NantHealth, Inc. (NASDAQ-GS: NH), a next-generation,
evidence-based, personalized healthcare company, today reported
financial results for its second quarter ended June 30, 2019.
“Our 2019 second quarter represents the fourth consecutive
quarter of total revenue growth,” said Bob Petrou, Chief Financial
Officer of NantHealth. “We generated strong topline growth and
substantial gross margin improvement, which was largely driven by
continued positive momentum in our Software and SaaS business, and
the continuation of cost management throughout the company.”
Software and Services
Highlights:
- Clinical Decision Support (Eviti):
- In Q2, at America’s Health Insurance Plans (AHIP) Institute
& Expo 2019, showcased Eviti® Connect, the company’s
evidence-based treatment intelligence and web-based oncology
decision support platform
- In Q2, as previously announced, signed and launched a
three-year partnership with CareSource, a leading nonprofit
multi-state health plan, expanding Eviti Connect’s total covered
lives to over 25 million
- In Q2, released v7.8 with Smart Regimen Search, an enhancement
that expedites treatment plan entry via intelligent regimen driven
drug matches
- Payer Engagement (NaviNet):
- In Q2, at America’s Health Insurance Plans (AHIP) Institute
& Expo 2019, showcased NaviNet® Open, the company’s secure,
multi-payer platform that lets payers and providers exchange vital
administrative and clinical information
- In Q2, released a number of enhancements to the NaviNet Open
Authorization application, which enable the company’s health plans
to offer more configuration options. These include reducing the
need for manual intervention via phone and fax processes and saving
providers time managing their authorization requests, speeding up
delivery of care
- In Q2, launched the NaviNet API Gateway, which allows the
company’s partners to interact directly with its API’s in a
standard method, reducing the reliance on custom integration
methods and enabling payer flexibility for their provider
networks
- Connected Care (DeviceConX):
- In Q2, at the 2019 HIMSS and Health 2.0 European Conference,
participated in the first-ever U.S. Pavilion where the company
showcased DeviceConX™, HBox® and VitalsConX to Europe’s eHealth
decision makers
- In May, at Vitalis, the largest e-health event in Scandinavia,
presented the company’s latest connected care solutions and
sponsored the Intelligent Hospital Pavilion (IHP), where the
company demonstrated its latest DeviceConX 5.15 medical device
integration solution
- In August, entered into a memorandum of understanding with
ASCOM to provide the company’s Denmark client increased visibility
of their device parameters. The combined capabilities provide
clinicians with increased visibility of intelligent alert
notifications, driving more informed decisions at the point of
care, closing digital information gaps and allowing for the best
possible decisions throughout the hospital ecosystem
Sequencing and Molecular
Analysis – Highlights:
- In Q2, total GPS orders were 136, comprised of 86 GPS Cancer
and 50 Liquid GPS
- In Q2, at the American Society of Clinical Oncology’s (ASCO)
2019 Annual Meeting, scientific teams from NantHealth and NantOmics
presented:
- With collaborators from Virginia Commonwealth University (VCU),
“Tumor mutation burden and PD-L1 expression in SDH/FH mutated solid
tumors,” which support, for the first time, a potential therapeutic
role for inhibition of PD-1/PD-L1 pathway in these tumors
- With collaborators from the University of California, San Diego
(UCSD), “Evidence for selective silencing of MHC-binding
neoepitopes to avoid immune surveillance,” which can inform the
development of effective immunotherapy and cancer vaccine
strategies
- In Q2, at the American Association for Cancer Research (AACR)
2019 Annual Meeting, scientific teams from NantHealth and NantOmics
presented:
- With collaborators from Duke University and the Sarcoma Center
of Southern California, “Enhanced expression of human cyclin G1
(CCNG1) gene in metastatic cancer, a novel biomarker in development
for CCNG1 inhibitor therapy,” which may position CCNG1 as a
companion diagnostic for the Delta Rex-G drug
- A study entitled “The genomic and transcriptomic landscape of
left versus right sided breast cancer in 410 cases,” which sheds
new light on ESR1 signaling in right sided breast cancers
Business and Financial Highlights
For the 2019 second quarter, total net revenue was $25.7
million, compared with $22.0 million in the 2018 second quarter.
Gross profit was $15.9 million, or 62% of total net revenue,
compared with $11.5 million, or 52% of total net revenue, for the
prior year period. Selling, general and administrative expenses
declined to $15.2 million, from $18.4 million in 2018 second
quarter. Research and development expenses decreased to $4.6
million from $5.9 million.
Financial results for the second quarter of 2019 included
non-cash charges for loss from related party equity method
investment of $2.2 million. Net loss from continuing operations,
net of tax, was $14.7 million, or $0.13 per share, compared with
$21.8 million, or $0.20 per share, for the 2018 second quarter. Net
loss (including discontinued operations) was $14.7 million, or
$0.13 per share, compared with $23.4 million, or $0.21 per share,
for 2018 second quarter.
On a non-GAAP basis, net loss from continuing operations, which
excludes the losses from our related party equity investment of
$2.2 million, an intangible asset impairment charge of $4.0
million, and a gain from change in the fair value of the Bookings
Commitment liability of $1.0 million, among other things, was $4.4
million, or $0.04 per share, down from $11.1 million, or $0.10 per
share, for the second quarter of last year.
Conference Call Information and Forward-Looking
Statements
Thursday, August 8, 2019, after market close, the company will
host a conference call at 1:30 p.m. PT (4:30 p.m. ET) to review its
results of operations for the second quarter ended June 30, 2019.
The conference call will be available to interested parties by
dialing 844-309-3709 from the U.S. or Canada, or 281-962-4864 from
international locations, passcode 3494698. The call will be
broadcast via the Internet at www.nanthealth.com. Listeners are
encouraged to visit the website at least 10 minutes prior to the
start of the scheduled presentation to register, download and
install any necessary audio software. A playback of the call will
be archived and accessible on the same website for at least three
months.
Discussion during the conference call may include
forward-looking statements regarding topics such as the company’s
financial status and performance, regulatory and operational
developments, and other comments the company may make about its
future plans or prospects in response to questions from
participants on the conference call.
Use of Non-GAAP Financial Measures
This news release contains references to Non-GAAP financial
measures, including adjusted net loss and adjusted net loss per
share, which are financial measures that are not prepared in
conformity with United States generally accepted accounting
principles (U.S. GAAP). The Company’s management believes that the
presentation of Non-GAAP financial measures provides useful
supplementary information regarding operational performance,
because it enhances an investor’s overall understanding of the
financial results for the Company’s core business. Additionally, it
provides a basis for the comparison of the financial results for
the Company’s core business between current, past and future
periods. Other companies may define these measures in different
ways. Non-GAAP financial measures should be considered only as a
supplement to, and not as a substitute for or as a superior measure
to, financial measures prepared in accordance with U.S. GAAP.
Non-GAAP per share numbers are calculated based on one class of
common stock and do not incorporate the effects, if any, of using
the two-class method.
About NantHealth, Inc.
NantHealth, a member of the NantWorks ecosystem of companies,
provides leading solutions across the continuum of care for
physicians, payors, patients and biopharmaceutical organizations.
NantHealth enables the use of cutting edge data and technology
towards the goals of empowering clinical decision support and
improving patient outcomes. NantHealth’s comprehensive product
portfolio combines the latest technology in payor/provider
platforms that exchange information in near-real time (NaviNet and
Eviti), connected care solutions that deliver medical device
interoperability (DeviceConX) and molecular profiling services that
combine comprehensive DNA & RNA tumor-normal profiling with
pharmacogenomics analysis (GPS Cancer®). For more information,
please visit www.nanthealth.com or follow us on Twitter, Facebook
and LinkedIn.
This news release contains certain statements of a
forward-looking nature relating to future events or future business
performance. Forward-looking statements can be identified by the
words “expects,” “anticipates,” “believes,” “intends,” “estimates,”
“plans,” “will,” “outlook” and similar expressions. Forward-looking
statements are based on management’s current plans, estimates,
assumptions and projections, and speak only as of the date they are
made. Risks and uncertainties include, but are not limited to: our
ability to successfully integrate a complex learning system to
address a wide range of healthcare issues; our ability to
successfully amass the requisite data to achieve maximum network
effects; appropriately allocating financial and human resources
across a broad array of product and service offerings; raising
additional capital as necessary to fund our operations; achieving
significant commercial market acceptance for our sequencing and
molecular analysis solutions; establish relationships with, key
thought leaders or payers’ key decision makers in order to
establish GPS Cancer as a standard of care for patients with
cancer; our ability to grow the market for our Systems
Infrastructure, and applications; successfully enhancing our
Systems Infrastructure and applications to achieve market
acceptance and keep pace with technological developments; customer
concentration; competition; security breaches; bandwidth
limitations; our ability to continue our relationship with
NantOmics; our ability to obtain regulatory approvals; dependence
upon senior management; the need to comply with and meet applicable
laws and regulations; unexpected adverse events; clinical adoption
and market acceptance of GPS Cancer; and anticipated cost savings.
We undertake no obligation to update any forward-looking statement
in light of new information or future events, except as otherwise
required by law. Forward-looking statements involve inherent risks
and uncertainties, most of which are difficult to predict and are
generally beyond our control. Actual results or outcomes may differ
materially from those implied by the forward-looking statements as
a result of the impact of a number of factors, many of which are
discussed in more detail in our reports filed with the Securities
and Exchange Commission.
NantHealth, Inc. Consolidated Balance Sheets (Dollars
in thousands)
June 30,2019 December 31,2018
(Unaudited) Assets Current assets Cash and cash
equivalents
$
7,076
$
18,305
Accounts receivable, net
13,858
15,286
Inventories
303
496
Related party receivables, net
938
1,007
Prepaid expenses and other current assets
5,726
4,350
Total current assets
27,901
39,444
Property, plant, and equipment, net
18,152
22,978
Goodwill
115,930
115,930
Intangible assets, net
56,242
64,703
Investment in related party
35,749
40,000
Related party receivable, net of current
1,360
1,611
Operating lease right-of-use assets
10,783
—
Other assets
1,929
1,671
Total assets
$
268,046
$
286,337
Liabilities and Stockholders' Equity (Deficit)
Current liabilities Accounts payable
$
3,047
$
1,650
Accrued and other current liabilities
12,614
13,832
Deferred revenue
17,566
16,263
Related party payables, net
4,192
4,791
Total current liabilities
37,419
36,536
Deferred revenue, net of current
4,329
6,704
Related party liabilities
20,939
17,708
Related party promissory note
112,666
112,666
Related party convertible note, net
8,613
8,378
Convertible notes, net
81,957
79,433
Operating lease liabilities
11,949
—
Other liabilities
20,670
22,081
Total liabilities
298,542
283,506
Stockholders' equity (deficit) Common stock, $0.0001 par
value per share, 750,000,000 shares authorized; 110,454,507 and
109,491,277 shares issued and outstanding at June 30, 2019 and
December 31, 2018, respectively (including 1 share of restricted
stock at both dates)
11
11
Additional paid-in capital
888,461
887,289
Accumulated deficit
(918,758
)
(884,122
)
Accumulated other comprehensive loss
(210
)
(347
)
Total stockholders' (deficit) equity
(30,496
)
2,831
Total liabilities and stockholders' equity (deficit)
$
268,046
$
286,337
NantHealth, Inc. Consolidated Statements of
Operations (Dollars in thousands, except per share amounts)
(Unaudited)
Three Months EndedJune 30, Six Months
EndedJune 30,
2019
2018
2019
2018
Total net revenue
$
25,686
$
22,047
$
49,415
$
44,311
Total cost of revenue
9,816
10,582
21,105
21,651
Gross Profit
15,870
11,465
28,310
22,660
Operating Expenses: Selling, general and
administrative
15,177
18,388
31,967
39,122
Research and development
4,584
5,889
9,664
11,040
Amortization of acquisition-related assets
1,054
1,054
2,108
2,108
Impairment of intangible assets
3,977
—
3,977
— Total operating expenses
24,792
25,331
47,716
52,270
Loss from operations
(8,922
)
(13,866
)
(19,406
)
(29,610
)
Interest expense, net
(4,473
)
(4,262
)
(8,887
)
(8,460
)
Other income (expense), net
1,054
(1,334
)
(1,451
)
(1,154
)
Loss from related party equity method investment
(2,208
)
(2,945
)
(4,418
)
(6,206
)
Loss from continuing operations before income taxes
(14,549
)
(22,407
)
(34,162
)
(45,430
)
Provision for (benefit from) income taxes
133
(601
)
359
(1,651
)
Net loss from continuing operations
(14,682
)
(21,806
)
(34,521
)
(43,779
)
Loss from discontinued operations, net of tax
(31
)
(1,591
)
(115
)
(1,785
)
Net loss
$
(14,713
)
$
(23,397
)
$
(34,636
)
$
(45,564
)
Net loss per share: Continuing operations Basic and
diluted - common stock
$
(0.13
)
$
(0.20
)
$
(0.31
)
$
(0.40
)
Discontinued operations Basic and diluted - common stock
$
—
$
(0.01
)
$
—
$
(0.02
)
Total net loss per share Basic and diluted - common stock
$
(0.13
)
$
(0.21
)
$
(0.31
)
$
(0.42
)
Weighted average shares outstanding: Basic and
diluted - common stock
110,209,510
109,120,438
110,057,981
108,851,348
NantHealth, Inc. Supplemental Revenue Schedule
(Dollars in thousands) (Unaudited)
Three Months EndedJune
30, Six Months EndedJune 30,
2019
2018
2019
2018
Revenue: Software-as-a-service related
$
18,291
$
16,220
$
36,093
$
32,386
Software and hardware related
3,099
885
4,126
2,340
Maintenance
2,535
2,388
5,028
4,835
Total software-related revenue
23,925
19,493
45,247
39,561
Sequencing and molecular analysis
491
924
1,305
1,764
Home health care services
1,270
1,630
2,863
2,986
Total net revenue
$
25,686
$
22,047
$
49,415
$
44,311
Cost of Revenue: Software-as-a-service related
$
5,743
$
5,741
$
11,495
$
12,342
Software and hardware related
794
789
1,579
1,675
Maintenance
311
234
581
449
Amortization of developed technologies
1,143
1,293
2,376
2,466
Total software-related cost of revenue
7,991
8,057
16,031
16,932
Sequencing and molecular analysis
1,177
1,689
3,603
3,120
Home health care services
648
836
1,471
1,599
Total cost of revenue
$
9,816
$
10,582
$
21,105
$
21,651
NantHealth, Inc. Non-GAAP Net Loss from Continuing
Operations andNon-GAAP Net Loss Per Share from Continuing
Operations (Dollars in thousands, except per share amounts)
(Unaudited)
Three Months EndedJune 30, Six Months
EndedJune 30,
2019
2018
2019
2018
Net loss from continuing operations
$
(14,682
)
$
(21,806
)
$
(34,521
)
$
(43,779
)
Adjustments to GAAP net loss: Loss from related party equity method
investment
2,208
2,945
4,418
6,206
Stock-based compensation expense from continuing operations
673
1,808
1,323
4,432
Acquisition related sales incentive —
425
—
570
Change in fair value of derivatives liability —
(1
)
—
(1
)
Change in fair value of Bookings Commitment
(989
)
—
1,505
— Impairment of Investment in IOBS —
1,750
—
1,750
Noncash interest expense related to convertible notes
1,403
1,235
2,760
2,429
Intangible amortization from continuing operations
2,197
2,347
4,484
4,574
Impairment of intangible assets
3,977
—
3,977
— Loss on sale of business
582
—
582
— Securities litigation costs —
749
—
823
Tax provision (benefit) resulting from certain noncash tax items
255
(599
)
366
(1,706
)
Total adjustments to GAAP net loss from continuing operations
10,306
10,659
19,415
19,077
Net loss - Non-GAAP from continuing operations
$
(4,376
)
$
(11,147
)
$
(15,106
)
$
(24,702
)
Weighted average shares outstanding
110,209,510
109,120,438
110,057,981
108,851,348
Net loss per share from continuing operations -
Non-GAAP
$
(0.04
)
$
(0.10
)
$
(0.14
)
$
(0.23
)
Reconciliation of Net Loss from Continuing Operations per
Common Share to Net Loss per Common Share from Continuing
Operations - Non-GAAP (Unaudited): Three Months
EndedJune 30, Six Months EndedJune 30,
2019
2018
2019
2018
Net loss per common share from continuing operations
$
(0.13
)
$
(0.20
)
$
(0.31
)
$
(0.40
)
Adjustments to GAAP net loss per common share from continuing
operations: Loss from related party equity method investment
0.01
0.03
0.03
0.06
Stock-based compensation expense from continuing operations
0.01
0.02
0.01
0.04
Acquisition related sales incentive — — — — Change in fair value of
derivatives liability — — — — Change in fair value of Bookings
Commitment
(0.01
)
—
0.01
— Impairment of Investment in IOBS —
0.02
—
0.02
Noncash interest expense related to convertible notes
0.01
0.01
0.03
0.02
Intangible amortization from continuing operations
0.02
0.02
0.04
0.04
Impairment of intangible assets
0.04
—
0.04
— Loss on sale of business
0.01
—
0.01
— Securities litigation costs —
0.01
—
0.01
Tax provision (benefit) resulting from certain noncash tax items —
(0.01
)
—
(0.02
)
Total adjustments to GAAP net loss per common share from continuing
operations
0.09
0.10
0.17
0.17
Net loss per common share from continuing operations -
Non-GAAP
$
(0.04
)
$
(0.10
)
$
(0.14
)
$
(0.23
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190808005757/en/
Investor Contact: Robert Jaffe rjaffe@rjaffeco.com
424.288.4098
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