- Total Q4 Revenue of $22.3 Million,
Up 25% from $17.8 Million in Prior Year Q4
- SAAS Revenue of $15.8 Million in Q4,
Up 10% from $14.4 Million in Prior Year Q4
- Total Gross Margin increased to 60%
in Q4, Up from 39% in Prior Year Q4
- Restructuring Plan and Sale
of Provider/Patient Engagement Solutions Business Combined to
Reduce Operating Loss by Nearly 53% in Q4 from Prior Year
Q4
- 2017 Full Year Revenue of $86.7
Million, Up 8% over Prior Year
- GPS Revenue for 2017 Increases
Threefold to $2.6 Million from Prior Year
- 606 GPS Commercial Tests Ordered in
Q4, Up 11% from Q3
- GPS Tests Ordered Continue to Grow;
February Largest Month of Orders to Date
NantHealth, Inc. (NASDAQ-GS: NH), a next-generation,
evidence-based, personalized healthcare company, today reported
financial results for its fourth quarter and full year ended
December 31, 2017.
In August 2017, NantHealth sold its provider/patient engagement
assets to Allscripts to focus on core competencies and accelerate
the plan to achieve profitability. As a result, the company has
classified the current and prior period operating results of its
provider/patient engagement business as discontinued operations.
All results presented below represent the company’s continuing
operations.
GPS Cancer – Highlights
- Test Growth: The company
reported 606 GPS Commercial Tests were ordered in Q4, up from 547
in Q3.
- New National GPS Cancer Payer:
In Q1 2018, the company signed a new GPS Cancer reimbursement
contract with a large, national healthcare IT company.
- New Lab Services Arrangement: In
Q1 2018, the company signed a laboratory services agreement with a
20+ facility hospital system for the availability of GPS Cancer
testing to its patient community.
- Expanded International Adoption:
In Q1 2018, the company signed a strategic reseller agreement with
a partner in the United Kingdom for the provision of molecular
analysis services for clinical studies and other research
initiatives.
- FDA Submission: In Q1 2018,
NantHealth submitted a 510K premarket notification application to
the FDA for tumor/normal DNA sequencing.
- Company to Provide GPS Cancer
Molecular Analysis to the University of California San Francisco
(UCSF) to Support Research Initiative Focused on Metastatic Breast
Cancer: This study will allow UCSF researchers to utilize
advancements made in molecular technology to examine the potential
clinical feasibility of molecular profiling, including gene
mutations and gene expression in the context of patient care. The
biopsy materials collected will also allow researchers to examine
immune markers within the tumor architecture. Results of the
clinical study to be presented at major medical conferences.
“We continue to make excellent progress on a number of
operational fronts,” said Patrick Soon-Shiong, M.D., Chief
Executive Officer and Chairman of NantHealth. “The number of
ordered GPS Commercial Tests continued to grow in our fourth
quarter from the previous quarter and February 2018 was the largest
month of orders in the company’s history. Moreover, we have entered
into a number of contracts in the first quarter of 2018, including
a reimbursement contract with a new, national GPS Cancer Payer, a
laboratory services agreement with a large, multi-facility hospital
system and a strategic reseller agreement with a partner in the
United Kingdom. We also recently completed the submission of a 510K
premarket notification application to the FDA for tumor/normal DNA
sequencing.”
Software and Services Highlights:
- Payer Engagement:
- In Q4 2017, the company signed a three
year NaviNet renewal contract with a total contract value of more
than $1.2 million and also went live with one of its largest
customers for its new Document Exchange solution.
- In Q1 2018, the company signed another
NaviNet renewal contract with a total contract value of
approximately $17 million.
- Clinical Decision Support: In Q4
2017, the company signed an expanded services contract with
an existing, national insurance carrier customer, with the
potential to extend the availability of the Eviti solution to an
additional 2.4 million lives.
- Connected Care:
- In Q4 2017, the company signed a device
connectivity license contract extension with an existing customer,
with the potential to expand its solution to additional facilities
within the customer’s 74 hospital system.
- The company’s pipeline for device
connectivity sales continues to progress, with numerous
international opportunities developing through its strategic
resellers in Europe and Asia.
- The company presented “The Future of
Device Connectivity Across the Continuum of Care” at the Healthcare
Information & Management Systems Society (HIMSS) Annual
Conference & Exhibition 2018.
“We reported a strong fourth quarter with revenues increasing on
a reduced cost base. Importantly, our SaaS business continues to
grow and generate healthy gross margins,” said Ron Louks, Chief
Operating Officer of NantHealth. “We’ve had a remarkable turnaround
in our quarterly operating results. We are proud of what our
organization has been able to accomplish over the second half of
2017 and look forward to continuing this momentum in 2018.”
Business and Financial Highlights
For the 2017 fourth quarter, total net revenue increased 25% to
$22.3 million from $17.8 million in 2016 fourth quarter. Gross
profit was $13.4 million, or 60% of total net revenue, compared
with $7.0 million, or 39% of total net revenue, for the prior-year
fourth quarter. Selling, general and administrative (SG&A)
expenses were $20.8 compared with $16.4 million. Research and
development (R&D) expenses decreased to $8.8 million from $10.8
million. Net loss from continuing operations, net of tax,
significantly narrowed to $22.6 million, or $0.21 per share, from
$48.4 million, or $0.40 per share for the 2016 fourth quarter.
Income from discontinued operations, net of tax, was $0.9 million,
or $0.01 per diluted share, versus loss from discontinued
operations, net of tax, $11.5 million, or $0.09 per share, for the
prior-year fourth quarter. Net loss was $21.6 million, or $0.20 per
share, compared with $60.0 million, or $0.49 per share, for 2016
fourth quarter.
Financial results for the 2017 fourth quarter included
approximately $4.0 million loss from related party equity method
investment, $0.7 million of acquisition related sales incentive,
$1.2 million of net non-cash expense related to convertible notes,
$2.2 million of intangible amortization and $8.6 million of
stock-based compensation expense, totaling $0.16 per share. On a
non-GAAP basis, adjusted net loss from continuing operations was
$7.8 million, or $0.07 per share, for the 2017 fourth quarter,
compared with $14.4 million, or $0.12 per share, for the 2016
fourth quarter.
For the 2017 full year, total net revenue increased 8% to $86.7
million from $80.4 million in 2016. Gross profit rose to $45.2
million, or 52% of total net revenue, compared with $36.3 million,
or 45% of total net revenue, for the prior year. SG&A expenses
were $75.0 compared with $105.3 million. R&D expenses decreased
to $33.9 million from $47.3 million. Net loss from continuing
operations, net of tax, was $131.4 million, or $1.12 per share,
from $140.5 million, or $1.30 per share for 2016. Loss from
discontinued operations, net of tax, was $43.8 million, or $0.37
per share, compared with $43.6 million, or $0.39 per share, for the
prior year. Net loss was $175.2 million, or $1.49 per share,
compared with $184.1 million, or $1.69 per share, for 2016.
Financial results for the 2017 full year included approximately
$50.3 million loss from related party equity method investment
including impairment loss, $2.4 million for corporate
restructuring, $2.7 million of acquisition related sales incentive,
$4.4 million of net non-cash expense related to convertible notes,
$9.4 million of intangible amortization and $8.1 million of
stock-based compensation expense, totaling $0.66 per share. On a
non-GAAP basis, adjusted net loss from continuing operations was
$55.3 million, or $0.47 per share, for the 2017 full year quarter,
compared with $58.2 million, or $0.50 per share, for the 2016 full
year.
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
fourth quarter and full year ended December 31, 2017. 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 2987414. 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, Inc., a member of the NantWorks ecosystem of
companies, is a next-generation, evidence-based, personalized
healthcare company enabling improved patient outcomes and more
effective treatment decisions for critical illnesses. NantHealth's
unique systems-based approach to personalized healthcare applies
novel diagnostics tailored to the specific molecular profiles of
patient tissue and integrates this molecular data in a clinical
setting with large-scale, real-time biometric signal and phenotypic
data to track patient outcomes and deliver precision medicine. For
nearly a decade, NantHealth has developed an adaptive learning
system that integrates our unique molecular profiling solution,
software and hardware. Our system infrastructure collects, indexes,
analyzes and interprets billions of molecular, clinical,
operational and financial data points derived from novel and
traditional sources to continuously improve decision-making and
optimize our clinical pathways and decision algorithms over time.
For more information please visit www.nanthealth.com.
About GPS Cancer™
GPS Cancer™ is a unique, comprehensive test available through
NantHealth. GPS CoverageGPS Cancer integrates whole genome (DNA)
sequencing, whole transcriptome (RNA) sequencing, and quantitative
proteomics through mass spectrometry, providing oncologists with a
comprehensive molecular profile of a patient’s cancer to inform
personalized treatment strategies. GPS Cancer testing is conducted
in CLIA-certified and CAP-accredited laboratories, and is a key
enabler for Cancer Breakthroughs 2020, the world’s most
comprehensive cancer collaborative initiative seeking to accelerate
the potential of combination immunotherapy as the next generation
standard of care in cancer patients. For more information,
visit www.gpscancer.com and
www.cancerbreakthroughs2020.org.
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, except per share amounts)
December 31, 2017 2016
Assets Current assets Cash and cash equivalents $
61,660 $ 157,573 Accounts receivable, net 11,491 11,673 Inventories
839 1,685 Deferred implementation costs 1,960 606 Related party
receivables, net 585 693 Prepaid expenses and other current assets
5,358 3,356 Current assets of discontinued operations -
9,992 Total current assets 81,893 185,578
Property, plant, and equipment, net 18,517 20,129 Deferred
implementation costs, net of current 3,951 3,201 Goodwill 114,625
114,625 Intangible assets, net 69,424 78,812 Investment in related
party 156,863 207,197 Related party receivable, net of current
1,727 1,971 Other assets 2,195 2,195 Noncurrent assets of
discontinued operations - 70,683 Total
assets $ 449,195 $ 684,391
Liabilities and
Stockholders' Equity Current liabilities Accounts payable $
3,164 $ 6,039 Accrued and other current liabilities 18,134 20,032
Deferred revenue 10,057 9,600 Related party payables, net 4,504
8,082 Current liabilities of discontinued operations -
13,496 Total current liabilities 35,859 57,249
Deferred revenue, net of current 7,126 11,127 Related party
liabilities 11,500 5,612 Related party promissory note 112,666
112,666 Related party convertible note, net 7,947 7,564 Convertible
notes, net 74,845 70,810 Other liabilities 5,950 820 Noncurrent
liabilities of discontinued operations - 6,949
Total liabilities 255,893 272,797
Stockholders' equity Common stock, $0.0001 par
value per share, 750,000,000 shares authorized; 108,383,602 and
121,250,437 shares issued and outstanding at December 31, 2017
(including 3,490 shares of restricted stock) and 2016 (including
6,976 shares of restricted stock), respectively 10 12 Additional
paid-in capital 886,669 886,334 Accumulated deficit (693,233 )
(475,273 ) Accumulated other comprehensive (loss) income
(144 ) 521 Total stockholders' equity 193,302
411,594 Total liabilities and stockholders'
equity $ 449,195 $ 684,391
NantHealth, Inc.
Consolidated and Combined Statements of
Operations
(Dollars in thousands, except per share
amounts)
Three Months Ended
December 31,
Year Ended December 31, 2017
2016 2017 2016
(Unaudited) Total net revenue $ 22,298 $ 17,846 $
86,676 $ 80,404 Total cost of revenue 8,880
10,893 41,522 44,107
Gross profit 13,418 6,953
45,154 36,297
Operating
Expenses: Selling, general and administrative 20,795 16,398
74,976 105,258 Research and development 8,811 10,792 33,862 47,310
Amortization of acquisition-related assets 1,054
1,055 4,216 4,217 Total
operating expenses 30,660 28,245
113,054 156,785 Loss from operations (17,242 )
(21,292 ) (67,900 ) (120,488 ) Interest expense, net (4,119 )
(1,669 ) (16,168 ) (6,429 ) Other income, net 492 3,052 800 3,593
Loss from related party equity method investment including
impairment loss (3,981 ) (33,101 ) (50,334 )
(40,994 ) Loss from continuing operations before income
taxes (24,850 ) (53,010 ) (133,602 ) (164,318 ) Provision for
(benefit from) income taxes (2,288 ) (4,594 )
(2,203 ) (23,797 ) Net loss from continuing operations
(22,562 ) (48,416 ) (131,399 ) (140,521 ) Loss from discontinued
operations, net of tax 928 (11,535 )
(43,812 ) (43,581 ) Net loss $ (21,634 ) $ (59,951 ) $
(175,211 ) $ (184,102 )
Basic and diluted net income
(loss) per share (1): Continued operations -
common stock $ (0.21 ) $ (0.40 ) $ (1.12 ) $ (1.30 ) Discontinued
operations - common stock $ 0.01 $ (0.09 ) $ (0.37 ) $ (0.39
) Total net loss per common stock $ (0.20 ) $ (0.49 ) $ (1.49 ) $
(1.69 ) Basic and diluted net income per redeemable common stock
N/A N/A N/A $ 0.99
Weighted average shares outstanding
(1): Basic and diluted - common stock
107,810,546 121,242,627 116,737,860
111,600,650 Basic and diluted - redeemable
common stock N/A N/A N/A
5,005,855 (1)
The net income (loss) per share and
weighted average shares outstanding have been computed to give
effect to the LLC conversion that occurred on June 1, 2016, prior
to the Company's initial public offering ("IPO"). In conjunction
with the LLC conversion, (a) all of the Company's outstanding
members' units automatically converted into shares of common stock,
based on the relative rights of the Company's pre-IPO equity
holders as set forth in the Company's limited liability company
agreement and (b) the Company adopted and filed a certificate of
incorporation with the Secretary of State of the state of Delaware
and adopted bylaws. The Company adopted and filed an amendment to
its certificate of incorporation with the Secretary of State of the
state of Delaware to effect a 1-for-5.5 reverse stock split of its
common stock on June 1, 2016.
The net loss per common share for the
years ended December 31, 2016 reflects $4,958 in accretion value
allocated to the redeemable common stock. The redeemable common
stock contained a put right, which expired unexercised on June 20,
2016. As a result of and as of that date, the shares were no longer
redeemable and were included in common stock.
NantHealth, Inc. Supplemental Revenue Schedule
(Dollars in thousands)
Three Months
Ended
December 31,
Year Ended December 31, 2017
2016 2017 2016
(Unaudited) Revenue: Software-as-a-service $ 15,844 $
14,401 $ 60,707 $ 56,210 Software and hardware 1,685
673 6,093 6,750
Total software-related revenue
17,529 15,074 66,800 62,960 Maintenance 2,239 2,110 10,421 9,089
Sequencing and molecular analysis 569 482 2,554 604 Other services
1,961 180 6,901 7,751 Total net revenue
$ 22,298 $ 17,846 $ 86,676 $ 80,404
Cost of Revenue:
Software-as-a-service $ 4,652 $ 5,092 $ 21,795 $ 19,883 Software
and hardware 64 148 660 816 Total
software-related cost of revenue 4,716 5,240 22,455 20,699
Maintenance 185 177 748 798 Sequencing and molecular analysis 1,222
1,058 6,029 1,987 Other services 1,614 2,822 7,118 12,131
Amortization of developed technologies 1,143 1,596
5,172 8,492 Total cost of revenue $ 8,880 $ 10,893 $
41,522 $ 44,107
NantHealth, Inc. Non-GAAP Net Loss
and Non-GAAP Net Loss Per Share (Dollars in thousands, except
per share amounts)
Three Months Ended
December 31,
Year Ended December 31, 2017
2016 2017 2016
(Unaudited) (Unaudited) Net loss from
continuing operations $ (22,562 ) $ (48,416 ) $ (131,399 ) $
(140,521 ) Adjustments to GAAP net loss: Corporate restructuring
from continuing operations (3) 17 246 2,422 2,544 Acquisition
related compensation expense - - - 4,814 Acquisition related sales
incentive 671 939 2,732 2,966 Intangible amortization from
continuing operations 2,197 2,651 9,388 12,709 Loss from related
party equity method investment including impairment loss 3,981
33,101 50,334 40,994 Non-cash interest expense related to
convertible notes 1,157 108 4,417 108 Change in fair value of
derivatives liability (19 ) (1,228 ) (264 ) (1,228 ) Stock-based
compensation expense from continuing operations 8,586 3,599 8,102
44,048 BP settlement - (842 ) - (842 ) Securities litigation costs
92 - 777 - The impact of intangible amortization, impact of the
"Tax Act" of 2017, and the conversion from a limited liability
company to a corporation on provision for (benefit from) income
taxes (1,909 ) (4,509 ) (1,796 )
(23,797 ) Total adjustments to GAAP net loss from continuing
operations 14,773 34,065 76,112
82,316 Net loss - Non-GAAP from continuing
operations $ (7,789 ) $ (14,351 ) $ (55,287 ) $ (58,205 )
Weighted average shares outstanding (1) 107,810,546 121,242,627
116,737,860 111,600,650 Weighted average Series F/redeemable stock
(1) (2) — — —
5,005,855 Shares outstanding - Non-GAAP (1)
107,810,546 121,242,627 116,737,860
116,606,505
Net loss per share from
continuing operations - Non-GAAP (1) $
(0.07 ) $ (0.12 ) $
(0.47 ) $ (0.50 )
Reconciliation of Net Loss per Common
Share to Net Loss per Common Share - Non-GAAP:
Three Months Ended
December 31,
Year Ended December 31, 2017
2016 2017 2016
(Unaudited) (Unaudited) Net loss per common
share from continuing operations - GAAP $ (0.21 ) $ (0.40 ) $ (1.12
) $ (1.30 ) Adjustments to GAAP net loss per common share from
continuing operations: Corporate restructuring from continuing
operations (3) — — 0.02 0.02 Acquisition related compensation
expense — — — 0.04 Acquisition related sales incentive 0.01 0.01
0.02 0.03 Intangible amortization from continuing operations 0.02
0.03 0.08 0.12 Loss from related party equity method investment
including impairment loss 0.04 0.27 0.43 0.37 Non-cash interest
expense related to convertible notes 0.01 — 0.04 — Change in fair
value of derivatives liability — (0.01 ) — (0.01 ) Stock-based
compensation expense from continuing operations 0.08 0.03 0.07 0.39
BP settlement — (0.01 ) — (0.01 ) Securities litigation costs — —
0.01 — The impact of intangible amortization, impact of the "Tax
Act" of 2017, and the conversion from a limited liability company
to a corporation on provision for (benefit from) income taxes (0.02
) (0.04 ) (0.02 ) (0.21 ) Accretion to redemption value of Series
F/redeemable common stock — — — 0.04 Dilution from Series
F/redeemable common stock — — —
0.02 Total adjustments to GAAP net loss per
common share from continuing operations 0.14
0.28 0.65 0.80
Net loss per
common share from continuing operations - Non-GAAP (1)
$ (0.07 ) $ (0.12 )
$ (0.47 ) $ (0.50 ) (1)
The net loss per common share from continuing operations -
non-GAAP, weighted-average shares outstanding, weighted average
Series F units/redeemable stock and shares outstanding - non-GAAP,
have been computed to give effect to the LLC conversion that
occurred June 1, 2016 prior to our initial public offering. In
conjunction with the LLC Conversion, (a) all of our outstanding
units automatically converted into shares of common stock, based on
the relative rights of our pre-IPO equityholders as set forth in
the limited liability company agreement and (b) we adopted and
filed a certificate of incorporation with the Secretary of State of
the state of Delaware and adopted bylaws. We filed an amended
certificate of incorporation to effect a 1-for-5.5 reverse stock
split of our common stock on June 1, 2016. (2) The
weighted-average shares outstanding have been further adjusted to
account for the redeemable Series F units (converted to common
stock in conjunction with the LLC conversion), whose put right
expired on June 20, 2016. Prior to June 20, 2016, these
units/shares of common stock were classified as redeemable
members’/stockholders’ equity in the balance sheet, and as such,
were not included in the weighted-average shares outstanding prior
to June 20, 2016. The put right expired June 20, 2016, and the
shares were no longer redeemable and are included in shareholders’
equity as of December 31, 2016. The weighted-average shares are
adjusted to include the redeemable common stock in the
weighted-average shares outstanding for the entire period.
(3) Corporate restructuring includes accrued bonus reversal of $0.5
million for the year ended December 31, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180314006114/en/
NantHealth, Inc.Investor Contact:Robert Jaffe,
424.288.4098rjaffe@rjaffeco.com
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