OKLAHOMA CITY – A securities class-action lawsuit against the health care company Ontrak Inc. was recently filed in the United States District Court for the Central District of California, the Oklahoma City-based law firm Federman and Sherwood said in a news release.
The complaint alleges that Ontrak violated federal securities laws and issued a series of material or false misrepresentations to the market, which artificially inflated the market price during the class period from Nov. 5, 2020 through Feb. 26, 2021.
The complaint alleges that throughout the class period, Ontrak made false and/ or misleading statements and failed to disclose adverse facts about the company’s business, operations and prospects.
The company allegedly failed to disclose the following information to investors, according to the news release:
• Ontrak’s 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.
• As a result, Ontrak’s largest customer did not find the program was effective and was likely to end its contract.
• Because that customer accounted for a significant portion of Ontrak’s revenue, losing its business would have an outsized impact on the company’s financial results.
• As a result, Ontrak’s positive statements about its business, operations and prospects were materially misleading and/or lacked a reasonable basis.
On March 1, Ontrak issued a press release announcing preliminary financial results for the fourth quarter and the full year 2020. The company stated that its largest customer had ended its contract with Ontrak effective June 26, 2021.
The company said that the customer “evaluated Ontrak on a provider basis” and “[a]s such, the customer evaluated [Ontrak’s] performance based on [its] ability to achieve the lowest possible cost per medical visit, and not on [its] clinical out-comes data or medical cost savings.”
The company also stated, “The coaching model which Ontrak has pioneered for over a decade was seen by the customer to be less relevant to their performance metrics.”
On this news, the company’s share price fell $27.32, or more than 46%, according to the news release. The price closed at $31.62 per share on March 1, thereby injuring investors.
The plaintiff seeks to recover damages on behalf of Ontrak shareholders who purchased common stock during the class period and are members of the class. Shareholders may ask the court no later than May 3 to serve as a lead plaintiff for the entire class no later. However, shareholders who want to serve as the lead plaintiff must meet certain requirements under the Private Securities Litigation Reform Act of 1995.