Item 2.05 Costs Associated with Exit or Disposal Activities.

Previously, on March 1, 2021, Ontrak, Inc. (the "Company") reported the notification of termination from its largest customer with an effective date of June 26, 2021. As a result of this termination notice, the Company's management assessed various options and deemed it prudent to initiate a workforce reduction plan to effectively align its resources, manage its operating costs and position it to achieve its previously stated growth target for 2021.

Under the workforce reduction plan and in order to address the change in staffing needs in the short term resulting from the impending termination of the customer contract, the Company intends to reduce approximately 35% of positions, predominately within departments directly supporting the contract. The Company estimates one-time costs of approximately $1.5 million of termination benefits to the impacted employees, including severance payments and benefits. The Company expects to complete the reduction in workforce plan by the end of the second quarter in 2021 and expects to bring back capacity to scale appropriately as new or expanded customer relationships are onboarded from its pipeline.

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