-
Q2 Financial Highlights:
-
Fourth consecutive quarter of total revenue growth
-
Total revenue was $25.7 million, up 17% from Q2 2018
-
SaaS revenue of $18.3 million, rose 13% from Q2 2018 and 3% sequentially
-
Gross profit was $15.9 million, compared with $11.5 million in Q2 2018
-
Gross margin increased to 62% from 52% in Q2 2018
-
-
Software and Service business continued positive momentum in 1H 2019
NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, today reported financial results for its second quarter ended June 30, 2019.
"Our 2019 second quarter represents the fourth consecutive quarter of total revenue growth," said Bob Petrou, Chief Financial Officer of NantHealth. "We generated strong topline growth and substantial gross margin improvement, which was largely driven by continued positive momentum in our Software and SaaS business, and the continuation of cost management throughout the company."
Software and Services Highlights: |
|
|
|
|
|
|
Sequencing and Molecular Analysis – Highlights: |
|
Business and Financial Highlights
For the 2019 second quarter, total net revenue was $25.7 million, compared with $22.0 million in the 2018 second quarter. Gross profit was $15.9 million, or 62% of total net revenue, compared with $11.5 million, or 52% of total net revenue, for the prior year period. Selling, general and administrative expenses declined to $15.2 million, from $18.4 million in 2018 second quarter. Research and development expenses decreased to $4.6 million from $5.9 million.
Financial results for the second quarter of 2019 included non-cash charges for loss from related party equity method investment of $2.2 million. Net loss from continuing operations, net of tax, was $14.7 million, or $0.13 per share, compared with $21.8 million, or $0.20 per share, for the 2018 second quarter. Net loss (including discontinued operations) was $14.7 million, or $0.13 per share, compared with $23.4 million, or $0.21 per share, for 2018 second quarter.
On a non-GAAP basis, net loss from continuing operations, which excludes the losses from our related party equity investment of $2.2 million, an intangible asset impairment charge of $4.0 million, and a gain from change in the fair value of the Bookings Commitment liability of $1.0 million, among other things, was $4.4 million, or $0.04 per share, down from $11.1 million, or $0.10 per share, for the second quarter of last year.
Conference Call Information and Forward-Looking Statements
Thursday, August 8, 2019, after market close, 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, 2019. 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 3494698. 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 towards 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), connected care solutions that deliver medical device interoperability (DeviceConX) 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 Twitter, Facebook 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.
NantHealth, Inc. | |||||||
Consolidated Balance Sheets | |||||||
(Dollars in thousands) | |||||||
June 30, 2019 |
December 31, 2018 |
||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ |
7,076 |
|
$ |
18,305 |
|
|
Accounts receivable, net |
|
13,858 |
|
|
15,286 |
|
|
Inventories |
|
303 |
|
|
496 |
|
|
Related party receivables, net |
|
938 |
|
|
1,007 |
|
|
Prepaid expenses and other current assets |
|
5,726 |
|
|
4,350 |
|
|
Total current assets |
|
27,901 |
|
|
39,444 |
|
|
Property, plant, and equipment, net |
|
18,152 |
|
|
22,978 |
|
|
Goodwill |
|
115,930 |
|
|
115,930 |
|
|
Intangible assets, net |
|
56,242 |
|
|
64,703 |
|
|
Investment in related party |
|
35,749 |
|
|
40,000 |
|
|
Related party receivable, net of current |
|
1,360 |
|
|
1,611 |
|
|
Operating lease right-of-use assets |
|
10,783 |
|
— |
|||
Other assets |
|
1,929 |
|
|
1,671 |
|
|
Total assets | $ |
268,046 |
|
$ |
286,337 |
|
|
Liabilities and Stockholders' Equity (Deficit) | |||||||
Current liabilities | |||||||
Accounts payable | $ |
3,047 |
|
$ |
1,650 |
|
|
Accrued and other current liabilities |
|
12,614 |
|
|
13,832 |
|
|
Deferred revenue |
|
17,566 |
|
|
16,263 |
|
|
Related party payables, net |
|
4,192 |
|
|
4,791 |
|
|
Total current liabilities |
|
37,419 |
|
|
36,536 |
|
|
Deferred revenue, net of current |
|
4,329 |
|
|
6,704 |
|
|
Related party liabilities |
|
20,939 |
|
|
17,708 |
|
|
Related party promissory note |
|
112,666 |
|
|
112,666 |
|
|
Related party convertible note, net |
|
8,613 |
|
|
8,378 |
|
|
Convertible notes, net |
|
81,957 |
|
|
79,433 |
|
|
Operating lease liabilities |
|
11,949 |
|
— |
|||
Other liabilities |
|
20,670 |
|
|
22,081 |
|
|
Total liabilities |
|
298,542 |
|
|
283,506 |
|
|
Stockholders' equity (deficit) | |||||||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 110,454,507 and 109,491,277 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively (including 1 share of restricted stock at both dates) |
|
11 |
|
|
11 |
|
|
Additional paid-in capital |
|
888,461 |
|
|
887,289 |
|
|
Accumulated deficit |
|
(918,758 |
) |
|
(884,122 |
) |
|
Accumulated other comprehensive loss |
|
(210 |
) |
|
(347 |
) |
|
Total stockholders' (deficit) equity |
|
(30,496 |
) |
|
2,831 |
|
|
Total liabilities and stockholders' equity (deficit) | $ |
268,046 |
|
$ |
286,337 |
|
NantHealth, Inc. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Total net revenue | $ |
25,686 |
|
$ |
22,047 |
|
$ |
49,415 |
|
$ |
44,311 |
|
|||
Total cost of revenue |
|
9,816 |
|
|
10,582 |
|
|
21,105 |
|
|
21,651 |
|
|||
Gross Profit |
|
15,870 |
|
|
11,465 |
|
|
28,310 |
|
|
22,660 |
|
|||
Operating Expenses: | |||||||||||||||
Selling, general and administrative |
|
15,177 |
|
|
18,388 |
|
|
31,967 |
|
|
39,122 |
|
|||
Research and development |
|
4,584 |
|
|
5,889 |
|
|
9,664 |
|
|
11,040 |
|
|||
Amortization of acquisition-related assets |
|
1,054 |
|
|
1,054 |
|
|
2,108 |
|
|
2,108 |
|
|||
Impairment of intangible assets |
|
3,977 |
|
— |
|
3,977 |
|
— | |||||||
Total operating expenses |
|
24,792 |
|
|
25,331 |
|
|
47,716 |
|
|
52,270 |
|
|||
Loss from operations |
|
(8,922 |
) |
|
(13,866 |
) |
|
(19,406 |
) |
|
(29,610 |
) |
|||
Interest expense, net |
|
(4,473 |
) |
|
(4,262 |
) |
|
(8,887 |
) |
|
(8,460 |
) |
|||
Other income (expense), net |
|
1,054 |
|
|
(1,334 |
) |
|
(1,451 |
) |
|
(1,154 |
) |
|||
Loss from related party equity method investment |
|
(2,208 |
) |
|
(2,945 |
) |
|
(4,418 |
) |
|
(6,206 |
) |
|||
Loss from continuing operations before income taxes |
|
(14,549 |
) |
|
(22,407 |
) |
|
(34,162 |
) |
|
(45,430 |
) |
|||
Provision for (benefit from) income taxes |
|
133 |
|
|
(601 |
) |
|
359 |
|
|
(1,651 |
) |
|||
Net loss from continuing operations |
|
(14,682 |
) |
|
(21,806 |
) |
|
(34,521 |
) |
|
(43,779 |
) |
|||
Loss from discontinued operations, net of tax |
|
(31 |
) |
|
(1,591 |
) |
|
(115 |
) |
|
(1,785 |
) |
|||
Net loss | $ |
(14,713 |
) |
$ |
(23,397 |
) |
$ |
(34,636 |
) |
$ |
(45,564 |
) |
|||
Net loss per share: | |||||||||||||||
Continuing operations | |||||||||||||||
Basic and diluted - common stock | $ |
(0.13 |
) |
$ |
(0.20 |
) |
$ |
(0.31 |
) |
$ |
(0.40 |
) |
|||
Discontinued operations | |||||||||||||||
Basic and diluted - common stock | $ |
— |
|
$ |
(0.01 |
) |
$ |
— |
|
$ |
(0.02 |
) |
|||
Total net loss per share | |||||||||||||||
Basic and diluted - common stock | $ |
(0.13 |
) |
$ |
(0.21 |
) |
$ |
(0.31 |
) |
$ |
(0.42 |
) |
|||
Weighted average shares outstanding: | |||||||||||||||
Basic and diluted - common stock |
|
110,209,510 |
|
|
109,120,438 |
|
|
110,057,981 |
|
|
108,851,348 |
|
NantHealth, Inc. | |||||||||||
Supplemental Revenue Schedule | |||||||||||
(Dollars in thousands) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||
Revenue: | |||||||||||
Software-as-a-service related | $ |
18,291 |
$ |
16,220 |
$ |
36,093 |
$ |
32,386 |
|||
Software and hardware related |
|
3,099 |
|
885 |
|
4,126 |
|
2,340 |
|||
Maintenance |
|
2,535 |
|
2,388 |
|
5,028 |
|
4,835 |
|||
Total software-related revenue |
|
23,925 |
|
19,493 |
|
45,247 |
|
39,561 |
|||
Sequencing and molecular analysis |
|
491 |
|
924 |
|
1,305 |
|
1,764 |
|||
Home health care services |
|
1,270 |
|
1,630 |
|
2,863 |
|
2,986 |
|||
Total net revenue | $ |
25,686 |
$ |
22,047 |
$ |
49,415 |
$ |
44,311 |
|||
Cost of Revenue: | |||||||||||
Software-as-a-service related | $ |
5,743 |
$ |
5,741 |
$ |
11,495 |
$ |
12,342 |
|||
Software and hardware related |
|
794 |
|
789 |
|
1,579 |
|
1,675 |
|||
Maintenance |
|
311 |
|
234 |
|
581 |
|
449 |
|||
Amortization of developed technologies |
|
1,143 |
|
1,293 |
|
2,376 |
|
2,466 |
|||
Total software-related cost of revenue |
|
7,991 |
|
8,057 |
|
16,031 |
|
16,932 |
|||
Sequencing and molecular analysis |
|
1,177 |
|
1,689 |
|
3,603 |
|
3,120 |
|||
Home health care services |
|
648 |
|
836 |
|
1,471 |
|
1,599 |
|||
Total cost of revenue | $ |
9,816 |
$ |
10,582 |
$ |
21,105 |
$ |
21,651 |
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, |
||||||||||||||
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Net loss from continuing operations | $ |
(14,682 |
) |
$ |
(21,806 |
) |
$ |
(34,521 |
) |
$ |
(43,779 |
) |
|||
Adjustments to GAAP net loss: | |||||||||||||||
Loss from related party equity method investment |
|
2,208 |
|
|
2,945 |
|
|
4,418 |
|
|
6,206 |
|
|||
Stock-based compensation expense from continuing operations |
|
673 |
|
|
1,808 |
|
|
1,323 |
|
|
4,432 |
|
|||
Acquisition related sales incentive | — |
|
425 |
|
— |
|
570 |
|
|||||||
Change in fair value of derivatives liability | — |
|
(1 |
) |
— |
|
(1 |
) |
|||||||
Change in fair value of Bookings Commitment |
|
(989 |
) |
— |
|
1,505 |
|
— | |||||||
Impairment of Investment in IOBS | — |
|
1,750 |
|
— |
|
1,750 |
|
|||||||
Noncash interest expense related to convertible notes |
|
1,403 |
|
|
1,235 |
|
|
2,760 |
|
|
2,429 |
|
|||
Intangible amortization from continuing operations |
|
2,197 |
|
|
2,347 |
|
|
4,484 |
|
|
4,574 |
|
|||
Impairment of intangible assets |
|
3,977 |
|
— |
|
3,977 |
|
— | |||||||
Loss on sale of business |
|
582 |
|
— |
|
582 |
|
— | |||||||
Securities litigation costs | — |
|
749 |
|
— |
|
823 |
|
|||||||
Tax provision (benefit) resulting from certain noncash tax items |
|
255 |
|
|
(599 |
) |
|
366 |
|
|
(1,706 |
) |
|||
Total adjustments to GAAP net loss from continuing operations |
|
10,306 |
|
|
10,659 |
|
|
19,415 |
|
|
19,077 |
|
|||
Net loss - Non-GAAP from continuing operations | $ |
(4,376 |
) |
$ |
(11,147 |
) |
$ |
(15,106 |
) |
$ |
(24,702 |
) |
|||
Weighted average shares outstanding |
|
110,209,510 |
|
|
109,120,438 |
|
|
110,057,981 |
|
|
108,851,348 |
|
|||
Net loss per share from continuing operations - Non-GAAP | $ |
(0.04 |
) |
$ |
(0.10 |
) |
$ |
(0.14 |
) |
$ |
(0.23 |
) |
|||
Reconciliation of Net Loss from Continuing Operations per Common Share | |||||||||||||||
to Net Loss per Common Share from Continuing Operations - Non-GAAP (Unaudited): | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Net loss per common share from continuing operations | $ |
(0.13 |
) |
$ |
(0.20 |
) |
$ |
(0.31 |
) |
$ |
(0.40 |
) |
|||
Adjustments to GAAP net loss per common share from continuing operations: | |||||||||||||||
Loss from related party equity method investment |
|
0.01 |
|
|
0.03 |
|
|
0.03 |
|
|
0.06 |
|
|||
Stock-based compensation expense from continuing operations |
|
0.01 |
|
|
0.02 |
|
|
0.01 |
|
|
0.04 |
|
|||
Acquisition related sales incentive | — | — | — | — | |||||||||||
Change in fair value of derivatives liability | — | — | — | — | |||||||||||
Change in fair value of Bookings Commitment |
|
(0.01 |
) |
— |
|
0.01 |
|
— | |||||||
Impairment of Investment in IOBS | — |
|
0.02 |
|
— |
|
0.02 |
|
|||||||
Noncash interest expense related to convertible notes |
|
0.01 |
|
|
0.01 |
|
|
0.03 |
|
|
0.02 |
|
|||
Intangible amortization from continuing operations |
|
0.02 |
|
|
0.02 |
|
|
0.04 |
|
|
0.04 |
|
|||
Impairment of intangible assets |
|
0.04 |
|
— |
|
0.04 |
|
— | |||||||
Loss on sale of business |
|
0.01 |
|
— |
|
0.01 |
|
— | |||||||
Securities litigation costs | — |
|
0.01 |
|
— |
|
0.01 |
|
|||||||
Tax provision (benefit) resulting from certain noncash tax items | — |
|
(0.01 |
) |
— |
|
(0.02 |
) |
|||||||
Total adjustments to GAAP net loss per common share from continuing operations |
|
0.09 |
|
|
0.10 |
|
|
0.17 |
|
|
0.17 |
|
|||
Net loss per common share from continuing operations - Non-GAAP | $ |
(0.04 |
) |
$ |
(0.10 |
) |
$ |
(0.14 |
) |
$ |
(0.23 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190808005757/en/
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