UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8‑K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 6, 2020
NantHealth, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
001-37792
 
27-3019889
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)

9920 Jefferson Boulevard
Culver City, California 90232
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (310) 883-1300

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

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0001 per share
NH
Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §(§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §(§240.12b-2).

Emerging growth company x

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





Item 2.02
Results of Operations and Financial Condition.

On August 6, 2020, NantHealth, Inc. publicly disseminated a press release announcing its financial results for the three months ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.

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

Item 9.01
Financial Statements and Exhibits.

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








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

 
 
NantHealth, Inc.
 
 
 
 
Date:
August 6, 2020
By:
/s/ Bob Petrou
 
 
 
Bob Petrou
 
 
 
Chief Financial Officer




Exhibit 99.1
  NANTHEALTHLOGOAA09.JPG
 
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
 

NANTHEALTH REPORTS 2020 SECOND QUARTER FINANCIAL RESULTS

Q2 Financial Highlights 2020 vs 2019:
SaaS revenue of $17.5 million vs $18.3 million
Total gross margin of 58%, up from 56%

In July 2020, acquired OpenNMS Group, the world’s premier open source network management company
Expands product and service offerings while opening opportunities beyond healthcare
Allows teams to leverage complementary AI technologies and capabilities in Cloud and SaaS

Culver City, Calif. - August 6, 2020 - NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, today reported financial results for its second quarter ended June 30, 2020.

“In July, we completed the strategic acquisition of the OpenNMS Group, Inc., a company with the world’s premier open source network management software platform,” said Ron Louks, Chief Operating Officer, NantHealth. “This is an exciting transaction for NantHealth because it expands and diversifies our software portfolio and service offerings, enhances our AI, Cloud and SaaS capabilities, and opens market opportunities beyond healthcare.

“In response to the COVID-19 crisis, we supported the healthcare community by launching the NantHealth Cares initiative. As part of this initiative, we made our NaviNet AllPayer platform available to providers for free during the month of May. We believe it is important to do our part during the pandemic to help reduce the financial and capacity strain on hard-hit providers, even if it temporarily impacted our revenue.

“In addition, NantHealth CEO, Dr. Patrick Soon-Shiong, presented a video series exploring the science behind COVID-19. The educational series was made accessible on the NantHealth.com website and our NaviNet and Eviti platforms, which garnered more than 10,000 views - over 1,300 hours watched. In addition, NantHealth medical experts hosted two webinars designed to educate our payers, providers and partners on COVID-19. Both webinars generated considerable interest with over 900 registrants each.”

Software and Services Highlights:

Clinical Decision Support (Eviti®):

Implemented, through a channel partnership, Eviti Advisor clinical decision support platform with a leading non-profit medical center in New York City

In July, significantly expanded Eviti Connect across the Medicaid population of a leading U.S. health insurance company with the addition of two states

Leveraged the Eviti platform to educate users on the implications of COVID-19 for cancer care and the science behind emerging treatments through videos and instruction. Also, added a feature enabling payers to gain insights to COVID-19 testing relative to oncology treatment plans

Released enhancements to the Eviti platform, including:





Return-on-Investment (ROI) reporting: implemented cost savings dashboard enabling more robust and expedited validation of ROI for our customers

White blood cell growth factor deviation messaging: added messaging to communicate unexpected use of white blood cell growth factor when a treatment plan is entered, allowing users to make real-time corrections for faster review and approval

Payer Engagement (NaviNet®):

Leveraged the NaviNet platform to enable payers to post updates to their medical policies and other key information - assisting the provider community directly impacted by the COVID-19 pandemic

Launched workflow enhancements that enable providers to update prior authorizations already on file with our payer customers. Payers that enable this option as part of their NaviNet Open services can expect to receive more prior authorization requests electronically, while streamlining the process of managing prior authorizations for their providers

Precision Medicine and Artificial Intelligence - Highlights:

In May, received notice from Molecular Diagnostic Services (MolDx) of a limited coverage determination for Omics CoreSM 

In June, announced the publication of four abstracts in the developmental therapeutics session of the American Society of Clinical Oncology (ASCO) 2020 Virtual Scientific Program. In collaboration with ImmunityBio, LLC, the company presented data, gathered from its database, which was used to advance findings in molecularly targeted agents and tumor biology

In June, announced the publication of a study in JCI Insight, a peer reviewed journal dedicated to biomedical research. The study, “Transcriptomic silencing as a potential mechanism of treatment resistance,” explained the importance of using both transcriptomics and genomics for patient tumor interrogation to gain actionable insights into reducing the risk of tumor treatment resistance

Business and Financial Highlights

For the 2020 second quarter:

Total net revenue was $17.6 million, which included $17.5 million of SaaS revenue. This compares with 2019 second quarter total net revenue of $20.1 million, which included $18.3 million of SaaS revenue and $1.3 million of home health care services revenue, a business the Company divested on June 7, 2019

Gross profit increased to $10.3 million, or 58% of total net revenue, compared with $11.3 million, or 56% of total net revenue, for the prior year period

Selling, general and administrative (SG&A) expenses declined to $12.0 million from $13.8 million in 2019 second quarter

Research and development (R&D) expenses increased to $4.2 million from $3.4 million, primarily due to investments in product portfolio expansion and growth in data science, machine learning and AI capabilities

Net loss from continuing operations, net of tax, was $48.3 million, or $0.44 per share, which included a non-cash loss from related party equity method investment of $29.9 million and a $6.9 million expense from our fair value bookings commitment liability. This compares with the prior-year second quarter net loss from continuing operations, net of tax, of $17.1 million, or $0.15 per share, which included loss from related party equity method investment of $2.2 million






Non-GAAP net loss from continuing operations was $7.5 million, or $0.07 per share, compared with $6.9 million, or $0.06 per share, for the second quarter of last year

At June 30, 2020, cash and cash equivalents totaled $37.5 million

Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) to review its results of operations for the second quarter ended June 30, 2020. The conference call will be available to interested parties by dialing 800-708-4540 from the U.S. or Canada, or 847-619-6397 from international locations, passcode 49876109. The call will be broadcast via the Internet at www.nanthealth.com. Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. A playback of the call will be archived and accessible on the same website for at least three months.

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

Use of Non-GAAP Financial Measures
This news release contains references to Non-GAAP financial measures, including adjusted net loss and adjusted net loss per share, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). The Company’s management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor’s overall understanding of the financial results for the Company’s core business. Additionally, it provides a basis for the comparison of the financial results for the Company’s core business between current, past and future periods. Other companies may define these measures in different ways. Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP. Non-GAAP per share numbers are calculated based on one class of common stock and do not incorporate the effects, if any, of using the two-class method.

About NantHealth, Inc.
NantHealth, a member of the NantWorks ecosystem of companies, provides leading solutions across the continuum of care for physicians, payors, patients and biopharmaceutical organizations. NantHealth enables the use of cutting-edge data and technology toward the goals of empowering clinical decision support and improving patient outcomes. NantHealth’s comprehensive product portfolio combines the latest technology in payor/provider platforms that exchange information in near-real time (NaviNet and Eviti), and molecular profiling services that combine comprehensive DNA & RNA tumor-normal profiling with pharmacogenomics analysis (GPS Cancer®). For more information, please visit www.nanthealth.com or follow us on TwitterFacebook and LinkedIn.

This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Forward-looking statements can be identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plans,” “will,” “outlook” and similar expressions. Forward-looking statements are based on management’s current plans, estimates, assumptions and projections, and speak only as of the date they are made. Risks and uncertainties include, but are not limited to: our ability to successfully integrate a complex learning system to address a wide range of healthcare issues; our ability to successfully amass the requisite data to achieve maximum network effects; appropriately allocating financial and human resources across a broad array of product and service offerings; raising additional capital as necessary to fund our operations; achieving significant commercial market acceptance for our sequencing and molecular analysis solutions; establish relationships with, key thought leaders or payers’ key decision makers in order to establish GPS Cancer as a standard of care for patients with cancer; our ability to grow the market for our Systems Infrastructure, and applications; successfully enhancing our Systems Infrastructure and applications to achieve market acceptance and keep pace with technological developments; customer concentration; competition; security breaches; bandwidth limitations; our ability to integrate OpenNMS into our operations; our ability to obtain regulatory approvals; dependence upon senior management;





the need to comply with and meet applicable laws and regulations; unexpected adverse events; clinical adoption and market acceptance of GPS Cancer; and anticipated cost savings. We undertake no obligation to update any forward-looking statement in light of new information or future events, except as otherwise required by law. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Actual results or outcomes may differ materially from those implied by the forward-looking statements as a result of the impact of a number of factors, many of which are discussed in more detail in our reports filed with the Securities and Exchange Commission.

FINANCIAL TABLES FOLLOW







NantHealth, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
 
June 30,
2020
 
December 31,
2019
 
(Unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
37,526

 
$
5,243

Accounts receivable, net
3,473

 
6,179

Related party receivables, net
1,146

 
823

Prepaid expenses and other current assets
3,359

 
19,341

Current assets of discontinued operation

 
6,327

Total current assets
45,504

 
37,913

Property, plant, and equipment, net
13,206

 
14,985

Goodwill
97,307

 
97,307

Intangible assets, net
47,829

 
51,848

Investment in related party

 
31,702

Related party receivable, net of current
848

 
1,108

Operating lease right-of-use assets
7,776

 
8,470

Other assets
2,038

 
1,818

Noncurrent assets of discontinued operation

 
21,336

Total assets
$
214,508

 
$
266,487

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
3,159

 
$
3,377

Accrued and other current liabilities
11,852

 
31,988

Deferred revenue
4,454

 
7,098

Related party payables, net
3,852

 
4,120

Notes payable

 
238

Current liabilities of discontinued operation

 
10,680

Total current liabilities
23,317

 
57,501

Deferred revenue, net of current
687

 
1,129

Related party liabilities
27,644

 
24,227

Related party promissory note
112,666

 
112,666

Related party convertible note, net
9,129

 
8,864

Convertible notes, net
87,518

 
84,648

Operating lease liabilities
8,863

 
9,728

Other liabilities
26,905

 
23,211

Noncurrent liabilities of discontinued operation

 
1,649

Total liabilities
296,729

 
323,623

 
 
 
 
Stockholders' deficit
 
 
 
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 110,929,357 and 110,619,678 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
11

 
11

Additional paid-in capital
890,292

 
889,955

Accumulated deficit
(972,108
)
 
(946,884
)
Accumulated other comprehensive loss
(416
)
 
(218
)
Total stockholders' deficit
(82,221
)
 
(57,136
)
Total liabilities and stockholders' deficit
$
214,508

 
$
266,487






NantHealth, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2020
 
2019
 
2020
 
2019
Total net revenue
$
17,585

 
$
20,052

 
$
35,765

 
$
40,261

 
 
 
 
 
 
 
 
Total cost of revenue
7,318

 
8,723

 
14,514

 
18,984

Gross Profit
10,267

 
11,329

 
21,251

 
21,277

 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
Selling, general and administrative
11,995

 
13,811

 
24,422

 
29,135

Research and development
4,215

 
3,391

 
7,765

 
7,241

Amortization of acquisition-related assets
866

 
1,054

 
1,733

 
2,108

Impairment of intangible asset

 
3,977

 

 
3,977

Total operating expenses
17,076

 
22,233

 
33,920

 
42,461

 
 
 
 
 
 
 
 
Loss from operations
(6,809
)
 
(10,904
)
 
(12,669
)
 
(21,184
)
Interest expense, net
(4,773
)
 
(4,473
)
 
(9,430
)
 
(8,887
)
Other (expense) income, net
(6,751
)
 
1,069

 
(3,297
)
 
(1,436
)
Loss from related party equity method investment
(29,918
)
 
(2,208
)
 
(31,702
)
 
(4,418
)
Loss from continuing operations before income taxes
(48,251
)
 
(16,516
)
 
(57,098
)
 
(35,925
)
Provision for income taxes
4

 
622

 
97

 
848

Net loss from continuing operations
(48,255
)
 
(17,138
)
 
(57,195
)
 
(36,773
)
(Loss) income from discontinued operations, net of tax
(34
)
 
2,425

 
31,971

 
2,137

Net loss
$
(48,289
)
 
$
(14,713
)
 
$
(25,224
)
 
$
(34,636
)
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share
 
 
 
 
 
 
 
Continuing operations - common stock
$
(0.44
)
 
$
(0.15
)
 
$
(0.52
)
 
$
(0.33
)
Discontinued operations - common stock
$

 
$
0.02

 
$
0.29

 
$
0.02

Total net loss per share - common stock
$
(0.44
)
 
$
(0.13
)
 
$
(0.23
)
 
$
(0.31
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
Basic and diluted - common stock
110,831,456

 
110,209,510

 
110,731,925

 
110,057,981







NantHealth, Inc.
Supplemental Revenue Schedule
(Dollars in thousands)
(Unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2020
 
2019
 
2020
 
2019
Revenue:
 
 
 
 
 
 
 
Software-as-a-service related
$
17,521

 
$
18,291

 
$
35,642

 
$
36,093

Total software-related revenue
17,521

 
18,291

 
35,642

 
36,093

Sequencing and molecular analysis
64

 
491

 
123

 
1,305

Home health care services

 
1,270

 

 
2,863

Total net revenue
$
17,585

 
$
20,052

 
$
35,765

 
$
40,261

 
 
 
 
 
 
 
 
Cost of Revenue:
 
 
 
 
 
 
 
Software-as-a-service related
$
5,916

 
$
5,658

 
$
11,617

 
$
11,366

Maintenance

 
97

 

 
167

Amortization of developed technologies
1,143

 
1,143

 
2,286

 
2,376

Total software-related cost of revenue
7,059

 
6,898

 
13,903

 
13,909

Sequencing and molecular analysis
259

 
1,177

 
611

 
3,604

Home health care services

 
648

 

 
1,471

Total cost of revenue
$
7,318

 
$
8,723

 
$
14,514

 
$
18,984








NantHealth, Inc.
Non-GAAP Net Loss from Continuing Operations and
Non-GAAP Net Loss Per Share from Continuing Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2020
 
2019
 
2020
 
2019
Net loss from continuing operations
$
(48,255
)
 
$
(17,138
)
 
$
(57,195
)
 
$
(36,773
)
Adjustments to GAAP net loss from continuing operations:
 
 
 
 
 
 
 
Loss from related party equity method investment
29,918

 
2,208

 
31,702

 
4,418

Stock-based compensation expense from continuing operations
396

 
673

 
1,049

 
1,323

Change in fair value of derivatives liability
58

 

 
63

 

Change in fair value of Bookings Commitment
6,856

 
(989
)
 
3,727

 
1,505

Noncash interest expense related to convertible notes
1,593

 
1,403

 
3,135

 
2,760

Intangible amortization from continuing operations
2,009

 
2,197

 
4,019

 
4,484

Impairment of intangible asset

 
3,977

 

 
3,977

Loss on sale of business

 
582

 

 
582

Securities litigation costs

 

 
(103
)
 

Tax (benefit) provision resulting from certain noncash tax items
(36
)
 
255

 
(36
)
 
366

Total adjustments to GAAP net loss from continuing operations
40,794

 
10,284

 
43,635

 
19,368

Net loss from continuing operations - Non-GAAP
$
(7,461
)
 
$
(6,854
)
 
$
(13,560
)
 
$
(17,405
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding
110,831,456

 
110,209,510

 
110,731,925

 
110,057,981

 
 
 
 
 
 
 
 
Net loss per share from continuing operations - Non-GAAP
$
(0.07
)
 
$
(0.06
)
 
$
(0.12
)
 
$
(0.16
)

Reconciliation of Net Loss per Common Share from Continuing Operations
to Net Loss per Common Share from Continuing Operations - Non-GAAP
(Unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2020
 
2019
 
2020
 
2019
Net loss per common share from continuing operations
$
(0.44
)
 
$
(0.15
)
 
$
(0.52
)
 
$
(0.33
)
Adjustments to GAAP net loss per common share from continuing operations:
 
 
 
 
 
 
 
Loss from related party equity method investment
0.28

 
0.01

 
0.29

 
0.03

Stock-based compensation expense from continuing operations

 
0.01

 
0.01

 
0.01

Change in fair value of derivatives liability

 

 

 

Change in fair value of Bookings Commitment
0.06

 
(0.01
)
 
0.03

 
0.01

Noncash interest expense related to convertible notes
0.01

 
0.01

 
0.03

 
0.03

Intangible amortization from continuing operations
0.02

 
0.02

 
0.04

 
0.04

Impairment of intangible asset

 
0.04

 

 
0.04

Loss on sale of business

 
0.01

 

 
0.01

Securities litigation costs

 

 

 

Tax (benefit) provision resulting from certain noncash tax items

 

 

 

Total adjustments to GAAP net loss per common share from continuing operations
0.37

 
0.09

 
0.40

 
0.17

Net loss per common share from continuing operations - Non-GAAP
$
(0.07
)
 
$
(0.06
)
 
$
(0.12
)
 
$
(0.16
)