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)
November 5, 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 November 5, 2020, NantHealth, Inc. publicly disseminated a press release announcing its financial results for the three months ended September 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:
Exhibit No. Description
99.1





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: November 5, 2020 By: /s/ Bob Petrou
Bob Petrou
Chief Financial Officer


Exhibit 99.1
  NANTHEALTHLOGOAA101A.JPG
Investor Contact:
Robert Jaffe
rjaffe@rjaffeco.com
424.288.4098
NANTHEALTH REPORTS 2020 THIRD QUARTER FINANCIAL RESULTS

Q3 2020 Financial Highlights:
Total net revenue was $18.8 million, up from $18.6 million
Total software-related revenue increased to $18.7 million from $18.3 million in Q3 2019 and rose 7% from Q2 2020
Recently acquired OpenNMS Group contributed revenue
Gross margin remained steady at 60% of total revenue

Culver City, Calif. – November 5, 2020 — NantHealth, Inc. (NASDAQ-GS: NH), a provider of enterprise solutions that help businesses transform complex data into actionable insights, today reported financial results for its third quarter ended September 30, 2020.

“Our 2020 third quarter total software-related revenue increased to $18.7 million from $18.3 million for the same quarter last year and climbed 7% on a sequential quarterly basis,” said Ron Louks, Chief Operating Officer, NantHealth. “The current year third quarter included a revenue contribution from our recently completed acquisition of OpenNMS. We are pleased to report that our gross margin remained strong at 60% of total revenue, selling, general and administrative expenses were lower, and our bottom line improved considerably. We view our overall financial performance as a solid achievement, given the challenges associated with operating during the ongoing pandemic.

“At the same time, we ramped up our investment in R&D. We continued our development of data solutions capabilities, by expanding our software portfolio and service offerings, and investing in cloud, SaaS and AI technologies.

“We are making excellent progress on integrating the highly complementary OpenNMS business into our operations. OpenNMS provides a number of cross marketing opportunities, by leveraging NantHealth’s data science and AI competencies and OpenNMS’ network monitoring solutions for critical data flows. In addition, we believe the acquisition will drive opportunities to expand into industries beyond healthcare and bring new sets of services to customers of both entities.”

Software and Services Highlights:

Clinical Decision Support (Eviti®):

Expanded client-base and net new clients through NantHealth’s Eviti channel partner, a leading clinical solutions provider

Expanded Eviti Connect across the Medicaid population of a leading U.S. health insurance company. Of the 13 states originally announced, six states have gone live through the third quarter of 2020

Payer Engagement (NaviNet®):




We expanded API capabilities with a new service offering for provider and revenue cycle organizations to connect with payers via the NaviNet Open platform to conduct Eligibility & Benefits, Claim Status Inquiry, Authorizations, and Referral transactions

Launched several user-centric enhancements that will provide a richer user experience on NaviNet Open, including self-service capability that allows NaviNet AllPayer subscribers to quickly and easily configure provider information for registration and access

Network Monitoring (OpenNMS®):

Released Meridian® 2020

A Fortune 500 Healthcare IT company went into production with the OpenNMS Architecture for Learning Enabled Correlation (ALEC) AI engine

Business and Financial Highlights

For the 2020 third quarter:

Total net revenue was $18.8 million compared with $18.6 million in Q3 of 2019 and up from $17.6 million in Q2, 2020. Within total revenue, there was $18.7 million of total software-related revenue, compared with $18.3 in previous year

Gross profit was $11.2 million, or 60% of total net revenue, consistent with the prior year period

Selling, general and administrative (SG&A) expenses declined to $12.4 million from $13.7 million in 2019 third quarter

Research and development (R&D) expenses increased to $4.7 million from $3.3 million, primarily due to expanding our software portfolio and service offerings, and investing in cloud, SaaS and AI technologies

Net loss from continuing operations attributable to NantHealth, net of tax, narrowed to $11.0 million, or $0.10 per share from $16.4 million, or $0.15 per share

Non-GAAP net loss from continuing operations attributable to NantHealth was $7.2 million, or $0.07 per share, compared with $7.5 million, or $0.07 per share, for the third quarter of last year

At September 30, 2020, cash and cash equivalents totaled $26 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 third quarter ended September 30, 2020. The conference call will be available to interested parties by dialing 844-309-3709 from the U.S. or Canada, or 281-962-4864 from international locations, passcode 9966656. 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 enterprise solutions that help businesses transform complex data into actionable insights. By offering efficient ways to move, interpret, and visualize complex and highly sensitive information, NantHealth helps its customers in healthcare, life sciences, logistics, telecommunications, and other industries, to automate, understand, and act on data while keeping it secure and scalable. NantHealth’s product portfolio comprises the latest technology in molecular analysis (GPS Cancer), payer/provider collaboration platforms for real-time coverage decision support (NaviNet and Eviti), and Data Products that provide multi-data analysis, reporting and professional services offerings. OpenNMS, a NantHealth subsidiary, helps businesses monitor and manage network health and performance. For more information, visit nanthealth.com, follow us on Twitter, Facebook and LinkedIn, and subscribe to our blog.


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)
September 30,
2020
December 31,
2019
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 25,908  $ 5,243 
Accounts receivable, net 4,195  6,179 
Related party receivables, net 1,577  823 
Prepaid expenses and other current assets 4,460  19,341 
Current assets of discontinued operation —  6,327 
Total current assets 36,140  37,913 
Property, plant, and equipment, net 14,232  14,985 
Goodwill 98,333  97,307 
Intangible assets, net 50,202  51,848 
Investment in related party —  31,702 
Related party receivable, net of current 612  1,108 
Operating lease right-of-use assets 7,604  8,470 
Other assets 1,856  1,818 
Noncurrent assets of discontinued operation —  21,336 
Total assets $ 208,979  $ 266,487 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 2,151  $ 3,377 
Accrued and other current liabilities 14,833  31,988 
Deferred revenue 3,276  7,098 
Related party payables, net 4,606  4,120 
Notes payable 1,065  238 
Current liabilities of discontinued operation —  10,680 
Total current liabilities 25,931  57,501 
Deferred revenue, net of current 715  1,129 
Related party liabilities 29,365  24,227 
Related party promissory note 112,666  112,666 
Related party convertible note, net 9,268  8,864 
Convertible notes, net 89,023  84,648 
Deferred income taxes, net 1,697  1,669 
Operating lease liabilities 8,508  9,728 
Other liabilities 24,135  21,542 
Noncurrent liabilities of discontinued operation —  1,649 
Total liabilities 301,308  323,623 
Stockholders' deficit
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 111,214,133 and 110,619,678 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively 11  11 
Additional paid-in capital 890,590  889,955 
Accumulated deficit (983,108) (946,884)
Accumulated other comprehensive loss (283) (218)
Total NantHealth stockholders' deficit (92,790) (57,136)
Noncontrolling interests 461  — 
Total stockholders' deficit $ (92,329) $ (57,136)
Total liabilities and stockholders' deficit $ 208,979  $ 266,487 



NantHealth, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020 2019 2020 2019
Revenue
Software-as-a-service related $ 18,355  $ 18,328  $ 53,997  $ 54,421 
Maintenance 299  —  299  — 
Professional services 62  —  62  — 
Total software-related revenue 18,716  18,328  54,358  54,421 
Sequencing and molecular analysis 49  276  172  1,581 
Home health care services —  —  —  2,863 
Total net revenue 18,765  18,604  54,530  58,865 
Cost of Revenue
Software-as-a-service related 5,935  5,638  17,552  17,004 
Maintenance 131  121  131  288 
Professional services 15  —  15  — 
Amortization of developed technologies 1,222  1,143  3,508  3,519 
Total software-related cost of revenue 7,303  6,902  21,206  20,811 
Sequencing and molecular analysis 216  462  827  4,066 
Home health care services —  —  —  1,471 
Total cost of revenue 7,519  7,364  22,033  26,348 
Gross Profit 11,246  11,240  32,497  32,517 
Operating Expenses
Selling, general and administrative 12,442  13,708  36,864  42,843 
Research and development 4,681  3,262  12,446  10,503 
Amortization of acquisition-related assets
958  1,054  2,691  3,162 
Impairment of intangible asset —  —  —  3,977 
Total operating expenses 18,081  18,024  52,001  60,485 
Loss from operations (6,835) (6,784) (19,504) (27,968)
Interest expense, net (4,861) (4,556) (14,291) (13,443)
Other income (expense), net 747  (3,586) (2,550) (5,022)
Loss from related party equity method investment
—  (1,983) (31,702) (6,401)
Loss from continuing operations before income taxes (10,949) (16,909) (68,047) (52,834)
Provision for (benefit from) income taxes 77  (529) 174  (659)
Net loss from continuing operations (11,026) (16,380) (68,221) (52,175)
(Loss) income from discontinued operations, net of tax attributable to NantHealth (16) 31,955  1,162 
Net loss (11,042) (16,377) (36,266) (51,013)
Net loss attributable to noncontrolling interests (42) —  (42) — 
Net loss attributable to NantHealth $ (11,000) $ (16,377) $ (36,224) $ (51,013)
Basic and diluted net income (loss) per share attributable to NantHealth:
Continuing operations - common stock $ (0.10) $ (0.15) $ (0.62) $ (0.47)
Discontinued operations - common stock $ —  $ —  $ 0.29  $ 0.01 
Total net loss per share - common stock $ (0.10) $ (0.15) $ (0.33) $ (0.46)
Weighted average shares outstanding
Basic and diluted - common stock 110,929,357  110,619,905  110,859,611  110,261,279 




NantHealth, Inc.
Non-GAAP Net Loss from Continuing Operations Attributable to NantHealth and
Non-GAAP Net Loss Per Share from Continuing Operations Attributable to NantHealth
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020 2019 2020 2019
Net loss from continuing operations attributable to NantHealth $ (10,984) $ (16,380) $ (68,179) $ (52,175)
Adjustments to GAAP net loss from continuing operations attributable to NantHealth:
Loss from related party equity method investment —  1,983  31,702  6,401 
Stock-based compensation expense from continuing operations
633  521  1,761  1,797 
Change in fair value of derivatives liability (56) —  — 
Change in fair value of Bookings Commitment (657) 3,159  3,070  4,664 
Noncash interest expense related to convertible notes
1,644  1,446  4,779  4,207 
Intangible amortization from continuing operations
2,165  2,197  6,184  6,681 
Impairment of intangible asset —  —  —  3,977 
Loss on sale of business —  —  —  582 
Securities litigation costs —  500  (103) 500 
Tax provision (benefit) resulting from certain noncash tax items 20  (885) (16) (519)
Total adjustments to GAAP net loss from continuing operations attributable to NantHealth 3,749  8,921  47,384  28,290 
Net loss from continuing operations attributable to NantHealth - Non-GAAP $ (7,235) $ (7,459) $ (20,795) $ (23,885)
Weighted average shares outstanding 110,929,357  110,619,905  110,859,611  110,261,279 
Net loss per share from continuing operations attributable to NantHealth - Non-GAAP $ (0.07) $ (0.07) $ (0.19) $ (0.22)

Reconciliation of Net Loss per Common Share from Continuing Operations Attributable to NantHealth
to Net Loss per Common Share from Continuing Operations Attributable to NantHealth - Non-GAAP
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020 2019 2020 2019
Net loss per common share from continuing operations attributable to NantHealth $ (0.10) $ (0.15) $ (0.62) $ (0.47)
Adjustments to GAAP net loss per common share from continuing operations attributable to NantHealth:
Loss from related party equity method investment —  0.03  0.28  0.04 
Stock-based compensation expense from continuing operations 0.01  —  0.02  0.02 
Change in fair value of derivatives liability —  —  —  — 
Change in fair value of Bookings Commitment (0.01) 0.03  0.03  0.04 
Noncash interest expense related to convertible notes 0.01  0.01  0.04  0.04 
Intangible amortization from continuing operations 0.02  0.02  0.06  0.06 
Impairment of intangible asset —  —  —  0.04 
Loss on sale of business —  —  —  0.01 
Securities litigation costs —  —  —  — 
Tax provision (benefit) resulting from certain noncash tax items —  (0.01) —  — 
Total adjustments to GAAP net loss per common share from continuing operations attributable to NantHealth 0.03  0.08  0.43  0.25 
Net loss per common share from continuing operations attributable to NantHealth - Non-GAAP $ (0.07) $ (0.07) $ (0.19) $ (0.22)