Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8‑K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 8, 2019
NantHealth, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
001-37792
 
27-3019889
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
9920 Jefferson Boulevard
Culver City, California 90232
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (310) 883-1300

Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  x


 





Item 2.02
Results of Operations and Financial Condition.

On August 8, 2019, NantHealth, Inc. publicly disseminated a press release announcing its financial results for the three months ended June 30, 2019. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.

As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits. The following is furnished as an exhibit to this Current Report on Form 8-K:

Exhibit No.
Description
99.1







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
NantHealth, Inc.
 
 
 
 
Date:
August 8, 2019
By:
 
/s/ Bob Petrou
 
 
 
 
Bob Petrou
 
 
 
 
Chief Financial Officer


Exhibit


Exhibit 99.1
 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13051655&doc=3
 
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
 

NANTHEALTH REPORTS 2019 SECOND-QUARTER FINANCIAL RESULTS

Q2 Financial Highlights:
Fourth consecutive quarter of total revenue growth
Total revenue was $25.7 million, up 17% from Q2 2018
SaaS revenue of $18.3 million, rose 13% from Q2 2018 and 3% sequentially
Gross profit was $15.9 million, compared with $11.5 million in Q2 2018
Gross margin increased to 62% from 52% in Q2 2018
Software and Service business continued positive momentum in 1H 2019

Culver City, Calif. - August 8, 2019 - 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 TwitterFacebook 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.

FINANCIAL TABLES FOLLOW





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 Ended 
 June 30,
 
Six Months Ended 
 June 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 Ended 
 June 30,
 
Six Months Ended 
 June 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 and
Non-GAAP Net Loss Per Share from Continuing Operations
(Dollars in thousands, except per share amounts)
(Unaudited)

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 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 Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2019
 
2018
 
2019
 
2018
Net loss 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
)