On November 7, 2019 NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, reported financial results for its third quarter ended September 30, 2019 (Press release, NantHealth, NOV 7, 2019, View Source [SID1234550677]).

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"For the 2019 third quarter, the top line for our SaaS business grew significantly over the same quarter last year," said Bob Petrou, Chief Financial Officer, NantHealth. "This performance, largely driven by an expanding customer base and increasing number of covered lives, demonstrates the integral role NantHealth’s SaaS solutions play in providing a continuum of care for payers, providers and, most importantly, the patients we serve. At the companywide level, we have made great progress managing our financial performance and growing gross margin, all resulting in reduced cash burn and enhanced bottom line results."

Software and Services Q3 Highlights:

Clinical Decision Support (Eviti):
Renewed a partnership contract with a leading provider of clinical solutions. The contract has a three-year term and a minimum estimated total value of $38.4 million
Signed an agreement with Wexford Health Sources, one of the nation’s largest correctional healthcare companies, bringing evidence-based standards and value-based oncology care to patients
Renewed an agreement with a large national health plan for federal employees, retirees and their families. Plan members will continue to receive streamlined preauthorization of cancer care
Launched several enhancements designed to provide payers with additional information about care management, including the intended use of brand name drugs and visibility into settings where care is provided. Payers with multiple plans can now permit their users to view multiple dashboards, which saves time by reducing the need for multiple logins and passwords
Received full accreditation from URAC for the Eviti platform. Eviti continues to meet URAC Health Utilization Management standards, valid through September 1, 2022. The designation recognizes those companies abiding by evidence-based standards and value-based care
Payer Engagement (NaviNet):
Added NaviNet’s Authorization Attachment application to the NaviNet implementation for one of the nation’s largest health insurance organizations. This feature ensures providers receive the right supporting documentation to make more informed, timely decisions
Expanded NaviNet Open functionality to provide additional notifications within the Authorization application, enabling users to receive information timely and respond quickly to critical requests, eliminating potential delays in caring for patients
NaviNet’s AllPayer product completed the conversion of 3,602 provider offices, more than 80% of AllPayer customers, from a legacy pricing model which will result in more than $1.0 million of additional annual recurring revenue
Connected Care (VCX, DCX):
Introduced VCX 3.0 (formerly VitalsConX), designed to reduce patient overstays and facilitate faster decision making. VCX 3.0 accelerates automated vital sign capture and provides easy entry of other customized observations at the point of care. Updates include streamlined data validation and a touch-based user interface to document vital signs quickly and easily. VCX 3.0 now supports "smart" patient vital sign monitors, including GE VC150
Announced new Shuttle cable features to help improve data collection, efficiency and accuracy using a medical-grade serial-to-USB interface cable
Signed a contract with Baxter expanding DCX (formerly DeviceConX) medical device driver development, enabling Baxter to connect additional devices to electronic medical record (EMR) systems.
In Q4, at the HIMSS Asia Pacific 2019 meeting, NantHealth led the Interoperability Showcase along with GE Healthcare, AirStrip and iProcedures. Together, the companies showcased how clinicians can spend less time on documentation and more time analyzing data in near real-time to improve patient outcomes
Sequencing and Molecular Analysis – Highlights:

Presented a poster on GPS Cancer at the IASLC (World Lung) meeting in Barcelona. Dr. Hossein Borghaei, Fox Chase Cancer Center, and authors from NantHealth and NantOmics, presented a poster, "222 NSCLC’s Classified by PAM50: Luminal A NSCLC Is a Distinct Subtype with Low TMB and Immune Suppressive TME." The poster concludes NantHealth and NantOmics can use GPS Cancer to identify a unique subset of patients who are likely to be resistant to conventional immune checkpoint inhibitor therapy, using a method that has not previously been well characterized in this clinical setting
Presented a poster at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) meeting. NantHealth and NantOmics, together with investigators from Moffitt Cancer Center, presented a poster, "Differential expression of immunoregulatory molecules and highly-associated cancer genes may provide novel insights into strategic trial design for therapeutics." The poster describes novel associations of immune checkpoint gene expression with cancer related genomic mutations beyond Tumor Mutation Burden (TMB) as a biomarker for immunotherapy response
Business and Financial Highlights

For the 2019 third quarter, total net revenue was $22.4 million, compared with $22.3 million in the 2018 third quarter. On June 7, 2019, the Company completed the divestiture of its home health care services business. Accordingly, financial results for the 2019 third quarter do not include the results of operations from this business, which over the last year averaged approximately $1.5 million of revenue per quarter.
Gross profit increased to $14.0 million, or 63% of total net revenue, compared with $11.1 million, or 50% 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 and overall cost management.
Selling, general and administrative expenses declined to $15.1 million from $17.0 million in 2018 third quarter. The decrease was mainly driven by ongoing cost management efforts and efficiencies in overall processes.
Research and development expenses decreased to $4.6 million from $4.8 million.
Net loss from continuing operations, net of tax, was $16.4 million, or $0.15 per share, compared with $97.5 million, or $0.89 per share, for the 2018 third quarter.
On a non-GAAP basis, net loss from continuing operations was $7.4 million, or $0.07 per share, down from $10.8 million, or $0.10 per share, for the third quarter of last year. The improvement reflects the company’s ongoing efforts to manage costs, growth of its SaaS business and efficiencies and process improvements.
At September 30, 2019, cash and cash equivalents totaled $9.3 million, an increase of $2.3 million from June 30, 2019.
Conference Call Information and Forward-Looking Statements

Thursday, November 7, 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 third quarter ended September 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 3294717. 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.