|
|
|
|
|
Delaware
|
|
27-3019889
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
9920 Jefferson Blvd
Culver City, California
|
|
90232
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.0001 per share
|
NH
|
Nasdaq Global Select Market
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
x
|
|
|
|
|
|
|
Emerging growth company
|
x
|
|
|
|
Page
|
PART I.
|
|
|
|
|
|
Item 1.
|
||
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
Consolidated Statement of Operations
|
|
|
|
|
|
Consolidated Statements of Comprehensive Loss
|
|
|
|
|
|
Consolidated Statements of Stockholders' Equity (Deficit)
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
PART II.
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
•
|
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;
|
•
|
the evolving treatment paradigm for cancer, including physicians’ use of molecular information and targeted oncology therapeutics and the market size for molecular information products;
|
•
|
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;
|
•
|
our ability to generate revenue from sales of products enabled by our molecular and biometric information platforms to physicians in clinical settings;
|
•
|
our ability to increase the commercial success and to accelerate commercial growth of our sequencing and molecular analysis solutions and our other products and services;
|
•
|
our plans or ability to obtain reimbursement for our sequencing and molecular analysis solutions, including expectations as to our ability or the amount of time it will take to achieve successful reimbursement from third-party payers, such as commercial insurance companies and health maintenance organizations, and government insurance programs, such as Medicare and Medicaid;
|
•
|
our ability to effectively manage our growth, including the rate and degree of market acceptance of our solutions;
|
•
|
our ability to offer new and innovative products and services, including new features and functionality for our existing products and services;
|
•
|
our ability to attract new partners and clients;
|
•
|
our ability to estimate the size of our target market;
|
•
|
our ability to maintain and enhance our reputation and brand recognition;
|
•
|
consolidation in the healthcare industry;
|
•
|
competition which could limit our ability to maintain or expand market share within our industry;
|
•
|
restrictions and penalties as a result of privacy and data protection laws;
|
•
|
our use of “open source” software;
|
•
|
our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
|
•
|
data loss or corruption due to failures or errors in our systems and service disruptions at our data centers;
|
•
|
breaches or failures of our security measures;
|
•
|
our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our users;
|
•
|
risks related to future acquisition opportunities;
|
•
|
the requirements of being a public company;
|
•
|
our ability to attract and retain key personnel;
|
•
|
our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act, or the JOBS Act;
|
•
|
our ability to obtain and maintain intellectual property protection for our solutions and not infringe upon the intellectual property of others;
|
•
|
our ability to implement our comprehensive restructuring plan that includes a wide range of organizational efficiency initiatives and other cost reduction opportunities; and
|
•
|
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.
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
7,076
|
|
|
$
|
18,305
|
|
Accounts receivable, net
|
13,858
|
|
|
15,286
|
|
||
Inventories
|
303
|
|
|
496
|
|
||
Related party receivables, net
|
938
|
|
|
1,007
|
|
||
Prepaid expenses and other current assets
|
5,726
|
|
|
4,350
|
|
||
Total current assets
|
27,901
|
|
|
39,444
|
|
||
Property, plant, and equipment, net
|
18,152
|
|
|
22,978
|
|
||
Goodwill
|
115,930
|
|
|
115,930
|
|
||
Intangible assets, net
|
56,242
|
|
|
64,703
|
|
||
Investment in related party
|
35,749
|
|
|
40,000
|
|
||
Related party receivable, net of current
|
1,360
|
|
|
1,611
|
|
||
Operating lease right-of-use assets
|
10,783
|
|
|
—
|
|
||
Other assets
|
1,929
|
|
|
1,671
|
|
||
Total assets
|
$
|
268,046
|
|
|
$
|
286,337
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity (Deficit)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
3,047
|
|
|
$
|
1,650
|
|
Accrued and other current liabilities
|
12,614
|
|
|
13,832
|
|
||
Deferred revenue
|
17,566
|
|
|
16,263
|
|
||
Related party payables, net
|
4,192
|
|
|
4,791
|
|
||
Total current liabilities
|
37,419
|
|
|
36,536
|
|
||
Deferred revenue, net of current
|
4,329
|
|
|
6,704
|
|
||
Related party liabilities
|
20,939
|
|
|
17,708
|
|
||
Related party promissory note
|
112,666
|
|
|
112,666
|
|
||
Related party convertible note, net
|
8,613
|
|
|
8,378
|
|
||
Convertible notes, net
|
81,957
|
|
|
79,433
|
|
||
Deferred income taxes, net
|
2,690
|
|
|
2,437
|
|
||
Operating lease liabilities
|
11,949
|
|
|
—
|
|
||
Other liabilities
|
17,980
|
|
|
19,644
|
|
||
Total liabilities
|
298,542
|
|
|
283,506
|
|
||
|
|
|
|
||||
Stockholders' equity (deficit)
|
|
|
|
||||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 110,454,507 and 109,491,277 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively (including 1 share of restricted stock at both dates)
|
11
|
|
|
11
|
|
||
Additional paid-in capital
|
888,461
|
|
|
887,289
|
|
||
Accumulated deficit
|
(918,758
|
)
|
|
(884,122
|
)
|
||
Accumulated other comprehensive loss
|
(210
|
)
|
|
(347
|
)
|
||
Total stockholders' (deficit) equity
|
(30,496
|
)
|
|
2,831
|
|
||
Total liabilities and stockholders' equity (deficit)
|
$
|
268,046
|
|
|
$
|
286,337
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service related
|
$
|
18,291
|
|
|
$
|
16,220
|
|
|
$
|
36,093
|
|
|
$
|
32,386
|
|
Software and hardware related
|
3,099
|
|
|
885
|
|
|
4,126
|
|
|
2,340
|
|
||||
Maintenance
|
2,535
|
|
|
2,388
|
|
|
5,028
|
|
|
4,835
|
|
||||
Total software-related revenue
|
23,925
|
|
|
19,493
|
|
|
45,247
|
|
|
39,561
|
|
||||
Sequencing and molecular analysis
|
491
|
|
|
924
|
|
|
1,305
|
|
|
1,764
|
|
||||
Home health care services
|
1,270
|
|
|
1,630
|
|
|
2,863
|
|
|
2,986
|
|
||||
Total net revenue
|
25,686
|
|
|
22,047
|
|
|
49,415
|
|
|
44,311
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cost of Revenue:
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service related
|
5,743
|
|
|
5,741
|
|
|
11,495
|
|
|
12,342
|
|
||||
Software and hardware related
|
794
|
|
|
789
|
|
|
1,579
|
|
|
1,675
|
|
||||
Maintenance
|
311
|
|
|
234
|
|
|
581
|
|
|
449
|
|
||||
Amortization of developed technologies
|
1,143
|
|
|
1,293
|
|
|
2,376
|
|
|
2,466
|
|
||||
Total software-related cost of revenue
|
7,991
|
|
|
8,057
|
|
|
16,031
|
|
|
16,932
|
|
||||
Sequencing and molecular analysis
|
1,177
|
|
|
1,689
|
|
|
3,603
|
|
|
3,120
|
|
||||
Home health care services
|
648
|
|
|
836
|
|
|
1,471
|
|
|
1,599
|
|
||||
Total cost of revenue
|
9,816
|
|
|
10,582
|
|
|
21,105
|
|
|
21,651
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
15,870
|
|
|
11,465
|
|
|
28,310
|
|
|
22,660
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
15,177
|
|
|
18,388
|
|
|
31,967
|
|
|
39,122
|
|
||||
Research and development
|
4,584
|
|
|
5,889
|
|
|
9,664
|
|
|
11,040
|
|
||||
Amortization of acquisition-related assets
|
1,054
|
|
|
1,054
|
|
|
2,108
|
|
|
2,108
|
|
||||
Impairment of intangible assets
|
3,977
|
|
|
—
|
|
|
3,977
|
|
|
—
|
|
||||
Total operating expenses
|
24,792
|
|
|
25,331
|
|
|
47,716
|
|
|
52,270
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(8,922
|
)
|
|
(13,866
|
)
|
|
(19,406
|
)
|
|
(29,610
|
)
|
||||
Interest expense, net
|
(4,473
|
)
|
|
(4,262
|
)
|
|
(8,887
|
)
|
|
(8,460
|
)
|
||||
Other income (expense), net
|
1,054
|
|
|
(1,334
|
)
|
|
(1,451
|
)
|
|
(1,154
|
)
|
||||
Loss from related party equity method investment
|
(2,208
|
)
|
|
(2,945
|
)
|
|
(4,418
|
)
|
|
(6,206
|
)
|
||||
Loss from continuing operations before income taxes
|
(14,549
|
)
|
|
(22,407
|
)
|
|
(34,162
|
)
|
|
(45,430
|
)
|
||||
Provision for (benefit from) income taxes
|
133
|
|
|
(601
|
)
|
|
359
|
|
|
(1,651
|
)
|
||||
Net loss from continuing operations
|
(14,682
|
)
|
|
(21,806
|
)
|
|
(34,521
|
)
|
|
(43,779
|
)
|
||||
Loss from discontinued operations, net of tax
|
(31
|
)
|
|
(1,591
|
)
|
|
(115
|
)
|
|
(1,785
|
)
|
||||
Net loss
|
$
|
(14,713
|
)
|
|
$
|
(23,397
|
)
|
|
$
|
(34,636
|
)
|
|
$
|
(45,564
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
$
|
(0.13
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.40
|
)
|
Discontinued operations
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
Total net loss per share
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
$
|
(0.13
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.42
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
110,209,510
|
|
|
109,120,438
|
|
|
110,057,981
|
|
|
108,851,348
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(14,713
|
)
|
|
$
|
(23,397
|
)
|
|
$
|
(34,636
|
)
|
|
$
|
(45,564
|
)
|
Other comprehensive income (loss) from foreign currency translation gain (loss)
|
82
|
|
|
(208
|
)
|
|
137
|
|
|
(98
|
)
|
||||
Total other comprehensive income (loss)
|
82
|
|
|
(208
|
)
|
|
137
|
|
|
(98
|
)
|
||||
Comprehensive loss
|
$
|
(14,631
|
)
|
|
$
|
(23,605
|
)
|
|
$
|
(34,499
|
)
|
|
$
|
(45,662
|
)
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive Loss |
|
Total Stockholders' Equity (Deficit)
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2018
|
109,491,277
|
|
|
$
|
11
|
|
|
$
|
887,289
|
|
|
$
|
(884,122
|
)
|
|
$
|
(347
|
)
|
|
$
|
2,831
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
707
|
|
|
—
|
|
|
—
|
|
|
707
|
|
|||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
430,370
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|||||
Assignment of NantHealth Labs (see Note 20)
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
55
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,923
|
)
|
|
—
|
|
|
(19,923
|
)
|
|||||
Balance at March 31, 2019
|
109,921,647
|
|
|
11
|
|
|
887,963
|
|
|
(904,045
|
)
|
|
(292
|
)
|
|
(16,363
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
707
|
|
|
—
|
|
|
—
|
|
|
707
|
|
|||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
532,860
|
|
|
—
|
|
|
(209
|
)
|
|
—
|
|
|
—
|
|
|
(209
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
82
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,713
|
)
|
|
—
|
|
|
(14,713
|
)
|
|||||
Balance at June 30, 2019
|
110,454,507
|
|
|
$
|
11
|
|
|
$
|
888,461
|
|
|
$
|
(918,758
|
)
|
|
$
|
(210
|
)
|
|
$
|
(30,496
|
)
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive Loss |
|
Total Stockholders' Equity (Deficit)
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2017
|
108,383,602
|
|
|
$
|
10
|
|
|
$
|
886,669
|
|
|
$
|
(693,233
|
)
|
|
$
|
(144
|
)
|
|
$
|
193,302
|
|
Modified retrospective adjustment on adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
1,263
|
|
|
—
|
|
|
1,263
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,655
|
|
|
—
|
|
|
—
|
|
|
2,655
|
|
|||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
208,344
|
|
|
—
|
|
|
(339
|
)
|
|
—
|
|
|
—
|
|
|
(339
|
)
|
|||||
Assignment of NantHealth Labs (see Note 20)
|
—
|
|
|
—
|
|
|
(3,785
|
)
|
|
—
|
|
|
—
|
|
|
(3,785
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|
110
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,168
|
)
|
|
—
|
|
|
(22,168
|
)
|
|||||
Balance at March 31, 2018
|
108,591,946
|
|
|
10
|
|
|
885,200
|
|
|
(714,138
|
)
|
|
(34
|
)
|
|
171,038
|
|
|||||
Stock-based compensation
|
|
|
|
|
|
|
1,808
|
|
|
|
|
|
|
|
|
1,808
|
|
|||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
793,614
|
|
|
1
|
|
|
(1,657
|
)
|
|
—
|
|
|
—
|
|
|
(1,656
|
)
|
|||||
Assignment of NantHealth Labs (see Note 20)
|
|
|
|
|
|
|
536
|
|
|
|
|
|
|
|
|
536
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(208
|
)
|
|
(208
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,397
|
)
|
|
|
|
|
(23,397
|
)
|
|||||
Balance at June 30, 2018
|
109,385,560
|
|
|
$
|
11
|
|
|
$
|
885,887
|
|
|
$
|
(737,535
|
)
|
|
$
|
(242
|
)
|
|
$
|
148,121
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(34,636
|
)
|
|
$
|
(45,564
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Loss on sale of business
|
582
|
|
|
—
|
|
||
Depreciation and amortization
|
11,943
|
|
|
10,883
|
|
||
Amortization of debt discounts and deferred financing offering cost
|
2,760
|
|
|
2,429
|
|
||
Impairment of goodwill and other intangible assets
|
3,977
|
|
|
—
|
|
||
Change in fair value of derivatives liability
|
—
|
|
|
(2
|
)
|
||
Change in fair value of Bookings Commitment
|
1,505
|
|
|
—
|
|
||
Stock-based compensation
|
1,323
|
|
|
4,432
|
|
||
Deferred income taxes, net
|
251
|
|
|
(1,785
|
)
|
||
Provision for bad debt expense
|
24
|
|
|
53
|
|
||
Loss from related party equity method investment
|
4,418
|
|
|
6,206
|
|
||
Other noncash expense
|
—
|
|
|
219
|
|
||
Impairment of equity securities
|
—
|
|
|
1,750
|
|
||
Changes in operating assets and liabilities, net of business combinations and divestitures:
|
|
|
|
||||
Accounts receivable, net
|
285
|
|
|
(3,322
|
)
|
||
Inventories
|
193
|
|
|
108
|
|
||
Related party receivables, net
|
320
|
|
|
(463
|
)
|
||
Prepaid expenses and other current assets
|
(1,836
|
)
|
|
1,109
|
|
||
Deferred implementation costs
|
—
|
|
|
34
|
|
||
Accounts payable
|
1,394
|
|
|
1,228
|
|
||
Accrued and other current liabilities
|
(2,398
|
)
|
|
(6,992
|
)
|
||
Deferred revenue
|
(1,072
|
)
|
|
929
|
|
||
Related party payables, net
|
2,624
|
|
|
3,830
|
|
||
Change in operating lease right-of-use assets and liabilities
|
(192
|
)
|
|
—
|
|
||
Other operating assets and liabilities
|
(629
|
)
|
|
1,338
|
|
||
Net cash used in operating activities
|
(9,164
|
)
|
|
(23,580
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from sale of business, net of cash disposed
|
300
|
|
|
—
|
|
||
Purchases of property and equipment including internal use software
|
(2,088
|
)
|
|
(5,327
|
)
|
||
Assignment of NantHealth Labs (formerly Liquid Genomics), net of cash assigned (see Note 20)
|
—
|
|
|
68
|
|
||
Net cash used in investing activities
|
(1,788
|
)
|
|
(5,259
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Tax payments related to stock issued, net of stock withheld, for vested equity awards
|
(267
|
)
|
|
(1,996
|
)
|
||
Net cash used in financing activities
|
(267
|
)
|
|
(1,996
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(10
|
)
|
|
(280
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(11,229
|
)
|
|
(31,115
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
(1)
|
19,441
|
|
|
62,010
|
|
||
Cash, cash equivalents and restricted cash, end of period
(1)
|
$
|
8,212
|
|
|
$
|
30,895
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
2,943
|
|
|
$
|
2,943
|
|
Interest received
|
—
|
|
|
3
|
|
||
Noncash investing and financing activities:
|
|
|
|
||||
Purchases of property and equipment including internal use software
|
91
|
|
|
577
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Prepaid expenses
|
$
|
1,508
|
|
|
$
|
1,485
|
|
Insurance receivable
|
2,220
|
|
|
306
|
|
||
Other current assets
|
1,998
|
|
|
2,559
|
|
||
Prepaid expenses and other current assets
|
$
|
5,726
|
|
|
$
|
4,350
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Payroll and related costs
|
$
|
4,439
|
|
|
$
|
5,803
|
|
NaviNet acquisition accrued earnout
|
—
|
|
|
1,700
|
|
||
Litigation expense payable
|
2,220
|
|
|
306
|
|
||
Operating lease liabilities
|
1,821
|
|
|
—
|
|
||
Other accrued and other current liabilities
|
4,134
|
|
|
6,023
|
|
||
Accrued and other current liabilities
|
$
|
12,614
|
|
|
$
|
13,832
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Computer equipment and software
|
$
|
14,159
|
|
|
$
|
14,058
|
|
Furniture and equipment
|
3,309
|
|
|
3,732
|
|
||
Leasehold and building improvements
|
7,423
|
|
|
7,450
|
|
||
Property, plant, and equipment, excluding internal use software
|
24,891
|
|
|
25,240
|
|
||
Less: Accumulated depreciation and amortization
|
(19,500
|
)
|
|
(17,884
|
)
|
||
Property, plant and equipment, excluding internal use software, net
|
5,391
|
|
|
7,356
|
|
||
Internal use software
|
31,965
|
|
|
31,565
|
|
||
Construction in progress - Internal use software
|
1,888
|
|
|
903
|
|
||
Less: Accumulated depreciation and amortization, internal use software
|
(21,092
|
)
|
|
(16,846
|
)
|
||
Internal use software, net
|
12,761
|
|
|
15,622
|
|
||
Property, plant, and equipment, net
|
$
|
18,152
|
|
|
$
|
22,978
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Customer relationships
|
$
|
52,000
|
|
|
$
|
52,000
|
|
Developed technologies
|
32,000
|
|
|
36,700
|
|
||
Trade name
|
3,000
|
|
|
3,000
|
|
||
|
87,000
|
|
|
91,700
|
|
||
Less: Accumulated amortization
|
(30,758
|
)
|
|
(26,997
|
)
|
||
Intangible assets, net
|
$
|
56,242
|
|
|
$
|
64,703
|
|
|
Amounts
|
||
Remainder of 2019
|
$
|
4,394
|
|
2020
|
8,038
|
|
|
2021
|
8,038
|
|
|
2022
|
8,038
|
|
|
2023
|
3,467
|
|
|
Thereafter
|
24,267
|
|
|
Total future intangible amortization expense
|
$
|
56,242
|
|
|
Three Months Ended
March 31 |
|
Six Months Ended
March 31 |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
$
|
1,320
|
|
|
$
|
1,582
|
|
|
$
|
3,066
|
|
|
$
|
2,966
|
|
Gross loss
|
(814
|
)
|
|
(2,018
|
)
|
|
(1,334
|
)
|
|
(6,287
|
)
|
||||
Loss from operations
|
(6,221
|
)
|
|
(13,230
|
)
|
|
(13,105
|
)
|
|
(26,684
|
)
|
||||
Impairment on equity investments
|
—
|
|
|
—
|
|
|
(12,265
|
)
|
|
—
|
|
||||
Net loss
|
(5,079
|
)
|
|
(12,080
|
)
|
|
(22,930
|
)
|
|
(44,039
|
)
|
||||
Net loss attributable to NantOmics
|
(4,958
|
)
|
|
(11,622
|
)
|
|
(22,709
|
)
|
|
(43,042
|
)
|
|
Related Party
|
|
Others
|
|
Total
|
||||||
Balance as of June 30, 2019
|
|
|
|
|
|
||||||
Gross proceeds
|
$
|
10,000
|
|
|
$
|
97,000
|
|
|
$
|
107,000
|
|
Unamortized debt discounts and deferred financing offering costs
|
(1,387
|
)
|
|
(15,043
|
)
|
|
(16,430
|
)
|
|||
Net carrying amount
|
$
|
8,613
|
|
|
$
|
81,957
|
|
|
$
|
90,570
|
|
|
|
|
|
|
|
||||||
Balance as of December 31, 2018
|
|
|
|
|
|
||||||
Gross proceeds
|
$
|
10,000
|
|
|
$
|
97,000
|
|
|
$
|
107,000
|
|
Unamortized debt discounts and deferred financing offering costs
|
(1,622
|
)
|
|
(17,567
|
)
|
|
(19,189
|
)
|
|||
Net carrying amount
|
$
|
8,378
|
|
|
$
|
79,433
|
|
|
$
|
87,811
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||
|
Related Party
|
|
Others
|
|
Total
|
|
Related Party
|
|
Others
|
|
Total
|
||||||||||||
Accrued coupon interest expense
|
$
|
137
|
|
|
$
|
1,334
|
|
|
$
|
1,471
|
|
|
$
|
275
|
|
|
$
|
2,668
|
|
|
$
|
2,943
|
|
Amortization of debt discounts
|
117
|
|
|
1,124
|
|
|
1,241
|
|
|
229
|
|
|
2,212
|
|
|
2,441
|
|
||||||
Amortization of deferred financing offering costs
|
3
|
|
|
159
|
|
|
162
|
|
|
6
|
|
|
312
|
|
|
318
|
|
||||||
Total convertible notes interest expense
|
$
|
257
|
|
|
$
|
2,617
|
|
|
$
|
2,874
|
|
|
$
|
510
|
|
|
$
|
5,192
|
|
|
$
|
5,702
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Related Party
|
|
Others
|
|
Total
|
|
Related Party
|
|
Others
|
|
Total
|
||||||||||||
Accrued coupon interest expense
|
$
|
137
|
|
|
$
|
1,334
|
|
|
$
|
1,471
|
|
|
$
|
275
|
|
|
$
|
2,668
|
|
|
$
|
2,943
|
|
Amortization of debt discounts
|
100
|
|
|
957
|
|
|
1,057
|
|
|
203
|
|
|
1,946
|
|
|
2,149
|
|
||||||
Amortization of deferred financing offering costs
|
3
|
|
|
135
|
|
|
138
|
|
|
5
|
|
|
275
|
|
|
280
|
|
||||||
Total convertible notes interest expense
|
$
|
240
|
|
|
$
|
2,426
|
|
|
$
|
2,666
|
|
|
$
|
483
|
|
|
$
|
4,889
|
|
|
$
|
5,372
|
|
|
June 30, 2019
|
||||||||||||||
|
Total
fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Bookings Commitment
|
$
|
18,452
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,452
|
|
|
December 31, 2018
|
||||||||||||||
|
Total
fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Bookings Commitment
|
$
|
16,947
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,947
|
|
|
March 31, 2019
|
|
Additions
|
|
Change in Fair Value
|
|
June 30, 2019
|
||||||||
Bookings Commitment
|
$
|
19,441
|
|
|
$
|
—
|
|
|
$
|
(989
|
)
|
|
$
|
18,452
|
|
|
December 31, 2018
|
|
Additions
|
|
Change in Fair Value
|
|
June 30, 2019
|
||||||||
Bookings Commitment
|
$
|
16,947
|
|
|
$
|
—
|
|
|
$
|
1,505
|
|
|
$
|
18,452
|
|
|
Fair Value
|
|
Carrying Value
|
|
Face Value
|
||||||
5.5% convertible senior notes due December 15, 2021:
|
|
|
|
|
|
||||||
Balance as of June 30, 2019
|
|
|
|
|
|
||||||
Related party
|
$
|
5,867
|
|
|
$
|
8,613
|
|
|
$
|
10,000
|
|
Others
|
56,914
|
|
|
81,957
|
|
|
97,000
|
|
|||
|
$
|
62,781
|
|
|
$
|
90,570
|
|
|
$
|
107,000
|
|
Balance as of December 31, 2018
|
|
|
|
|
|
||||||
Related party
|
$
|
5,879
|
|
|
$
|
8,378
|
|
|
$
|
10,000
|
|
Others
|
57,031
|
|
|
79,433
|
|
|
97,000
|
|
|||
|
$
|
62,910
|
|
|
$
|
87,811
|
|
|
$
|
107,000
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||
|
2019
|
|
2019
|
||||
Operating lease cost
|
$
|
711
|
|
|
$
|
1,347
|
|
Short-term lease cost
|
276
|
|
|
552
|
|
||
Variable cost
|
71
|
|
|
150
|
|
||
Sublease income
|
(52
|
)
|
|
(104
|
)
|
||
Total lease cost
|
$
|
1,006
|
|
|
$
|
1,945
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
2019
|
|
2019
|
||||
Operating cash flows for operating leases
|
$
|
(707
|
)
|
|
$
|
(1,340
|
)
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
—
|
|
|
$
|
1,837
|
|
Operating lease liabilities arising from obtaining right-of-use assets
|
$
|
—
|
|
|
$
|
1,837
|
|
Weighted average remaining lease term - operating leases
|
|
|
6.2 years
|
|
|||
Weighted average discount rate - operating leases
|
|
|
11
|
%
|
Maturity Analysis
|
Amounts
|
||
2019
|
$
|
1,589
|
|
2020
|
3,182
|
|
|
2021
|
3,033
|
|
|
2022
|
3,074
|
|
|
2023
|
3,115
|
|
|
Thereafter
|
5,014
|
|
|
Total future minimum lease payments
|
19,007
|
|
|
Less imputed interest
|
(5,237
|
)
|
|
Total
|
$
|
13,770
|
|
As reported in the Consolidated Balance Sheet
|
|
||
Accrued and other current liabilities
|
$
|
1,821
|
|
Operating lease liabilities
|
11,949
|
|
|
|
$
|
13,770
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Restricted Stock:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
51
|
|
Phantom units:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
(1
|
)
|
|
118
|
|
|
21
|
|
|
250
|
|
||||
Selling, general and administrative
|
16
|
|
|
162
|
|
|
38
|
|
|
415
|
|
||||
Research and development
|
10
|
|
|
152
|
|
|
(3
|
)
|
|
326
|
|
||||
Total phantom units stock-based compensation expense
|
25
|
|
|
432
|
|
|
56
|
|
|
991
|
|
||||
Stock options:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Restricted Stock Units:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
2
|
|
|
9
|
|
|
5
|
|
|
19
|
|
||||
Selling, general and administrative
|
625
|
|
|
1,270
|
|
|
1,231
|
|
|
3,223
|
|
||||
Research and development
|
6
|
|
|
70
|
|
|
16
|
|
|
148
|
|
||||
Total restricted stock units stock-based compensation expense
|
633
|
|
|
1,349
|
|
|
1,252
|
|
|
3,390
|
|
||||
Total stock-based compensation expense
|
673
|
|
|
1,808
|
|
|
1,323
|
|
|
4,432
|
|
||||
Amount capitalized to internal-use software
|
34
|
|
|
116
|
|
|
91
|
|
|
260
|
|
||||
Total stock-based compensation cost
|
$
|
707
|
|
|
$
|
1,924
|
|
|
$
|
1,414
|
|
|
$
|
4,692
|
|
|
Number of Units
|
|
Weighted
Average Grant
Date Value Per
Phantom Unit
|
|||
Unvested phantom units outstanding December 31, 2018
|
588,852
|
|
|
$
|
14.95
|
|
Vested
|
(287,500
|
)
|
|
$
|
15.79
|
|
Forfeited
|
(17,500
|
)
|
|
$
|
14.05
|
|
Unvested phantom units outstanding - March 31, 2019
|
283,852
|
|
|
$
|
14.16
|
|
Vested
|
(129,881
|
)
|
|
$
|
14.10
|
|
Forfeited
|
(19,773
|
)
|
|
$
|
14.10
|
|
Unvested phantom units outstanding - June 30, 2019
|
134,198
|
|
|
$
|
14.22
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date
Fair Value
|
|||
Unvested restricted stock units outstanding - December 31, 2018
|
1,812,961
|
|
|
$
|
2.74
|
|
Granted
|
60,000
|
|
|
$
|
0.98
|
|
Vested
|
(38,967
|
)
|
|
$
|
1.65
|
|
Forfeited
|
(43,812
|
)
|
|
$
|
3.39
|
|
Unvested restricted stock units outstanding - March 31, 2019
|
1,790,182
|
|
|
$
|
2.66
|
|
Vested
|
(865,129
|
)
|
|
$
|
2.70
|
|
Forfeited
|
(129,530
|
)
|
|
$
|
3.06
|
|
Unvested restricted stock units outstanding - June 30, 2019
|
795,523
|
|
|
$
|
2.59
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Common Stock
|
|
Common Stock
|
|
Common Stock
|
|
Common Stock
|
||||||||
Net loss per share numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss from continuing operations
|
$
|
(14,682
|
)
|
|
$
|
(21,806
|
)
|
|
$
|
(34,521
|
)
|
|
$
|
(43,779
|
)
|
Net loss from discontinued operations
|
(31
|
)
|
|
(1,591
|
)
|
|
(115
|
)
|
|
(1,785
|
)
|
||||
Net loss for basic and diluted net loss per share
|
$
|
(14,713
|
)
|
|
$
|
(23,397
|
)
|
|
$
|
(34,636
|
)
|
|
$
|
(45,564
|
)
|
Weighted-average shares for basic net loss per share
|
110,209,510
|
|
|
109,120,438
|
|
|
110,057,981
|
|
|
108,851,348
|
|
||||
Effect of dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average shares for dilutive net loss per share
|
110,209,510
|
|
|
109,120,438
|
|
|
110,057,981
|
|
|
108,851,348
|
|
||||
Basic and diluted net loss per share from continuing operations
|
$
|
(0.13
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.40
|
)
|
Basic and diluted net loss per share from discontinued operations
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
Basic and diluted total net loss per share
|
$
|
(0.13
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.42
|
)
|
|
June 30,
|
||||
|
2019
|
|
2018
|
||
Unvested restricted stock
|
1
|
|
|
3,490
|
|
Unvested phantom units
|
134,198
|
|
|
691,625
|
|
Unvested restricted stock units
|
795,523
|
|
|
1,649,564
|
|
Unexercised stock options
|
905,724
|
|
|
—
|
|
Convertible notes
|
8,815,655
|
|
|
8,815,655
|
|
(Dollars in thousands, except per share amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss from continuing operations
|
$
|
(14,682
|
)
|
|
$
|
(21,806
|
)
|
|
$
|
(34,521
|
)
|
|
$
|
(43,779
|
)
|
Adjustments to GAAP net loss:
|
|
|
|
|
|
|
|
|
|
||||||
Loss from related party equity method investment
|
2,208
|
|
|
2,945
|
|
|
4,418
|
|
|
6,206
|
|
||||
Stock-based compensation expense from continuing operations
|
673
|
|
|
1,808
|
|
|
1,323
|
|
|
4,432
|
|
||||
Acquisition related sales incentive
|
—
|
|
|
425
|
|
|
—
|
|
|
570
|
|
||||
Change in fair value of derivatives liability
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Change in fair value of Bookings Commitment
|
(989
|
)
|
|
—
|
|
|
1,505
|
|
|
—
|
|
||||
Impairment of investment in IOBS
|
—
|
|
|
1,750
|
|
|
—
|
|
|
1,750
|
|
||||
Noncash interest expense related to convertible notes
|
1,403
|
|
|
1,235
|
|
|
2,760
|
|
|
2,429
|
|
||||
Intangible amortization from continuing operations
|
2,197
|
|
|
2,347
|
|
|
4,484
|
|
|
4,574
|
|
||||
Impairment of intangible assets
|
3,977
|
|
|
—
|
|
|
3,977
|
|
|
—
|
|
||||
Loss on sale of business
|
582
|
|
|
—
|
|
|
582
|
|
|
—
|
|
||||
Securities litigation costs
|
—
|
|
|
749
|
|
|
—
|
|
|
823
|
|
||||
Tax provision (benefit) resulting from certain noncash tax items
|
255
|
|
|
(599
|
)
|
|
366
|
|
|
(1,706
|
)
|
||||
Total adjustments to GAAP net loss from continuing operations
|
10,306
|
|
|
10,659
|
|
|
19,415
|
|
|
19,077
|
|
||||
Net loss - Non-GAAP from continuing operations
|
$
|
(4,376
|
)
|
|
$
|
(11,147
|
)
|
|
$
|
(15,106
|
)
|
|
$
|
(24,702
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
110,209,510
|
|
|
109,120,438
|
|
|
110,057,981
|
|
|
108,851,348
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per share from continuing operations - Non-GAAP
|
$
|
(0.04
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.23
|
)
|
(Dollars in thousands, except per share amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss per common share from continuing operations
|
$
|
(0.13
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.40
|
)
|
Adjustments to GAAP net loss per common share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Loss from related party equity method investment
|
0.01
|
|
|
0.03
|
|
|
0.03
|
|
|
0.06
|
|
||||
Stock-based compensation expense from continuing operations
|
0.01
|
|
|
0.02
|
|
|
0.01
|
|
|
0.04
|
|
||||
Acquisition related sales incentive
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in fair value of derivatives liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in fair value of Bookings Commitment
|
(0.01
|
)
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Impairment of Investment in IOBS
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.02
|
|
||||
Noncash interest expense related to convertible notes
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.02
|
|
||||
Intangible amortization from continuing operations
|
0.02
|
|
|
0.02
|
|
|
0.04
|
|
|
0.04
|
|
||||
Impairment of intangible assets
|
0.04
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
||||
Loss on sale of business
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Securities litigation costs
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
||||
Tax provision (benefit) resulting from certain noncash tax items
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
(0.02
|
)
|
||||
Total adjustments to GAAP net loss per common share from continuing operations
|
0.09
|
|
|
0.10
|
|
|
0.17
|
|
|
0.17
|
|
||||
Net loss per common share from continuing operations - Non-GAAP
|
$
|
(0.04
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.23
|
)
|
(Dollars in thousands, except per share amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service related
|
$
|
18,291
|
|
|
$
|
16,220
|
|
|
$
|
36,093
|
|
|
$
|
32,386
|
|
Software and hardware related
|
3,099
|
|
|
885
|
|
|
4,126
|
|
|
2,340
|
|
||||
Maintenance
|
2,535
|
|
|
2,388
|
|
|
5,028
|
|
|
4,835
|
|
||||
Total software-related revenue
|
23,925
|
|
|
19,493
|
|
|
45,247
|
|
|
39,561
|
|
||||
Sequencing and molecular analysis
|
491
|
|
|
924
|
|
|
1,305
|
|
|
1,764
|
|
||||
Home health care services
|
1,270
|
|
|
1,630
|
|
|
2,863
|
|
|
2,986
|
|
||||
Total net revenue
|
25,686
|
|
|
22,047
|
|
|
49,415
|
|
|
44,311
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cost of Revenue:
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service related
|
5,743
|
|
|
5,741
|
|
|
11,495
|
|
|
12,342
|
|
||||
Software and hardware related
|
794
|
|
|
789
|
|
|
1,579
|
|
|
1,675
|
|
||||
Maintenance
|
311
|
|
|
234
|
|
|
581
|
|
|
449
|
|
||||
Amortization of developed technologies
|
1,143
|
|
|
1,293
|
|
|
2,376
|
|
|
2,466
|
|
||||
Total software-related cost of revenue
|
7,991
|
|
|
8,057
|
|
|
16,031
|
|
|
16,932
|
|
||||
Sequencing and molecular analysis
|
1,177
|
|
|
1,689
|
|
|
3,603
|
|
|
3,120
|
|
||||
Home health care services
|
648
|
|
|
836
|
|
|
1,471
|
|
|
1,599
|
|
||||
Total cost of revenue
|
9,816
|
|
|
10,582
|
|
|
21,105
|
|
|
21,651
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
15,870
|
|
|
11,465
|
|
|
28,310
|
|
|
22,660
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
15,177
|
|
|
18,388
|
|
|
31,967
|
|
|
39,122
|
|
||||
Research and development
|
4,584
|
|
|
5,889
|
|
|
9,664
|
|
|
11,040
|
|
||||
Amortization of acquisition-related assets
|
1,054
|
|
|
1,054
|
|
|
2,108
|
|
|
2,108
|
|
||||
Impairment of intangible assets
|
3,977
|
|
|
—
|
|
|
3,977
|
|
|
—
|
|
||||
Total operating expenses
|
24,792
|
|
|
25,331
|
|
|
47,716
|
|
|
52,270
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(8,922
|
)
|
|
(13,866
|
)
|
|
(19,406
|
)
|
|
(29,610
|
)
|
||||
Interest expense, net
|
(4,473
|
)
|
|
(4,262
|
)
|
|
(8,887
|
)
|
|
(8,460
|
)
|
||||
Other income (expense), net
|
1,054
|
|
|
(1,334
|
)
|
|
(1,451
|
)
|
|
(1,154
|
)
|
||||
Loss from related party equity method investment
|
(2,208
|
)
|
|
(2,945
|
)
|
|
(4,418
|
)
|
|
(6,206
|
)
|
||||
Loss from continuing operations before income taxes
|
(14,549
|
)
|
|
(22,407
|
)
|
|
(34,162
|
)
|
|
(45,430
|
)
|
||||
Provision for (benefit from) income taxes
|
133
|
|
|
(601
|
)
|
|
359
|
|
|
(1,651
|
)
|
||||
Net loss from continuing operations
|
(14,682
|
)
|
|
(21,806
|
)
|
|
(34,521
|
)
|
|
(43,779
|
)
|
||||
Loss from discontinued operations, net of tax
|
(31
|
)
|
|
(1,591
|
)
|
|
(115
|
)
|
|
(1,785
|
)
|
||||
Net loss
|
$
|
(14,713
|
)
|
|
$
|
(23,397
|
)
|
|
$
|
(34,636
|
)
|
|
$
|
(45,564
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
$
|
(0.13
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.40
|
)
|
Total net loss per share
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
$
|
(0.13
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.42
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
110,209,510
|
|
|
109,120,438
|
|
|
110,057,981
|
|
|
108,851,348
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
|
|
|
|
||||
Software-as-a-service related
|
71.2
|
%
|
|
73.6
|
%
|
|
73.0
|
%
|
|
73.1
|
%
|
Software and hardware related
|
12.1
|
%
|
|
4.0
|
%
|
|
8.3
|
%
|
|
5.3
|
%
|
Maintenance
|
9.9
|
%
|
|
10.8
|
%
|
|
10.2
|
%
|
|
10.9
|
%
|
Total software-related revenue
|
93.2
|
%
|
|
88.4
|
%
|
|
91.5
|
%
|
|
89.3
|
%
|
Sequencing and molecular analysis
|
1.9
|
%
|
|
4.2
|
%
|
|
2.6
|
%
|
|
4.0
|
%
|
Home health care services
|
4.9
|
%
|
|
7.4
|
%
|
|
5.9
|
%
|
|
6.7
|
%
|
Total net revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
Cost of Revenue:
|
|
|
|
|
|
|
|
||||
Software-as-a-service related
|
22.4
|
%
|
|
26.0
|
%
|
|
23.3
|
%
|
|
27.9
|
%
|
Software and hardware related
|
3.1
|
%
|
|
3.6
|
%
|
|
3.2
|
%
|
|
3.8
|
%
|
Maintenance
|
1.2
|
%
|
|
1.1
|
%
|
|
1.2
|
%
|
|
1.0
|
%
|
Amortization of developed technologies
|
4.4
|
%
|
|
5.9
|
%
|
|
4.7
|
%
|
|
5.5
|
%
|
Total software-related cost of revenue
|
31.1
|
%
|
|
36.5
|
%
|
|
32.4
|
%
|
|
38.2
|
%
|
Sequencing and molecular analysis
|
4.6
|
%
|
|
7.7
|
%
|
|
7.3
|
%
|
|
7.0
|
%
|
Home health care services
|
2.5
|
%
|
|
3.8
|
%
|
|
3.0
|
%
|
|
3.6
|
%
|
Total cost of revenue
|
38.2
|
%
|
|
48.0
|
%
|
|
42.7
|
%
|
|
48.9
|
%
|
|
|
|
|
|
|
|
|
||||
Gross Profit
|
61.8
|
%
|
|
52.0
|
%
|
|
57.3
|
%
|
|
51.1
|
%
|
|
|
|
|
|
|
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
59.1
|
%
|
|
83.4
|
%
|
|
64.7
|
%
|
|
88.2
|
%
|
Research and development
|
17.8
|
%
|
|
26.7
|
%
|
|
19.6
|
%
|
|
24.9
|
%
|
Amortization of acquisition-related assets
|
4.1
|
%
|
|
4.8
|
%
|
|
4.3
|
%
|
|
4.8
|
%
|
Impairment of intangible assets
|
15.5
|
%
|
|
—
|
%
|
|
8.0
|
%
|
|
—
|
%
|
Total operating expenses
|
96.5
|
%
|
|
114.9
|
%
|
|
96.6
|
%
|
|
117.9
|
%
|
|
|
|
|
|
|
|
|
||||
Loss from operations
|
(34.7
|
)%
|
|
(62.9
|
)%
|
|
(39.3
|
)%
|
|
(66.8
|
)%
|
Interest expense, net
|
(17.4
|
)%
|
|
(19.3
|
)%
|
|
(18.0
|
)%
|
|
(19.1
|
)%
|
Other income (expense), net
|
4.1
|
%
|
|
(6.1
|
)%
|
|
(2.9
|
)%
|
|
(2.6
|
)%
|
Loss from related party equity method investment
|
(8.6
|
)%
|
|
(13.3
|
)%
|
|
(8.9
|
)%
|
|
(14.0
|
)%
|
Loss from continuing operations before income taxes
|
(56.6
|
)%
|
|
(101.6
|
)%
|
|
(69.1
|
)%
|
|
(102.5
|
)%
|
Provision for (benefit from) income taxes
|
0.6
|
%
|
|
(2.7
|
)%
|
|
0.8
|
%
|
|
(3.7
|
)%
|
Net loss from continuing operations
|
(57.2
|
)%
|
|
(98.9
|
)%
|
|
(69.9
|
)%
|
|
(98.8
|
)%
|
Loss from discontinued operations, net of tax
|
(0.1
|
)%
|
|
(7.2
|
)%
|
|
(0.2
|
)%
|
|
(4.0
|
)%
|
Net loss
|
(57.3
|
)%
|
|
(106.1
|
)%
|
|
(70.1
|
)%
|
|
(102.8
|
)%
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||||||||||
Software-as-a-service related
|
$
|
18,291
|
|
|
$
|
16,220
|
|
|
$
|
36,093
|
|
|
$
|
32,386
|
|
|
$
|
2,071
|
|
|
12.8
|
%
|
|
$
|
3,707
|
|
|
11.4
|
%
|
Software and hardware related
|
3,099
|
|
|
885
|
|
|
4,126
|
|
|
2,340
|
|
|
2,214
|
|
|
250.2
|
%
|
|
1,786
|
|
|
76.3
|
%
|
||||||
Maintenance
|
2,535
|
|
|
2,388
|
|
|
5,028
|
|
|
4,835
|
|
|
147
|
|
|
6.2
|
%
|
|
193
|
|
|
4.0
|
%
|
||||||
Total software-related revenue
|
23,925
|
|
|
19,493
|
|
|
45,247
|
|
|
39,561
|
|
|
4,432
|
|
|
22.7
|
%
|
|
5,686
|
|
|
14.4
|
%
|
||||||
Sequencing and molecular analysis
|
491
|
|
|
924
|
|
|
1,305
|
|
|
1,764
|
|
|
(433
|
)
|
|
(46.9
|
)%
|
|
(459
|
)
|
|
(26.0
|
)%
|
||||||
Home health care services
|
1,270
|
|
|
1,630
|
|
|
2,863
|
|
|
2,986
|
|
|
(360
|
)
|
|
(22.1
|
)%
|
|
(123
|
)
|
|
(4.1
|
)%
|
||||||
Total net revenue
|
$
|
25,686
|
|
|
$
|
22,047
|
|
|
$
|
49,415
|
|
|
$
|
44,311
|
|
|
$
|
3,639
|
|
|
16.5
|
%
|
|
$
|
5,104
|
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, 2019 |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Software-as-a-service related
|
$
|
5,743
|
|
|
$
|
5,741
|
|
|
$
|
11,495
|
|
|
$
|
12,342
|
|
|
$
|
2
|
|
|
—
|
%
|
|
$
|
(847
|
)
|
|
(6.9
|
)%
|
Software and hardware related
|
794
|
|
|
789
|
|
|
1,579
|
|
|
1,675
|
|
|
5
|
|
|
0.6
|
%
|
|
(96
|
)
|
|
(5.7
|
)%
|
||||||
Maintenance
|
311
|
|
|
234
|
|
|
581
|
|
|
449
|
|
|
77
|
|
|
32.9
|
%
|
|
132
|
|
|
29.4
|
%
|
||||||
Amortization of developed technologies
|
1,143
|
|
|
1,293
|
|
|
2,376
|
|
|
2,466
|
|
|
(150
|
)
|
|
(11.6
|
)%
|
|
(90
|
)
|
|
(3.6
|
)%
|
||||||
Total software-related cost of revenue
|
7,991
|
|
|
8,057
|
|
|
16,031
|
|
|
16,932
|
|
|
(66
|
)
|
|
(0.8
|
)%
|
|
(901
|
)
|
|
(5.3
|
)%
|
||||||
Sequencing and molecular analysis
|
1,177
|
|
|
1,689
|
|
|
3,603
|
|
|
3,120
|
|
|
(512
|
)
|
|
(30.3
|
)%
|
|
483
|
|
|
15.5
|
%
|
||||||
Home health care services
|
648
|
|
|
836
|
|
|
1,471
|
|
|
1,599
|
|
|
(188
|
)
|
|
(22.5
|
)%
|
|
(128
|
)
|
|
(8.0
|
)%
|
||||||
Total cost of revenue
|
$
|
9,816
|
|
|
$
|
10,582
|
|
|
$
|
21,105
|
|
|
$
|
21,651
|
|
|
$
|
(766
|
)
|
|
(7.2
|
)%
|
|
$
|
(546
|
)
|
|
(2.5
|
)%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Selling, general and administrative
|
$
|
15,177
|
|
|
$
|
18,388
|
|
|
$
|
31,967
|
|
|
$
|
39,122
|
|
|
$
|
(3,211
|
)
|
|
(17.5
|
)%
|
|
$
|
(7,155
|
)
|
|
(18.3
|
)%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Research and development
|
$
|
4,584
|
|
|
$
|
5,889
|
|
|
$
|
9,664
|
|
|
$
|
11,040
|
|
|
$
|
(1,305
|
)
|
|
(22.2
|
)%
|
|
$
|
(1,376
|
)
|
|
(12.5
|
)%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Interest expense, net
|
$
|
4,473
|
|
|
$
|
4,262
|
|
|
$
|
8,887
|
|
|
$
|
8,460
|
|
|
$
|
211
|
|
|
5.0
|
%
|
|
$
|
427
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Other income (expense), net
|
$
|
1,054
|
|
|
$
|
(1,334
|
)
|
|
$
|
(1,451
|
)
|
|
$
|
(1,154
|
)
|
|
$
|
2,388
|
|
|
(179.0
|
)%
|
|
$
|
(297
|
)
|
|
25.7
|
%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Loss from related party equity method Investment including impairment loss
|
$
|
2,208
|
|
|
$
|
2,945
|
|
|
$
|
4,418
|
|
|
$
|
6,206
|
|
|
$
|
(737
|
)
|
|
(25.0
|
)%
|
|
$
|
(1,788
|
)
|
|
(28.8
|
)%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Provision for (benefit from) income taxes
|
$
|
133
|
|
|
$
|
(601
|
)
|
|
$
|
359
|
|
|
$
|
(1,651
|
)
|
|
$
|
734
|
|
|
(122.1
|
)%
|
|
$
|
2,010
|
|
|
(121.7
|
)%
|
|
|
|
|
|
|
|
|
|
Period-To-Period Change
|
||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||||
Loss from discontinued operations, net of tax
|
$
|
(31
|
)
|
|
$
|
(1,591
|
)
|
|
$
|
(115
|
)
|
|
$
|
(1,785
|
)
|
|
$
|
1,560
|
|
|
(98.1
|
)%
|
|
$
|
1,670
|
|
|
(93.6
|
)%
|
(Dollars in thousands)
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
Cash used in:
|
|
|
|
|
||||
Operating activities
|
|
$
|
(9,164
|
)
|
|
$
|
(23,580
|
)
|
Investing activities
|
|
(1,788
|
)
|
|
(5,259
|
)
|
||
Financing activities
|
|
(267
|
)
|
|
(1,996
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(10
|
)
|
|
(280
|
)
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(11,229
|
)
|
|
$
|
(31,115
|
)
|
•
|
Software-as-a-service related (“SaaS”)
- SaaS related revenue is generated from customers’ access to and usage of our hosted software solutions on a subscription basis for a specified contract term. In SaaS arrangements, the customer 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.
|
•
|
Software and hardware related
- Software and hardware related revenue is generated from the license of our software, on a perpetual basis, the sale of hardware and professional services that are complementary to the software and may or may not be required for the software to function as desired by the customer. The services are generally provided in the form of implementation and training services and do not include maintenance revenue. The software is installed on the customer’s site or the customer’s designated vendor’s site and is not hosted by us or by a vendor contracted by us. See the section below “
Contracts with Software, Hardware, and Implementation Services”
for details of our judgments and recognition of revenue relating to this category.
|
•
|
Maintenance
- Maintenance revenue includes ongoing post contract client support (“PCS”) or maintenance on software and hardware during the PCS term. Additionally, PCS includes ongoing development of software updates and upgrades provided to the client on a when-and-if-available basis. Revenue is recognized over the maintenance term.
|
•
|
Sequencing and molecular analysis
- Sequencing and molecular analysis revenue is generated by providing customers with reports of the results of performing sequencing and molecular analysis of DNA and RNA (and previously proteomic testing) under our reseller agreement with NantOmics, LLC ("NantOmics"), and from blood samples via its liquid/blood-based tumor profiling platform through our subsidiary, NantHealth Labs, Inc. ("NantHealth Labs", previously named Liquid Genomics, Inc.) (see Note 20 of the Consolidated Financial Statements). Revenue is recognized at a point in time, when reports of results are transferred to the ordering physician or institution, or when cash is received as described below, or ratably over time for the period of stand-ready obligation to provide blood-based tumor profiling services.
|
•
|
Home health care services
- Home health care services revenue includes the sale of nursing and therapy services provided to patients in a home care setting. These revenues are recognized at a point in time or over time, as services are provided. On June 7, 2019, we completed the divestiture of our home health care services business. See Note 4
Discontinued Operations and Divestitures
to the financial statements herein.
|
•
|
increase our sales and marketing efforts to drive market adoption of NantHealth solutions (including GPS Cancer and NantHealth software solutions);
|
•
|
address competitive developments;
|
•
|
fund development and marketing efforts of any future platforms and solutions;
|
•
|
expand adoption of GPS Cancer and Eviti platform solutions into critical illnesses outside of oncology;
|
•
|
acquire, license or invest in complimentary businesses, technologies or service offerings; and
|
•
|
finance capital expenditures and general and administrative expenses.
|
•
|
our success in driving adoption of our molecular analysis solutions, including GPS Cancer;
|
•
|
our success in making our molecular analysis solutions reimbursable by payers;
|
•
|
our ability to achieve revenue growth;
|
•
|
the cost of expanding our products and service offerings, including our sales and marketing efforts
|
•
|
our ability to achieve interoperability across all of our acquired businesses, technologies and service offerings to deliver networking effects to our clients;
|
•
|
the effect of competing technological and market developments;
|
•
|
costs related to international expansion;
|
•
|
costs associated with clinical studies; and
|
•
|
the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
|
•
|
our ability to convince key thought leaders, 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 liquid tumor profiling tests;
|
•
|
the willingness of physicians, self-insured employers, payers and healthcare providers to utilize our sequencing and molecular analysis services; and
|
•
|
the willingness of commercial third-party payers and government payers to reimburse for our molecular services, the scope and amount of which will affect patients’ willingness or ability to pay for our molecular analysis services and likely heavily influence our customers’ decisions to recommend our molecular analysis services.
|
•
|
generate sufficient preclinical or other data to support the initiation or continuation of clinical studies;
|
•
|
obtain regulatory authorization, or feedback on clinical study design, to commence a clinical study;
|
•
|
identify, recruit and train suitable clinical investigators;
|
•
|
reach agreement on acceptable terms with prospective Contract Research Organizations, or CROs, and clinical study sites;
|
•
|
obtain and maintain institutional review board, or IRB, approval at each clinical study site (where required);
|
•
|
identify, recruit and enroll suitable patients to participate in a clinical study;
|
•
|
have a sufficient number of patients complete a clinical study or return for post-treatment follow-up;
|
•
|
ensure clinical investigators observe clinical study protocol or continue to participate in a clinical study;
|
•
|
address any patient safety concerns that arise during the course of a clinical study;
|
•
|
address any conflicts with new or existing laws or regulations;
|
•
|
add a sufficient number of clinical study sites;
|
•
|
timely manufacture sufficient quantities of product candidate for use in clinical trials; or
|
•
|
raise sufficient capital to fund a clinical study.
|
•
|
the price, performance and functionality of our offerings;
|
•
|
the availability, price, performance and functionality of competing solutions;
|
•
|
our ability to develop complementary applications and services;
|
•
|
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;
|
•
|
the stability, performance and security of our hosting infrastructure and hosting services;
|
•
|
changes in healthcare laws, regulations or trends; and
|
•
|
the business environment of our clients, in particular, headcount reductions by our clients.
|
•
|
damage from fire, power loss and other natural disasters;
|
•
|
communications failures;
|
•
|
software and hardware errors, failures and crashes;
|
•
|
security breaches, computer viruses and similar disruptive problems; and
|
•
|
other potential interruptions.
|
•
|
Payer-provider collaboration vendors such as Availity, LLC, Change Healthcare, Inc. (formerly Emdeon), Experian Information Solutions, Inc. (including its Passport division), Healthx, Inc. and HealthTrio, LLC;
|
•
|
Medical device data system and device connectivity vendors, such as Capsule Technologies, Inc., Cerner Corporation, Koninklijke Philips N.V. and Excel Medical Electronics LLC; and
|
•
|
Healthcare information technology decision support vendors such as The Advisory Board Company, Castlight Health, Inc., or Castlight Health, eviCore healthcare, HealthCatalyst, Inc., or HealthCatalyst, International Business Machines Corporation, or IBM, Inovalon Holdings, Inc., or Inovalon, and Truven Health Analytics, or Truven
|
•
|
we or any collaborative partner will make timely filings with the FDA;
|
•
|
the FDA will act favorably or quickly on these submissions;
|
•
|
we or any collaborative partner will not be required to submit additional information;
|
•
|
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
|
•
|
other significant difficulties and costs related to obtaining FDA clearance or approval will not be encountered.
|
•
|
acquiring appropriate and cost-efficient supplies to produce our sequencing and molecular analysis solutions;
|
•
|
delivering our sequencing and molecular analysis solutions in a timely manner to us;
|
•
|
continuing to keep our sequencing and molecular analysis solutions up to date and on pace with current clinical and market developments;
|
•
|
filing, prosecuting and maintaining patents that cover our sequencing and molecular analysis solutions;
|
•
|
complying with CLIA regulations and maintaining a CLIA license and all other applicable state laboratory licenses, including through periodic inspections; and
|
•
|
hiring qualified personnel experienced in completing highly complex laboratory tests.
|
•
|
inability to integrate or benefit from acquired technologies or services in a profitable manner;
|
•
|
unanticipated costs or liabilities associated with the acquisition;
|
•
|
difficulty integrating the accounting systems, operations and personnel of the acquired business;
|
•
|
difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;
|
•
|
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;
|
•
|
difficulty in cross-selling our existing solutions and offerings to the acquired business’ customers;
|
•
|
diversion of management’s attention from other business concerns;
|
•
|
adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;
|
•
|
the potential loss of key employees;
|
•
|
use of resources that are needed in other parts of our business; and
|
•
|
use of substantial portions of our available cash to consummate the acquisition.
|
•
|
our failure to predict physician and patient market demand accurately in terms of test platform functionality and to supply a test platform that meets this demand in a timely fashion;
|
•
|
delays in releasing to the market our new components or enhancements to our test platform to the market;
|
•
|
failing to keep our sequencing and molecular analysis solutions up to date and on pace with current clinical and market developments;
|
•
|
complexity in the implementation or utilization of the new components and enhancements;
|
•
|
negative publicity about their performance or effectiveness;
|
•
|
introduction or anticipated introduction of competing test platforms and products by our competitors;
|
•
|
poor business conditions for our physician customers, causing them to delay IT purchases.
|
•
|
requirements or preferences for domestic products or solutions, which could reduce demand for our products;
|
•
|
differing existing or future regulatory and certification requirements;
|
•
|
management communication and integration problems resulting from cultural and geographic dispersion;
|
•
|
greater difficulty in collecting accounts receivable and longer collection periods;
|
•
|
difficulties in enforcing contracts;
|
•
|
difficulties and costs of staffing and managing non-U.S. operations;
|
•
|
the uncertainty of protection for intellectual property rights in some countries;
|
•
|
tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products;
|
•
|
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;
|
•
|
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;
|
•
|
potentially adverse tax consequences, including multiple and possibly overlapping tax structures; and
|
•
|
political and economic instability, political unrest and terrorism.
|
•
|
the scope of rights granted under the license agreement and other interpretation-related issues;
|
•
|
our right to sublicense intellectual property rights to third parties under collaborative development relationships; and
|
•
|
our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations.
|
•
|
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;
|
•
|
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;
|
•
|
private litigation by individuals adversely affected by any misuse of their personal health information for which we are responsible; and
|
•
|
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.
|
•
|
not experimental or investigational;
|
•
|
medically necessary;
|
•
|
appropriate for the specific patient;
|
•
|
cost-effective;
|
•
|
supported by peer-reviewed publications;
|
•
|
included in clinical practice guidelines; and
|
•
|
supported by clinical utility studies.
|
•
|
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 was been temporarily suspended for calendar years 2016 and 2017. On January 22, 2018, the United States Congress extended the suspension for an additional two years. Accordingly, the medical device excise tax does not apply to the sale of taxable medical devices by the manufacturer, producer or importer of the device during the period beginning on January 1, 2016 and ending on December 31, 2019, but will be reinstated in 2020 without additional Congressional action.
|
•
|
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.
|
•
|
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.
|
•
|
announcements by us or our competitors of new products, significant contracts, commercial relationships or capital commitments and the timing of these introductions or announcements;
|
•
|
adverse regulatory or reimbursement announcements;
|
•
|
announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments;
|
•
|
the results of our efforts to develop additional offerings;
|
•
|
our dependence on our customers, partners and collaborators;
|
•
|
regulatory or legal developments in the United States or other countries;
|
•
|
reimbursement decisions regarding our molecular profiling solutions, including GPS Cancer;
|
•
|
developments or disputes concerning patent applications, issued patents or other proprietary rights;
|
•
|
the recruitment or departure of key management or other personnel;
|
•
|
our ability to successfully commercialize our future products;
|
•
|
the level of expenses related to any of our products;
|
•
|
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
|
•
|
actual or anticipated quarterly variations in our financial results or those of our competitors;
|
•
|
any change to the composition of the board of directors or key personnel;
|
•
|
sales of common stock by us or our stockholders in the future, as well as the overall trading volume of our common stock;
|
•
|
changes in the structure of healthcare payment systems;
|
•
|
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;
|
•
|
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
|
•
|
the other factors described in this “Risk Factors” section.
|
•
|
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;
|
•
|
not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
|
•
|
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;
|
•
|
reduced disclosure obligations regarding executive compensation; and
|
•
|
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
|
•
|
a requirement that special meetings of stockholders be called only by the board of directors, the president or the chief executive officer;
|
•
|
advance notice requirements for stockholder proposals and nominations for election to our board of directors; and
|
•
|
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.
|
•
|
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.
|
•
|
We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
We may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Number
|
|
Exhibit Title
|
|
Form
|
|
Exhibit
|
|
Filing
|
|
Filed
|
Date
|
Herewith
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
10.1
|
|
2019-05-09
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Date:
|
August 8, 2019
|
|
|
|
|
|
|
|
|
By:
|
/s/ Patrick Soon-Shiong
|
|
|
Name:
|
Patrick Soon-Shiong
|
|
|
Its:
|
Chairman, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
Date:
|
August 8, 2019
|
|
|
|
|
By:
|
/s/ Bob Petrou
|
|
|
Name:
|
Bob Petrou
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Its:
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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(a)
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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;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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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
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(d)
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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
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(a)
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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
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(b)
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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.
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Date:
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August 8, 2019
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By:
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/s/ Patrick Soon-Shiong
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Dr. Patrick Soon-Shiong
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Chairman, Chief Executive Officer and Director
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(Principal Executive Officer)
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(a)
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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;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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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
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(d)
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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
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(a)
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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
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(b)
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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.
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Date:
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August 8, 2019
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By:
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/s/ Bob Petrou
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Bob Petrou
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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(i)
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the Company’s Quarterly Report on Form 10-Q of NantHealth, Inc for the quarter ended
June 30, 2019
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
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(ii)
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that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NantHealth, Inc.
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Date:
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August 8, 2019
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By:
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/s/ Patrick Soon-Shiong
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Dr. Patrick Soon-Shiong
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Chairman, Chief Executive Officer and Director
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(Principal Executive Officer)
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(i)
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the Company’s Quarterly Report on Form 10-Q of NantHealth, Inc. for the quarter ended
June 30, 2019
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
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(ii)
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that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NantHealth, Inc.
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Date:
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August 8, 2019
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By:
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/s/ Bob Petrou
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Bob Petrou
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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