Ontrak Announces Closing of Follow-On Offering of Non-Convertible Preferred Stock

Company to use non-dilutive capital for working capital, M&A, investment in technology

Ontrak, a leading AI-powered and telehealth enabled, virtualized healthcare company, announced that it has closed its previously announced underwritten public offering of 1,730,000 shares of its 9.50% Series A Cumulative Perpetual Preferred Stock at $24.75 per share, for gross proceeds to the Company of $42.8 million. The Company has granted the underwriters a 30-day option to purchase up to an additional 259,500 shares of Series A Preferred Stock. The Series A Preferred is listed on the Nasdaq Global Market under the symbol “OTRKP.” After deducting underwriting fees and other offering expenses payable by the Company, the net proceeds to the Company were approximately $39.7 million prior to any exercise of the underwriters’ option to purchase additional shares.

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Mr. Terren Peizer, Chairman and CEO of Ontrak, stated: “Like our August preferred stock offering, this financing was very well received by the capital markets and has greatly enhanced shareholder value. We now have in excess of $100 million in cash on hand to execute on the strategic initiatives that we believe will further accelerate our growth trajectory and commercial expansion. This month Ontrak was ranked the fastest growing healthcare company of its size and number 279 on Deloitte’s Technology Fast 500, a ranking of the 500 fastest-growing technology, media, telecommunications, life sciences and energy tech companies in North America. As the leading behavioral health company targeting and successfully engaging the care avoidant 5.7% of the population that Milliman found represented 44% of total medical expenditure before the pandemic, we believe that Ontrak is uniquely well positioned and very well capitalized to continue to be one of the fastest growing technology and healthcare companies.”

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The Company intends to use the net proceeds of this offering to fund a segregated dividend account for the payment of dividends on the Series A Preferred Stock through August 2022 and to use the remaining net proceeds for general corporate purposes, which may include working capital, M&A, and investments in technology.

B. Riley Securities, Ladenburg Thalmann and William Blair acted as book-running managers for the offering. Aegis Capital Corp., The Benchmark Company, Incapital and Kingswood Capital Markets, division of Benchmark Investments, Inc. acted as co-managers.

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