California Biotech Reports Positive QOL Improvements in Program
Research Report

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Disclosures for Roth MKM, Ontrak Inc., September 13, 2024

Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclosures: Within the last twelve months, ROTH Capital Partners, or an affiliate to ROTH Capital Partners, has received compensation for investment banking services from Ontrak, Inc.. ROTH and/or its employees, officers, directors and owners own options, rights or warrants to purchase shares of Ontrak, Inc. stock. Shares of Ontrak, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities. Roth or its affiliates beneficially own(s) 1% or more of an equity security of Ontrak, Inc..

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Roth MKM analyst Dr. Jonathan Aschoff, in a research report published on September 13, 2024, provided an update on Ontrak Inc. (OTRK:NASDAQ) following the company's announcement of significant results from the first six months of data collected through its implementation of the Recovering Quality of Life (ReQoL) measure in its WholeHealth+ program. The analyst maintained a Buy rating and a 12-month price target of US$3.00 on the stock.

Ontrak reported that among members with initially poor quality of life scores, 35% of Medicaid recipients and 18% of commercially insured members showed significant improvements in their ReQoL scores over the six-month period.

Aschoff noted, "The positive ReQol trend aligns with the consistently demonstrated improvements in depression and anxiety as measured by PHQ-9 and GAD-7, which are also evaluations administered with WholeHealth+."

The analyst highlighted the significance of these results, stating, "ReQol is a patient-reported outcome assessment that evaluates the quality of life parameters for those with mental health conditions. More specifically, ReQoL measurements evaluate the impact of mental health conditions, psychological interventions, and healthcare interventions on patients because ReQol focuses on understanding the person over the diagnosis, which is consistent with modern recovery-oriented strategies."

Ontrak's strategic focus includes integrating ReQoL into its WholeHealth+ program to better monitor outcomes and demonstrate the effectiveness of its behavioral healthcare platform. The company's mission is to improve health outcomes for vulnerable members of the behavioral health population through personalized care coaching and customized care pathways.

Roth MKM's valuation methodology for Ontrak is based on a discounted cash flow (DCF) analysis. "Our 12-month price target of US$3 is based on a DCF analysis using a 10% discount rate that is applied to all cash flows and the terminal value, which is based on a 5x multiple of our projected 2031 operating income of US$117 million," Aschoff explained.

With a Buy rating and a price target of US$3.00, representing a potential return of approximately 1,329% from the price at the time of the report of US$0.21, Roth MKM sees significant upside potential for Ontrak. However, Aschoff notes several risk factors, including clinical, regulatory, financing, and competitive risks, as well as high stock price volatility common among small-cap biotechnology companies.