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Catasys Presentation March 2020


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Catasys, Inc. harnesses proprietary big data predictive analytics, artificial intelligence and telehealth, and human intervention to deliver improved member health and cost savings to health plans through integrated technology enabled treatment solutions. It is our mission to provide access to affordable and effective care, thereby improving health and reducing cost of care for people who suffer from the medical consequences of behavioral health conditions. Catasys helps these people and their families achieve and maintain better lives.

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Catasys Presentation March 2020

  1. 1. We are the experts in AI-powered and telehealth-enabled healthcare engagement that drives lasting behavior transformation ®
  2. 2. The nationwide leader in engagement 1 Closing price on 3/13/20 2 Revenue Full Year 2019 3 Net New Member Enrollment Full Year 2019 Serving members of major health plans in 28 states and Washington, D.C. 2 CATS Publicly traded on NASDAQ since 2017 $10.56 Stock Price1 137% y/y Enrollment Increase3 131% y/y Revenue Growth2 $33.7B Total Addressable Market ®
  3. 3. Behavioral health conditions cause or exacerbate other chronic diseases (diabetes, hypertension, coronary artery disease, COPD, and congestive heart failure) which means that our members cost health plans 4.5 times more than those without BH issues. 3 Those with treated Behavioral Health/SUD make up less than 14% of insured members but account for $6K $5K $4K $3K $2K $1K PerMemberPerMonthCost3 Hypertension Asthma Bipolar Chronic Pain Diabetes CAD COPD CHF All Others Catasys Eligible The market opportunity 1in5American adults are impacted each year with behavioral health issues1 (substance use disorder, anxiety, depression). of total U.S. healthcare spending.2 1SAMSHA National Survey on Drug Use and Health, published August 2019 2 Milliman, April 2014, Economic Impact of Integrated Medical-Behavioral Healthcare ®® 3 Catasys medical claims data across all customers and lines of business
  4. 4. * No Treatment for SUD is defined as not receiving treatment at any location, such as a hospital (inpatient), rehabilitation facility (inpatient or outpatient), mental health center, emergency room, private doctor's office, self-help group, or prison/jail. PAST YEAR, 2018 NSDUH, 12+ The National Survey on Drug Use and Health indicates the majority of Catasys eligible members are not seeking treatment. 4 Behavioral healthcare avoidance is the PROBLEM
  5. 5. Our members consciously or unconsciously AVOID CARE. We address the member’s medical, social and behavioral barriers to engage them with the health system they would otherwise avoid. 1Source: Catasys total member ratings of OnTrak Program across all health plans ENGAGEMENT is the game-changing SOLUTION We don’t require members to take the first step. We engage those others cannot reach. 68 Netflix 62 Amazon 72 Apple The Catasys OnTrak program has a member Net Promoter Score of 5 Catasys “Member Obsession” drives engagement and loyalty of Catasys members had not received behavioral health services in the last 12 months. ® 1 The Net Promoter Score is calculated as the difference between the percentage of Promoters and Detractors. The NPS is not expressed as a percentage but as an absolute number lying between -100 and +100. NPS = % of promoters - % of detractors 12 Average Health Plan
  6. 6. ~ At 20% enrollment that would be $6.7 billion in revenue opportunity for Catasys Significant Upside Catasys health plan partners comprise the majority of the U.S. market Total Addressable Market (TAM) Commercial Fully Insured $7.7B Medicare Advantage $3.8B Commercial ASO $12B Managed Medicaid $10.2B for Substance Use Disorder, Anxiety and Depression ® 6 Catasys OnTrakTM Total Addressable Market
  7. 7. 1. AI –enabled hyper targeting of high cost, care-avoidant members 2. Proprietary identification algorithms for behavioral health conditions including substance use disorder, anxiety, depression & chronic disease conditions 3. Flexible program duration with one trusted Catasys Care Coach for up to 52 weeks 4. Industry-leading member retention and graduation rates due to “fingerprinted ”interventions 5. Local and virtual resource: local Community Care Coordinators, Care Coaches, Providers, Member Engagement Specialists AND a behavioral health telehealth network. 6. Unrivaled financial outcomes, durable medical claims savings and ROI. 7. Catasys methodology for evaluation of OnTrak program outcomes validated by Milliman1. Key Differentiators: 7 ® A 15-year playbook on how to drive lasting behavior transformation 1Milliman, actuarial industry leader, has peer reviewed the matched pairs study methodology used by Catasys to evaluate the OnTrak program and has found it reasonable and appropriate for the circumstances. Specific calculations and conclusions were not reviewed.
  8. 8. We integrate machine learning, cutting edge analytics, fingerprinted engagement, care coaching, network and digital tools to improve clinical outcomes and lower the cost of care. Cognitive Segmentation, Behavioral Drivers & Goals Care Coaches Multiple Communication Modalities Program Type & Duration Credentialed Network Machine Learning and AI Community Care Coordinators Member Engagement Specialists OnTrakTM Program ® 8
  9. 9. We PREDICT and identify individuals for whom behavioral or medical intervention could help. We RECOMMEND care pathways that harness the intersection between what is effective, evidence- based care and what individuals are willing to do. We ENGAGE through sophisticated techniques and tools that encourage mental and physical behavior change, reduce costs and improve outcomes. We can achieve this for any chronic disease. PREDICT RECOMMEND ENGAGE PRETM Catasys PRE™ is a cutting edge analytics platform that identifies members who have both diagnosed and undiagnosed behavioral health conditions and comorbidities. 9 ®
  10. 10. 10 An advanced analytic engine evolved over 10 years to apply machine intelligence to manage data at scale and provide actionable insight at unmatched speed. Designed and built using highly diverse claims, third party data and clinical data from OnTrakTM Application. Populated with data from the nation’s largest health plans representing millions of covered lives and billions of individual data points. ® PRETM Technology Platform The data foundation for our integrated solution
  11. 11. Revenue per patient enrolled $8,500 Revenue per enrolled member at ~80% retention $6,500 Revenue per 10,000 enrolled members $65,000,000 We deliver industry-leading ROI by focusing on those members who can benefit the most 11 ® 1. Validated ROI Methodology1 Healthcare IT Industry 2. Assume millions of members will take the first step 3. Low cost savings per member 1. No/low ROI 2. Engage hundreds of thousands of very high cost members 3. Industry-leading cost savings per member 1Milliman, actuarial industry leader, has peer reviewed the matched pairs study methodology used by Catasys to evaluate the OnTrak program and has found it reasonable and appropriate for the circumstances. Specific calculations and conclusions were not reviewed.
  12. 12. • Prior to treatment with Catasys, these patients cost an average of $30,000 each year in medical costs (emergency room visits and inpatient stays). • Catasys provides health plans ~54% in savings per enrolled member. • Nearly a 5-to-1 ROI1 for health plans, incentivizing them to pay 100% of the treatment costs. (Investment) (Return) 1Health Plan ROI calculation = Return/Investment Return On Investment X2 $30,000 $16,200 $32,400 $6,500 $35K $30K $25K $20K $15K $10K $5K Average OnTrak Program Cost 2 Year Cost Savings2 Post Graduation Average Savings2 Prior Average Health Plan Cost 12 ® AverageMedicalCostPerYear 2 Analysis of Catasys medical claims data across all customers and lines of business
  13. 13. 1 Launch 45 – 90 Days Day 90 Day 45 Day 1 • Signing of contract • Days to launch: • 45 days to launch in a previously entered state • 90 days to launch into a new state • Clinical integration with the health plan requires little effort from the health plan after transfer of data • Enrollment is an iterative process after entering into a new state • Approximately 12-15 months after launch to achieve steady state of 20% enrollment Greater than 20% in Year 2 Rapid Enrollment Ramp (Commercial example) 12 Months from Launch 20% 13 ®
  14. 14. Catasys saw a significant increase in the effective eligible member population in 2019 as a result of new states and expansion within existing health plans. # of Individuals Note: Historically, we reported total outreach pool, but believe the effective outreach pool is a better predictor of future revenue growth 1 An effective outreach pool of 108,120 individuals equates to a total outreach pool of 156,000 eligible lives. 2020 Quarterly Projections 14 250,000 200,000 150,000 100,000 20,000 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 35,553 40,674 47,388 55,811 102,266 108,1201 145,000 181,000 200,000 200,000 Accelerated Growth: Significant Ramp in Effective Outreach Pool of Individuals ®
  15. 15. • Multi-year track record of outperforming guidance • Supported through rapid enrollment growth • Solely represents existing enrollment launches with current health plan partners and several program expansions with existing customers. Excludes new contracts and subsequent launches, initial launches of existing contracts, and new expansions within existing contracts. 15 2020 Financial Guidance of $90 Million in GAAP Revenues ® In 2020 $7.7M $100 $80 $60 $40 $20 2017 2018 2019 2020 $15.2M $35.1M $90M Accelerating Revenue Growth CatasysRevenue($M)
  16. 16. 16 Proven Leadership CURT MEDEIROS President & Chief Operating Officer • 20+ years experience in designing and executing growth strategies, establishing partnerships that improve the healthcare system for all stakeholders • Expertise in big data analytics to drive better outcomes and lower the cost of care • Served nearly 10 years at UnitedHealth Group, most recently serving as President of OPTUM Analytics • Joined Catasys in 2019, heading Catasys Operations, Sales and Marketing, and Digital Technology TERREN PEIZER Founder, Chairman & Chief Executive Officer • Founder of several health care and life science companies • Extensive background in venture capital, investing, mergers and acquisitions, corporate finance • Held senior executive positions with investment banking firms Goldman Sachs, First Boston and Drexel Burnham Lambert • Chairman of Acuitas Group Holdings (personal holding company with ~57% Ownership of CATS) • Chairman of Crede Capital Group, LLC, an industry leading Micro-Cap investment company • Founder and Chairman of NeurMedix, Inc. ®
  17. 17. We invest in innovative technology to: • Heighten Catasys operational efficiency • Address expanded populations • Enhance clinical value • Deliver improved member experience and health • Partner with health plans on validated outcomes and savings. ®
  18. 18. Except for statements of historical fact, the matters discussed in this press release are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control, which may cause actual results to differ materially from stated expectations. These risk factors include, among others, changes in regulations or issuance of new regulations or interpretations, limited operating history, our inability to execute our business plan, increase our revenue and achieve profitability, lower than anticipated eligible members under our contracts, our inability to recognize revenue, lack of outcomes and statistically significant formal research studies, difficulty enrolling new members and maintaining existing members in our programs, the risk that the treatment programs might not be effective, difficulty in developing, exploiting and protecting proprietary technologies, intense competition and substantial regulation in the health care industry, business disruption and related risks resulting from the outbreak of the novel coronavirus 2019, high customer concentration, dependence on key personnel and the ability to recruit, retain and develop a large and diverse workforce, the risks associated with the adequacy of our existing cash resources and our ability to continue as a going concern, our ability to raise additional capital when needed and our liquidity. You are urged to consider statements that include the words “may,” “will,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plan,” “anticipates,” “intends,” “continues,” “forecast,” “designed,” “goal,” or the negative of those words or other comparable words to be uncertain and forward-looking. For a further list and description of the risks and uncertainties we face, please refer to our most recent Securities and Exchange Commission filings which are available on its website at Such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. *Closing price on March 13, 2020 230 day average At a Glance Ticker NASDAQ: CATS Stock Price* $10.56 Common Shares Outstanding 16.7 Million Float 7.5 Million Average Daily Volume2 151,060 Market Cap* $176.6 Million Warrants (WAEP $6.08) 1,550,975 Analyst Coverage Canaccord Genuity, Dougherty & Co., ThinkEquity 18 Forward-Looking Statements ®