Shareholder rights law firm Robbins LLP announces that a purchaser of Ontrak, Inc. (NASDAQ: OTRK) filed a class action complaint against the Company and its officers and directors for alleged violations of the Securities Exchange Act of 1934 between November 5, 2020 and February 26, 2021. Ontrak is a healthcare company that offers a Predict-Recommend-Engage platform that organizes and automates healthcare data integration and analytics. Ontrak programs provide healthcare solutions to members with behavioral conditions that cause or exacerbate chronic medical conditions.
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Ontrak, Inc. (OTRK) Failed to Disclose the Impact Losing its Largest Customer Would Have on its Financial Results
According to the complaint, Ontrak failed to disclose that: (1) its largest customer evaluated the Company on a provider basis, valuing Ontrak’s performance based on achieving the lowest cost per medical visit rather than clinical outcomes or medical cost savings; (2) as a result, Ontrak’s largest customer did not find the Company’s program to be effective and was reasonably likely to terminate its contract with Ontrak; and (3) because this customer accounted for a significant portion of the Company's revenue, the loss of the customer would have an outsized impact on Ontrak's financial results.
On March 1, 2021, Ontrak announced its preliminary financial results for fourth quarter and full year 2020 and shared that its largest customer had terminated its contract with Ontrak effective June 26, 2021. 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." On this news, Ontrak's share price fell $27.32, or more than 46%, to close at $31.62 per share on March 2, 2021.
If you purchased shares of Ontrak, Inc. (OTRK) between November 5, 2020 and February 26, 2021, you have until May 3, 2021, to ask the court to appoint you lead plaintiff for the class.
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