It is alleged in this complaint that Ontrak failed to disclose that: (1) their largest customer evaluated Ontrak on a provider basis, valuing Ontrak’s performance based on achieving the lowest cost per medical visit instead of medical cost savings or clinical outcomes ; (2) Ontrak’s largest customer did not find their program to be effective and was reasonably likely to terminate its contract with Ontrak as a result; and (3) because this customer accounted for a significant portion of Ontrak’s revenue, losing this customer would have an outsized impact on Ontrak’s financial results.
Ontrak announced its preliminary financial results for fourth quarter and full year 2020 on March 1, 2021 and shared that, effective June 26, 2021, its largest customer had terminated its contract with Ontrak. Apparently, “the customer evaluated [Ontrak’s] performance based on [its] ability to achieve the lowest possible cost per medical visit, and not on [its] clinical outcomes data or medical cost savings, which were meaningful and significant.” Further, “the coaching model which Ontrak has pioneered for over a decade was seen by the customer as less relevant to their performance metrics.” Ontrak’s share price fell $27.32, or more than 46% to close at $31.62 per share on March 2, 2021, on this news.
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