|
|
|
Delaware
|
|
001-37792
|
|
27-3019889
|
(State or other jurisdiction of incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer
Identification No.)
|
|
Item 2.02
|
Results of Operations and Financial Condition.
|
Item 9.01
|
Financial Statements and Exhibits
.
|
Exhibit No.
|
Description
|
99.1
|
Press Release dated August 10, 2017 announcing results for the quarter ended June 30, 2017.
|
|
|
|
|
NantHealth, Inc.
|
|
|
|
|
|
Date:
|
August 10, 2017
|
By:
|
|
/s/ Paul Holt
|
|
|
|
|
Paul Holt
|
|
|
|
|
Chief Financial Officer
|
Exhibit No.
|
Description
|
99.1
|
Press Release dated August 10, 2017 announcing results for the three months ended June 30, 2017.
|
|
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
|
|
•
|
Restructuring Plan Implemented To Focus on Cancer Decision Support and Artificial Intelligence Platform
|
◦
|
Integration of Four Pillars: GPS Cancer, Eviti Clinical Decision Support, Connected Care and Provider/Payer Engagement
|
◦
|
Sale of Patient/Provider Portal to Allscripts
|
◦
|
Expected to Significantly Accelerate Timeline to Profitability
|
◦
|
Synergies of Restructuring and Headcount Reduction to Result in Cost Savings Anticipated to Exceed $70 million Annually
|
•
|
GPS Continues to Grow
|
◦
|
379 GPS Commercial Tests Ordered in Q2
|
◦
|
264 GPS Commercial Tests Delivered in Q2
|
◦
|
GPS Tests Ordered in July, Largest Month in Orders to Date
|
◦
|
The number of Oncologists that Have Ordered the Test has Grown to 432
|
◦
|
Documentation and Validation of GPS Cancer Coverage has been Completed and Will be Filed in this Quarter to CMS for Coverage
|
•
|
Q2-2017 Revenue Increased 17% to $26.2 Million from Q1-2017
|
•
|
Gross Profit Increased 175% to $9.6 Million from Q1-2017
|
•
|
Number of GPS Cancer payers:
At June 30, 2017, the company’s expanded sales team developed a late-stage pipeline that includes several national and regional health plans with contract signings expected by year end.
|
•
|
Local Coverage Determination (LCD) & National Coverage by CMS
: Discussions are continuing for both local and national coverage with CMS and FDA regarding GPS Cancer coverage by Medicare. The company is encouraged following multiple detailed meetings with CMS in which the accuracy and comprehensiveness of the GPS Cancer solution, as well as its clinical utility, were presented. The documentation and validation for review for coverage by CMS has been completed and will be filed this quarter.
|
•
|
Expanded international adoption:
The company is pursuing GPS Cancer partnerships with locally based resellers. Post quarter end, the company added Sistemas Medicos Nacionales as the first international payer to cover GPS Cancer for patients, bringing a new standard of care to Mexico.
|
•
|
Increased field sales and clinical team:
In Q2, the company continued to add experienced professionals to the field sales team, including international sales, that call on oncologists; increased clinical support for oncologists engaged with the company’s GPS Cancer team.
|
•
|
Eviti (Clinical Decision Support) covered lives increased to approximately 23.4 million at the end of Q2 from 22.5 million at the end of Q1.
|
•
|
The company signed a three-year contract extension with Blue Cross and Blue Shield of Nebraska (BCBSNE) for Payor engagement SaaS services. The agreement also adds Navinet Open Document Exchange solution to its existing set of solutions in use by this customer.
|
•
|
Added a new Navinet Open customer with the execution of an agreement with Medical Mutual of Omaha.
|
•
|
The company executed an agreement with a new payer customer intended for nationwide deployment of NantHealth’s Clinical Decision Support solutions nationwide.
|
•
|
A Restructuring Plan was implemented in the third quarter
to focus on the company’s core competencies and position the artificial intelligent platform to focus on cancer: GPS (Cancer Molecular Profiling Solution) and Clinical Decision Support, Connected Care and Payer Engagement. Synergies of the restructuring plan and headcount reduction to result in cost savings anticipated to exceed $70 million annually and significantly accelerate timeline to profitability.
|
•
|
On August 3, 2017, entered into an agreement
with Allscripts Healthcare Solutions, Inc. under which NantHealth agreed to sell its provider/patient engagement solutions business. The agreement is subject to customary closing conditions and is expected to close in the third quarter of 2017.
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
92,669
|
|
|
$
|
160,353
|
|
Accounts receivable, net
|
11,345
|
|
|
13,728
|
|
||
Inventories
|
2,165
|
|
|
2,217
|
|
||
Deferred implementation costs
|
4,207
|
|
|
3,336
|
|
||
Related party receivables, net
|
1,136
|
|
|
899
|
|
||
Prepaid expenses and other current assets
|
5,228
|
|
|
5,046
|
|
||
Total current assets
|
116,750
|
|
|
185,579
|
|
||
Property, plant, and equipment, net
|
31,773
|
|
|
29,139
|
|
||
Deferred implementation costs, net of current
|
8,882
|
|
|
7,910
|
|
||
Goodwill
|
131,068
|
|
|
131,068
|
|
||
Intangible assets, net
|
109,287
|
|
|
119,126
|
|
||
Investment in related party
|
163,786
|
|
|
207,197
|
|
||
Related party receivable, net of current
|
1,869
|
|
|
1,971
|
|
||
Other assets
|
2,033
|
|
|
2,317
|
|
||
Total assets
|
$
|
565,448
|
|
|
$
|
684,307
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,195
|
|
|
$
|
6,720
|
|
Accrued and other current liabilities
|
18,686
|
|
|
25,231
|
|
||
Deferred revenue
|
18,699
|
|
|
17,216
|
|
||
Related party payables, net
|
11,368
|
|
|
8,082
|
|
||
Total current liabilities
|
49,948
|
|
|
57,249
|
|
||
Deferred revenue, net of current
|
12,244
|
|
|
17,238
|
|
||
Related party liabilities
|
8,521
|
|
|
5,612
|
|
||
Related party promissory note
|
112,666
|
|
|
112,666
|
|
||
Related party convertible note, net
|
7,750
|
|
|
7,564
|
|
||
Convertible notes, net
|
72,763
|
|
|
70,810
|
|
||
Other liabilities
|
1,741
|
|
|
1,574
|
|
||
Total liabilities
|
265,633
|
|
|
272,713
|
|
||
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 121,953,800 and 121,250,437 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively (Including 6,976 shares of restricted stock)
|
12
|
|
|
12
|
|
||
Additional paid-in capital
|
885,654
|
|
|
886,334
|
|
||
Accumulated deficit
|
(586,452
|
)
|
|
(475,273
|
)
|
||
Accumulated other comprehensive income
|
601
|
|
|
521
|
|
||
Total stockholders' equity
|
299,815
|
|
|
411,594
|
|
||
Total liabilities and stockholders' equity
|
$
|
565,448
|
|
|
$
|
684,307
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Total net revenue
|
$
|
26,230
|
|
|
$
|
31,490
|
|
|
$
|
48,739
|
|
|
$
|
50,941
|
|
|
|
|
|
|
|
|
|
||||||||
Total cost of revenue
|
16,672
|
|
|
22,240
|
|
|
35,701
|
|
|
35,278
|
|
||||
Gross profit
|
9,558
|
|
|
9,250
|
|
|
13,038
|
|
|
15,663
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
22,944
|
|
|
47,248
|
|
|
43,822
|
|
|
74,621
|
|
||||
Research and development
|
11,846
|
|
|
24,322
|
|
|
25,245
|
|
|
35,016
|
|
||||
Amortization of software license and acquisition-related assets
|
1,814
|
|
|
1,813
|
|
|
3,628
|
|
|
3,628
|
|
||||
Total operating expenses
|
36,604
|
|
|
73,383
|
|
|
72,695
|
|
|
113,265
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(27,046
|
)
|
|
(64,133
|
)
|
|
(59,657
|
)
|
|
(97,602
|
)
|
||||
Interest expense, net
|
(4,013
|
)
|
|
(1,758
|
)
|
|
(7,982
|
)
|
|
(3,256
|
)
|
||||
Other income (expense), net
|
57
|
|
|
(77
|
)
|
|
330
|
|
|
261
|
|
||||
Loss from related party equity method investment including impairment loss
|
(38,885
|
)
|
|
(2,375
|
)
|
|
(43,411
|
)
|
|
(5,289
|
)
|
||||
Loss before income taxes
|
(69,887
|
)
|
|
(68,343
|
)
|
|
(110,720
|
)
|
|
(105,886
|
)
|
||||
Provision for (benefit from) income taxes
|
177
|
|
|
(14,211
|
)
|
|
459
|
|
|
(18,609
|
)
|
||||
Net loss
|
$
|
(70,064
|
)
|
|
$
|
(54,132
|
)
|
|
$
|
(111,179
|
)
|
|
$
|
(87,277
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share (1):
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
$
|
(0.58
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.91
|
)
|
|
$
|
(0.91
|
)
|
Basic and diluted - redeemable common stock
|
N/A
|
|
|
$
|
0.25
|
|
|
N/A
|
|
|
$
|
0.49
|
|
||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding (1):
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
121,756,108
|
|
|
104,072,198
|
|
|
121,687,454
|
|
|
101,846,445
|
|
||||
Basic and diluted - redeemable common stock
|
N/A
|
|
|
9,419,152
|
|
|
N/A
|
|
|
10,066,719
|
|
(1)
|
The net income (loss) per share and weighted-average shares outstanding for the
three and six
months ended
June 30, 2016
, have been computed to give effect to the LLC Conversion 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, 20
16.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Software and hardware
|
$
|
3,446
|
|
|
$
|
4,149
|
|
|
$
|
4,091
|
|
|
$
|
4,823
|
|
Software–as-a-service
|
15,281
|
|
|
15,181
|
|
|
30,512
|
|
|
28,882
|
|
||||
Total software-related revenue
|
18,727
|
|
|
19,330
|
|
|
34,603
|
|
|
33,705
|
|
||||
Maintenance
|
4,693
|
|
|
4,512
|
|
|
7,855
|
|
|
7,650
|
|
||||
Sequencing and molecular analysis
|
450
|
|
|
45
|
|
|
960
|
|
|
45
|
|
||||
Other services
|
2,360
|
|
|
7,603
|
|
|
5,321
|
|
|
9,541
|
|
||||
Total net revenue
|
$
|
26,230
|
|
|
$
|
31,490
|
|
|
$
|
48,739
|
|
|
$
|
50,941
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of Revenue:
|
|
|
|
|
|
|
|
||||||||
Software and hardware
|
$
|
528
|
|
|
$
|
435
|
|
|
$
|
840
|
|
|
$
|
674
|
|
Software-as-a-service
|
6,226
|
|
|
9,314
|
|
|
13,459
|
|
|
13,737
|
|
||||
Total software-related cost of revenue
|
6,754
|
|
|
9,749
|
|
|
14,299
|
|
|
14,411
|
|
||||
Maintenance
|
954
|
|
|
743
|
|
|
1,816
|
|
|
1,273
|
|
||||
Sequencing and molecular analysis
|
1,512
|
|
|
359
|
|
|
3,050
|
|
|
359
|
|
||||
Other services
|
4,647
|
|
|
7,492
|
|
|
10,325
|
|
|
11,057
|
|
||||
Amortization of developed technologies
|
2,805
|
|
|
3,897
|
|
|
6,211
|
|
|
8,178
|
|
||||
Total cost of revenue
|
$
|
16,672
|
|
|
$
|
22,240
|
|
|
$
|
35,701
|
|
|
$
|
35,278
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
||||||||||
Net loss
|
$
|
(70,064
|
)
|
|
$
|
(54,132
|
)
|
|
$
|
(111,179
|
)
|
|
$
|
(87,277
|
)
|
Adjustments to GAAP net loss:
|
|
|
|
|
|
|
|
||||||||
Loss from related party equity method investment including impairment loss
|
38,885
|
|
|
2,375
|
|
|
43,411
|
|
|
5,289
|
|
||||
Stock-based compensation expense
|
637
|
|
|
43,691
|
|
|
887
|
|
|
43,788
|
|
||||
Corporate restructuring
|
1,593
|
|
|
179
|
|
|
1,813
|
|
|
2,145
|
|
||||
Acquisition related compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
4,814
|
|
||||
Acquisition related sales incentive
|
671
|
|
|
40
|
|
|
1,334
|
|
|
1,461
|
|
||||
Change in fair value of derivatives liability
|
(24
|
)
|
|
—
|
|
|
(239
|
)
|
|
—
|
|
||||
Non-cash interest expense related to convertible notes
|
1,088
|
|
|
—
|
|
|
2,139
|
|
|
—
|
|
||||
Intangible amortization
|
4,619
|
|
|
5,710
|
|
|
9,839
|
|
|
11,806
|
|
||||
Impacts of intangibles amortization and the conversion from a limited liability company to a corporation on provision for (benefit from) income taxes
|
141
|
|
|
(14,386
|
)
|
|
374
|
|
|
(18,914
|
)
|
||||
Total adjustments to GAAP net loss
|
47,610
|
|
|
37,609
|
|
|
59,558
|
|
|
50,389
|
|
||||
Net loss - Non-GAAP
|
$
|
(22,454
|
)
|
|
$
|
(16,523
|
)
|
|
$
|
(51,621
|
)
|
|
$
|
(36,888
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding (1)
|
121,756,108
|
|
|
104,072,198
|
|
|
121,687,454
|
|
|
101,846,445
|
|
||||
Weighted average Series F/redeemable stock (1)(2)
|
—
|
|
|
9,419,152
|
|
|
—
|
|
|
10,066,719
|
|
||||
Shares outstanding - Non-GAAP (1)
|
121,756,108
|
|
|
113,491,350
|
|
|
121,687,454
|
|
|
111,913,164
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per share - Non-GAAP (1)
|
$
|
(0.18
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
(0.33
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net loss per common share
-
GAAP
|
$
|
(0.58
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.91
|
)
|
|
$
|
(0.91
|
)
|
Adjustments to GAAP net loss per common share:
|
|
|
|
|
|
|
|
||||||||
Loss from related party equity method investment including impairment loss
|
0.32
|
|
|
0.02
|
|
|
0.36
|
|
|
0.05
|
|
||||
Stock-based compensation expense
|
0.01
|
|
|
0.42
|
|
|
0.01
|
|
|
0.43
|
|
||||
Corporate restructuring
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
0.02
|
|
||||
Acquisition related compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
||||
Acquisition related sales incentive
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
||||
Change in fair value of derivatives liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-cash interest expense related to convertible notes
|
0.01
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
||||
Intangible amortization
|
0.04
|
|
|
0.06
|
|
|
0.08
|
|
|
0.13
|
|
||||
Impacts of intangibles amortization and the conversion from a limited liability company to a corporation on provision for (benefit from) income taxes
|
—
|
|
|
(0.14
|
)
|
|
—
|
|
|
(0.19
|
)
|
||||
Accretion to redemption value of Series F/redeemable common stock
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.05
|
|
||||
Dilution from Series F/redeemable common stock
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.03
|
|
||||
Total adjustments to GAAP net loss per common share
|
0.40
|
|
|
0.39
|
|
|
0.49
|
|
|
0.58
|
|
||||
Net loss per common share - Non-GAAP (1)
|
$
|
(0.18
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
(0.33
|
)
|
(1)
|
The net loss per common 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 IPO. 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 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 following that day. The weighted-average shares are adjusted to include the redeemable common stock in the weighted average shares outstanding for the entire period.
|