Ontrak extends slump as brokerages downgrade after customer ends contract

Ontrak

20/08/2021 13:46

** Shares of telehealth co Ontrak Inc  OTRK.O  down 8.2% at
$10.72 in premarket trading after falling 44.5% in the previous
session
    ** Ontrak said on Thursday that one of its customers decided
to end its contract with co after Dec 31, 2021  urn:newsml:reuters.com:*:nFWN2PQ18O
    ** Though Ontrak did not disclose the client's name, many
brokerages say the customer is Cigna Corp  CI.N 
    ** Brokerages are largely disappointed after the
announcement, despite co stating this event would not have
material negative impact on its prior FY revenue, margin outlook
    ** Ontrak also said customer loss does not materially change
co's existing outreach pool
    ** Cowen and Company downgrades co to "underperform" from
"market perform"; believes shares to remain under pressure
following the loss
    ** After the loss of CVS Health's  CVS.N  subsidiary Aetna,
and now Cigna  CI.N , brokerage thinks "a significant conversion
of OTRK's sales pipeline will be needed to help mitigate losses
and improve an otherwise bleak outlook for 2022"
    ** Co had notified in March about the loss of its largest
customer Aetna  urn:newsml:reuters.com:*:nL3N2L02XI
    ** Canaccord Genuity downgrades OTRK to "hold" from "buy";
calls the loss "discouraging"
    ** Says OTRK's two largest customers terminating contracts
raises questions on co's ability to win new business in future
    ** At least four brokerages also cut PTs on OTRK
    ** Three of seven brokerages rate the stock "buy" or higher
and four as "hold"; their median PT is $16 vs $40 last month -
Refinitiv


 (Reporting by Tapanjana Rudra)
 ((Tapanjana.Rudra@thomsonreuters.com;))