If I said, name a technology-driven virtual healthcare platform growing revenue at a triple-digit rate, you'd say Livongo Health (NASDAQ:LVGO), right? The health start-up that focuses on diabetes and hypertension treatment and coaching grew revenue 115% in Q1 2020 and provided a preliminary Q2 report that showed another 110% rise in revenue from a year ago. Shares of the status quo disruptor have gained a massive 350% so far this year.

But there's another virtual healthcare platform making waves this year: Ontrak (NASDAQ:OTRK), formerly known as Catasys (the name was recently changed to match the company's care platform). This data-driven behavioral healthcare technologist's stock has doubled this year and is forecasting even faster revenue growth than Livongo. As with all small up-and-coming companies, though, some homework will reveal whether owning shares is worthwhile. 

Mental and behavioral health, virtualized

The artificial intelligence (AI)-driven platform targets and engages with those coping with chronic conditions whose lives can improve with behavioral change. The company then delivers its insights to patients either in-person or via telehealth connection with a healthcare professional.

Like Livongo, Ontrak partners with employers and healthcare plans to find, treat, and support those with behavioral health conditions, eventually delivering medical expense savings upwards of 50%. 

A doctor in a lab coat holding a stethoscope up to an illustrated icon of a person.

Image source: Getty Images.

Amid shelter-in-place orders during the pandemic, Ontrak is seeing rising engagement on its platform as many eligible participants have been more open to getting mental health help. Revenue increased 81% in Q1 2020 to $12.3 million, driven by a record 10,176 members enrolled in the Ontrak program (up from just 6,996 at the end of 2019). Net enrollment additions increased by another 1,339 in April alone.

That's a small number of people using Ontrak, and adding new enrollees is the name of the game here. Besides converting more potential enrollees into members, Ontrak is also growing its availability (currently approved in only 31 states and Washington D.C.), as well as developing new programs to address congestive heart failure and COPD (both of which are expected to run pilot programs later this year).

In total, management expects full-year 2020 revenue to come in at $90 million, representing a 156% increase over 2019 results.

Small company, small pockets, potentially huge gains

With a market cap of just $551 million as of this writing, Ontrak trades for just 6.1 times 2020 expected revenue. That compares with the sky-high 32.8 times forward price to sales Livongo trades for. Ontrak looks like a serious value. 

Of course, there's a reason why that's the case. Ontrak is a fraction of the size of Livongo, and a lot is riding on it continuing to maintain its momentum. Free cash flow (revenue less cash operating and capital expenses, basically what gets added to or subtracted from the balance sheet each quarter) was negative $4.61 million in Q1 2020. And with just $12 million in cash on balance at the end of March, the company is going to need to raise some fresh liquidity soon to keep up its pace of growth. That could come in the form of new debt (Ontrak had $33.3 million in long-term debt at the end of March) or through the issuance of new shares (like when it had its official IPO listing in 2017 that raised $15 million in cash).

Either way, this tiny company has a lot of potential, but a lot could go wrong to derail its progress. Nevertheless, some of those same issues exist at Livongo, which is comparatively larger but still a small operation, and risk-averse optimistic investors have run up the price of the company this year.

I like both companies and think the potential for telehealth and digital data-driven business models is massive in the decade ahead. But for those looking to bet on the movement right now, Ontrak is worth a look. Just remember to keep those initial positions small.