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)
May 7, 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 May 7, 2020, NantHealth, Inc. publicly disseminated a press release announcing its financial results for the three months ended March 31, 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:
May 7, 2020
By:
/s/ Bob Petrou
 
 
 
Bob Petrou
 
 
 
Chief Financial Officer


Exhibit


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

NANTHEALTH REPORTS 2020 FIRST QUARTER FINANCIAL RESULTS


Q1 Financial Highlights 2020 vs 2019:
SaaS revenue was $18.1 million, up 2%
Total gross margin increased to 60% from 49%

Appointed Deanna L. Wise, Senior Vice President and Chief Information Officer for Banner Health, to Board of Directors

Completed Sale of Connected Care Business in February 2020, which generated a partial quarter of revenues of $1.2 million

Culver City, Calif. - May 7, 2020 - NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, today reported financial results for its first quarter ended March 31, 2020.

In February 2020, NantHealth completed the sale of its Connected Care Business for $47.25 million. Accordingly, the company has classified the current and prior period operating results of its Connected Care Business as discontinued operations. The financial results presented below represent the company’s continuing operations.

“During the first quarter of 2020, we made progress on a number of fronts,” said Ron Louks, Chief Operating Officer, NantHealth. “Operationally, we completed the sale of our Connected Care Business, which significantly increased our cash position and further streamlined our operations. Financially, we grew SaaS revenue, substantially increased gross margin and lowered operating expenses compared with the same quarter last year. We also implemented a number of steps to ensure the safety of our employees in response to the COVID-19 pandemic and our team has responded with resilience and dedication to the providers and payer communities that we are proud to serve.

“In addition, we strengthened our leadership team by adding Deanna Wise to our board of directors. Deanna brings extensive clinical Information Technology (IT) experience in the hospital and healthcare industry. We look forward to benefitting from Deanna’s insights and expertise, particularly in helping shape our future operations and strategic direction.”

Software and Services Highlights:

Clinical Decision Support (Eviti®):

In January, presented Eviti Connect real world data on treatment patterns for patients with advanced colorectal cancer (CRC) at the 2020 Gastrointestinal Cancer Symposium sponsored by the American Society of Clinical Oncology (ASCO). The ability to identify treatment patterns through data analysis can provide unique and critical information to pharma, payers and provider networks to optimize treatment strategies

In January, signed a three-year renewal agreement with one of the largest non-profit rural health plans in





the U.S., as previously announced

Signed an agreement with a leading U.S. health insurance company to roll out Eviti Connect across their Medicaid population to additional states, as previously announced. In addition to the pilot states, four of the added states are now live with Eviti Connect, and implementation is underway across three more states, with the remaining states scheduled to go live in the third quarter

Deployed significant workflow and database enhancements to the Eviti platform including:
Warning notifications: allows users to configure a warning and/or deviation notification to alert the submitter when a drug does not comply with the preferred drug program, saving review cycle time and ensuring patients receive correct care
Payer-customized messaging: allows users to indicate when specific data is required in order to complete the Patient Insurance ID field, reducing submission delays

Payer Engagement (NaviNet®):

In January, added new payer customer, The Health Plan, servicing members in Ohio and West Virginia, as previously reported. The 5-year agreement includes NaviNet Open as a key component of The Health Plan’s payer-provider collaboration strategy

Launched significant enhancements to the NaviNet Open platform, including AllPayer self-service subscription management workflow. This new storefront, an addition to the NaviNet AllPayer solution, enables the provider office to quickly create and manage subscriptions for our AllPayer offerings, allowing providers to expand their NaviNet access to nearly all health plans offered to their patients

Precision Medicine - Highlights:
In January, presented GPS Cancer platform data revealing increased opportunities for HER2 directed therapy in colorectal cancer patients at the 2020 Gastrointestinal Cancer Symposium sponsored by the American Society of Clinical Oncology (ASCO), as reported previously. The data showed that up to 40% more patients may be eligible for HER2 directed therapies, which have implications for drug development and clinical trials

Artificial Intelligence - Highlights:
In January, NantHealth and NantOmics presented an initial report on a novel artificial intelligence (AI) platform for aiding pathologists in image-based lung cancer subtyping at the Society for Imaging Science and Technology’s International Symposium on Electronic Imaging 2020, as reported previously. This novel machine vision software platform accurately subtypes lung cancer pathology and achieves high concordance with analysis performed by trained medical pathologists.

In February, NantHealth and NantOmics announced the publication of a peer-reviewed study in Breast Cancer Research, a Springer Nature journal, on a novel AI technique in breast cancer, as reported previously. The study reports on a novel deep-learning system of digital pathology images and omics data used together to more precisely identify mechanisms of therapy resistance.

Business and Financial Highlights

For the 2020 first quarter, total net revenue was $18.2 million, which included $18.1 million of SaaS revenue. This compares with 2019 first quarter total net revenue of $20.2 million, which included $17.8 million of SaaS revenue and $1.6 million of home health care services revenue, a business the Company divested on June 7, 2019.
Gross profit increased to $11.0 million, or 60% of total net revenue, compared with $9.9 million, or 49% of total net revenue, for the prior year period. The increase was primarily driven by continued growth of the Company’s higher margin SaaS business, the divestiture of lower margin businesses and overall cost





management.
Selling, general and administrative (SG&A) expenses declined to $12.4 million from $15.3 million in 2019 first quarter, mainly driven by ongoing cost management efforts and efficiencies in overall processes. Research and development (R&D) expenses decreased to $3.6 million from $3.9 million.
Net loss from continuing operations, net of tax, was $8.9 million, or $0.08 per share, compared with $19.6 million, or $0.18 per share, for the 2019 first quarter.
On a non-GAAP basis, net loss from continuing operations was $6.1 million, or $0.06 per share, down from $10.6 million, or $0.10 per share, for the first quarter of last year. The improvement reflects the company’s ongoing efforts to manage costs, growth of its SaaS business and better overall financial performance.
At March 31, 2020, cash and cash equivalents totaled $47.5 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 first quarter ended March 31, 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 2797775. 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 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.
Consolidated Balance Sheets
(Dollars in thousands)

March 31,
2020

December 31,
2019

(Unaudited)

 
Assets



Current assets



Cash and cash equivalents
$
47,478


$
5,243

Accounts receivable, net
6,816


6,179

Related party receivables, net
657


823

Prepaid expenses and other current assets
3,680


19,341

Current assets of discontinued operation


6,327

Total current assets
58,631


37,913

Property, plant, and equipment, net
13,755


14,985

Goodwill
97,307


97,307

Intangible assets, net
49,838


51,848

Investment in related party
29,918


31,702

Related party receivable, net of current
1,274


1,108

Operating lease right-of-use assets
8,092


8,470

Other assets
2,144


1,818

Noncurrent assets of discontinued operation


21,336

Total assets
$
260,959


$
266,487





Liabilities and Stockholders' Equity



Current liabilities



Accounts payable
$
3,314


$
3,377

Accrued and other current liabilities
17,033


31,988

Deferred revenue
5,523


7,098

Related party payables, net
4,552


4,120

Notes payable


238

Current liabilities of discontinued operation


10,680

Total current liabilities
30,422


57,501

Deferred revenue, net of current
1,148


1,129

Related party liabilities
25,931


24,227

Related party promissory note
112,666


112,666

Related party convertible note, net
8,994


8,864

Convertible notes, net
86,060


84,648

Operating lease liabilities
9,264


9,728

Other liabilities
20,065


23,211

Noncurrent liabilities of discontinued operation


1,649

Total liabilities
294,550


323,623





Stockholders' deficit



Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 110,619,678 and 110,619,678 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
11


11

Additional paid-in capital
890,623


889,955

Accumulated deficit
(923,819
)

(946,884
)
Accumulated other comprehensive loss
(406
)

(218
)
Total stockholders' deficit
(33,591
)

(57,136
)
Total liabilities and stockholders' deficit
$
260,959


$
266,487






NantHealth, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)

Three Months Ended 
 March 31,

2020

2019
Total net revenue
$
18,180


$
20,209






Total cost of revenue
7,196


10,261

Gross Profit
10,984


9,948





Operating Expenses




Selling, general and administrative
12,427


15,324

Research and development
3,550


3,850

Amortization of acquisition-related assets
867


1,054

Total operating expenses
16,844


20,228







Loss from operations
(5,860
)

(10,280
)
Interest expense, net
(4,657
)

(4,414
)
Other income (expense), net
3,454


(2,505
)
Loss from related party equity method investment
(1,784
)

(2,210
)
Loss from continuing operations before income taxes
(8,847
)

(19,409
)
Provision for income taxes
93


226

Net loss from continuing operations
(8,940
)

(19,635
)
Income (loss) from discontinued operations, net of tax
32,005


(288
)
Net income (loss)
$
23,065


$
(19,923
)




Basic and diluted net income (loss) per share



Continuing operations - common stock
$
(0.08
)

$
(0.18
)
Discontinued operations - common stock
$
0.29


$

Total net income (loss) per share - common stock
$
0.21


$
(0.18
)




Weighted average shares outstanding



Basic and diluted - common stock
110,619,780


109,904,336







NantHealth, Inc.
Supplemental Revenue Schedule
(Dollars in thousands)
(Unaudited)

Three Months Ended 
 March 31,

2020

2019
Revenue:



Software-as-a-service related
$
18,121


$
17,802

Total software-related revenue
18,121


17,802

Sequencing and molecular analysis
59


814

Home health care services


1,593

Total net revenue
$
18,180


$
20,209





Cost of Revenue:



Software-as-a-service related
$
5,701


$
5,708

Maintenance


70

Amortization of developed technologies
1,143


1,233

Total software-related cost of revenue
6,844


7,011

Sequencing and molecular analysis
352


2,427

Home health care services


823

Total cost of revenue
$
7,196


$
10,261








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 
 March 31,

2020

2019
Net loss from continuing operations
$
(8,940
)

$
(19,635
)
Adjustments to GAAP net loss from continuing operations:





Loss from related party equity method investment
1,784


2,210

Stock-based compensation expense from continuing operations
732


625

Change in fair value of derivatives liability
5



Change in fair value of Bookings Commitment
(3,128
)

2,494

Noncash interest expense related to convertible notes
1,542


1,357

Intangible amortization from continuing operations
2,010


2,287

Securities litigation costs
(103
)


Tax provision resulting from certain noncash tax items


111

Total adjustments to GAAP net loss from continuing operations
2,842


9,084

Net loss from continuing operations - Non-GAAP
$
(6,098
)

$
(10,551
)






Weighted average shares outstanding
110,619,780


109,904,336







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

$
(0.10
)

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 
 March 31,

2020

2019
Net loss per common share from continuing operations
$
(0.08
)

$
(0.18
)
Adjustments to GAAP net loss per common share from continuing operations:





Loss from related party equity method investment
0.01


0.02

Stock-based compensation expense from continuing operations
0.01


0.01

Change in fair value of derivatives liability



Change in fair value of Bookings Commitment
(0.03
)

0.02

Noncash interest expense related to convertible notes
0.01


0.01

Intangible amortization from continuing operations
0.02


0.02

Securities litigation costs



Tax provision resulting from certain noncash tax items



Total adjustments to GAAP net loss per common share from continuing operations
0.02


0.08

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

$
(0.10
)