|
|
|
Delaware
|
|
001-37792
|
|
27-3019889
|
(State or other jurisdiction of incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer
Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.0001 per share
|
NH
|
The Nasdaq Stock Market LLC
|
|
Item 2.02
|
Results of Operations and Financial Condition.
|
Item 9.01
|
Financial Statements and Exhibits.
|
Exhibit No.
|
Description
|
99.1
|
|
|
|
|
NantHealth, Inc.
|
|
|
|
|
|
Date:
|
February 28, 2020
|
By:
|
|
/s/ Bob Petrou
|
|
|
|
|
Bob Petrou
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
|
|
•
|
Q4 Financial Highlights 2019 vs 2018:
|
◦
|
Total revenue was $24.2 million, up 6%
|
◦
|
SaaS revenue was $18.4 million, up 6%
|
◦
|
Total gross margin increased to 63% from 50%
|
•
|
Full-Year Financial Highlights 2019 vs 2018:
|
◦
|
Total revenue was $96.0 million, up 7%
|
◦
|
SaaS revenue was $72.8 million, up 11%
|
◦
|
Total gross margin increased to 60% from 51%
|
•
|
Received Landmark FDA 510(k) Clearance for Omics Core℠
|
•
|
Completed Sale of Connected Care Business for $47.25 Million, February 2020
|
•
|
Clinical Decision Support (Eviti®):
|
◦
|
Presented new breast cancer research findings at the San Antonio Breast Cancer Symposium (SABCS). The study results indicate that the simultaneous presentation and publication of oncology data is an effective method for relaying practice-changing clinical data, enabling oncologists to quickly adjust treatment patterns and regimen selections
|
◦
|
Deployed significant workflow enhancements to the Eviti platform including:
|
▪
|
Multiple Payer Access: a significant time-saving enhancement that simplifies workflow, by allowing a user with multiple payers to toggle quickly between payer dashboards
|
▪
|
Configuration for Appeals: allows payers to self-configure the appeals function within their account
|
▪
|
Patient Match and Attach: automatically associates provider-submitted medical records to the appropriate treatment plan, eliminating manual processes and helping speed up treatment plan reviews
|
◦
|
Signed an agreement with Wexford Health Sources, one of the nation’s largest correctional healthcare companies, as previously announced. Implementation was completed in early Q1 2020
|
◦
|
In January 2020, announced two expanded Eviti Connect programs:
|
▪
|
A leading U.S. health insurance company extended a successful two-state pilot program to 13 states after seeing a significant improvement in the use of evidence-based medicine for member oncology care
|
▪
|
One of the largest non-profit rural health plans in the country signed a three-year renewal agreement to continue providing high-quality, high-value care for members
|
•
|
Payer Engagement (NaviNet®):
|
◦
|
Achieved 25% increase in NaviNet’s direct to provider Q4 2019 revenues from Q4 2018
|
◦
|
In January 2020, signed an agreement with The Health Plan, where NaviNet Open will help decrease administrative costs and improve provider network communication and collaboration for the plan in West Virginia and Ohio
|
◦
|
Announced enhancements to the NaviNet Open platform:
|
▪
|
Claim Appeal: a new application that allows payers to offer an electronic channel for appeals submission, enabling stronger collaboration with the payer for claim resolution, streamlining what is often a manual analog process for both the provider and payer
|
▪
|
NaviNet Attachments, now available within our Claim Investigation workflow, provides our users the ability to submit their required documentation easily through our portal to our payer partners, eliminating the need to send supporting documentation through manual processes outside of the portal and saving valuable time when reviewing and resolving inquiries
|
▪
|
New Open Authorization enhancements have been introduced that enable payers and providers to manage complex prior authorization requests through electronic submissions, reducing manual workflows based on fax or phone submissions
|
•
|
Connected Care (VCX, DCX):
|
◦
|
As noted above, the company completed the sale of its Connected Care assets to Masimo, a global leader in noninvasive monitoring technologies, on February 3, 2020 for $47.25 million. Assets in the sale included the Company’s DCX device connectivity software product (formerly known as DeviceConX™), VCX™ patient vitals software (formerly known as VitalsConX™), HBox® connectivity hub and Shuttle interface cable. As part of the transaction, the NantHealth employees associated with the Connected Care business joined Masimo
|
•
|
Announced FDA 510(k) clearance for Omics Core(SM), the nation’s first tumor-normal mutation profiling of overall tumor mutational burden (TMB) from whole exome sequencing in solid tumors. TMB is an emerging biomarker predicting response to checkpoint therapy and identifies tumors that may benefit from immunotherapy
|
•
|
In January 2020, 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). Data showed that up to 40% more patients may be eligible for HER2 directed therapies, which have implications for drug development and clinical trials
|
•
|
In January 2020, 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. This novel machine vision software platform accurately subtypes lung cancer pathology and achieves high concordance with analysis performed by trained medical pathologists.
|
•
|
In February 2020, 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. 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.
|
•
|
For the 2019 fourth quarter, total net revenue was $24.2 million, compared with $22.9 million in the 2018 fourth quarter, with the increase driven primarily by new customers in SaaS business and the variability in our DCX product line. On June 7, 2019, the Company completed the divestiture of its home healthcare services business. Accordingly, financial results for the 2019 fourth quarter do not include the results of operations from this business, which in the recent past averaged approximately $1.5 million of revenue per quarter.
|
•
|
Gross profit increased to $15.2 million, or 63% of total net revenue, compared with $11.5 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 (SG&A) expenses declined to $13.9 million from $14.6 million in 2018 fourth quarter, mainly driven by ongoing cost management efforts and efficiencies in overall processes. Research and development (R&D) expenses decreased to $4.8 million from $5.0 million.
|
•
|
Net loss from continuing operations, net of tax, was $11.7 million, or $0.11 per share, compared with $49.2 million, or $0.45 per share, for the 2018 fourth quarter.
|
•
|
On a non-GAAP basis, net loss from continuing operations was $4.9 million, or $0.04 per share, down from $9.0 million, or $0.08 per share, for the fourth 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.
|
•
|
For the 2019 full year, total net revenue increased to $96.0 million from $89.5 million for the 2018 full year, due to strong growth in the SaaS and DCX product lines, partially offset by the divestiture of the home healthcare services business and declines in GPS sales.
|
•
|
Gross profit increased to $57.5 million, or 60% of total net revenue, from $45.2 million, or 51% of total net revenue, for the prior year.
|
•
|
SG&A expense declined to $61.0 million from $70.8 million in 2018, driven by continued efforts to reduce costs and maximize existing resources. R&D expense declined to $19.1 million from $20.9 million in 2018.
|
•
|
For the full year 2019, Net loss from continuing operations, net of tax, was $62.6 million, or $0.57 per share, compared with $190.4 million, or $1.74 per share, for the 2018 full year.
|
•
|
For the full year 2019, on a non-GAAP basis, net loss from continuing operations was $27.4 million, or $0.25 per share, down from $44.5 million, or $0.41 per share, for 2018.
|
•
|
At December 31, 2019, cash and cash equivalents totaled $5.2 million.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,243
|
|
|
$
|
18,305
|
|
Accounts receivable, net
|
10,918
|
|
|
15,286
|
|
||
Inventories
|
798
|
|
|
496
|
|
||
Related party receivables, net
|
823
|
|
|
1,007
|
|
||
Prepaid expenses and other current assets
|
20,131
|
|
|
4,350
|
|
||
Total current assets
|
37,913
|
|
|
39,444
|
|
||
Property, plant, and equipment, net
|
16,095
|
|
|
22,978
|
|
||
Goodwill
|
115,930
|
|
|
115,930
|
|
||
Intangible assets, net
|
51,848
|
|
|
64,703
|
|
||
Investment in related party
|
31,702
|
|
|
40,000
|
|
||
Related party receivable, net of current
|
1,108
|
|
|
1,611
|
|
||
Operating lease right-of-use assets
|
10,073
|
|
|
—
|
|
||
Other assets
|
1,818
|
|
|
1,671
|
|
||
Total assets
|
$
|
266,487
|
|
|
$
|
286,337
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
3,951
|
|
|
$
|
1,650
|
|
Accrued and other current liabilities
|
32,444
|
|
|
13,832
|
|
||
Deferred revenue
|
16,748
|
|
|
16,263
|
|
||
Related party payables, net
|
4,120
|
|
|
4,791
|
|
||
Notes payable
|
238
|
|
|
—
|
|
||
Total current liabilities
|
57,501
|
|
|
36,536
|
|
||
Deferred revenue, net of current
|
1,286
|
|
|
6,704
|
|
||
Related party liabilities
|
24,227
|
|
|
17,708
|
|
||
Related party promissory note
|
112,666
|
|
|
112,666
|
|
||
Related party convertible note, net
|
8,864
|
|
|
8,378
|
|
||
Convertible notes, net
|
84,648
|
|
|
79,433
|
|
||
Operating lease liabilities
|
11,010
|
|
|
—
|
|
||
Other liabilities
|
23,421
|
|
|
22,081
|
|
||
Total liabilities
|
323,623
|
|
|
283,506
|
|
||
|
|
|
|
||||
Stockholders' equity (deficit)
|
|
|
|
||||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 110,619,678 and 109,491,277 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
11
|
|
|
11
|
|
||
Additional paid-in capital
|
889,955
|
|
|
887,289
|
|
||
Accumulated deficit
|
(946,884
|
)
|
|
(884,122
|
)
|
||
Accumulated other comprehensive loss
|
(218
|
)
|
|
(347
|
)
|
||
Total stockholders' (deficit) equity
|
(57,136
|
)
|
|
2,831
|
|
||
Total liabilities and stockholders' equity (deficit)
|
$
|
266,487
|
|
|
$
|
286,337
|
|
|
Three Months Ended
December 31, |
|
Year Ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total net revenue
|
$
|
24,190
|
|
|
$
|
22,862
|
|
|
$
|
95,961
|
|
|
$
|
89,464
|
|
|
|
|
|
|
|
|
|
||||||||
Total cost of revenue
|
8,944
|
|
|
11,393
|
|
|
38,422
|
|
|
44,269
|
|
||||
Gross Profit
|
15,246
|
|
|
11,469
|
|
|
57,539
|
|
|
45,195
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
13,942
|
|
|
14,638
|
|
|
61,043
|
|
|
70,763
|
|
||||
Research and development
|
4,840
|
|
|
5,041
|
|
|
19,072
|
|
|
20,916
|
|
||||
Amortization of acquisition-related assets
|
1,054
|
|
|
1,054
|
|
|
4,217
|
|
|
4,217
|
|
||||
Impairment of intangible asset
|
—
|
|
|
—
|
|
|
3,977
|
|
|
—
|
|
||||
Total operating expenses
|
19,836
|
|
|
20,733
|
|
|
88,309
|
|
|
95,896
|
|
||||
Loss from operations
|
(4,590
|
)
|
|
(9,264
|
)
|
|
(30,770
|
)
|
|
(50,701
|
)
|
||||
Interest expense, net
|
(4,601
|
)
|
|
(4,354
|
)
|
|
(18,044
|
)
|
|
(17,120
|
)
|
||||
Other expense, net
|
(586
|
)
|
|
(16,948
|
)
|
|
(5,625
|
)
|
|
(17,876
|
)
|
||||
Loss from related party equity method investment
|
(1,916
|
)
|
|
(18,898
|
)
|
|
(8,317
|
)
|
|
(108,409
|
)
|
||||
Loss from continuing operations before income taxes
|
(11,693
|
)
|
|
(49,464
|
)
|
|
(62,756
|
)
|
|
(194,106
|
)
|
||||
Provision for (benefit from) income taxes
|
56
|
|
|
(244
|
)
|
|
(112
|
)
|
|
(3,673
|
)
|
||||
Net loss from continuing operations
|
(11,749
|
)
|
|
(49,220
|
)
|
|
(62,644
|
)
|
|
(190,433
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
97
|
|
|
(118
|
)
|
|
(1,719
|
)
|
||||
Net loss
|
$
|
(11,749
|
)
|
|
$
|
(49,123
|
)
|
|
$
|
(62,762
|
)
|
|
$
|
(192,152
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per share
|
|
|
|
|
|
|
|
||||||||
Continuing operations - common stock
|
$
|
(0.11
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(1.74
|
)
|
Discontinued operations - common stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
Total net loss per share - common stock
|
$
|
(0.11
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(1.76
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic - common stock
|
110,619,780
|
|
|
109,490,441
|
|
|
110,351,638
|
|
|
109,168,798
|
|
||||
Diluted - common stock
|
110,732,280
|
|
|
109,490,441
|
|
|
110,468,372
|
|
|
109,168,798
|
|
|
Three Months Ended
December 31, |
|
Year Ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service related
|
$
|
18,410
|
|
|
$
|
17,326
|
|
|
$
|
72,831
|
|
|
$
|
65,646
|
|
Software and hardware related
|
2,880
|
|
|
744
|
|
|
8,015
|
|
|
4,534
|
|
||||
Maintenance
|
2,748
|
|
|
2,477
|
|
|
10,519
|
|
|
9,834
|
|
||||
Total software-related revenue
|
24,038
|
|
|
20,547
|
|
|
91,365
|
|
|
80,014
|
|
||||
Sequencing and molecular analysis
|
152
|
|
|
622
|
|
|
1,733
|
|
|
3,129
|
|
||||
Home health care services
|
—
|
|
|
1,693
|
|
|
2,863
|
|
|
6,321
|
|
||||
Total net revenue
|
$
|
24,190
|
|
|
$
|
22,862
|
|
|
$
|
95,961
|
|
|
$
|
89,464
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of Revenue
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service related
|
$
|
6,078
|
|
|
$
|
5,488
|
|
|
$
|
23,233
|
|
|
$
|
23,691
|
|
Software and hardware related
|
683
|
|
|
923
|
|
|
2,886
|
|
|
3,335
|
|
||||
Maintenance
|
560
|
|
|
241
|
|
|
1,625
|
|
|
924
|
|
||||
Amortization of developed technologies
|
1,143
|
|
|
1,233
|
|
|
4,662
|
|
|
4,933
|
|
||||
Total software-related cost of revenue
|
8,464
|
|
|
7,885
|
|
|
32,406
|
|
|
32,883
|
|
||||
Sequencing and molecular analysis
|
480
|
|
|
2,612
|
|
|
4,545
|
|
|
8,055
|
|
||||
Home health care services
|
—
|
|
|
896
|
|
|
1,471
|
|
|
3,331
|
|
||||
Total cost of revenue
|
$
|
8,944
|
|
|
$
|
11,393
|
|
|
$
|
38,422
|
|
|
$
|
44,269
|
|
|
Three Months Ended
December 31, |
|
Year Ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss from continuing operations
|
$
|
(11,749
|
)
|
|
$
|
(49,220
|
)
|
|
$
|
(62,644
|
)
|
|
$
|
(190,433
|
)
|
Adjustments to GAAP net loss from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Loss from related party equity method investment
|
1,916
|
|
|
18,898
|
|
|
8,317
|
|
|
108,409
|
|
||||
Stock-based compensation expense from continuing operations
|
937
|
|
|
852
|
|
|
2,786
|
|
|
5,657
|
|
||||
Acquisition related sales incentive
|
—
|
|
|
425
|
|
|
—
|
|
|
1,420
|
|
||||
Change in fair value of derivatives liability
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||
Change in fair value of Bookings Commitment
|
372
|
|
|
16,947
|
|
|
5,036
|
|
|
16,947
|
|
||||
Impairment of investment in IOBS
|
—
|
|
|
—
|
|
|
—
|
|
|
1,750
|
|
||||
Non-cash interest expense related to convertible notes
|
1,495
|
|
|
1,316
|
|
|
5,702
|
|
|
5,019
|
|
||||
Intangible amortization from continuing operations
|
2,197
|
|
|
2,287
|
|
|
8,879
|
|
|
9,150
|
|
||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
3,977
|
|
|
—
|
|
||||
Loss on sale of business
|
—
|
|
|
—
|
|
|
582
|
|
|
—
|
|
||||
Securities litigation costs
|
28
|
|
|
(392
|
)
|
|
528
|
|
|
1,317
|
|
||||
Tax benefit resulting from certain non-cash tax items
|
(51
|
)
|
|
(111
|
)
|
|
(570
|
)
|
|
(3,760
|
)
|
||||
Total adjustments to GAAP net loss from continuing operations
|
6,894
|
|
|
40,222
|
|
|
35,237
|
|
|
145,902
|
|
||||
Net loss - Non-GAAP from continuing operations
|
$
|
(4,855
|
)
|
|
$
|
(8,998
|
)
|
|
$
|
(27,407
|
)
|
|
$
|
(44,531
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average basic shares outstanding
|
110,619,780
|
|
|
109,490,441
|
|
|
110,351,638
|
|
|
109,168,798
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per share from continuing operations - Non-GAAP
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.41
|
)
|
|
Three Months Ended
December 31, |
|
Year Ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss per common share from continuing operations - GAAP
|
$
|
(0.11
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(1.74
|
)
|
Adjustments to GAAP net loss per common share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Loss from related party equity method investment
|
0.03
|
|
|
0.17
|
|
|
0.07
|
|
|
0.98
|
|
||||
Stock-based compensation expense from continuing operations
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.05
|
|
||||
Acquisition related sales incentive
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Change in fair value of derivatives liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in fair value of Bookings Commitment
|
—
|
|
|
0.16
|
|
|
0.05
|
|
|
0.16
|
|
||||
Impairment of investment in IOBS
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
||||
Non-cash interest expense related to convertible notes
|
0.01
|
|
|
0.01
|
|
|
0.05
|
|
|
0.05
|
|
||||
Intangible amortization from continuing operations
|
0.02
|
|
|
0.02
|
|
|
0.08
|
|
|
0.08
|
|
||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
||||
Loss on sale of business
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Securities litigation costs
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Tax benefit resulting from certain non-cash tax items
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
(0.03
|
)
|
||||
Total adjustments to GAAP net loss per common share from continuing operations
|
0.07
|
|
|
0.37
|
|
|
0.32
|
|
|
1.33
|
|
||||
Net loss per common share from continuing operations - Non-GAAP
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.41
|
)
|