What happened
Shares of virtual healthcare specialist Ontrak (OTRK -0.69%) dropped 17.8% in September, according to data from S&P Global Market Intelligence. For context, the S&P 500 fell 3.8% last month.
(Shares have raced out of the gate so far this month, however, gaining 24.7% in the three trading days through Monday, Oct. 5.)
Ontrak stock has provided investors with super healthy gains in 2020. Shares are up 359% this year through Oct. 5. The broader market has returned 7% over this period, while fellow digital health players Teledoc Health (TDOC -2.91%) and Livongo Health (LVGO) -- which are slated to become one once Teladoc's pending acquisition closes -- are up 169% and 475%, respectively, over this period.
Ontrak operates a digital health platform for helping people manage mental health issues and chronic physical conditions.
Image source: Getty Images.
So what
We can probably attribute Ontrak stock's September pullback of 18% -- which is relatively small -- largely to investors (or short-term traders, more specifically) taking some profits off the table. After all, shares have been red-hot recently, skyrocketing 55% in July and then 91% in August.
Like its peers in the digital health realm, Ontrak's business has gotten a brisk tailwind from the COVID-19 pandemic, as many folks have shunned in-person visits to healthcare providers to limit their exposure to the novel coronavirus.
As I previously reported, Ontrak stock had two big catalysts in August, both of which occurred on Aug. 5: the company's release of strong second-quarter results and news that Teladoc was acquiring Livongo.
In Q2, Ontrak's revenue surged 124% year over year to $17.2 million, driven by a 203% increase in the number of enrolled members to 11,989. Adjusted for one-time items, net loss was $4 million, or $0.24 per share, roughly flat with the year-ago period's net loss of $3.8 million, or $0.23 per share.
As I wrote at that time: "Ontrak stock got a lift from the Teladoc-Livongo news because the market hated that news, driving both those healthcare stocks notably lower. It views Ontrak as a potential beneficiary of an ill-advised corporate marriage."
Here's Ontrak stock's year-to-date performance picture:
Data source: YCharts.
Now what
For full-year 2020, Ontrak management guided for revenue of at least $90 million, representing annual growth of at least 156%.
