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TMCNet:  NantHealth Reports 2022 Third Quarter Financial Results

[November 03, 2022]

NantHealth Reports 2022 Third Quarter Financial Results

NantHealth, Inc. (NASDAQ-GS: NH), a leading provider of enterprise solutions that help businesses transform complex data into actionable insights, today reported financial results for its third quarter ended September 30, 2022.

"Net revenue was $16.6 million for the third quarter of 2022, representing the fourth consecutive quarter of top-line growth," said Ron Louks, Chief Operating Officer, NantHealth. "Moreover, our gross profit of $9.7 million and gross margin of 58 percent for the quarter were the highest since the fourth quarter of 2020.

"We expect to continue the positive momentum generated over the last several quarters. Recently, we signed a new customer, a leading provider of technology-enabled payment integrity, eligibility and related analytics services, to a four-year agreement for our NantHealth solutions. Importantly, we are also benefiting from a broadened product portfolio, with existing customers appreciating the value of our multiple solutions and services."

Software and Services Q3 Highlights:

  • Clinical Decision Support and Pre-Authorization (Eviti®):
    • In October, secured a three-year contract extension with a large national commercial insurer providing coverage to over two million of their Medicaid members across multiple states. This client has opted to continue bringing unparalleled value to their operations by using Eviti Connect®, and has used this renewal period to increase their solution set to include formulary redirection, further enabling value-based care
    • Announced Eviti Connect platform once again earned full URAC accreditation for Health Utilization Management through 2025. This designation demonstrates the highest level of commitment to quality healthcare
    • Maryland Physicians Care signed a two-year renewal agreement, ensuring it continues to receive a unique and tailored solution for its members with autoimmune diseases
    • Added new capability to Eviti Connect, which allows payer clients to comply seamlessly with state-mandated preferred drug lists, eliminating the need for manual reviews and secondary processing when those preferred drugs are prescribed
  • Payer Engagement (NaviNet®):
    • Secured an agreement with an existing customer, one of America's leading health insurance organizations, which added 750,000 new members to NaviNet
    • Went live with NaviNet Open Prior Authorization for a key customer. This capability is expected to streamline workflows and data collection to enable automated decisions and reduced manual processes. The initial deployment has been completed with further roll outs planned in Q4
    • Added new platform functionality to speed up the prior authorization process, enabling more timely patient care. Updates include the ability for health plans to add direct-to-provider information within the request
  • Network Monitoring and Management (The OpenNMS Group, Inc.):
    • Completed shipment of small form factor OpenNMS mini appliances for user testing. Highly optimized for secure, scalable, and reliable distributed monitoring via the OpenNMS Minion component, these hardware appliances provide visibility into remote or private areas of enterprise networks
    • Made significant progress toward the development of a capability that will let customers monitor infrastructures built using VMware SD-WAN. This initiative marks a significant milestone in the OpenNMS Managed Service Provider (MSP) support program
    • Delivered several service engagements positioning OpenNMS as strategically significant within the clients' IT organizations. Clients included a large national retail chain, an entertainment streaming service, and a top wireless communication provider

Third quarter Financial Results: 2022 vs 2021

For the 2022 third quarter:

  • Total net revenue was $16.6 million compared with $14.4 million.
  • Gross profit was $9.7 million, or 58% of total net revenue, compared with $7.5 million, or 52% of total net revenue.
  • Selling, general and administrative (SG&A) expenses increased to $16.6 million from $13.0 million.
  • Research and development (R&D) expenses increased to $6.3 million from $4.6 million.
  • Net loss attributable to NantHealth was $13.7 million, or $0.12 per share, compared with $10.8 million, or $0.09 per share.
  • On a non-GAAP basis, net loss from continuing operations was $14.0 million, or $0.12 per share, compared with $11.5 million, or $0.10 per share.
  • At September 30, 2022, cash and cash equivalents totaled $0.6 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 third quarter ended September 30, 2022. The conference call will be available to interested parties by dialing 800-942-2493 from the U.S. or Canada, or 212-231-2931 from international locations. 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 enterprise solutions that help businesses transform complex data into actionable insights. By offering efficient ways to move, interpret and visualize complex and highly sensitive information, NantHealth enables customers in healthcare, life sciences, logistics, telecommunications and other industries to automate, understand and act on data while keeping it secure and scalable. NantHealth's product portfolio comprises the latest technology in payer/provider collaboration platforms for real-time coverage decision support (Eviti and NaviNet), and data solutions that provide multi-data analysis, reporting and professional services offerings (Quadris). The OpenNMS Group, Inc., a NantHealth subsidiary, helps businesses monitor and manage network health and performance. For more information, visit nanthealth.com, follow us on Twitter, Facebook, LinkedIn and YouTube and subscribe to our blog.

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; our ability to grow the market for our software and data solutions; successfully enhancing our software and data solutions to achieve market acceptance and keep pace with technological developments; customer concentration; competition; security breaches; bandwidth limitations; our use and distribution of open source software; our ability to obtain necessary regulatory approvals, certifications and licenses; dependence upon senior management; the need to comply with and meet applicable laws and regulations; unexpected adverse events; 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)

 

 

September 30,
2022

 

December 31,
2021

 

(Unaudited)

 

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

635

 

 

$

29,084

 

Accounts receivable, net

 

5,299

 

 

 

5,810

 

Related party receivables, net

 

476

 

 

 

506

 

Prepaid expenses and other current assets

 

5,738

 

 

 

4,010

 

Total current assets

 

12,148

 

 

 

39,410

 

Property, plant, and equipment, net

 

11,754

 

 

 

12,366

 

Goodwill

 

98,333

 

 

 

98,333

 

Intangible assets, net

 

32,342

 

 

 

39,039

 

Related party receivable, net of current

 

937

 

 

 

1,012

 

Operating lease right-of-use assets

 

4,604

 

 

 

6,048

 

Other assets

 

794

 

 

 

1,620

 

Total assets

$

160,912

 

 

$

197,828

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

6,216

 

 

$

3,204

 

Accrued and other current liabilities

 

18,771

 

 

 

16,358

 

Deferred revenue

 

2,663

 

 

 

2,440

 

Related party payables, net

 

4,825

 

 

 

5,161

 

Notes payable

 

1,112

 

 

 

782

 

Total current liabilities

 

33,587

 

 

 

27,945

 

Deferred revenue, net of current

 

1,397

 

 

 

2,024

 

Related party liabilities

 

43,922

 

 

 

38,278

 

Related party promissory note

 

112,666

 

 

 

112,666

 

Related party convertible note, net

 

62,318

 

 

 

62,268

 

Convertible notes, net

 

74,663

 

 

 

74,603

 

Deferred income taxes, net

 

1,561

 

 

 

1,775

 

Operating lease liabilities

 

4,554

 

 

 

6,248

 

Other liabilities

 

27,406

 

 

 

34,013

 

Total liabilities

 

362,074

 

 

 

359,820

 

 

 

 

 

Stockholders' deficit

 

 

 

Common stock, $0.0001 par value per share, 750,000,000 shares authorized;
115,550,244 and 115,505,244 shares issued and outstanding at September 30,
2022 and December 31, 2021, respectively

 

12

 

 

 

12

 

Additional paid-in capital

 

894,750

 

 

 

891,105

 

Accumulated deficit

 

(1,095,016

)

 

 

(1,052,897

)

Accumulated other comprehensive loss

 

(908

)

 

 

(212

)

Total stockholders' deficit

$

(201,162

)

 

$

(161,992

)

Total liabilities and stockholders' deficit

$

160,912

 

 

$

197,828

 

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

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

Revenue

 

 

 

 

 

 

 

Software-as-a-service related

$

16,161

 

 

$

13,879

 

 

$

47,793

 

 

$

45,140

 

Maintenance

 

398

 

 

 

406

 

 

 

1,290

 

 

 

1,201

 

Professional services

 

73

 

 

 

57

 

 

 

419

 

 

 

257

 

Total software-related revenue

 

16,632

 

 

 

14,342

 

 

 

49,502

 

 

 

46,598

 

Other

 

1

 

 

 

17

 

 

 

2

 

 

 

20

 

Total net revenue

 

16,633

 

 

 

14,359

 

 

 

49,504

 

 

 

46,618

 

 

 

 

 

 

 

 

 

Cost of Revenue

 

 

 

 

 

 

 

Software-as-a-service related

 

5,172

 

 

 

5,244

 

 

 

16,356

 

 

 

16,223

 

Maintenance

 

509

 

 

 

298

 

 

 

1,347

 

 

 

775

 

Professional services

 

-

 

 

 

6

 

 

 

9

 

 

 

13

 

Amortization of developed technologies

 

1,247

 

 

 

1,247

 

 

 

3,741

 

 

 

3,741

 

Total software-related cost of revenue

 

6,928

 

 

 

6,795

 

 

 

21,453

 

 

 

20,752

 

Other

 

-

 

 

 

34

 

 

 

1

 

 

 

127

 

Total cost of revenue

 

6,928

 

 

 

6,829

 

 

 

21,454

 

 

 

20,879

 

 

 

 

 

 

 

 

 

Gross Profit

 

9,705

 

 

 

7,530

 

 

 

28,050

 

 

 

25,739

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Selling, general and administrative

 

16,580

 

 

 

12,969

 

 

 

45,577

 

 

 

37,309

 

Research and development

 

6,299

 

 

 

4,648

 

 

 

17,875

 

 

 

14,510

 

Amortization of acquisition-related assets

 

985

 

 

 

985

 

 

 

2,956

 

 

 

2,956

 

Total operating expenses

 

23,864

 

 

 

18,602

 

 

 

66,408

 

 

 

54,775

 

 

 

 

 

 

 

 

 

Gain (loss) from operations

 

(14,159

)

 

 

(11,072

)

 

 

(38,358

)

 

 

(29,036

)

Interest income (expense), net

 

(3,511

)

 

 

(3,572

)

 

 

(10,431

)

 

 

(10,943

)

Other income (expense), net

 

4,003

 

 

 

3,759

 

 

 

6,651

 

 

 

(1,862

)

Income (loss) from continuing operations before income
taxes

 

(13,667

)

 

 

(10,885

)

 

 

(42,138

)

 

 

(41,841

)

Provision for (benefit from) income taxes

 

(10

)

 

 

23

 

 

 

(19

)

 

 

21

 

Net income (loss) from continuing operations

 

(13,657

)

 

 

(10,908

)

 

 

(42,119

)

 

 

(41,862

)

Income (loss) from discontinued operations, net of tax
attributable to NantHealth

 

-

 

 

 

-

 

 

 

-

 

 

 

24

 

Net income (loss)

 

(13,657

)

 

 

(10,908

)

 

 

(42,119

)

 

 

(41,838

)

Net income (loss) attributable to noncontrolling interests

 

-

 

 

 

(65

)

 

 

-

 

 

 

(284

)

Net income (loss) attributable to NantHealth

$

(13,657

)

 

$

(10,843

)

 

$

(42,119

)

 

$

(41,554

)

 

 

 

 

 

 

 

 

Basic and diluted net loss per share attributable to NantHealth:

 

 

 

 

 

 

 

Total net income (loss) per share - common stock

$

(0.12

)

 

$

(0.09

)

 

$

(0.36

)

 

$

(0.37

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic and diluted - common stock

 

115,550,244

 

 

 

115,243,671

 

 

 

115,540,681

 

 

 

113,706,124

 

NantHealth, Inc.
Non-GAAP Net Loss from Continuing Operations Attributable to NantHealth and
Non-GAAP Net Loss Per Share from Continuing Operations Attributable to NantHealth
(Dollars in thousands, except per share amounts)
(Unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

Net income (loss) from continuing operations
attributable to NantHealth

$

(13,657

)

 

$

(10,843

)

 

$

(42,119

)

 

$

(41,578

)

Adjustments to GAAP net income (loss) from
continuing operations attributable to NantHealth:

 

 

 

 

 

 

 

Loss on Exchange and Prepayment of 2016 Notes

 

-

 

 

 

-

 

 

 

-

 

 

 

742

 

Stock-based compensation expense from
continuing operations

 

889

 

 

 

799

 

 

 

3,542

 

 

 

2,533

 

Change in fair value of derivatives liability

 

-

 

 

 

-

 

 

 

-

 

 

 

(4

)

Change in fair value of Bookings Commitment

 

(3,656

)

 

 

(3,670

)

 

 

(6,156

)

 

 

1,133

 

Impairment of ROU asset

 

-

 

 

 

-

 

 

 

208

 

 

 

-

 

Noncash interest expense related to convertible
notes

 

37

 

 

 

58

 

 

 

110

 

 

 

568

 

Intangible amortization from continuing operations

 

2,232

 

 

 

2,222

 

 

 

6,697

 

 

 

6,646

 

Cyber incident estimated liability

 

220

 

 

 

-

 

 

 

220

 

 

 

-

 

Tax provision (benefit) resulting from certain
noncash tax items

 

(29

)

 

 

(17

)

 

 

(73

)

 

 

(105

)

Total adjustments to GAAP net income (loss) from
continuing operations attributable to NantHealth

 

(307

)

 

 

(608

)

 

 

4,548

 

 

 

11,513

 

Net loss from continuing operations attributable to
NantHealth - Non-GAAP

$

(13,964

)

 

$

(11,451

)

 

$

(37,571

)

 

$

(30,065

)

 

 

 

 

 

 

 

 

Weighted average basis common shares outstanding

 

115,550,244

 

 

 

115,243,671

 

 

 

115,540,681

 

 

 

113,706,124

 

 

 

 

 

 

 

 

 

Net income (loss) per common share from
continuing operations attributable to NantHealth -
Non-GAAP

$

(0.12

)

 

$

(0.10

)

 

$

(0.33

)

 

$

(0.26

)

Reconciliation of Net Loss per Common Share from Continuing Operations Attributable to NantHealth
to Net Loss per Common Share from Continuing Operations Attributable to NantHealth - Non-GAAP
(Unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

Net income (loss) per common share from continuing
operations attributable to NantHealth

$

(0.12

)

 

$

(0.09

)

 

$

(0.36

)

 

$

(0.37

)

Adjustments to GAAP net income (loss) per common
share from continuing operations attributable to
NantHealth:

 

 

 

 

 

 

 

Loss on Exchange and Prepayment of 2016 Notes

 

-

 

 

 

-

 

 

 

-

 

 

 

0.01

 

Stock-based compensation expense from
continuing operations

 

0.01

 

 

 

0.01

 

 

 

0.03

 

 

 

0.03

 

Change in fair value of derivatives liability

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Change in fair value of Bookings Commitment

 

(0.03

)

 

 

(0.04

)

 

 

(0.06

)

 

 

0.01

 

Impairment of ROU asset

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Noncash interest expense related to convertible
notes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Intangible amortization from continuing operations

 

0.02

 

 

 

0.02

 

 

 

0.06

 

 

 

0.06

 

Cyber incident estimated liability

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax provision (benefit) resulting from certain
noncash tax items

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total adjustments to GAAP net income (loss) per
common share from continuing operations
attributable to NantHealth

 

-

 

 

 

(0.01

)

 

 

0.03

 

 

 

0.11

 

Net income (loss) per common share from
continuing operations attributable to NantHealth -
Non-GAAP

$

(0.12

)

 

$

(0.10

)

 

$

(0.33

)

 

$

(0.26

)

 


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