UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8‑K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 9, 2019
NantHealth, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
001-37792
 
27-3019889
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
9920 Jefferson Boulevard
Culver City, California 90232
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (310) 883-1300

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

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

Emerging growth company   x

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


 




Item 2.02
Results of Operations and Financial Condition.

On May 9, 2019 , NantHealth, Inc. publicly disseminated a press release announcing its financial results for the three months ended March 31, 2019 . A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.

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

Item 9.01
Financial Statements and Exhibits .

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

Exhibit No.
Description





EXHIBIT INDEX
Exhibit No.
Description





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

 
 
 
 
NantHealth, Inc.
 
 
 
 
Date:
May 9, 2019
By:
 
/s/ Bob Petrou
 
 
 
 
Bob Petrou
 
 
 
 
Interim Chief Financial Officer




Exhibit 99.1
  NANTHEALTHLOGOAA05.JPG
 
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
 

NANTHEALTH REPORTS 2019 FIRST-QUARTER FINANCIAL RESULTS

•
Total revenue in Q1 was $23.7 million, up 7% from Q1 2018
◦
SaaS revenue of $17.8 million in Q1, up 10% from Q1 2018 and 3% sequentially
•
Signed Substantial Three-year Eviti Contract with Multi-state Healthcare Payer
•
Sequencing and Molecular Analysis, 820 total tests ordered in Q1, including 428 GPS Cancer® and 392 Liquid GPS SM Tests

Culver City, Calif. - May 09, 2019 - NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, today reported financial results for its first quarter ended March 31, 2019.

“We had an excellent start to fiscal 2019,” said Bob Petrou, Chief Financial Officer of NantHealth. “Our solid 2019 first quarter results were driven by higher total revenue combined with an improved gross margin. Our SaaS business, which comprises the largest portion of our operations, continued its sequential quarterly topline growth, and with the recent signing of a multi-year contract for our Eviti clinical decision support solution, we expect to continue to see further revenue growth.”

Software and Services Highlights:
•
Clinical Decision Support (Eviti):
◦
In Q2, signed a three-year partnership with a leading nonprofit multi-state health plan, expanding Eviti Connect’s total covered lives to over 25 million
◦
In Q1, released versions 7.6 and 7.7, with the following enhancements:
▪
Added features that alert payers when a patient begins treatment before eligibility is determined
▪
Clinical content teams can now publish regimens more efficiently and effectively to meet client needs
▪
Payer medical management groups can now customize warnings and deviations for their clinically equivalent programs
▪
Payers are now provided with superior insights into member eligibility and treatment timeframes

•
Payer Engagement (NaviNet):
◦
In Q1, implemented refreshed pricing for NaviNet AllPayer services, which is expected to drive enhanced SaaS financial performance in 2019
◦
In Q1, enhanced new workflow capabilities within the Authorizations applications to support functionality in submission workflow, and updated the Authorization Appeals application to better support users
◦
In Q1, upgraded the Claim Status Inquiry tool to allow for better visibility of actions taken within NaviNet for non-NaviNet Claims, increasing utility of the NaviNet solution beyond current payer partners
◦
In Q1, provided health plans/payers greater efficiency by allowing enhanced customization to Open Claim attachment metadata, improving automated file retrieval and processing on their backend

•
Connected Care (DeviceConX):
◦
In Q1, participated in Healthcare Information and Management Systems Society (HIMSS) Conference in Orlando FL, showcasing the DeviceConX solution’s ability to successfully deliver GE Healthcare




device data and the company’s collaborations with Dell Boomi, Baxter and other kidney dialysis treatment solutions
◦
In Q1, significantly increased connectivity license sales, driving improved recurring maintenance revenue on a go forward basis, as previously announced
◦
In Q1, as previously announced, deployed DeviceConX Version 5.15 upgrade, with the ability to push OS security patches directly to HBox Connected Care hardware devices
◦
In April, the company presented its VitalsConX technology at the American Nursing Informatics Association (ANIA) Annual Conference, demonstrating the ease of collecting, inputting and integrating patient data into electronic health records (EHRs)

Sequencing and Molecular Analysis - Highlights
◦
In Q1, total GPS orders were 820, comprised of GPS Cancer of 428 and Liquid GPS of 392
◦
In Q1, scientific teams from NantHealth and NantOmics presented five posters at the American Society of Clinical Oncology’s (ASCO) Gastrointestinal Cancers Symposium and two posters at the ASCO’s Genitourinary Cancers Symposium. The research presented focused on the significance of RNA expression, in tissue and blood, and individual biomarkers in determining why some patients do not respond to targeted cancer therapies based on DNA genomic profiling alone

Business and Financial Highlights
For the 2019 first quarter, total net revenue was $23.7 million, compared with $22.3 million in 2018 first quarter. Gross profit was $12.4 million, or 52% of total net revenue, compared with $11.2 million, or 50% of total net revenue, for the prior year period. Selling, general and administrative expenses declined to $16.8 million, from $20.7 million in 2018 first quarter. Research and development expenses decreased to $5.1 million from $5.2 million.

Financial results for the first quarter of 2019 included non-cash charges for loss from related party equity method investment and Allscripts liability of $4.7million. Net loss from continuing operations, net of tax, was $19.8 million, or $0.18 per share, compared with $22.0 million, or $0.20 per share, for the 2018 first quarter. Net loss was $19.9 million, or $0.18 per share, compared with $22.2 million, or $0.20 per share, for 2018 first quarter.

For the 2019 first quarter, on a non-GAAP basis, adjusted net loss from continuing operations was $10.7 million, or $0.10 per share, compared with $13.5 million, or $0.12 per share, for the 2018 first quarter.

Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) to review its results of operations for the first quarter ended March 31, 2019. The conference call will be available to interested parties by dialing 844-309-3709 from the U.S. or Canada, or 281-962-4864 from international locations, passcode 6159197. The call will be broadcast via the Internet at www.nanthealth.com. Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. A playback of the call will be archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking statements regarding topics such as the company’s financial status and performance, regulatory and operational developments, and other comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

Use of Non-GAAP Financial Measures
This news release contains references to Non-GAAP financial measures, including adjusted net loss and adjusted net loss per share, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). The Company’s management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor’s overall understanding of the financial results for the Company’s core business. Additionally, it provides a basis for the comparison of the financial results for the Company’s core business




between current, past and future periods. Other companies may define these measures in different ways. Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP. Non-GAAP per share numbers are calculated based on one class of common stock and do not incorporate the effects, if any, of using the two-class method.

About NantHealth
NantHealth, a member of the NantWorks ecosystem of companies, provides leading solutions across the continuum of care for physicians, payers, patients and biopharmaceutical organizations. NantHealth enables the use of cutting-edge data and technology towards the goal of empowering clinical decision support and improving patient outcomes. NantHealth’s comprehensive product portfolio combines the latest technology in payer/provider platforms that exchange information in near-real time (NaviNet and Eviti), connected care solutions (DeviceConx and VitalsConx) that deliver Medical Device Interoperability (MDI) and molecular analysis through its GPS Cancer® and Liquid GPS SM profiling solutions. For more information, please visit www.nanthealth.com or follow us on Twitter , Facebook and LinkedIn .

This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Forward-looking statements can be identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plans,” “will,” “outlook” and similar expressions. Forward-looking statements are based on management’s current plans, estimates, assumptions and projections, and speak only as of the date they are made. Risks and uncertainties include, but are not limited to: our ability to successfully integrate a complex learning system to address a wide range of healthcare issues; our ability to successfully amass the requisite data to achieve maximum network effects; appropriately allocating financial and human resources across a broad array of product and service offerings; raising additional capital as necessary to fund our operations; achieving significant commercial market acceptance for our sequencing and molecular analysis solutions; establish relationships with, key thought leaders or payers’ key decision makers in order to establish GPS Cancer and Liquid GPS as a standard of care for patients with cancer; our ability to grow the market for our Systems Infrastructure, and applications; successfully enhancing our Systems Infrastructure and applications to achieve market acceptance and keep pace with technological developments; customer concentration; competition; security breaches; bandwidth limitations; our ability to continue our relationship with NantOmics; our ability to obtain regulatory approvals; dependence upon senior management; the need to comply with and meet applicable laws and regulations; unexpected adverse events; clinical adoption and market acceptance of GPS Cancer and Liquid GPS; and anticipated cost savings. We undertake no obligation to update any forward-looking statement in light of new information or future events, except as otherwise required by law. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Actual results or outcomes may differ materially from those implied by the forward-looking statements as a result of the impact of a number of factors, many of which are discussed in more detail in our reports filed with the Securities and Exchange Commission.

FINANCIAL TABLES FOLLOW









NantHealth, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
 
March 31,
2019
 
December 31,
2018
 
(Unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
12,444

 
$
18,305

Accounts receivable, net
15,288

 
15,286

Inventories
416

 
496

Related party receivables, net
735

 
1,007

Prepaid expenses and other current assets
5,264

 
4,350

Total current assets
34,147

 
39,444

Property, plant, and equipment, net
20,673

 
22,978

Goodwill
115,930

 
115,930

Intangible assets, net
62,416

 
64,703

Investment in related party
37,810

 
40,000

Related party receivable, net of current
1,603

 
1,611

Operating lease right-of-use assets
11,099

 
—

Other assets
1,566

 
1,671

Total assets
$
285,244

 
$
286,337

 
 
 
 
Liabilities and Stockholders' Equity (Deficit)
 
 
 
Current liabilities
 
 
 
Accounts payable
$
2,335

 
$
1,650

Accrued and other current liabilities
15,293

 
13,832

Deferred revenue
16,892

 
16,263

Related party payables, net
4,856

 
4,791

Total current liabilities
39,376

 
36,536

Deferred revenue, net of current
7,091

 
6,704

Related party liabilities
19,313

 
17,708

Related party promissory note
112,666

 
112,666

Related party convertible note, net
8,494

 
8,378

Convertible notes, net
80,674

 
79,433

Operating lease liabilities
12,404

 
—

Other liabilities
21,589

 
22,081

Total liabilities
301,607

 
283,506

 
 
 
 
Stockholders' equity (deficit)
 
 
 
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 109,921,647 and 109,491,277 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively (including 1 share of restricted stock at both dates)
11

 
11

Additional paid-in capital
887,963

 
887,289

Accumulated deficit
(904,045
)
 
(884,122
)
Accumulated other comprehensive loss
(292
)
 
(347
)
Total stockholders' equity (deficit)
(16,363
)
 
2,831

Total liabilities and stockholders' equity (deficit)
$
285,244

 
$
286,337





NantHealth, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
 
 
 
Total net revenue
$
23,729

 
$
22,263

 
 
 
 
Total cost of revenue
11,290

 
11,068

Gross Profit
12,439

 
11,195

 
 
 
 
Operating Expenses:
 
 
 
Selling, general and administrative
16,789

 
20,737

Research and development
5,080

 
5,151

Amortization of acquisition-related assets
1,054

 
1,054

Total operating expenses
22,923

 
26,942

 
 
 
 
Loss from operations
(10,484
)
 
(15,747
)
Interest expense, net
(4,414
)
 
(4,197
)
Other (expense) income, net
(2,505
)
 
180

Loss from related party equity method investment
(2,210
)
 
(3,261
)
Loss from continuing operations before income taxes
(19,613
)
 
(23,025
)
Provision for (benefit from) income taxes
226

 
(1,050
)
Net loss from continuing operations
(19,839
)
 
(21,975
)
Loss from discontinued operations, net of tax
(84
)
 
(193
)
Net loss
$
(19,923
)
 
$
(22,168
)
 
 
 
 
Net loss per share:
 
 
 
Continuing operations
 
 
 
Basic and diluted - common stock
$
(0.18
)
 
$
(0.20
)
 
 
 
 
Discontinued operations
 
 
 
Basic and diluted - common stock
$
—

 
$
—

 
 
 
 
Total net loss per share
 
 
 
Basic and diluted - common stock
$
(0.18
)
 
$
(0.20
)
 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic and diluted - common stock
109,904,336

 
108,579,271






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

 
Three Months Ended 
 March 31,
 
2019
 
2018
 
 
 
 
Revenue:
 
 
 
Software-as-a-service related
$
17,802

 
$
16,166

Software and hardware related
1,027

 
1,455

Maintenance
2,493

 
2,446

Total software-related revenue
21,322

 
20,067

Sequencing and molecular analysis
814

 
840

Home health care services
1,593

 
1,356

Total net revenue
$
23,729

 
$
22,263

 
 
 
 
Cost of Revenue:
 
 
 
Software-as-a-service related
$
5,752

 
$
6,602

Software and hardware related
785

 
885

Maintenance
270

 
215

Amortization of developed technologies
1,233

 
1,173

Total software-related cost of revenue
8,040

 
8,875

Sequencing and molecular analysis
2,427

 
1,431

Home health care services
823

 
762

Total cost of revenue
$
11,290

 
$
11,068







NantHealth, Inc.
Non-GAAP Net Loss from Continuing Operations and
Non-GAAP Net Loss Per Share from Continuing Operations
(Dollars in thousands, except per share amounts)
(Unaudited)

 
Three Months Ended 
 March 31,
 
2019
 
2018
 
 
Net loss from continuing operations
$
(19,839
)
 
$
(21,975
)
Adjustments to GAAP net loss:
 
 
 
Loss from related party equity method investment
2,210

 
3,261

Stock-based compensation expense from continuing operations
650

 
2,718

Acquisition related sales incentive
—

 
145

Change in fair value of derivatives liability
—

 
(1
)
Change in fair value of Bookings Commitment
2,494

 
—

Noncash interest expense related to convertible notes
1,357

 
1,194

Intangible amortization from continuing operations
2,287

 
2,227

Securities litigation costs
—

 
73

Tax provision (benefit) resulting from certain noncash tax items
111

 
(1,123
)
Total adjustments to GAAP net loss from continuing operations
9,109

 
8,494

Net loss - Non-GAAP from continuing operations
$
(10,730
)
 
$
(13,481
)
 
 
 
 
Weighted average shares outstanding
109,904,336

 
108,579,271

 
 
 
 
Net loss per share from continuing operations - Non-GAAP
$
(0.10
)
 
$
(0.12
)

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

 
Three Months Ended 
 March 31,
 
2019
 
2018
 
 
 
 
Net loss from continuing operations
$
(0.18
)
 
$
(0.20
)
Adjustments to GAAP net loss per common share from continuing operations:
 
 
 
Loss from related party equity method investment
0.02

 
0.03

Stock-based compensation expense from continuing operations
0.01

 
0.03

Acquisition related sales incentive
—

 
—

Change in fair value of derivatives liability
—

 
—

Change in fair value of Bookings Commitment
0.02

 
—

Noncash interest expense related to convertible notes
0.01

 
0.01

Intangible amortization from continuing operations
0.02

 
0.02

Securities litigation costs
—

 
—

Tax provision (benefit) resulting from certain noncash tax items
—

 
(0.01
)
Total adjustments to GAAP net loss per common share from continuing operations
0.08

 
0.08

Net loss per common share from continuing operations - Non-GAAP
$
(0.10
)
 
$
(0.12
)