On February 28, 2020 NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, reported financial results for its fourth quarter and full year ended December 31, 2019 (Press release, NantHealth, FEB 28, 2020, View Source [SID1234554984]).
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"For both the 2019 fourth quarter and full year, we continued to generate strong positive sales momentum, largely due to the ongoing growth of our SaaS business," said Ron Louks, Chief Operating Officer, NantHealth. "The results speak to the dedicated efforts of the entire NantHealth team, who have rallied around our initiatives to grow our business and drive down expenses.
"In recent months, we have streamlined our operations to accelerate growth for Eviti and NaviNet SaaS solutions. In June 2019, we completed the divestiture of our home healthcare services business, and a few weeks ago, we finalized the sale of the assets related to our Connected Care business for $47.25 million. These transactions have improved our capital position and financial flexibility, and allow us to explore growth opportunities."
Software and Services Q4 Highlights:
Clinical Decision Support (Eviti):
Presented new breast cancer research findings at the San Antonio Breast Cancer Symposium (SABCS). The study results indicate that the simultaneous presentation and publication of oncology data is an effective method for relaying practice-changing clinical data, enabling oncologists to quickly adjust treatment patterns and regimen selections
Deployed significant workflow enhancements to the Eviti platform including:
Multiple Payer Access: a significant time-saving enhancement that simplifies workflow, by allowing a user with multiple payers to toggle quickly between payer dashboards
Configuration for Appeals: allows payers to self-configure the appeals function within their account
Patient Match and Attach: automatically associates provider-submitted medical records to the appropriate treatment plan, eliminating manual processes and helping speed up treatment plan reviews
Signed an agreement with Wexford Health Sources, one of the nation’s largest correctional healthcare companies, as previously announced. Implementation was completed in early Q1 2020
In January 2020, announced two expanded Eviti Connect programs:
A leading U.S. health insurance company extended a successful two-state pilot program to 13 states after seeing a significant improvement in the use of evidence-based medicine for member oncology care
One of the largest non-profit rural health plans in the country signed a three-year renewal agreement to continue providing high-quality, high-value care for members
Payer Engagement (NaviNet):
Achieved 25% increase in NaviNet’s direct to provider Q4 2019 revenues from Q4 2018
In January 2020, signed an agreement with The Health Plan, where NaviNet Open will help decrease administrative costs and improve provider network communication and collaboration for the plan in West Virginia and Ohio
Announced enhancements to the NaviNet Open platform:
Claim Appeal: a new application that allows payers to offer an electronic channel for appeals submission, enabling stronger collaboration with the payer for claim resolution, streamlining what is often a manual analog process for both the provider and payer
NaviNet Attachments, now available within our Claim Investigation workflow, provides our users the ability to submit their required documentation easily through our portal to our payer partners, eliminating the need to send supporting documentation through manual processes outside of the portal and saving valuable time when reviewing and resolving inquiries
New Open Authorization enhancements have been introduced that enable payers and providers to manage complex prior authorization requests through electronic submissions, reducing manual workflows based on fax or phone submissions
Connected Care (VCX, DCX):
As noted above, the company completed the sale of its Connected Care assets to Masimo, a global leader in noninvasive monitoring technologies, on February 3, 2020 for $47.25 million. Assets in the sale included the Company’s DCX device connectivity software product (formerly known as DeviceConX), VCX patient vitals software (formerly known as VitalsConX), HBox connectivity hub and Shuttle interface cable. As part of the transaction, the NantHealth employees associated with the Connected Care business joined Masimo
Precision Medicine – Highlights:
Announced FDA 510(k) clearance for Omics Core℠, the nation’s first tumor-normal mutation profiling of overall tumor mutational burden (TMB) from whole exome sequencing in solid tumors. TMB is an emerging biomarker predicting response to checkpoint therapy and identifies tumors that may benefit from immunotherapy
In January 2020, 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) (Free ASCO Whitepaper). 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 2020, 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. This novel machine vision software platform accurately subtypes lung cancer pathology and achieves high concordance with analysis performed by trained medical pathologists.
In February 2020, 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. 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 2019 fourth quarter, total net revenue was $24.2 million, compared with $22.9 million in the 2018 fourth quarter, with the increase driven primarily by new customers in SaaS business and the variability in our DCX product line. On June 7, 2019, the Company completed the divestiture of its home healthcare services business. Accordingly, financial results for the 2019 fourth quarter do not include the results of operations from this business, which in the recent past averaged approximately $1.5 million of revenue per quarter.
Gross profit increased to $15.2 million, or 63% of total net revenue, compared with $11.5 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 (SG&A) expenses declined to $13.9 million from $14.6 million in 2018 fourth quarter, mainly driven by ongoing cost management efforts and efficiencies in overall processes. Research and development (R&D) expenses decreased to $4.8 million from $5.0 million.
Net loss from continuing operations, net of tax, was $11.7 million, or $0.11 per share, compared with $49.2 million, or $0.45 per share, for the 2018 fourth quarter.
On a non-GAAP basis, net loss from continuing operations was $4.9 million, or $0.04 per share, down from $9.0 million, or $0.08 per share, for the fourth 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.
For the 2019 full year, total net revenue increased to $96.0 million from $89.5 million for the 2018 full year, due to strong growth in the SaaS and DCX product lines, partially offset by the divestiture of the home healthcare services business and declines in GPS sales.
Gross profit increased to $57.5 million, or 60% of total net revenue, from $45.2 million, or 51% of total net revenue, for the prior year.
SG&A expense declined to $61.0 million from $70.8 million in 2018, driven by continued efforts to reduce costs and maximize existing resources. R&D expense declined to $19.1 million from $20.9 million in 2018.
For the full year 2019, Net loss from continuing operations, net of tax, was $62.6 million, or $0.57 per share, compared with $190.4 million, or $1.74 per share, for the 2018 full year.
For the full year 2019, on a non-GAAP basis, net loss from continuing operations was $27.4 million, or $0.25 per share, down from $44.5 million, or $0.41 per share, for 2018.
At December 31, 2019, cash and cash equivalents totaled $5.2 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 fourth quarter and full year ended December 31, 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 9998343. 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.