Ontrak, Inc.

Good day and thank you for standing by. Welcome to the on-track third quarter 2021 earnings call. At this time, all attendee lines are in a listen-only mode. We will have a question and answer on today's presentation. If you wish to ask a question, please press star 1 on your telephone. Please be advised that today's call is being recorded. I will now hand over the call to our host for today, Ms. Caroline Paul. Ma'am, please go ahead.

Thank you, and thank you all for participating in today's call. Joining me today are Jonathan Mayhew, Chief Executive Officer, and Brandon LaVerne, Chief Financial Officer. Earlier today, OnTrack released financial results for the quarter ended September 30th, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are forward-looking statements. The words anticipate, believes, estimates, expects, intends, guidance, confidence, targets, projects, and some other expressions typically are used to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, but may involve and are subject to certain risks and uncertainties, other factors that may affect ONTRAC's business, financial condition, and other operating results, which include but are not limited to the risk factors described in the risk factors section of the Form 10-K and Form 10-Q as filed with the SEC. Therefore, actual outcomes and results may differ materially from those expressed or implied by these forward-looking statements. ONTRAC expressly disclaims any intent or obligation to update these forward-looking statements. With that, I'd like to turn the call over to Jonathan.

Thank you, Caroline. Good afternoon, everyone, and thanks for joining us. During the third quarter, we made important progress on building out our sales pipeline. We are now in active discussions with three of the larger national health plans in the country, and we're exchanging data and creating financial models for multiple provider and employer organizations. I'll break down these opportunities for you in a moment, but our confidence in our ability to fast-track growth and convert meaningful portions of our pipeline is increasing given the overall market dynamics in our new management team. During our last earnings call, I shared our plan to recruit experienced leaders for three new executive roles at OnTrack. Number one, renowned industry thought leader Dr. Robert Accardino joined OnTrack from Quartet. in September as our chief medical officer. He's already engaging with clinical decision makers at customer and prospect organizations, presenting the OnTrack program at national healthcare conferences, and giving keynote speeches at Fortune 100 company events, while restructuring OnTrack clinical operations to accelerate our ability to achieve meaningful and measurable engagement across a wider spectrum of individuals with behavioral health conditions and comorbidities. Mary Lou Osborne joined us from Aetna as Chief Customer Officer. She's meeting with our customers and leading our conversion of an increasingly robust sales pipeline, which I'll speak more to momentarily. Arik Hill became OnTrack's first CIO. Arik joined us from the New York foundling and is taking a pragmatic view of our technology investments prioritizing high-value AI-enabled solutions that drive market differentiation for OnTrack. These new appointments round out our executive team and advance our ability to deliver a flexible portfolio of behavioral health solutions to a broader set of customers across more channels. Demand for behavioral health care continues to soar, and access to quality behavioral health care is worsening. The CDC and the U.S. Census Bureau have reported that one in four adults experiencing symptoms of anxiety or depression had not received the counseling or the therapy that they felt that they needed. On-track care coaches continue to play a critical role in preparing members to receive behavioral health care from providers, ensuring that members are guided along appropriate care pathways and engaging with members between provider visits to help them succeed at completing treatments. At a time when there's tremendous pressure on therapists, OnTrack can lessen the burden on providers by increasing members' adherence and engagement. Now I'd like to give you a breakdown of our sales pipeline. I'm very pleased with the recent levels of customer and prospect interest that we're generating as we broaden our reach with refined value propositions for clinically meaningful enhanced human and digital interactions, customized for Medicare, Medicaid, commercial, ASO, at-risk provider groups, and the direct-to-employer market. Health plans remain our core business. We now have market-validated value propositions that recognize the distinct needs of each line of business, commercial, Medicare, and Medicaid, and the metrics that matter most to each customer constituency. We expect our health plan government business to remain the largest share of OnTrack's business. However, we are in discussions with a number of organizations seeking solutions for every line of business. Our current pipeline of health plan prospects includes three of the larger health plans in the nation, and we're actively engaged in discussions with a total of 16 plans in large population states in the Southwest, Midwest, and East. Provider networks are a new source of revenue. We're seeing continued interest in our services among provider networks and hospital systems. We can help these organizations improve access to behavioral health care and completion of treatment through our ability to remove barriers to care, create customized care pathways, and engage and support even those individuals who have the least trust in the health care system. These provider networks are also interested in our ability to help them on value-based care incentives. We're advancing discussions with two regional provider networks and anticipate conversations with a number of large integrated provider organizations representing a significant potential revenue stream for OnTrack. The employer market is another source of increased revenue. We are targeting employer organizations with over 5,000 employees and are in advanced discussions with three employers of that size and have participated in a large employer RFP. We've also begun a dialogue with a national pharmacy retailer, and last month Dr. Robert Accardino, our chief medical officer, was honored to be the keynote speaker at Ford Motor Company's Global Health Awareness Day. I'd now like to provide an update on the product strategy. We continue to see the strongest interest for our highest acuity product for individuals with severe behavioral health conditions. Addressing high acuity populations and delivering health and financial outcomes through a blend of on-track care coaching, digital interventions, and provider visits is as valuable now as it's ever been in improving members' access to behavioral health support while driving down medical costs and improving health outcomes. In fact, in the past several weeks, multiple health plans have reported that the cost of care is well above normal levels due to higher COVID-related costs. Emergency room visits have continued to rise, indicating that high-acuity individuals are increasingly in use of expensive, avoidable ER services instead of accessing the appropriate community primary care and behavioral health services. High acuity members need to be coached to and through care, which requires a well-coordinated effort and continuous communication on the part of their on-track care team, behavioral health providers, and primary care physicians. We are enhancing our highest acuity offering with a new on-track mobile care product that will give our care coaches and providers an easier and more efficient way to communicate with each other and allows members swifter referrals to high-quality behavioral health providers. We envision further investments in content and feature upgrades in an effort to make high-acuity product the clear market leader for evidence-based engagement and treatment of the most difficult to engage individuals. To give you a sense of the value of our high-acuity product, our monthly pricing has historically averaged between $500 and $700 per enrolled member per month. Recently, we've been able to reduce this to the lower end of the range as we have built efficiencies into our cost structure to enable and ensure an appropriate ROI for our customers. As we continue to refine our OnTrack product, including the addition of the OnTrack mobile care module, we anticipate further efficiencies that provide more flexibility to incorporate different price points depending on our customers' needs, including the ability to lower or raise the threshold target spend for inclusion in our program. We believe that lowering the base targeted spend threshold could increase our typical 2% to 4% of the population by an additional 10% to 12%, but at a lower price point while flexing our cost and delivery model to maintain strong margins. and increasing our total addressable market for the core on-track program to approximately $43 billion. Two of our largest employer customers who utilize our Life Dojo well-being digital solution have increased and expressed an interest in adding a lower threshold targeted spend on-track program to their existing well-being program, but at a lower price point than our historic higher targeted spend threshold for the OnTrack program. Further, one of our longest standing health plan customers has already signed a contract to add the OnTrack mobile care product to the high acuity OnTrack program. We estimate that 2022 revenues will still come primarily from high acuity members sold through health plan customers. For low acuity individuals seeking well-being, we are delivering our new OnTrack mobile care product, which takes the original LifeDojo digital product and enhances it with additional human coaching, video-based and interactive content, and asynchronous one-on-one chat for those who are ready to manage their own well-being needs. We expect that employers may want to combine this low-acuity product with flexible features of the OnTrack program in the same way that the two current employer plans are doing so today. Pricing for the low-acuity product will be a few dollars PMPM, focused on employer groups with 5,000 or more employees in the U.S. We estimate that the total addressable market associated with well-being for employers could be nearly $6 billion. Foundational to our product strategy our advanced digital and data infrastructure, tracking of meaningful engagement, and real-time reporting to our customers and the members' care team. In light of the large number of digital apps now available in the behavioral health marketplace, we have been intently focused on meaningful engagement, by which I mean clinical measures of member care teams, interactions that have proven behavioral science-backed verifiable outcomes. All of our products combine human and digital interventions, and the level of human engagement aligns with the severity of the member's condition and their readiness and the needs of the individual. There is no one-size-fits-all approach for those with behavioral health conditions, and we will continue to invest in clinical insights and measures that expand beyond social determinants of health assessments. With respect to our existing customers, we continue to see meaningful levels of interest as we discuss our product development roadmap, develop strategies to maintain or increase the ROI, and enhance our reporting and insights and analytics. As I mentioned earlier, one of our health plan customers is contracted to deliver the OnTrack mobile care product to their members effective early next year, and two of our employer customers will augment their well-being program with some of the flexible features of the OnTrack program for the next year. As I mentioned on our last earnings call, we expect our continued execution and intense focus on growth initiatives will drive us towards greater predictability while also expanding our ability to meet soaring demand across the nation. OnTrack has a world-class management team, a market-validated flexible product, and an increasingly robust sales line that we believe positions us to scale in a rapidly expanding market. I'll now turn the call over to Brandon LaVerne, our Chief Financial Officer. Brandon.