Financial Analysis: Catasys (CATS) & American Renal Associates (ARA)

Catasys (NASDAQ: CATS) and American Renal Associates (NYSE:ARA) are both small-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.

Institutional and Insider Ownership

4.7% of Catasys shares are owned by institutional investors. Comparatively, 91.6% of American Renal Associates shares are owned by institutional investors. 92.2% of Catasys shares are owned by company insiders. Comparatively, 9.6% of American Renal Associates shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Catasys and American Renal Associates, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Catasys 0 1 1 0 2.50
American Renal Associates 0 1 2 0 2.67

Catasys presently has a consensus target price of $8.00, indicating a potential upside of 61.62%. American Renal Associates has a consensus target price of $23.50, indicating a potential upside of 37.19%. Given Catasys’ higher probable upside, equities analysts clearly believe Catasys is more favorable than American Renal Associates.

Earnings and Valuation

This table compares Catasys and American Renal Associates’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Catasys $7.72 million 10.20 -$13.60 million ($0.85) -5.82
American Renal Associates $745.11 million 0.72 $4.85 million $0.61 28.08

American Renal Associates has higher revenue and earnings than Catasys. Catasys is trading at a lower price-to-earnings ratio than American Renal Associates, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Catasys has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500. Comparatively, American Renal Associates has a beta of 1.94, meaning that its share price is 94% more volatile than the S&P 500.


This table compares Catasys and American Renal Associates’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Catasys -176.29% N/A -201.38%
American Renal Associates -1.00% 14.51% 2.06%


American Renal Associates beats Catasys on 10 of the 13 factors compared between the two stocks.

About Catasys

Catasys, Inc. provides data analytics based specialized behavioral health management and integrated treatment services to health plans and other third party payors. It offers OnTrak solution to improve treatment outcomes and lower the utilization of medical and behavioral health plan services. The company's OnTrak solution includes medical and psychosocial interventions; and a proprietary Web based clinical information platform and database, psychosocial programs, and integrated care coaching services. Its OnTrak solution combines medical and psychosocial treatments with elements of traditional disease management, case management, and ongoing member support to help organizations treat and manage populations struggling with substance dependence, depression, and anxiety to improve their health and thereby decrease their health care costs. Catasys, Inc.'s OnTrak solution includes various components, such as identification of impactable members, member engagement, enrollment/referral, provider network, outpatient medical treatment, outpatient psychosocial treatment, care coaching, monitoring and reporting, and proprietary Web-based clinical information platform. The company was formerly known as Hythiam, Inc. and changed its name to Catasys, Inc. in March 2011. Catasys, Inc. was founded in 2000 and is based in Los Angeles, California.

About American Renal Associates

American Renal Associates Holdings, Inc. operates as a dialysis services provider in the United States. It operates dialysis clinics focusing on joint venture partnerships with physicians. The company offers kidney dialysis services to patients suffering from chronic kidney failure or end stage renal disease. As of December 31, 2017, it owned and operated 228 dialysis clinics in partnership with 401 nephrologist partners treating approximately 15,600 patients in 26 states and the District of Columbia. The company was founded in 1999 and is headquartered in Beverly, Massachusetts.

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