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Why Shares of Ontrak Are Plunging Today

By Jason Hawthorne – Aug 19, 2021 at 1:50PM

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Shareholders get deja vu as the company loses another big customer.

What happened

Shares of Ontrak (OTRK -0.92%), a company using artificial intelligence to deliver outpatient care to those with chronic conditions, were down more than 40% as of 1:30 p.m. EDT after it disclosed the loss of a key customer.

A person sitting at a desk with their head on a laptop computer.

Image source: Getty Images.

So what

Today's news adds insult to injury from this spring. The company previously let go of 35% of its workforce in March after it lost its largest contract. That one was with Aetna, a health insurance subsidiary of CVS

Although today's lost customer is quitting at the end of this year, the company says it has already billed about $42 million of the $90 million it expected over the three-year deal. Still, it's a huge chunk of business to replace. The company has only reported $108 million in sales over the past 12 months. The stock certainly reflects the negativity. With today's news, it sits almost 80% below where it started the year and has a market cap of only $236 million.

OTRK Chart

OTRK data by YCharts

Now what

Despite losing the contract, management estimates the remaining customers from 2021 will contribute $50 million in revenue next year -- a 62% increase. As for this year, the loss won't effect Ontrak's previous projections of between $80 million and $85 million in revenue.

Jason Hawthorne has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

Stocks Mentioned

Ontrak, Inc. Stock Quote
Ontrak, Inc.
OTRK
$0.42 (-0.92%) $0.00
Cvs Health Stock Quote
Cvs Health
CVS
$101.96 (-0.60%) $0.62

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