What happened

Shares of Ontrak (OTRK -4.42%) were sinking today after the telehealth company said in its fourth-quarter earnings pre-release that it was going to lose its biggest customer later this year.

That news caused 2021 guidance to be much worse than expected; the stock was trading down 48.7% as of 1:02 p.m. EST.

An older man talks to a doctor on his laptop.

Image source: Getty Images.

So what

Ontrak, which is focused on chronic-disease management, reported solid results in Q4 with revenue growth of 149% to $29.3 million -- in line with estimates -- while its per-share loss narrowed from $0.39 to $0.07, beating the analyst consensus at $0.30.

However, the news that Ontrak-A, its biggest customer, was leaving stunned the market. As CEO Terren Peizer explained:

After a long process with our largest customer where we believed we were working toward an extended and expanded contract, we were notified after market close on February 26, 2021 that our participation status with this customer will be terminated effective June 26, 2021.

Peizer pinned the blame for Ontrak-A's departure on that customer's use of different performance-evaluation metrics than Ontrak's other customers use. He also said the company had a strategy to win back Ontrak-A's business and expressed optimism about Ontrak's long-term growth, saying it was focused on a $30 billion market opportunity.

Now what

Because of the loss of Ontrak-A, Ontrak slashed its revenue guidance for 2021 from $165 million to $100 million, showing that Ontrak-A was responsible for more than a third of the company's business. With the revised guidance, management now sees revenue increasing just 21% in 2021, though it anticipates returning to 100% revenue growth in 2022, citing the strength of its pipeline.

Given the sharp reduction in its guidance for the year and the loss of Ontrak-A, it's not surprising to see the stock getting slashed in half today. Whether or not the loss of Ontrak-A is a one-off incident or reflective of greater problems with the company's product or its customer retention is unclear. But for now, investors are clearly playing it cautiously with this high-flying growth stock .