Catasys Announces Expansion of Debt Financing Agreement to $15 Million; Proceeds to be Utilized to Support Accelerating Growth

Catasys, Inc. (NASDAQ: CATS), a leading AI and technology-enabled
healthcare company, announced today that it has entered into an
amendment and expansion of its previously announced financing of a
receivable facility agreement and term loan (see: Catasys
Attracts $10 Million in Debt Financing to Support Accelerating Growth -
June 14, 2018).

The Company entered into a $15 million financing with Horizon Technology
Finance Corporation (“Horizon”) (NASDAQ: HRZN), which includes initial
term loans in the amount of $7.5 million previously funded under the
original Loan Agreement entered into June 2018 and an additional up to
$7.5 million loan in three revolving tranches of $2.5 million.

The initial interest rate on the term loan is 9.75% and will float with
Libor when north of 2% (currently 2.49%). The initial blended interest
rate on the financing is approximately 10.24%.

Catasys intends to use the proceeds to support its growth strategy,
including investments in new technology platforms, and to provide excess
capital. The Company also has access to the previously announced
receivable facility agreement of $2.5 million with Heritage Bank of
Commerce.

Management Comments

Mr. Terren Peizer, Chairman and CEO of Catasys, stated, “This amended
financing provides greater financial flexibility to implement all of
Catasys’ growth initiatives without any dilution to existing
shareholders. We have been pleased with our partnership with Horizon,
which is focused on financing high growth companies in the technology
and healthcare space. We were pleased to expand our financing terms
following their extensive due diligence on Catasys’ recent expansions of
its partnerships with healthcare plans, as well as visibility into our
2019 business model. We believe that the Company’s capital-light model
allows for the use of debt financing upon favorable terms for Catasys
and its shareholders. We expect that this provides sufficient runway to
drive the accelerating expansion in our business and technological
advancements in the coming months. We further believe that any capital
requirements from possible launches of new plan partners and expansions
from existing partners not contemplated in our 2019 business may be
funded by additional debt capital availability. Our 2019 model is
generally based on the business that we have in hand, and not on
possible or unanticipated launches and expansions that may occur
throughout the year.”

About Catasys, Inc.

Catasys, Inc. harnesses proprietary big data predictive analytics,
artificial intelligence and telehealth, combined with 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; helping
these people and their families achieve and maintain better lives.

Catasys' OnTrak solution--contracted with a growing number of national
and regional health plans--is designed to treat members with behavioral
conditions that cause or exacerbate co-existing medical conditions such
as diabetes, hypertension, coronary artery disease, COPD, and congestive
heart failure, which result in high medical costs.

Catasys has a unique ability to engage these members, who do not
otherwise seek behavioral healthcare, leveraging proprietary enrollment
capabilities built on deep insights into the drivers of care avoidance
matched with data driven engagement technologies.

OnTrak integrates evidence-based medical and psychosocial interventions
along with care coaching in a 52-week outpatient solution. The program
is currently improving member health and, at the same time, is
demonstrating reduced inpatient and emergency room utilization, driving
a more than 50 percent reduction in total health insurers' costs for
enrolled members. OnTrak is available to members of several leading
health plans in California, Connecticut, Florida, Georgia, Illinois,
Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Missouri, Nebraska,
New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina,
Tennessee, Texas, Virginia, West Virginia and Wisconsin.

Forward-Looking Statements

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 treatment programs might not be
effective, difficulty in developing, exploiting and protecting
proprietary technologies, intense competition and substantial regulation
in the health care industry, 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," "would," "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 http://www.sec.gov.
Such forward-looking statements are current only as of the date they are
made, and we assume no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law.

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