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Share Name | Share Symbol | Market | Type |
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NantHealth Inc | NASDAQ:NH | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 1.35 | 1.35 | 1.39 | 0 | 01:00:00 |
NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, today reported financial results for its third quarter ended September 30, 2017.
In August 2017, NantHealth sold its provider/patient engagement assets to Allscripts to focus on core competencies and accelerate the plan to achieve profitability. As a result, the company has classified the current and prior period operating results of its provider/patient engagement business as discontinued operations. All results presented below represent the company’s continuing operations.
The company reported 547 GPS Commercial Tests were ordered in Q3, up from 379 in Q2.
GPS Cancer – Highlights
“We are encouraged and heartened by the positive results of an independent 1,040-patient clinical study performed at the Memorial Sloan Kettering Cancer Center and recently published in the Journal of the American Medical Association (JAMA),” said Patrick Soon-Shiong, M.D., Chief Executive Officer and Chairman of NantHealth. “Results of the study show that universal sequencing of a broad panel of cancer-related genes in paired germline and tumor DNA samples, similar to GPS Cancer, was associated with increased detection of clinically significant mutations. The study’s conclusion directly supports our long-held contention and aligns with the data we presented to MolDx illustrating the need for tumor-normal sequencing for all cancer patients. We are making every effort to share this medically important information with regulatory bodies, the oncology community and insurers.”
Payer Engagement & Clinical Decision Support Software and Services:
“During the quarter, we made excellent progress on the plan to focus our business on core competencies, enhanced efficiencies and accelerate toward profitability,” said Ron Louks, Chief Operating Officer of NantHealth. “Regarding our third quarter financial performance, the key highlights of our performance were significantly increased sales of our GPS solution and substantially lower operating expenses, which were largely due to the sale of our provider/patient engagement assets combined with our recently implemented restructuring plan.”
Business and Financial Highlights
For the 2017 third quarter, total net revenue increased to $21.8 million from $20.7 million in 2016 third quarter. Gross profit was $10.3 million compared with $10.6 million for the prior year third quarter. Selling, general and administrative expenses substantially declined to $17.5 million from $22.0 million for the 2016 third quarter. Research and development expenses decreased to $7.7 million from $10.0 million. Net loss from continuing operations, net of tax, narrowed to $23.0 million, or $0.20 per share, from $26.4 million, or $0.22 per share for the 2016 third quarter. Loss from discontinued operations, net of tax, was $19.4 million, or $0.17 per share, compared with $10.5 million, or $0.09 per share, for the prior year third quarter. Net loss was $42.4 million, or $0.37 per share, compared with $36.9 million, or $0.30 per share, for 2016 third quarter.
Financial results for the 2017 third quarter included approximately $2.9 million loss from related party equity method investment, $0.8 million of corporate restructuring expense, $0.7 million of acquisition related sales incentive, $1.1 million of net non-cash expense related to convertible notes, and $2.2 million of intangible amortization, totaling $0.07 per share. On a non-GAAP basis, adjusted net loss from continuing operations was $14.9 million, or $0.13 per share, for the 2017 third quarter, compared with $16.2 million, or $0.13 per share, for the 2016 third quarter.
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, 2017. 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 7296769. 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, Inc., a member of the NantWorks ecosystem of companies, is a next-generation, evidence-based, personalized healthcare company enabling improved patient outcomes and more effective treatment decisions for critical illnesses. NantHealth's unique systems-based approach to personalized healthcare applies novel diagnostics tailored to the specific molecular profiles of patient tissues and integrates this molecular data in a clinical setting with large-scale, real-time biometric signal and phenotypic data to track patient outcomes and deliver precision medicine. For nearly a decade, NantHealth has developed an adaptive learning system, which includes its unique software, middleware and hardware systems infrastructure that collects, indexes, analyzes and interprets billions of molecular, clinical, operational and financial data points derived from novel and traditional sources, continuously improves decision-making and further optimizes our clinical pathways and decision algorithms over time. For more information please visit www.nanthealth.com.
About GPS Cancer™
GPS Cancer™ is a unique, comprehensive test available through NantHealth. GPS CoverageGPS Cancer integrates whole genome (DNA) sequencing, whole transcriptome (RNA) sequencing, and quantitative proteomics through mass spectrometry, providing oncologists with a comprehensive molecular profile of a patient’s cancer to inform personalized treatment strategies. GPS Cancer testing is conducted in CLIA-certified and CAP-accredited laboratories, and is a key enabler for Cancer Breakthroughs 2020, the world’s most comprehensive cancer collaborative initiative seeking to accelerate the potential of combination immunotherapy as the next generation standard of care in cancer patients. For more information, visit www.gpscancer.com and www.cancerbreakthroughs2020.org.
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 continue our relationship with NantOmics; 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. Condensed Consolidated Balance Sheets (Dollars in thousands, except per share amounts) September 30, December 31, 2017 2016 (Unaudited) Assets Current assets Cash and cash equivalents $ 73,493 $ 157,573 Accounts receivable, net 12,037 11,673 Inventories 974 1,685 Deferred implementation costs 1,121 606 Related party receivables, net 500 693 Prepaid expenses and other current assets 4,224 3,356 Current assets of discontinued operations - 9,992 Total current assets 92,349 185,578 Property, plant, and equipment, net 19,984 20,129 Deferred implementation costs, net of current 4,374 3,201 Goodwill 114,625 114,625 Intangible assets, net 71,621 78,812 Investment in related party 160,542 207,197 Related party receivable, net of current 1,798 1,971 Other assets 1,834 2,195 Noncurrent assets of discontinued operations - 70,683 Total assets $ 467,127 $ 684,391 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 4,099 $ 6,039 Accrued and other current liabilities 19,968 20,032 Deferred revenue 9,200 9,600 Related party payables, net 5,502 8,082 Current liabilities of discontinued operations - 13,496 Total current liabilities 38,769 57,249 Deferred revenue, net of current 6,807 11,127 Related party liabilities 10,011 5,612 Related party promissory note 112,666 112,666 Related party convertible note, net 7,847 7,564 Convertible notes, net 73,787 70,810 Other liabilities 8,495 820 Noncurrent liabilities of discontinued operations - 6,949 Total liabilities 258,382 272,797 Stockholders' equity Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 106,963,706 and 121,250,437 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively (Including 6,976 shares of restricted stock) 11 12 Additional paid-in capital 880,801 886,334 Accumulated deficit (671,599 ) (475,273 ) Accumulated other comprehensive income (468 ) 521 Total stockholders' equity 208,745 411,594 Total liabilities and stockholders' equity $ 467,127 $ 684,391 NantHealth, Inc. Condensed Consolidated Statements of Operations (Dollars in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (Unaudited) Total net revenue $ 21,760 $ 20,662 $ 64,378 $ 62,558 Total cost of revenue 11,472 10,036 32,643 33,214 Gross profit 10,288 10,626 31,735 29,344 Operating Expenses: Selling, general and administrative 17,521 22,034 54,181 88,860 Research and development 7,749 9,960 25,051 36,519 Amortization of software license and acquisition-related assets 1,054 1,054 3,163 3,162 Total operating expenses 26,324 33,048 82,395 128,541 Loss from operations (16,036 ) (22,422 ) (50,660 ) (99,197 ) Interest expense, net (4,067 ) (1,415 ) (12,049 ) (4,760 ) Other income (expense), net 60 104 308 541 Loss from related party equity method investment including impairment loss (2,942 ) (2,604 ) (46,353 ) (7,893 ) Loss from continuing operations before income taxes (22,985 ) (26,337 ) (108,754 ) (111,309 ) Provision for (benefit from) income taxes 30 55 85 (19,203 ) Net loss from continuing operations (23,015 ) (26,392 ) (108,839 ) (92,106 ) Loss from discontinued operations, net of tax (19,383 ) (10,482 ) (44,738 ) (32,045 ) Net loss $ (42,398 ) $ (36,874 ) $ (153,577 ) $ (124,151 ) Net income (loss) per share (1): Continuing operations Basic and diluted - common stock $ (0.20 ) $ (0.22 ) $ (0.91 ) $ (0.90 ) Discontinued operations Basic and diluted - common stock $ (0.17 ) $ (0.08 ) $ (0.37 ) $ (0.29 ) Total net income (loss) per share Basic and diluted - common stock $ (0.37 ) $ (0.30 ) $ (1.28 ) $ (1.19 ) Basic and diluted - redeemable common stock N/A N/A N/A $ 0.74 Weighted average shares outstanding (1): Basic and diluted - common stock 115,924,122 121,245,440 119,745,231 108,359,973 Basic and diluted - redeemable common stock N/A N/A N/A 6,686,653 Footnote: (1) The net income (loss) per share and weighted average shares outstanding for the nine months ended September 30, 2016, have been computed to give effect to the LLC Conversion that occurred on June 1, 2016, prior to the Company’s initial public offering ("IPO"). In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation with the Secretary of State of the state of Delaware to effect a 1-for-5.5 reverse stock split of its common stock on June 1, 2016. The net loss per share for the common stock for the nine months ended September 30, 2016 reflects $4,958 in accretion value allocated to the redeemable common stock. The redeemable common stock contained a put right, which expired unexercised on June 20, 2016. As a result of and as of that date, the shares were no longer redeemable and were included in common stock. NantHealth, Inc. Supplemental Revenue Schedule (Dollars in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (Unaudited) Revenue: Software and hardware $ 1,162 $ 2,065 $ 4,408 $ 6,077Software-as-a-service
15,200 14,000 44,863 41,809 Total software-related revenue 16,362 16,065 49,271 47,886 Maintenance 2,696 1,979 8,182 6,979 Sequencing and molecular analysis 1,025 77 1,985 122 Other services 1,677 2,541 4,940 7,571 Total net revenue $ 21,760 $ 20,662 $ 64,378 $ 62,558 Cost of Revenue: Software and hardware $ 443 $ 528 $ 596 $ 668 Software-as-a-service 5,859 4,159 17,143 14,791 Total software-related cost of revenue 6,302 4,687 17,739 15,459 Maintenance 274 112 564 621 Sequencing and molecular analysis 1,757 570 4,807 929 Other services 1,996 2,623 5,504 9,309 Amortization of developed technologies 1,143 2,044 4,029 6,896 Total cost of revenue $ 11,472 $ 10,036 $ 32,643 $ 33,214 NantHealth, Inc. Non-GAAP Net Loss and Non-GAAP Net Loss Per Share (Dollars in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (Unaudited) Net loss from continuing operations $ (23,015 ) $ (26,392 ) $ (108,839 ) $ (92,106 ) Adjustments to GAAP net loss: Loss from related party equity method investment including impairment loss 2,942 2,604 46,353 7,893 Stock-based compensation expense from continuing operations (170 ) 3,576 (485 ) 40,455 Corporate restructuring from continuing operations 807 362 2,396 2,298 Acquisition related compensation expense - - - 4,814 Acquisition related sales incentive 727 567 2,061 2,027 Change in fair value of derivatives liability (6 ) - (245 ) - Non-cash interest expense related to convertible notes 1,121 - 3,260 - Intangible amortization from continuing operations 2,197 3,098 7,192 10,058 Securities litigation costs 500 - 685 - Impacts of the conversion from a limited liability company to a corporation on benefit from income taxes - - - (19,533 ) Total adjustments to GAAP net loss from continuing operations 8,118 10,207 61,217 48,012 Net loss - Non-GAAP from continuing operations $ (14,897 ) $ (16,185 ) $ (47,622 ) $ (44,094 ) Weighted average shares outstanding (1) 115,924,122 121,245,440 119,745,231 108,359,973 Weighted average Series F/redeemable stock (1)(2) — — — 6,686,653 Shares outstanding - Non-GAAP (1) 115,924,122 121,245,440 119,745,231 115,046,626 Net loss per share from continuing operations - Non-GAAP (1) $ (0.13 ) $ (0.13 ) $ (0.40 ) $ (0.38 ) Reconciliation of Net Loss per Common Share to Net Loss per Common Share - Non-GAAP (Unaudited): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss per common share from continuing operations - GAAP $ (0.20 ) $ (0.22 ) $ (0.91 ) $ (0.90 ) Adjustments to GAAP net loss per common share from continuing operations: Loss from related party equity method investment including impairment loss 0.03 0.02 0.39 0.07 Stock-based compensation expense from continuing operations — 0.03 — 0.37 Corporate restructuring from continuing operations 0.01 — 0.02 0.02 Acquisition related compensation expense — — — 0.04 Acquisition related sales incentive 0.01 — 0.02 0.02 Non-cash interest expense related to convertible notes 0.01 — 0.03 — Intangible amortization from continuing operations 0.01 0.04 0.04 0.10 Securities litigation costs — — 0.01 — Impacts of the conversion from a limited liability company to a corporation on benefit from income taxes — — — (0.18 ) Accretion to redemption value of Series F/redeemable common stock — — — 0.05 Dilution from Series F/redeemable common stock — — — 0.03 Total adjustments to GAAP net loss per common share from continuing operations 0.07 0.09 0.51 0.52 Net loss per common share from continuing operations - Non-GAAP (1) $ (0.13 ) $ (0.13 ) $ (0.40 ) $ (0.38 ) (1) The net loss per common share - non-GAAP, weighted average shares outstanding, weighted average Series F units/redeemable stock, and shares outstanding - non-GAAP have been computed to give effect to the LLC conversion that occurred June 1, 2016 prior to our IPO. In conjunction with the LLC Conversion, (a) all of our outstanding units automatically converted into shares of common stock, based on the relative rights of our pre-IPO equityholders as set forth in the limited liability company agreement and (b) we adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. We filed an amended certificate of incorporation to effect a 1-for-5.5 reverse stock split of our common stock on June 1, 2016. (2) The weighted average shares outstanding have been further adjusted to account for the redeemable Series F units (converted to common stock in conjunction with the LLC conversion), whose Put Right expired on June 20, 2016. Prior to June 20, 2016, these units/shares of common stock were classified as redeemable members’/stockholders’ equity in the balance sheet, and as such, were not included in the weighted-average shares outstanding prior to June 20, 2016. The Put Right expired June 20, 2016, and the shares were no longer redeemable and are included in shareholders’ equity following that day. The weighted-average shares are adjusted to include the redeemable common stock in the weighted average shares outstanding for the entire period.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171109006565/en/
NantHealth, Inc.Investor Contact:Robert Jaffe424.288.4098rjaffe@rjaffeco.com
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