Do you know how its model compares to LVGO’s?
Hi Remmdawg
they are in the field of Telehealth.
It seems they have a similar treatment method of chronic diseases. It looks like they are initially focused on substance abuse patients. It seems that they save the insurance companies money from their treatment.
The first slide in their Q1 slideshow says “Driving lasting behavior change for members with unaddressed behavioral health conditions through AI-powered engagement and tele-health enabled interventions.”
The CEO is Terren Peizer
In the Q1 call he mentions a tailwind from Covid
“Alongside these operational improvements, COVID-19 has created some unique opportunities for Catasys. The shelter-in-place orders have led to more people in our outreach pool being at their homes which makes it easier for our team to reach them. We had record highs of reaching over 20,000 members in March compared to an average of approximately 13,000 members reached in January and February and 5,200 reached in the first quarter of 2019. Further, these people are currently more open to accepting help than they previously might have been”
It looks like they are creating new avenues of treatment
"Looking forward, our pipeline continues to build, including several meaningful opportunities with leading managed care providers. One national Medicare Advantage plan that was previously delayed looks to be on track to launch at the start of the third quarter, and we are in dialogue for a significant expansion with an existing partner. We are continuing the design of new OnTrak disease area pilots for congestive heart failure and COPD, with the objective of launching two new pilots in the second half of the year. "
An analyst asks Terren
“A lot of times, I’m hearing investors comparing you with Livongo, and you guys are two of the leaders in telehealth right now in the market. How do you see Catasys relative to Livongo though?”
Well, we’re different companies. They’re – obviously, their main business is diabetes space. It’s a SaaS model. Most of their customers are employees. We’re the only pure behavioral health, telehealth play. And of course, we’re at the intersection of – our members have multiple chronic diseases and multiple behavioral health diseases. But as such, our member community is care and treatment-avoidant. The other telehealth and a company like Livongo are dealing with the treatment seeking. And we’re just structurally different. There’s definitely a more capital-intensive model than ours as well. I think if you look at our margins at scale, they all have a higher gross margin because we embed the cost of our care community and the cost of services provided.
But if you look at our EBITDA margin because we have significantly less marketing expense and they’re marketing straight to consumers, if you will. Our EBITDA margin should be slightly higher. But the only comparison I think you can make is we’re both in the telehealth industry. Their multiple is a lot higher than ours. But it’s interesting. If you look at their year, they reported last night. But in 2019, they did $169 million of revenue.
I think if you redo the math, and based on what I think our growth rate continues into next year, you could easily see that we could surpass that number. I’m not giving guidance yet for 2021. But you could see how we could be ahead of their 2019 number. And all last year, they traded around a $3.5 billion plus or minus market cap. This year, and last night, they reported, they should do somewhere around $296 million. And right now they have over a $5.2 billion market cap. So, I believe we’re only about a year or so behind Livongo. So, I look forward to being compared on a multiple basis, which I think we’ll get there."
He seems confident they are growing as fast or faster than LVGO and that their stock price should have room for multiple expansion.
This company also seems to be in the sweet spot of what Bear was looking for with revenue much lower than the 1 billion mark.