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Delaware
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27-3019889
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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9920 Jefferson Blvd.
Culver City, California
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90232
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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NASDAQ Global Select Market
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Large accelerated filer
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Accelerated filer
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x
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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x
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Page
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PART I.
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II.
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Item 7A.
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Item 8.
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Consolidated and Combined Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Item 9B.
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Other Information
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PART III.
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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Item 15.
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Exhibits
, Financial Statement Schedules
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Exhibits index
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the structural change in the market for healthcare in the United States, including uncertainty in the healthcare regulatory framework and regulatory developments in the United States and foreign countries;
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the evolving treatment paradigm for cancer, including physicians’ use of molecular information and targeted oncology therapeutics and the market size for molecular information products;
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physicians’ need for precision medicine products and any perceived advantage of our solutions over those of our competitors, including the ability of our comprehensive platform to help physicians treat their patients’ cancers;
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our ability to generate revenue from sales of products enabled by our molecular and biometric information platforms to physicians in clinical settings;
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our ability to increase the commercial success of our sequencing and molecular analysis solution;
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our plans or ability to obtain reimbursement for our sequencing and molecular analysis solution, including expectations as to our ability or the amount of time it will take to achieve successful reimbursement from third-party payers, such as commercial insurance companies and health maintenance organizations, and government insurance programs, such as Medicare and Medicaid;
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our ability to effectively manage our growth, including the rate and degree of market acceptance of our solutions;
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our ability to offer new and innovative products and services;
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our ability to attract new partners and clients;
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our ability to estimate the size of our target market;
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our ability to maintain and enhance our reputation and brand recognition;
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consolidation in the healthcare industry;
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competition which could limit our ability to maintain or expand market share within our industry;
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restrictions and penalties as a result of privacy and data protection laws;
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our use of “open source” software;
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our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
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data loss or corruption due to failures or errors in our systems and service disruptions at our data centers;
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breaches or failures of our security measures;
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our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our users;
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risks related to future acquisition opportunities;
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the requirements of being a public company;
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our ability to attract and retain key personnel;
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our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act;
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our ability to obtain and maintain intellectual property protection for our solutions and not infringe upon the intellectual property of others;
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our ability to implement our comprehensive restructuring plan that includes a wide range of organizational efficiency initiatives and other cost reduction opportunities; and
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our financial performance expectations, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in research and development, sales and marketing and general and administrative expenses, and our ability to achieve and maintain future profitability.
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providers to seamlessly act on the best evidence-based information available to better fulfill their roles as caregivers rather than financial managers;
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payers with the necessary tools to better fulfill their roles as stewards of an increasingly complex and rapidly evolving healthcare system;
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biopharmaceutical companies to accelerate development of drugs for critical illnesses based upon the unique biology and specific health conditions of patients; and
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patients with the knowledge to enable active participation in the management of their own health, or self-care.
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1.
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A rapid evolution from traditional fee-for-service to patient-centered and patient-empowered, value-based models driven by quantifiable measures of outcomes relative to cost
. Unsustainable escalating healthcare costs, which we believe is due to broken fee-for-service models, is driving many stakeholders and governments towards alternative delivery models. Despite significant investments in EHRs and other technologies designed to enable the transition to more value-based care, we believe that, in a fee-for-service model, the economic incentives generally discourage coordination amongst healthcare stakeholders and encourage volume-driven (rather than outcomes-driven) decision-making. This model results in healthcare and financial data that remains largely segregated into “walled gardens.” Thus, patient data often remains static and cannot be easily shared or interpreted due to siloed legacy proprietary platforms that lack interoperability.
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A paradigm shift to molecularly precise and real-time biometric-driven medicine, with both massive volumes and rapidly expanding repositories of complex data from traditional and novel sources.
Advances in molecular medicine require healthcare providers to promptly aggregate, evaluate and synthesize hundreds to thousands of relevant facts in real time to arrive at a single patient decision. Molecular profiling often generates hundreds of gigabytes of data per patient, which must then be transported, stored, analyzed and interpreted with supercomputing and/or high-performance computing environments. We believe the rapid pace of medical advancements, the massive amount of molecular data and the frequency of biometric information is overwhelming many providers’ ability to process that information at the point of care, thereby inhibiting the paradigm shift to individualized medicine.
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Driving global reimbursement, awareness, and adoption of GPS Cancer.
To drive the growth of GPS Cancer in the United States, we have deployed an integrated, multi-pronged strategy to (1) obtain reimbursement through large national and regional payers and self-insured employers and (2) drive oncologist awareness and adoption in those regions with reimbursement. Likewise, we are pursuing international growth through a combination of reseller agreements and other unique partnership models to yield predictable and recurring revenue. To date, we have announced agreements and agreements in principle for US insurance coverage for GPS Cancer with health plans, providers and self-insured employers, as well as reseller agreements in multiple countries outside of the US. Traction amongst commercial payers, employers, and partners continues to accelerate globally. We are also increasing recognition of GPS Cancer through engaging and educating oncologists, cancer patients, caregivers, patient advocacy groups and other key oncology stakeholders, and communicating patient outcomes through peer-reviewed journals and conference presentations. Finally, we are a founding member of the Cancer Breakthroughs 2020 Global Immunotherapy Coalition, which we believe will help accelerate the adoption and validation of GPS Cancer.
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Increasing sales of NantHealth solutions, to healthcare providers, payers and self-insured employers.
We are marketing NantHealth solutions to healthcare providers transitioning from fee-for-service reimbursement models to value-based care models in pursuit of improved patient outcomes and lower costs. We believe we are positioning NantHealth as a next-generation payer intermediary and partner with healthcare payers and self-insured employers as they roll out value-based model partnerships and transition to value-based precision care.
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Broadening usage of our solutions among existing clients.
Our broad portfolio of NantHealth solutions affords us a unique ability to expand our agreements with existing clients through cross-selling opportunities. We are actively focused on leveraging existing relationships to create these opportunities to drive additional revenue for our solutions including GPS Cancer and NantHealth software solutions. Many of our clients are already successfully using certain of our solutions, and we are working to demonstrate the full value of our integrated systems infrastructure and platforms.
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Expanding our business in international markets.
We are executing our go-to-market strategies internationally, creating global awareness of our brand and taking steps towards our goal of broader adoption worldwide. We are expanding aggressively in Canada, the United Kingdom and Southeast Asia and opportunistically in other international markets where we or our strategic partners have established relationships and our clients have healthcare business interests.
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Developing new features and functionality for NantHealth solutions.
We plan to continue to leverage NantHealth solutions to create new features and functionality that our clients can use to drive improved patient outcomes and lower the cost of care. This includes expansion of our molecular profiling portfolio expected to broaden clinical utility and enhance usability.
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Complementing internal growth with strategic acquisitions.
We believe opportunities exist for us to enhance our competitive position by acquiring additional companies with complementary products and technologies and/or acquiring rights to proprietary products or technologies from third parties.
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The knowledge domain, including academic centers, scientific institutions and companies that discover and commercialize medical and scientific knowledge;
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The care delivery domain, including hospitals, physicians and other constituents that deliver healthcare to patients; and
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The payer domain, including insurers, governments and self-insured employers that administer and provide funding to the healthcare system.
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Improved pharmacoeconomics, including the use of more cost-effective drugs approved for other indications (such as asthma and diabetes) in cancer treatment regimens;
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A clearer understanding of critical drug resistance information;
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Increased adoption of bundled payments as providers and payers recognize the efficiency of optimized therapies; and
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Increased awareness and published clinical results demonstrating the benefits of evidence-based molecular medicine.
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Cancer Care Solutions
. Our comprehensive set of interoperability, advanced diagnostics, risk stratification and decision support solutions (Eviti) can enable our clients to improve decision-making and coordinate care across the healthcare continuum. Our molecular profiling solution, GPS Cancer, is the only comprehensive and commercially available molecular profiling solution that integrates whole genome (comparing both a patient’s normal and tumor tissue), RNA, proteomic and molecular pathways information into a clinical report that analyzes this data and identifies actionable targets and potential clinical treatment options.
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Provider Solutions
. Our provider solution software, comprised of an integration of our various solutions, including DeviceConX, VitalsConX and NaviNet, leverage the data available on our systems infrastructure to enable patient-centered engagement and coordination across care locations. Our NantHealth software solutions include real-time vitals connectivity, and clinical and administrative workflows including eligibility and benefits, claims, referral and readmissions management solutions. Our device connectivity modules and flexible applications analyze and interpret patient and provider-specific information and can deliver critical clinical and administrative insights.
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Payer Solutions
. Our payer NantHealth software solutions establish daily access to the clinical practice and caregiver and leverage the data available on our systems infrastructure to facilitate payment for value. We believe our position between the payer and the provider allows us to align incentives as a next-generation payer intermediary, to help payers ensure consistent evidence-based treatment pathways and to accelerate pre-adjudication and lower administrative overhead for providers. This can ultimately drive quality of care and streamline workflows while improving control over the administrative and operating costs associated with eligibility and benefits, claims processing, referrals, authorizations, document exchange and review utilization. Our multi-payer collaboration solution, NaviNet Open, offers provider end users a uniform set of workflows and services across many or all the payers with whom they routinely collaborate. This multipayer experience benefits payers and providers alike. Providers can benefit from a uniform experience and toolset across multiple payer relationships, and the payer can benefit from the uniform application of best practices, tools, and options, as well as the reduction in costly errors and phone-based interactions that can stem from a non-uniform end-user experience.
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Access to next-generation genomic and proteomic analysis technologies with near real-time bioinformatics, provided as part of GPS Cancer through our affiliate, NantOmics;
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Access to a secure HIPAA-compliant cloud environment; and
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Device connectivity in over 350 client sites to what we estimate to be approximately 30,000 medical devices and collecting tens of billions of vital signs annually with the ability to connect to over 425 medical device models.
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Avoiding ineffective therapy usage:
By providing molecular insight into sensitivity or resistance to specific drugs, GPS Cancer may help oncologists identify regimens that are unlikely to benefit the patient. This insight may help avoid use of high-cost therapies that are unlikely to help the patient.
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Decreasing treatment cycles through improved therapy selection:
Therapies selected based on molecular evidence of likely benefit may require fewer cycles to achieve response.
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Increasing clinical trial participation:
For many advanced cancers, standard-of-care drug options are quickly exhausted, and clinical trials represent a source of additional options for patients. GPS Cancer helps identify trials that may be applicable to the patient based on their tumor’s molecular profile.
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List targets based on DNA/RNA/quantitative protein analysis that may be treated by FDA-approved drugs either in an on-label or off-label manner based on peer-reviewed clinical data;
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List findings that suggest a particular targeted therapy which the physician would otherwise use may not work due to a potential resistance marker;
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List the quantitative expression of certain proteins that suggest a chemotherapy agent may be more likely, or alternatively, less likely, to work;
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Provide information on key biomarkers that inform the use of immunotherapy, including PD-L1, tumor mutational burden, and microsatellite instability (MSI);
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Provide the information necessary for the physician to decide whether it is appropriate to place the patient in a clinical trial; and
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Provide key information based on germline sequencing, including germline mutations in cancer predisposition genes and confirmation of provenance - i.e., that the tumor being tested comes from the intended patient.
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Cancer of unknown primary;
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Rare cancers (i.e., less than one percent of cancers) with metastases for which there are only documented case reports and small series of treatment experience;
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Metastatic cancer that has progressed after treatment with a regimen of chemotherapy and for which additional chemotherapy is indicated;
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Primary brain cancer;
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Pediatric cancers;
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Triple negative breast cancer;
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Virally infected tumors;
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Metastatic non-small cell lung cancer that has progressed after treatment with two different regimens of chemotherapy and for which additional chemotherapy is indicated; and
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Individuals eligible for cancer immunotherapy.
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RNA sequencing to confirm DNA alterations that may result in expression of abnormal proteins; and
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Tumor-germline comparison to (1) help avoid inappropriate therapies due to misinterpretation of inherited mutations as somatic and (2) confirm provenance - i.e., that the tumor being tested comes from that patient.
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The patient is initially treated with the checkpoint inhibitor pembrolizumab (MK-3475). Since the target analyte, PD-L1, is expressed in low amounts, or less than the 100 amol/ug in the “Efficacy Threshold” column of the table to the left of the graph below, published reports would suggest a decreased likelihood of benefit from the treatment. Consistent with the expected result, the patient did not respond well to the treatment, as reflected by an increase in the CA-125 level in the graph below.
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The patient is then treated with paclitaxel (Taxol) and trastuzumab (HerceptinTM). Published reports indicate an increased likelihood of benefit from the treatments if the TUBB3 expression level is below 850 amol/ug and the HER2 expression level is greater than 740 amol/ug for paclitaxel and trastuzumab respectively. In this case, the patient’s tumor expresses less than 100 amol/ug of the TUBB3 analyte and 4,995 amol/ug of the HER2 analyte. The result of the treatment is consistent with the published studies’ efficacy thresholds. As illustrated in the graph below through the significant decline of CA-125, the patient had a beneficial response to the combination of paclitaxel and trastuzumab until approximately June of 2015, a period of nine months, when CA-125 starts to increase again.
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The patient is then taken off paclitaxel and put on doxorubicin. GPS Cancer results suggest a reduced likelihood of response to doxorubicin since the level of TOPO2A analyte needed for such a response is greater than 1,530 amol/ug (per published studies) and the patient’s level is only 472 amol/ug. As illustrated in the graph below, the treatment was not effective as there was an increase in CA-125 during the duration of time the patient was being treated with doxorubicin.
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After the ineffective doxorubicin treatment, the patient is then put on pemetrexed. Published studies indicate that pemetrexed is more likely to be effective when the FRa analyte is present in amount greater than 1,510 amol/ug. In this case, the patient’s tumor expressed 10,500 amol/ug of the FRa analyte, well in excess of the published analyte threshold. Consistent with the efficacy thresholds, the patient had a beneficial response to pemetrexed, which is visually depicted by the decreasing CA-125 level in the bottom right of the graph below.
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Liquid Tissue
. Extracts lysates from FFPE tissue using proprietary methods to examine tumor-normal proteins and genomes.
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Transporter Software
. Securely transfers unassembled data from sequencing instruments to the analytical custom-designed supercomputing environment.
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Contraster Software
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Rapidly identifies genomic variants in a patient’s tumor samples and compares it to that patient’s germline or proprietary database of disease associated genes.
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Paradigm Software.
Integrates DNA sequencing data from the contraster software with RNA sequencing data to identify alterations in cellular signaling behavior that are driving disease progression. The algorithm matches the alterations to the library of all known signaling pathways and all drugs and drug targets, irrespective of indication, to potentially help predict the effectiveness of personalized therapies and points of resistance.
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Device Connectivity Suite:
Our device connectivity and near real-time biometric software and hardware suite allow us to aggregate data from one of the largest libraries of in-hospital and remote medical devices and wearables on the market. Utilizing our hardware and software platform, we can extract data from various disparate provider systems, payer systems and consumer devices across the care continuum. Our offerings can enable the near real-time collection and integration of quantifiable biometric and phenotypic data into EHRs and other clinical systems, resulting in the enrichment of the holistic patient health record which can improve care and treatment. In addition, our offerings can improve care coordination and data aggregation across care settings to facilitate transitioning patients to lower cost care settings such as a skilled nursing facility or the patient’s home.
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DeviceConX, or DCX, a NantHealth Software Solutions:
DCX is a device data normalization software that connects to hundreds of inpatient and outpatient clinical devices and converts data into a standard format that can be integrated into EHR systems and other clinical systems. This offering provides physicians with a real-time and integrated snapshot of a patient’s physiological data. Our software is scalable and can be embedded across the care continuum, including inpatient, outpatient and home settings. In addition, our platform can enable connectivity with both networked and non-networked medical devices and can eliminate the need for manual data entry by clinicians, which can result in time savings and potentially eliminate transcription errors and adverse events in patients. DCX is installed in over 350 client sites across the United States, Canada, Denmark, Sweden, and Singapore.
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HBox:
The HBox is an Internet of Medical Things, or IoMT, and Internet of Things, or IoT, hardware hub that provides wired or wireless connectivity to multiple monitoring devices and transmits the data into remote monitoring centers and third-party EHR systems, giving providers near real-time access to physiological data. Several home monitoring devices have been tested and integrated with the HBox to support remote monitoring, readmission management and care coordination solutions and services. The HBox integrates with various weight scales, pulse oximeters and blood pressure monitors and mobile health devices, including various consumer wearables. For non-networked medical devices, we use our proprietary DeviceEscort adapter and HBox to wirelessly connect to nearly any medical device that is capable of outputting discrete medical data. HBox is currently installed at client sites in both the United States, Canada, Denmark, Sweden, and Singapore.
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VitalsConX, or VCX, a NantHealth Software Solutions:
In addition to DCX and HBox, we also provide a tablet-optimized application that sits on top of our DCX platform to provide clinicians more convenient and ubiquitous access to capture a wide array of patient vitals such as respiratory rate, blood pressure and heart rate in addition to performing patient assessments. Our solution can enable a more efficient patient rounding and assessment workflow by providing a near real-time stream of data from the patient's bedside unlike periodic sampling typically entered into an EHR hours later.
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Plan Central:
Provides our health plan partners with the ability to deliver a branded custom-content experience to their provider networks, allowing plans to own and manage their communications to users in support of their business. Plan Central is valued by our partners as a single access point for all provider and end-user communications, transactions, and content, delivering ease of use and increased provider satisfaction.
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Eligibility and Benefits:
Delivers membership verification, insurance coverage, and payment information, such as copayments, deductibles, and benefit intelligence to provider offices in real-time - information that is highly valued by providers and members alike. Provider offices can verify insurance and benefit coverage at the time of a patient visit or as part of the billing cycle.
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Claims Status Inquiry:
Lets provider offices access detailed financial and claim status information in real-time - automating the delivery of claim receipt confirmation, adjudication status, and payment details. This eliminates the need for provider offices to call health plans directly to maintain a healthy revenue cycle and improves provider satisfaction.
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Claims Management:
A collection of powerful claim applications that consist of Claim Submission, pre- and post-adjudication Corrections and Adjustments, Claim Attachments, Claim Investigation and a multi-payer Claims Log where users manage their claim submissions. Our integrated Claims Management solution simplifies payment efforts by eliminating phone calls, costly paper claims, and other manual processes associated with claims follow-up, correction, and resubmission. Providers now gain access to a powerful set of claim tools, without needing a sophisticated EMR or practice management system.
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Referrals:
Lets provider offices submit and access referrals in real-time, guiding patients to the best specialist at the most affordable cost. Referrals empowers provider staff with more referral information - such as benefit tiers, preferred providers, and patient payment implications. Administrative staff becomes better equipped to navigate complex sub-networks, while health plans optimize in-network referrals to reduce leakage and lower costs.
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Authorizations:
Lets provider offices submit authorizations to health plans and access real-time authorization information, such as status updates and approvals. The authorizations workflow is optimized to make it simple for health plans to configure fields and add additional business logic and links to third party applications. Providers can upload any documents needed for authorization processing, further streaming workflows and lowering costs.
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Document Exchange:
Modernizes communication between health plans and providers by transmitting administrative and clinical information in real-time. This application lets health plans and providers share risk adjustment information, quality measurement data, and performance reports, among other data. Providers are notified of care gaps within their existing workflows, making it easy to upload supporting documents.
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AllPayer
provides standard eligibility, benefit, and claim status information to provider offices for hundreds of
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Direct sales organization:
We leverage domain and subject matter expertise, market credibility, thought leadership, and relationships of our executives, senior management, and product leaders in our sales efforts. Our direct sales organization is divided into two focused teams, one dedicated to commercializing our GPS Cancer solution, and the other focused on NantHealth’s health information technology solutions portfolio. These two primary direct coverage teams include both sales professionals searching for new accounts and client engagement sales professionals responsible for developing existing accounts. Furthermore, sales professionals have unique expertise and specialized coverage for health plans, self-insured employers, health systems, and individual providers. Our account management organization is responsible for the continuity of current client relationships and the expansion of those relationships to include additional solutions and services.
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Resale and channel partnership:
In the United States, we have entered strategic resale arrangements with major partners, including EHR vendors (including Allscripts), in-hospital medical devices manufacturers and health plans who resell our solutions to their customer base. Internationally, we have entered resale arrangements with other strategic distributors to accelerate our market adoption. Reseller revenue in
2017
and
2016
was
$14.8 million
and
$14.1 million
, respectively.
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Molecular analysis vendors, such as Caris Life Sciences, Inc., Foundation Medicine, Inc., Guardant Health, Inc., Paradigm Diagnostics, Inc., Personal Genome Diagnostics, Inc. and Tempus Labs;
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Payer-provider collaboration vendors, such as Availity, LLC, Change Healthcare, Inc. (formerly Emdeon), Experian Information Solutions, Inc. (including its Passport division), Healthx, Inc. and Health Trio, LlC;
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Medical device data system and device connectivity vendors, such as Qualcomm Technologies, Inc. (formerly Capsule Tech, Inc.), Cerner Corporation, Bernoulli Enterprise, Inc., General Electric Company and Medical Information Technology, Inc.; and
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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 (acquired by IBM).
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Breadth and depth of application functionality;
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Ease of use and performance;
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Network strength and level of user adoption;
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Client testimonials and recommendations;
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Breadth of client base;
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Cloud-based delivery model;
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Competitive and understandable pricing;
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Ability to deliver actionable information in a relevant time period;
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Size and scope of payer clinical policy knowledge;
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Sale and marketing capabilities of vendor;
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Financial stability of vendor;
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Ability to integrate with legacy enterprise infrastructures and third-party applications; and
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Ability to innovate and respond rapidly to client needs and regulatory changes.
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Building and cultivating RELATIONSHIPS with our clients and each other. Treating individuals with dignity and respect and contributing to the success of others.
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Demonstrating INTEGRITY by being intellectually honest, doing what you say, and engaging with others from a point of honesty and trust.
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Delivering excellence in SERVICE. Aspiring to be the best through quality outcomes, partnering to optimize solutions, and holding self and others accountable for success.
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Actively seeking out the opportunity to ELEVATE by speaking up, contributing feedback and ideas, and advancing the organization’s mission and purpose.
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increase our sales and marketing efforts to drive market adoption of NantHealth solutions (including GPS Cancer and NantHealth software solutions);
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address competitive developments;
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fund development and marketing efforts of any future platforms and solutions;
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expand adoption of GPS Cancer and Eviti platform solutions into critical illnesses outside of oncology;
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acquire, license or invest in complimentary businesses, technologies or service offerings; and
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finance capital expenditures and general and administrative expenses.
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our success in driving adoption of our molecular analysis solutions, including GPS Cancer;
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our success in making our molecular analysis solutions reimbursable by payers;
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our ability to achieve revenue growth;
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the cost of expanding our products and service offerings, including our sales and marketing efforts;
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our ability to achieve interoperability across all of our acquired businesses, technologies and service offerings to deliver networking effects to our clients;
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the effect of competing technological and market developments;
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costs related to international expansion; and
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the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
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our ability to convince key thought 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 quantitative proteomic analysis;
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the willingness of physicians, self-insured employers, payers and healthcare providers to utilize our molecular analysis solutions; and
|
•
|
the willingness of commercial third-party payers and government payers to reimburse for our molecular testing, the scope and amount of which will affect patients’ willingness or ability to pay for our molecular testing and likely heavily influence our customers’ decisions to recommend our molecular testing.
|
•
|
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 Qualcomm Technologies, Inc. (formerly Capsule Tech, Inc.), Cerner Corporation, Bernoulli Enterprise, Inc., General Electric Company and Medical Information Technology, Inc.; 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 (acquired by IBM).
|
•
|
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.
|
•
|
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 has been temporarily suspended for calendar years 2016 and 2017, but will be reinstated in 2018 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 future 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;
|
•
|
expiration of contractual lock-up agreements with our executive officers, directors and security holders;
|
•
|
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.
|
•
|
United States
|
◦
|
Boston, Massachusetts
|
◦
|
Panama City, Florida
|
◦
|
Philadelphia, Pennsylvania
|
◦
|
Phoenix, Arizona
|
•
|
International
|
◦
|
Belfast, Northern Ireland
|
City
|
State
|
Country
|
Sqft
|
Type
|
Business Nature/Use
|
|
Boston
|
MA
|
USA
|
68,070
|
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Panama City
|
FL
|
USA
|
51,288
|
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
Belfast
|
NI
|
UK
|
15,500
|
|
Lease
|
R&D, engineering, administrative
|
Phoenix
|
AZ
|
USA
|
4,865
|
|
Lease
|
Administrative, sales, client support, professional services
|
Philadelphia
|
PA
|
USA
|
12,640
|
|
Lease
|
Administrative, sales, client support, R&D, engineering, professional services
|
|
|
|
152,363
|
|
|
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||
First Quarter
|
$
|
10.56
|
|
|
$
|
4.10
|
|
|
N/A
|
|
|
N/A
|
|
Second Quarter
(1)
|
5.45
|
|
|
2.98
|
|
|
18.59
|
|
12.50
|
||||
Third Quarter
|
4.68
|
|
|
2.66
|
|
|
15.35
|
|
|
9.96
|
|
||
Fourth Quarter
|
4.97
|
|
|
2.92
|
|
|
13.69
|
|
|
9.71
|
|
Chart information
|
Jun 2, 2016
|
|
Jun 30, 2016
|
|
Sep 30,
2016 |
|
Dec 31,
2016 |
|
Mar 31, 2017
|
|
Jun 30, 2017
|
|
Sep 30, 2017
|
|
Dec 31, 2017
|
||||||||||||||||
NantHealth, Inc.
|
$
|
100.00
|
|
|
$
|
67.24
|
|
|
$
|
70.74
|
|
|
$
|
53.47
|
|
|
$
|
26.68
|
|
|
$
|
22.75
|
|
|
$
|
22.16
|
|
|
$
|
16.41
|
|
NASDAQ Composite Index
|
$
|
100.00
|
|
|
$
|
97.41
|
|
|
$
|
106.85
|
|
|
$
|
108.28
|
|
|
$
|
118.92
|
|
|
$
|
123.52
|
|
|
$
|
130.67
|
|
|
$
|
138.86
|
|
NASDAQ Biotechnology Index
|
$
|
100.00
|
|
|
$
|
89.99
|
|
|
$
|
101.14
|
|
|
$
|
92.64
|
|
|
$
|
102.55
|
|
|
$
|
108.44
|
|
|
$
|
116.70
|
|
|
$
|
112.14
|
|
Consolidated and Combined Statement of Operations Data:
|
Year Ended December 31,
|
||||||||||||||
(Dollars in thousands, except per share data)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service
|
$
|
60,707
|
|
|
$
|
56,210
|
|
|
$
|
13,926
|
|
|
$
|
8,930
|
|
Software and hardware
|
6,093
|
|
|
6,750
|
|
|
14,292
|
|
|
8,249
|
|
||||
Total software-related revenue
|
66,800
|
|
|
62,960
|
|
|
28,218
|
|
|
17,179
|
|
||||
Maintenance
|
10,421
|
|
|
9,089
|
|
|
9,199
|
|
|
5,291
|
|
||||
Sequencing and molecular analysis
|
2,554
|
|
|
604
|
|
|
75
|
|
|
—
|
|
||||
Other services
|
6,901
|
|
|
7,751
|
|
|
8,685
|
|
|
10,410
|
|
||||
Total net revenue
|
86,676
|
|
|
80,404
|
|
|
46,177
|
|
|
32,880
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cost of Revenue:
|
|
|
|
|
|
|
|
||||||||
Software-as-a-service
|
21,795
|
|
|
19,883
|
|
|
3,227
|
|
|
3,261
|
|
||||
Software and hardware
|
660
|
|
|
816
|
|
|
(153
|
)
|
|
1,025
|
|
||||
Total software-related cost of revenue
|
22,455
|
|
|
20,699
|
|
|
3,074
|
|
|
4,286
|
|
||||
Maintenance
|
748
|
|
|
798
|
|
|
411
|
|
|
438
|
|
||||
Sequencing and molecular analysis
|
6,029
|
|
|
1,987
|
|
|
39
|
|
|
—
|
|
||||
Other services
|
7,118
|
|
|
12,131
|
|
|
11,263
|
|
|
7,047
|
|
||||
Amortization of developed technologies
|
5,172
|
|
|
8,492
|
|
|
5,901
|
|
|
5,902
|
|
||||
Total cost of revenue
|
41,522
|
|
|
44,107
|
|
|
20,688
|
|
|
17,673
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
45,154
|
|
|
36,297
|
|
|
25,489
|
|
|
15,207
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
74,976
|
|
|
105,258
|
|
|
55,717
|
|
|
43,380
|
|
||||
Research and development
|
33,862
|
|
|
47,310
|
|
|
14,248
|
|
|
14,437
|
|
||||
Amortization of acquisition-related assets
|
4,216
|
|
|
4,217
|
|
|
22
|
|
|
7,033
|
|
||||
Impairment of intangible asset
|
—
|
|
|
—
|
|
|
—
|
|
|
24,150
|
|
||||
Total operating expenses
|
113,054
|
|
|
156,785
|
|
|
69,987
|
|
|
89,000
|
|
||||
Loss from operations
|
(67,900
|
)
|
|
(120,488
|
)
|
|
(44,498
|
)
|
|
(73,793
|
)
|
||||
Interest expense, net
|
(16,168
|
)
|
|
(6,429
|
)
|
|
(627
|
)
|
|
(980
|
)
|
Other income, net
|
800
|
|
|
3,593
|
|
|
2,410
|
|
|
(536
|
)
|
||||
Loss from related party equity method investment including impairment loss
|
(50,334
|
)
|
|
(40,994
|
)
|
|
(2,584
|
)
|
|
1,525
|
|
||||
Loss from continuing operations before income
taxes
|
(133,602
|
)
|
|
(164,318
|
)
|
|
(45,299
|
)
|
|
(73,784
|
)
|
||||
Provision for (benefit from) income taxes
|
(2,203
|
)
|
|
(23,797
|
)
|
|
391
|
|
|
4
|
|
||||
Net loss from continuing operations
|
(131,399
|
)
|
|
(140,521
|
)
|
|
(45,690
|
)
|
|
(73,788
|
)
|
||||
Loss from discontinued operations, net of tax
|
(43,812
|
)
|
|
(43,581
|
)
|
|
(26,321
|
)
|
|
(10,829
|
)
|
||||
Net loss
|
(175,211
|
)
|
|
(184,102
|
)
|
|
(72,011
|
)
|
|
$
|
(84,617
|
)
|
|||
Less: Net loss attributed to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(192
|
)
|
||||
Net loss attributed to NantHealth
|
$
|
(175,211
|
)
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
$
|
(84,425
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income (loss) per share
(1)
:
|
|
|
|
|
|
|
|
||||||||
Continued operations - common stock
|
$
|
(1.12
|
)
|
|
$
|
(1.30
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
0.99
|
|
Discontinued operations - common stock
|
$
|
(0.37
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
0.14
|
|
Total net loss per common stock
|
$
|
(1.49
|
)
|
|
$
|
(1.69
|
)
|
|
$
|
(0.99
|
)
|
|
$
|
1.13
|
|
Basic and diluted net income per redeemable
common stock
|
N/A
|
|
|
$
|
0.99
|
|
|
$
|
1.50
|
|
|
N/A
|
|
||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
(1)
:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted - common stock
|
116,737,860
|
|
|
111,600,650
|
|
|
88,970,842
|
|
|
74,505,127
|
|
||||
Basic and diluted - redeemable common stock
|
N/A
|
|
|
5,005,855
|
|
|
10,714,285
|
|
|
N/A
|
|
Consolidated and Combined Balance Sheets Data:
|
December 31,
|
||||||||||||||
(Dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Cash and cash equivalents and marketable securities
|
$
|
61,660
|
|
|
$
|
157,573
|
|
|
$
|
7,232
|
|
|
$
|
225,570
|
|
Working capital (deficit)
|
46,034
|
|
|
128,329
|
|
|
(10,210
|
)
|
|
146,221
|
|
||||
Total assets
|
449,195
|
|
|
684,391
|
|
|
411,953
|
|
|
310,875
|
|
||||
Long term notes payable
|
195,458
|
|
|
191,040
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
255,893
|
|
|
272,797
|
|
|
60,906
|
|
|
96,074
|
|
||||
Redeemable series F units
|
—
|
|
|
—
|
|
|
166,042
|
|
|
150,000
|
|
||||
Accumulated deficit
|
(693,233
|
)
|
|
(475,273
|
)
|
|
(291,171
|
)
|
|
(219,160
|
)
|
||||
Total stockholders' equity
|
193,302
|
|
|
411,594
|
|
|
185,005
|
|
|
64,801
|
|
||||
Total equity and redeemable stock
|
193,302
|
|
|
411,594
|
|
|
351,047
|
|
|
214,801
|
|
(1)
|
The net income (loss) per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) that occurred on June 1, 2016, prior to the Company’s initial public offering ("IPO"). In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equity holders as set forth in the Company's limited liability company agreement and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation with the Secretary of State of the state of Delaware to effect a 1-for-5.5 reverse stock split of its common stock on June 1, 2016. See Note
18
for the calculation of net income (loss) per share for common stock and redeemable common stock for the years ended December 31,
2017
,
2016
and
2015
.
|
•
|
providers to seamlessly act on the best evidence-based information available to better fulfill their roles as caregivers rather than financial managers;
|
•
|
payers with the necessary tools to better fulfill their roles as stewards of an increasingly complex and rapidly evolving healthcare system;
|
•
|
biopharmaceutical companies to accelerate development of drugs for critical illnesses based upon the unique biology and specific health conditions of patients; and
|
•
|
patients with the knowledge to enable active participation in the management of their own health, or self-care.
|
(Dollars in thousands, except per share amounts)
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss from continuing operations
|
$
|
(131,399
|
)
|
|
$
|
(140,521
|
)
|
|
$
|
(45,690
|
)
|
Adjustments to GAAP net loss:
|
|
|
|
|
|
||||||
Corporate restructuring from continuing operations
(3)
|
2,422
|
|
|
2,544
|
|
|
1,470
|
|
|||
Acquisition related compensation expense
|
—
|
|
|
4,814
|
|
|
—
|
|
|||
Acquisition related sales incentive
|
2,732
|
|
|
2,966
|
|
|
—
|
|
|||
Intangible amortization from continuing operations
|
9,388
|
|
|
12,709
|
|
|
5,923
|
|
|||
Loss from related party equity method investment including impairment loss
|
50,334
|
|
|
40,994
|
|
|
2,584
|
|
|||
Non-cash interest expense related to convertible notes
|
4,417
|
|
|
108
|
|
|
—
|
|
|||
Change in fair value of derivatives liability
|
(264
|
)
|
|
(1,228
|
)
|
|
—
|
|
|||
Stock-based compensation expense from continuing operations
|
8,102
|
|
|
44,048
|
|
|
1,429
|
|
|||
BP settlement
|
—
|
|
|
(842
|
)
|
|
—
|
|
|||
Securities litigation costs
|
777
|
|
|
—
|
|
|
—
|
|
|||
The impact of intangible amortization, impact of the "Tax Act" of 2017, and the conversion from a limited liability company to a corporation on provision for (benefit from) income taxes
|
(1,796
|
)
|
|
(23,797
|
)
|
|
391
|
|
|||
Total adjustments to GAAP net loss from continuing operations
|
76,112
|
|
|
82,316
|
|
|
11,797
|
|
|||
Net loss - Non-GAAP from continuing operations
|
$
|
(55,287
|
)
|
|
$
|
(58,205
|
)
|
|
$
|
(33,893
|
)
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding
(1)
|
116,737,860
|
|
|
111,600,650
|
|
|
88,970,842
|
|
|||
Weighted average Series F/redeemable stock
(1) (2)
|
—
|
|
|
5,005,855
|
|
|
10,714,285
|
|
|||
Shares outstanding - Non-GAAP
(1)
|
116,737,860
|
|
|
116,606,505
|
|
|
99,685,127
|
|
|||
|
|
|
|
|
|
||||||
Net loss per share from continuing operations - Non-GAAP
(1)
|
$
|
(0.47
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(0.34
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss per common share from continuing operations - GAAP
|
$
|
(1.12
|
)
|
|
$
|
(1.30
|
)
|
|
$
|
(0.69
|
)
|
Adjustments to GAAP net loss per common share from continuing operations:
|
|
|
|
|
|
||||||
Corporate restructuring from continuing operations
(3)
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|||
Acquisition related compensation expense
|
—
|
|
|
0.04
|
|
|
—
|
|
|||
Acquisition related sales incentive
|
0.02
|
|
|
0.03
|
|
|
—
|
|
|||
Intangible amortization from continuing operations
|
0.08
|
|
|
0.12
|
|
|
0.06
|
|
|||
Loss from related party equity method investment including impairment loss
|
0.43
|
|
|
0.37
|
|
|
0.03
|
|
|||
Non-cash interest expense related to convertible notes
|
0.04
|
|
|
—
|
|
|
—
|
|
|||
Change in fair value of derivatives liability
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Stock-based compensation expense from continuing operations
|
0.07
|
|
|
0.39
|
|
|
0.02
|
|
|||
BP settlement
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Securities litigation costs
|
0.01
|
|
|
—
|
|
|
—
|
|
|||
The impact of intangible amortization, impact of the "Tax Act" of 2017, and the conversion from a limited liability company to a corporation on provision for (benefit from) income taxes
|
(0.02
|
)
|
|
(0.21
|
)
|
|
—
|
|
|||
Accretion to redemption value of Series F/redeemable common stock
|
—
|
|
|
0.04
|
|
|
0.18
|
|
|||
Dilution from Series F/redeemable common stock
|
—
|
|
|
0.02
|
|
|
0.04
|
|
|||
Total adjustments to GAAP net loss per common share from continuing operations
|
0.65
|
|
|
0.80
|
|
|
0.35
|
|
|||
Net loss per common share from continuing operations - Non-GAAP
(1)
|
$
|
(0.47
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(0.34
|
)
|
(1)
|
The net loss per common share from continuing operations - non-GAAP, weighted-average shares outstanding, weighted average Series F units/redeemable stock and shares outstanding - non-GAAP, have been computed to give effect to the LLC conversion that occurred June 1, 2016 prior to our initial public offering. In conjunction with the LLC Conversion, (a) all of our outstanding units automatically converted into shares of common stock, based on the relative rights of our pre-IPO equityholders as set forth in the limited liability company agreement and (b) we adopted and filed a certificate of incorporation with the Secretary of State of Delaware and adopted bylaws. We filed an amended certificate of incorporation to effect a 1-for-5.5 reverse stock split of our common stock on June 1, 2016. Please see Note 16 to our audited financial statements included in Item 8 of this Annual Report on Form 10-K for additional information related to the LLC conversion and related transactions.
|
(2)
|
The weighted-average shares outstanding have been further adjusted to account for the redeemable Series F units (converted to common stock in conjunction with the LLC conversion), whose put right expired on June 20, 2016. Prior to June 20, 2016, these units/shares of common stock were classified as redeemable members’/stockholders’ equity in the balance sheet, and as such, were not included in the weighted-average shares outstanding prior to June 20, 2016. The put right expired June 20, 2016, and the shares were no longer redeemable and are included in shareholders’ equity as of December 31, 2016. The weighted-average shares are adjusted to include the redeemable common stock in the weighted-average shares outstanding for the entire period. Please see Note 16 to our audited financial statements included in Item 8 of this Annual Report on Form 10-K for additional information related to the LLC conversion and related transactions.
|
(3)
|
Corporate restructuring includes accrued bonus reversal of $0.5 million for the year ended December 31, 2017.
|
▪
|
Software and hardware
-
Software and hardware cost of revenue includes third-party software and hardware costs directly associated with our solutions.
|
▪
|
Software-as-a-service
-
SaaS cost of revenue includes personnel-related, amortization of deferred implementation costs, depreciation of internal use software and other direct costs associated with the delivery and hosting of Eviti, our cancer-decision support solution, and NaviNet on a subscription basis.
|
▪
|
Maintenance
- Maintenance cost of revenue includes personnel-related and other direct costs associated with the ongoing support or maintenance we provide for our clients.
|
▪
|
Sequencing and molecular analysis
- Sequencing and molecular analysis cost of revenue includes internal costs associated with these services and amounts due to NantOmics under our Reseller Agreement for the sequencing and analysis of whole genome, DNA, RNA and proteomic results.
|
▪
|
Other services
- Other services cost of revenue includes personnel-related costs, amortization of deferred implementation costs, depreciation of internal use software and other direct costs associated with software training and implementation services provided to our clients as well as direct expenses relating to our nursing and therapy services provided to patients in a home care setting.
|
(Dollars in thousands except per share amounts)
|
Year Ended December 31,
|
|||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||
Revenue:
|
|
|
|
|
|
|||||||
Software-as-a-service
|
$
|
60,707
|
|
|
$
|
56,210
|
|
|
$
|
13,926
|
|
|
Software and hardware
|
6,093
|
|
|
6,750
|
|
|
14,292
|
|
||||
Total software-related revenue
|
66,800
|
|
|
62,960
|
|
|
28,218
|
|
||||
Maintenance
|
10,421
|
|
|
9,089
|
|
|
9,199
|
|
||||
Sequencing and molecular analysis
|
2,554
|
|
|
604
|
|
|
75
|
|
||||
Other services
|
6,901
|
|
|
7,751
|
|
|
8,685
|
|
||||
Total net revenue
|
86,676
|
|
|
80,404
|
|
|
46,177
|
|
||||
|
|
|
|
|
|
|||||||
Cost of Revenue:
|
|
|
|
|
|
|||||||
Software-as-a-service
|
21,795
|
|
|
19,883
|
|
|
3,227
|
|
||||
Software and hardware
|
660
|
|
|
816
|
|
|
(153
|
)
|
||||
Total software-related cost of revenue
|
22,455
|
|
|
20,699
|
|
|
3,074
|
|
||||
Maintenance
|
748
|
|
|
798
|
|
|
411
|
|
||||
Sequencing and molecular analysis
|
6,029
|
|
|
1,987
|
|
|
39
|
|
||||
Other services
|
7,118
|
|
|
12,131
|
|
|
11,263
|
|
||||
Amortization of developed technologies
|
5,172
|
|
|
8,492
|
|
|
5,901
|
|
||||
Total cost of revenue
|
41,522
|
|
|
44,107
|
|
|
20,688
|
|
||||
|
|
|
|
|
|
|||||||
Gross profit
|
45,154
|
|
|
36,297
|
|
|
25,489
|
|
||||
|
|
|
|
|
|
|||||||
Operating Expenses:
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
74,976
|
|
|
105,258
|
|
|
55,717
|
|
||||
Research and development
|
33,862
|
|
|
47,310
|
|
|
14,248
|
|
||||
Amortization of acquisition-related assets
|
4,216
|
|
|
4,217
|
|
|
22
|
|
||||
Total operating expenses
|
113,054
|
|
|
156,785
|
|
|
69,987
|
|
||||
Loss from operations
|
(67,900
|
)
|
|
(120,488
|
)
|
|
(44,498
|
)
|
||||
Interest expense, net
|
(16,168
|
)
|
|
(6,429
|
)
|
|
(627
|
)
|
||||
Other income, net
|
800
|
|
|
3,593
|
|
|
2,410
|
|
||||
Loss from related party equity method investment including impairment loss
|
(50,334
|
)
|
|
(40,994
|
)
|
|
(2,584
|
)
|
||||
Loss from continuing operations before income taxes
|
(133,602
|
)
|
|
(164,318
|
)
|
|
(45,299
|
)
|
||||
Provision for (benefit from) income taxes
|
(2,203
|
)
|
|
(23,797
|
)
|
|
391
|
|
||||
Net loss from continuing operations
|
(131,399
|
)
|
|
(140,521
|
)
|
|
(45,690
|
)
|
||||
Loss from discontinued operations, net of tax
|
(43,812
|
)
|
|
(43,581
|
)
|
|
(26,321
|
)
|
||||
Net loss
|
$
|
(175,211
|
)
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
|
|
|
|
|
|
|||||||
Basic and diluted net income (loss) per share
(1)
:
|
|
|
|
|
|
|||||||
Continued operations - common stock
|
$
|
(1.12
|
)
|
|
$
|
(1.30
|
)
|
|
$
|
(0.69
|
)
|
|
Discontinued operations - common stock
|
$
|
(0.37
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.30
|
)
|
|
Total net loss per common stock
|
$
|
(1.49
|
)
|
|
$
|
(1.69
|
)
|
|
$
|
(0.99
|
)
|
|
Basic and diluted net income per redeemable common stock
|
N/A
|
|
|
$
|
0.99
|
|
0.00099
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding
(1)
:
|
|
|
|
|
|
|||||||
Basic and diluted - common stock
|
116,737,860
|
|
|
111,600,650
|
|
|
88,970,842
|
|
||||
Basic and diluted - redeemable common stock
|
N/A
|
|
|
5,005,855
|
|
|
10,714,285
|
|
(1)
|
The net income (loss) per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) that occurred on June 1, 2016, prior to the Company’s initial public offering ("IPO"). In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation with the Secretary of State of the state of Delaware to effect a 1-for-5.5 reverse stock split of its common stock on June 1, 2016. See Note
18
for the calculation of net income (loss) per share for common stock and redeemable common stock for the years ended December 31,
2017
,
2016
and
2015
.
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Revenue:
|
|
|
|
|
|
|||
Software-as-a-service
|
70.1
|
%
|
|
69.9
|
%
|
|
30.1
|
%
|
Software and hardware
|
7.0
|
%
|
|
8.4
|
%
|
|
31.0
|
%
|
Total software-related revenue
|
77.1
|
%
|
|
78.3
|
%
|
|
61.1
|
%
|
Maintenance
|
12.0
|
%
|
|
11.3
|
%
|
|
19.9
|
%
|
Sequencing and molecular analysis
|
2.9
|
%
|
|
0.8
|
%
|
|
0.2
|
%
|
Other services
|
8.0
|
%
|
|
9.6
|
%
|
|
18.8
|
%
|
Total net revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|||
Cost of Revenue:
|
|
|
|
|
|
|||
Software-as-a-service
|
25.1
|
%
|
|
24.7
|
%
|
|
7.0
|
%
|
Software and hardware
|
0.8
|
%
|
|
1.0
|
%
|
|
(0.3
|
%)
|
Total software-related cost of revenue
|
25.9
|
%
|
|
25.7
|
%
|
|
6.7
|
%
|
Maintenance
|
0.9
|
%
|
|
1.0
|
%
|
|
0.9
|
%
|
Sequencing and molecular analysis
|
7.0
|
%
|
|
2.5
|
%
|
|
0.1
|
%
|
Other services
|
8.2
|
%
|
|
15.1
|
%
|
|
24.4
|
%
|
Amortization of developed technologies
|
5.9
|
%
|
|
10.6
|
%
|
|
12.7
|
%
|
Total cost of revenue
|
47.9
|
%
|
|
54.9
|
%
|
|
44.8
|
%
|
|
|
|
|
|
|
|||
Gross profit
|
52.1
|
%
|
|
45.1
|
%
|
|
55.2
|
%
|
|
|
|
|
|
|
|||
Operating Expenses:
|
|
|
|
|
|
|||
Selling, general and administrative
|
86.4
|
%
|
|
131.0
|
%
|
|
120.7
|
%
|
Research and development
|
39.1
|
%
|
|
58.8
|
%
|
|
30.9
|
%
|
Amortization of acquisition-related assets
|
4.9
|
%
|
|
5.2
|
%
|
|
0.0
|
%
|
Impairment of intangible asset
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Total operating expenses
|
130.4
|
%
|
|
195.0
|
%
|
|
151.6
|
%
|
Loss from operations
|
(78.3
|
%)
|
|
(149.9
|
%)
|
|
(96.4
|
%)
|
Interest expense, net
|
(18.7
|
%)
|
|
(8.0
|
%)
|
|
(1.4
|
%)
|
Other income, net
|
0.9
|
%
|
|
4.5
|
%
|
|
5.2
|
%
|
Loss from related party equity method investment including impairment loss
|
(58.0
|
%)
|
|
(51.0
|
%)
|
|
(5.5
|
%)
|
Loss from continuing operations before income taxes
|
(154.1
|
%)
|
|
(204.4
|
%)
|
|
(98.1
|
%)
|
Provision for (benefit from) income taxes
|
(2.5
|
%)
|
|
(29.6
|
%)
|
|
0.8
|
%
|
Net loss from continuing operations
|
(151.6
|
%)
|
|
(174.8
|
%)
|
|
(98.9
|
%)
|
Loss from discontinued operations, net of tax
|
(50.5
|
%)
|
|
(54.2
|
%)
|
|
(57.0
|
%)
|
Net loss
|
(202.1
|
%)
|
|
(229.0
|
%)
|
|
(155.9
|
%)
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Software–as-a-service
|
|
$
|
60,707
|
|
|
$
|
56,210
|
|
|
$
|
13,926
|
|
|
4,497
|
|
|
8.0
|
%
|
|
42,284
|
|
|
303.6
|
%
|
||
Software and hardware
|
|
6,093
|
|
|
6,750
|
|
|
14,292
|
|
|
(657
|
)
|
|
-9.7
|
%
|
|
(7,542
|
)
|
|
-52.8
|
%
|
|||||
Total software-related revenues
|
|
66,800
|
|
|
62,960
|
|
|
28,218
|
|
|
3,840
|
|
|
6.1
|
%
|
|
34,742
|
|
|
123.1
|
%
|
|||||
Maintenance
|
|
10,421
|
|
|
9,089
|
|
|
9,199
|
|
|
1,332
|
|
|
14.7
|
%
|
|
(110
|
)
|
|
-1.2
|
%
|
|||||
Sequencing and molecular analysis
|
|
2,554
|
|
|
604
|
|
|
75
|
|
|
1,950
|
|
|
322.8
|
%
|
|
529
|
|
|
705.3
|
%
|
|||||
Other services
|
|
6,901
|
|
|
7,751
|
|
|
8,685
|
|
|
(850
|
)
|
|
-11.0
|
%
|
|
(934
|
)
|
|
-10.8
|
%
|
|||||
Total net revenue
|
|
$
|
86,676
|
|
|
$
|
80,404
|
|
|
$
|
46,177
|
|
|
$
|
6,272
|
|
|
7.8
|
%
|
|
$
|
34,227
|
|
|
74.1
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Software–as-a-service
|
|
$
|
21,795
|
|
|
$
|
19,883
|
|
|
$
|
3,227
|
|
|
$
|
1,912
|
|
|
9.6
|
%
|
|
16,656
|
|
|
516.1
|
%
|
|
Software and hardware
|
|
660
|
|
|
816
|
|
|
(153
|
)
|
|
(156
|
)
|
|
-19.1
|
%
|
|
969
|
|
|
-633.3
|
%
|
|||||
Total software-related cost of revenue
|
|
22,455
|
|
|
20,699
|
|
|
3,074
|
|
|
1,756
|
|
|
8.5
|
%
|
|
17,625
|
|
|
573.4
|
%
|
|||||
Maintenance
|
|
748
|
|
|
798
|
|
|
411
|
|
|
(50
|
)
|
|
-6.3
|
%
|
|
387
|
|
|
94.2
|
%
|
|||||
Sequencing and molecular analysis
|
|
6,029
|
|
|
1,987
|
|
|
39
|
|
|
4,042
|
|
|
203.4
|
%
|
|
1,948
|
|
|
4,994.9
|
%
|
|||||
Other services
|
|
7,118
|
|
|
12,131
|
|
|
11,263
|
|
|
(5,013
|
)
|
|
-41.3
|
%
|
|
868
|
|
|
7.7
|
%
|
|||||
Amortization of developed technologies
|
|
5,172
|
|
|
8,492
|
|
|
5,901
|
|
|
(3,320
|
)
|
|
-39.1
|
%
|
|
2,591
|
|
|
43.9
|
%
|
|||||
Total cost of revenue
|
|
$
|
41,522
|
|
|
$
|
44,107
|
|
|
$
|
20,688
|
|
|
$
|
(2,585
|
)
|
|
-5.9
|
%
|
|
$
|
23,419
|
|
|
113.2
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Selling, general and administrative
|
|
$
|
74,976
|
|
|
$
|
105,258
|
|
|
$
|
55,717
|
|
|
$
|
(30,282
|
)
|
|
(28.8
|
)%
|
|
$
|
49,541
|
|
|
88.9
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Research and development
|
|
$
|
33,862
|
|
|
$
|
47,310
|
|
|
$
|
14,248
|
|
|
$
|
(13,448
|
)
|
|
(28.4
|
)%
|
|
$
|
33,062
|
|
|
232.0
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Interest expense, net
|
|
$
|
(16,168
|
)
|
|
$
|
(6,429
|
)
|
|
$
|
(627
|
)
|
|
$
|
(9,739
|
)
|
|
151.5
|
%
|
|
$
|
(5,802
|
)
|
|
925.4
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Other income (expense), net
|
|
$
|
800
|
|
|
$
|
3,593
|
|
|
$
|
2,410
|
|
|
$
|
(2,793
|
)
|
|
-77.7
|
%
|
|
$
|
1,183
|
|
|
49.1
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Loss from related party equity method Investment including impairment loss
|
|
$
|
(50,334
|
)
|
|
$
|
(40,994
|
)
|
|
$
|
(2,584
|
)
|
|
$
|
(9,340
|
)
|
|
22.8
|
%
|
|
$
|
(38,410
|
)
|
|
1,486.5
|
%
|
(Dollars in thousands)
|
|
Year Ended December 31,
|
|
Period-To-Period Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||||||||
Provision for (benefit from) income taxes
|
|
$
|
(2,203
|
)
|
|
$
|
(23,797
|
)
|
|
$
|
391
|
|
|
$
|
21,594
|
|
|
(90.7
|
)%
|
|
$
|
(24,188
|
)
|
|
(6,186.2
|
)%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(81,148
|
)
|
|
$
|
(70,634
|
)
|
|
$
|
(74,000
|
)
|
Investing activities
|
(12,275
|
)
|
|
(88,765
|
)
|
|
(95,262
|
)
|
|||
Financing activities
|
(5,335
|
)
|
|
313,594
|
|
|
171,688
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
65
|
|
|
169
|
|
|
(136
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(98,693
|
)
|
|
$
|
154,364
|
|
|
$
|
2,290
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Purchasing obligations
|
$
|
381,235
|
|
|
$
|
2,235
|
|
|
$
|
4,000
|
|
|
$
|
50,000
|
|
|
$
|
325,000
|
|
Long term debt obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Related party promissory note
|
154,685
|
|
|
—
|
|
|
—
|
|
|
154,685
|
|
|
—
|
|
|||||
Related party convertible notes
|
10,000
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|||||
Other convertible notes
|
97,000
|
|
|
—
|
|
|
—
|
|
|
97,000
|
|
|
—
|
|
|||||
Operating leases and capital leases obligations
|
2,613
|
|
|
1,721
|
|
|
700
|
|
|
192
|
|
|
—
|
|
|||||
Total Obligations
|
$
|
645,533
|
|
|
$
|
3,956
|
|
|
$
|
4,700
|
|
|
$
|
311,877
|
|
|
$
|
325,000
|
|
|
|
|
|
|
Page
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
Consolidated and Combined Statements of Operations
|
|
|
|
|
|
Consolidated and Combined Statements of Comprehensive Loss
|
|
|
|
|
|
Consolidated and Combined Statements of Changes in Stockholders’ / Members’ Equity
|
|
|
|
|
|
Consolidated and Combined Statements of Cash Flows
|
|
|
|
|
|
Notes to Consolidated and Combined Financial Statements
|
|
|
|
|
|
NantOmics, LLC
|
|
|
Consolidated and Combined Financial Statements
Years Ended December 31, 2017, 2016 and 2015 (In thousands, except per unit amounts) |
|
|
|
|
|
Independent Auditors' Report
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
Consolidated and Combined Statements of Operations and Comprehensive Loss
|
|
|
|
|
|
Consolidated and Combined Statements of Changes in Members’ Equity
|
|
|
|
|
|
Consolidated and Combined Statements of Cash Flows
|
|
|
|
|
|
Notes to Consolidated and Combined Financial Statements
|
/s/ Ernst & Young LLP
|
|
|
|
We have served as the Company's auditor since 2013.
|
|
|
|
Los Angeles, California
|
|
March 16, 2018
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
61,660
|
|
|
$
|
157,573
|
|
Accounts receivable, net
|
11,491
|
|
|
11,673
|
|
||
Inventories
|
839
|
|
|
1,685
|
|
||
Deferred implementation costs
|
1,960
|
|
|
606
|
|
||
Related party receivables, net
|
585
|
|
|
693
|
|
||
Prepaid expenses and other current assets
|
5,358
|
|
|
3,356
|
|
||
Current assets of discontinued operations
|
—
|
|
|
9,992
|
|
||
Total current assets
|
81,893
|
|
|
185,578
|
|
||
Property, plant, and equipment, net
|
18,517
|
|
|
20,129
|
|
||
Deferred implementation costs, net of current
|
3,951
|
|
|
3,201
|
|
||
Deferred income tax assets, net
|
—
|
|
|
84
|
|
||
Goodwill
|
114,625
|
|
|
114,625
|
|
||
Intangible assets, net
|
69,424
|
|
|
78,812
|
|
||
Investment in related party
|
156,863
|
|
|
207,197
|
|
||
Related party receivable, net of current
|
1,727
|
|
|
1,971
|
|
||
Other assets
|
2,195
|
|
|
2,111
|
|
||
Noncurrent assets of discontinued operations
|
—
|
|
|
70,683
|
|
||
Total assets
|
$
|
449,195
|
|
|
$
|
684,391
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
3,164
|
|
|
$
|
6,039
|
|
Accrued and other current liabilities
|
18,134
|
|
|
20,032
|
|
||
Deferred revenue
|
10,057
|
|
|
9,600
|
|
||
Related party payables, net
|
4,504
|
|
|
8,082
|
|
||
Current liabilities of discontinued operations
|
—
|
|
|
13,496
|
|
||
Total current liabilities
|
35,859
|
|
|
57,249
|
|
||
Deferred revenue, net of current
|
7,126
|
|
|
11,127
|
|
||
Related party liabilities
|
11,500
|
|
|
5,612
|
|
||
Related party promissory note
|
112,666
|
|
|
112,666
|
|
||
Related party convertible note, net
|
7,947
|
|
|
7,564
|
|
||
Convertible notes, net
|
74,845
|
|
|
70,810
|
|
||
Deferred income taxes, net
|
5,838
|
|
|
—
|
|
||
Other liabilities
|
112
|
|
|
820
|
|
||
Noncurrent liabilities of discontinued operations
|
—
|
|
|
6,949
|
|
||
Total liabilities
|
255,893
|
|
|
272,797
|
|
||
Stockholders' equity
|
|
|
|
||||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 108,383,602 and 121,250,437 shares issued and outstanding at December 31, 2017 (including 3,490 shares of restricted stock) and 2016 (including 6,976 shares of restricted stock), respectively
|
10
|
|
|
12
|
|
||
Additional paid-in capital
|
886,669
|
|
|
886,334
|
|
||
Accumulated deficit
|
(693,233
|
)
|
|
(475,273
|
)
|
||
Accumulated other comprehensive (loss) income
|
(144
|
)
|
|
521
|
|
||
Total stockholders' equity
|
193,302
|
|
|
411,594
|
|
||
Total liabilities and stockholders' equity
|
$
|
449,195
|
|
|
$
|
684,391
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Software-as-a-service
|
$
|
60,707
|
|
|
$
|
56,210
|
|
|
$
|
13,926
|
|
Software and hardware
|
6,093
|
|
|
6,750
|
|
|
14,292
|
|
|||
Total software-related revenue
|
66,800
|
|
|
62,960
|
|
|
28,218
|
|
|||
Maintenance
|
10,421
|
|
|
9,089
|
|
|
9,199
|
|
|||
Sequencing and molecular analysis
|
2,554
|
|
|
604
|
|
|
75
|
|
|||
Other services
|
6,901
|
|
|
7,751
|
|
|
8,685
|
|
|||
Total net revenue
|
86,676
|
|
|
80,404
|
|
|
46,177
|
|
|||
|
|
|
|
|
|
||||||
Cost of Revenue:
|
|
|
|
|
|
||||||
Software-as-a-service
|
21,795
|
|
|
19,883
|
|
|
3,227
|
|
|||
Software and hardware
|
660
|
|
|
816
|
|
|
(153
|
)
|
|||
Total software-related cost of revenue
|
22,455
|
|
|
20,699
|
|
|
3,074
|
|
|||
Maintenance
|
748
|
|
|
798
|
|
|
411
|
|
|||
Sequencing and molecular analysis
|
6,029
|
|
|
1,987
|
|
|
39
|
|
|||
Other services
|
7,118
|
|
|
12,131
|
|
|
11,263
|
|
|||
Amortization of developed technologies
|
5,172
|
|
|
8,492
|
|
|
5,901
|
|
|||
Total cost of revenue
|
41,522
|
|
|
44,107
|
|
|
20,688
|
|
|||
|
|
|
|
|
|
||||||
Gross profit
|
45,154
|
|
|
36,297
|
|
|
25,489
|
|
|||
|
|
|
|
|
|
||||||
Operating Expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
74,976
|
|
|
105,258
|
|
|
55,717
|
|
|||
Research and development
|
33,862
|
|
|
47,310
|
|
|
14,248
|
|
|||
Amortization of acquisition-related assets
|
4,216
|
|
|
4,217
|
|
|
22
|
|
|||
Total operating expenses
|
113,054
|
|
|
156,785
|
|
|
69,987
|
|
|||
Loss from operations
|
(67,900
|
)
|
|
(120,488
|
)
|
|
(44,498
|
)
|
|||
Interest expense, net
|
(16,168
|
)
|
|
(6,429
|
)
|
|
(627
|
)
|
|||
Other income, net
|
800
|
|
|
3,593
|
|
|
2,410
|
|
|||
Loss from related party equity method investment including impairment loss
|
(50,334
|
)
|
|
(40,994
|
)
|
|
(2,584
|
)
|
|||
Loss from continuing operations before income taxes
|
(133,602
|
)
|
|
(164,318
|
)
|
|
(45,299
|
)
|
|||
Provision for (benefit from) income taxes
|
(2,203
|
)
|
|
(23,797
|
)
|
|
391
|
|
|||
Net loss from continuing operations
|
(131,399
|
)
|
|
(140,521
|
)
|
|
(45,690
|
)
|
|||
Loss from discontinued operations, net of tax
|
(43,812
|
)
|
|
(43,581
|
)
|
|
(26,321
|
)
|
|||
Net loss
|
$
|
(175,211
|
)
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
|
|
|
|
|
|
||||||
Basic and diluted net income (loss) per share
(1)
:
|
|
|
|
|
|
||||||
Continued operations - common stock
|
$
|
(1.12
|
)
|
|
$
|
(1.30
|
)
|
|
$
|
(0.69
|
)
|
Discontinued operations - common stock
|
$
|
(0.37
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.30
|
)
|
Total net loss per common stock
|
$
|
(1.49
|
)
|
|
$
|
(1.69
|
)
|
|
$
|
(0.99
|
)
|
Basic and diluted net income per redeemable common stock
|
N/A
|
|
|
$
|
0.99
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding
(1)
:
|
|
|
|
|
|
||||||
Basic and diluted - common stock
|
116,737,860
|
|
|
111,600,650
|
|
|
88,970,842
|
|
|||
Basic and diluted - redeemable common stock
|
N/A
|
|
|
5,005,855
|
|
|
10,714,285
|
|
(1)
|
The net income (loss) per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) that occurred on June 1, 2016, prior to the Company’s initial public offering ("IPO"). In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement, and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation with the Secretary of State of the state of Delaware to effect a 1-for-5.5 reverse stock split of its common stock on June 1, 2016. See Note
18
for the calculation of net income (loss) per share for common stock and redeemable common stock for the years ended December 31,
2017
,
2016
and
2015
.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(175,211
|
)
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
Other comprehensive loss, net of reclassification adjustments and taxes:
|
|
|
|
|
|
||||||
Amounts reclassified from accumulated other comprehensive income
(1)
|
(977
|
)
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss) from foreign currency translation
|
312
|
|
|
608
|
|
|
(136
|
)
|
|||
Comprehensive loss
|
$
|
(175,876
|
)
|
|
$
|
(183,494
|
)
|
|
$
|
(72,147
|
)
|
|
Members' Equity
|
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Total Equity
|
||||||||||||||||||
|
Units
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2014
|
481,024,678
|
|
|
$
|
283,912
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(219,160
|
)
|
|
$
|
49
|
|
|
$
|
64,801
|
|
Issuance of membership interests
|
59,367,813
|
|
|
200,774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,774
|
|
||||||
Stock-based compensation expense (pre LLC conversion)
|
835,680
|
|
|
1,429
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,429
|
|
||||||
Deemed capital contributions from chairman and CEO (pre LLC conversion)
|
—
|
|
|
6,190
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,190
|
|
||||||
Series F put right accretion (pre LLC conversion)
|
—
|
|
|
(16,042
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,042
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
(136
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,011
|
)
|
|
—
|
|
|
(72,011
|
)
|
||||||
Balance at December 31, 2015
|
541,228,171
|
|
|
476,263
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(291,171
|
)
|
|
(87
|
)
|
|
185,005
|
|
||||||
Issuance of membership interests
|
15,513,726
|
|
|
52,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,500
|
|
||||||
Stock-based compensation expense (pre LLC conversion)
|
—
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
||||||
Deemed capital contributions from chairman and CEO (pre LLC conversion)
|
—
|
|
|
830
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
830
|
|
||||||
Series F put right accretion (pre LLC conversion)
|
—
|
|
|
(4,375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,375
|
)
|
||||||
Conversion of members' interests
|
(556,741,897
|
)
|
|
(525,388
|
)
|
|
99,661,906
|
|
|
10
|
|
|
525,378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock upon conversion of related party promissory note
|
—
|
|
|
—
|
|
|
2,899,297
|
|
|
—
|
|
|
40,590
|
|
|
—
|
|
|
—
|
|
|
40,590
|
|
||||||
Issuance of common stock in initial public offering, net of $13,034 in offering costs
|
—
|
|
|
—
|
|
|
6,900,000
|
|
|
1
|
|
|
83,565
|
|
|
—
|
|
|
—
|
|
|
83,566
|
|
||||||
Series F put right accretion (post LLC conversion)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(583
|
)
|
|
—
|
|
|
—
|
|
|
(583
|
)
|
||||||
Redeemable common stock put right expiration
|
—
|
|
|
—
|
|
|
10,714,285
|
|
|
1
|
|
|
170,999
|
|
|
—
|
|
|
—
|
|
|
171,000
|
|
||||||
Stock-based compensation expense (post LLC conversion)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,925
|
|
|
—
|
|
|
—
|
|
|
54,925
|
|
||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
—
|
|
|
—
|
|
|
1,074,949
|
|
|
—
|
|
|
(5,838
|
)
|
|
—
|
|
|
—
|
|
|
(5,838
|
)
|
||||||
Deemed capital contributions from Chairman and CEO (post LLC conversion)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,980
|
|
|
—
|
|
|
—
|
|
|
2,980
|
|
||||||
Equity component of the convertible notes issuance, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,318
|
|
|
—
|
|
|
—
|
|
|
14,318
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
608
|
|
|
608
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(184,102
|
)
|
|
—
|
|
|
(184,102
|
)
|
||||||
Balance at December 31, 2016
|
—
|
|
|
—
|
|
|
121,250,437
|
|
|
12
|
|
|
886,334
|
|
|
(475,273
|
)
|
|
521
|
|
|
411,594
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,670
|
|
|
—
|
|
|
—
|
|
|
5,670
|
|
||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes
|
—
|
|
|
—
|
|
|
2,133,165
|
|
|
—
|
|
|
(5,335
|
)
|
|
—
|
|
|
—
|
|
|
(5,335
|
)
|
||||||
Retirement of stock
|
—
|
|
|
—
|
|
|
(15,000,000
|
)
|
|
(2
|
)
|
|
—
|
|
|
(42,749
|
)
|
|
—
|
|
|
(42,751
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(665
|
)
|
|
(665
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175,211
|
)
|
|
—
|
|
|
(175,211
|
)
|
||||||
Balance at December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
108,383,602
|
|
|
$
|
10
|
|
|
$
|
886,669
|
|
|
$
|
(693,233
|
)
|
|
$
|
(144
|
)
|
|
$
|
193,302
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
(1)
|
|
2016
(1)
|
|
2015
(1)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(175,211
|
)
|
|
$
|
(184,102
|
)
|
|
$
|
(72,011
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Loss on sale of business and dissolution of a business component
|
9,648
|
|
|
—
|
|
|
—
|
|
|||
Provision for bad debt expense
|
220
|
|
|
549
|
|
|
207
|
|
|||
Inventory provision
|
692
|
|
|
499
|
|
|
7
|
|
|||
Depreciation and amortization
|
28,055
|
|
|
30,933
|
|
|
15,788
|
|
|||
Loss from related party equity method investment including impairment loss
|
50,334
|
|
|
40,994
|
|
|
2,584
|
|
|||
Amortization of debt discounts and deferred financing offering cost
|
4,417
|
|
|
108
|
|
|
—
|
|
|||
Change in fair value of derivatives liability
|
(264
|
)
|
|
(1,228
|
)
|
|
—
|
|
|||
Unrealized changes in fair value of marketable securities
|
—
|
|
|
(49
|
)
|
|
(3,624
|
)
|
|||
Realized changes in fair value of marketable securities
|
—
|
|
|
49
|
|
|
3,971
|
|
|||
Deferred income taxes, net
|
5,059
|
|
|
(23,385
|
)
|
|
—
|
|
|||
Stock-based compensation
|
4,511
|
|
|
53,952
|
|
|
1,429
|
|
|||
Other noncash expense
|
—
|
|
|
144
|
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of business combinations:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
4
|
|
|
8,111
|
|
|
3,580
|
|
|||
Inventories
|
196
|
|
|
(570
|
)
|
|
982
|
|
|||
Related party receivables, net
|
623
|
|
|
(325
|
)
|
|
228
|
|
|||
Prepaid expenses and other current assets
|
(588
|
)
|
|
3,495
|
|
|
(4,245
|
)
|
|||
Deferred implementation costs
|
(2,214
|
)
|
|
(5,952
|
)
|
|
(4,155
|
)
|
|||
Accounts payable
|
(1,852
|
)
|
|
(5,644
|
)
|
|
1,731
|
|
|||
Accrued and other current liabilities
|
(6,321
|
)
|
|
3,787
|
|
|
5,450
|
|
|||
Deferred revenue
|
(999
|
)
|
|
3,853
|
|
|
(21,158
|
)
|
|||
Related party payables, net
|
2,832
|
|
|
4,220
|
|
|
(4,738
|
)
|
|||
Other assets and liabilities
|
(290
|
)
|
|
(73
|
)
|
|
(26
|
)
|
|||
Net cash used in operating activities
|
(81,148
|
)
|
|
(70,634
|
)
|
|
(74,000
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of business, net of cash disposed
|
1,721
|
|
|
—
|
|
|
—
|
|
|||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
(78,725
|
)
|
|
(50,548
|
)
|
|||
Deferred consideration for acquisition
|
—
|
|
|
4,358
|
|
|
—
|
|
|||
Purchase of property and equipment including internal use software
|
(13,636
|
)
|
|
(15,780
|
)
|
|
(8,244
|
)
|
|||
Proceeds from sales of property and equipment
|
—
|
|
|
138
|
|
|
—
|
|
|||
Purchases of intangible assets
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|||
Investments in unconsolidated related parties
|
—
|
|
|
—
|
|
|
(150,816
|
)
|
|||
Purchase of cost method investment
|
—
|
|
|
—
|
|
|
(1,750
|
)
|
|||
Purchases of marketable securities
|
(360
|
)
|
|
(31
|
)
|
|
(15,219
|
)
|
|||
Proceeds from sales of marketable securities
|
—
|
|
|
1,275
|
|
|
136,315
|
|
|||
Net cash used in investing activities
|
(12,275
|
)
|
|
(88,765
|
)
|
|
(95,262
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of convertible notes to others, net of offering costs
|
—
|
|
|
92,797
|
|
|
—
|
|
|||
Proceeds from issuance of convertible notes to related party, net of offering costs
|
—
|
|
|
9,917
|
|
|
—
|
|
|||
Proceeds from (payment of) related party promissory notes
|
—
|
|
|
152,666
|
|
|
(34,502
|
)
|
|||
Proceeds from issuance of membership interests
|
—
|
|
|
—
|
|
|
200,000
|
|
|||
Proceeds from initial public offering, net of offering costs
|
—
|
|
|
83,566
|
|
|
—
|
|
|||
Deemed capital contribution from Chairman and CEO
|
—
|
|
|
3,810
|
|
|
6,190
|
|
Tax payments related to stock issued, net of stock withheld, for vested phantom units
|
(5,335
|
)
|
|
(5,838
|
)
|
|
—
|
|
|||
Payment of short-term notes payable
|
—
|
|
|
(23,324
|
)
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(5,335
|
)
|
|
313,594
|
|
|
171,688
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
65
|
|
|
169
|
|
|
(136
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(98,693
|
)
|
|
154,364
|
|
|
2,290
|
|
|||
Cash and cash equivalents, beginning of period (including cash of discontinued
operations) |
160,353
|
|
|
5,989
|
|
|
3,699
|
|
|||
Cash and cash equivalents, end of period
|
$
|
61,660
|
|
|
$
|
160,353
|
|
|
$
|
5,989
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
(1)
|
|
2016
(1)
|
|
2015
(1)
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
(5,778
|
)
|
|
$
|
(11
|
)
|
|
$
|
(2,193
|
)
|
Interest received
|
63
|
|
|
119
|
|
|
599
|
|
|||
Noncash investing and financing activities:
|
|
|
|
|
|
||||||
Noncash consideration (common stock) from sale of Business (Note 3) and
subsequent retirement of stock |
42,749
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment (including internal use software)
|
759
|
|
|
2,962
|
|
|
—
|
|
|||
Transfer of marketable securities as investment in unconsolidated related party
|
—
|
|
|
—
|
|
|
99,184
|
|
|||
Equity component reclassification of the convertible notes issuance, net
|
—
|
|
|
14,318
|
|
|
—
|
|
|||
Conversion of related party promissory note and interest payable to common
stock |
—
|
|
|
40,590
|
|
|
—
|
|
|||
Reclassification of redeemable common stock to common stock (former Series F
units) |
—
|
|
|
171,000
|
|
|
—
|
|
|||
Accretion to redemption value of Series F / redeemable common stock
|
—
|
|
|
4,958
|
|
|
16,042
|
|
•
|
Software and hardware
- Software and hardware revenue is generated from the sale of the Company’s software, on either a perpetual or term license basis, and the sale of hardware. The software is installed on the client’s site or the client’s designated vendor’s site and is not hosted by the Company or by a vendor contracted by the Company. The Company also sells third-party software and hardware to its clients.
|
•
|
Software-as-a-service
(“SaaS”) - SaaS revenue is generated from clients’ access to and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually monthly. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period.
|
•
|
Maintenance
- Maintenance revenue includes ongoing post contract client support (“PCS”) or maintenance during the paid PCS term. Additionally, PCS includes ongoing development of software updates and upgrades provided to the client on a when and if available basis.
|
•
|
Sequencing and molecular analysis
- Sequencing and molecular analysis revenue is generated by the process of performing sequencing and analysis of whole genome DNA, RNA and proteomic results under the Company's reseller agreement with NantOmics, LLC ("NantOmics") (See Note
19
).
|
•
|
Other services
- Other services includes revenue from professional services provided that are generally complementary to the software and may or may not be required for the software to function as desired by the client. The services are generally provided in the form of training and implementation services during the software license period and do not include PCS. Other services revenue also includes the sale of nursing and therapy services provided to patients in a home care setting and any other services not included in the preceding revenue sources.
|
•
|
Software and hardware
- Software and hardware cost of revenue includes third-party software and hardware costs directly associated with solutions, including purchasing and receiving costs.
|
•
|
Software-as-a-service
- SaaS cost of revenue includes personnel-related costs, amortization of deferred implementation costs and other direct costs associated with the delivery and hosting of the Company's subscription services.
|
•
|
Maintenance
- Maintenance cost of revenue includes personnel-related costs and other direct costs associated with the ongoing support or maintenance provided to the Company’s clients.
|
•
|
Sequencing and molecular analysis
- Sequencing and molecular analysis cost of revenue includes (a) personnel-related costs associated with these services and (b) amounts due to NantOmics under the reseller agreement (See Note
19
) for the sequencing and analysis of whole genome, DNA, RNA, and proteomic results.
|
•
|
Other services
- Other services cost of revenue includes personnel-related, amortization of deferred implementation costs and other direct costs associated with the Company’s software training and implementation services provided to our clients as well as direct expenses relating to the Company’s nursing and therapy services provided to patients in a home care setting.
|
•
|
Level 1—Quoted prices for identical assets or liabilities in active markets;
|
•
|
Level 2—Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable; and
|
•
|
Level 3—Unobservable inputs that reflect estimates and assumptions.
|
Period
|
|
Significant
Customers
|
|
Percentage of Total
Revenues
|
|
Percentage of Total
Accounts Receivable
|
||||||||||||||||||||||||||
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
||||||||||
Year Ended December 31, 2017
|
|
5
|
|
14.1
|
%
|
|
11.0
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
15.7
|
%
|
|
18.1
|
%
|
|
11.3
|
%
|
|
10.1
|
%
|
Year Ended December 31, 2016
|
|
2
|
|
13.3
|
%
|
|
12.7
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Year Ended December 31, 2015
|
|
1
|
|
18.6
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Cash received as consideration
|
$
|
1,742
|
|
Deferred consideration related to working capital adjustments
|
1,021
|
|
|
Estimated costs to be incurred by the Company to fulfill certain customer service obligations of
the Business post-closing |
(883
|
)
|
|
Fair value of common stock
|
42,750
|
|
|
Net consideration received
|
44,630
|
|
|
Less: Carrying value of net assets sold
|
(55,255
|
)
|
|
Plus: Reclassification of cumulative translation adjustments of foreign subsidiaries
|
117
|
|
|
Loss from sale of Business
|
$
|
(10,508
|
)
|
|
December 31,
2016 |
||
Cash and cash equivalents
|
$
|
2,780
|
|
Accounts receivable, net
|
2,055
|
|
|
Inventories
|
532
|
|
|
Deferred implementation costs
|
2,730
|
|
|
Related party receivables, net
|
206
|
|
|
Prepaid expenses and other current assets
|
1,689
|
|
|
Current assets of discontinued operations
|
9,992
|
|
|
Property, plant, and equipment, net
|
9,010
|
|
|
Deferred implementation costs, net of current
|
4,709
|
|
|
Goodwill
|
16,444
|
|
|
Intangible assets, net
|
40,314
|
|
|
Other assets
|
206
|
|
|
Total assets of discontinued operations
|
$
|
80,675
|
|
|
|
||
Accounts payable
|
$
|
681
|
|
Accrued and other current liabilities
|
5,199
|
|
|
Deferred revenue
|
7,616
|
|
|
Current liabilities of discontinued operations
|
13,496
|
|
|
Deferred revenue, net of current
|
6,111
|
|
|
Deferred income tax liabilities, net of current
|
838
|
|
|
Total liabilities of discontinued operations
|
$
|
20,445
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Major line items constituting loss from discontinued operations
|
|
|
|
|
|
||||||
Net revenue
|
$
|
7,619
|
|
|
$
|
19,976
|
|
|
$
|
12,127
|
|
Cost of revenue
|
16,318
|
|
|
28,227
|
|
|
14,121
|
|
|||
Selling, general and administrative
|
8,891
|
|
|
15,396
|
|
|
13,304
|
|
|||
Research and development
|
7,571
|
|
|
14,326
|
|
|
9,587
|
|
|||
Amortization of software license and acquisition-related assets
|
1,978
|
|
|
3,040
|
|
|
1,520
|
|
|||
Other expense (income)
|
134
|
|
|
1,582
|
|
|
(98
|
)
|
|||
Loss from sale of Business
|
10,508
|
|
|
—
|
|
|
—
|
|
|||
Gain from dissolution of a business component
|
(860
|
)
|
|
—
|
|
|
—
|
|
|||
Loss from discontinued operations, before income taxes
|
(36,921
|
)
|
|
(42,595
|
)
|
|
(26,307
|
)
|
|||
Provision for income taxes
|
6,891
|
|
|
986
|
|
|
14
|
|
|||
Loss from discontinued operations, net of income taxes
|
$
|
(43,812
|
)
|
|
$
|
(43,581
|
)
|
|
$
|
(26,321
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Depreciation and amortization from discontinued operations
|
$
|
8,829
|
|
|
$
|
12,422
|
|
|
$
|
7,162
|
|
Loss from sale of Business
|
10,508
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of Business
|
1,721
|
|
|
—
|
|
|
—
|
|
|||
Capital expenditures
|
4,673
|
|
|
5,926
|
|
|
1,254
|
|
|
Balance as of December 31, 2016
|
|
Expenses, Net
|
|
Cash
|
|
Balance as of December 31, 2017
|
||||||||
Employee severance and other personnel benefits liability
|
$
|
—
|
|
|
$
|
2,955
|
|
|
$
|
(2,884
|
)
|
|
$
|
71
|
|
|
Amounts
|
||
Cash paid to 3BE at closing
|
$
|
74,823
|
|
Cash paid to option holders after closing
|
2,580
|
|
|
Cash paid to escrow account
|
6,126
|
|
|
Working capital settlement payment
|
455
|
|
|
Fair value of Series H units
|
52,500
|
|
|
Total consideration
|
$
|
136,484
|
|
|
Amounts
|
||
Cash and restricted cash
|
$
|
4,804
|
|
Accounts receivable, net
|
10,693
|
|
|
Property, plant and equipment
|
5,044
|
|
|
Other assets and liabilities, net
|
4,561
|
|
|
Accounts payable
|
(4,585
|
)
|
|
Accrued and other current liabilities
|
(3,674
|
)
|
|
Deferred revenue
|
(2,603
|
)
|
|
Deferred tax liability
|
(15,508
|
)
|
|
Assumed indebtedness
|
(23,324
|
)
|
|
Trade names
|
3,000
|
|
|
Developed technology
|
32,000
|
|
|
Customer relationships
|
52,000
|
|
|
Goodwill
|
74,076
|
|
|
Total fair value of net assets acquired
|
$
|
136,484
|
|
|
Balance at beginning of the year
|
|
Additions to expense
|
|
(Write offs) / Recoveries
|
|
Balance at the end of the year
|
||||||
Year Ended December 31, 2017
|
$
|
70
|
|
|
79
|
|
|
—
|
|
|
$
|
149
|
|
Year Ended December 31, 2016
|
$
|
301
|
|
|
364
|
|
|
(595
|
)
|
|
$
|
70
|
|
Year Ended December 31, 2015
|
$
|
142
|
|
|
83
|
|
|
76
|
|
|
$
|
301
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Finished goods
|
$
|
839
|
|
|
$
|
1,308
|
|
Raw materials
|
—
|
|
|
377
|
|
||
Inventories
|
$
|
839
|
|
|
$
|
1,685
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Prepaid expenses
|
$
|
2,791
|
|
|
$
|
3,083
|
|
Restricted cash
(1)
|
350
|
|
|
100
|
|
||
Other current assets
|
2,217
|
|
|
173
|
|
||
Prepaid expenses and other current assets
|
$
|
5,358
|
|
|
$
|
3,356
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Payroll and related costs
|
$
|
7,051
|
|
|
$
|
9,821
|
|
NaviNet acquisition accrued earnout (See Note 4)
|
5,408
|
|
|
2,675
|
|
||
Other accrued and other current liabilities
|
5,675
|
|
|
7,536
|
|
||
Accrued and other current liabilities
|
$
|
18,134
|
|
|
$
|
20,032
|
|
|
|
|
December 31,
|
||||||
|
Useful life (in years)
|
|
2017
|
|
2016
|
||||
Computer equipment and software
|
3-5
|
|
$
|
13,998
|
|
|
$
|
13,391
|
|
Furniture and equipment
|
5-7
|
|
3,211
|
|
|
3,169
|
|
||
Leasehold and building improvements
(1)
|
|
|
4,233
|
|
|
3,921
|
|
||
Internal use software
|
3
|
|
17,690
|
|
|
10,371
|
|
||
Construction in progress
|
|
|
629
|
|
|
1,090
|
|
||
|
|
|
39,761
|
|
|
31,942
|
|
||
Less: Accumulated depreciation and amortization
|
|
|
(21,244
|
)
|
|
(11,813
|
)
|
||
Property, plant and equipment, net
|
|
|
$
|
18,517
|
|
|
$
|
20,129
|
|
|
December 31, 2017
|
||||||||||||||
|
Customer
Relationships |
|
Developed Technologies
|
|
Trade Name
|
|
Total
|
||||||||
Gross carrying amount
|
$
|
52,000
|
|
|
$
|
32,000
|
|
|
$
|
3,000
|
|
|
$
|
87,000
|
|
Accumulated amortization
|
(6,933
|
)
|
|
(9,143
|
)
|
|
(1,500
|
)
|
|
(17,576
|
)
|
||||
Intangible assets, net
|
$
|
45,067
|
|
|
$
|
22,857
|
|
|
$
|
1,500
|
|
|
$
|
69,424
|
|
|
December 31, 2016
|
||||||||||||||
|
Customer
Relationships |
|
Developed Technologies
|
|
Trade Name
|
|
Total
|
||||||||
Gross carrying amount
|
$
|
52,400
|
|
|
$
|
61,130
|
|
|
$
|
3,000
|
|
|
$
|
116,530
|
|
Accumulated amortization
|
(3,867
|
)
|
|
(33,101
|
)
|
|
(750
|
)
|
|
(37,718
|
)
|
||||
Intangible assets, net
|
$
|
48,533
|
|
|
$
|
28,029
|
|
|
$
|
2,250
|
|
|
$
|
78,812
|
|
|
Amounts
|
||
2018
|
$
|
8,788
|
|
2019
|
8,788
|
|
|
2020
|
8,038
|
|
|
2021
|
8,038
|
|
|
2022
|
8,038
|
|
|
Thereafter
|
27,734
|
|
|
Total future intangibles amortization expense
|
$
|
69,424
|
|
|
Amounts
|
||
Balance at January 1, 2016
|
$
|
56,718
|
|
NaviNet acquisition (See Note 4)
|
74,076
|
|
|
HCS measurement period adjustment
|
275
|
|
|
Goodwill allocated to discontinued operations
|
(16,444
|
)
|
|
Net activity during the year
|
57,907
|
|
|
Balance at December 31, 2016
|
114,625
|
|
|
Activity during the year
|
—
|
|
|
Balance at December 31, 2017
|
$
|
114,625
|
|
|
Trailing Twelve Months Ended September 30, 2017
|
|
Trailing Twelve Months Ended September 30, 2016
|
||||
Sales
|
$
|
7,103
|
|
|
$
|
5,189
|
|
Gross loss
|
(7,167
|
)
|
|
(5,752
|
)
|
||
Loss from operations
|
(48,989
|
)
|
|
(42,215
|
)
|
||
Net loss
|
(57,958
|
)
|
|
(36,435
|
)
|
||
Net loss attributable to NantOmics
|
(54,784
|
)
|
|
(34,236
|
)
|
|
Related party
|
|
Others
|
|
Total
|
||||||
Balance as of December 31, 2017
|
|
|
|
|
|
||||||
Gross proceeds
|
$
|
10,000
|
|
|
$
|
97,000
|
|
|
$
|
107,000
|
|
Unamortized debt discounts and deferred financing offering costs
|
(2,053
|
)
|
|
(22,155
|
)
|
|
(24,208
|
)
|
|||
Net carrying amount
|
$
|
7,947
|
|
|
$
|
74,845
|
|
|
$
|
82,792
|
|
Balance as of December 31, 2016
|
|
|
|
|
|
||||||
Gross proceeds
|
$
|
10,000
|
|
|
$
|
97,000
|
|
|
$
|
107,000
|
|
Unamortized debt discounts and deferred financing offering costs
|
(2,436
|
)
|
|
(26,190
|
)
|
|
(28,626
|
)
|
|||
Net carrying amount
|
$
|
7,564
|
|
|
$
|
70,810
|
|
|
$
|
78,374
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
Related party
|
|
Others
|
|
Total
|
|
Related party
|
|
Others
|
|
Total
|
||||||||||||
Coupon interest expense
|
$
|
550
|
|
|
$
|
5,335
|
|
|
$
|
5,885
|
|
|
$
|
15
|
|
|
$
|
139
|
|
|
$
|
154
|
|
Amortization of debt discounts
|
373
|
|
|
3,536
|
|
|
3,909
|
|
|
10
|
|
|
86
|
|
|
96
|
|
||||||
Amortization of deferred financing offering costs
|
10
|
|
|
499
|
|
|
509
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||||
Total convertible notes interest expense
|
$
|
933
|
|
|
$
|
9,370
|
|
|
$
|
10,303
|
|
|
$
|
25
|
|
|
$
|
237
|
|
|
$
|
262
|
|
|
December 31, 2017
|
||||||||||||||
|
Total
fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets
- Cash equivalents
|
$
|
57,683
|
|
|
$
|
57,683
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assets
- Held-to-maturity securities
|
361
|
|
|
—
|
|
|
361
|
|
|
—
|
|
||||
Liabilities
- Interest make-whole derivative
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
December 31, 2016
|
||||||||||||||
|
Total
fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets
- Cash equivalents
|
$
|
149,067
|
|
|
$
|
149,067
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assets
- Held-to-maturity securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Liabilities
- Interest make-whole derivative
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
December 31, 2017
|
||||||
|
Cost
|
|
Fair Value
|
||||
Held-to-maturity:
|
|
|
|
||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
Due in one to three years
|
361
|
|
|
361
|
|
||
Total
|
$
|
361
|
|
|
$
|
361
|
|
|
December 31, 2016
|
|
Additions
|
|
Change in fair value
|
|
December 31, 2017
|
||||||||
Interest make-whole derivative liability:
|
|
|
|
|
|
|
|
||||||||
Related party
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
Others
|
246
|
|
|
—
|
|
|
(239
|
)
|
|
7
|
|
||||
|
$
|
271
|
|
|
$
|
—
|
|
|
$
|
(264
|
)
|
|
$
|
7
|
|
|
December 31, 2015
|
|
Additions
|
|
Change in fair value
|
|
December 31, 2016
|
||||||||
Interest make-whole derivative liability:
|
|
|
|
|
|
|
|
||||||||
Related party
|
$
|
—
|
|
|
$
|
148
|
|
|
$
|
(123
|
)
|
|
$
|
25
|
|
Others
|
—
|
|
|
1,351
|
|
|
(1,105
|
)
|
|
246
|
|
||||
|
$
|
—
|
|
|
$
|
1,499
|
|
|
$
|
(1,228
|
)
|
|
$
|
271
|
|
|
Fair value
|
|
Carrying value
|
|
Face value
|
||||||
5.5% convertible senior notes due December 15, 2021:
|
|
|
|
|
|
||||||
Balance as of December 31, 2017
|
|
|
|
|
|
||||||
Related party
|
$
|
7,327
|
|
|
$
|
7,947
|
|
|
$
|
10,000
|
|
Others
|
71,076
|
|
|
74,845
|
|
|
97,000
|
|
|||
|
$
|
78,403
|
|
|
$
|
82,792
|
|
|
$
|
107,000
|
|
Balance as of December 31, 2016
|
|
|
|
|
|
||||||
Related party
|
$
|
11,081
|
|
|
$
|
7,564
|
|
|
$
|
10,000
|
|
Others
|
107,491
|
|
|
70,810
|
|
|
97,000
|
|
|||
|
$
|
118,572
|
|
|
$
|
78,374
|
|
|
$
|
107,000
|
|
|
Amounts
|
||
2018
|
$
|
1,451
|
|
2019
|
326
|
|
|
2020
|
272
|
|
|
2021
|
192
|
|
|
2022
|
—
|
|
|
Total minimum rental commitments
|
$
|
2,241
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(498
|
)
|
|
$
|
228
|
|
|
$
|
338
|
|
State
|
17
|
|
|
28
|
|
|
52
|
|
|||
Foreign
|
100
|
|
|
164
|
|
|
1
|
|
|||
Total current provision
|
(381
|
)
|
|
420
|
|
|
391
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(3,001
|
)
|
|
(12,613
|
)
|
|
—
|
|
|||
State
|
1,179
|
|
|
(2,807
|
)
|
|
—
|
|
|||
Entity status change
|
—
|
|
|
(8,719
|
)
|
|
—
|
|
|||
Foreign
|
—
|
|
|
(78
|
)
|
|
—
|
|
|||
Total deferred benefit
|
(1,822
|
)
|
|
(24,217
|
)
|
|
—
|
|
|||
Provision for (benefit from) income taxes, net
|
$
|
(2,203
|
)
|
|
$
|
(23,797
|
)
|
|
$
|
391
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
United States federal tax at statutory rate
|
34.00
|
%
|
|
34.00
|
%
|
|
34.00
|
%
|
Items affecting federal income tax rate:
|
|
|
|
|
|
|||
State tax rate, net of federal benefit
|
3.53
|
%
|
|
4.04
|
%
|
|
0.11
|
%
|
Pass - through losses
|
—
|
%
|
|
(8.87
|
)%
|
|
(32.18
|
)%
|
Valuation allowance
|
1.41
|
%
|
|
(24.84
|
)%
|
|
(0.70
|
)%
|
LLC conversion to C corporation
|
—
|
%
|
|
12.96
|
%
|
|
—
|
%
|
Stock compensation
|
(1.95
|
)%
|
|
(1.36
|
)%
|
|
—
|
%
|
"Tax Act" 2017 impact
|
(34.83
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other adjustments
|
(0.51
|
)%
|
|
(1.44
|
)%
|
|
(2.10
|
)%
|
Effective income tax rate
|
1.65
|
%
|
|
14.49
|
%
|
|
(0.87
|
)%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred income tax assets:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
1,520
|
|
|
$
|
3,222
|
|
Inventory impairment
|
466
|
|
|
431
|
|
||
Deferred revenue
|
3,458
|
|
|
5,562
|
|
||
Allowance for doubtful accounts
|
178
|
|
|
31
|
|
||
Property, plant and equipment, net
|
1,098
|
|
|
3,279
|
|
||
Intangibles
|
4,865
|
|
|
2,918
|
|
||
Investments
|
22,404
|
|
|
15,653
|
|
||
Stock compensation
|
3,487
|
|
|
8,976
|
|
||
Other
|
32
|
|
|
1,144
|
|
||
Net operating loss carryforwards
|
93,689
|
|
|
93,974
|
|
||
Less: Valuation allowance
|
(97,324
|
)
|
|
(88,291
|
)
|
||
Total deferred income tax assets
|
33,873
|
|
|
46,899
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Accounts receivable, net
|
—
|
|
|
(250
|
)
|
||
State taxes
|
(3,397
|
)
|
|
(2,906
|
)
|
||
Intangible assets, net
|
(28,768
|
)
|
|
(32,155
|
)
|
||
Convertible notes
|
(5,437
|
)
|
|
(9,700
|
)
|
||
Deferred implementation cost
|
(1,960
|
)
|
|
(1,224
|
)
|
||
Other
|
(149
|
)
|
|
(580
|
)
|
||
Total deferred income tax liabilities
|
(39,711
|
)
|
|
(46,815
|
)
|
||
Deferred income taxes, net
|
$
|
(5,838
|
)
|
|
$
|
84
|
|
|
Balance at beginning of the year
|
|
Additions (Adjustments)
|
|
Deductions
|
|
Balance at the end of the year
|
||||||
Year to Date December 31, 2017
|
$
|
88,291
|
|
|
9,032
|
|
|
—
|
|
|
$
|
97,323
|
|
Year to Date December 31, 2016
|
$
|
30,849
|
|
|
66,161
|
|
|
(8,719
|
)
|
|
$
|
88,291
|
|
Year to Date December 31, 2015
|
$
|
28,995
|
|
|
1,854
|
|
|
—
|
|
|
$
|
30,849
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Balance as of January 1
|
$
|
977
|
|
|
$
|
879
|
|
Increases/(decreases) related to tax positions taken during the current year
|
(977
|
)
|
|
98
|
|
||
Balance as of December 31
|
$
|
—
|
|
|
$
|
977
|
|
|
Pre Conversion
(Units)
|
|
Former Series A Unit Holders
|
420,255,676
|
|
Former Series B Unit Holders
|
19,109,603
|
|
Former Series C Unit Holders
|
3,470,254
|
|
Former Series D Unit Holders
|
3,572,066
|
|
Former Series E Unit Holders
|
35,720,664
|
|
Former Series G Unit Holders
|
59,099,908
|
|
Former Series H Unit Holders
|
15,513,726
|
|
Total Member Units
|
556,741,897
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Series C / Restricted Stock:
|
|
|
|
|
|
||||||
Research and development
|
$
|
111
|
|
|
$
|
(238
|
)
|
|
$
|
1,429
|
|
Phantom units:
|
|
|
|
|
|
||||||
Cost of revenue
|
186
|
|
|
5,011
|
|
|
—
|
|
|||
Selling, general and administrative
|
(341
|
)
|
|
26,290
|
|
|
—
|
|
|||
Research and development
|
144
|
|
|
12,931
|
|
|
—
|
|
|||
Discontinued operations
|
(3,591
|
)
|
|
9,904
|
|
|
—
|
|
|||
Total phantom units stock-based compensation expense
|
(3,602
|
)
|
|
54,136
|
|
|
—
|
|
|||
Stock options:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
(49
|
)
|
|
54
|
|
|
—
|
|
|||
Restricted Stock Units:
|
|
|
|
|
|
||||||
Cost of revenue
|
26
|
|
|
—
|
|
|
—
|
|
|||
Selling, general and administrative
|
5,223
|
|
|
—
|
|
|
—
|
|
|||
Research and development
|
2,802
|
|
|
—
|
|
|
—
|
|
|||
Total restricted stock units stock-based compensation expense
|
8,051
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Total stock-based compensation expense
|
4,511
|
|
|
53,952
|
|
|
1,429
|
|
|||
Amount capitalized to internal-use software and deferred implementation costs
|
784
|
|
|
2,433
|
|
|
—
|
|
|||
Total stock-based compensation cost
|
$
|
5,295
|
|
|
$
|
56,385
|
|
|
$
|
1,429
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date Value per Phantom Unit
|
|||
Unvested phantom units outstanding - December 31, 2015
|
3,722,914
|
|
|
$
|
15.78
|
|
Granted
|
3,024,430
|
|
|
14.07
|
|
|
Vested
|
(1,638,617
|
)
|
|
15.02
|
|
|
Forfeited
|
(786,646
|
)
|
|
15.38
|
|
|
Unvested phantom units outstanding - December 31, 2016
|
4,322,081
|
|
|
14.95
|
|
|
Granted
|
113,656
|
|
|
4.75
|
|
|
Vested
|
(1,440,822
|
)
|
|
14.14
|
|
|
Forfeited
|
(1,702,130
|
)
|
|
15.31
|
|
|
Unvested phantom units outstanding - December 31, 2017
|
1,292,785
|
|
|
$
|
15.01
|
|
|
Number of Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life (Years)
|
|
Intrinsic Value
|
|||||
Unvested stock options outstanding - December 31, 2016
|
500,000
|
|
|
$
|
14.00
|
|
|
9.9
|
|
$
|
—
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Vested and exercisable
|
(125,000
|
)
|
|
14.00
|
|
|
8.9
|
|
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Unvested stock options outstanding - December 31, 2017
|
375,000
|
|
|
$
|
14.00
|
|
|
8.9
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||
|
2017
|
|
2016
|
||
Risk-free interest rates
|
1.92
|
%
|
|
1.56
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
Expected life (in years)
|
2.4
|
|
|
3.4
|
|
Expected volatility
|
39
|
%
|
|
40
|
%
|
|
Number of Units
|
|
Weighted-Average Grant-Date
Fair Value
|
|||
Unvested restricted stock units outstanding - December 31, 2016
|
—
|
|
|
$
|
—
|
|
Granted
|
5,147,190
|
|
|
3.43
|
|
|
Vested
|
(1,975,448
|
)
|
|
3.43
|
|
|
Forfeited
|
(65,718
|
)
|
|
3.39
|
|
|
Unvested restricted stock units outstanding - December 31, 2017
|
3,106,024
|
|
|
$
|
3.43
|
|
|
Year ended December 31,
|
||||||||||||||||||
|
2017
|
2016
|
|
2015
|
|||||||||||||||
|
Common Stock
|
|
Common Stock
|
|
Redeemable Common Stock
|
|
Common Stock
|
|
Redeemable Common Stock
|
||||||||||
Income (loss) per share numerator:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss from continuing operations
|
$
|
(131,399
|
)
|
|
$
|
(140,521
|
)
|
|
$
|
—
|
|
|
$
|
(45,690
|
)
|
|
$
|
—
|
|
Net loss from discontinued operations
|
(43,812
|
)
|
|
(43,581
|
)
|
|
—
|
|
|
(26,321
|
)
|
|
—
|
|
|||||
Total net loss
|
(175,211
|
)
|
|
(184,102
|
)
|
|
—
|
|
|
(72,011
|
)
|
|
—
|
|
|||||
Accretion to redemption value of series F/redeemable common stock
|
—
|
|
|
(4,958
|
)
|
|
4,958
|
|
|
(16,042
|
)
|
|
16,042
|
|
|||||
Net income (loss) for basic and diluted net income (loss) per share
|
$
|
(175,211
|
)
|
|
$
|
(189,060
|
)
|
|
$
|
4,958
|
|
|
$
|
(88,053
|
)
|
|
$
|
16,042
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) per share denominator:
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average shares for basic net loss per share
|
116,737,860
|
|
|
111,600,650
|
|
|
5,005,855
|
|
|
88,970,842
|
|
|
10,714,285
|
|
|||||
Effect of dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Weighted-average shares for dilutive net income (loss) per share
|
116,737,860
|
|
|
111,600,650
|
|
|
5,005,855
|
|
|
88,970,842
|
|
|
10,714,285
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted net loss per share from continuing operations
|
$
|
(1.12
|
)
|
|
$
|
(1.30
|
)
|
|
N/A
|
|
|
$
|
(0.69
|
)
|
|
N/A
|
|
||
Basic and diluted net loss per share from discontinued operations
|
$
|
(0.37
|
)
|
|
$
|
(0.39
|
)
|
|
N/A
|
|
|
$
|
(0.30
|
)
|
|
N/A
|
|
||
Basic and diluted net income (loss) per share
|
$
|
(1.49
|
)
|
|
$
|
(1.69
|
)
|
|
$
|
0.99
|
|
|
$
|
(0.99
|
)
|
|
$
|
1.50
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Unvested restricted stock
|
3,490
|
|
|
6,976
|
|
|
10,462
|
|
Unvested phantom units
|
1,292,785
|
|
|
4,322,081
|
|
|
3,722,914
|
|
Unexercised stock options
|
500,000
|
|
|
500,000
|
|
|
—
|
|
Unvested restricted stock units
|
3,106,024
|
|
|
—
|
|
|
—
|
|
Convertible notes
|
8,815,655
|
|
|
8,815,655
|
|
|
—
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net revenue
|
$
|
19,104
|
|
|
$
|
23,514
|
|
|
$
|
21,760
|
|
|
$
|
22,298
|
|
Cost of revenue
|
11,518
|
|
|
9,652
|
|
|
11,472
|
|
|
8,880
|
|
||||
Gross profit
|
7,586
|
|
|
13,862
|
|
|
10,288
|
|
|
13,418
|
|
||||
Operating expenses
|
27,415
|
|
|
28,655
|
|
|
26,324
|
|
|
30,660
|
|
||||
Loss from operations
|
(19,829
|
)
|
|
(14,793
|
)
|
|
(16,036
|
)
|
|
(17,242
|
)
|
||||
Net loss from continuing operations
|
(28,126
|
)
|
|
(57,696
|
)
|
|
(23,015
|
)
|
|
(22,562
|
)
|
||||
Loss from discontinued operations, net of tax
|
(12,989
|
)
|
|
(12,368
|
)
|
|
(19,383
|
)
|
|
928
|
|
||||
Net loss
|
(41,115
|
)
|
|
(70,064
|
)
|
|
(42,398
|
)
|
|
(21,634
|
)
|
||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Continued operations - common stock
|
$
|
(0.23
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.21
|
)
|
Discontinued operations - common stock
|
$
|
(0.11
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
0.01
|
|
Total net (loss) per common stock
|
$
|
(0.34
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.20
|
)
|
Basic and diluted net income per redeemable common stock
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net revenue
|
$
|
17,783
|
|
|
$
|
24,113
|
|
|
$
|
20,662
|
|
|
$
|
17,846
|
|
Cost of revenue
|
8,517
|
|
|
14,661
|
|
|
10,036
|
|
|
10,893
|
|
||||
Gross profit
|
9,266
|
|
|
9,452
|
|
|
10,626
|
|
|
6,953
|
|
||||
Operating expenses
|
33,061
|
|
|
62,431
|
|
|
33,048
|
|
|
28,245
|
|
||||
Loss from operations
|
(23,795
|
)
|
|
(52,979
|
)
|
|
(22,422
|
)
|
|
(21,292
|
)
|
||||
Net loss from continuing operations
|
(24,061
|
)
|
|
(41,652
|
)
|
|
(26,392
|
)
|
|
(48,416
|
)
|
||||
Loss from discontinued operations, net of tax
|
(9,084
|
)
|
|
(12,480
|
)
|
|
(10,482
|
)
|
|
(11,535
|
)
|
||||
Net loss
|
(33,145
|
)
|
|
(54,132
|
)
|
|
(36,874
|
)
|
|
(59,951
|
)
|
||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Continued operations - common stock
|
$
|
(0.27
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.40
|
)
|
Discontinued operations - common stock
|
$
|
(0.09
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
Total net (loss) per common stock
|
$
|
(0.36
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.49
|
)
|
Basic and diluted net income per redeemable common stock
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
N/A
|
|
|
N/A
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,925
|
|
|
$
|
5,209
|
|
Marketable securities - trading
|
—
|
|
|
83
|
|
||
Accounts receivable, net of allowance of $167 and $353 at December 31, 2017 and 2016, respectively
|
280
|
|
|
169
|
|
||
Related party accounts receivable, net of allowance of $0 at December 31, 2017 and 2016
|
710
|
|
|
3,650
|
|
||
Related party notes receivable
|
158,320
|
|
|
150,074
|
|
||
Prepaid expenses and other current assets
|
1,697
|
|
|
2,496
|
|
||
Total current assets
|
166,932
|
|
|
161,681
|
|
||
Property and equipment, net
|
34,946
|
|
|
29,437
|
|
||
Marketable securities - available for sale
|
8,843
|
|
|
28,819
|
|
||
Cost method investments
|
5,000
|
|
|
5,000
|
|
||
Goodwill
|
8,928
|
|
|
7,623
|
|
||
Intangible assets, net
|
10,473
|
|
|
7,023
|
|
||
Other assets
|
225
|
|
|
277
|
|
||
Total assets
|
$
|
235,347
|
|
|
$
|
239,860
|
|
Liabilities and Members' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
12,036
|
|
|
$
|
1,623
|
|
Accrued expenses
|
3,203
|
|
|
2,950
|
|
||
Related party payables
|
7,783
|
|
|
3,923
|
|
||
Related party promissory notes payable
|
63,170
|
|
|
20,763
|
|
||
Deferred revenue, current
|
5,000
|
|
|
—
|
|
||
Other current liabilities
|
706
|
|
|
1,123
|
|
||
Total current liabilities
|
91,898
|
|
|
30,382
|
|
||
Deferred revenue, non-current
|
2,474
|
|
|
7,694
|
|
||
Other non-current liabilities
|
3,499
|
|
|
1,628
|
|
||
Total liabilities
|
97,871
|
|
|
39,704
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
|
|
|
|
||||
Members' equity
|
|
|
|
||||
Series A-1 units: 1,008,105 and 1,007,805 units issued and outstanding at December 31, 2017 and 2016, respectively
|
27,585
|
|
|
27,713
|
|
||
Series A-2 units: 175,813 units issued and outstanding at December 31, 2017 and 2016
|
258,524
|
|
|
258,524
|
|
||
Series B units: 150,000 units authorized, 8,457 units issued and outstanding at December 31, 2017 and 2016 (excluding liability-classified units)
|
2,129
|
|
|
1,574
|
|
||
Accumulated deficit
|
(147,420
|
)
|
|
(87,113
|
)
|
||
Total NantOmics members' equity
|
140,818
|
|
|
200,698
|
|
||
Non-controlling interests
|
(3,342
|
)
|
|
(542
|
)
|
||
Total members' equity
|
137,476
|
|
|
200,156
|
|
||
Total liabilities and members' equity
|
$
|
235,347
|
|
|
$
|
239,860
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Related party revenue
|
|
$
|
5,126
|
|
|
$
|
5,418
|
|
|
$
|
3,753
|
|
Third party revenue
|
|
953
|
|
|
936
|
|
|
1,217
|
|
|||
Net revenue
|
|
6,079
|
|
|
6,354
|
|
|
4,970
|
|
|||
Cost of Revenue:
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
14,274
|
|
|
12,517
|
|
|
5,011
|
|
|||
Amortization of acquisition-related assets
|
|
1,059
|
|
|
1,021
|
|
|
788
|
|
|||
Total cost of revenue
|
|
15,333
|
|
|
13,538
|
|
|
5,799
|
|
|||
Gross loss
|
|
(9,254
|
)
|
|
(7,184
|
)
|
|
(829
|
)
|
|||
Operating Expenses:
|
|
|
|
|
|
|
||||||
Selling, general and administrative (including related party shared service expenses of $2,230, $2,945, and $2,726 for the years ended December 31, 2017, 2016 and 2015, respectively)
|
|
12,969
|
|
|
11,152
|
|
|
11,633
|
|
|||
Research and development
|
|
26,952
|
|
|
18,772
|
|
|
13,696
|
|
|||
Impairment on intangible assets
|
|
—
|
|
|
2,129
|
|
|
—
|
|
|||
Total operating expenses
|
|
39,921
|
|
|
32,053
|
|
|
25,329
|
|
|||
Loss from operations
|
|
(49,175
|
)
|
|
(39,237
|
)
|
|
(26,158
|
)
|
|||
Impairments on equity investments
|
|
(19,976
|
)
|
|
(15,771
|
)
|
|
—
|
|
|||
Interest income (expense), net
|
|
6,364
|
|
|
7,686
|
|
|
(1,084
|
)
|
|||
Other income (expense), net
|
|
134
|
|
|
635
|
|
|
(1,208
|
)
|
|||
Loss before income taxes
|
|
(62,653
|
)
|
|
(46,687
|
)
|
|
(28,450
|
)
|
|||
Provision for income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss and comprehensive loss
|
|
(62,653
|
)
|
|
(46,687
|
)
|
|
(28,450
|
)
|
|||
Less: Net loss attributable to non-controlling interests
|
|
(2,346
|
)
|
|
(2,683
|
)
|
|
(1,843
|
)
|
|||
Net loss attributable to NantOmics
|
|
$
|
(60,307
|
)
|
|
$
|
(44,004
|
)
|
|
$
|
(26,607
|
)
|
|
Series A-1 Units
|
|
Series A-2 Units
|
|
Series B Units
|
|
Accumulated
|
|
NantOmics, LLC
|
|
Non-controlling
|
|
Total
|
|||||||||||||||||||||||
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Deficit
|
|
Equity
|
|
Interests
|
|
Equity
|
|||||||||||||||||
Balance at December 31, 2014
|
1,007,805
|
|
|
$
|
24,740
|
|
|
—
|
|
|
$
|
—
|
|
|
8,250
|
|
|
$
|
327
|
|
|
$
|
(16,457
|
)
|
|
$
|
8,610
|
|
|
$
|
3,254
|
|
|
$
|
11,864
|
|
Exercise of OncoPlex warrants
|
—
|
|
|
(1,097
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,097
|
)
|
|
1,097
|
|
|
—
|
|
|||||||
Transactions with non-controlling interests
|
—
|
|
|
3,444
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,444
|
|
|
(1,617
|
)
|
|
1,827
|
|
|||||||
Acquisition of TRM
|
—
|
|
|
—
|
|
|
611
|
|
|
774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
774
|
|
|
873
|
|
|
1,647
|
|
|||||||
Issuance of membership interests
|
—
|
|
|
—
|
|
|
175,202
|
|
|
257,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257,750
|
|
|
—
|
|
|
257,750
|
|
|||||||
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
541
|
|
|
—
|
|
|
541
|
|
|
377
|
|
|
918
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,607
|
)
|
|
(26,607
|
)
|
|
(1,843
|
)
|
|
(28,450
|
)
|
|||||||
Balance at December 31, 2015
|
1,007,805
|
|
|
27,087
|
|
|
175,813
|
|
|
258,524
|
|
|
8,457
|
|
|
868
|
|
|
(43,064
|
)
|
|
243,415
|
|
|
2,141
|
|
|
245,556
|
|
|||||||
Non-cash contributions by Parent
|
—
|
|
|
630
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
630
|
|
|
—
|
|
|
630
|
|
|||||||
Equity based compensation
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
661
|
|
|
—
|
|
|
657
|
|
|
—
|
|
|
657
|
|
|||||||
Early adoption of ASU No. 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,004
|
)
|
|
(44,004
|
)
|
|
(2,683
|
)
|
|
(46,687
|
)
|
|||||||
Balance at December 31, 2016
|
1,007,805
|
|
|
27,713
|
|
|
175,813
|
|
|
258,524
|
|
|
8,457
|
|
|
1,574
|
|
|
(87,113
|
)
|
|
200,698
|
|
|
(542
|
)
|
|
200,156
|
|
|||||||
Non-cash contributions by Parent
|
—
|
|
|
402
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
402
|
|
|
—
|
|
|
402
|
|
|||||||
Forgiveness of related party receivables
|
—
|
|
|
(452
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(452
|
)
|
|
—
|
|
|
(452
|
)
|
|||||||
Acquisition of Liquid Genomics
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
|||||||
Equity based compensation
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
555
|
|
|
—
|
|
|
522
|
|
|
—
|
|
|
522
|
|
|||||||
Issuance of membership interests
|
300
|
|
|
295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
295
|
|
|
(741
|
)
|
|
(446
|
)
|
|||||||
Contribution of non-controlling interests by
Parent
|
—
|
|
|
644
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
644
|
|
|
(644
|
)
|
|
—
|
|
|||||||
Forgiveness of TRM liabilities
|
—
|
|
|
(931
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(931
|
)
|
|
931
|
|
|
—
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60,307
|
)
|
|
(60,307
|
)
|
|
(2,346
|
)
|
|
(62,653
|
)
|
|||||||
Balance at December 31, 2017
|
1,008,105
|
|
|
$
|
27,585
|
|
|
175,813
|
|
|
$
|
258,524
|
|
|
8,457
|
|
|
$
|
2,129
|
|
|
$
|
(147,420
|
)
|
|
$
|
140,818
|
|
|
$
|
(3,342
|
)
|
|
$
|
137,476
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(62,653
|
)
|
|
$
|
(46,687
|
)
|
|
$
|
(28,450
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
9,545
|
|
|
6,919
|
|
|
3,164
|
|
|||
Amortization
|
2,473
|
|
|
2,436
|
|
|
2,203
|
|
|||
Equity-based compensation
|
2,199
|
|
|
1,308
|
|
|
1,293
|
|
|||
Impairments
|
19,976
|
|
|
17,900
|
|
|
—
|
|
|||
Net realized losses on sales of marketable securities
|
—
|
|
|
1,264
|
|
|
2,162
|
|
|||
Net unrealized changes in fair value of marketable securities - trading
|
—
|
|
|
(1,564
|
)
|
|
1,469
|
|
|||
Non-cash interest items, net
|
(8,264
|
)
|
|
(8,184
|
)
|
|
(252
|
)
|
|||
Non-cash contributions by Parent
|
402
|
|
|
630
|
|
|
—
|
|
|||
Other
|
64
|
|
|
293
|
|
|
(1
|
)
|
|||
Net changes in operating assets and liabilities, net of business combinations:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(12
|
)
|
|
(178
|
)
|
|
(76
|
)
|
|||
Related party accounts receivable, net
|
2,488
|
|
|
(539
|
)
|
|
(3,111
|
)
|
|||
Prepaid and other current assets
|
814
|
|
|
110
|
|
|
(2,459
|
)
|
|||
Other assets
|
23
|
|
|
(169
|
)
|
|
(9
|
)
|
|||
Accounts payable
|
1,806
|
|
|
(1,596
|
)
|
|
300
|
|
|||
Accrued expenses and other liabilities
|
(417
|
)
|
|
346
|
|
|
1,390
|
|
|||
Related party payables
|
2,430
|
|
|
(664
|
)
|
|
5,370
|
|
|||
Deferred revenue
|
(220
|
)
|
|
434
|
|
|
7,260
|
|
|||
Net cash used in operating activities
|
(29,346
|
)
|
|
(27,941
|
)
|
|
(9,747
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(5,865
|
)
|
|
(7,480
|
)
|
|
(28,012
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
(4,308
|
)
|
|
—
|
|
|
(29
|
)
|
|||
Purchases of cost method investments
|
—
|
|
|
(9,000
|
)
|
|
—
|
|
|||
Purchases of marketable securities
|
(6
|
)
|
|
(83
|
)
|
|
(201,330
|
)
|
|||
Proceeds from sales of marketable securities
|
89
|
|
|
81,159
|
|
|
191,002
|
|
|||
Investments in related party notes receivable
|
(1,175
|
)
|
|
(172,225
|
)
|
|
(10,000
|
)
|
|||
Purchase of non-controlling interests
|
(446
|
)
|
|
—
|
|
|
(17,125
|
)
|
|||
Net cash used in investing activities
|
(11,711
|
)
|
|
(107,629
|
)
|
|
(65,494
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Repayments of notes payable
|
(54
|
)
|
|
(45
|
)
|
|
(53
|
)
|
|||
Repayments of capital lease obligations
|
(330
|
)
|
|
(292
|
)
|
|
(302
|
)
|
|||
Proceeds from issuance of related party promissory notes payable
|
42,157
|
|
|
20,392
|
|
|
15,385
|
|
|||
Repayments of related party promissory notes
|
—
|
|
|
(1,236
|
)
|
|
—
|
|
|||
Proceeds from issuance of Series A-2 units, net of issuance costs
|
—
|
|
|
—
|
|
|
158,566
|
|
|||
Proceeds from issuance of non-controlling interests
|
—
|
|
|
—
|
|
|
18,952
|
|
|||
Release of restricted cash
|
—
|
|
|
138
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
41,773
|
|
|
18,957
|
|
|
192,548
|
|
|||
Net increase/(decrease) in cash and cash equivalents
|
716
|
|
|
(116,613
|
)
|
|
117,307
|
|
|||
Cash and cash equivalents, beginning of period
|
5,209
|
|
|
121,822
|
|
|
4,515
|
|
|||
Cash and cash equivalents, end of period
|
$
|
5,925
|
|
|
$
|
5,209
|
|
|
$
|
121,822
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Non-cash transactions:
|
|
|
|
|
|
||||||
Conversion of note receivable into NantHealth common stock
|
$
|
—
|
|
|
$
|
40,590
|
|
|
$
|
—
|
|
Settlement of notes payable with marketable securities
|
—
|
|
|
25,022
|
|
|
—
|
|
|||
Purchase of intangible assets in exchange for forgiveness of notes receivable
|
1,193
|
|
|
—
|
|
|
—
|
|
|||
Forgiveness of related party receivables
|
452
|
|
|
—
|
|
|
—
|
|
|||
Forgiveness of TRM liabilities
|
931
|
|
|
—
|
|
|
—
|
|
|||
Property acquired under capital leases
|
—
|
|
|
—
|
|
|
336
|
|
|||
Acquisition of property and equipment included in accounts payable and related party payables
|
8,802
|
|
|
130
|
|
|
2,496
|
|
|||
Issuance of Series A-2 units in exchange for marketable securities
|
—
|
|
|
—
|
|
|
99,184
|
|
|||
Contribution of non-controlling interests by parent
|
644
|
|
|
—
|
|
|
—
|
|
|||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
14
|
|
|
31
|
|
|
60
|
|
|||
Cash paid for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
1.
|
Description of Business and Basis of Presentation
|
•
|
Expression Pathology, Inc. doing business as OncoPlex Diagnostics
(“
OncoPlex
”) - formed under the laws of the State of Maryland on December 6, 2001, provides molecular diagnostics through a CAP-accredited, CLIA-certified oncology laboratory linking clinical proteomics and genomics to support personalized patient care.
|
•
|
Five3 Genomics, LLC (“Five3G”) -
formed under the laws of the State of Delaware on May 20, 2010, to commercialize certain patent rights which were licensed from The Regents of the University of California on December 20, 2010. Five3G provides data processing and analysis services for personalized cancer therapy, matching treatments to specific genetic aberrations discovered in the cancer cells of individual patients.
|
•
|
Liquid Genomics, Inc. ("Liquid Genomics") -
formed
under the laws of the State of Delaware on November 12, 2013, is a liquid biopsy company that uses proprietary technology to isolate and analyze both circulating tumor DNA (“ctDNA”) and circulating tumor RNA (“ctRNA”) from ambient temperature-shipped blood.
|
•
|
NantCare, LLC, formerly known as NantCRO (“NantCare”) -
formed under the laws of the State of Delaware on April 4, 2014, provides clinical research services to support the pharmaceutical, biotechnology, medical device and various other industries.
|
2.
|
Summary of Significant Accounting Policies
|
•
|
Genomic sequencing and bioinformatics services
- diagnostic services utilizing whole genome sequencing and RNA sequencing of a patient’s tumor, with the patient’s normal sample, to identify molecular alterations in the DNA and RNA of the patient’s tumor
.
|
•
|
Quantitative proteomics services
- proprietary clinical services that allow oncologists to determine the optimal treatment plan for oncology patients, based on a molecular analysis of both the mutant genes and dysfunctional proteins that drive the cellular biochemistry responsible for an individual’s cancer.
|
•
|
Research services
- contract research services for bio-pharmaceutical companies related to cancer drug development generally sold under fixed price contracts.
|
•
|
Other revenue
- includes translational research services, the commercial sale of gene mutation and protein expression panel testing kits and license revenues based on net sales of the licensees’ use of the Company’s patented process.
|
•
|
Level 1 - Quoted prices for identical assets or liabilities in active markets;
|
•
|
Level 2 - Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable; and
|
•
|
Level 3 - Unobservable inputs that reflect estimates and assumptions.
|
3.
|
Business Combinations
|
Cash and cash equivalents
|
$
|
152
|
|
Developed technology
|
4,579
|
|
|
Goodwill
|
1,305
|
|
|
Property and equipment, net
|
357
|
|
|
Other assets
|
166
|
|
|
Accounts payable
|
(234
|
)
|
|
Accrued expenses
|
(144
|
)
|
|
Capital lease obligations
|
(197
|
)
|
|
Other current liabilities
|
(24
|
)
|
|
Related party payables
|
(31
|
)
|
|
Related party promissory note payables
|
(250
|
)
|
|
Total assets acquired and liabilities assumed
|
$
|
5,679
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Net revenue
|
$
|
6,130
|
|
|
$
|
6,849
|
|
Net loss attributable to NantOmics
|
(61,806
|
)
|
|
(47,522
|
)
|
|
Amounts
|
||
Cash
|
$
|
250
|
|
Value assigned to 611 Series A-2 units
|
774
|
|
|
Non-controlling interest of 46.0%
|
873
|
|
|
Total consideration
|
$
|
1,897
|
|
|
Amounts
|
||
Cash and cash equivalents
|
$
|
221
|
|
Accounts receivable
|
106
|
|
|
Other assets
|
15
|
|
|
Current liabilities
|
(1,040
|
)
|
|
Clinical study site relationships
|
1,400
|
|
|
Goodwill
|
1,195
|
|
|
Total fair value of net assets acquired
|
$
|
1,897
|
|
4.
|
Property and Equipment, net
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Equipment and other
|
$
|
47,204
|
|
|
$
|
35,073
|
|
Equipment acquired under capital leases
|
1,856
|
|
|
1,639
|
|
||
Computer equipment and software
|
6,610
|
|
|
3,904
|
|
||
|
55,670
|
|
|
40,616
|
|
||
Less: accumulated depreciation
|
(20,724
|
)
|
|
(11,179
|
)
|
||
Property and equipment, net
|
$
|
34,946
|
|
|
$
|
29,437
|
|
5.
|
Intangible Assets and Goodwill
|
|
December 31, 2017
|
||||||
|
Developed Technologies
|
|
Total
|
||||
Gross carrying amount
|
$
|
20,523
|
|
|
$
|
20,523
|
|
Accumulated amortization
|
(10,050
|
)
|
|
(10,050
|
)
|
||
Intangible assets, net
|
$
|
10,473
|
|
|
$
|
10,473
|
|
|
|
|
|
||||
|
December 31, 2016
|
||||||
|
Developed Technologies
|
|
Total
|
||||
Gross carrying amount
|
$
|
14,600
|
|
|
$
|
14,600
|
|
Accumulated amortization
|
(7,577
|
)
|
|
(7,577
|
)
|
||
Intangible assets, net
|
$
|
7,023
|
|
|
$
|
7,023
|
|
For the year ended December 31,
|
Amounts
|
||
2018
|
$
|
2,174
|
|
2019
|
1,951
|
|
|
2020
|
1,951
|
|
|
2021
|
1,008
|
|
|
2022
|
536
|
|
|
Thereafter
|
2,853
|
|
|
|
$
|
10,473
|
|
|
Amounts
|
||
Balance at December 31, 2015
|
$
|
8,818
|
|
Activity during the year:
|
|
||
Impairment (see Note 3)
|
(1,195
|
)
|
|
Balance at December 31, 2016
|
7,623
|
|
|
Activity during the year:
|
|
||
Acquisitions (see Note 3)
|
1,305
|
|
|
Balance at December 31, 2017
|
$
|
8,928
|
|
6.
|
Cost Method Investments
|
7.
|
Fair Value Measurements
|
|
December 31, 2017
|
||||||||||||||
|
Total fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
5,039
|
|
|
$
|
5,039
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities - available for sale
|
8,843
|
|
|
8,843
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
13,882
|
|
|
$
|
13,882
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Other non-current liabilities (see Note 11)
|
$
|
2,739
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,739
|
|
Total liabilities
|
$
|
2,739
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,739
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2016
|
||||||||||||||
|
Total fair value
|
|
Quoted price in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
5,012
|
|
|
$
|
5,012
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities - trading
|
83
|
|
|
83
|
|
|
—
|
|
|
—
|
|
||||
Marketable securities - available for sale
|
28,819
|
|
|
28,819
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
33,914
|
|
|
$
|
33,914
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Other non-current liabilities (see Note 11)
|
$
|
1,062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,062
|
|
Total liabilities
|
$
|
1,062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,062
|
|
8.
|
Commitments and Contingencies
|
|
Capital Leases
|
|
Operating Leases
|
||||
For the year end December 31,
|
|
|
|
||||
2018
|
$
|
217
|
|
|
$
|
1,447
|
|
2019
|
65
|
|
|
1,486
|
|
||
2020
|
—
|
|
|
1,250
|
|
||
2021
|
—
|
|
|
891
|
|
||
2022
|
—
|
|
|
991
|
|
||
Thereafter
|
—
|
|
|
3,509
|
|
||
Total minimum lease payments
|
282
|
|
|
$
|
9,574
|
|
|
Less amount representing interest
|
(36
|
)
|
|
|
|||
Capital lease obligation, net of interest
|
246
|
|
|
|
|||
Current portion of capital lease obligation
|
(189
|
)
|
|
|
|||
Non-current portion of capital lease obligation
|
$
|
57
|
|
|
|
9.
|
Income Tax
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total current provision
|
—
|
|
|
—
|
|
|
—
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(4,359
|
)
|
|
3,429
|
|
|
3,431
|
|
|||
State
|
1,758
|
|
|
594
|
|
|
324
|
|
|||
Less: valuation allowance
|
2,601
|
|
|
(4,023
|
)
|
|
(3,755
|
)
|
|||
Total deferred benefit
|
—
|
|
|
—
|
|
|
—
|
|
|||
Provision for income taxes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
20,235
|
|
|
$
|
19,269
|
|
Charitable contributions
|
13
|
|
|
—
|
|
||
Equity Compensation
|
6
|
|
|
9
|
|
||
Accrual to cash differences
|
478
|
|
|
472
|
|
||
Depreciation and amortization
|
553
|
|
|
721
|
|
||
Compensation accrual
|
22
|
|
|
—
|
|
||
Bad debt
|
47
|
|
|
—
|
|
||
|
21,354
|
|
|
20,471
|
|
||
Less: Valuation allowance
|
(21,305
|
)
|
|
(20,471
|
)
|
||
Net deferred tax assets
|
$
|
49
|
|
|
$
|
—
|
|
Deferred tax liabilities
|
|
|
|
||||
Depreciation and amortization
|
(29
|
)
|
|
—
|
|
||
Capital lease
|
(20
|
)
|
|
—
|
|
||
Net deferred tax liabilities
|
(49
|
)
|
|
—
|
|
||
|
|
|
|
||||
Deferred Tax Assets/(Liabilities)
|
$
|
—
|
|
|
$
|
—
|
|
10.
|
Members' Equity
|
11.
|
Equity Based Compensation
|
|
December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Risk-free interest rate
|
1.75-1.93%
|
|
|
0.85-1.35%
|
|
|
1.32
|
%
|
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Expected volatility
|
45
|
%
|
|
50
|
%
|
|
70
|
%
|
Expected life in years
|
1-2.6
|
|
|
1-2.6
|
|
|
3.5
|
|
|
Number of
|
|
Weighted Average
|
|||
Liability Classified Awards
|
Series B
|
|
Grant Date
|
|||
|
Units Outstanding
|
|
Fair Value
|
|||
Nonvested outstanding, beginning of year
|
1,433
|
|
|
$
|
0.45
|
|
Granted
|
—
|
|
|
$
|
0.45
|
|
Vested
|
(707
|
)
|
|
$
|
0.45
|
|
Forfeited
|
(27
|
)
|
|
$
|
0.45
|
|
Nonvested outstanding, end of year
|
699
|
|
|
$
|
0.45
|
|
|
Number of
|
|
Weighted Average
|
|||
Equity Classified Awards
|
Series B
|
|
Grant Date
|
|||
|
Units Outstanding
|
|
Fair Value
|
|||
Nonvested outstanding, beginning of year
|
8,016
|
|
|
$
|
0.34
|
|
Vested
|
(5,504
|
)
|
|
$
|
0.34
|
|
Nonvested outstanding, end of year
|
2,512
|
|
|
$
|
0.34
|
|
12.
|
Employee Retirement Plan
|
13.
|
Related Party Transactions
|
14.
|
Subsequent Events
|
Name
|
|
Age
|
|
Position
|
|
Director Since
|
|
Patrick Soon-Shiong, M.D., FRCS (C) FACS
|
|
65
|
|
|
Chairman and Chief Executive Officer and Director
|
|
2010
|
Michael S. Sitrick
(1)(2)
|
|
70
|
|
|
Director
|
|
2016
|
Kirk K. Calhoun
(1)
|
|
73
|
|
|
Director
|
|
2016
|
Mark Burnett
|
|
57
|
|
|
Director
|
|
2016
|
Michael Blaszyk
(1)(2)
|
|
65
|
|
|
Director
|
|
2016
|
Name
|
|
Age
|
|
Position
|
Patrick Soon-Shiong, M.D., FRCS (C) FACS
|
|
65
|
|
Chairman and Chief Executive Officer and Director
|
Paul Holt
|
|
51
|
|
Chief Financial Officer
|
Ron Louks
|
|
53
|
|
Chief Operating Officer
|
•
|
selecting and hiring the independent registered public accounting firm to audit our financial statements;
|
•
|
helping to ensure the independence and performance of the independent registered public accounting firm;
|
•
|
approving audit and non-audit services and fees;
|
•
|
reviewing financial statements and discussing with management and the independent registered public accounting firm our annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews, and the reports and certifications regarding internal controls over financial reporting and disclosure controls;
|
•
|
preparing the audit committee report that the SEC requires to be included in our annual proxy statement;
|
•
|
reviewing reports and communications from the independent registered public accounting firm;
|
•
|
reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures;
|
•
|
reviewing our policies on risk assessment and risk management;
|
•
|
reviewing related party transactions; and
|
•
|
establishing and overseeing procedures for the receipt, retention and treatment of accounting related complaints and the confidential submission by our employees of concerns regarding questionable accounting or auditing matters.
|
•
|
overseeing our overall compensation philosophy and compensation policies, plans and benefit programs;
|
•
|
reviewing and approving or recommending to the board for approval compensation for our executive officers and directors;
|
•
|
preparing the compensation committee report that the SEC will require to be included in our annual proxy statement; and
|
•
|
administering our equity compensation plans.
|
(Amount in Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Name and Principal Position
(1)
|
|
Year
|
|
Salary ($)
(2)
|
|
Bonus ($)
(2)
|
|
|
Stock Awards ($)
(3)
|
|
All Other ($)
|
|
|
Total ($)
|
|||||
Patrick Soon-Shiong, M.D. FRCS (C),
FACS
(4)
|
|
2017
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Chairman and Chief Executive
Officer
|
|
2016
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Paul Holt
|
|
2017
|
|
360,500
|
|
|
153,213
|
|
(10)
|
|
—
|
|
|
—
|
|
|
|
513,713
|
|
Chief Financial Officer
|
|
2016
|
|
360,433
|
|
|
98,056
|
|
(5)
|
|
445,136
|
|
|
11,387
|
|
(6)
|
|
915,012
|
|
Ron Louks
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Chief Operating Officer
|
|
2017
|
|
420,577
|
|
|
648,250
|
|
(8)
|
|
2,238,058
|
|
|
38,113
|
|
(9)
|
|
3,344,998
|
|
(3)
|
The amounts shown are total vested and unvested stock awards granted during the respective years at grant date fair value in accordance with Accounting Standards Codification 718, Compensation: Stock Compensation (“ASC 718”). The assumptions used to calculate the grant date fair value of option awards are set forth under Note 2 of the Notes to the Consolidated and Combined Financial Statements.
|
(6)
|
The amounts consist of $7,950 of matching contributions made by us pursuant to our 401(k) plan and $3,437 of premiums paid by the Company for life insurance and disability insurance.
|
(8)
|
The bonus amount of Mr. Louks consists of $475,000 sign-on bonus paid in 2017, and $173,250 subject to approval.
|
(Amount in Dollars)
|
|
|
|
Stock Awards
|
||||||
Name
|
|
Date
|
|
Number of shares or units of stock that have not vested (#)
|
|
|
Market value of shares of units of stock that have not vested ($)
(1)
|
|||
Patrick Soon-Shiong, M.D. FRCS (C), FACS
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Paul Holt
|
|
4/13/2015
|
|
|
42,622
|
|
(2)(3)
|
|
129,997
|
|
|
|
5/2/2016
|
|
|
11,924
|
|
(2)(4)
|
|
36,368
|
|
Ron Louks
|
|
10/3/2017
|
|
|
100,000
|
|
(5)(6)
|
|
305,000
|
|
|
|
11/6/2017
|
|
|
375,588
|
|
(5)(7)
|
|
1,145,543
|
|
(Amount in Dollars)
|
|
|
|
|
|
|
|||
Name
|
|
Fees Earned or Paid in Cash ($)
|
|
Stock Awards ($)
(1) (2)
|
|
Total ($)
|
|||
Michael S. Sitrick
|
|
55,000
|
|
|
172,443
|
|
|
227,443
|
|
Kirk K. Calhoun
|
|
50,000
|
|
|
172,443
|
|
|
222,443
|
|
Mark Burnett
|
|
50,000
|
|
|
—
|
|
|
50,000
|
|
Edward Miller
(3)
|
|
12,500
|
|
|
—
|
|
|
12,500
|
|
Michael Blaszyk
|
|
60,000
|
|
|
172,443
|
|
|
232,443
|
|
(1)
|
The amounts shown are total vested and unvested stock awards granted during the respective years at grant date fair value in accordance with Accounting Standards Codification 718, Compensation: Stock Compensation (“ASC 718”). The assumptions used to calculate the grant date fair value of option awards are set forth under Note 2 of the Notes to the Consolidated and Combined Financial Statements.
|
(2)
|
As of December
31, 2017, our non-employee directors held vested outstanding equity awards as follows: Mr. Sitrick (25,434 restricted
stock units and no options); Mr. Calhoun (25,434 restricted
stock units and no options); Mr. Burnett (no restricted stock units and vested options to purchase 125,000 shares of the Company’s common stock); Dr. Miller (none); and Mr. Blaszyk (25,434 restricted stock units and no options).
|
(3)
|
Dr. Miller requested that the board not re-nominate him as a director in connection with our 2017 annual
|
Plan Category
|
|
(a) Number of Securities to be Issued Upon Vesting of Equity Awards, Exercise of Outstanding Options, Warrants and Rights
|
|
(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)
|
||||
Equity compensation plans approved by stockholders
|
|
|
|
|
|
|
||||
2016 Equity Incentive Plan
|
|
3,606,024
|
|
|
$
|
14.00
|
|
|
352,810
|
|
Phantom Units Plan
(1)
|
|
1,292,785
|
|
|
—
|
|
|
—
|
|
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
4,898,809
|
|
|
|
|
352,810
|
|
•
|
each person, or group of affiliated persons, who we know to beneficially own more than 5% of our common stock;
|
•
|
each of our named executive officers;
|
•
|
each of our directors; and
|
•
|
all of our executive officers and directors as a group.
|
Name of Beneficial Owner
|
|
Number of Shares of Common Stock Beneficially Owned
|
|
Percentage of Common Stock Beneficially Owned
|
||
5% Stockholders:
|
|
|
|
|
||
NantWorks, LLC
(1)
|
|
70,113,411
|
|
|
64.6
|
%
|
NHealth Holdings, Inc. and affiliates
(2)
|
|
17,857,144
|
|
|
16.4
|
%
|
Directors and Executive Officers:
|
|
|
|
|
||
Patrick Soon-Shiong, M.D., FRCS (C), FACS
(1)
|
|
70,113,411
|
|
|
64.6
|
%
|
Paul Holt
(3)
|
|
52,848
|
|
|
*
|
|
Ron Louks
(4)
|
|
99,690
|
|
|
*
|
|
Michael S. Sitrick
(5)
|
|
29,763
|
|
|
*
|
|
Kirk K. Calhoun
(6)
|
|
29,763
|
|
|
*
|
|
Mark Burnett
(7)
|
|
125,000
|
|
|
*
|
|
Michael Blaszyk
(8)
|
|
29,763
|
|
|
*
|
|
All current directors and executive officers as a group (7 persons)
|
|
70,480,238
|
|
|
64.9
|
%
|
Term
|
|
Renewal Threshold
|
Initial Term
|
|
300,000 GPS Cancer tests completed between June 19, 2015 and June 30, 2020
|
First Exclusive Renewal Term
|
|
570,000 GPS Cancer tests completed between July 1, 2020 and June 30, 2023
|
Second Exclusive Renewal Term
|
|
760,000 GPS Cancer tests completed between July 1, 2023 and June 30, 2026
|
(Amount in Dollars)
|
2017
|
|
2016
|
||||
Audit Fees
(1)
|
$
|
3,215,808
|
|
|
$
|
5,403,148
|
|
Audit-Related Fees
|
—
|
|
|
—
|
|
||
Tax Fees
(2)
|
280,512
|
|
|
305,404
|
|
||
All Other Fees
|
—
|
|
|
—
|
|
||
|
$
|
3,496,320
|
|
|
$
|
5,708,552
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Number
|
|
Exhibit Title
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
|
|
Filed
|
|
Date
|
Herewith
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
10-Q
|
|
001-37792
|
|
3.1
|
|
August 15, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
10-Q
|
|
001-37792
|
|
3.2
|
|
August 15, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1.1+
|
|
|
10-Q
|
|
001-37792
|
|
10.1
|
|
November 10, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1.2+
|
|
|
S-1/A
|
|
333-211196
|
|
10.1
|
|
June 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2+
|
|
|
S-1/A
|
|
333-211196
|
|
10.2
|
|
June 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3#
|
|
|
S-1
|
|
333-211196
|
|
10.12
|
|
May 6, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4#
|
|
|
S-1
|
|
333-211196
|
|
10.13
|
|
May 6, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
S-1/A
|
|
333-211196
|
|
10.18
|
|
May 11, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
|
S-1/A
|
|
333-211196
|
|
10.19
|
|
May 24, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
S-1/A
|
|
333-211196
|
|
10.21
|
|
May 23, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
8-K
|
|
001-37792
|
|
10.2
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
|
8-K
|
|
001-37792
|
|
4.1
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
8-K
|
|
001-37792
|
|
10.1
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
|
8-K
|
|
001-37792
|
|
10.2
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
8-K
|
|
001-37792
|
|
10.3
|
|
December 21, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
8-K
|
|
001-37792
|
|
2.1
|
|
August 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14+
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Number
|
|
Exhibit Title
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
|
|
Filed
|
|
Date
|
Herewith
|
||||||||||
23.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1 *
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2 *
|
|
|
|
|
|
|
|
|
|
|
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:
|
March 16, 2018
|
|
|
|
|
|
|
|
|
By:
|
/s/ Patrick Soon-Shiong
|
|
|
Name:
|
Patrick Soon-Shiong
|
|
|
Its:
|
Chairman, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Paul Holt
|
|
|
Name:
|
Paul Holt
|
|
|
Its:
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Patrick Soon-Shiong
|
|
Chairman, Chief Executive Officer and Director
|
|
March 16, 2018
|
Patrick Soon-Shiong
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Paul Holt
|
|
Chief Financial Officer
|
|
March 16, 2018
|
Paul Holt
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Michael S. Sitrick
|
|
Director
|
|
March 16, 2018
|
Michael S. Sitrick
|
|
|
|
|
|
|
|
|
|
/s/ Kirk K. Calhoun
|
|
Director
|
|
March 16, 2018
|
Kirk K. Calhoun
|
|
|
|
|
|
|
|
|
|
/s/ Mark Burnett
|
|
Director
|
|
March 16, 2018
|
Mark Burnett
|
|
|
|
|
|
|
|
|
|
/s/ Michael Blaszyk
|
|
Director
|
|
March 16, 2018
|
Michael Blaszyk
|
|
|
|
|
a.
|
With respect to Omics Services completed between the Amendment Effective Date and June 30, 2018 (the “
Fee Adjustment Period
”): (i) the “Fee Floor” shall be [***] (instead of [***]) and (ii) the reference to “[***]” in the table in Section 3.1 shall be deemed to be “[***]”.
|
b.
|
In the last paragraph of Section 3.1, the phrase “if NantHealth bills” is hereby replaced with “if NantHealth bills following the Fee Adjustment Period”.
|
2.
|
Except as set forth in this Amendment, the Agreement is unaffected and shall continue in full force and effect in accordance with its terms. Except as otherwise modified or defined herein, all capitalized terms in this Amendment have the same meanings as set forth in the Agreement. If there is conflict between this amendment and the Agreement or any earlier amendment, the terms of this Amendment will prevail.
|
Name of Subsidiary
|
|
Jurisdiction of Organization
|
NaviNet, Inc.
|
|
Delaware
|
NaviNet Limited
|
|
United Kingdom
|
Assisteo Holding, Inc.
|
|
Delaware
|
AZ Home Health, LLC
|
|
Delaware
|
NantHealth Singapore Pte Ltd
|
|
Singapore
|
New Nant Health Canada, Inc.
|
|
Canada
|
|
/s/ Ernst & Young LLP
|
|
|
Los Angeles, California
|
|
March 16, 2018
|
|
|
|
/s/ Mayer Hoffman McCann, P.C.
|
|
|
|
Los Angeles, California
|
|
March 16, 2018
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Patrick Soon-Shiong
|
|
Chairman, Chief Executive Officer and Director
|
|
March 16, 2018
|
Patrick Soon-Shiong
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Paul Holt
|
|
Chief Financial Officer
|
|
March 16, 2018
|
Paul Holt
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Michael S. Sitrick
|
|
Director
|
|
March 16, 2018
|
Michael S. Sitrick
|
|
|
|
|
|
|
|
|
|
/s/ Kirk K. Calhoun
|
|
Director
|
|
March 16, 2018
|
Kirk K. Calhoun
|
|
|
|
|
|
|
|
|
|
/s/ Mark Burnett
|
|
Director
|
|
March 16, 2018
|
Mark Burnett
|
|
|
|
|
|
|
|
|
|
/s/ Michael Blaszyk
|
|
Director
|
|
March 16, 2018
|
Michael Blaszyk
|
|
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 16, 2018
|
By:
|
/s/ Patrick Soon-Shiong
|
|
|
Dr. Patrick Soon-Shiong
|
|
|
Chairman, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 16, 2018
|
By:
|
/s/ Paul Holt
|
|
|
Paul Holt
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
(i)
|
the Company’s Annual Report on Form 10-K for the year ended December 31,
2017
to which this Certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act, and
|
(ii)
|
that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NantHealth, Inc.
|
By:
|
/s/ Patrick Soon-Shiong
|
|
Dr. Patrick Soon-Shiong
|
|
Chairman, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
(i)
|
the Company’s Annual Report on Form 10-K for the year ended December 31,
2017
to which this Certification is attached as Exhibit 32.2 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act, and
|
(ii)
|
that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NantHealth, Inc.
|
By:
|
/s/ Paul Holt
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|