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Delaware
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27-3019889
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( State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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9920 Jefferson Blvd.
Culver City, California
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90232
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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NASDAQ Global Select Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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x
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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PART I.
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II.
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Item 7A.
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Item 8.
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Consolidated and Combined Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Item 9B.
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Other Information
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PART III.
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13..
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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Item 15.
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Exhibits
, Financial Statement Schedules
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Exhibits index
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the structural change in the market for healthcare in the United States, including uncertainty in the healthcare regulatory framework and regulatory developments in the United States and foreign countries;
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the evolving treatment paradigm for cancer, including physicians’ use of molecular information and targeted oncology therapeutics and the market size for molecular information products;
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physicians’ need for precision medicine products and any perceived advantage of our solutions over those of our competitors, including the ability of our comprehensive platform to help physicians treat their patients’ cancers;
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our ability to generate revenue from sales of products enabled by our molecular and biometric information platforms to physicians in clinical settings;
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our ability to increase the commercial success of our sequencing and molecular analysis solution;
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our plans or ability to obtain reimbursement for our sequencing and molecular analysis solution, including expectations as to our ability or the amount of time it will take to achieve successful reimbursement from third-party payors, such as commercial insurance companies and health maintenance organizations, and government insurance programs, such as Medicare and Medicaid;
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our ability to effectively manage our growth, including the rate and degree of market acceptance of our solutions;
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our ability to offer new and innovative products and services;
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our ability to attract new partners and clients;
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our ability to estimate the size of our target market;
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our ability to maintain and enhance our reputation and brand recognition;
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consolidation in the healthcare industry;
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competition which could limit our ability to maintain or expand market share within our industry;
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restrictions and penalties as a result of privacy and data protection laws;
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our use of “open source” software;
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our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
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data loss or corruption due to failures or errors in our systems and service disruptions at our data centers;
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breaches or failures of our security measures;
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our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our users;
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risks related to future acquisition opportunities;
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the requirements of being a public company;
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our ability to attract and retain key personnel;
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our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act;
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our ability to obtain and maintain intellectual property protection for our solutions and not infringe upon the intellectual property of others; and
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our financial performance expectations, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in research and development, sales and marketing and general and administrative expenses, and our ability to achieve and maintain future profitability.
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providers to seamlessly act on the best evidence-based information available to better fulfill their roles as caregivers rather than financial managers
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payors with the necessary tools to better fulfill their roles as stewards of an increasingly complex and rapidly evolving healthcare system
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biopharmaceutical companies to accelerate development of drugs for critical illnesses based upon the unique biology and specific health conditions of patients
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patients with the knowledge to enable active participation in the management of their own health, or self-care.
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A rapid evolution from traditional fee-for-service to patient-centered and patient-empowered, value-based models driven by quantifiable measures of outcomes relative to cost
. Unsustainable escalating healthcare costs, which we believe is due to broken fee-for-service models, is driving many stakeholders and governments towards alternative delivery models. Despite significant investments in EHRs and other technologies designed to enable the transition to more value-based care, we believe that, in a fee-for-service model, the economic incentives generally discourage coordination amongst healthcare stakeholders and encourage volume-driven (rather than outcomes-driven) decision-making. This model results in healthcare and financial data that remains largely segregated into “walled gardens.” Thus, patient data often remains static and cannot be easily shared or interpreted due to siloed legacy proprietary platforms that lack interoperability.
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A paradigm shift to molecularly precise and real-time biometric-driven medicine, with both massive volumes and rapidly expanding repositories of complex data from traditional and novel sources.
Advances in molecular medicine require healthcare providers to promptly aggregate, evaluate and synthesize hundreds to thousands of relevant facts in real time to arrive at a single patient decision. Molecular profiling often generates hundreds of gigabytes of data per patient, which must then be transported, stored, analyzed and interpreted with supercomputing and/or high performance computing environments. We believe the rapid pace of medical advancements, the massive amount of molecular data and the frequency of biometric information is overwhelming many providers’ ability to process that information at the point of care, thereby inhibiting the paradigm shift to individualized medicine.
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Driving global reimbursement, awareness, and adoption of GPS Cancer.
To drive the growth of GPS Cancer in the United States, we have deployed an integrated, multi-pronged strategy to (1) obtain reimbursement through large national and regional payors and self-insured employers and (2) drive oncologist awareness and adoption in those regions with reimbursement. Likewise, we are pursuing international growth through a combination of reseller agreements and other unique partnership models to yield predictable and recurring revenue. To date, we have announced agreements and agreements in principle for US insurance coverage for GPS Cancer with health plans, providers and self-insured employers, as well as reseller agreements in multiple countries outside of the US. Traction amongst commercial payors, employers, and partners continues to accelerate globally. We are also increasing recognition of GPS Cancer through engaging and educating oncologists, cancer patients, caregivers, patient advocacy groups and other key oncology stakeholders, and communicating patient outcomes through peer-reviewed journals and conference presentations. Finally, we are a founding member of the Cancer Breakthroughs 2020 Global Immunotherapy Coalition, which we believe will help accelerate the adoption and validation of GPS Cancer.
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Increasing sales of NantHealth solutions, including, NantOS and NantOS applications, to healthcare providers, payors and self-insured employers.
We are marketing NantHealth solutions, including NantOS and NantOS applications, to healthcare providers transitioning from fee-for-service reimbursement models to value-based care models in pursuit of improved patient outcomes and lower costs. We believe we are positioning NantHealth as a next-generation payor intermediary and partner with healthcare payors and self-insured employers as they roll out value-based model partnerships and transition to value-based precision care.
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Broadening usage of our solutions among existing clients.
Our broad portfolio of NantHealth solutions affords us a unique ability to expand our agreements with existing clients through cross-selling opportunities. We are actively focused on leveraging existing relationships to create these opportunities to drive additional revenue for our solutions including GPS Cancer, NantOS and NantOS applications. Many of our clients are already successfully using certain of our solutions, and we are working to demonstrate the full value of our integrated Systems Infrastructure and platforms.
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Expanding our business in international markets.
We are executing our go-to-market strategies internationally, creating global awareness of our brand and taking steps towards our goal of broader adoption worldwide. We are expanding aggressively in Canada, the United Kingdom and Southeast Asia and opportunistically in other international markets where we or our strategic partners have established relationships and our clients have healthcare business interests.
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Developing new features and functionality for NantHealth solutions.
We plan to continue to leverage NantHealth solutions, and our NantOS middleware solution to create new features and functionality that our clients can use to drive improved patient outcomes and lower the cost of care.
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Complementing internal growth with strategic acquisitions.
We believe opportunities exist for us to enhance our competitive position by acquiring additional companies with complementary products and technologies and/or acquiring rights to proprietary products or technologies from third parties.
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The knowledge domain, including academic centers, scientific institutions and companies that discover and commercialize medical and scientific knowledge;
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The care delivery domain, including hospitals, physicians and other constituents that deliver healthcare to patients; and
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The payor domain, including insurers, governments and self-insured employers that administer and provide funding to the healthcare system.
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Improved pharmacoeconomics, including the use of more cost-effective drugs approved for other indications (such as asthma and diabetes) in cancer treatment regimens;
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A clearer understanding of critical drug resistance information;
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Increased adoption of bundled payments as providers and payors recognize the efficiency of optimized therapies; and
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Increased awareness and published clinical results demonstrating the benefits of evidence-based molecular medicine.
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Oncology Solutions
. Our comprehensive set of interoperability, advanced diagnostics, risk stratification and decision support solutions (eviti) can enable our clients to improve decision-making and coordinate care across the healthcare continuum. Our molecular profiling solution, GPS Cancer, is the only comprehensive and commercially available clinical cancer platform incorporating and integrating whole genome (comparing both a patient’s normal and tumor tissue), RNA, proteomic and molecular pathways information into a clinical report that analyzes this data and identifies actionable targets and potential clinical treatment decisions.
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Patient and Provider Solutions
. Our provider solution software and middleware, comprised of an integration of our various solutions, including cOS, FusionFX, DeviceConX, VitalsConX and NaviNet Open, or collectively NantOS, leverage the data available on our Systems Infrastructure to enable patient-centered engagement and coordination across care locations. Our web-based and mobile NantOS apps include patient, provider and collaboration portals for advanced care coordination, including real-time vitals connectivity, clinical and administrative workflow, eligibility and benefits, claims, referral and readmissions management solutions, secure messaging and analytical applications to measure outcomes and costs. Our database of clinical pathways and decision algorithms is continuously being enhanced, enabling the delivery of evidence-based clinical decision support. Our device connectivity modules and flexible applications analyze and interpret patient- and provider-specific information and can deliver critical clinical and administrative insights.
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Payor Solutions
. Our payor NantOS app solutions establish daily access to the clinical practice and caregiver and leverage the data available on our Systems Infrastructure to facilitate payment for value. We believe our position between the payor and the provider allows us to align incentives as a next-generation payor intermediary, to help payors ensure consistent evidence-based treatment pathways and to accelerate pre-adjudication and lower administrative overhead for providers. This can ultimately drive quality of care and streamline workflows while improving control over the administrative and operating costs associated with eligibility and benefits, claims processing, referrals, authorizations, document exchange and review utilization. Our multi-payor collaboration NantOS app solution, NaviNet Open, offers provider end users a uniform set of workflows and services across many or all the payors with whom they routinely collaborate. This multipayor experience benefits payors and providers alike. Providers can benefit from a uniform experience and toolset across multiple payor relationships, and the payor can benefit from the uniform application of best practices, tools, and options, as well as the reduction in costly errors and phone-based interactions that can stem from a non-uniform end-user experience. Our NantOS app solutions can also identify high-risk patient populations, implement advanced diagnostics and FDA-approved, real-time biometric patient monitoring solutions to identify opportunities for precision medicine and preventative interventions, and enable provider and payor engagement in integrated and coordinated value-based models.
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Advanced Molecular Diagnosis (Box 1).
Our solutions enable diagnosis at the individual molecular signature level with genomic and proteomic analysis solutions through GPS Cancer, population-level analytics and risk stratification at the molecular level.
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Define Right Treatment Before Treatment Begins (Boxes 2, 9, 10).
Our solutions support decision-making with near real-time bioinformatics and evidence-based protocols using our eviti solution, enabling the clinician to potentially make more optimal treatment decisions.
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Patient Engagement (Box 6).
Our solutions inform the patient, patient advocate and caregivers to improve patient engagement, satisfaction and compliance and encourage active participation in the management of their own health (self-care).
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Care Coordination and Delivery of Care (Box 7).
Our solutions enable point-of-care connectivity and coordinate and deliver care with clinical and administrative workflow collaboration portals, care coordination applications and clinical intervention engagement (mission control).
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Real-time Clinical Learning (Box 8).
Our solutions implement advanced analytics and real-time clinical learning while monitoring and measuring outcomes to enrich data sets and to implement proactive and preventative clinical intervention engagement.
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Payment for Value (Box 11).
Our solutions facilitate payment for value, better outcomes at lower cost, using our evidence-based approach to the clinical practice of medicine through our inter-domain collaboration portal NaviNet Open.
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Access to next-generation genomic and proteomic analysis technologies with near real-time bioinformatics, provided as part of GPS Cancer through our affiliate, NantOmics;
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Access to a secure HIPAA-compliant cloud environment maintained internally through our subsidiary NantCloud Services;
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Device connectivity in over 350 client sites to what we estimate to be more than 30,000 medical devices and collecting tens of billions of vital signs annually with the ability to connect to over 500 medical device and health and wellness sensors; and
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Open architecture, service-oriented software platform-as-a-service, enabling the integration and interoperability of disparate electronic medical records through 250 clinical, financial and operational systems connectors and 300 infrastructure and healthcare services, facilitating real-time clinical learning.
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Enabling utilization of lower cost chemotherapy with knowledge of quantitative proteomic chemo-resistance or chemo-sensitivity biomarkers before treatment begins
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Preventing inappropriate utilization of high cost monoclonal antibody therapy
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Providing quantitative evidence of presence of actionable targets for high cost small molecule targeted therapy
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Providing molecular insight into the potential efficacy of high-cost checkpoint inhibitors
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Enabling enrollment into clinical trials and the Cancer Breakthroughs 2020 program
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Driving to low cost cancer vaccine immunotherapy combined with low-dose chemotherapy
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List targets based on DNA/RNA/quantitative protein analysis that may be treated by FDA-approved drugs either in an on-label or off-label manner based on peer-reviewed clinical data;
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List findings that suggest a particular targeted therapy which the physician would otherwise use may not work due to a potential resistance marker;
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List the quantitative expression of certain proteins that suggest a chemotherapy agent may be more likely, or alternatively, less likely, to work; and
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Provide the information necessary for the physician to decide whether it is appropriate to place the patient in a clinical trial.
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Cancer of unknown primary;
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Rare cancers (i.e., less than one percent of cancers) with metastases for which there are only documented case reports and small series of treatment experience;
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Metastatic cancer that has progressed after treatment with a regimen of chemotherapy and for which additional chemotherapy is indicated;
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Primary brain cancer;
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Pediatric cancers;
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Triple negative breast cancer;
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Virally infected tumors;
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Metastatic non-small cell lung cancer that has progressed after treatment with two different regimens of chemotherapy and for which additional chemotherapy is indicated; and
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Individuals eligible for cancer immunotherapy.
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The patient is initially treated with the checkpoint inhibitor pembrolizumab (MK-3475). Since the target analyte, PD-L1, is expressed in low amounts, or less than the 100 amol/ug in the “Efficacy Threshold” column of the table to the left of the graph below, published reports would suggest a decreased likelihood of benefit from the treatment. Consistent with the expected result, the patient did not respond well to the treatment, as reflected by an increase in the CA-125 level in the graph below.
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The patient is then treated with paclitaxel (Taxol) and trastuzumab (HerceptinTM). Published reports indicate an increased likelihood of benefit from the treatments if the TUBB3 expression level is below 850 amol/ug and the HER2 expression level is greater than 740 amol/ug for paclitaxel and trastuzumab respectively. In this case, the patient’s tumor expresses less than 100 amol/ug of the TUBB3 analyte and 4,995 amol/ug of the HER2 analyte. The result of the treatment is consistent with the published studies’ efficacy thresholds. As illustrated in the graph below through the significant decline of CA-125, the patient had a beneficial response to the combination of paclitaxel and trastuzumab until approximately June of 2015, a period of nine months, when CA-125 starts to increase again.
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The patient is then taken off paclitaxel and put on doxorubicin. GPS Cancer results suggest a reduced likelihood of response to doxorubicin since the level of TOPO2A analyte needed for such a response is greater than 1,530 amol/ug (per published studies) and the patient’s level is only 472 amol/ug. As illustrated in the graph below, the treatment was not effective as there was an increase in CA-125 during the duration of time the patient was being treated with doxorubicin.
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After the ineffective doxorubicin treatment, the patient is then put on pemetrexed. Published studies indicate that pemetrexed is more likely to be effective when the FRa analyte is present in amount greater than 1,510 amol/ug. In this case, the patient’s tumor expressed 10,500 amol/ug of the FRa analyte, well in excess of the published analyte threshold. Consistent with the efficacy thresholds, the patient had a beneficial response to pemetrexed, which is visually depicted by the decreasing CA-125 level in the bottom right of the graph below.
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Liquid Tissue
. Extracts lysates from FFPE tissue using proprietary methods to examine tumor-normal proteins and genomes.
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Transporter Software
. Securely transfers unassembled data from sequencing instruments to the analytical custom-designed supercomputing environment.
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Contraster Software
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Rapidly identifies genomic variants in a patient’s tumor samples and compares it to that patient’s germline or proprietary database of disease associated genes.
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Paradigm Software.
Integrates DNA sequencing data from the contraster software with RNA sequencing data to identify alterations in cellular signaling behavior that are driving disease progression. The algorithm matches the alterations to the library of all known signaling pathways and all drugs and drug targets, irrespective of indication, to potentially help predict the effectiveness of personalized therapies and points of resistance.
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Patient Portal NantOS App:
Our Patient Portal NantOS app enables providers to incorporate the patient (or his or her proxy) as a full member of the care team, which can result in improved patient engagement, satisfaction and compliance. This NantOS app can pull information from EHRs and integrate the growing mobile health app and wearable health data into the patient’s health records, providing a single access point and unified health record across the healthcare system. In addition to aggregating key data from the EHR and other sources, this NantOS app enables the patient to have convenient access to perform common tasks such as scheduling appointments, refilling prescriptions and reviewing lab tests. One feature enables the patient to actively participate in the management of their own health (self-care). The patient portal NantOS app includes a watch list that visualizes and explains key metrics, such as lab values, that a patient
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Health Heritage NantOS App:
The Health Heritage NantOS app is a patient-facing tool designed to empower users to collect, maintain and share their detailed personal and family medical histories and receive personalized risk assessments and recommendations. Branching logic and guidance enables users to easily construct the foundation of their medical history. This NantOS app can also work with health systems to extract key details from a user’s electronic medical record automatically, in part, using its custom-built Natural Language Processing engine. Secure methods are provided for family members to share and maintain up-to-date family information. All information is currently used to identify individuals at risk for seven common cancers (breast, colorectal, melanoma, ovarian, pancreatic, prostate and uterine) and their related hereditary cancer syndromes and to provide evidence-based recommendations for users to discuss with their providers.
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Cancer Genome Browser:
Allows users to view a patient’s entire genome with the goal of understanding the totality of the genomic and proteomic expression information.
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Care Coordination and Real-Time Connectivity (NantOS and NantOS Apps):
A key part of our care coordination and real-time connectivity solutions is to enable hospital systems, integrated delivery networks, health plans and government sponsored health organizations and their clinicians to improve productivity, more easily collaborate across the care team with both patients and payors through next-generation collaboration portals, and better manage the growing volume of data from numerous disparate sources to obtain actionable insights for improving performance at the enterprise, office and individual physician levels. Even where a hospital system may have a single EHR vendor across all its facilities, our provider engagement solution can be valued as a comprehensive, real-time solution to integrate the larger continuum of care (e.g., pharmacy, laboratory, imaging center and patient’s home). Many other marketplace offerings typically provide retrospective analyses in siloed applications or do not adequately integrate health information across the continuum of care.
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Data Layer:
Our platform extracts, transforms, aggregates and contextualizes a vast array of molecular, clinical, financial, operational and other relevant data from internal and external sources into a more patient-centric information model. NantOS integrates with the systems provided by major health information technology vendors, including Varian Medical Systems, Inc., Epic, Cerner, McKesson and Allscripts, and has a robust library of over 250 EHR, pharmacy, lab, imaging, cost accounting, provider data and financial systems connectors. Additionally, our device connectivity platform has the ability to normalize and track data from over 300 inpatient and outpatient medical devices as well as over 200 consumer health and wellness sensors. Our data layer architecture is flexible to support federated, distributed or enterprise data repository approaches. This flexibility enables us to balance transactional, analytical, decision support, information security and performance requirements across different stakeholders and geographies. With an increasingly disparate set of data sources, ensuring data quality is a fundamental challenge in this space. Adjusting duplicative, incorrect, absent or irrelevant data into a consistent terminology is a core capability of our master data management services. We believe our experience integrating real-world data across millions of patients and billions of patient-level clinical data points across the globe enables us to provide some of the most usable, patient-centric data available. Furthermore, our clinical terminology translation service allows us to map disparate EHR, lab and pharmacy systems into a common clinical informatics model.
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Services Layer:
We believe we have one of the most highly reliable and scalable suites of infrastructure and healthcare specific services. Clients and third parties use these services to build or integrate key applications. A SOA is an architectural pattern in computer software design in which application components provide services to other components via a communications protocol, typically over a network. The principles of service orientation are independent of any vendor, product or technology. We have been developing cloud-based SOA architectures for over a decade. We believe we have one of the largest open services SOA platforms in healthcare, with a growing library of over 300 infrastructure and healthcare specific services. Some of our infrastructure services include master data, identity management, security, audit and message orchestration. Other healthcare specific services include labs, orders, device, genomics, insurance administration and care plans.
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Application Programming Interfaces:
APIs are a set of routines, protocols and tools for building software applications. Nearly all the NantOS services have exposed APIs that enable distributed application development environments. These APIs enable us, our clients and third parties to develop ecosystems of compatible applications. Using these APIs, we have developed a series of applications such as secure messaging, value monitor, care coordination, population explorer and patient and provider portals. Additionally, certain of our clients and third-party partners have built their own internal and cross enterprise solutions using NantOS’ exposed APIs.
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Device Connectivity Suite:
Our device connectivity and real-time biometric software and hardware suite allow us to aggregate data from one of the largest libraries of in-hospital and remote medical devices and wearables on the market. Utilizing our hardware and software platform, we can extract data from various disparate provider systems, payor systems and consumer devices across the care continuum. Our offerings can enable real-time collection of quantifiable biometric and phenotypic data, enriching the holistic patient health record to improve care and treatment. In addition, our offerings can improve care coordination and data aggregation across care settings to facilitate transitioning patients to lower cost care settings such as a skilled nursing facility or the patient’s home. Key offerings include device integration to EHR systems, remote patient monitoring and medication adherence.
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DeviceConX, or DCX, a NantOS App:
DCX is an FDA-approved device data normalization software that connects to hundreds of inpatient and outpatient clinical devices and converts data into a standard format that can be integrated into EHR systems and decision support platforms such as NantOS. This offering provides physicians with a real-time and integrated snapshot of a patient’s physiological data. Our software is scalable and can be embedded across the care continuum, including inpatient, outpatient and home settings. In addition, our platform can enable connectivity with both networked and non-networked medical devices and can eliminate the need for manual entry by physicians, which can result in clinician time savings and potentially eliminate transcription errors. DCX is installed in over 350 client sites across the United States, Singapore and Denmark.
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HBox:
The HBox is an Internet of Medical Things, or IoMT, and Internet of Things, or IoT, hardware hub that provides wired or wireless connectivity to multiple monitoring devices and transmits the data into our remote monitoring centers, our care coordination software and third-party EHR systems, giving providers real-time access to physiological data. We offer several home monitoring devices that have been tested and integrated with the HBox to support remote monitoring, readmission management and care coordination solutions and services. The HBox integrates with various weight scales, pulse oximeters and blood pressure monitors and mobile health devices, including various consumer wearables. For non-networked medical devices, we use our proprietary DeviceEscort adapter and HBox to wirelessly connect to nearly any medical device that is capable of outputting discrete medical data. HBox is currently installed at client sites in both the United States and Singapore.
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VitalsConX, or VCX, a NantOS App:
In addition to DCX and HBox, we also provide a tablet-optimized application that sits on top of our DCX platform to provide clinicians more convenient and ubiquitous access to capture a wide array of patient vitals such as respiratory rate, blood pressure and heart rate in addition to performing patient assessments. Our solution can enable more efficient patient monitoring and provides a near real-time stream of data unlike periodic sampling typically captured in an EHR.
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Vitality:
Vitality Medication Adherence is a hardware device and cloud-connected software NantOS app (GlowCaps for pill bottles) that tracks, reminds and alerts patients to reinforce them to take their prescribed medication. The hardware components use escalating reminders such as light and sound and the software includes text, email or phone reminders along with easy-to-understand weekly reports that can be sent to patients, family members and/or providers.
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Provider Portal NantOS App:
Provider Portal is a clinical and administrative workflow and collaboration support NantOS app for care teams within a healthcare system, including affiliated providers in the community. The application helps providers obtain the relevant information in configurable, specific clinical views and leverage data across any connected source system, including legacy EHRs, health information exchanges, or HIEs, and data warehouses. The Provider Portal NantOS app is a patient-centric web application for viewing a virtual longitudinal care record. The Provider Portal NantOS app is context aware, which facilitates integration of our products into clinical workflow and can be synchronized with context enabled (CCOW) applications. For clients that are seeking an enterprise context management functionality, we offer a clinical workstation solution to launch multiple applications in a context-sensitive manner. The portal can be used to integrate siloed systems into unique user-specific clinical and administrative views to enable providers to make more informed decisions and improve care coordination on a near real-time basis.
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Care Coordination NantOS App Suite:
Our Care Coordination NantOS app suite manages patient care across multiple care settings and supports longitudinal clinical record management. Using proprietary techniques and supply chain management principles, the Care Coordination app suite integrates evidence-based pathways to activity-based costing, potentially enabling clinicians to provide high-quality care at a lower cost. The NantOS Care Coordination app suite can integrate, aggregate and normalize data from medical claims, pharmacy claims, EHR systems, lab systems and pharmacy systems, cost accounting systems, operational and financial systems. Our care coordination application suite organizes care activities and information sharing among key constituents managing a patient with the goal of helping achieve safer and more effective care. Our Care Coordination NantOS app suite includes:
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Guided Care NantOS App:
The Guided Care NantOS app is a mobile and web application that is designed for organizing the care activities and sharing information among all participants concerned with a patient’s care, to achieve optimal care. The Guided Care app can be used to put patients on the most appropriate care plan, set goals for the patients to target, schedule regular calls or visits with the patients and monitor their adherence to the care plan via real time feedback from biometric devices and other health tracking apps. The Guided Care app can be used to manage both disease management programs as well as lifestyle management program for payors, providers and self-insured employers.
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Urgent Care NantOS App:
The Urgent Care NantOS app is used to coordinate care of patients that have urgent care requirements. Using its telemedicine capabilities, the Urgent Care app can be used by remote providers to tele-triage the patient thereby potentially saving emergency department admission costs. In a Medicare-sponsored program, this application, along with appropriate business process changes, resulted in projected savings of over $30 million dollars in hospitalization costs over a 3-year period.
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Transition Planner and Readmissions Management NantOS App:
The Transition Planner and Readmissions Management NantOS app proactively manages patient discharge, care transitions and medication reconciliation for patients with a high risk of readmission. This application leverages data across disparate physician electronic medical record, or EMR, systems and hospital information technology systems to provide important post-discharge care for high-risk patients, thereby potentially reducing costs. It also allows hospitals to potentially reduce exposure to readmission penalties from CMS and commercial payors.
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Referral Management NantOS App:
The Referral Management NantOS app is a web application that allows for the creation and tracking of a patient referral that includes up to date documentation of their care for viewing and managing by the care team. A referral may be as simple as a provider requesting a patient consultation from another provider or as complex as a primary care provider requesting that a specialist assumes responsibility for all or part of a patient’s treatment. This NantOS app manages the entire life-cycle of the referral process-creation, scheduling, management, procedures and results documentation. Role-based views and workflows facilitate each step in the referral process. The 360-degree view and near real-time care information keep every clinician notified of the patient’s progress throughout their continuum of care. Additionally, this NantOS app can retrieve referral requests from a health information exchange.
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Secure Messaging NantOS App:
The Secure Messaging NantOS app is an easily integrated information exchange solution that can help improve care coordination while protecting patient privacy. Messages are transported between trusted parties using the direct trust standards. The identity of recipients and the security and privacy of electronic protected health information are designed to be assured for the exchange participants, including providers, clinicians and patients. Patient information can be sent to or received from third-party direct messaging applications as attachments via direct protocols. Each message contains a unique patient context that allows the recipient to view the patient’s clinical record with a single click.
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Outcomes Analytics:
Outcomes Analytics is a set of applications that run on the NantOS platform that allows payors and providers to perform comparative effectiveness studies. The NantOS big data infrastructure provides multiple levels of outcomes data starting with structured and standardized models to unstructured, schema-on-read models that can ingest large volumes and varieties of data (phenotype, omics, bio-metric, etc.). The omics results data from the reference labs and the phenotypic data from EMR and financial/cost data is normalized into a single model and made available for comparative research purposes. Outcomes Analytics is then used to create cohorts and design research studies using the study designer. We also make available to our customers a NantHealth-wide customer outcomes data repository derived from our other customers that have agreed to share de-identified data for comparative effectiveness research purposes, enabling our customers to search for cohorts and obtain access to a wider database of patients beyond their own patient cohorts.
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Value Monitor NantOS App:
The Value Monitor NantOS app is designed to measure and monitor providers with respect to resource usage, procedure usage, efficiency, cost and customer satisfaction as compared to their peer group. Value Monitor also looks at the near real-time costs incurred versus outcomes achieved. Currently, Value Monitor is looking at high-level outcomes such as length of stay, readmissions and mortality (as specified by the CMS value-based purchasing program).
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Quality Scoring NantOS App:
The Quality Scoring NantOS app monitors quality of care across a patient’s care team and records compliance with existing pay-for-performance measures as well as custom measures with the goal of ensuring high-quality outcomes and expected reimbursement.
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Population Health Assessment NantOS App Suite:
We believe controlling costs requires identifying and exploring cohorts most in need of targeted interventions, necessitating advanced risk stratification at the population level. Our NantOS population health assessment applications consist of:
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Risk Stratification NantOS App:
The Risk Stratification NantOS app provides analysis and reporting applications and algorithms that can enable users to gain insight into operational or financial risks within their patient population and identifies detectable characteristics associated with unwanted outcomes (e.g., hospital readmissions or longer-length stays).
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Population Explorer NantOS App:
The Population Explorer NantOS app is an application used to analyze and stratify populations into various groups of patients with common attributes. After stratifications are complete, patients in each strata or cohort can be assigned to specific care plans. These stratifications can provide insight into the population and segment provider performance. We use several groupers including the Hopkins Grouper for identifying high-cost and high-risk patients and the Lace Algorithm for identifying patients that are at high risk for readmission. The Population Explorer NantOS app also creates disease registries by analyzing the patient populations by ICD-9 and ICD-10 classifications.
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“Mission Control” Patient Engagement Services:
We provide targeted health services and interventions through our remote “mission control” patient engagement center where our team of clinicians develops clinical care plans for certain high-risk patients identified in our risk stratification process (e.g., hypertension, diabetes and cancer patients). These services are intended to encourage behavioral modification and are supported by clinical psychologists, pharmacists, nurses and nutritionists.
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Home Health Services:
We provide home healthcare services that enable adults to be cared for in their homes through Assisteo. Our home health business also provides an opportunity to potentially understand the effectiveness of new technologies and develop clinical care plans for patients in alternative healthcare settings. High-risk patients with chronic diseases identified through our “mission control” patient engagement services may be proactively managed through our home health service which can result in avoidance of unnecessary, expensive visits and admissions to the emergency room and hospital.
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Plan Central:
Provides each health-plan client with the ability to provide end users with a branded custom-content experience that allows plan customers to communicate, broadcast, share, and inform end users in support of their business. Plans can benefit from an open communication channel to the entire provider community, and providers can benefit from the ability to access plan-specific communications in one place, across many plans.
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Eligibility and Benefits:
Delivers rich patient eligibility information on a single, user friendly screen, allowing providers to verify insurance and benefit levels at the time of a patient visit or as part of the billing cycle.
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Claims Status Inquiry:
Allows provider office staff access to near real-time, detailed claim status information, potentially eliminating the need for the provider office to call a health plan directly to maintain a healthy revenue cycle. Users can check claim status at any time following a claim submission, and can check all claims regardless of whether submission took place on our collaboration platform or via another method. Reducing phone calls would not only eliminate costs, but also dramatically improve provider network satisfaction.
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Claims Management:
A suite of powerful, yet easy-to-use claims-related provider applications consisting of web-based Claim Entry and Submission, Claim Repair, Claim Adjustment, Claims Log, and Claim Attachments. With these applications, provider office users can submit new claims with or without attachments, repair and re-submit rejected claims, and adjust claims that were processed or paid incorrectly due to a billing error. Notably, Claim Adjustment and Claim Attachments are both able to support any claim - regardless of whether the original claim was submitted through NaviNet, a practice management system, or even a clearinghouse. With NaviNet Open Claims Management, health plans finally have a solution to eliminate costly paper claims and attachments as well as the phone calls and manual processes associated with claims follow-up, correction, and resubmission. Additionally, providers now have access to a powerful set of claim-related applications without needing a sophisticated EMR or even a practice management system.
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Document Exchange:
Designed to ensure that relevant clinical data are available at the right place and right time to improve overall patient care, while reducing inefficiencies in communication and transaction completion. The solution can enable rich, bi-directional interactions between payors and providers in a flexible, bi-directional, multi-tenant service, available alone via API, or in the context of our collaboration application portal.
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Authorizations:
Allows provider staff to submit near real-time authorizations and conduct subsequent status inquiries directly with authorizing health plans. The simplified workflow guides provider choices by offering relevant information such as preferred-provider status.
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Advanced Referrals:
Empowers providers to submit and access referrals in near real time. Key features of this application include a user-friendly, multi-payor portal, easily configurable business terms and automated decision support. The application supports provider offices with a broad range of referral information. This can result in increased provider productivity and reduced operational costs through near real-time access to up-to-date and complete referral network information.
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Provider Data Management
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A web-based, multi-payer application that allows providers to update, validate, and attest to their provider information directly. The Application allows providers to communicate provider information updates to health plans in support of the Centers for Medicare and Medicaid Services (CMS) and state-based network adequacy mandates. The NaviNet Open Provider Data Management Application enables health plans to improve provider directory accuracy, increase operational efficiency, and adhere to compliance and audit checks.
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Direct sales organization:
We leverage domain and subject matter expertise, market credibility, thought leadership, and relationships of our executives, senior management, and product leaders in our sales efforts. Our direct sales organization is divided into two focused teams, one dedicated to commercializing our GPS Cancer solution, and the other focused on NantHealth’s health information technology solutions portfolio. These two primary direct coverage teams include both sales professionals searching for new accounts and client engagement sales professionals responsible for developing existing accounts. Furthermore, sales professionals have unique expertise and specialized coverage for health plans, self-insured employers, health systems, and individual providers. Our account management organization is responsible for the continuity of current client relationships and the expansion of those relationships to include additional solutions and services.
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Resale and channel partnership:
In the United States, we have entered strategic resale arrangements with major partners, including EHR vendors (including Allscripts), in-hospital medical devices manufacturers and health plans who resell our solutions to their customer base. Internationally, we have entered resale arrangements with major telecommunications companies, systems integrators and other strategic distributors to accelerate our market adoption. Reseller revenue in 2016 and 2015 was $19.0 million and $9.2 million, respectively.
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Genetic testing providers and platforms, such as Foundation Medicine, Caris Life Sciences, Personal Genome Diagnostics, and academic hospitals and research centers, including University of Michigan, Baylor Medical Genetics Laboratories, and Washington University in St. Louis;
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EHR vendors, such as Allscripts, athenahealth, Cerner, Epic, Flatiron Health, GE Healthcare, McKesson, Meditech, and Quality Systems;
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HIE and integration vendors, such as Allscripts, Intersystems, and Orion Health; and
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Healthcare IT decision support vendors, such as The Advisory Board Company, Castlight Health, HealthCatalyst, IBM, Inovalon and Truven (acquired by IBM).
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Breadth and depth of application functionality;
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Ease of use and performance;
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Network strength and level of user adoption;
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Client testimonials and recommendations;
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Breadth of client base;
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Cloud-based delivery model;
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Competitive and understandable pricing;
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Ability to deliver actionable information in a relevant time period;
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Size and scope of payor clinical policy knowledge;
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Sale and marketing capabilities of vendor;
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Financial stability of vendor;
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Ability to integrate with legacy enterprise infrastructures and third-party applications; and
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Ability to innovate and respond rapidly to client needs and regulatory changes.
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Clinical operating system architectures and clinical operating system servers;
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Designs for a medication container top;
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Computer program generation systems and methods for creating a computer program by recording the actions of a user to easily repeat tasks to streamline workflow;
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Computer systems and methods for monitoring changes in one or more variables in one or more target applications to efficiently synchronize computer applications; and
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Hub-spoke model health care transaction systems and methods where a user interface communication bridge allows users to query disparate, remote databases and supports converting health care data to and from specific formats.
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Healthcare data networks and management methods for synchronizing healthcare databases;
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Electronic caps for medication containers featuring e-ink and curved displays;
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Night light devices operable in a medication compliance system;
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Methods, logic, and apparatus for generating a healthcare signature for an individual;
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Methods, logic, and apparatus for facilitating access to aggregated medical data;
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Methods, logic, and apparatus for generating visual displays of medical data;
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Methods, media, and apparatus for generating and executing individual patient care plans;
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Methods, media, and apparatus for analyzing clinical, operational, and financial outcomes resulting from execution of patient care plans to determine status of medical care facilities and patients;
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Methods and apparatus where personal health operating system uses n-gram analysis of sensor data to determine a person’s fitness;
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Methods and systems for receiving, mapping, and routing medical event data associated with a patient;
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Clinical operating system servers;
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Methods, systems, and apparatus for modifying alarms at a medical device based on an alarm fatigue level of a user;
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Systems and apparatus for adjusting the measurement latency of a patient sensor based on the health status of the patient to achieve real-time monitoring;
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Systems and apparatus for reconfiguring networked patient sensors;
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Systems for querying an electronic medical record database from a mobile device over a cellular network; and
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Methods, systems, and media for data analysis, secured by a homomorphic encryption scheme, in a healthcare network environment.
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Building and cultivating RELATIONSHIPS with our clients and each other. Treating individuals with dignity and respect and contributing to the success of others.
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Demonstrating INTEGRITY by being intellectually honest, doing what you say, and engaging with others from a point of honesty and trust.
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Delivering excellence in SERVICE. Aspiring to be the best through quality outcomes, partnering to optimize solutions, and holding self and others accountable for success.
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Actively seeking out the opportunity to ELEVATE by speaking up, contributing feedback and ideas, and advancing the organization’s mission and purpose.
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increase our sales and marketing efforts to drive market adoption of NantHealth solutions, GPS Cancer, NantOS and NantOS apps;
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address competitive developments;
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fund development and marketing efforts of any future platforms and solutions;
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expand adoption of GPS Cancer and eviti platform solutions into critical illnesses outside of oncology;
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acquire, license or invest in complimentary businesses, technologies or service offerings; and
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finance capital expenditures and general and administrative expenses.
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our success in driving adoption of GPS Cancer;
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our success in making GPS cancer reimbursable by payors;
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our ability to achieve revenue growth;
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the cost of expanding our products and service offerings, including our sales and marketing efforts;
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our ability to achieve interoperability across all of our acquired businesses, technologies and service offerings to deliver networking effects to our clients;
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the effect of competing technological and market developments;
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costs related to international expansion; and
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the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
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our ability to convince key thought lenders, physicians and caregivers and other key oncology stakeholders of the clinical utility of our entire product offering and its potential advantages over existing sequencing tests, specifically, the advantages of our RNA sequencing, which maps oncology disease pathways versus a patient’s own germline and our quantitative proteomic analysis;
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the willingness of physicians, self-insured employers, payors and healthcare providers to utilize GPS Cancer; and
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the willingness of commercial third-party payors and government payors to reimburse GPS Cancer, the scope and amount of which will affect patients’ willingness or ability to pay for GPS Cancer and likely heavily influence our customers’ decisions to recommend GPS Cancer.
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the price, performance and functionality of our offerings;
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the availability, price, performance and functionality of competing solutions;
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our ability to develop complementary applications and services;
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our continued ability to access the pricing and claims data necessary to enable us to deliver reliable data in our cost estimation and price transparency offering to customers;
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the stability, performance and security of our hosting infrastructure and hosting services;
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changes in healthcare laws, regulations or trends; and
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the business environment of our clients, in particular, headcount reductions by our clients.
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damage from fire, power loss and other natural disasters;
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communications failures;
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software and hardware errors, failures and crashes;
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security breaches, computer viruses and similar disruptive problems; and
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other potential interruptions.
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Electronic Health Record, or EHR, vendors such as Allscripts Healthcare Solutions, Inc., or Allscripts, athenahealth, Inc., or athenahealth, Cerner Corporation, or Cerner, Epic Systems Corporation, or Epic, Flatiron Health Inc., or Flatiron, GE Healthcare, Inc., or GE Healthcare, McKesson Corporation, or McKesson, Medical Information Technology, Inc., or Meditech, and Quality Systems, Inc., or Quality Systems;
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Health Information Exchange, or HIE, and integration vendors such as Allscripts, Intersystems Corporation, or Intersystems, and Orion Health Group Limited, or Orion; and
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Healthcare information technology decision support vendors such as The Advisory Board Company, Castlight Health, Inc., or Castlight Health, HealthCatalyst, Inc., or HealthCatalyst, International Business Machines Corporation, or IBM, Inovalon Holdings, Inc., or Inovalon, and Truven Health Analytics, or Truven (acquired by IBM).
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we or any collaborative partner will make timely filings with the FDA;
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the FDA will act favorably or quickly on these submissions;
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we or any collaborative partner will not be required to submit additional information;
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we or any collaborative partner will not be required to submit an application for premarket approval, rather than a 510(k) premarket notification submission as described below; or
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other significant difficulties and costs related to obtaining FDA clearance or approval will not be encountered.
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acquiring appropriate and cost-efficient supplies to produce our sequencing and molecular analysis solutions;
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delivering our sequencing and molecular analysis solutions in a timely manner to us;
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continuing to keep our sequencing and molecular analysis solutions up to date and on pace with current clinical and market developments;
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filing, prosecuting and maintaining patents that cover our sequencing and molecular analysis solutions;
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complying with CLIA regulations and maintaining a CLIA license and all other applicable state laboratory licenses, including through periodic inspections; and
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hiring qualified personnel experienced in completing highly complex laboratory tests.
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inability to integrate or benefit from acquired technologies or services in a profitable manner;
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unanticipated costs or liabilities associated with the acquisition;
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difficulty integrating the accounting systems, operations and personnel of the acquired business;
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difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;
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difficulty converting the customers of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company;
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difficulty in cross-selling our existing solutions and offerings to the acquired business’ customers;
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diversion of management’s attention from other business concerns;
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adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;
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the potential loss of key employees;
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use of resources that are needed in other parts of our business; and
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use of substantial portions of our available cash to consummate the acquisition.
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requirements or preferences for domestic products or solutions, which could reduce demand for our products;
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differing existing or future regulatory and certification requirements;
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management communication and integration problems resulting from cultural and geographic dispersion;
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greater difficulty in collecting accounts receivable and longer collection periods;
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difficulties in enforcing contracts;
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difficulties and costs of staffing and managing non-U.S. operations;
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the uncertainty of protection for intellectual property rights in some countries;
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tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products;
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greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including export and antitrust regulations, the FCPA and any trade regulations ensuring fair trade practices;
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heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
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potentially adverse tax consequences, including multiple and possibly overlapping tax structures; and
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political and economic instability, political unrest and terrorism.
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breach of our contractual obligations to clients, which may cause our clients to terminate their relationship with us and may result in potentially significant financial obligations to our clients;
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investigation by the federal and state regulatory authorities empowered to enforce HIPAA and other data privacy and security laws, which include the U.S. Department of Health and Human Services, or HHS, the Federal Trade Commission and state attorneys general, and the possible imposition of civil and criminal penalties;
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private litigation by individuals adversely affected by any misuse of their personal health information for which we are responsible; and
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negative publicity, which may decrease the willingness of current and potential future customers to work with us and negatively affect our sales and operating results.
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not experimental or investigational;
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medically necessary;
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appropriate for the specific patient;
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cost-effective;
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supported by peer-reviewed publications;
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included in clinical practice guidelines; and
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supported by clinical utility studies.
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requires each medical device manufacturer to pay an excise tax equal to 2.3% of the price for which such manufacturer sells its medical devices. This tax may apply to GPS Cancer and some or all of our products which are in development. The excise tax has been temporarily suspended for calendar years 2016 and 2017, but will be reinstated in 2018 without additional Congressional action.
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mandates a reduction in payments for clinical laboratory services paid under the Medicare Clinical Laboratory Fee Schedule of 1.75% for the years 2011 through 2015. In addition, a productivity adjustment is made to the fee schedule payment amount.
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creates initiatives to promote quality indicators in payment methodologies and the coordination and promotion of research on comparative clinical effectiveness of different technologies and procedures.
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announcements by us or our competitors of new products, significant contracts, commercial relationships or capital commitments and the timing of these introductions or announcements;
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adverse regulatory or reimbursement announcements;
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announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments;
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the results of our efforts to develop additional offerings;
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our dependence on our customers, partners and collaborators;
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regulatory or legal developments in the United States or other countries;
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reimbursement decisions regarding our future molecular profiling solutions, including GPS Cancer;
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developments or disputes concerning patent applications, issued patents or other proprietary rights;
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the recruitment or departure of key management or other personnel;
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our ability to successfully commercialize our future products;
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the level of expenses related to any of our products;
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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
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actual or anticipated quarterly variations in our financial results or those of our competitors;
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any change to the composition of the board of directors or key personnel;
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expiration of contractual lock-up agreements with our executive officers, directors and security holders;
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sales of common stock by us or our stockholders in the future, as well as the overall trading volume of our common stock;
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changes in the structure of healthcare payment systems;
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commencement of, or our involvement in, litigation, including claims by our equityholders pertaining to our conversion from a Delaware limited liability company into a Delaware corporation or the pending class action litigation;
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general economic, industry and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies; and
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the other factors described in this “Risk Factors” section.
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being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
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not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
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reduced disclosure obligations regarding executive compensation; and
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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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a requirement that special meetings of stockholders be called only by the board of directors, the president or the chief executive officer;
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advance notice requirements for stockholder proposals and nominations for election to our board of directors; and
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the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.
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We will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.
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We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.
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We are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.
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We will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification.
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The rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons.
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We may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
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United States
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Boston, Massachusetts
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Dallas, Texas
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Rockville, Maryland
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Mayfield Heights, Ohio
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Melbourne, Florida
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Panama City, Florida
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Philadelphia, Pennsylvania
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Phoenix, Arizona
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International
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Belfast, Northern Ireland
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London, United Kingdom
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Hyderabad, India
|
City
|
State
|
Country
|
Sqft
|
Type
|
Business Nature/Use
|
Boston
|
MA
|
USA
|
68,070
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Panama City
|
FL
|
USA
|
51,288
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Belfast
|
NI
|
UK
|
15,500
|
Lease
|
R&D, engineering, administrative
|
Phoenix
|
AZ
|
USA
|
4,865
|
Lease
|
administrative, sales, client support, professional services
|
Dallas
|
TX
|
USA
|
15,371
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Melbourne
|
FL
|
USA
|
12,159
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Phoenix
|
AZ
|
USA
|
6,365
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Philadelphia
|
PA
|
USA
|
12,640
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Reading
|
BRK
|
UK
|
2,488
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Mayfield Heights
|
OH
|
USA
|
4,156
|
Lease
|
R&D, engineering
|
Hyderabad
|
TS
|
India
|
10,596
|
Lease
|
R&D, engineering, administrative
|
|
|
|
203,498
|
|
|
|
|
Price Range
|
||||||
Year Ended December 31, 2016
|
|
High
|
Low
|
|||||
|
|
|
|
|
||||
Second Quarter (beginning June 2, 2016)
|
|
$
|
18.59
|
|
|
$
|
12.50
|
|
Third Quarter
|
|
15.35
|
|
|
9.96
|
|
||
Fourth Quarter
|
|
13.69
|
|
|
9.71
|
|
Chart information
|
Jun 2,
2016 |
Jun 30,
2016 |
Jul 31,
2016 |
Aug 31,
2016 |
Sep 30,
2016 |
Oct 31,
2016 |
Nov 30,
2016 |
Dec 31,
2016 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
NantHealth, Inc.
|
100.00
|
|
$
|
67.24
|
|
$
|
54.33
|
|
$
|
70.52
|
|
$
|
71.01
|
|
$
|
70.63
|
|
$
|
62.02
|
|
$
|
53.47
|
|
NASDAQ Composite Index
|
100.00
|
|
$
|
97.41
|
|
$
|
103.84
|
|
$
|
104.87
|
|
$
|
106.85
|
|
$
|
104.38
|
|
$
|
107.09
|
|
$
|
108.28
|
|
NASDAQ Biotechnology Index
|
100.00
|
|
$
|
89.99
|
|
$
|
101.18
|
|
$
|
98.17
|
|
$
|
101.14
|
|
$
|
89.62
|
|
$
|
95.70
|
|
$
|
92.64
|
|
Consolidated Statement of Operations Data:
|
|
Year Ended December 31,
|
||||||||||
(Dollars in thousands, except per share data)
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Software-related revenue
|
|
$
|
66,601
|
|
|
$
|
35,350
|
|
|
$
|
18,150
|
|
Maintenance
|
|
14,238
|
|
|
10,452
|
|
|
5,345
|
|
|||
Sequencing and molecular analysis
|
|
604
|
|
|
75
|
|
|
—
|
|
|||
Other services
|
|
18,937
|
|
|
12,427
|
|
|
10,426
|
|
|||
Total net revenue
|
|
$
|
100,380
|
|
|
$
|
58,304
|
|
|
$
|
33,921
|
|
|
|
|
|
|
|
|
||||||
Cost of Revenue:
|
|
|
|
|
|
|
||||||
Software-related cost of revenue
|
|
$
|
26,547
|
|
|
$
|
7,109
|
|
|
$
|
9,051
|
|
Maintenance
|
|
2,750
|
|
|
1,874
|
|
|
438
|
|
|||
Sequencing and molecular analysis
|
|
1,987
|
|
|
39
|
|
|
—
|
|
|||
Other services
|
|
25,462
|
|
|
15,202
|
|
|
7,047
|
|
|||
Amortization of developed technologies
|
|
15,588
|
|
|
10,585
|
|
|
7,694
|
|
|||
Total cost of revenue
|
|
72,334
|
|
|
34,809
|
|
|
24,230
|
|
|||
|
|
|
|
|
|
|
||||||
Gross profit
|
|
28,046
|
|
|
23,495
|
|
|
9,691
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Expenses:
|
|
|
|
|
|
|
||||||
Amortization of software license and acquisition-related assets
|
|
$
|
7,257
|
|
|
$
|
1,542
|
|
|
$
|
7,033
|
|
Impairment of intangible asset
|
|
—
|
|
|
—
|
|
|
24,150
|
|
|||
Other operating expenses
|
|
182,290
|
|
|
92,856
|
|
|
63,188
|
|
|||
Total operating expenses
|
|
$
|
189,547
|
|
|
$
|
94,398
|
|
|
$
|
94,371
|
|
|
|
|
|
|
|
|
||||||
Loss from operations (2)
|
|
$
|
(161,501
|
)
|
|
$
|
(70,903
|
)
|
|
$
|
(84,680
|
)
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
|
$
|
(6,340
|
)
|
|
$
|
(627
|
)
|
|
$
|
(980
|
)
|
|
|
|
|
|
|
|
||||||
(Loss) income from related party equity method investments
|
|
$
|
(40,994
|
)
|
|
$
|
(2,584
|
)
|
|
$
|
1,525
|
|
|
|
|
|
|
|
|
||||||
Loss before income taxes
|
|
$
|
(206,913
|
)
|
|
$
|
(71,606
|
)
|
|
$
|
(84,612
|
)
|
|
|
|
|
|
|
|
||||||
Provision for (benefit from) income taxes (3)
|
|
$
|
(22,811
|
)
|
|
$
|
405
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
||||||
Net loss (2) (3) (4)
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,617
|
)
|
|
|
|
|
|
|
|
||||||
Basic and diluted net loss per share - common stock (1)
|
|
$
|
(1.69
|
)
|
|
$
|
(0.99
|
)
|
|
$
|
(1.13
|
)
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding basic and diluted - common stock
|
|
111,600,650
|
|
|
88,970,842
|
|
|
74,505,127
|
|
|
|
|
|
|
|
|
||||||
Consolidated Balance Sheets Data:
|
|
December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents and marketable securities
|
|
$
|
160,353
|
|
|
$
|
7,232
|
|
|
$
|
225,570
|
|
Working capital (deficit)
|
|
128,330
|
|
|
(10,210
|
)
|
|
146,221
|
|
|||
Total assets
|
|
684,307
|
|
|
411,953
|
|
|
310,875
|
|
|||
Long term notes payable
|
|
191,040
|
|
|
—
|
|
|
—
|
|
|||
Total liabilities
|
|
272,713
|
|
|
60,906
|
|
|
96,074
|
|
|||
Redeemable series F units
|
|
—
|
|
|
166,042
|
|
|
150,000
|
|
|||
Accumulated deficit
|
|
(475,273
|
)
|
|
(291,171
|
)
|
|
(219,160
|
)
|
|||
Total stockholders' / members' equity
|
|
411,594
|
|
|
185,005
|
|
|
64,801
|
|
|||
Total equity and redeemable stock
|
|
411,594
|
|
|
351,047
|
|
|
214,801
|
|
(1)
|
The net loss per share and weighted-average shares outstanding 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. The net loss per share for the common stock for the years ended December 31, 2016 and 2015 reflects $4,958 and $16,042 in accretion value allocated to the redeemable common stock, respectively. 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.
|
(2)
|
Loss from operations for the year ended December 31, 2016 included $
54.1 million
phantom units stock based compensation, which started to be recognized upon our Company's going IPO.
|
(3)
|
Benefit from income taxes, net, in the amount of $8.7 million was recorded in 2016 arising from the deferred tax asset valuation allowance release due to the LLC conversion to a C corporation and forming a federal tax consolidated group. The deferred tax liability previously recorded in purchase accounting of NaviNet became a source of income for the valuation allowance release. Also benefit from income taxes, net, in the amount of $8.6 million was recorded in 2016 arising from recording a deferred tax expense in additional paid in capital due to the convertible debt bifurcation between equity and liability. We are required to record an income tax benefit in continuing operations as an offset to the deferred tax expense recorded in equity.
|
(4)
|
Our net loss for the year ended December 31, 2016 included a $29.8 million non-cash impairment charge as a result of our determination that the fair value of our investment in NantOmics had declined below our carrying value as of December 31, 2016, and that this decline in value was other than temporary.
|
(Dollars in thousands, except per share amounts)
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss attributed to NantHealth
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,425
|
)
|
|
|
|
|
|
|
|
||||||
Adjustments to GAAP net loss attributed to NantHealth:
|
|
|
|
|
|
|
||||||
Loss (income) from related party equity method investments
|
|
40,994
|
|
|
2,584
|
|
|
(1,525
|
)
|
|||
Stock-based compensation expense
|
|
53,952
|
|
|
1,429
|
|
|
340
|
|
|||
Corporate restructuring
|
|
2,794
|
|
|
1,905
|
|
|
839
|
|
|||
BP settlement
|
|
(842
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition related compensation expense
|
|
4,814
|
|
|
—
|
|
|
—
|
|
|||
Sales incentive
|
|
2,966
|
|
|
—
|
|
|
—
|
|
|||
Long-lived assets impairment charges
|
|
—
|
|
|
—
|
|
|
24,150
|
|
|||
Change in fair value of derivatives liability
|
|
(1,228
|
)
|
|
—
|
|
|
—
|
|
|||
Non-cash interest expense related to convertible notes
|
|
108
|
|
|
—
|
|
|
—
|
|
|||
Intangible amortization
|
|
22,845
|
|
|
12,127
|
|
|
14,727
|
|
|||
Provision for (benefit from) income taxes
|
|
(23,260
|
)
|
|
403
|
|
|
5
|
|
|||
Total adjustments to GAAP net loss attributed to NantHealth
|
|
103,143
|
|
|
18,448
|
|
|
38,536
|
|
|||
Net loss - Non-GAAP
|
|
$
|
(80,959
|
)
|
|
$
|
(53,563
|
)
|
|
$
|
(45,889
|
)
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding
|
|
111,600,650
|
|
|
88,970,842
|
|
|
74,505,127
|
|
|||
Weighted average Series F/redeemable stock
|
|
5,005,855
|
|
|
10,714,285
|
|
|
5,724,070
|
|
|||
Shares outstanding - Non-GAAP
|
|
116,606,505
|
|
|
99,685,127
|
|
|
80,229,197
|
|
|||
|
|
|
|
|
|
|
||||||
Net loss per share - Non-GAAP
|
|
$
|
(0.69
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.57
|
)
|
•
|
introduce new marketing, education and engagement efforts and foster relationships across the oncology community to drive adoption of GPS Cancer;
|
•
|
pursue reimbursement of GPS Cancer from regional and national third-party payors and government payors and self-insured employers;
|
•
|
publish scientific and medical advances;
|
•
|
strengthen our commercial organization to increase our NantHealth solutions client base and to broaden usage of our solutions by existing clients who currently use only NantOS, specific NantOS apps or suites of NantOS apps; and
|
•
|
develop new features and functionality for NantHealth solutions to address the needs of current and future healthcare provider and payor, self-insured employer and biopharmaceutical company clients.
|
•
|
NDO
In June 2014, we acquired NDO, which provides healthcare interoperability and informatics solutions through its cOS platform to address population health issues. Our results of operations include the impact of the NDO acquisition as of June 2014.
|
•
|
NantOmics
In June 2015, we invested a substantial portion of our available capital in NantOmics, a majority owned subsidiary of NantWorks. Our investment represents approximately 14.3% of the issued and outstanding membership interests of NantOmics. Our relationship with NantOmics provides us with access to what we believe is the nation’s only CAP- and CLIA-certified whole genome and quantitative proteomics laboratory.
|
•
|
Healthcare Solutions (“HCS”)
In July 2015, we acquired certain assets related to HCS business from Harris Corporation. We believe the acquired assets will help complex healthcare delivery organizations achieve better patient outcomes, clinical and administrative workflow efficiency and stronger collaboration across the continuum of care.
|
•
|
NaviNet
In January 2016, we acquired NaviNet, which provides a secure collaboration network connecting approximately 36 health plans and which is estimated to be utilized in more than 70% of the nation’s physicians’ offices during the fourth quarter of 2016. NaviNet Open will serve as a nationwide scalable and secure web-based portal for patients and providers.
|
(Dollars in thousands, except per share amounts)
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss attributed to NantHealth
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,425
|
)
|
|
|
|
|
|
|
|
||||||
Adjustments to GAAP net loss attributed to NantHealth:
|
|
|
|
|
|
|
||||||
Loss (income) from related party equity method investments
|
|
40,994
|
|
|
2,584
|
|
|
(1,525
|
)
|
|||
Stock-based compensation expense
|
|
53,952
|
|
|
1,429
|
|
|
340
|
|
|||
Corporate restructuring
|
|
2,794
|
|
|
1,905
|
|
|
839
|
|
|||
BP settlement
|
|
(842
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition related compensation expense
|
|
4,814
|
|
|
—
|
|
|
—
|
|
|||
Sales incentive
|
|
2,966
|
|
|
—
|
|
|
—
|
|
|||
Long-lived assets impairment charges
|
|
—
|
|
|
—
|
|
|
24,150
|
|
|||
Change in fair value of derivatives liability
|
|
(1,228
|
)
|
|
—
|
|
|
—
|
|
|||
Non-cash interest expense related to convertible notes
|
|
108
|
|
|
—
|
|
|
—
|
|
|||
Intangible amortization
|
|
22,845
|
|
|
12,127
|
|
|
14,727
|
|
|||
Provision for (benefit from) income taxes
|
|
(23,260
|
)
|
|
403
|
|
|
5
|
|
|||
Total adjustments to GAAP net loss attributed to NantHealth
|
|
103,143
|
|
|
18,448
|
|
|
38,536
|
|
|||
Net loss - Non-GAAP
|
|
$
|
(80,959
|
)
|
|
$
|
(53,563
|
)
|
|
$
|
(45,889
|
)
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding (1)
|
|
111,600,650
|
|
|
88,970,842
|
|
|
74,505,127
|
|
|||
Weighted average Series F/redeemable stock (1) (2)
|
|
5,005,855
|
|
|
10,714,285
|
|
|
5,724,070
|
|
|||
Shares outstanding - Non-GAAP (1)
|
|
116,606,505
|
|
|
99,685,127
|
|
|
80,229,197
|
|
|||
|
|
|
|
|
|
|
||||||
Net loss per share - Non-GAAP (1)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.57
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss per common share - GAAP
|
|
$
|
(1.69
|
)
|
|
$
|
(0.99
|
)
|
|
$
|
(1.13
|
)
|
Adjustments to GAAP net loss per common share:
|
|
|
|
|
|
|
||||||
Loss (income) from related party equity method investments
|
|
0.37
|
|
|
0.03
|
|
|
(0.02
|
)
|
|||
Stock-based compensation expense
|
|
0.48
|
|
|
0.02
|
|
|
—
|
|
|||
Corporate restructuring
|
|
0.03
|
|
|
0.02
|
|
|
0.01
|
|
|||
BP settlement
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition related compensation expense
|
|
0.04
|
|
|
—
|
|
|
—
|
|
|||
Sales incentive
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|||
Long-lived assets impairment charges
|
|
—
|
|
|
—
|
|
|
0.32
|
|
|||
Change in fair value of derivatives liability
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|||
Non-cash interest expense related to convertible notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Intangible amortization
|
|
0.20
|
|
|
0.14
|
|
|
0.20
|
|
|||
Provision for (benefit from) income taxes
|
|
(0.21
|
)
|
|
—
|
|
|
—
|
|
|||
Accretion to redemption value of Series F/redeemable common stock
|
|
0.04
|
|
|
0.18
|
|
|
—
|
|
|||
Dilution from Series F/redeemable common stock
|
|
0.04
|
|
|
0.06
|
|
|
0.05
|
|
|||
Total adjustments to GAAP net loss per common share
|
|
1.00
|
|
|
0.45
|
|
|
0.56
|
|
|||
Net loss per share - Non-GAAP
|
|
$
|
(0.69
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.57
|
)
|
(1)
|
The net loss per share - 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. Please see Note 18 to our audited financial statements included in Item 8 of this Annual Report on Form 10-K for additional information related to the LLC conversion and related transactions.
|
(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. Please see Note 18 to our audited financial statements included in Item 8 of this Annual Report on Form 10-K for additional information related to the LLC conversion and related transactions.
|
▪
|
Software, middleware and hardware
-
Software and hardware cost of revenue includes third-party software and hardware costs directly associated with our solutions.
|
▪
|
Software-as-a-service
-
SaaS cost of revenue includes personnel-related, amortization of deferred implementation costs and other direct costs associated with the delivery and hosting of NantOS and NantOS apps, including eviti, our cancer-decision support solution, and NaviNet on a subscription basis.
|
▪
|
Maintenance
- Maintenance cost of revenue includes personnel-related and other direct costs associated with the ongoing support or maintenance we provide for our clients.
|
▪
|
Sequencing and molecular analysis
- Sequencing and molecular analysis cost of revenue includes internal costs associated with these services and amounts due to NantOmics under our Reseller Agreement for the sequencing and analysis of whole genome, DNA, RNA and proteomic results.
|
▪
|
Other services
- Other services cost of revenue includes personnel-related costs, amortization of deferred implementation costs and other direct costs associated with software training and implementation services provided to our clients as well as direct expenses relating to our nursing and therapy services provided to patients in a home care setting.
|
(Dollars in thousands except per share amounts)
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Software and hardware
|
|
$
|
8,242
|
|
|
$
|
14,616
|
|
|
$
|
8,372
|
|
Software–as-a-service
|
|
58,359
|
|
|
20,734
|
|
|
9,778
|
|
|||
Total software-related revenue
|
|
66,601
|
|
|
35,350
|
|
|
18,150
|
|
|||
Maintenance
|
|
14,238
|
|
|
10,452
|
|
|
5,345
|
|
|||
Sequencing and molecular analysis
|
|
604
|
|
|
75
|
|
|
—
|
|
|||
Other services
|
|
18,937
|
|
|
12,427
|
|
|
10,426
|
|
|||
Total net revenue
|
|
100,380
|
|
|
58,304
|
|
|
33,921
|
|
|||
|
|
|
|
|
|
|
||||||
Cost of Revenue:
|
|
|
|
|
|
|
||||||
Software and hardware
|
|
1,834
|
|
|
90
|
|
|
1,025
|
|
|||
Software-as-a-service
|
|
24,713
|
|
|
7,019
|
|
|
8,026
|
|
|||
Total software-related cost of revenue
|
|
26,547
|
|
|
7,109
|
|
|
9,051
|
|
|||
Maintenance
|
|
2,750
|
|
|
1,874
|
|
|
438
|
|
|||
Sequencing and molecular analysis
|
|
1,987
|
|
|
39
|
|
|
—
|
|
|||
Other services
|
|
25,462
|
|
|
15,202
|
|
|
7,047
|
|
|||
Amortization of developed technologies
|
|
15,588
|
|
|
10,585
|
|
|
7,694
|
|
|||
Total cost of revenue
|
|
72,334
|
|
|
34,809
|
|
|
24,230
|
|
|||
|
|
|
|
|
|
|
||||||
Gross profit
|
|
28,046
|
|
|
23,495
|
|
|
9,691
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Expenses:
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
|
120,653
|
|
|
69,021
|
|
|
46,209
|
|
|||
Research and development
|
|
61,637
|
|
|
23,835
|
|
|
16,979
|
|
|||
Amortization of software license and acquisition-related assets
|
|
7,257
|
|
|
1,542
|
|
|
7,033
|
|
|||
Impairment of intangible asset
|
|
—
|
|
|
—
|
|
|
24,150
|
|
|||
Total operating expenses
|
|
189,547
|
|
|
94,398
|
|
|
94,371
|
|
|||
Loss from operations
|
|
(161,501
|
)
|
|
(70,903
|
)
|
|
(84,680
|
)
|
|||
Interest expense, net
|
|
(6,340
|
)
|
|
(627
|
)
|
|
(980
|
)
|
|||
Other income (expense), net
|
|
1,922
|
|
|
2,508
|
|
|
(477
|
)
|
|||
(Loss) income from related party equity method investments
|
|
(40,994
|
)
|
|
(2,584
|
)
|
|
1,525
|
|
|||
Loss before income taxes
|
|
(206,913
|
)
|
|
(71,606
|
)
|
|
(84,612
|
)
|
|||
Provision for (benefit from) income taxes
|
|
(22,811
|
)
|
|
405
|
|
|
5
|
|
|||
Net loss
|
|
(184,102
|
)
|
|
(72,011
|
)
|
|
(84,617
|
)
|
|||
Less: Net loss attributed to non-controlling interests
|
|
—
|
|
|
—
|
|
|
(192
|
)
|
|||
Net loss attributed to NantHealth
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,425
|
)
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share (1):
|
|
|
|
|
|
|
||||||
Basic and diluted - common stock
|
|
$
|
(1.69
|
)
|
|
$
|
(0.99
|
)
|
|
$
|
(1.13
|
)
|
Basic and diluted - redeemable common stock
|
|
$
|
0.99
|
|
|
$
|
1.50
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding (1):
|
|
|
|
|
|
|
||||||
Basic and diluted - common stock
|
|
111,600,650
|
|
|
88,970,842
|
|
|
74,505,127
|
|
|||
Basic and diluted - redeemable common shares
|
|
5,005,855
|
|
|
10,714,285
|
|
|
N/A
|
|
(1)
|
The net income (loss) per share and weighted-average shares outstanding 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 net income (loss) per share for the common stock for the years ended December 31, 2016 and 2015 reflects $4,958 and $16,042 in accretion value allocated to the redeemable common stock, respectively. 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.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Revenue:
|
|
|
|
|
|
|
|||
Software and hardware
|
|
8.2
|
%
|
|
25.1
|
%
|
|
24.7
|
%
|
Software–as-a-service
|
|
58.1
|
%
|
|
35.5
|
%
|
|
28.8
|
%
|
Total software-related revenue
|
|
66.3
|
%
|
|
60.6
|
%
|
|
53.5
|
%
|
Maintenance
|
|
14.2
|
%
|
|
17.9
|
%
|
|
15.8
|
%
|
Sequencing and molecular analysis
|
|
0.6
|
%
|
|
0.1
|
%
|
|
0.0
|
%
|
Other services
|
|
18.9
|
%
|
|
21.4
|
%
|
|
30.7
|
%
|
Total net revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|||
Cost of Revenue:
|
|
|
|
|
|
|
|||
Software and hardware
|
|
1.8
|
%
|
|
0.2
|
%
|
|
3.0
|
%
|
Software-as-a-service
|
|
24.6
|
%
|
|
12.0
|
%
|
|
23.7
|
%
|
Total software-related cost of revenue
|
|
26.4
|
%
|
|
12.2
|
%
|
|
26.7
|
%
|
Maintenance
|
|
2.7
|
%
|
|
3.2
|
%
|
|
1.3
|
%
|
Sequencing and molecular analysis
|
|
2.0
|
%
|
|
0.1
|
%
|
|
0.0
|
%
|
Other services
|
|
25.4
|
%
|
|
26.1
|
%
|
|
20.8
|
%
|
Amortization of developed technologies
|
|
15.6
|
%
|
|
18.1
|
%
|
|
22.6
|
%
|
Total cost of revenue
|
|
72.1
|
%
|
|
59.7
|
%
|
|
71.4
|
%
|
|
|
|
|
|
|
|
|||
Gross profit
|
|
27.9
|
%
|
|
40.3
|
%
|
|
28.6
|
%
|
|
|
|
|
|
|
|
|||
Operating Expenses:
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
|
120.2
|
%
|
|
118.4
|
%
|
|
136.2
|
%
|
Research and development
|
|
61.4
|
%
|
|
40.9
|
%
|
|
50.1
|
%
|
Amortization of software license and acquisition-related assets
|
|
7.2
|
%
|
|
2.6
|
%
|
|
20.7
|
%
|
Impairment of intangible asset
|
|
0.0
|
%
|
|
0.0
|
%
|
|
71.2
|
%
|
Total operating expenses
|
|
188.8
|
%
|
|
161.9
|
%
|
|
278.2
|
%
|
Loss from operations
|
|
(160.9
|
%)
|
|
(121.6
|
%)
|
|
(249.6
|
%)
|
Interest expense, net
|
|
(6.3
|
%)
|
|
(1.1
|
%)
|
|
(2.9
|
%)
|
Other income (expense), net
|
|
1.9
|
%
|
|
4.3
|
%
|
|
(1.4
|
%)
|
(Loss) income from equity method investments
|
|
(40.8
|
%)
|
|
(4.4
|
%)
|
|
4.5
|
%
|
Loss before income taxes
|
|
(206.1
|
%)
|
|
(122.8
|
%)
|
|
(249.4
|
%)
|
Provision for (benefit from) income taxes
|
|
22.7
|
%
|
|
(0.7
|
%)
|
|
(0.1
|
%)
|
Net loss
|
|
(183.4
|
%)
|
|
(123.5
|
%)
|
|
(249.5
|
%)
|
Less: Net loss attributed to non-controlling interests
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.6
|
%
|
Net loss attributed to NantHealth
|
|
(183.4
|
%)
|
|
(123.5
|
%)
|
|
(248.9
|
%)
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
|||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
|||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|||||||||||
Software and hardware
|
|
$
|
8,242
|
|
|
$
|
14,616
|
|
|
$
|
8,372
|
|
|
$
|
(6,374
|
)
|
|
-43.6
|
%
|
|
$
|
6,244
|
|
|
74.6%
|
Software–as-a-service
|
|
58,359
|
|
|
20,734
|
|
|
9,778
|
|
|
37,625
|
|
|
181.5
|
%
|
|
10,956
|
|
|
112.0%
|
|||||
Total software-related revenues
|
|
66,601
|
|
|
35,350
|
|
|
18,150
|
|
|
31,251
|
|
|
88.4
|
%
|
|
17,200
|
|
|
94.8%
|
|||||
Maintenance
|
|
14,238
|
|
|
10,452
|
|
|
5,345
|
|
|
3,786
|
|
|
36.2
|
%
|
|
5,107
|
|
|
95.5%
|
|||||
Sequencing and molecular analysis
|
|
604
|
|
|
75
|
|
|
—
|
|
|
529
|
|
|
705.3
|
%
|
|
75
|
|
|
-
|
|||||
Other services
|
|
18,937
|
|
|
12,427
|
|
|
10,426
|
|
|
6,510
|
|
|
52.4
|
%
|
|
2,001
|
|
|
19.2%
|
|||||
Total net revenue
|
|
$
|
100,380
|
|
|
$
|
58,304
|
|
|
$
|
33,921
|
|
|
$
|
42,076
|
|
|
72.2
|
%
|
|
$
|
24,383
|
|
|
71.9%
|
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Software and hardware
|
|
$
|
1,834
|
|
|
$
|
90
|
|
|
$
|
1,025
|
|
|
$
|
1,744
|
|
|
1,937.8
|
%
|
|
$
|
(935
|
)
|
|
-91.2
|
%
|
Software–as-a-service
|
|
24,713
|
|
|
7,019
|
|
|
8,026
|
|
|
17,694
|
|
|
252.1
|
%
|
|
(1,007
|
)
|
|
-12.5
|
%
|
|||||
Total software-related cost of revenue
|
|
26,547
|
|
|
7,109
|
|
|
9,051
|
|
|
19,438
|
|
|
273.4
|
%
|
|
(1,942
|
)
|
|
-21.5
|
%
|
|||||
Maintenance
|
|
2,750
|
|
|
1,874
|
|
|
438
|
|
|
876
|
|
|
46.7
|
%
|
|
1,436
|
|
|
327.9
|
%
|
|||||
Sequencing and molecular analysis
|
|
1,987
|
|
|
39
|
|
|
—
|
|
|
1,948
|
|
|
4,994.9
|
%
|
|
39
|
|
|
0.0
|
%
|
|||||
Other services
|
|
25,462
|
|
|
15,202
|
|
|
7,047
|
|
|
10,260
|
|
|
67.5
|
%
|
|
8,155
|
|
|
115.7
|
%
|
|||||
Amortization of developed technologies
|
|
15,588
|
|
|
10,585
|
|
|
7,694
|
|
|
5,003
|
|
|
47.3
|
%
|
|
2,891
|
|
|
37.6
|
%
|
|||||
Total cost of revenue
|
|
$
|
72,334
|
|
|
$
|
34,809
|
|
|
$
|
24,230
|
|
|
$
|
37,525
|
|
|
107.8
|
%
|
|
$
|
10,579
|
|
|
43.7
|
%
|
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Selling, general and administrative
|
|
$
|
120,653
|
|
|
$
|
69,021
|
|
|
$
|
46,209
|
|
|
$
|
51,632
|
|
|
74.8
|
%
|
|
$
|
22,812
|
|
|
49.4
|
%
|
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Research and development
|
|
$
|
61,637
|
|
|
$
|
23,835
|
|
|
$
|
16,979
|
|
|
$
|
37,802
|
|
|
158.6
|
%
|
|
$
|
6,856
|
|
|
40.4
|
%
|
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Interest expense, net
|
|
$
|
(6,340
|
)
|
|
$
|
(627
|
)
|
|
$
|
(980
|
)
|
|
$
|
(5,713
|
)
|
|
911.2
|
%
|
|
$
|
353
|
|
|
(36.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Other income (expense), net
|
|
$
|
1,922
|
|
|
$
|
2,508
|
|
|
$
|
(477
|
)
|
|
$
|
(586
|
)
|
|
-23.4
|
%
|
|
$
|
2,985
|
|
|
-625.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Income (loss) from related party equity method Investments
|
|
$
|
(40,994
|
)
|
|
$
|
(2,584
|
)
|
|
$
|
1,525
|
|
|
$
|
(38,410
|
)
|
|
1,486.5
|
%
|
|
$
|
(4,109
|
)
|
|
(269.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Provision for (benefit from) income taxes
|
|
$
|
(22,811
|
)
|
|
$
|
405
|
|
|
$
|
5
|
|
|
$
|
(23,216
|
)
|
|
(5,732.3
|
)%
|
|
$
|
400
|
|
|
8,000.0
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
(70,634
|
)
|
|
$
|
(74,000
|
)
|
|
$
|
(42,135
|
)
|
Investing activities
|
|
(88,765
|
)
|
|
(95,262
|
)
|
|
(230,077
|
)
|
|||
Financing activities
|
|
313,594
|
|
|
171,688
|
|
|
258,845
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
169
|
|
|
(136
|
)
|
|
49
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
154,364
|
|
|
$
|
2,290
|
|
|
$
|
(13,318
|
)
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Purchasing obligations
|
|
$
|
385,720
|
|
|
$
|
2,985
|
|
|
$
|
5,735
|
|
|
$
|
27,000
|
|
|
$
|
350,000
|
|
Long term debt obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Related party promissory note
|
|
154,685
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
154,685
|
|
|||||
Related party convertible notes
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|||||
Other convertible notes
|
|
97,000
|
|
|
—
|
|
|
—
|
|
|
97,000
|
|
|
—
|
|
|||||
Operating leases and capital leases obligations (1)
|
|
10,392
|
|
|
6,026
|
|
|
3,508
|
|
|
858
|
|
|
—
|
|
|||||
Total Obligations
|
|
$
|
657,797
|
|
|
$
|
9,011
|
|
|
$
|
9,243
|
|
|
$
|
134,858
|
|
|
$
|
504,685
|
|
|
|
|
|
|
Page
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
Consolidated and Combined Balance Sheets
|
|
|
|
|
|
Consolidated and Combined Statements of Operations
|
|
|
|
|
|
Consolidated and Combined Statements of Comprehensive Loss
|
|
|
|
|
|
Consolidated and Combined Statements of Changes in Stockholders’ / Members’ Equity
|
|
|
|
|
|
Consolidated and Combined Statements of Cash Flows
|
|
|
|
|
|
Notes to Consolidated and Combined Financial Statements
|
|
|
|
|
|
NantOmics, LLC
|
|
|
Consolidated and Combined Financial Statements
Years Ended December 31, 2016, 2015 and 2014 (In thousands, except per unit amounts) |
|
|
|
|
|
Independent Auditors' Report
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
Consolidated and Combined Statements of Operations and Comprehensive Loss
|
|
|
|
|
|
Consolidated and Combined Statements of Changes in Members’ Equity
|
|
|
|
|
|
Consolidated and Combined Statements of Cash Flows
|
|
|
|
|
|
Notes to Consolidated and Combined Financial Statements
|
/s/ Ernst & Young LLP
|
|
|
|
Los Angeles, California
|
|
March 31, 2017
|
|
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
160,353
|
|
|
$
|
5,989
|
|
Marketable securities
|
—
|
|
|
1,243
|
|
||
Accounts receivable, net
|
13,728
|
|
|
11,472
|
|
||
Inventories
|
2,217
|
|
|
2,146
|
|
||
Deferred implementation costs
|
3,336
|
|
|
2,224
|
|
||
Related party receivables, net
|
899
|
|
|
1,245
|
|
||
Prepaid expenses and other current assets
|
5,046
|
|
|
8,707
|
|
||
Total current assets
|
185,579
|
|
|
33,026
|
|
||
Property, plant, and equipment, net
|
29,139
|
|
|
13,899
|
|
||
Deferred implementation costs, net of current
|
7,910
|
|
|
1,930
|
|
||
Goodwill
|
131,068
|
|
|
56,718
|
|
||
Intangible assets, net
|
119,126
|
|
|
54,971
|
|
||
Investment in related party
|
207,197
|
|
|
248,191
|
|
||
Related party receivable, net of current
|
1,971
|
|
|
1,300
|
|
||
Other assets
|
2,317
|
|
|
1,918
|
|
||
Total assets
|
$
|
684,307
|
|
|
$
|
411,953
|
|
|
|
|
|
||||
Liabilities and Stockholders' / Members' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
6,720
|
|
|
$
|
6,447
|
|
Accrued and other current liabilities
|
25,231
|
|
|
15,967
|
|
||
Deferred revenue
|
17,216
|
|
|
10,656
|
|
||
Related party payables, net
|
8,082
|
|
|
10,166
|
|
||
Total current liabilities
|
57,249
|
|
|
43,236
|
|
||
Deferred revenue, net of current
|
17,238
|
|
|
17,312
|
|
||
Related party liabilities
|
5,612
|
|
|
—
|
|
||
Related party promissory note
|
112,666
|
|
|
—
|
|
||
Related party convertible note, net
|
7,564
|
|
|
—
|
|
||
Convertible notes, net
|
70,810
|
|
|
—
|
|
||
Deferred income taxes, net
|
754
|
|
|
—
|
|
||
Other liabilities
|
820
|
|
|
358
|
|
||
Total liabilities
|
272,713
|
|
|
60,906
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
|
|
|
|
||||
Redeemable Series F units: 53,580,996 units issued and outstanding at December 31, 2015
|
—
|
|
|
166,042
|
|
||
|
|
|
|
||||
Stockholders' / members' equity
|
|
|
|
||||
Members' equity, 541,228,171 units issued and outstanding at December 31, 2015
|
—
|
|
|
476,263
|
|
||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 121,250,437 shares issued and outstanding at December 31, 2016 (Including 6,976 restricted stock)
|
12
|
|
|
—
|
|
||
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized; no shares issued and outstanding at December 31, 2016
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
886,334
|
|
|
—
|
|
||
Accumulated deficit
|
(475,273
|
)
|
|
(291,171
|
)
|
||
Accumulated other comprehensive income (loss)
|
521
|
|
|
(87
|
)
|
||
Total stockholders' / members' equity
|
411,594
|
|
|
185,005
|
|
||
Total liabilities and stockholders' / members' equity
|
$
|
684,307
|
|
|
$
|
411,953
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Software and hardware
|
|
$
|
8,242
|
|
|
$
|
14,616
|
|
|
$
|
8,372
|
|
Software–as-a-service
|
|
58,359
|
|
|
20,734
|
|
|
9,778
|
|
|||
Total software-related revenue
|
|
66,601
|
|
|
35,350
|
|
|
18,150
|
|
|||
Maintenance
|
|
14,238
|
|
|
10,452
|
|
|
5,345
|
|
|||
Sequencing and molecular analysis
|
|
604
|
|
|
75
|
|
|
—
|
|
|||
Other services
|
|
18,937
|
|
|
12,427
|
|
|
10,426
|
|
|||
Total net revenue
|
|
100,380
|
|
|
58,304
|
|
|
33,921
|
|
|||
|
|
|
|
|
|
|
||||||
Cost of Revenue:
|
|
|
|
|
|
|
||||||
Software and hardware
|
|
1,834
|
|
|
90
|
|
|
1,025
|
|
|||
Software-as-a-service
|
|
24,713
|
|
|
7,019
|
|
|
8,026
|
|
|||
Total software-related cost of revenue
|
|
26,547
|
|
|
7,109
|
|
|
9,051
|
|
|||
Maintenance
|
|
2,750
|
|
|
1,874
|
|
|
438
|
|
|||
Sequencing and molecular analysis
|
|
1,987
|
|
|
39
|
|
|
—
|
|
|||
Other services
|
|
25,462
|
|
|
15,202
|
|
|
7,047
|
|
|||
Amortization of developed technologies
|
|
15,588
|
|
|
10,585
|
|
|
7,694
|
|
|||
Total cost of revenue
|
|
72,334
|
|
|
34,809
|
|
|
24,230
|
|
|||
|
|
|
|
|
|
|
||||||
Gross profit
|
|
28,046
|
|
|
23,495
|
|
|
9,691
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Expenses:
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
|
120,653
|
|
|
69,021
|
|
|
46,209
|
|
|||
Research and development
|
|
61,637
|
|
|
23,835
|
|
|
16,979
|
|
|||
Amortization of software license and acquisition-related assets
|
|
7,257
|
|
|
1,542
|
|
|
7,033
|
|
|||
Impairment of intangible asset
|
|
—
|
|
|
—
|
|
|
24,150
|
|
|||
Total operating expenses
|
|
189,547
|
|
|
94,398
|
|
|
94,371
|
|
|||
Loss from operations
|
|
(161,501
|
)
|
|
(70,903
|
)
|
|
(84,680
|
)
|
|||
Interest expense, net
|
|
(6,340
|
)
|
|
(627
|
)
|
|
(980
|
)
|
|||
Other income (expense), net
|
|
1,922
|
|
|
2,508
|
|
|
(477
|
)
|
|||
(Loss) income from related party equity method investments
|
|
(40,994
|
)
|
|
(2,584
|
)
|
|
1,525
|
|
|||
Loss before income taxes
|
|
(206,913
|
)
|
|
(71,606
|
)
|
|
(84,612
|
)
|
|||
Provision for (benefit from) income taxes
|
|
(22,811
|
)
|
|
405
|
|
|
5
|
|
|||
Net loss
|
|
(184,102
|
)
|
|
(72,011
|
)
|
|
(84,617
|
)
|
|||
Less: Net loss attributed to non-controlling interests
|
|
—
|
|
|
—
|
|
|
(192
|
)
|
|||
Net loss attributed to NantHealth
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,425
|
)
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share (1):
|
|
|
|
|
|
|
||||||
Basic and diluted - common stock
|
|
$
|
(1.69
|
)
|
(2)
|
$
|
(0.99
|
)
|
(2)
|
$
|
(1.13
|
)
|
Basic and diluted - redeemable common stock
|
|
$
|
0.99
|
|
|
$
|
1.50
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding (1):
|
|
|
|
|
|
|
||||||
Basic and diluted - common stock
|
|
111,600,650
|
|
|
88,970,842
|
|
|
74,505,127
|
|
|||
Basic and diluted - redeemable common stock
|
|
5,005,855
|
|
|
10,714,285
|
|
|
N/A
|
|
(1)
|
The net income (loss) per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) 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 units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders 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. See Note
20
for the calculation of net income (loss) per share for common stock and redeemable common stock for the years ended December 31, 2016, 2015 and 2014.
|
(2)
|
The net income (loss) per share for the common stock for the years ended December 31, 2016 and 2015 reflects
$4,958
and
$16,042
in accretion value allocated to the redeemable common stock, respectively. 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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,617
|
)
|
Other comprehensive income (loss), net of reclassification adjustments and income taxes:
|
|
|
|
|
|
|
||||||
Foreign currency translation gains (losses)
|
|
608
|
|
|
(136
|
)
|
|
49
|
|
|||
Net changes related to available for sale securities:
|
|
|
|
|
|
|
||||||
Remeasurement of investment in NDO to fair value
|
|
—
|
|
|
—
|
|
|
172
|
|
|||
Reclassification of losses to net income
|
|
—
|
|
|
—
|
|
|
332
|
|
|||
Total net changes related to available for sale securities
|
|
—
|
|
|
—
|
|
|
504
|
|
|||
Total other comprehensive income (loss)
|
|
608
|
|
|
(136
|
)
|
|
553
|
|
|||
Comprehensive loss
|
|
(183,494
|
)
|
|
(72,147
|
)
|
|
(84,064
|
)
|
|||
Less: Comprehensive loss attributed to non-controlling interests
|
|
—
|
|
|
—
|
|
|
(192
|
)
|
|||
Comprehensive loss attributed to NantHealth
|
|
$
|
(183,494
|
)
|
|
$
|
(72,147
|
)
|
|
$
|
(83,872
|
)
|
|
Members' Equity
|
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive Income (loss)
|
|
Total NantHealth Equity
|
|
Non-controlling interests
|
|
Total Equity
|
||||||||||||||||||||||
|
Units
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2013
|
425,782,531
|
|
|
$
|
155,914
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(134,735
|
)
|
|
$
|
(504
|
)
|
|
$
|
20,675
|
|
|
$
|
(18
|
)
|
|
$
|
20,657
|
|
Issuance of membership interests
|
43,052,311
|
|
|
110,525
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110,525
|
|
|
—
|
|
|
110,525
|
|
||||||||
Acquisition of NDO
|
6,905,566
|
|
|
16,619
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
332
|
|
|
16,951
|
|
|
—
|
|
|
16,951
|
|
||||||||
Sale of former subsidiary
|
—
|
|
|
5,439
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,439
|
|
|
—
|
|
|
5,439
|
|
||||||||
Sale of related party equity method investment
|
—
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|
102
|
|
||||||||
Transactions with non-controlling interests
|
2,764,908
|
|
|
(4,892
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,892
|
)
|
|
75
|
|
|
(4,817
|
)
|
||||||||
Stock-based compensation expense (pre LLC conversion)
|
2,519,362
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|
135
|
|
|
340
|
|
||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
221
|
|
|
221
|
|
|
—
|
|
|
221
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(84,425
|
)
|
|
—
|
|
|
(84,425
|
)
|
|
(192
|
)
|
|
(84,617
|
)
|
||||||||
Balance at December 31, 2014
|
481,024,678
|
|
|
283,912
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(219,160
|
)
|
|
49
|
|
|
64,801
|
|
|
—
|
|
|
64,801
|
|
||||||||
Issuance of membership interests
|
59,367,813
|
|
|
200,774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,774
|
|
|
—
|
|
|
200,774
|
|
||||||||
Stock-based compensation expense (pre LLC conversion)
|
835,680
|
|
|
1,429
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,429
|
|
|
—
|
|
|
1,429
|
|
||||||||
Deemed capital contributions from chairman and CEO (pre LLC conversion
|
—
|
|
|
6,190
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,190
|
|
|
—
|
|
|
6,190
|
|
||||||||
Series F put right accretion (pre LLC conversion)
|
—
|
|
|
(16,042
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,042
|
)
|
|
—
|
|
|
(16,042
|
)
|
||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
(136
|
)
|
|
—
|
|
|
(136
|
)
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,011
|
)
|
|
—
|
|
|
(72,011
|
)
|
|
—
|
|
|
(72,011
|
)
|
||||||||
Balance at December 31, 2015
|
541,228,171
|
|
|
476,263
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(291,171
|
)
|
|
(87
|
)
|
|
185,005
|
|
|
—
|
|
|
185,005
|
|
||||||||
Issuance of membership interests
|
15,513,726
|
|
|
52,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,500
|
|
|
—
|
|
|
52,500
|
|
||||||||
Stock-based compensation expense (pre LLC conversion)
|
—
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
||||||||
Deemed capital contributions from Chairman and CEO (pre LLC conversion
|
—
|
|
|
830
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
830
|
|
|
—
|
|
|
830
|
|
||||||||
Series F put right accretion (pre LLC conversion)
|
—
|
|
|
(4,375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,375
|
)
|
|
—
|
|
|
(4,375
|
)
|
||||||||
Conversion of members' interests
|
(556,741,897
|
)
|
|
(525,388
|
)
|
|
99,661,906
|
|
|
10
|
|
|
525,378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Issuance of common stock upon conversion of related party promissory note
|
—
|
|
|
—
|
|
|
2,899,297
|
|
|
—
|
|
|
40,590
|
|
|
—
|
|
|
—
|
|
|
40,590
|
|
|
—
|
|
|
40,590
|
|
||||||||
Issuance of common stock in initial public offering, net of $13,034 in offering costs
|
—
|
|
|
—
|
|
|
6,900,000
|
|
|
1
|
|
|
83,565
|
|
|
—
|
|
|
—
|
|
|
83,566
|
|
|
—
|
|
|
83,566
|
|
||||||||
Series F put right accretion (post LLC conversion)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(583
|
)
|
|
—
|
|
|
—
|
|
|
(583
|
)
|
|
—
|
|
|
(583
|
)
|
||||||||
Redeemable common stock put right expiration
|
—
|
|
|
—
|
|
|
10,714,285
|
|
|
1
|
|
|
170,999
|
|
|
—
|
|
|
—
|
|
|
171,000
|
|
|
—
|
|
|
171,000
|
|
||||||||
Stock-based compensation expense (post LLC conversion)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,925
|
|
|
—
|
|
|
—
|
|
|
54,925
|
|
|
—
|
|
|
54,925
|
|
||||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
—
|
|
|
—
|
|
|
1,074,949
|
|
|
—
|
|
|
(5,838
|
)
|
|
—
|
|
|
—
|
|
|
(5,838
|
)
|
|
—
|
|
|
(5,838
|
)
|
||||||||
Deemed capital contributions from Chairman and CEO (post LLC conversion)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,980
|
|
|
—
|
|
|
—
|
|
|
2,980
|
|
|
—
|
|
|
2,980
|
|
||||||||
Equity component of the convertible notes issuance, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,318
|
|
|
—
|
|
|
—
|
|
|
14,318
|
|
|
—
|
|
|
14,318
|
|
||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
608
|
|
|
608
|
|
|
—
|
|
|
608
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(184,102
|
)
|
|
—
|
|
|
(184,102
|
)
|
|
—
|
|
|
(184,102
|
)
|
||||||||
Balance at December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
121,250,437
|
|
|
$
|
12
|
|
|
$
|
886,334
|
|
|
$
|
(475,273
|
)
|
|
$
|
521
|
|
|
$
|
411,594
|
|
|
$
|
—
|
|
|
$
|
411,594
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,617
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
30,933
|
|
|
15,788
|
|
|
16,178
|
|
|||
Amortization of debt discounts and deferred financing offering cost
|
108
|
|
|
—
|
|
|
—
|
|
|||
Impairment of intangible asset
|
—
|
|
|
—
|
|
|
24,150
|
|
|||
Unrealized changes in fair value of marketable securities
|
(49
|
)
|
|
(3,624
|
)
|
|
3,677
|
|
|||
Realized changes in fair value of marketable securities
|
49
|
|
|
3,971
|
|
|
109
|
|
|||
Change in fair value of derivatives liability
|
(1,228
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
53,952
|
|
|
1,429
|
|
|
340
|
|
|||
Deferred income taxes, net
|
(23,385
|
)
|
|
—
|
|
|
—
|
|
|||
Provision for bad debt expense
|
549
|
|
|
207
|
|
|
204
|
|
|||
Inventory provision
|
499
|
|
|
7
|
|
|
38
|
|
|||
Loss (income) from related party equity method investments
|
40,994
|
|
|
2,584
|
|
|
(1,525
|
)
|
|||
Other non-cash expense
|
144
|
|
|
—
|
|
|
333
|
|
|||
Changes in operating assets and liabilities, net of business combinations:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
8,111
|
|
|
3,580
|
|
|
468
|
|
|||
Inventories
|
(570
|
)
|
|
982
|
|
|
(2,308
|
)
|
|||
Related party receivables, net
|
(325
|
)
|
|
228
|
|
|
120
|
|
|||
Prepaid expenses and other current assets
|
3,495
|
|
|
(4,245
|
)
|
|
(132
|
)
|
|||
Deferred implementation costs
|
(5,952
|
)
|
|
(4,155
|
)
|
|
—
|
|
|||
Accounts payable
|
(5,644
|
)
|
|
1,731
|
|
|
1,634
|
|
|||
Accrued and other current liabilities
|
3,787
|
|
|
5,450
|
|
|
(4,606
|
)
|
|||
Deferred revenue
|
3,853
|
|
|
(21,158
|
)
|
|
(928
|
)
|
|||
Related party payables
|
4,220
|
|
|
(4,738
|
)
|
|
7,582
|
|
|||
Other assets and liabilities
|
(73
|
)
|
|
(26
|
)
|
|
(2,852
|
)
|
|||
Net cash used in operating activities
|
(70,634
|
)
|
|
(74,000
|
)
|
|
(42,135
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
(15,780
|
)
|
|
(8,244
|
)
|
|
(7,637
|
)
|
|||
Investments in unconsolidated related parties
|
—
|
|
|
(150,816
|
)
|
|
(3,319
|
)
|
|||
Purchases of intangible assets
|
—
|
|
|
(5,000
|
)
|
|
(4,000
|
)
|
|||
Purchases of marketable securities
|
(31
|
)
|
|
(15,219
|
)
|
|
(251,729
|
)
|
|||
Proceeds from sales of marketable securities
|
1,275
|
|
|
136,315
|
|
|
26,072
|
|
|||
Proceeds from sales of property and equipment
|
138
|
|
|
—
|
|
|
—
|
|
|||
Purchase of cost method investment
|
—
|
|
|
(1,750
|
)
|
|
—
|
|
|||
Proceeds from sale of business and equity method investment, net of cash transferred
|
—
|
|
|
—
|
|
|
12,842
|
|
|||
Acquisitions of businesses, net of cash acquired
|
(78,725
|
)
|
|
(50,548
|
)
|
|
(2,306
|
)
|
|||
Deferred consideration for acquisition
|
4,358
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(88,765
|
)
|
|
(95,262
|
)
|
|
(230,077
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of membership interests
|
—
|
|
|
200,000
|
|
|
260,525
|
|
|||
Deemed capital contribution from Chairman and CEO
|
3,810
|
|
|
6,190
|
|
|
—
|
|
|||
Payment of short-term notes payable
|
(23,324
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of long-term notes payable
|
—
|
|
|
—
|
|
|
(1,975
|
)
|
|||
Earnout to former non-controlling interests
|
—
|
|
|
—
|
|
|
(5,608
|
)
|
|||
Proceeds from (payment of) related party promissory notes
|
152,666
|
|
|
(34,502
|
)
|
|
5,903
|
|
Proceeds from initial public offering, net of offering costs
|
83,566
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of convertible notes to related party, net of offering costs
|
9,917
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of convertible notes to others, net of offering costs
|
92,797
|
|
|
—
|
|
|
—
|
|
|||
Tax payments related to stock issued, net of stock withheld, for vested phantom units
|
(5,838
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
313,594
|
|
|
171,688
|
|
|
258,845
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
169
|
|
|
(136
|
)
|
|
49
|
|
|||
Net increase in cash and cash equivalents
|
154,364
|
|
|
2,290
|
|
|
(13,318
|
)
|
|||
Cash and cash equivalents, beginning of period
|
5,989
|
|
|
3,699
|
|
|
17,017
|
|
|||
Cash and cash equivalents, end of period
|
$
|
160,353
|
|
|
$
|
5,989
|
|
|
$
|
3,699
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
(11
|
)
|
|
$
|
(2,193
|
)
|
|
$
|
(31
|
)
|
Interest received
|
119
|
|
|
599
|
|
|
—
|
|
|||
Non-cash transactions:
|
|
|
|
|
|
||||||
Transfer of marketable securities as investment in unconsolidated related party
|
—
|
|
|
99,184
|
|
|
—
|
|
|||
Healthcare Solutions acquisition escrow receivable
|
—
|
|
|
2,494
|
|
|
—
|
|
|||
Purchase of property and equipment (including internal use software capitalized costs including stock based compensation)
|
2,962
|
|
|
—
|
|
|
—
|
|
|||
Accretion to redemption value of Series F / redeemable common stock
|
4,958
|
|
|
16,042
|
|
|
—
|
|
|||
Conversion of related party promissory note and interest payable to common stock
|
40,590
|
|
|
—
|
|
|
—
|
|
|||
Reclassification of redeemable common stock to common stock (former Series F units)
|
171,000
|
|
|
—
|
|
|
—
|
|
|||
Equity component reclassification of the convertible notes issuance, net
|
14,318
|
|
|
—
|
|
|
—
|
|
•
|
Software and hardware -
Software and hardware revenue is generated from the sale of the Company’s software, on either a perpetual or term license basis, and the sale of hardware. The software is installed on the client’s site or the client’s designated vendor’s site and is not hosted by the Company or by a vendor contracted by the Company. The Company also sells third-party software and hardware to its clients.
|
•
|
Software-as-a-service
(“SaaS”) - SaaS revenue is generated from clients’ access to and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually monthly. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period.
|
•
|
Maintenance -
Maintenance revenue includes ongoing post contract client support (“PCS”) or maintenance during the paid PCS term. Additionally, PCS includes ongoing development of software updates and upgrades provided to the client on a when and if available basis.
|
•
|
Sequencing and molecular analysis -
Sequencing and molecular analysis revenue is generated by the process of performing sequencing and analysis of whole genome DNA, RNA and proteomic results under the Company's reseller agreement with NantOmics, LLC ("NantOmics") (See Note
21
).
|
•
|
Other services -
Other services includes revenue from professional services provided that are generally complementary to the software and may or may not be required for the software to function as desired by the client. The services are generally provided in the form of training and implementation services during the software license period and do not include PCS. Other services revenue also includes the sale of nursing and therapy services provided to patients in a home care setting and any other services not included in the preceding revenue sources.
|
•
|
Software and hardware
- Software and hardware cost of revenue includes third-party software and hardware costs directly associated with solutions, including purchasing and receiving costs.
|
•
|
Software-as-a-service
- SaaS cost of revenue includes personnel-related costs, amortization of deferred implementation costs and other direct costs associated with the delivery and hosting of NantOS and NantOS apps, the cancer-decision support solution, and NaviNet on a subscription basis.
|
•
|
Maintenance
- Maintenance cost of revenue includes personnel-related costs and other direct costs associated with the ongoing support or maintenance provided to the Company’s clients.
|
•
|
Sequencing and molecular analysis
- Sequencing and molecular analysis cost of revenue includes (a) personnel-related costs associated with these services and (b) amounts due to NantOmics under the reseller agreement (See Note
21
) for the sequencing and analysis of whole genome, DNA, RNA and proteomic results.
|
•
|
Other services
- Other services cost of revenue includes personnel-related, amortization of deferred implementation costs and other direct costs associated with the Company’s software training and implementation services provided to our clients as well as direct expenses relating to the Company’s nursing and therapy services provided to patients in a home care setting.
|
•
|
Level 1—Quoted prices for identical assets or liabilities in active markets;
|
•
|
Level 2—Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable; and
|
•
|
Level 3—Unobservable inputs that reflect estimates and assumptions.
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Significant
Customers
|
|
Percentage of Total
Revenues
|
|
Percentage of Total
Accounts Receivable
|
||||
|
|
|
|
A
|
|
B
|
|
A
|
|
B
|
Year Ended December 31, 2016
|
|
2
|
|
10.6%
|
|
10.2%
|
|
7.9%
|
|
7.6%
|
Year Ended December 31, 2015
|
|
1
|
|
14.7%
|
|
—%
|
|
—%
|
|
—%
|
|
Amounts
|
||
Cash paid to 3BE at closing
|
$
|
74,823
|
|
Cash paid to option holders after closing
|
2,580
|
|
|
Cash paid to escrow account
|
6,126
|
|
|
Working capital settlement payment
|
455
|
|
|
Fair value of Series H units
|
52,500
|
|
|
Total consideration
|
$
|
136,484
|
|
|
Amounts
|
||
Cash and restricted cash
|
$
|
4,804
|
|
Accounts receivable, net
|
10,693
|
|
|
Property, plant and equipment
|
5,044
|
|
|
Other assets and liabilities, net
|
4,561
|
|
|
Accounts payable
|
(4,585
|
)
|
|
Accrued and other current liabilities
|
(3,674
|
)
|
|
Deferred revenue
|
(2,603
|
)
|
|
Deferred tax liability
|
(15,508
|
)
|
|
Assumed indebtedness
|
(23,324
|
)
|
|
Trade names
|
3,000
|
|
|
Developed technology
|
32,000
|
|
|
Customer relationships
|
52,000
|
|
|
Goodwill
|
74,076
|
|
|
Total fair value of net assets acquired
|
$
|
136,484
|
|
|
Amounts
|
||
Cash paid to Harris at closing
|
$
|
43,056
|
|
Cash paid to escrow account
|
7,500
|
|
|
Working capital released from escrow
|
(2,494
|
)
|
|
Total consideration
|
$
|
48,062
|
|
|
Amounts
|
||
Accounts receivable, net
|
$
|
13,119
|
|
Other liabilities and assets, net
|
(2,205
|
)
|
|
Deferred revenue
|
(16,076
|
)
|
|
Trademarks
|
2,400
|
|
|
Developed technology
|
14,400
|
|
|
Customer relationships
|
8,900
|
|
|
Backlog
|
3,900
|
|
|
Goodwill
|
23,624
|
|
|
Total fair value of net assets acquired
|
$
|
48,062
|
|
|
Amounts
|
||
Fair value of acquired 60.9% interest
|
$
|
16,619
|
|
Fair value of previously owned 39.1% investment
|
14,005
|
|
|
Debt repayment to NDO founder
|
2,335
|
|
|
Interest-bearing liabilities assumed
|
722
|
|
|
Settlement of preexisting relationships
|
6,393
|
|
|
Total consideration
|
$
|
40,074
|
|
|
Amounts
|
||
Cash and cash equivalents
|
$
|
29
|
|
Non-cash net working capital, excluding deferred revenue
|
(3,773
|
)
|
|
Property and Equipment and other non-current assets
|
332
|
|
|
Deferred revenue
|
(7,352
|
)
|
|
Developed technology
|
23,400
|
|
|
Goodwill
|
27,438
|
|
|
Total fair value of net assets acquired
|
$
|
40,074
|
|
|
|
Balance at beginning of the year
|
|
Additions to expense
|
|
(Write offs) / Recoveries
|
|
Balance at the end of the year
|
||||||
Year Ended December 31, 2016
|
|
$
|
956
|
|
|
543
|
|
|
(1,047
|
)
|
|
$
|
452
|
|
Year Ended December 31, 2015
|
|
$
|
277
|
|
|
694
|
|
|
(15
|
)
|
|
$
|
956
|
|
Year Ended December 31, 2014
|
|
$
|
373
|
|
|
145
|
|
|
(241
|
)
|
|
$
|
277
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Finished goods
|
$
|
1,840
|
|
|
$
|
2,005
|
|
Raw Materials
|
377
|
|
|
141
|
|
||
Inventories
|
$
|
2,217
|
|
|
$
|
2,146
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Prepaid expenses
|
$
|
4,685
|
|
|
$
|
2,161
|
|
Restricted cash
(1)
|
100
|
|
|
—
|
|
||
Deferred equity offering costs (See Note 1)
|
—
|
|
|
3,902
|
|
||
Escrow receivable (See Note 3)
|
—
|
|
|
2,494
|
|
||
Other current assets
|
261
|
|
|
150
|
|
||
Prepaid expenses and other current assets
|
$
|
5,046
|
|
|
$
|
8,707
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Payroll and related costs
|
$
|
13,248
|
|
|
$
|
7,194
|
|
Other accrued and other current liabilities
|
11,983
|
|
|
8,773
|
|
||
Accrued and other current liabilities
|
$
|
25,231
|
|
|
$
|
15,967
|
|
|
|
|
December 31,
|
||||||
|
Useful life (in years)
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
|
||||
Computer equipment and software
|
3-5
|
|
$
|
16,080
|
|
|
$
|
9,865
|
|
Furniture and equipment
|
5-7
|
|
7,533
|
|
|
6,772
|
|
||
Leasehold and building improvements
(1)
|
|
|
4,051
|
|
|
1,433
|
|
||
Internal use software
|
3
|
|
15,600
|
|
|
1,018
|
|
||
Construction in progress
|
|
|
1,090
|
|
|
1,462
|
|
||
|
|
|
44,354
|
|
|
20,550
|
|
||
Less: Accumulated depreciation and amortization
|
|
|
(15,215
|
)
|
|
(6,651
|
)
|
||
Property, plant and equipment, net
|
|
|
$
|
29,139
|
|
|
$
|
13,899
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
Customer
Relationships
|
|
Developed Technologies
|
|
Software
License
|
|
Intellectual Property
|
|
Trade Name
|
|
Total
|
||||||||||||
Gross carrying amount
|
$
|
65,200
|
|
|
$
|
98,930
|
|
|
$
|
5,000
|
|
|
$
|
2,400
|
|
|
$
|
3,000
|
|
|
$
|
174,530
|
|
Accumulated amortization
|
(7,707
|
)
|
|
(44,665
|
)
|
|
(1,562
|
)
|
|
(720
|
)
|
|
(750
|
)
|
|
(55,404
|
)
|
||||||
Intangible assets, net
|
$
|
57,493
|
|
|
$
|
54,265
|
|
|
$
|
3,438
|
|
|
$
|
1,680
|
|
|
$
|
2,250
|
|
|
$
|
119,126
|
|
|
December 31, 2015
|
||||||||||||||||||||||
|
Customer
Relationships
|
|
Developed Technologies
|
|
Software
License
|
|
Intellectual Property
|
|
Trade Name
|
|
Total
|
||||||||||||
Gross carrying amount
|
$
|
13,200
|
|
|
$
|
66,930
|
|
|
$
|
5,000
|
|
|
$
|
2,400
|
|
|
$
|
—
|
|
|
$
|
87,530
|
|
Accumulated amortization
|
(1,680
|
)
|
|
(30,326
|
)
|
|
(313
|
)
|
|
(240
|
)
|
|
—
|
|
|
(32,559
|
)
|
||||||
Intangible assets, net
|
$
|
11,520
|
|
|
$
|
36,604
|
|
|
$
|
4,687
|
|
|
$
|
2,160
|
|
|
$
|
—
|
|
|
$
|
54,971
|
|
|
Amounts
|
||
2017
|
$
|
19,078
|
|
2018
|
18,478
|
|
|
2019
|
18,166
|
|
|
2020
|
14,958
|
|
|
2021
|
11,646
|
|
|
Thereafter
|
36,800
|
|
|
Total future intangibles amortization expense
|
$
|
119,126
|
|
|
Amounts
|
||
|
|
||
Balance at January 1, 2015
|
$
|
33,368
|
|
Activity during the year:
|
|
||
HCS acquisition (See Note 3)
|
23,350
|
|
|
|
|
||
Balance at December 31, 2015
|
56,718
|
|
|
|
|
||
Activity during the year:
|
|
||
NaviNet acquisition (See Note 3)
|
74,076
|
|
|
HCS measurement period adjustment (See Note 3)
|
274
|
|
|
Net activity during the year
|
74,350
|
|
|
|
|
||
Balance at December 31, 2016
|
$
|
131,068
|
|
|
Trailing Twelve Months Ended September 30, 2016
|
||
Sales
|
$
|
5,189
|
|
Gross loss
|
(5,752
|
)
|
|
Loss from operations
|
(42,215
|
)
|
|
Net loss
|
(36,435
|
)
|
|
Net loss attributable to NantOmics
|
(34,236
|
)
|
|
Related party
|
|
Others
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Gross proceeds
|
$
|
10,000
|
|
|
$
|
97,000
|
|
|
$
|
107,000
|
|
|
|
|
|
|
|
||||||
Interest make-whole derivative
|
(148
|
)
|
|
(1,351
|
)
|
|
(1,499
|
)
|
|||
Conversion option reported in equity as additional paid-in capital
|
(2,233
|
)
|
|
(21,688
|
)
|
|
(23,921
|
)
|
|||
Deferred financing offering costs
|
(65
|
)
|
|
(3,249
|
)
|
|
(3,314
|
)
|
|||
Amortization of debt discounts and deferred financing offering costs
|
10
|
|
|
98
|
|
|
108
|
|
|||
Unamortized debt discounts and deferred financing offering costs
|
(2,436
|
)
|
|
(26,190
|
)
|
|
(28,626
|
)
|
|||
|
|
|
|
|
|
||||||
Net carrying amount
|
$
|
7,564
|
|
|
$
|
70,810
|
|
|
$
|
78,374
|
|
|
|
|
|
|
|
|
Related party
|
|
Others
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Accrued coupon interest expense
|
$
|
15
|
|
|
$
|
139
|
|
|
$
|
154
|
|
Amortization of debt discounts
|
10
|
|
|
86
|
|
|
96
|
|
|||
Amortization of deferred financing offering costs
|
—
|
|
|
12
|
|
|
12
|
|
|||
Total convertible notes interest expense
|
$
|
25
|
|
|
$
|
237
|
|
|
$
|
262
|
|
|
|
|
|
|
|
|
December 31, 2016
|
||||||||||||||
|
Total
fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
149,067
|
|
|
$
|
149,067
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
149,067
|
|
|
149,067
|
|
|
—
|
|
|
—
|
|
||||
Liabilities
- Interest make-whole derivative
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
December 31, 2015
|
||||||||||||||
|
Total
fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
630
|
|
|
$
|
630
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities
|
1,243
|
|
|
1,243
|
|
|
—
|
|
|
—
|
|
||||
|
1,873
|
|
|
1,873
|
|
|
—
|
|
|
—
|
|
|
|
December 31, 2015
|
|
Additions
|
|
Change in fair value
|
|
December 31, 2016
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest make-whole derivative liability:
|
|
|
|
|
|
|
|
|
||||||||
Related party
|
|
$
|
—
|
|
|
$
|
148
|
|
|
$
|
(123
|
)
|
|
$
|
25
|
|
Others
|
|
—
|
|
|
1,351
|
|
|
(1,105
|
)
|
|
246
|
|
||||
|
|
$
|
—
|
|
|
$
|
1,499
|
|
|
$
|
(1,228
|
)
|
|
$
|
271
|
|
|
|
Fair value
|
|
Carrying value
|
|
Face value
|
||||||
|
|
|
|
|
|
|
|
|
|
|||
5.5% convertible senior notes due December 15, 2021:
|
|
|
|
|
|
|
||||||
Related party
|
|
$
|
11,081
|
|
|
$
|
7,564
|
|
|
$
|
10,000
|
|
Others
|
|
107,491
|
|
|
70,810
|
|
|
97,000
|
|
|||
|
|
$
|
118,572
|
|
|
$
|
78,374
|
|
|
$
|
107,000
|
|
|
|
Amounts
|
||
Balance at December 31, 2013
|
|
$
|
13,833
|
|
Fair value adjustment
|
|
172
|
|
|
Derecognition upon acquisition (See Note 3)
|
|
(14,005
|
)
|
|
|
|
|
||
Balance at December 31, 2014
|
|
$
|
—
|
|
|
|
|
|
Amounts
|
||
2017
|
$
|
4,568
|
|
2018
|
2,539
|
|
|
2019
|
641
|
|
|
2020
|
508
|
|
|
2021
|
327
|
|
|
Total minimum rental commitments
|
$
|
8,583
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
228
|
|
|
$
|
338
|
|
|
$
|
—
|
|
State
|
|
28
|
|
|
52
|
|
|
5
|
|
|||
Foreign
|
|
318
|
|
|
15
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Total current provision
|
|
574
|
|
|
405
|
|
|
5
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
(11,864
|
)
|
|
—
|
|
|
—
|
|
|||
State
|
|
(2,671
|
)
|
|
—
|
|
|
—
|
|
|||
Entity status change
|
|
(8,725
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Total deferred benefit
|
|
(23,385
|
)
|
|
—
|
|
|
—
|
|
|||
Provision for (benefit from) income taxes, net
|
|
$
|
(22,811
|
)
|
|
$
|
405
|
|
|
$
|
5
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
|
|
|
|
|
|
|
|||
United States federal tax at statutory rate
|
|
34.00
|
%
|
|
34.00
|
%
|
|
34.00
|
%
|
|
|
|
|
|
|
|
|||
Items affecting federal income tax rate:
|
|
|
|
|
|
|
|||
State tax rate, net of federal benefit
|
|
4.02
|
%
|
|
0.07
|
%
|
|
—
|
%
|
Pass - through losses
|
|
(7.04
|
)%
|
|
(30.70
|
)%
|
|
(26.50
|
)%
|
Valuation allowance
|
|
(28.04
|
)%
|
|
(2.60
|
)%
|
|
(5.90
|
)%
|
LLC conversion to C corporation
|
|
10.29
|
%
|
|
—
|
%
|
|
—
|
%
|
Stock compensation
|
|
(1.08
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other adjustments
|
|
(1.13
|
)%
|
|
(1.47
|
)%
|
|
(1.60
|
)%
|
|
|
|
|
|
|
|
|||
Effective income tax rate
|
|
11.02
|
%
|
|
(0.70
|
)%
|
|
—
|
%
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Deferred income tax assets:
|
|
|
|
|
||||
Accounts payable and accrued expenses
|
|
$
|
3,231
|
|
|
$
|
29
|
|
Inventory impairment
|
|
431
|
|
|
255
|
|
||
Deferred revenue
|
|
10,229
|
|
|
841
|
|
||
Allowance for doubtful accounts
|
|
124
|
|
|
399
|
|
||
Property, plant and equipment, net
|
|
3,279
|
|
|
131
|
|
||
Intangibles
|
|
2,918
|
|
|
36
|
|
||
Investments
|
|
15,653
|
|
|
—
|
|
||
Stock compensation
|
|
11,574
|
|
|
—
|
|
||
Other
|
|
1,144
|
|
|
59
|
|
||
Net operating loss carryforwards
|
|
93,974
|
|
|
37,387
|
|
||
Less: Valuation allowance
|
|
(88,861
|
)
|
|
(30,850
|
)
|
||
Total deferred income tax assets
|
|
53,696
|
|
|
8,287
|
|
||
|
|
|
|
|
||||
Deferred income tax liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(250
|
)
|
|
—
|
|
||
State taxes
|
|
(2,933
|
)
|
|
(1,290
|
)
|
||
Intangible assets, net
|
|
(36,581
|
)
|
|
(6,812
|
)
|
||
Convertible notes
|
|
(9,700
|
)
|
|
—
|
|
||
Deferred implementation cost
|
|
(3,753
|
)
|
|
—
|
|
||
Other
|
|
(1,233
|
)
|
|
(185
|
)
|
||
Total deferred income tax liabilities
|
|
(54,450
|
)
|
|
(8,287
|
)
|
||
|
|
|
|
|
||||
Deferred income taxes, net
|
|
$
|
(754
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of the year
|
|
Additions (Adjustments)
|
|
Deductions
|
|
Balance at the end of the year
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Year to Date December 31, 2016
|
|
$
|
30,849
|
|
|
66,731
|
|
|
(8,719
|
)
|
|
$
|
88,861
|
|
Year to Date December 31, 2015
|
|
$
|
28,995
|
|
|
1,854
|
|
|
—
|
|
|
$
|
30,849
|
|
Year to Date December 31, 2014
|
|
$
|
22,746
|
|
|
6,249
|
|
|
—
|
|
|
$
|
28,995
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Balance as of January 1
|
|
$
|
879
|
|
|
$
|
—
|
|
Increases related to tax positions taken during the current year
|
|
98
|
|
|
879
|
|
||
Balance as of December 31
|
|
$
|
977
|
|
|
$
|
879
|
|
|
Redeemable Series F Units
|
|
Redeemable Common Stock
|
|
Common Stock and Additional-Paid-in-Capital
|
||||||
Balance at December 31, 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuance of units
|
150,000
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2014
|
150,000
|
|
|
—
|
|
|
—
|
|
|||
Accretion to redemption value
|
16,042
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2015
|
166,042
|
|
|
—
|
|
|
—
|
|
|||
Accretion to redemption value
|
4,375
|
|
|
—
|
|
|
—
|
|
|||
Balance at June 1, 2016 pre-LLC Conversion
|
170,417
|
|
|
—
|
|
|
—
|
|
|||
LLC Conversion
|
(170,417
|
)
|
|
170,417
|
|
|
—
|
|
|||
Balance at June 1, 2016 post-LLC Conversion
|
—
|
|
|
170,417
|
|
|
—
|
|
|||
Accretion to redemption value
|
—
|
|
|
583
|
|
|
—
|
|
|||
Balance at June 20, 2016 pre expiration of Put Right
|
—
|
|
|
171,000
|
|
|
—
|
|
|||
Expiration of Put Right at June 20, 2016
|
—
|
|
|
(171,000
|
)
|
|
171,000
|
|
|||
Balance at June 20, 2016 post expiration of Put Right and at December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
171,000
|
|
|
Amounts
|
||
|
|
||
Net loss attributable to NantHealth
|
$
|
(84,425
|
)
|
|
|
|
|
Transfers to (from) the non-controlling interests:
|
|
||
Increase in NantHealth’s Series A members’ equity upon sale of Qi Imaging (See Note 21)
|
5,439
|
|
|
Decrease in NantHealth’s Series A members’ equity for acquisition of eviti’s non-controlling interests
|
(75
|
)
|
|
Decrease in NantHealth’s Series A members’ equity for acquisition of iSirona’s non-controlling interests
|
(4,817
|
)
|
|
|
|
|
|
Net transfers to (from) non-controlling interests
|
547
|
|
|
Change from net loss attributable to NantHealth and transfers to (from) the non-controlling interests
|
$
|
(83,878
|
)
|
|
|
|
Pre Conversion
(Units)
|
|
Former Series A Unit Holders
|
420,255,676
|
|
Former Series B Unit Holders
|
19,109,603
|
|
Former Series C Unit Holders
|
3,470,254
|
|
Former Series D Unit Holders
|
3,572,066
|
|
Former Series E Unit Holders
|
35,720,664
|
|
Former Series G Unit Holders
|
59,099,908
|
|
Former Series H Unit Holders
|
15,513,726
|
|
Total Member Units
|
556,741,897
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Series C / Restricted Stock -
|
|
|
|
|
|
|
||||||
Research and development
|
|
$
|
(238
|
)
|
|
$
|
1,429
|
|
|
$
|
340
|
|
|
|
|
|
|
|
|
||||||
Phantom units:
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
8,415
|
|
|
—
|
|
|
—
|
|
|||
Selling, general and administrative
|
|
28,534
|
|
|
—
|
|
|
—
|
|
|||
Research and development
|
|
17,187
|
|
|
—
|
|
|
—
|
|
|||
Total phantom units stock-based compensation expense
|
|
54,136
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Stock options -
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
|
54
|
|
|
—
|
|
|
—
|
|
|||
Total stock-based compensation expense
|
|
53,952
|
|
|
1,429
|
|
|
340
|
|
|||
Amount capitalized to internal-use software and deferred implementation costs
|
|
2,433
|
|
|
—
|
|
|
—
|
|
|||
Total stock-based compensation cost
|
|
$
|
56,385
|
|
|
$
|
1,429
|
|
|
$
|
340
|
|
|
Number of Units
|
|
Weighted
Average Grant
date value per
phantom unit
|
|
Unvested phantom units outstanding - December 31, 2013 and 2014
|
—
|
|
—
|
|
Granted
|
5,079,187
|
|
|
$15.78
|
Vested
|
—
|
|
—
|
|
Forfeited
|
(1,356,273
|
)
|
|
$15.79
|
Unvested phantom units outstanding - December 31, 2015
|
3,722,914
|
|
|
$15.78
|
Granted
|
3,024,430
|
|
|
$14.07
|
Vested
|
(1,638,617
|
)
|
|
$15.02
|
Forfeited
|
(786,646
|
)
|
|
$15.38
|
Unvested phantom units outstanding - December 31, 2016
|
4,322,081
|
|
|
$14.95
|
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Weighted Average grant date fair value
|
|
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
500,000
|
|
|
$14.00
|
|
9.9
|
|
$11.98
|
|
$—
|
Vested and Expected to Vest
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Exercisable
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
Amounts
|
|
|
|
|
Risk-free interest rates
|
1.56
|
%
|
Expected dividend yield
|
—
|
%
|
Expected life
|
3.4
|
yrs
|
Expected volatility
|
40.0
|
%
|
|
|
Year ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||
|
|
Common Stock
|
|
Redeemable Common Stock
|
|
Common Stock
|
|
Redeemable Common Stock
|
|
Common Stock
|
||||||||||
Income (loss) per share numerator:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss attributed to NantHealth
|
|
$
|
(184,102
|
)
|
|
$
|
—
|
|
|
$
|
(72,011
|
)
|
|
$
|
—
|
|
|
$
|
(84,425
|
)
|
Accretion to redemption value of series F/redeemable common stock
|
|
(4,958
|
)
|
|
4,958
|
|
|
(16,042
|
)
|
|
16,042
|
|
|
—
|
|
|||||
Net income (loss) for basic/diluted net income (loss) per share
|
|
$
|
(189,060
|
)
|
|
$
|
4,958
|
|
|
$
|
(88,053
|
)
|
|
$
|
16,042
|
|
|
$
|
(84,425
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) per share denominator:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average shares for basic net loss per share
|
|
111,600,650
|
|
|
5,005,855
|
|
|
88,970,842
|
|
|
10,714,285
|
|
|
74,505,127
|
|
|||||
Effect of dilutive securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Weighted-average shares for dilutive net income (loss) per share
|
|
111,600,650
|
|
|
5,005,855
|
|
|
88,970,842
|
|
|
10,714,285
|
|
|
74,505,127
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted net income (loss) per share
|
|
$
|
(1.69
|
)
|
|
$
|
0.99
|
|
|
$
|
(0.99
|
)
|
|
$
|
1.50
|
|
|
$
|
(1.13
|
)
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
|
|
|
|
|
|
|||
Unvested restricted stock
|
6,976
|
|
|
10,462
|
|
|
13,948
|
|
Unvested phantom units
|
4,322,081
|
|
|
3,722,914
|
|
|
—
|
|
Stock options
|
500,000
|
|
|
—
|
|
|
—
|
|
Convertible notes
|
8,815,655
|
|
|
—
|
|
|
—
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Fourth Quarter
|
|
Third Quarter
|
|
Second Quarter
|
|
First Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net revenue
|
$
|
24,082
|
|
|
$
|
25,357
|
|
|
$
|
31,490
|
|
|
$
|
19,451
|
|
Gross profit
|
4,262
|
|
|
8,121
|
|
|
9,250
|
|
|
6,413
|
|
||||
Loss from operations
|
(31,636
|
)
|
|
(32,263
|
)
|
|
(64,133
|
)
|
|
(33,469
|
)
|
||||
Net loss
|
(59,951
|
)
|
|
(36,874
|
)
|
|
(54,132
|
)
|
|
(33,145
|
)
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
(0.49
|
)
|
|
(0.30
|
)
|
|
(0.54
|
)
|
|
(0.36
|
)
|
||||
Basic and diluted - redeemable common stock
|
N/A
|
|
|
N/A
|
|
|
0.25
|
|
|
N/A
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
Fourth Quarter
|
|
Third Quarter
|
|
Second Quarter
|
|
First Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net revenue
|
$
|
20,405
|
|
|
$
|
14,405
|
|
|
$
|
11,752
|
|
|
$
|
11,742
|
|
Gross profit
|
9,552
|
|
|
2,314
|
|
|
5,453
|
|
|
6,176
|
|
||||
Loss from operations
|
(15,001
|
)
|
|
(23,620
|
)
|
|
(17,343
|
)
|
|
(14,939
|
)
|
||||
Net loss
|
(17,852
|
)
|
|
(22,958
|
)
|
|
(17,236
|
)
|
|
(13,965
|
)
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
(0.35
|
)
|
|
(0.24
|
)
|
|
(0.21
|
)
|
|
(0.17
|
)
|
||||
Basic and diluted - redeemable common stock
|
1.50
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
(As adjusted - see Note 14)
|
|
|||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,209
|
|
|
$
|
121,822
|
|
Marketable securities - trading
|
83
|
|
|
105,881
|
|
||
Accounts receivable, net of allowance of $353 and $60 at December 31, 2016 and 2015, respectively
|
169
|
|
|
284
|
|
||
Related party accounts receivable, net of allowance of $0 at December 31, 2016 and 2015
|
3,650
|
|
|
3,111
|
|
||
Related party notes receivable
|
150,074
|
|
|
10,255
|
|
||
Prepaid expenses and other current assets
|
2,496
|
|
|
2,743
|
|
||
Total current assets
|
161,681
|
|
|
244,096
|
|
||
Property and equipment, net
|
29,437
|
|
|
28,746
|
|
||
Marketable securities - available for sale
|
28,819
|
|
|
—
|
|
||
Cost method investments
|
5,000
|
|
|
—
|
|
||
Goodwill
|
7,623
|
|
|
8,818
|
|
||
Intangible assets, net
|
7,023
|
|
|
10,393
|
|
||
Other assets
|
277
|
|
|
108
|
|
||
Total assets
|
239,860
|
|
|
292,161
|
|
||
Liabilities and Members' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,623
|
|
|
$
|
3,219
|
|
Accrued expenses
|
2,950
|
|
|
2,694
|
|
||
Related party payables
|
3,923
|
|
|
6,232
|
|
||
Related party promissory notes payable
|
20,763
|
|
|
24,854
|
|
||
Other current liabilities
|
1,123
|
|
|
1,305
|
|
||
Total current liabilities
|
30,382
|
|
|
38,304
|
|
||
Deferred revenue, non-current
|
7,694
|
|
|
7,260
|
|
||
Other non-current liabilities
|
1,628
|
|
|
1,041
|
|
||
Total liabilities
|
39,704
|
|
|
46,605
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
|
|
|
|
||||
Members' equity
|
|
|
|
||||
Series A-1 units: 1,007,805 units issued and outstanding
at December 31, 2016 and 2015
|
27,713
|
|
|
27,087
|
|
||
Series A-2 units: 175,813 units issued and outstanding at December 31, 2016 and 2015
|
258,524
|
|
|
258,524
|
|
||
Series B units: 150,000 units authorized, 8,457 units issued and outstanding at December 31, 2016 and 2015 (excluding liability-classified units)
|
1,574
|
|
|
868
|
|
||
Accumulated deficit
|
(87,113
|
)
|
|
(43,064
|
)
|
||
Total NantOmics members' equity
|
200,698
|
|
|
243,415
|
|
||
Non-controlling interests
|
(542
|
)
|
|
2,141
|
|
||
Total members' equity
|
200,156
|
|
|
245,556
|
|
||
Total liabilities and members' equity
|
$
|
239,860
|
|
|
$
|
292,161
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
(As adjusted - see Note 14)
|
|
(As adjusted - see Note 14)
|
||||||
|
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Related party revenue
|
|
$
|
5,418
|
|
|
$
|
3,753
|
|
|
$
|
—
|
|
Third party revenue
|
|
936
|
|
|
1,217
|
|
|
424
|
|
|||
Net revenue
|
|
6,354
|
|
|
4,970
|
|
|
424
|
|
|||
Cost of Revenue:
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
12,517
|
|
|
5,011
|
|
|
227
|
|
|||
Amortization of acquisition-related assets
|
|
1,021
|
|
|
788
|
|
|
671
|
|
|||
Total cost of revenue
|
|
13,538
|
|
|
5,799
|
|
|
898
|
|
|||
Gross loss
|
|
(7,184
|
)
|
|
(829
|
)
|
|
(474
|
)
|
|||
Operating Expenses:
|
|
|
|
|
|
|
||||||
Selling, general and administrative (including related party shared service expenses of $2,945, $2,726, and $598 for the years ended December 31, 2016, 2015 and 2014, respectively)
|
|
11,152
|
|
|
11,633
|
|
|
9,110
|
|
|||
Research and development
|
|
18,772
|
|
|
13,696
|
|
|
5,688
|
|
|||
Impairment on intangible assets
|
|
2,129
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
|
32,053
|
|
|
25,329
|
|
|
14,798
|
|
|||
Loss from operations
|
|
(39,237
|
)
|
|
(26,158
|
)
|
|
(15,272
|
)
|
|||
Impairments on equity investments
|
|
(15,771
|
)
|
|
—
|
|
|
—
|
|
|||
Interest income (expense), net
|
|
7,686
|
|
|
(1,084
|
)
|
|
(146
|
)
|
|||
Gain on previously held equity interests
|
|
—
|
|
|
—
|
|
|
4,290
|
|
|||
Other income (expense), net
|
|
635
|
|
|
(1,208
|
)
|
|
(71
|
)
|
|||
Loss before income taxes
|
|
(46,687
|
)
|
|
(28,450
|
)
|
|
(11,199
|
)
|
|||
Provision for income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss and comprehensive loss
|
|
(46,687
|
)
|
|
(28,450
|
)
|
|
(11,199
|
)
|
|||
Less: Net loss attributable to non-controlling interests
|
|
(2,683
|
)
|
|
(1,843
|
)
|
|
(2,580
|
)
|
|||
Net loss attributable to NantOmics
|
|
$
|
(44,004
|
)
|
|
$
|
(26,607
|
)
|
|
$
|
(8,619
|
)
|
|
|
|
|
|
|
|
|
Series A-1 Units
|
|
Series A-2 Units
|
|
Series B Units
|
|
Accumulated
|
|
NantOmics, LLC
|
|
Non-controlling
|
|
Total
|
||||||||||||||||
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Deficit
|
|
Equity
|
|
Interests
|
|
Equity
|
||||||||||
Balance at December 31, 2013,
as adjusted (see Note 14)
|
—
|
|
|
14,628
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,838
|
)
|
|
6,790
|
|
|
280
|
|
|
7,070
|
|
Acquisition of Five3G
|
7,805
|
|
|
7,805
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,805
|
|
|
1,850
|
|
|
9,655
|
|
Non-cash contributions by Parent
|
1,000,000
|
|
|
2,459
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,459
|
|
|
—
|
|
|
2,459
|
|
Cash contributions by Parent
|
—
|
|
|
2,184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,184
|
|
|
816
|
|
|
3,000
|
|
Purchase of additional shares of OncoPlex
|
—
|
|
|
(2,558
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,558
|
)
|
|
2,558
|
|
|
—
|
|
Transactions with non-controlling interests
|
—
|
|
|
222
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
222
|
|
|
79
|
|
|
301
|
|
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,250
|
|
|
327
|
|
|
—
|
|
|
327
|
|
|
251
|
|
|
578
|
|
Net loss, as adjusted (see Note 14)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,619
|
)
|
|
(8,619
|
)
|
|
(2,580
|
)
|
|
(11,199
|
)
|
Balance at December 31, 2014,
as adjusted (see Note 14)
|
1,007,805
|
|
|
24,740
|
|
|
—
|
|
|
—
|
|
|
8,250
|
|
|
327
|
|
|
(16,457
|
)
|
|
8,610
|
|
|
3,254
|
|
|
11,864
|
|
Exercise of OncoPlex warrants
|
—
|
|
|
(1,097
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,097
|
)
|
|
1,097
|
|
|
—
|
|
Transactions with non-controlling interests
|
—
|
|
|
3,444
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,444
|
|
|
(1,617
|
)
|
|
1,827
|
|
Acquisition of TRM
|
—
|
|
|
—
|
|
|
611
|
|
|
774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
774
|
|
|
873
|
|
|
1,647
|
|
Issuance of membership interests
|
—
|
|
|
—
|
|
|
175,202
|
|
|
257,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257,750
|
|
|
—
|
|
|
257,750
|
|
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
541
|
|
|
—
|
|
|
541
|
|
|
377
|
|
|
918
|
|
Net loss, as adjusted (see Note 14)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,607
|
)
|
|
(26,607
|
)
|
|
(1,843
|
)
|
|
(28,450
|
)
|
Balance at December 31, 2015,
as adjusted (see Note 14)
|
1,007,805
|
|
|
27,087
|
|
|
175,813
|
|
|
258,524
|
|
|
8,457
|
|
|
868
|
|
|
(43,064
|
)
|
|
243,415
|
|
|
2,141
|
|
|
245,556
|
|
Non-cash contributions by Parent
|
—
|
|
|
630
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
630
|
|
|
—
|
|
|
630
|
|
Equity based compensation
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
661
|
|
|
—
|
|
|
657
|
|
|
—
|
|
|
657
|
|
Early adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,004
|
)
|
|
(44,004
|
)
|
|
(2,683
|
)
|
|
(46,687
|
)
|
Balance at December 31, 2016
|
1,007,805
|
|
|
27,713
|
|
|
175,813
|
|
|
258,524
|
|
|
8,457
|
|
|
1,574
|
|
|
(87,113
|
)
|
|
200,698
|
|
|
(542
|
)
|
|
200,156
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
(As adjusted - see Note 14)
|
|
(As adjusted - see Note 14)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(46,687
|
)
|
|
$
|
(28,450
|
)
|
|
$
|
(11,199
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
6,919
|
|
|
3,164
|
|
|
287
|
|
|||
Amortization
|
2,436
|
|
|
2,203
|
|
|
1,614
|
|
|||
Equity-based compensation
|
1,308
|
|
|
1,293
|
|
|
578
|
|
|||
Gain on previously owned investment in Five3G
|
—
|
|
|
—
|
|
|
(4,290
|
)
|
|||
Impairments
|
17,900
|
|
|
—
|
|
|
—
|
|
|||
Net realized losses on sales of marketable securities
|
1,264
|
|
|
2,162
|
|
|
—
|
|
|||
Net unrealized changes in fair value of marketable securities - trading
|
(1,564
|
)
|
|
1,469
|
|
|
—
|
|
|||
Non-cash interest items, net
|
(8,184
|
)
|
|
(252
|
)
|
|
—
|
|
|||
Non-cash contributions by Parent
|
630
|
|
|
—
|
|
|
—
|
|
|||
Other
|
293
|
|
|
(1
|
)
|
|
(3
|
)
|
|||
Net changes in operating assets and liabilities, net of business combinations:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(178
|
)
|
|
(76
|
)
|
|
79
|
|
|||
Related party accounts receivable, net
|
(539
|
)
|
|
(3,111
|
)
|
|
—
|
|
|||
Prepaid and other current assets
|
110
|
|
|
(2,459
|
)
|
|
(110
|
)
|
|||
Other assets
|
(169
|
)
|
|
(9
|
)
|
|
(39
|
)
|
|||
Accounts payable
|
(1,596
|
)
|
|
300
|
|
|
201
|
|
|||
Accrued expenses and other liabilities
|
346
|
|
|
1,390
|
|
|
1,084
|
|
|||
Related party payables
|
(664
|
)
|
|
5,370
|
|
|
846
|
|
|||
Deferred revenue
|
434
|
|
|
7,260
|
|
|
—
|
|
|||
Net cash used in operating activities
|
(27,941
|
)
|
|
(9,747
|
)
|
|
(10,952
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(7,480
|
)
|
|
(28,012
|
)
|
|
(269
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
(29
|
)
|
|
(991
|
)
|
|||
Purchases of cost method investments
|
(9,000
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of marketable securities
|
(83
|
)
|
|
(201,330
|
)
|
|
—
|
|
|||
Proceeds from sales of marketable securities
|
81,159
|
|
|
191,002
|
|
|
—
|
|
|||
Investments in related party notes receivable
|
(172,225
|
)
|
|
(10,000
|
)
|
|
—
|
|
|||
Purchase of non-controlling interests
|
—
|
|
|
(17,125
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(107,629
|
)
|
|
(65,494
|
)
|
|
(1,260
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Repayments of notes payable
|
(45
|
)
|
|
(53
|
)
|
|
(56
|
)
|
|||
Repayments of capital lease obligations
|
(292
|
)
|
|
(302
|
)
|
|
(150
|
)
|
|||
Proceeds from issuance of related party promissory notes payable
|
20,392
|
|
|
15,385
|
|
|
9,394
|
|
|||
Repayments of related party promissory notes
|
(1,236
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of Series A-2 units, net of issuance costs
|
—
|
|
|
158,566
|
|
|
—
|
|
|||
Proceeds from investment by Parent company, net of issuance costs
|
—
|
|
|
—
|
|
|
3,000
|
|
|||
Proceeds from issuance of non-controlling interests
|
—
|
|
|
18,952
|
|
|
300
|
|
|||
Release of restricted cash
|
138
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
18,957
|
|
|
192,548
|
|
|
12,488
|
|
|||
Net decrease in cash and cash equivalents
|
(116,613
|
)
|
|
117,307
|
|
|
276
|
|
|||
Cash and cash equivalents, beginning of period
|
121,822
|
|
|
4,515
|
|
|
4,239
|
|
|||
Cash and cash equivalents, end of period
|
$
|
5,209
|
|
|
$
|
121,822
|
|
|
$
|
4,515
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
(As adjusted - see Note 14)
|
|
(As adjusted - see Note 14)
|
||||||
|
|
|
|
|
|
||||||
Non-cash transactions:
|
|
|
|
|
|
||||||
Conversion of note receivable into NantHealth common stock
|
$
|
40,590
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Settlement of notes payable with marketable securities
|
25,022
|
|
|
—
|
|
|
—
|
|
|||
Property acquired under capital leases
|
—
|
|
|
336
|
|
|
684
|
|
|||
Contributions of investment in Five3G by Parent
|
—
|
|
|
—
|
|
|
2,302
|
|
|||
Contribution of note receivable by Parent
|
—
|
|
|
—
|
|
|
158
|
|
|||
Acquisition of property and equipment included in accounts payable and related party payables
|
130
|
|
|
2,496
|
|
|
—
|
|
|||
Issuance of Series A-2 units in exchange for marketable securities
|
—
|
|
|
99,184
|
|
|
—
|
|
|||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
31
|
|
|
60
|
|
|
38
|
|
|||
Cash paid for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
1.
|
Description of Business and Basis of Presentation
|
•
|
Expression Pathology, Inc. doing business as OncoPlex Diagnostics
(“
OncoPlex
”) - formed under the laws of the State of Maryland on December 6, 2001, provides molecular diagnostics through a CAP-accredited, CLIA-certified oncology laboratory linking clinical proteomics and genomics to support personalized patient care.
|
•
|
Five3 Genomics, LLC (“Five3G”) -
formed under the laws of the State of Delaware on May 20, 2010, to commercialize certain patent rights which were licensed from The Regents of the University of California on December 20, 2010. Five3G provides data processing and analysis services for personalized cancer therapy, matching treatments to specific genetic aberrations discovered in the cancer cells of individual patients.
|
•
|
NantCare, LLC, formerly known as NantCRO (“NantCare”) -
formed under the laws of the State of Delaware on April 4, 2014, provides clinical research services to support the pharmaceutical, biotechnology, medical device and various other industries.
|
•
|
Translational Research Management, LLC (“TRM”) -
formed under the laws of the State of Delaware on October 23, 2009, is a management services organization building a nationwide network of community based oncology professionals dedicated to offering research studies to their patients.
|
•
|
OncoPlex - 65.2% of equity on a fully diluted basis
|
•
|
Five3G -35.0% of equity on a fully diluted basis
|
2.
|
Summary of Significant Accounting Policies
|
•
|
Genomic sequencing and bioinformatics services
- diagnostic services utilizing whole genome sequencing and RNA sequencing of a patient’s tumor, with the patient’s normal sample, to identify molecular alterations in the DNA and RNA of the patient’s tumor
.
|
•
|
Quantitative proteomics services
- proprietary clinical services that allow oncologists to determine the optimal treatment plan for oncology patients, based on a molecular analysis of both the mutant genes and dysfunctional proteins that drive the cellular biochemistry responsible for an individual’s cancer.
|
•
|
Research services
- contract research services for bio-pharmaceutical companies related to cancer drug development generally sold under fixed price contracts.
|
•
|
Other revenue
- includes translational research services, the commercial sale of gene mutation and protein expression panel testing kits and license revenues based on net sales of the licensees’ use of the Company’s patented process.
|
•
|
Level 1 - Quoted prices for identical assets or liabilities in active markets;
|
•
|
Level 2 - Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable; and
|
•
|
Level 3 - Unobservable inputs that reflect estimates and assumptions.
|
3.
|
Business Combinations
|
|
Amounts
|
||
Cash
|
$
|
250
|
|
Value assigned to 611 Series A-2 units
|
774
|
|
|
Non-controlling interest of 46.0%
|
873
|
|
|
Total consideration
|
$
|
1,897
|
|
|
Amounts
|
||
Cash and cash equivalents
|
$
|
221
|
|
Accounts receivable
|
106
|
|
|
Other assets
|
15
|
|
|
Current liabilities
|
(1,040
|
)
|
|
Clinical study site relationships
|
1,400
|
|
|
Goodwill
|
1,195
|
|
|
Total fair value of net assets acquired
|
$
|
1,897
|
|
|
|
|
Amounts
|
||
Cash
|
$
|
1,033
|
|
Fair value of acquired 50.7% interest
|
7,805
|
|
|
Fair value of previously held 38.7% interest
|
6,749
|
|
|
Non-controlling interest of 10.6%
|
1,850
|
|
|
Total consideration
|
$
|
17,437
|
|
|
Amounts
|
||
Cash and cash equivalents
|
$
|
41
|
|
Accounts receivable
|
41
|
|
|
Fixed assets
|
21
|
|
|
Current liabilities
|
(189
|
)
|
|
Developed technology
|
9,900
|
|
|
Goodwill
|
7,623
|
|
|
Total fair value of net assets acquired
|
$
|
17,437
|
|
4.
|
Property and Equipment, net
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Equipment and other
|
$
|
35,073
|
|
|
$
|
30,207
|
|
Equipment acquired under capital leases
|
1,639
|
|
|
1,639
|
|
||
Computer equipment and software
|
3,904
|
|
|
1,160
|
|
||
|
40,616
|
|
|
33,006
|
|
||
Less: accumulated depreciation
|
(11,179
|
)
|
|
(4,260
|
)
|
||
Property and equipment, net
|
$
|
29,437
|
|
|
$
|
28,746
|
|
5.
|
Intangible Assets and Goodwill
|
|
December 31, 2016
|
||||||||||
|
Developed Technologies
|
|
Clinical Study Site Relationships
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Gross carrying amount
|
$
|
14,600
|
|
|
$
|
—
|
|
|
$
|
14,600
|
|
Accumulated amortization
|
(7,577
|
)
|
|
—
|
|
|
(7,577
|
)
|
|||
Intangible assets, net
|
$
|
7,023
|
|
|
$
|
—
|
|
|
$
|
7,023
|
|
|
|
|
|
|
|
||||||
|
December 31, 2015
(As Adjusted - See Note 14)
|
||||||||||
|
Developed Technologies
|
|
Clinical Study Site Relationships
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Gross carrying amount
|
$
|
14,600
|
|
|
$
|
1,400
|
|
|
$
|
16,000
|
|
Accumulated amortization
|
(5,490
|
)
|
|
(117
|
)
|
|
(5,607
|
)
|
|||
Intangible assets, net
|
$
|
9,110
|
|
|
$
|
1,283
|
|
|
$
|
10,393
|
|
For the year ended December 31,
|
Amounts
|
||
2017
|
$
|
2,086
|
|
2018
|
1,638
|
|
|
2019
|
1,414
|
|
|
2020
|
1,414
|
|
|
2021
|
471
|
|
|
|
$
|
7,023
|
|
|
Amounts
|
||
Balance at December 31, 2015
|
$
|
8,818
|
|
Impairment
|
(1,195
|
)
|
|
Balance at December 31, 2016
|
$
|
7,623
|
|
6.
|
Cost Method Investments
|
7.
|
Fair Value Measurements
|
|
December 31, 2016
|
||||||||||||||
|
Total fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
5,012
|
|
|
$
|
5,012
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities - trading
|
83
|
|
|
83
|
|
|
—
|
|
|
—
|
|
||||
Marketable securities - available for sale
|
28,819
|
|
|
28,819
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2015
|
||||||||||||||
|
Total fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
5,006
|
|
|
$
|
5,006
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities - trading
|
105,881
|
|
|
105,881
|
|
|
—
|
|
|
—
|
|
8.
|
Commitments and Contingencies
|
|
Capital Leases
|
|
Operating Leases
|
||||
For the year end December 31,
|
|
|
|
||||
2017
|
$
|
296
|
|
|
$
|
1,388
|
|
2018
|
81
|
|
|
1,586
|
|
||
2019
|
—
|
|
|
1,621
|
|
||
2020
|
—
|
|
|
1,345
|
|
||
2021
|
—
|
|
|
985
|
|
||
Thereafter
|
—
|
|
|
4,524
|
|
||
Total minimum lease payments
|
377
|
|
|
11,449
|
|
||
|
|
|
|
||||
Less amount representing interest
|
(18
|
)
|
|
|
|||
Capital lease obligation, net of interest
|
359
|
|
|
|
|||
Current portion of capital lease obligation
|
(293
|
)
|
|
|
|||
Non-current portion of capital lease obligation
|
$
|
66
|
|
|
|
9.
|
Income Tax
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Current:
|
|
|
|
||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
||
Total current provision
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Deferred:
|
|
|
|
||||
Federal
|
3,429
|
|
|
3,431
|
|
||
State
|
594
|
|
|
324
|
|
||
Less: valuation allowance
|
(4,023
|
)
|
|
(3,755
|
)
|
||
Total deferred benefit
|
—
|
|
|
—
|
|
||
Provision for income taxes
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Deferred tax assets
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
19,269
|
|
|
$
|
15,467
|
|
Equity Compensation
|
9
|
|
|
9
|
|
||
Accrual to cash differences
|
472
|
|
|
361
|
|
||
Depreciation and amortization
|
721
|
|
|
610
|
|
||
|
20,471
|
|
|
16,447
|
|
||
Less: Valuation allowance
|
(20,471
|
)
|
|
(16,447
|
)
|
||
Net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|
10.
|
Members' Equity
|
11.
|
Equity Based Compensation
|
|
|
Number of
|
|
Weighted Average
|
Liability Classified Awards
|
|
Series B
|
|
Grant Date
|
|
|
Units Outstanding
|
|
Fair Value
|
Nonvested outstanding, beginning of year
|
2,244
|
|
$0.45
|
|
Granted
|
|
—
|
|
$0.45
|
Vested
|
|
(725)
|
|
$0.45
|
Forfeited
|
|
(86)
|
|
$0.45
|
Nonvested outstanding, end of year
|
|
1,433
|
|
$0.45
|
|
|
Number of
|
|
Weighted Average
|
Equity Classified Awards
|
|
Series B
|
|
Grant Date
|
|
|
Units Outstanding
|
|
Fair Value
|
Nonvested outstanding, beginning of year
|
8,270
|
|
$0.34
|
|
Vested
|
|
(254)
|
|
$0.35
|
Nonvested outstanding, end of year
|
|
8,016
|
|
$0.34
|
12.
|
Employee Retirement Plan
|
13.
|
Related Party Transactions
|
14.
|
Change in Method of Accounting for Patent Costs
|
Consolidated and Combined Statements of Cash Flows
|
As Reported
|
|
Effect of Change
|
|
As Adjusted
|
||||||
Year Ended December 31, 2016*
|
|
|
|
|
|
||||||
Net loss
|
$
|
(46,018
|
)
|
|
$
|
(669
|
)
|
|
$
|
(46,687
|
)
|
Amortization
|
2,680
|
|
|
(244
|
)
|
|
2,436
|
|
|||
Other
|
293
|
|
|
—
|
|
|
293
|
|
|||
Net cash used in operating activities
|
(27,028
|
)
|
|
(913
|
)
|
|
(27,941
|
)
|
|||
Purchases of intellectual property rights
|
(913
|
)
|
|
913
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(108,542
|
)
|
|
913
|
|
|
(107,629
|
)
|
|||
Year Ended December 31, 2015
|
|
|
|
|
|
||||||
Net loss
|
(28,108
|
)
|
|
(342
|
)
|
|
(28,450
|
)
|
|||
Amortization
|
2,369
|
|
|
(166
|
)
|
|
2,203
|
|
|||
Other
|
90
|
|
|
(91
|
)
|
|
(1
|
)
|
|||
Net cash used in operating activities
|
(9,148
|
)
|
|
(599
|
)
|
|
(9,747
|
)
|
|||
Purchases of intellectual property rights
|
(599
|
)
|
|
599
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(66,093
|
)
|
|
599
|
|
|
(65,494
|
)
|
|||
Year Ended December 31, 2014
|
|
|
|
|
|
||||||
Net loss
|
(10,968
|
)
|
|
(231
|
)
|
|
(11,199
|
)
|
|||
Amortization
|
1,745
|
|
|
(131
|
)
|
|
1,614
|
|
|||
Other
|
69
|
|
|
(72
|
)
|
|
(3
|
)
|
|||
Net cash used in operating activities
|
(10,518
|
)
|
|
(434
|
)
|
|
(10,952
|
)
|
|||
Purchases of intellectual property rights
|
(434
|
)
|
|
434
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(1,694
|
)
|
|
434
|
|
|
(1,260
|
)
|
|||
* This period has not been reported, therefore, the numbers are As Computed.
|
|
|
|
|
|
15.
|
Subsequent Events
|
Date:
|
March 31, 2017
|
|
|
|
|
|
|
|
|
By:
|
/s/ Patrick Soon-Shiong
|
|
|
Name:
|
Patrick Soon-Shiong
|
|
|
Its:
|
Chairman, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Paul Holt
|
|
|
Name:
|
Paul Holt
|
|
|
Its:
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Patrick Soon-Shiong
|
|
Chairman, Chief Executive Officer and Director
|
|
March 31, 2017
|
Patrick Soon-Shiong
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Paul Holt
|
|
Chief Financial Officer
|
|
March 31, 2017
|
Paul Holt
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Michael S. Sitrick
|
|
Director
|
|
March 31, 2017
|
Michael S. Sitrick
|
|
|
|
|
|
|
|
|
|
/s/ Kirk K. Calhoun
|
|
Director
|
|
March 31, 2017
|
Kirk K. Calhoun
|
|
|
|
|
|
|
|
|
|
/s/ Mark Burnett
|
|
Director
|
|
March 31, 2017
|
Mark Burnett
|
|
|
|
|
|
|
|
|
|
/s/ Edward Miller
|
|
Director
|
|
March 31, 2017
|
Edward Miller
|
|
|
|
|
|
|
|
|
|
/s/ Michael Blaszyk
|
|
Director
|
|
March 31, 2017
|
Michael Blaszyk
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Number
|
|
Exhibit Title
|
|
Form
|
|
File No.
|
|
Filing
|
|
Filed
|
Date
|
Herewith
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation.
|
|
10-Q
|
|
001-37792
|
|
August 15, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws.
|
|
10-Q
|
|
001-37792
|
|
August 15, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1.1+
|
|
Second Amended and Restated NantOmics Exclusive Reseller Agreement, dated as of September 20, 2016, by and between the Registrant and NantOmics, LLC.
|
|
10-Q
|
|
001-37792
|
|
November 10, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1.2+
|
|
Amended and Restated NantOmics Exclusive Reseller Agreement, dated as of May 9, 2016, by and between the Registrant and NantOmics, LLC.
|
|
S-1/A
|
|
333-211196
|
|
June 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2+
|
|
NantHealth License Agreement, dated June 19, 2015, by and between the Registrant and NantOmics, LLC, as amended.
|
|
S-1/A
|
|
333-211196
|
|
June 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3#
|
|
2016 Equity Incentive Plan and form of agreement thereunder.
|
|
S-1
|
|
333-211196
|
|
May 6, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4#
|
|
2016 Executive Incentive Compensation Plan.
|
|
S-1
|
|
333-211196
|
|
May 6, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Amended and Restated Promissory Note, between Registrant and NantCapital LLC, dated May 9, 2016.
|
|
S-1/A
|
|
333-211196
|
|
May 11, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Amended and Restated Promissory Note, between Registrant and NantOmics, LLC, dated May 23, 2016.
|
|
S-1/A
|
|
333-211196
|
|
May 24, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Side Letter Agreement, between Registrant and NantWorks, LLC, dated May 22, 2016.
|
|
S-1/A
|
|
333-211196
|
|
May 23, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
Indenture, dated December 21, 2016, between NantHealth, Inc. and U.S. Bank National Association.
|
|
8-K
|
|
333-211196
|
|
December 20, 2016?
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
Form of 5.50% Convertible Senior Note due 2021 (included in Exhibit 4.1).
|
|
8-K
|
|
333-211196
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
Purchase Agreement, dated December 15, 2016, by and among NantHealth, Inc. and J.P. Morgan Securities LLC and Jefferies LLC, as representative of the initial purchasers named therein.
|
|
8-K
|
|
333-211196
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
Purchase Agreement, dated December 15, 2016, by and between NantHealth, Inc. and Cambridge Equities, L.P..
|
|
8-K
|
|
333-211196
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
Second Amended and Restated Promissory Note, dated December 15, 2016, by and between NantHealth, Inc. and Nant Capital LLC.
|
|
8-K
|
|
333-211196
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries
|
|
|
|
|
|
|
|
X
|
23.1
|
|
Consent of
Ernst & Young LLP
|
|
|
|
|
|
|
|
X
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Number
|
|
Exhibit Title
|
|
Form
|
|
File No.
|
|
Filing
|
|
Filed
|
Date
|
Herewith
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
23.2
|
|
Consent Mayer Hoffman McCann, P.C.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
Power of Attorney (Contained on Signature Page to this Annual Report on Form 10-K).
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
32.1 *
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
32.2 *
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
Name of Subsidiary
|
Jurisdiction of Organization
|
|
|
NaviNet, Inc.
|
Delaware
|
NaviNet Limited
|
United Kingdom
|
Assisteo Holding, Inc.
|
Delaware
|
AZ Home Health, LLC
|
Delaware
|
NantHealth Technologies India Private Ltd
|
India
|
NantHealth Ltd
|
United Kingdom
|
NantHealth Singapore Pte Ltd
|
Singapore
|
Nant Health Canada, Inc.
|
Canada
|
Net. Orange, Ltd
|
United Kingdom
|
/s/ Ernst & Young LLP
|
|
|
|
Los Angeles, California
|
|
March 31, 2017
|
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 31, 2017
|
By:
|
/s/ Patrick Soon-Shiong
|
|
|
Dr. Patrick Soon-Shiong
|
|
|
Chairman, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 31, 2017
|
By:
|
/s/ Paul Holt
|
|
|
Paul Holt
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
(i)
|
the Company’s Annual Report on Form 10-K for the year ended December 31,
2016
to which this Certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act, and
|
(ii)
|
that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NantHealth, Inc.
|
By:
|
/s/ Patrick Soon-Shiong
|
|
Dr. Patrick Soon-Shiong
|
|
Chairman, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
(i)
|
the Company’s Annual Report on Form 10-K for the year ended December 31,
2016
to which this Certification is attached as Exhibit 32.2 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act, and
|
(ii)
|
that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NantHealth, Inc.
|
By:
|
/s/ Paul Holt
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|