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The terms of the offering are noteworthy, as each share or warrant sold comes with two additional warrants, each with an exercise price of 85 cents. The closure of this public offering is scheduled for next Tuesday, and Ontrak anticipates raising about $6.3 million from the sale. These funds are earmarked for working capital and general corporate purposes, as the company seeks to stabilize its financial position.
The current market reaction reflects investor sentiment on the dilutive effect of such offerings, where the issuance of new shares tends to reduce the value of existing shares. Ontrak’s decision to launch this offering at combined prices has been highlighted by Chris Wack in his report on the company’s performance and prospects.
This move by Ontrak represents a critical juncture as it attempts to navigate through financial challenges by bolstering its capital through public investment. Investors and market watchers will be closely monitoring the outcome of this offering and its impact on Ontrak’s financial health and stock performance.
In light of recent events, InvestingPro has highlighted some key insights into Ontrak Inc.’s financial standing. The company operates with a significant debt burden and is quickly burning through cash, according to InvestingPro Tips. The stock has taken a significant hit over the last week, month, and six months, with a 1-week price total return of -31.03%, a 3-month price total return of -56.52%, and a 6-month price total return of -71.02%.
Despite the company’s efforts to raise capital through public offerings, analysts do not anticipate the company will be profitable this year. Ontrak’s return on assets is at a concerning -128.49% as of Q2 2023, indicating a poor return on assets. Furthermore, the company’s valuation implies a poor free cash flow yield, which could be a red flag for potential investors.
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