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)
November 7, 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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0001 per share
NH
Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §(§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §(§240.12b-2).

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 November 7, 2019, NantHealth, Inc. publicly disseminated a press release announcing its financial results for the three months ended September 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







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:
November 7, 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=13189052&doc=3
 
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
 

NANTHEALTH REPORTS 2019 THIRD-QUARTER FINANCIAL RESULTS


Q3 Financial Highlights:
Total revenue was $22.4 million
SaaS revenue was $18.3 million, up 15% from Q3 2018
Total gross margin increased to 63% from 50% in Q3 2018
Company was cash flow positive, with cash growing by $2.3 million from Q2 2019 to $9.3 million at Q3 2019
Software and Service business: in Q3, Eviti acquired one new customer and renewed two customer contracts for a total contract value exceeding $40 million

Culver City, Calif. - November 7, 2019 - NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, today reported financial results for its third quarter ended September 30, 2019.

“For the 2019 third quarter, the top line for our SaaS business grew significantly over the same quarter last year,” said Bob Petrou, Chief Financial Officer, NantHealth. “This performance, largely driven by an expanding customer base and increasing number of covered lives, demonstrates the integral role NantHealth’s SaaS solutions play in providing a continuum of care for payers, providers and, most importantly, the patients we serve. At the companywide level, we have made great progress managing our financial performance and growing gross margin, all resulting in reduced cash burn and enhanced bottom line results.”

Software and Services Q3 Highlights:
Clinical Decision Support (Eviti®):
Renewed a partnership contract with a leading provider of clinical solutions. The contract has a three-year term and a minimum estimated total value of $38.4 million
Signed an agreement with Wexford Health Sources, one of the nation’s largest correctional healthcare companies, bringing evidence-based standards and value-based oncology care to patients
Renewed an agreement with a large national health plan for federal employees, retirees and their families. Plan members will continue to receive streamlined preauthorization of cancer care
Launched several enhancements designed to provide payers with additional information about care management, including the intended use of brand name drugs and visibility into settings where care is provided. Payers with multiple plans can now permit their users to view multiple dashboards, which saves time by reducing the need for multiple logins and passwords
Received full accreditation from URAC for the Eviti platform. Eviti continues to meet URAC Health Utilization Management standards, valid through September 1, 2022. The designation recognizes those companies abiding by evidence-based standards and value-based care
Payer Engagement (NaviNet®):
Added Navinet’s Authorization Attachment application to the NaviNet implementation for one of the nation’s largest health insurance organizations. This feature ensures providers receive the right supporting documentation to make more informed, timely decisions
Expanded NaviNet Open functionality to provide additional notifications within the Authorization application, enabling users to receive information timely and respond quickly to critical requests, eliminating potential delays in caring for patients
NaviNet’s AllPayer product completed the conversion of 3,602 provider offices, more than 80% of AllPayer customers, from a legacy pricing model which will result in more than $1.0 million of additional annual recurring revenue









Connected Care (VCX, DCX):
Introduced VCX 3.0 (formerly VitalsConX), designed to reduce patient overstays and facilitate faster decision making. VCX 3.0 accelerates automated vital sign capture and provides easy entry of other customized observations at the point of care. Updates include streamlined data validation and a touch-based user interface to document vital signs quickly and easily. VCX 3.0 now supports “smart” patient vital sign monitors, including GE VC150
Announced new Shuttle cable features to help improve data collection, efficiency and accuracy using a medical-grade serial-to-USB interface cable
Signed a contract with Baxter expanding DCX (formerly DeviceConX) medical device driver development, enabling Baxter to connect additional devices to electronic medical record (EMR) systems.
In Q4, at the HIMSS Asia Pacific 2019 meeting, NantHealth led the Interoperability Showcase along with GE Healthcare, AirStrip and iProcedures. Together, the companies showcased how clinicians can spend less time on documentation and more time analyzing data in near real-time to improve patient outcomes

Sequencing and Molecular Analysis - Highlights:
Presented a poster on GPS Cancer at the IASLC (World Lung) meeting in Barcelona. Dr. Hossein Borghaei, Fox Chase Cancer Center, and authors from NantHealth and NantOmics, presented a poster, “222 NSCLC’s Classified by PAM50: Luminal A NSCLC Is a Distinct Subtype with Low TMB and Immune Suppressive TME.” The poster concludes NantHealth and NantOmics can use GPS Cancer to identify a unique subset of patients who are likely to be resistant to conventional immune checkpoint inhibitor therapy, using a method that has not previously been well characterized in this clinical setting
Presented a poster at the European Society for Medical Oncology (ESMO) meeting. NantHealth and NantOmics, together with investigators from Moffitt Cancer Center, presented a poster, “Differential expression of immunoregulatory molecules and highly-associated cancer genes may provide novel insights into strategic trial design for therapeutics.” The poster describes novel associations of immune checkpoint gene expression with cancer related genomic mutations beyond Tumor Mutation Burden (TMB) as a biomarker for immunotherapy response

Business and Financial Highlights
For the 2019 third quarter, total net revenue was $22.4 million, compared with $22.3 million in the 2018 third quarter. On June 7, 2019, the Company completed the divestiture of its home health care services business. Accordingly, financial results for the 2019 third quarter do not include the results of operations from this business, which over the last year averaged approximately $1.5 million of revenue per quarter.

Gross profit increased to $14.0 million, or 63% of total net revenue, compared with $11.1 million, or 50% 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 and overall cost management.

Selling, general and administrative expenses declined to $15.1 million from $17.0 million in 2018 third quarter. The decrease was mainly driven by ongoing cost management efforts and efficiencies in overall processes.

Research and development expenses decreased to $4.6 million from $4.8 million.

Net loss from continuing operations, net of tax, was $16.4 million, or $0.15 per share, compared with $97.5 million, or $0.89 per share, for the 2018 third quarter.

On a non-GAAP basis, net loss from continuing operations was $7.4 million, or $0.07 per share, down from $10.8 million, or $0.10 per share, for the third quarter of last year. The improvement reflects the company’s ongoing efforts to manage costs, growth of its SaaS business and efficiencies and process improvements.

At September 30, 2019, cash and cash equivalents totaled $9.3 million, an increase of $2.3 million from June 30, 2019.

Conference Call Information and Forward-Looking Statements
Thursday, November 7, 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 third quarter ended September 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 3294717. 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), connected care solutions that deliver medical device interoperability (DCX device connectivity platform and VCX patient vitals software) 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)
 
September 30,
2019
 
December 31,
2018
 
(Unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
9,326

 
$
18,305

Accounts receivable, net
10,948

 
15,286

Inventories
202

 
496

Related party receivables, net
1,047

 
1,007

Prepaid expenses and other current assets
23,670

 
4,350

Total current assets
45,193

 
39,444

Property, plant, and equipment, net
16,351

 
22,978

Goodwill
115,930

 
115,930

Intangible assets, net
54,045

 
64,703

Investment in related party
33,612

 
40,000

Related party receivable, net of current
1,029

 
1,611

Operating lease right-of-use assets
10,353

 

Other assets
1,903

 
1,671

Total assets
$
278,416

 
$
286,337

 
 
 
 
Liabilities and Stockholders' Equity (Deficit)
 
 
 
Current liabilities
 
 
 
Accounts payable
$
2,912

 
$
1,650

Accrued and other current liabilities
35,044

 
13,832

Deferred revenue
17,792

 
16,263

Related party payables, net
3,771

 
4,791

Notes payable
946



Total current liabilities
60,465

 
36,536

Deferred revenue, net of current
2,764

 
6,704

Related party liabilities
22,583

 
17,708

Related party promissory note
112,666

 
112,666

Related party convertible note, net
8,736

 
8,378

Convertible notes, net
83,281

 
79,433

Operating lease liabilities
11,418

 

Other liabilities
23,080

 
22,081

Total liabilities
324,993

 
283,506

 
 
 
 
Stockholders' equity (deficit)
 
 
 
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 110,619,906 and 109,491,277 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
11

 
11

Additional paid-in capital
888,994

 
887,289

Accumulated deficit
(935,135
)
 
(884,122
)
Accumulated other comprehensive loss
(447
)
 
(347
)
Total stockholders' (deficit) equity
(46,577
)
 
2,831

Total liabilities and stockholders' equity (deficit)
$
278,416

 
$
286,337






NantHealth, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Total net revenue
$
22,356

 
$
22,292

 
$
71,771

 
$
66,603

 
 
 
 
 
 
 
 
Total cost of revenue
8,372

 
11,226

 
29,478

 
32,878

Gross Profit
13,984

 
11,066

 
42,293

 
33,725

 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
Selling, general and administrative
15,136

 
17,001

 
47,101

 
56,123

Research and development
4,568

 
4,835

 
14,232

 
15,875

Amortization of acquisition-related assets
1,054

 
1,054

 
3,163

 
3,163

Impairment of intangible assets




3,977



Total operating expenses
20,758

 
22,890

 
68,473

 
75,161

 
 
 
 
 
 
 
 
Loss from operations
(6,774
)
 
(11,824
)
 
(26,180
)
 
(41,436
)
Interest expense, net
(4,556
)
 
(4,306
)
 
(13,443
)
 
(12,766
)
Other (expense) income, net
(3,588
)
 
226

 
(5,039
)
 
(928
)
Loss from related party equity method investment
(1,983
)
 
(83,306
)
 
(6,401
)
 
(89,512
)
Loss from continuing operations before income taxes
(16,901
)
 
(99,210
)
 
(51,063
)
 
(144,642
)
Benefit from income taxes
(527
)
 
(1,778
)
 
(168
)
 
(3,429
)
Net loss from continuing operations
(16,374
)
 
(97,432
)
 
(50,895
)
 
(141,213
)
Loss from discontinued operations, net of tax
(3
)
 
(32
)
 
(118
)
 
(1,817
)
Net loss
$
(16,377
)
 
$
(97,464
)
 
$
(51,013
)
 
$
(143,030
)
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
 
Basic and diluted - common stock
$
(0.15
)
 
$
(0.89
)
 
$
(0.46
)
 
$
(1.29
)
 
 
 
 
 
 
 
 
Discontinued operations
 
 
 
 
 
 
 
Basic and diluted - common stock
$

 
$

 
$

 
$
(0.02
)
 
 
 
 
 
 
 
 
Total net loss per share
 
 
 
 
 
 
 
Basic and diluted - common stock
$
(0.15
)
 
$
(0.89
)
 
$
(0.46
)
 
$
(1.31
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic and diluted - common stock
110,619,905

 
109,471,712

 
110,261,279

 
109,060,408







NantHealth, Inc.
Supplemental Revenue Schedule
(Dollars in thousands)
(Unaudited)

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Software-as-a-service related
$
18,328

 
$
15,937

 
$
54,421

 
$
48,323

Software and hardware related
1,009

 
1,450

 
5,135

 
3,790

Maintenance
2,743

 
2,522

 
7,771

 
7,357

Total software-related revenue
22,080

 
19,909

 
67,327

 
59,470

Sequencing and molecular analysis
276

 
742

 
1,581

 
2,506

Home health care services

 
1,641

 
2,863

 
4,627

Total net revenue
$
22,356

 
$
22,292

 
$
71,771

 
$
66,603

 
 
 
 
 
 
 
 
Cost of Revenue:
 
 
 
 
 
 
 
Software-as-a-service related
$
5,659

 
$
5,863

 
$
17,155

 
$
18,205

Software and hardware related
624

 
737

 
2,203

 
2,412

Maintenance
484

 
234

 
1,065

 
683

Amortization of developed technologies
1,143

 
1,233

 
3,519

 
3,700

Total software-related cost of revenue
7,910

 
8,067

 
23,942

 
25,000

Sequencing and molecular analysis
462

 
2,323

 
4,065

 
5,443

Home health care services

 
836

 
1,471

 
2,435

Total cost of revenue
$
8,372

 
$
11,226

 
$
29,478

 
$
32,878








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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Net loss from continuing operations
$
(16,374
)
 
$
(97,432
)
 
$
(50,895
)
 
$
(141,213
)
Adjustments to GAAP net loss:
 
 
 
 
 
 
 
Loss from related party equity method investment
1,983

 
83,306

 
6,401

 
89,512

Stock-based compensation expense from continuing operations
526

 
373

 
1,849

 
4,805

Acquisition related sales incentive

 
425

 

 
995

Change in fair value of derivatives liability

 
(5
)
 

 
(7
)
Change in fair value of Bookings Commitment
3,159

 

 
4,664

 

Impairment of investment in IOBS

 

 

 
1,750

Noncash interest expense related to convertible notes
1,447

 
1,273

 
4,207

 
3,702

Intangible amortization from continuing operations
2,197

 
2,287

 
6,682

 
6,863

Impairment of intangible assets

 

 
3,977

 

Loss on sale of business

 

 
582

 

Securities litigation costs
500

 
887

 
500

 
1,709

Tax benefit resulting from certain noncash tax items
(885
)
 
(1,943
)
 
(519
)
 
(3,649
)
Total adjustments to GAAP net loss from continuing operations
8,927

 
86,603

 
28,343

 
105,680

Net loss from continuing operations - Non-GAAP
$
(7,447
)
 
$
(10,829
)
 
$
(22,552
)
 
$
(35,533
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding
110,619,905

 
109,471,712

 
110,261,279

 
109,060,408

 
 
 
 
 
 
 
 
Net loss per share from continuing operations - Non-GAAP
$
(0.07
)
 
$
(0.10
)
 
$
(0.20
)
 
$
(0.33
)

Reconciliation of Net Loss per Common Share from Continuing Operations
to Net Loss per Common Share from Continuing Operations - Non-GAAP (Unaudited):

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Net loss from continuing operations
$
(0.15
)
 
$
(0.89
)
 
$
(0.46
)
 
$
(1.29
)
Adjustments to GAAP net loss per common share from continuing operations:
 
 
 
 
 
 
 
Loss from related party equity method investment
0.03

 
0.77

 
0.05

 
0.82

Stock-based compensation expense from continuing operations

 

 
0.02

 
0.04

Acquisition related sales incentive

 

 

 
0.01

Change in fair value of derivatives liability

 

 

 

Change in fair value of Bookings Commitment
0.03

 

 
0.04

 

Impairment of Investment in IOBS

 

 

 
0.02

Noncash interest expense related to convertible notes
0.01

 
0.01

 
0.04

 
0.03

Intangible amortization from continuing operations
0.02

 
0.02

 
0.06

 
0.05

Impairment of intangible assets

 

 
0.04

 

Loss on sale of business

 

 
0.01

 

Securities litigation costs

 
0.01

 

 
0.02

Tax benefit resulting from certain noncash tax items
(0.01
)
 
(0.02
)
 

 
(0.03
)
Total adjustments to GAAP net loss per common share from continuing operations
0.08

 
0.79

 
0.26

 
0.96

Net loss per common share from continuing operations - Non-GAAP
$
(0.07
)
 
$
(0.10
)
 
$
(0.20
)
 
$
(0.33
)