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NantHealth Reports 17 Percent Revenue Growth in Q1

This story has been updated to reflect corrected revenue breakdowns by segment that NantHealth issued Wednesday evening and to include comments made by NantHealth management during a conference call.

NEW YORK (GenomeWeb) – NantHealth reported after the close of the market on Wednesday that its first quarter revenues rose 17 percent year over year.

For the three months ended March 31, the firm said revenues rose to $22.3 million from $19.1 million a year earlier.

The year-over-year results reflect continuing operations only, the company noted. In August 2017, NantHealth announced a restructuring plan that included 300 layoffs and the sale of its provider and patient engagement assets to Allscripts Healthcare Solutions. As a result, the company has classified the current and prior period operating results of those assets as discontinued operations.

Further, NantHealth said, the company changed how it recognizes some revenues at the beginning of 2018, adding, among other things, a category for home healthcare services. Total Q1 net revenues prior to the impact of the new revenue recognition standard increased 14 percent to $21.7 million from $19.1 million Q1 2017.

NantHealth did see revenue growth in all of its business segments, but particularly from its software/hardware and sequencing/molecular analysis units. Sales in the molecular division rose 65 percent, to $840,000 from $510,000 during Q1 2017, while software and hardware revenues jumped to $1.5 million from $598,000, the company reported. Meanwhile, software-as-a-service revenues rose to $16.2 million from $14.8 million the year before, maintenance revenues rose to $2.4 million from $2.0 million, and home healthcare service revenues rose to $1.4 million from $1.2 million.

"This shows that the restructuring plan is working," CFO Ronald Louks said in a conference call following the release of these financial results. CEO and Chairman Patrick Soon-Shiong was not on the call due to a "prior commitment," NantHealth officials said.

The company also reported that 677 of its GPS Cancer commercial tests were ordered in Q1, up sequentially from 606 tests ordered in Q4 2017. The company also submitted a medical device application with the US Food and Drug Administration for its proprietary cfDNA liquid biopsy platform during the quarter, and said that its molecular analysis portfolio expanded to include proprietary blood-based tumor profiling services, with beta launch of a 26-analyte profiling test.

NantHealth is planning the commercial launch of the 26-analyte liquid biopsy test for cfDNA and cfRNA for next month at the annual American Society of Clinical Oncology meeting, according to Louks.

In January, NantHealth submitted a portion of GPS Cancer for solid tumors to the FDA, specifically a tumor-normal sequencing test that analyzes the exome and reports somatic mutations, though it could also be used to call germline variants. Wednesday, Chief Medical Officer Sandeep "Bobby" Reddy said that the regulatory agency has reviewed that test.

"We are in constructive dialogue with them, ongoing," Reddy said. "We've received back comments and submitted back our replies."

Since the end of Q1, the company has submitted its first CE Mark application, for DeviceConX, a technology platform that captures patient data from medical devices for export to electronic health records and other IT systems, automating an otherwise error-prone manual process. 

NantHealth's Q1 net loss narrowed to $22.2 million, or $.20 per share, from $41.1 million, or $.34 per diluted share. On an adjusted basis, the firm's net loss from continuing operations was $.12 per share.  

The firm's Q1 R&D expenses fell 42 percent to $5.2 million from $8.9 million, while its SG&A costs for the quarter rose 19 percent to $20.7 million from $17.4 million a year ago.

As of March 31, NantHealth had cash and cash equivalents of $46.4 million.