Catasys total revenues up 192% in second quarter 2014

Catasys, Inc. (OTCBB: CATS), provider of proprietary health management services to health insurers and employers, today announced its financial results for the second quarter ended June 30, 2014.


  • 80% increase in second quarter enrollment compared with the same quarter last year.
  • 192% increase in recognized revenue from the healthcare services to $312,000 in the second quarter, compared with the same quarter last year.
  • $295,000 increase in deferred revenue from healthcare services to $829,000 at June 30, 2014, compared with December 31, 2013.
  • In August 2014, Catasys signed an amendment to an existing contract with one of the largest insurance providers in the country, expanding the availability of OnTrak to the provider's commercial members in Florida. Enrollment is expected to commence by the end of the fourth quarter.
  • Catasys currently operates programs in Kansas, Louisiana, Massachusetts, Oklahoma, West Virginia, Kentucky, and Wisconsin

Rick Anderson, President and COO commented, "During the second quarter, total enrollment and healthcare services revenue continued to grow at an accelerated pace, up 80% and 192%, respectively. These results helped the Company to complete an excellent first half of the year, as demonstrated by the percent change in our deferred revenue, up 55% since December 31, 2013. This metric is important as a large portion of our fees are deferred over the term of the 12 month program or until performance guarantees are achieved."

Mr. Anderson added, "The positive momentum has continued into the second half of the year, as underscored by one of our largest customers expanding to the offering to include its commercial population in Florida. The impetus behind the increased spending with Catasys is directly correlated to the program's early results indicating the ability to save the health plan money. This demonstrates the dual opportunity to generate increased revenue from program expansions, both with existing customers and by bringing on new clients. As more and more existing and new customers realize the return on investment that OnTrak, provides, we expect our growth to be able to increase substantially, and profitably, as we add revenue with very little incremental overhead cost, leveraging our already built out infrastructure. We are confident that this represents a near term opportunity, as customers are expanding use of the OnTrak program within 12 months of launching."


  • Customers – Catasys presently provides its proprietary OnTrak program to health plans in Kansas, Louisiana, Massachusetts, Oklahoma, West Virginia, Kentucky, and Wisconsin.
  • Sales Pipeline and Growth – Management expects continued organic growth not only as existing insurers continue to recognize the value of the services of our program and expand into new territories and/or lines of business, but also as we sign new insurers. In addition to the signed national insurer, the Company had a sales pipeline of 9.5 million covered lives with 3.5 million in advanced stages of discussion, as of the end of July 30, 2014.
  • Enrollment – Generally 0.5% of a commercial health plan's covered lives will be eligible for the OnTrak program and the Company anticipates that approximately 20% of those that are eligible will enroll in the program each year after full enrollment is achieved, which is anticipated to be up to approximately 12 months from the commencement of enrollment.
  • Revenues – Healthcare services revenues are generated either monthly, based on enrolled members at approximately $8,500 per member per year, or at a lower case rate when a member enrolls plus a share of cost savings realized. Revenue without performance guarantees is recognized ratably over 12 months. If contracts contain a minimum performance guarantee, that portion of the monthly fee subject to the guarantee is reserved as deferred revenue until the performance measurement period is completed. Savings shares are recognized when they are paid.

Second Quarter 2014 Results of Operations
For the second quarter of fiscal 2014, total revenues increased 192% to $312,000 compared with $107,000 for the same period last year. Increased total revenues are primarily a result of an increase in health plans covered and enrollment growth compared with the same quarter in 2013. The Company reported a loss from operations before income taxes of $27.5 million, or $1.27 per basic share and per diluted share, for the second quarter of 2014, compared with a loss from operations before income taxes of $6.2 million, or $0.45 per basic share and per diluted share, in the second quarter last year, related to the revaluation of our warrant liabilities. The increased loss from operations during the second quarter of 2014 was primarily the result of the change in fair value of the warrants at June 30, 2014.

Total operating expenses for the second quarter of 2014 were $2.0 million compared with $1.5 million in the second quarter in 2013.

OnTrak Program
Catasys' OnTrak program – contracted with a growing number of health insurers – is designed to improve member health and at the same time lower costs to the insurer by utilizing member engagement and patient centric treatment that integrates evidence based medical and psychosocial interventions along with care coaching in a 52-week outpatient program. OnTrak is currently improving member health and, at the same time, is demonstrating reduced inpatient and emergency department utilization driving a more than 50 percent reduction in total health care costs for enrolled members.


Catasys, Inc.

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