman actuarial study that looked at 2017 pre-COVID data that stated that 5.7% of the U.S. commercial population is responsible for 44% of the total medical spend of this population and went on to show that little is spent on the behavioral healthcare needs of this cohort. This is our care-avoidant population and its impact that we uniquely address. About our team, I want to thank everyone of our teammates, starting with the front line of our member engagement and care community to our provider network teammates, to our digital technology and product group, project management, finance and HR teammates.

From top to bottom in our company, we are mission driven. Our mission is to help improve the health and save the lives of as many people as possible. And we achieve this daily. Our mission-driven culture is the driving force of our engagement capability.

This is why no one has been able to successfully duplicate our third-party validated clinical outcomes, medical cost savings, ROI and NPS. Our future is as bright as ever. With that, we will now open it up to questions, and I'll moderate them. Thank you, operator.

Questions & Answers:


Operator

Thank you. [Operator instructions] First question is from Andrew D'Silva with B. Riley Securities.

Andrew D'Silva -- B. Riley Securities -- Analyst

Good afternoon. Thanks for taking my question. I'd just like to spend a little bit of time understanding the pipeline. It'd be useful if you could maybe just quantify or qualify the pipeline as it relates to potential dollar values.

And about how much you'd qualify as maybe late-stage versus mid-stage and early stage customers within there. And I understand that each payer is different. But it seems like earlier, part of the marketing was based on validation obtained by utilization from early adopters. Does the loss of Aetna change or has it changed any of your discussions with prospects within the pipeline?

Terren Peizer -- Chairman and Chief Executive Officer

Curt?

Curt Medeiros -- President and Chief Operating Officer

Thanks. So let's start with the last piece. We've proactively outreached both to existing clients, as well as in potential discussions, explaining again what we know about the process and the decision that Aetna took. And there has been no concern expressed from existing clients and the conversations with potential folks in the pipeline based on analysis specific to their businesses and their members are continuing forward.

So we haven't seen any headwinds so far associated with the loss of Aetna with other customers or prospects. So that's piece one. In terms of how we're approaching the market and the pipeline, we're looking at it sort of in three different buckets. So one is there are both planned and near-term expansions with existing clients.

And so with Cigna, for example, there's additional states that they've moved into. We're looking to expand, and they're asking us to bring our services into those new states for their members. With customers like Health Alliance and CBC, smaller, more regional plans, being able to extend our relationship in time but also go together to their ASO clients to expand our offering because they see the value. And then last, Terren mentioned a very near-term contract that has been sent to the state for review, that would significantly expand the relationship we have with that customer.

So that's sort of group one. And those are all pretty near term. At this point, we're not quantifying the different components, but we are actively working on all aspects of continuing to drive the pipeline forward with small, medium and large client opportunities. The second piece is existing clients that have earlier opportunities.

And so we're continuing to pursue expansions with large national plans like Cigna with their commercial business, as well as expanding across Centene. And then the last bucket is net new clients, and I would put those in two buckets. There are medium to large health plans that -- some old names, some new names that we're continuing to pursue that have added significantly to the pipeline, especially in the last quarter in terms of the opportunities. These are generally earlier in the process with the hopes of closing and starting something in the second half of this year.

Because these are newer clients, it's likely that they're going to start with pilot phases, which will be smaller in scope initially and then expand over time, like we have seen with our large accounts like Cigna. And then something that's really exciting to me within that new client bucket is we're actually fielding a lot of interest from large provider networks who have both medical and behavioral components to their clinical networks, but are looking for more outpatient and telehealth-based services to add to their mix. And so we are talking with some of the largest provider systems in the United States, as well as some of the largest at-risk Medicare Advantage systems. Again, these are earlier conversations because it's a new client type.

It's going to take us some time to figure out the best way to set these deals up, but high interest because, as Terren said, the really acute need for access to behavioral health services caused by the pandemic and the ongoing challenges in access in the behavioral health space.

Terren Peizer -- Chairman and Chief Executive Officer

That was -- Curt, that was excellent. Let me add something to that. We've been -- and in some cases, health plans and real -- large health plans are reaching out to us and a theme that is emerging in the last few weeks among health -- large health plans, medium health plans and the healthcare systems that Curt is talking about is they acknowledge and like our high-touch capability, our engagement capability. So that gives you an idea what when we're classified as a vendor, and we get credited for the savings that makes us actually the lowest cost provider versus an expensive program or a high cost provider that our model is very valued by the industry, and I believe that will carry our pipeline further faster.

Andrew D'Silva -- B. Riley Securities -- Analyst

Yeah. The feedback from the Medicare and Medicaid books of business, in particular, is that the approach of a digital solution alone is not enough for their members.

Terren Peizer -- Chairman and Chief Executive Officer

Correct.

Andrew D'Silva -- B. Riley Securities -- Analyst

OK. That's very useful context. Thanks for that. And just staying with the existing customers, are there any contracts that are up for renewal this year? And can you just give a little color or at least refresh my memory on the typical contract duration and what maybe carve-outs typically exists for something to be terminated earlier? Not saying that we would expect anything like that, just kind of curious what exemptions exist.

Curt Medeiros -- President and Chief Operating Officer

So I can jump in, Terren. As you all might remember, in the late third quarter, early fourth quarter, we extended the Centene contract. We obviously signed in the second quarter and implemented in October -- I mean, I'm sorry, the third quarter -- and implemented in October, the Cigna contract. And so when you look at the rest of our clients with Health Alliance, CBC, Optima.

We expect that in -- by the end of the first quarter, all of those will have either an extension or an expansion or both. So other than Aetna, we will have renewed and expanded contracts with each and every client. In terms of the criteria -- sorry?

Andrew D'Silva -- B. Riley Securities -- Analyst

You're answering the question. Thank you.

Curt Medeiros -- President and Chief Operating Officer

In terms of the criteria, these are generally large health plans, whether nationally or in their region. And the typical contracts do have the ability to cancel with a notice period. And so that's a typical setup. We have not been successful in removing those termination clauses to date.

But again, where -- the relationship we have with these clients in terms of the level of engagement, the transparency in sharing data, and jointly looking at opportunities and challenges that arise as we're working together is much different. And as I said earlier, we proactively reached out to explain what we saw with the Aetna contract ending and how -- get feedback from our clients. And again, the consistent feedback was we are doing the right things. We're continuing to drive value based on their businesses, and there are no challenges at this moment.

In terms of the structure, in terms of time length, we've generally moved to contracts that are one-year renewable. And so at this point, again, unless there's an explicit cancellation, those will continue to renew year over year.

Andrew D'Silva -- B. Riley Securities -- Analyst

OK. So they're effectively like an evergreen clause. That makes sense. And then just my last question, and this is just maybe a little bit more nuanced, but you noted that the way Aetna was categorizing Ontrak was as a provider.

So if that's the actual context of how they're looking at you, there has to be some sort of -- or correct me if I'm wrong, continuation of care for patients. Are they saying that at the end of June, that's good enough for the members to get referred out to an approved provider? Or is it more nuanced than that? And is there maybe something else that can be monetized out of that relationship just as it relates to the continuation of care?

Curt Medeiros -- President and Chief Operating Officer

So we're in process of working with them to set the transition process, member-by-member with the thousands of members that we were serving across their Medicare and their commercial books of business. That in and of itself is going to be quite a process. We're early in that process because we're not, again, far away from having received the termination. And so we don't have a set plan yet, but our objective is to make sure we have a successful transition for each and every person that where -- we are serving today.

Andrew D'Silva -- B. Riley Securities -- Analyst

OK. Great. Hey, thank you very much. Best of luck going forward in 2021.

Operator

Our next question comes from Charles Rhyee with Cowen.

Charles Rhyee -- Cowen and Company -- Analyst

Yeah. Hey, guys. Thanks for taking the questions. Can we talk about maybe the -- you talked about the strategy to sort of regain the Aetna business here.

Can you go into a little bit more about that? Like to do so, would you be talking with a new group within Aetna and starting a new conversation? Or is it going to the behavioral health group that you are working with currently and discussing a new way to -- a new relationship with them? Maybe any kind of color around that would be helpful.

Terren Peizer -- Chairman and Chief Executive Officer

Well, I'll address this. The latter is always possible. But as we've repeatedly pointed out that we are classified as a provider and not as a vendor and the behavioral health division of Aetna does not get credit, it does -- at least from our understanding, does not get credit for medical cost savings, which is unique to all of our other customers and the industry generally. It's kind of an old model that we don't see elsewhere.

And certainly, someone, if you take a step up at Aetna, if you look at the management team of Aetna, they clearly care overall about clinical outcomes, about savings, ROI, things that all the other health plans care about. But because we're classified as a provider, we were seen as an expensive provider because where our program might seem expensive. But as I pointed out earlier, we're really the lowest cost provider because our savings is so much greater than the actual cost of the program. So like all of our -- as I mentioned last week and today, we work with the medical side on all of our health plans.

That's what distinguishes this from -- Aetna from the others in our relationship. So we're going to endeavor to engage those that this matters. And believe me, there are people at Aetna and there are people at CVS who bought Aetna that care about the whole health and integrated care of these membership populations.

Charles Rhyee -- Cowen and Company -- Analyst

Thanks. A follow-up question would be, I want to talk about the -- you're launching the tiered products. Any kind of feedback you can give us so far from existing or prospective clients about them? What's been the interest level like? And how much of that is -- is any of that assumed in the 2021 guidance at all? And particularly, the sort of the $88 million?

Terren Peizer -- Chairman and Chief Executive Officer

Curt?

Curt Medeiros -- President and Chief Operating Officer

Yeah. So right now, there is no assumption around tiers below the current Ontrak program in the 2021 guidance. So that part is clear, and we're working to make any short-term sales upside to push us toward and above the numbers. In terms of the feedback, different clients have different components of these in place.

So I would say the large health plans like the aspect of having an integrated solution for low-, medium- and high-acuity individuals. Because as we all know, through time, people with both medical and behavioral challenges will move from those buckets. So the idea that we can deploy a low-cost, primarily digital solution to those that are on the lower acuity end of the spectrum, but use it as a means to monitor those individuals and create triggers as to when they might need additional services. But be able to provide that sort of medium, as well as high acuity bundle and have the analytics integrated across that spectrum to demonstrate both engagement, as well as performance.

And that performance has to do both with access to the behavioral health system, as well as the traditional metrics around utilization and cost savings that we've talked about. So that's one piece. The medium to small health plans really, the feedback is that they're looking at this package as an ideal approach to their ASO clients. So I mentioned earlier in the pipeline question that we have a couple of customers that are really interested in working with us to be able to offer this across their ASO clients and sell jointly with them.

So far, the feedback is good. We're continuing to learn from the market in terms of how we price and offer and integrate. A big part of the interest across all of our solutions, including our current solution, is how do we continue to improve and drive integration, both with the health plan, as well as the provider system. I hope that answer your question, Charles.

Terren Peizer -- Chairman and Chief Executive Officer

I think -- also, let me add something. What's interesting is a lot of the prominent digital platforms, they're being asked by their health plan customers that can they impact the higher utilizers as well. These health plans would like one vendor to handle all their behavioral health needs. What's unique about us and what's unique about our opportunity is, like we've mentioned repeatedly today, that we don't know of any one who impacts this high cost care-avoidant population like we do.

We don't know a lot of people even attempting to do it. But we can integrate with the digital platforms that we're creating and we can partner, and we can do a lot of things where we can -- we uniquely can offer the full continuum of care. Now this will happen over time as we continually build up value in the high utilizers and then incorporate and build upon our, we'll call it, the lower utilizers or care seeking starting with the LifeDojo app and adding on more. So we -- as we said over the year plus, we can do with everyone -- that segment, the digital platforms is getting commoditized.

But our area is unique, and we're the only ones that address it.

Charles Rhyee -- Cowen and Company -- Analyst

Great. Thanks for the questions.

Operator

Thank you. Our next question is from Sean Dodge with RBC Capital Markets.

Sean Dodge -- RBC Capital Markets -- Analyst

Thanks. Good afternoon. Terren, the expansion you mentioned just signing for a couple of populations that now just needs to be signed by the state. Can you give us a sense of the incremental or annualized revenue that should contribute? And then on the guidance, you had bucketed the $100 million into $88 million of under contract or signing phase and $12 million in go-get.

This expansion, was that part of the go-get? Or was that part of the -- what was being contemplated in the $88 million?

Terren Peizer -- Chairman and Chief Executive Officer

I'll let Brandon answer that. But generally, I'll say this that it is relative to our guidance, it is a significant number. But I'll let Brandon be a little more evasive.

Brandon LaVerne -- Chief Financial Officer

Thanks for the question, Sean. So yes, this would be part of -- because it's right there, it's in front of us. It's what we would classify in the signature phase. And so that's in the $88 million.

And so it is in our guidance. And we do expect that this particular customer will become a pretty good chunk of our overall business. And so it's a good-sized expansion.

Sean Dodge -- RBC Capital Markets -- Analyst

OK. And then on the eligibility pool, you talked about the people not seeking healthcare because of COVID and that causing them to drop out of the pool. As that normalizes utilization, snaps back. Do you have a sense of how many people are in this kind of shadow pool? How many people are covered by your non-Aetna contracts that have substance abuse or that aren't currently being captured or eligible because of their medical spending has temporarily dipped?

Terren Peizer -- Chairman and Chief Executive Officer

Jump off.

Curt Medeiros -- President and Chief Operating Officer

So I can take that one. This is Curt. When -- of course, when we've been monitoring this, Aetna has been included in the numbers. I'll give you a rough range because we don't have the full view of what this would look like at the time because we went through this COVID experience with Aetna, and the mix of their business in terms of commercial versus Medicare is different than a lot of our other customers.

So it's somewhere between 25% to 30% of the overall historically that we've seen come down. And so I would expect, as we look forward, to see an uptick of a similar range as utilization starts to normalize.

Sean Dodge -- RBC Capital Markets -- Analyst

OK, OK. So if healthcare utilization normalizes, then the non-Aetna part of the eligibility pool, you think could be 20% to 30% higher roughly?

Curt Medeiros -- President and Chief Operating Officer

Yeah. Again, I mean, our historical analysis includes Aetna, and there's obviously a very different mix across all of the different clients. So yes, I think it's in that 25% to 30% range.

Sean Dodge -- RBC Capital Markets -- Analyst

OK. That's great. Thanks again for taking my question.

Operator

Our next question comes from Richard Close with Canaccord Genuity.

Richard Close -- Canaccord Genuity -- Analyst

Yeah. Can you hear me OK?

Terren Peizer -- Chairman and Chief Executive Officer

Yes. Thank you.

Richard Close -- Canaccord Genuity -- Analyst

OK. Great. Thanks. First question, just again on that outreach pool.

Are you guys giving specific numbers for the outreach pool? Now with Aetna excluded, is there a specific point number that you're providing? Maybe I missed that.

Brandon LaVerne -- Chief Financial Officer

Yeah, Richard, what I'd mentioned is that Aetna represented about 82% of the outreach pool as of the end of the year. So that will give you some rough math to tell you what's left. Like to you point there is that the outreach pool acts very differently. And as Curt indicated, Aetna was the mix of commercial to Medicare was much different than the rest of our populations.

Not -- plus we had the stale data for the last eight months embedded in there. And so the pool itself, regardless of its size, will act very, very differently going forward with the populations we now have going forward.

Terren Peizer -- Chairman and Chief Executive Officer

A much bigger enrollment rate, I mean, multiples, many multiples. And it also pushes in the curve. And it refreshes often.

Richard Close -- Canaccord Genuity -- Analyst

OK. And so to maybe dive deeper on to the enrollment rates. Obviously, 60% pretty significant number. Do you guys got to balance that at all in terms of clearly a really steep ramp in Cigna in the four and a half months or so.

Is there any ever -- is there ever any concern, I should say, that you're maybe enrolling too fast?

Brandon LaVerne -- Chief Financial Officer

Well, the key point here is that the outreach pool continues to turn. And so if we roll too fast, we're taking a member out of the pool, but we are getting data faster than we ever have for new people who are hitting the utilization or any other reason that we're able to get them into the pool for the first time. And so we continue to address these folks as they come into the pool as anyone's new, however they got there. And so it's not like we're going through the entire pool, and there's nobody left.

It continues to refresh.

Richard Close -- Canaccord Genuity -- Analyst

OK. So then as we think about provider versus vendor. And obviously, if you're looked at as a vendor, you're saving money on the medical costs, even though you might be a significant member from writing you a check each quarter or whatnot. You don't think that growing -- enrolling 60% is it raises eyebrows or anything like that?

Terren Peizer -- Chairman and Chief Executive Officer

Well, Curt can elaborate, but we recently met with this particular plan. And they have always let us go as high as we could. And their attitude is, the more people you enroll, the more savings we get, which is hopefully how you want everyone to be. But yeah, that's -- as recently as this week, we've had those conversations.

Richard Close -- Canaccord Genuity -- Analyst

OK. And then, Brandon, maybe just to understand the expense items. As we think about 2021, with Aetna ramping down and then you're talking about going from 11,000 and change, I guess, clinicians to 15,000 over the course of the year. How are you thinking about or how should we think about expenses throughout the quarters?

Brandon LaVerne -- Chief Financial Officer

Sure. So if I start with gross margin as a starting point, if you look at the numbers that I described, you can see that the Aetna contract was, frankly, not as profitable as other lines of business. And so when we think about how we are addressing that, we have opportunities to improve. And if you look at the organizational structure, we have a lot of folks who are serving their members every day, and they do a great job at it, and we want to keep them busy.

And so the faster we can enroll, the faster we can launch new plans, the faster we can engage new health plans and everything that Curt had mentioned earlier, the better. When we think about the bottom half of the P&L, we're still very focused on doing everything that we have laid out from a strategy perspective. And so we don't intend to slow down. We've lost a large customer.

That's great. I shouldn't say -- it's not great. It is what it is. However, we are continuing to move the business as if we're the same as we were before.

And we have to, we want to. And so we do expect to spend some money as we have just achieved EBITDA positivity for the, frankly, just not the fourth quarter, but the last five months in a row through December. I do believe that's going to be a little bit more challenging with the revenue moderating in the new world. But we still -- we're still looking at the overall strategy of the company to grow our top line as fast as we can and keeping our expenses in check overall.

Richard Close -- Canaccord Genuity -- Analyst

OK. So as we think about customer diversification, and if you have Aetna like 8,400, I think it was last week -- in last week's press release and the 5,100 Cigna. So that sort of puts the other bucket, the remaining customers at about 2,200. So as we think about the growth there through 2021, is there any type of target that we should think in terms of like what the other customers make up by year-end? Or anything along those lines?

Terren Peizer -- Chairman and Chief Executive Officer

Curt?

Curt Medeiros -- President and Chief Operating Officer

I mean we do have targets that we've set internally. I don't think at this point, and Brandon, correct me if I'm wrong, we're articulating those externally. But Richard, the intent, both in terms of how we're deploying resources, as well as how we're prosecuting against the pipeline and the data that we're expecting in the next handful of weeks to be able to work with Milliman and Stanford to understand our results and validate them, that's the strategy to move into new clients. There are some new clients that are waiting for that information.

There are some new clients that are looking to move forward based on the analysis that we've done on their books of business. But we are aggressively trying to move the needle, Richard, on the balance of large existing clients versus diversifying and definitely having more new clients take up a bigger percentage, especially as we get into 2022.

Richard Close -- Canaccord Genuity -- Analyst

OK. And do I have time for one more question?

Terren Peizer -- Chairman and Chief Executive Officer

Yeah.

Richard Close -- Canaccord Genuity -- Analyst

OK. So as we think about customer diversification, obviously, you bought LifeDojo, but that's relatively small. And that gotcha into the employer business a little bit. How do you think about like M&A in terms of diversification or just consolidation within the area as well? Obviously, you guys have a lot of positive attributes yourself.

Terren Peizer -- Chairman and Chief Executive Officer

Well, LifeDojo was more than -- like, well, yes, it was a small acquisition. It was a platform that we can build upon and enhance to transform it from a -- what was then a wellness app to the full suite of behavioral health modules, which, again, substance use dependence, depression and anxiety. So -- and it's also a significant productivity enhancer for our care community. So we view that as a tool to get to where we want to go.

Not the end in of itself. Yeah, it gets us into a player market, but it was really more of a stepping stone to our digital platform. As far as -- I'm not sure what the other part of your question is asking.

Curt Medeiros -- President and Chief Operating Officer

I can take it, Terren. So it's really about how going forward, we're thinking about partnerships and M&A to further diversify our business. And so the way that we're thinking about that, Richard, is how do we, like LifeDojo, add good products that have strong data in both engagement and outcomes. And so we are continuing to aggressively look at a behavioral focus where we can find programs.

So at this point, we're not looking at just capabilities, but where we can have programs that target different populations, whether they're lower on the acuity spectrum or populations that we don't currently address in our solution to be able to diversify our portfolio and have a broader solution set. Again, with the idea we talked about earlier of allowing health plans to be able to buy more services from one vendor, Ontrak, than having to try to buy it and put it together themselves. But the key component are a digital front door, integrated coaching, the ability to integrate with the behavioral provider network and the foundations of AI-powered personalization. Those are the principles that we're working off of.

And we want to find interventions that will allow us to deploy those on different populations and with good engagement and outcomes data on the intake.

Richard Close -- Canaccord Genuity -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Gene Mannheimer with Collier Securities.

Gene Mannheimer -- Collier Securities -- Analyst

Thanks. Hey, guys, in the past, you've talked about some 35 new logos in the pipeline worth several hundred thousand in outreach lives. Can you just provide an update there in terms of number of logos in the pipe, potential outreach pool with expansions?

Terren Peizer -- Chairman and Chief Executive Officer

Curt and Brandon?

Curt Medeiros -- President and Chief Operating Officer

In terms of the number, I mean, we've continued to grow that. I would say, they are not all equally risk-adjusted, Gene. So in terms of magnitude, we're talking about -- since we last talked, another 25% plus increase in terms of new logos, how they translate to outreach full potential. And we're continuing to pursue new opportunities.

Not all of those come in the same size and shape. So some of the opportunities we're looking at large national health plans. Their pilot are potentially as big as some of our smallest clients that are fully rolled out right now. So we're continuing to push that.

But since we talked, I would say 25% to 30% continued increase.

Gene Mannheimer -- Collier Securities -- Analyst

OK, that's great. In terms of Cigna, maybe if you could talk a little bit about the potential there. You cited 5,100 members. What -- that comprises how much of your total agreements? And what percent of the total potential within that customer?

Terren Peizer -- Chairman and Chief Executive Officer

Brandon, I'll let you dissect this one.

Brandon LaVerne -- Chief Financial Officer

Sure. So we haven't disclosed exactly what the revenue per customer is for Cigna. But I would tell you this that we are and as alluded to in an earlier question, I mean, we are definitely out the gate fast. We've already had conversations or started conversations with this customer about how we can think about this going forward.

The overall business -- the overall contract was scoped at around $90 million for over three years. At the beginning, if you just flatline that that sounds like $30 million a year. And at the very beginning, we started talking about how we believe that Aetna -- I'm sorry, that Cigna could be about $40 million for the first year, for 2021. And it appears we're moving faster than that.

And so that's why we're having the conversations. We look to a little bit of history to say what's the likelihood of Cigna saying keep going. Early indications are positive. And so the intent is, together with expansions into some of the new states that Curt had mentioned with them that we will come to a conclusion that this is great for all of their members, as well as Cigna itself, and we can move that forward and increase the overall scope of the contract.

The contract did accommodate some element of going in excess of the $90 million, which is why we originally even said that we could do $40 million in the first year. So we're already in that phase of how much can we overexceed and is that something that we can continue to sustain? From a membership perspective, we have the staff, we have the capability and the NPS score to prove that it's working and all the clinical outcomes to show it. And so everything has been full speed ahead there. And it's just a matter of as we get through the next few quarters to see how this continues to expand.

We do expect enrollment rates to normalize. Any time you jump out of a program, the rates tend to start fast and they will normalize. But when -- I think I mentioned earlier that the whole year last year, ex Aetna, was 40%. And we've been, for years, talking about a number that was half of that.

And so this is something that we see a lot of tremendous success with in this particular market, and Medicare Advantage is a big reason why we're pushing forward with a lot of our pipeline in that space as well.

Gene Mannheimer -- Collier Securities -- Analyst

All right. Very helpful color, Brandon. And last one from me. There's been some questions asked about your M&A strategy as it relates to you as the buyer.

How about you as the seller? I mean, with your stock down two-thirds off its high, I imagine there's some private equity interest in the space, perhaps some strategic. If you're comfortable talking about that at all.

Terren Peizer -- Chairman and Chief Executive Officer

Well, I mean, look, my attitude is always to be as transparent as possible. It shouldn't surprise anyone. We have received a lot of inquiries in the last week. Obviously, I'm a majority shareholder today.

I am a rational businessperson. I will always optimize the value of the company. I think it's fair to say that we're not going to get picked off. We're not going to acquiesce to just because those lost lots of value this past week, doesn't mean that we've lost any -- and I said it pretty strongly on the call.

I feel as great about our future -- our future is great as it's ever been. I think the Aetna thing sets us back a year. So we're going to replace them. We hopefully will add them.

We'll replace them and get back to where that 100% growth rate. And we use that 100% growth rate because we've constantly achieved in excess of 100% growth rate. And we see -- when you're looking at our total addressable market and the opportunity we have in Medicare and Medicaid populations alone that really, again, digital apps are not going to solve for. As well as the aging of the population on the commercial side, won't solve for that.

Digital apps are great for the seekers. But the real -- the real chunk of savings and the real cost of the system is that 44% of the medical spend tied to 5.7% of the population, and that they're not getting appropriate behavioral healthcare. Now -- so to your question, yes, we've seen -- we've received a lot of inquiry. No formal offers, no things of that sort yet and who knows.

But we're not going to get picked off. And there are some partnerships that have come up. We will evaluate anything that can enhance our long-term shareholder value, but not -- we're not looking for a short-term solution to the loss of value that we experienced.

Gene Mannheimer -- Collier Securities -- Analyst

Gotcha. Thank you. Thanks, Terren.

Operator

Thank you. And this concludes our Q&A session. I would like to turn the call back to Terren Peizer for his final thoughts.

Terren Peizer -- Chairman and Chief Executive Officer

Well, thank you, everyone. It's been quite a week. I appreciate your support. The whole team does, our whole company does.

And we're going to work really hard to deliver the results that you've seen from us consistently over the years. Everyone, have a great night. And again, thank you for joining us.

Operator

[Operator signoff]

Duration: 66 minutes

Call participants:

Caroline Paul -- Investor Relations

Terren Peizer -- Chairman and Chief Executive Officer

Brandon LaVerne -- Chief Financial Officer

Andrew D'Silva -- B. Riley Securities -- Analyst

Curt Medeiros -- President and Chief Operating Officer

Charles Rhyee -- Cowen and Company -- Analyst

Sean Dodge -- RBC Capital Markets -- Analyst

Richard Close -- Canaccord Genuity -- Analyst

Gene Mannheimer -- Collier Securities -- Analyst

More OTRK analysis

All earnings call transcripts

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.