- Q1 Financial Highlights 2020 vs 2019:
- SaaS revenue was $18.1 million, up 2%
- Total gross margin increased to 60% from 49%
- Appointed Deanna L. Wise, Senior Vice President and Chief
Information Officer for Banner Health, to Board of
Directors
- Completed Sale of Connected Care Business in February 2020,
which generated a partial quarter of revenues of $1.2
million
NantHealth, Inc. (NASDAQ-GS: NH), a next-generation,
evidence-based, personalized healthcare company, today reported
financial results for its first quarter ended March 31, 2020.
In February 2020, NantHealth completed the sale of its Connected
Care Business for $47.25 million. Accordingly, the company has
classified the current and prior period operating results of its
Connected Care Business as discontinued operations. The financial
results presented below represent the company’s continuing
operations.
“During the first quarter of 2020, we made progress on a number
of fronts,” said Ron Louks, Chief Operating Officer, NantHealth.
“Operationally, we completed the sale of our Connected Care
Business, which significantly increased our cash position and
further streamlined our operations. Financially, we grew SaaS
revenue, substantially increased gross margin and lowered operating
expenses compared with the same quarter last year. We also
implemented a number of steps to ensure the safety of our employees
in response to the COVID-19 pandemic and our team has responded
with resilience and dedication to the providers and payer
communities that we are proud to serve.
“In addition, we strengthened our leadership team by adding
Deanna Wise to our board of directors. Deanna brings extensive
clinical Information Technology (IT) experience in the hospital and
healthcare industry. We look forward to benefitting from Deanna’s
insights and expertise, particularly in helping shape our future
operations and strategic direction.”
Software and Services Highlights:
- Clinical Decision Support (Eviti®):
- In January, presented Eviti Connect real world data on
treatment patterns for patients with advanced colorectal cancer
(CRC) at the 2020 Gastrointestinal Cancer Symposium sponsored by
the American Society of Clinical Oncology (ASCO). The ability to
identify treatment patterns through data analysis can provide
unique and critical information to pharma, payers and provider
networks to optimize treatment strategies
- In January, signed a three-year renewal agreement with one of
the largest non-profit rural health plans in the U.S., as
previously announced
- Signed an agreement with a leading U.S. health insurance
company to roll out Eviti Connect across their Medicaid population
to additional states, as previously announced. In addition to the
pilot states, four of the added states are now live with Eviti
Connect, and implementation is underway across three more states,
with the remaining states scheduled to go live in the third
quarter
- Deployed significant workflow and database enhancements to the
Eviti platform including:
- Warning notifications: allows users to configure a warning
and/or deviation notification to alert the submitter when a drug
does not comply with the preferred drug program, saving review
cycle time and ensuring patients receive correct care
- Payer-customized messaging: allows users to indicate when
specific data is required in order to complete the Patient
Insurance ID field, reducing submission delays
- Payer Engagement (NaviNet®):
- In January, added new payer customer, The Health Plan,
servicing members in Ohio and West Virginia, as previously
reported. The 5-year agreement includes NaviNet Open as a key
component of The Health Plan’s payer-provider collaboration
strategy
- Launched significant enhancements to the NaviNet Open platform,
including AllPayer self-service subscription management workflow.
This new storefront, an addition to the NaviNet AllPayer solution,
enables the provider office to quickly create and manage
subscriptions for our AllPayer offerings, allowing providers to
expand their NaviNet access to nearly all health plans offered to
their patients
Precision Medicine - Highlights:
- In January, presented GPS Cancer platform data revealing
increased opportunities for HER2 directed therapy in colorectal
cancer patients at the 2020 Gastrointestinal Cancer Symposium
sponsored by the American Society of Clinical Oncology (ASCO), as
reported previously. The data showed that up to 40% more patients
may be eligible for HER2 directed therapies, which have
implications for drug development and clinical trials
Artificial Intelligence - Highlights:
- In January, NantHealth and NantOmics presented an initial
report on a novel artificial intelligence (AI) platform for aiding
pathologists in image-based lung cancer subtyping at the Society
for Imaging Science and Technology’s International Symposium on
Electronic Imaging 2020, as reported previously. This novel machine
vision software platform accurately subtypes lung cancer pathology
and achieves high concordance with analysis performed by trained
medical pathologists.
- In February, NantHealth and NantOmics announced the publication
of a peer-reviewed study in Breast Cancer Research, a Springer
Nature journal, on a novel AI technique in breast cancer, as
reported previously. The study reports on a novel deep-learning
system of digital pathology images and omics data used together to
more precisely identify mechanisms of therapy resistance.
Business and Financial Highlights
- For the 2020 first quarter, total net revenue was $18.2
million, which included $18.1 million of SaaS revenue. This
compares with 2019 first quarter total net revenue of $20.2
million, which included $17.8 million of SaaS revenue and $1.6
million of home health care services revenue, a business the
Company divested on June 7, 2019.
- Gross profit increased to $11.0 million, or 60% of total net
revenue, compared with $9.9 million, or 49% of total net revenue,
for the prior year period. The increase was primarily driven by
continued growth of the Company’s higher margin SaaS business, the
divestiture of lower margin businesses and overall cost
management.
- Selling, general and administrative (SG&A) expenses
declined to $12.4 million from $15.3 million in 2019 first quarter,
mainly driven by ongoing cost management efforts and efficiencies
in overall processes. Research and development (R&D) expenses
decreased to $3.6 million from $3.9 million.
- Net loss from continuing operations, net of tax, was $8.9
million, or $0.08 per share, compared with $19.6 million, or $0.18
per share, for the 2019 first quarter.
- On a non-GAAP basis, net loss from continuing operations was
$6.1 million, or $0.06 per share, down from $10.6 million, or $0.10
per share, for the first quarter of last year. The improvement
reflects the company’s ongoing efforts to manage costs, growth of
its SaaS business and better overall financial performance.
- At March 31, 2020, cash and cash equivalents totaled $47.5
million.
Conference Call Information and Forward-Looking
Statements
Later today, 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
first quarter ended March 31, 2020. 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 2797775. 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
toward 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), 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)
March 31,2020 December 31,2019
(Unaudited) Assets Current assets Cash and cash equivalents
$ 47,478
$ 5,243
Accounts receivable, net
6,816
6,179
Related party receivables, net
657
823
Prepaid expenses and other current assets
3,680
19,341
Current assets of discontinued operation —
6,327
Total current assets
58,631
37,913
Property, plant, and equipment, net
13,755
14,985
Goodwill
97,307
97,307
Intangible assets, net
49,838
51,848
Investment in related party
29,918
31,702
Related party receivable, net of current
1,274
1,108
Operating lease right-of-use assets
8,092
8,470
Other assets
2,144
1,818
Noncurrent assets of discontinued operation —
21,336
Total assets
$ 260,959
$ 266,487
Liabilities and Stockholders' Equity Current liabilities
Accounts payable
$ 3,314
$ 3,377
Accrued and other current liabilities
17,033
31,988
Deferred revenue
5,523
7,098
Related party payables, net
4,552
4,120
Notes payable —
238
Current liabilities of discontinued operation —
10,680
Total current liabilities
30,422
57,501
Deferred revenue, net of current
1,148
1,129
Related party liabilities
25,931
24,227
Related party promissory note
112,666
112,666
Related party convertible note, net
8,994
8,864
Convertible notes, net
86,060
84,648
Operating lease liabilities
9,264
9,728
Other liabilities
20,065
23,211
Noncurrent liabilities of discontinued operation —
1,649
Total liabilities
294,550
323,623
Stockholders' deficit Common stock, $0.0001 par value per
share, 750,000,000 shares authorized; 110,619,678 and 110,619,678
shares issued and outstanding at March 31, 2020 and December 31,
2019, respectively
11
11
Additional paid-in capital
890,623
889,955
Accumulated deficit
(923,819
)
(946,884
)
Accumulated other comprehensive loss
(406
)
(218
)
Total stockholders' deficit
(33,591
)
(57,136
)
Total liabilities and stockholders' deficit
$ 260,959
$ 266,487
NantHealth, Inc. Consolidated Statements of
Operations (Dollars in thousands, except per share amounts)
(Unaudited)
Three Months EndedMarch 31,
2020
2019
Total net revenue
$ 18,180
$ 20,209
Total cost of revenue
7,196
10,261
Gross Profit
10,984
9,948
Operating Expenses Selling, general and administrative
12,427
15,324
Research and development
3,550
3,850
Amortization of acquisition-related assets
867
1,054
Total operating expenses
16,844
20,228
Loss from operations
(5,860
)
(10,280
)
Interest expense, net
(4,657
)
(4,414
)
Other income (expense), net
3,454
(2,505
)
Loss from related party equity method investment
(1,784
)
(2,210
)
Loss from continuing operations before income taxes
(8,847
)
(19,409
)
Provision for income taxes
93
226
Net loss from continuing operations
(8,940
)
(19,635
)
Income (loss) from discontinued operations, net of tax
32,005
(288
)
Net income (loss)
$ 23,065
$ (19,923
)
Basic and diluted net income (loss) per share Continuing
operations - common stock
$ (0.08
)
$ (0.18
)
Discontinued operations - common stock
$ 0.29
$ — Total net income (loss) per share - common stock
$ 0.21
$ (0.18
)
Weighted average shares outstanding Basic and diluted -
common stock
110,619,780
109,904,336
NantHealth, Inc. Supplemental Revenue Schedule
(Dollars in thousands) (Unaudited)
Three Months
EndedMarch 31,
2020
2019
Revenue: Software-as-a-service related
$ 18,121
$ 17,802
Total software-related revenue
18,121
17,802
Sequencing and molecular analysis
59
814
Home health care services —
1,593
Total net revenue
$ 18,180
$ 20,209
Cost of Revenue: Software-as-a-service related
$ 5,701
$ 5,708
Maintenance —
70
Amortization of developed technologies
1,143
1,233
Total software-related cost of revenue
6,844
7,011
Sequencing and molecular analysis
352
2,427
Home health care services —
823
Total cost of revenue
$ 7,196
$ 10,261
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 EndedMarch 31,
2020
2019
Net loss from continuing operations
$ (8,940
)
$ (19,635
)
Adjustments to GAAP net loss from continuing operations: Loss from
related party equity method investment
1,784
2,210
Stock-based compensation expense from continuing operations
732
625
Change in fair value of derivatives liability
5
— Change in fair value of Bookings Commitment
(3,128
)
2,494
Noncash interest expense related to convertible notes
1,542
1,357
Intangible amortization from continuing operations
2,010
2,287
Securities litigation costs
(103
)
— Tax provision resulting from certain noncash tax items —
111
Total adjustments to GAAP net loss from continuing operations
2,842
9,084
Net loss from continuing operations - Non-GAAP
$ (6,098
)
$ (10,551
)
Weighted average shares outstanding
110,619,780
109,904,336
Net loss per share from continuing operations - Non-GAAP
$ (0.06
)
$ (0.10
)
Reconciliation of Net Loss per Common Share from
Continuing Operationsto Net Loss per Common Share from Continuing
Operations - Non-GAAP (Unaudited): Three Months EndedMarch
31,
2020
2019
Net loss per common share from continuing operations
$ (0.08
)
$ (0.18
)
Adjustments to GAAP net loss per common share from continuing
operations: Loss from related party equity method investment
0.01
0.02
Stock-based compensation expense from continuing operations
0.01
0.01
Change in fair value of derivatives liability — — Change in fair
value of Bookings Commitment
(0.03
)
0.02
Noncash interest expense related to convertible notes
0.01
0.01
Intangible amortization from continuing operations
0.02
0.02
Securities litigation costs — — Tax provision resulting from
certain noncash tax items — — Total adjustments to GAAP net loss
per common share from continuing operations
0.02
0.08
Net loss per common share from continuing operations -
Non-GAAP
$ (0.06
)
$ (0.10
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005875/en/
Investor Contact: Robert Jaffe rjaffe@rjaffeco.com
424.288.4098
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