Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 09, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NantHealth, Inc. | |
Entity Central Index Key | 1,566,469 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 121,239,975 |
Condensed Consolidated and Comb
Condensed Consolidated and Combined Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 75,801 | $ 5,989 |
Marketable securities | 0 | 1,243 |
Accounts receivable, net | 12,928 | 11,472 |
Inventories | 1,802 | 2,146 |
Deferred implementation costs | 4,539 | 2,224 |
Related party receivables, net | 882 | 1,245 |
Prepaid expenses and other current assets | 5,803 | 8,707 |
Total current assets | 101,755 | 33,026 |
Property, plant, and equipment, net | 29,412 | 13,899 |
Deferred implementation costs, net of current | 7,109 | 1,930 |
Goodwill | 132,729 | 56,718 |
Intangible assets, net | 124,645 | 54,971 |
Investment in related party | 240,297 | 248,191 |
Related party receivable, net of current | 1,987 | 1,300 |
Other assets | 2,277 | 1,918 |
Total assets | 640,211 | 411,953 |
Current liabilities | ||
Accounts payable | 6,540 | 6,447 |
Accrued expenses | 23,027 | 15,967 |
Deferred revenue | 17,180 | 10,656 |
Related party payables, net | 7,530 | 10,166 |
Total current liabilities | 54,277 | 43,236 |
Deferred revenue, net of current | 16,750 | 17,312 |
Related party interest payable | 4,171 | 0 |
Related party promissory note | 112,666 | 0 |
Deferred income taxes, net | 780 | 0 |
Other liabilities | 428 | 358 |
Total liabilities | 189,072 | 60,906 |
Redeemable Series F units: 53,580,996 units issued and outstanding at December 31, 2015 | 0 | 166,042 |
Stockholders' / members' equity | ||
Members' equity, 541,228,171 units issued and outstanding at December 31, 2015 (Note 16) | 476,263 | |
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 121,236,673 shares issued and outstanding at September 30, 2016 | 12 | |
Additional paid-in capital | 865,889 | 0 |
Accumulated deficit | (415,322) | (291,171) |
Accumulated other comprehensive income (loss) | 560 | (87) |
Total stockholders' / members' equity | 451,139 | 185,005 |
Total liabilities and stockholders' / members' equity | $ 640,211 | $ 411,953 |
Condensed Consolidated and Com3
Condensed Consolidated and Combined Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Redeemable Series F units issued (units) | 53,580,996 | |
Redeemable Series F units outstanding (units) | 53,580,996 | |
Members' equity units issued (units) | 541,228,171 | |
Members' equity units outstanding (units) | 541,228,171 | |
Common stock, par value (usd per share) | $ 0.0001 | |
Common stock authorized (shares) | 750,000,000 | |
Common stock issued (shares) | 121,236,673 | |
Common stock outstanding (shares) | 121,236,673 |
Condensed Consolidated and Com4
Condensed Consolidated and Combined Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |||||
Revenue: | ||||||||
Software and hardware | $ 2,391 | $ 4,493 | $ 7,214 | $ 12,196 | ||||
Software–as-a-service | 14,603 | 4,143 | 43,485 | 11,361 | ||||
Total software-related revenue | 16,994 | 8,636 | 50,699 | 23,557 | ||||
Maintenance | 3,204 | 2,897 | 10,854 | 7,937 | ||||
Sequencing and molecular analysis | 77 | 75 | 122 | 75 | ||||
Other services | 5,082 | 2,797 | 14,623 | 6,330 | ||||
Total net revenue | 25,357 | 14,405 | 76,298 | 37,899 | ||||
Cost of Revenue: | ||||||||
Software and hardware | (764) | (74) | (1,438) | 297 | ||||
Software-as-a-service | 4,930 | 1,670 | 18,667 | 5,460 | ||||
Total software-related cost of revenue | 5,694 | 1,744 | 20,105 | 5,163 | ||||
Maintenance | 702 | 694 | 1,975 | 906 | ||||
Sequencing and molecular analysis | 570 | 39 | 929 | 39 | ||||
Other services | 6,564 | 6,725 | 17,621 | 10,402 | ||||
Amortization of developed technologies | 3,706 | 2,889 | 11,884 | 7,446 | ||||
Total cost of revenue | 17,236 | 12,091 | 52,514 | 23,956 | ||||
Gross profit | 8,121 | 2,314 | 23,784 | 13,943 | ||||
Operating Expenses: | ||||||||
Selling, general and administrative | 24,715 | 18,147 | 99,336 | 52,386 | ||||
Research and development | 13,855 | 7,027 | 48,871 | 16,677 | ||||
Amortization of software license and acquisition-related assets | 1,814 | 760 | 5,442 | 782 | ||||
Total operating expenses | 40,384 | 25,934 | 153,649 | 69,845 | ||||
Loss from operations | (32,263) | (23,620) | (129,865) | (55,902) | ||||
Interest income (expense), net | (1,415) | 1 | (4,671) | (627) | ||||
Other income (expense), net | (336) | 662 | (75) | 2,517 | ||||
Loss from related party equity method investment | (2,604) | 0 | (7,893) | (145) | ||||
Loss before income taxes | (36,618) | (22,957) | (142,504) | (54,157) | ||||
Provision for (benefit from) income taxes | 256 | 1 | (18,353) | 2 | ||||
Net loss | $ (36,874) | $ (22,958) | $ (124,151) | $ (54,159) | ||||
Common Stock | ||||||||
Net income (loss) per share (1): | ||||||||
Basic and diluted (usd per share) | $ (0.30) | [1] | $ (0.24) | [1] | $ (1.19) | $ (0.62) | [2] | |
Weighted average shares outstanding (1): | ||||||||
Basic and diluted (shares) | [1] | 121,245,440 | 95,906,797 | 108,359,973 | 86,696,282 | |||
Redeemable Common Stock | ||||||||
Net income (loss) per share (1): | ||||||||
Basic and diluted (usd per share) | [1] | $ 0.74 | ||||||
Weighted average shares outstanding (1): | ||||||||
Basic and diluted (shares) | [1] | 6,686,653 | ||||||
[1] | The net loss per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) that occurred on June 1, 2016, prior to the Company’s initial public offering ("IPO"). In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation with the Secretary of State of the state of Delaware to effect a 1-for-5.5 reverse stock split of its common stock on June 1, 2016. See Note 18 for the calculation of net loss per share for common stock and redeemable common stock for the nine months ended September 30, 2016. | |||||||
[2] | The net loss per share for the common stock for the nine months ended September 30, 2016 reflects $4,958 in accretion value allocated to the redeemable common stock. The redeemable common stock contained a put right, which expired unexercised on June 20, 2016. As a result of and as of that date, the shares were no longer redeemable and were included in common stock. |
Condensed Consolidated and Com5
Condensed Consolidated and Combined Statements of Operations - Footnote $ in Thousands | Jun. 01, 2016 | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Income Statement [Abstract] | ||||
Reverse stock split, conversion ratio | 0.1818 | |||
Accretion to redemption value | $ 4,958 | $ 0 | $ 16,042 |
Condensed Consolidated and Com6
Condensed Consolidated and Combined Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (36,874) | $ (22,958) | $ (124,151) | $ (54,159) |
Other comprehensive income (loss), net of reclassification adjustments and taxes - | ||||
Foreign currency translation gains (losses) | 254 | (184) | 647 | (186) |
Comprehensive loss | $ (36,620) | $ (23,142) | $ (123,504) | $ (54,345) |
Condensed Consolidated and Com7
Condensed Consolidated and Combined Stockholders' / Members' Equity - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Members' Equity | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (loss) |
Balance at December 31, 2015, units at Dec. 31, 2015 | 541,228,171 | |||||
Balance at December 31, 2015 at Dec. 31, 2015 | $ 476,263 | |||||
Balance at December 31, 2015, shares at Dec. 31, 2015 | 0 | |||||
Balance at December 31, 2015 at Dec. 31, 2015 | $ 185,005 | $ (291,171) | $ (87) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of membership interests, units | 15,513,726 | |||||
Issuance of membership interests | 52,500 | $ 52,500 | ||||
Stock-based compensation expense (pre LLC conversion) | 170 | 170 | ||||
Deemed capital contribution from Chairman and CEO (pre LLC conversion | 830 | 830 | ||||
Series F put right accretion | 4,375 | $ 4,375 | ||||
Conversion of members' interests, units | (556,741,897) | |||||
Conversion of members' interests | $ (525,388) | |||||
Conversion of members' interests, shares | 99,651,444 | |||||
Conversion of members' interests | $ 10 | $ 525,378 | ||||
Issuance of common stock upon conversion of related party promissory note, shares | 2,899,297 | |||||
Issuance of common stock upon conversion of related party promissory note | 40,590 | 40,590 | ||||
Issuance of common stock in initial public offering, net of $13,370 in offering costs, shares | 6,900,000 | |||||
Issuance of common stock in initial public offering, net of $13,034 in offering costs | 83,566 | $ 1 | 83,565 | |||
Series F put right accretion | 583 | 583 | ||||
Redeemable common stock put right expiration, shares | 10,714,285 | |||||
Redeemable common stock put right expiration | 171,000 | $ 1 | 170,999 | |||
Stock-based compensation expense (post LLC conversion) | 49,172 | 49,172 | ||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes, shares | 1,071,647 | |||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (5,822) | (5,822) | ||||
Deemed capital contribution from Chairman and CEO (post LLC conversion) | 2,590 | 2,590 | ||||
Other comprehensive income | 647 | 647 | ||||
Net loss | (124,151) | |||||
Balance at September 30, 2016, units at Sep. 30, 2016 | 0 | |||||
Balance at September 30, 2016 at Sep. 30, 2016 | $ 0 | |||||
Balance at September 30, 2016, shares at Sep. 30, 2016 | 121,236,673 | |||||
Balance at September 30, 2016 at Sep. 30, 2016 | $ 451,139 | $ 12 | $ 865,889 | $ (415,322) | $ 560 |
Condensed Consolidated and Com8
Condensed Consolidated and Combined Stockholders' / Members' Equity Parenthetical $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Offering costs for initial public offering | $ 13,034 |
Condensed Consolidated and Com9
Condensed Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (124,151) | $ (54,159) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 22,990 | 10,867 |
Unrealized changes in fair value of marketable securities | (49) | (3,126) |
Realized changes in fair value of marketable securities | 49 | 3,359 |
Stock-based compensation | 48,982 | 1,350 |
Deferred income taxes, net | (18,752) | 0 |
Provision for bad debt expense | 522 | 88 |
Inventory provision | 479 | 0 |
Loss from related party equity method investment | 7,893 | 145 |
Other non-cash expense | 144 | 0 |
Changes in operating assets and liabilities, net of business combinations: | ||
Accounts receivable, net | 8,950 | 2,709 |
Inventories | (135) | 839 |
Related party receivables, net | (324) | 302 |
Prepaid expenses and other current assets | 4,883 | (5,582) |
Deferred implementation costs | (6,695) | (1,783) |
Accounts payable | (4,315) | 1,769 |
Accrued expenses | 1,729 | 11,478 |
Deferred revenue | 3,304 | (12,421) |
Related party payables | 2,278 | (8,064) |
Other assets and liabilities | 71 | (27) |
Net cash used in operating activities | (52,147) | (52,256) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (12,701) | (6,405) |
Investments in unconsolidated related parties | 0 | (150,816) |
Purchases of intangible asset | 0 | (5,000) |
Purchases of marketable securities | (31) | 0 |
Proceeds from sales of marketable securities | 1,275 | 97,660 |
Proceeds from sales of property and equipment | 138 | 0 |
Purchase of cost method investment | 0 | (1,750) |
Acquisitions of businesses, net of cash acquired | (79,423) | (50,548) |
Deferred consideration for acquisition | 1,949 | 2,494 |
Net cash used in investing activities | (88,793) | (114,365) |
Cash flows from financing activities: | ||
Proceeds from issuance of membership interests | 0 | 200,000 |
Deemed capital contribution from Chairman and CEO | 3,420 | 4,790 |
Payment of short-term notes payable | (23,324) | 0 |
Proceeds from (payment of) related party promissory notes | 152,666 | (34,502) |
Proceeds from initial public offering, net of offering costs | 83,566 | 0 |
Tax payments related to stock issued, net of stock withheld, for vested phantom units | (5,822) | 0 |
Net cash provided by financing activities | 210,506 | 170,288 |
Effect of exchange rate changes on cash and cash equivalents | 246 | (186) |
Net increase in cash and cash equivalents | 69,812 | 3,481 |
Cash and cash equivalents, beginning of period | 5,989 | 3,699 |
Cash and cash equivalents, end of period | 75,801 | 7,180 |
Supplemental disclosure of cash flow information: | ||
Interest paid | (358) | (2,364) |
Interest received | 555 | 447 |
Non-cash transactions: | ||
Transfer of marketable securities as investment in unconsolidated related party | 0 | 99,184 |
NaviNet escrow receivable | 1,678 | 0 |
Accretion to redemption value of Series F / redeemable common stock | 4,958 | 0 |
Conversion of related party promissory note and interest payable to common stock | 40,590 | 0 |
Reclassification of redeemable common stock to common stock (former Series F units) | $ 171,000 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Nature of Business Nant Health, LLC was formed on July 7, 2010, as a Delaware limited liability company. On June 1, 2016, Nant Health, LLC converted into a Delaware corporation (the “LLC Conversion”) and changed its name to NantHealth, Inc. (“NantHealth”). NantHealth, together with its subsidiaries (the “Company”) , is a healthcare cloud-based IT company converging science and technology through a single integrated clinical platform, to provide actionable health information at the point of care. NantHealth is a majority-owned subsidiary of NantWorks, LLC (“NantWorks”), which is a subsidiary of California Capital Equity, LLC (“Cal Cap”). The three companies were founded and are led by Dr. Patrick Soon-Shiong. As of September 30, 2016 , the Company conducted the majority of its operations in the United States, Canada, the United Kingdom, Singapore and India. Initial Public Offering and LLC Conversion On June 1, 2016, immediately prior to the pricing of its initial public offering (“IPO”) and in conjunction with the LLC Conversion, all outstanding units of Nant Health, LLC were automatically converted into shares of the Company’s common stock. Immediately following the LLC Conversion, the Company effected a 1 -for- 5.5 reverse stock split of its common stock. All share and per share amounts in the Condensed Consolidated and Combined Financial Statements and notes thereto have been retroactively adjusted, where necessary, to give effect to this reverse stock split. On June 7, 2016, the Company completed its IPO, whereby it sold 6,500,000 shares of common stock at a public offering price of $14.00 per share. Additionally, on June 9, 2016, the underwriters partially exercised their over allotment option to purchase an additional 400,000 shares of common stock at $14.00 per share. The Company received a total of $83,566 in proceeds from its IPO, after deducting underwriting discounts and commissions and offering costs of $13,034 . The offering was registered under the Securities Act of 1933, as amended, on a registration statement on Form S-1 (Registration No. 333-211196), as amended (the “Registration Statement”). Basis of Presentation The accompanying unaudited Condensed Consolidated and Combined Financial Statements include the accounts of NantHealth and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim Condensed Consolidated and Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These Financial Statements have been prepared on the same basis as the audited Consolidated and Combined Financial Statements for the fiscal year ended December 31, 2015 and, in the opinion of management, include all adjustments, which are normal and recurring in nature, necessary for a fair presentation of the Company's financial position and results of operation. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The accompanying Condensed Consolidated and Combined Balance Sheet as of December 31, 2015 has been derived from the audited Consolidated and Combined Financial Statements at that date but does not include all of the disclosures required by GAAP. Principles of Consolidation The accompanying Condensed Consolidated and Combined Financial Statements include the financial statements of all wholly owned subsidiaries and other entities in which the Company has a controlling financial interest. For consolidated subsidiaries that are less than wholly owned, the third-party holdings of equity interests are referred to as non-controlling interests. All intercompany balances and transactions with the Company’s subsidiaries have been eliminated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies With the exception of the incremental software developed for internal use, stock based compensation and net loss per share policies described below, there have been no significant changes to the accounting policies as disclosed in the Company's Registration Statement. The accounting policies described below are included to supplement the disclosure in the Company’s Registration Statement. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated and Combined Financial Statements and accompanying notes. Actual results may differ from those estimates. Variable Interest Entities The Company evaluates its ownership interests, contractual rights and other interests in entities to determine if the entities are variable interest entities (“VIEs”), if it has a variable interest in those entities and the nature and extent of those interests. These evaluations are highly complex and involve judgment, the use of estimates and assumptions based on available historical information. In order for the Company to be the primary beneficiary of a VIE, it must have both (1) the power to direct the activities of a VIE that most significantly affect the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that, in either case, could potentially be significant to the VIE. The Company consolidates entities of which it is the primary beneficiary. The Company determines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis. This determination is based upon an analysis of the design of the VIE, including the VIE’s structure and activities, the power to make significant economic decisions held by the Company and by other parties, and the variable interests owned by the Company and other parties. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following three categories: • Level 1—Quoted prices for identical assets or liabilities in active markets; • Level 2—Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable; and • Level 3—Unobservable inputs that reflect estimates and assumptions. The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable, notes payable, deferred revenue and other current monetary assets and liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. In accordance with this guidance, the Company measures its cash equivalents and marketable securities at fair value. The Company’s cash equivalents and marketable securities are classified within Level 1. Cash equivalents and marketable securities are valued primarily using quoted market prices utilizing market observable inputs. Revenue Recognition Revenue represents the consideration received or receivable from clients for solutions and services provided by the Company. The Company’s revenue is generated from the following sources: • Software and hardware— Software and hardware revenue is generated from the sale of the Company’s software, on either a perpetual or term license basis, and the sale of hardware. The software is installed on the client’s site or the client’s designated vendor’s site and is not hosted by the Company or by a vendor contracted by the Company. The Company also sells third-party software and hardware to its clients. Solutions sold are grouped together under the NantOS Interoperability platform (formerly known as cOS) and FusionFX, NantOS, DeviceConX and HBox. • Software-as-a-service (“SaaS”)— SaaS revenue is generated from clients’ access to and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually monthly. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period. Solutions sold under a SaaS model include the NantOS Interoperability cancer decision support solution (formerly known as eviti), NantOS Interoperability and NaviNet. • Maintenance— Maintenance revenue includes ongoing post contract client support (“PCS”) or maintenance during the paid PCS term. Additionally, PCS includes ongoing development of software updates and upgrades provided to the client on a when and if available basis. • Sequencing and molecular analysis— Sequencing and molecular analysis revenue is generated by the process of performing sequencing and analysis of whole genome DNA, RNA and proteomic results under the Company's reseller agreement with NantOmics, LLC ("NantOmics") (See Note 19). • Other services— Other services includes revenue from professional services provided that are generally complementary to the software and may or may not be required for the software to function as desired by the client. The services are generally provided in the form of training and implementation services during the software license period and do not include PCS. Other services revenue also includes the sale of nursing and therapy services provided to patients in a home care setting and any other services not included in the preceding revenue sources. Revenue is recognized when persuasive evidence of an arrangement exists, services or products have been provided to the client, fees are fixed or determinable, and collectability is reasonably assured. While most of the Company’s arrangements include short-term payment terms, the Company on occasion provides payment terms to clients in excess of one year from the date of contract signing. The Company does not recognize revenue for arrangements containing these extended payment terms until such payments become due. Certain of the Company’s customer arrangements allow for termination for convenience with advanced notice. Such termination rights do not allow for refunds other than prepaid PCS or other services. These provisions do not affect when the Company commences revenue recognition. The Company also has certain arrangements which allow for termination and refunds of fees in the event that software acceptance by the customer has not occurred. In these instances, the Company will defer all revenue until software acceptance has occurred. The Company's sequencing and molecular analysis revenue is primarily generated from payments received from commercial third-party payors, hospitals and other provider networks and patients. The Company reports revenue from arrangements with these customers on a gross basis in accordance with Financial Accounting Standards Board (“ FASB") Accounting Standards Update ("ASC") No. 605-45, Principal Agent Considerations . The Company recognizes revenue from these arrangements when all revenue recognition criteria have been met or on a cash basis when it cannot conclude that the fees are fixed or determinable and collectability is reasonably assured. The Company uses judgment in its assessment of whether the fees are fixed or determinable and whether collectability is reasonably assured in determining when to recognize revenue in the future as it continues to gain payment experience with its customers. Accordingly, the Company expects to recognize revenue on a cash basis when it cannot conclude that the fees from a particular customer are fixed or determinable and collectability is reasonably assured until it has a sufficient history to reliably estimate payment patterns from such customer. The Company engages in various multiple-element arrangements, which may generate revenue across any of the sources noted above. For multiple-element software arrangements that involve the sale of the Company’s proprietary software, PCS and other software-related services, vendor-specific objective evidence (“VSOE”) of fair value is required to allocate and recognize revenue for each element. VSOE of fair value is determined based on the price charged in which each deliverable is sold separately. The Company has established VSOE for PCS on certain of its software solutions using the Stated Renewal Method. In this instance, the Company has determined that its stated renewals are substantive and appropriate for use in the Stated Renewal Method. The Company has not yet established VSOE of fair value for any element other than PCS for a portion of its arrangements. In situations where VSOE of fair value exists for PCS but not a delivered element (typically the software license and services elements), the residual method is used to allocate revenue to the undelivered element equal to its VSOE value with the remainder allocated to the delivered elements. In situations in which VSOE of fair value does not exist for all of the undelivered software-related elements, revenue is deferred until only one undelivered element remains (typically the PCS element) and then recognized following the pattern of delivery of the final undelivered element. The Company’s multiple element arrangements typically provide for renewal of PCS terms upon expiration of the original term. The amounts of these PCS renewals are recognized as revenue ratably over the specified PCS renewal period. For non-software arrangements that include multiple-elements, primarily consisting of the Company’s SaaS agreements, revenue recognition involves the identification of separate units of accounting after consideration of combining and/or segmenting contracts and allocation of the arrangement consideration to the units of accounting on the basis of their relative selling price. The selling price used for each deliverable is based on VSOE of fair value, if available, third party evidence (“TPE”) of fair value if VSOE is not available, or the Company’s best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. In determining the units of accounting for these arrangements, the Company evaluates whether each deliverable has stand-alone value as defined in the FASB’s guidance. The Company’s SaaS arrangements are treated as a single unit of accounting as the professional services do not have standalone value. As a result, the Company recognizes initial system implementation and deployment fees ratably over a period of time from when the system implementation or deployment services are completed and accepted by the customer over the longer of the life of the agreement or the estimated customer life. If an arrangement to deliver software requires significant production, modification or customization of the licensed software, the Company accounts for the arrangement as a construction-type contract. The Company currently recognizes revenue for these arrangements using the completed-contract method as it does not currently have sufficient information to reliably estimate the percentage of completion for these projects. The Company considers these arrangements to be substantially complete upon the clients’ acceptance of the software and related professional services and consistently applies this policy to all contract accounting arrangements. Transaction processing fees are recognized on a monthly basis based on the number of transactions processed and the fee per transaction. Revenue derived from reseller arrangements is recognized when the resellers, in turn, sell the software solution to their clients and installation of the software solution has occurred, provided all other revenue recognition criteria are met. This is commonly referred to as the sell-through method and the Company defers recognition until there is a sell-through by the reseller to an actual end user clients and acceptance by the end user has occurred. Investments in Related Parties Investments in and advances to related parties in which the Company has a substantial ownership interest of approximately 20% to 50% , or for which the Company exercises significant influence but not control over policy decisions, are accounted for by the equity method. Investments in limited liability companies that are similar to partnerships are also accounted for under the equity method if more than minor influence over the operation of the investee exists (generally through more than 3 - 5% ownership). As part of that accounting, the Company recognizes gains and losses that arise from the issuance of stock by a related party that results in changes in the Company’s proportionate share of the dollar amount of the related party’s equity. Investments in related parties are assessed for possible impairment when events indicate that the fair value of the investment may be below the Company’s carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in net loss. In making the determination as to whether a decline is other than temporary, the Company considers such factors as the duration and extent of the decline, the investee’s financial performance, and the Company’s ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the investment’s market value. The new cost basis of investments in these equity investees is not changed for subsequent recoveries in fair value. Differences between the Company’s carrying value of an equity investment and its underlying equity in the net assets of the related party are assigned to the extent practicable to specific assets and liabilities based on the Company’s analysis of the various factors giving rise to the difference. When appropriate, the Company’s share of the related party’s reported earnings is adjusted quarterly to reflect the difference between these allocated values and the related party’s historical book values. Business Combinations Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Management routinely monitors the factors impacting the acquired assets and liabilities. Transaction related costs are expensed as incurred. The operating results of the acquired business are reflected in the Company’s Condensed Consolidated and Combined Financial Statements as of the acquisition date. Deferred Revenue The Company records deferred revenue when it receives cash from clients prior to meeting the applicable revenue recognition criteria. The Company uses judgment in determining the period over which the deliverables are recognized as revenue. As of September 30, 2016 and December 31, 2015, current and non-current deferred revenue are comprised of deferrals for fees related to software licenses, SaaS arrangements, PCS services, non-PCS services and other revenue. Non-current deferred revenue is expected to be recognized on or over 12 month period following September 30, 2016 . Deferred Implementation Costs The Company provides SaaS and information technology management services under long-term arrangements which require the Company to perform system implementation activities. In some cases, the arrangements either contain provisions requiring customer acceptance of the setup activities prior to commencement of the ongoing services arrangement or the system implementation services do not have separate value from the service revenue. Up-front fees billed during the setup phase for these arrangements are deferred and setup costs that are direct and incremental to the contract are capitalized. The costs deferred consist of employee compensation (including stock based compensation) and benefits for those employees directly involved with performing system implementation or deployment services, as well as other direct and incremental costs. The Company defers costs estimated to be realizable based on contracted implementation revenue and estimated margin from the service contract. The Company periodically reviews the deferred implementation contracts for recoverability. The costs are amortized to cost of revenue ratably over a period of time from when the system implementation or deployment services are completed and accepted to the end of the contract term or the expected customer life, whichever is longer. Software Developed for Internal Use The Company accounts for the costs of computer software obtained or developed for internal use in accordance with FASB ASC 350, " Intangibles — Goodwill and Other " ("ASC 350"). Computer software development costs are expensed as incurred, except for internal use software costs that qualify for capitalization as described below, and include employee related expenses, including salaries, benefits and stock-based compensation expenses; costs of computer hardware and software; and costs incurred in developing features and functionality. These capitalized costs are included in property and equipment on the Condensed Consolidated and Combined Balance Sheets. The Company expenses costs incurred in the preliminary project and post implementation stages of software development and capitalizes costs incurred in the application development stage and costs associated with significant enhancements to existing internal use software applications. Software costs are amortized using the straight-line method over an estimated useful life of three years commencing when the software project is ready for its intended use. Research and Development Expenses Research and development (“R&D”) costs incurred to establish the technological feasibility of software to be sold are expensed as incurred. These expenses include the costs of the Company’s proprietary R&D efforts, as well as costs incurred in connection with certain licensing arrangements. Development costs, consisting primarily of employee salaries and benefits, incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any software development costs are capitalized. Costs incurred to acquire or create a computer software product are expensed when incurred as research and development until technological feasibility has been established for the product, at which point such costs are capitalized. Technological feasibility is normally established upon completion of a detailed program design or, in its absence, a working model of the software product. Capitalization of computer software costs ceases when the product is available for general release to customers. As of September 30, 2016 , the Company has not capitalized software costs as no significant costs have been incurred in developing software products and technological feasibility has not been established for new software products and enhancements to existing software. Stock Based Compensation The Company accounts for stock based compensation arrangements granted to employees in accordance with ASC 718, " Compensation: Stock Compensation", by measuring the grant date fair value of the award and recognizing the resulting expense over the period during which the employee is required to perform service in exchange for the award. The Company accounts for stock based compensation arrangements issued to non-employees using the fair value approach prescribed by ASC 505-50, “ Equity-Based Payments to Non-Employees". The value of non-employee stock based compensation is re-measured at the end of each reporting period until the award vests and is recognized as stock based compensation expense over the period during which the non-employee provides the services. Stock based compensation expense for both employee and non-employee awards is recognized on a straight-line basis over the appropriate service period for awards that are only subject to service conditions and is recognized using the accelerated attribution method for awards that are subject to performance conditions. Stock based compensation expense is only recognized for awards subject to performance conditions if it is probable that the performance condition will be achieved. The Company early adopted FASB ASU 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ” (“ASU 2016-09”) related to stock based compensation, beginning July 1, 2016, simplifying the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory withholding requirements, as well as the related classification in the statement of cash flows. All excess tax benefits and tax deficiencies are recognized as income tax benefit or expense in the income statement as discrete items in the reporting period in which they occur, and such tax benefits and tax deficiencies are not included in the estimate of an entity’s annual effective tax rate, applied on a prospective basis. The recognition of excess tax benefits is not deferred until the benefit is realized through a reduction to taxes payable. When the Company applies the treasury stock method, in calculating diluted earnings per share, excess tax benefits, if applicable, are excluded and deficiencies from the calculation of assumed proceeds since such amounts are recognized in the income statement. Excess tax benefits if applicable, are classified as operating activities in the same manner as other cash flows related to income taxes on the statement of cash flows. Per ASU 2016-09, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The Company has elected to account for forfeitures when they occur. Cash paid by the Company when directly withholding shares for tax withholding purposes should be classified as a financing activity in the Statement of Cash Flows (See Note 14 and Note 17). Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, adjusted to give effect to potentially dilutive securities. However, potentially dilutive securities are excluded from the computation of diluted net loss per share to the extent that their effect is anti-dilutive. Segment Reporting The chief operating decision maker for the Company is its Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a Condensed Consolidated and Combined basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results, or plans for levels or components below the Condensed Consolidated and Combined unit level. Accordingly, management has determined that the Company operates in one reportable segment. Recent Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, " Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ." This standard update was issued to address diversity in practice in how certain cash receipts and cash payments are presented and classified. The provisions of ASU 2016-15 will be effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's Condensed Consolidated and Combined Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, " Measurement of Credit Losses on Financial Instruments" (“ASU 2016-13”), which changes how companies measure credit losses on most financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Rather than generally recognizing credit losses when it is probable that the loss has been incurred, the revised guidance requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument's contractual life. ASU 2016-13 is effective for fiscal periods beginning after December 15, 2019 and must be adopted as a cumulative effect adjustment to retained earnings. Early adoption is permitted. The Company is evaluating the potential effects of the adoption of this guidance on the Company's Condensed Consolidated and Combined Financial Statement s. In May 2016, the FASB issued ASU No. 2016-12, " Revenue from Contracts with Customers (Topic 606)" . The amendments, which address transition, collectability, non-cash consideration and the presentation of sales and other similar taxes, do not change the core principles of ASU 2014-09, but rather address implementation issues and are intended to result in more consistent application. The Company intends to adopt this standard on January 1, 2018. The Company is evaluating the potential effects of the adoption to the Company's Condensed Consolidated and Combined Financial Statements. In April 2016, the FASB issued ASU No. 2016-10, " Identifying Performance Obligations and Licensing", which amends certain aspects of ASC 606, Revenue from Contracts with Customers. ASU No. 2016-10 amends step two of the new revenue standard’s five-step model to include guidance on immaterial promised goods or services, shipping and handling activities and identifying when promises represent performance obligations. ASU No. 2016-10 also provides guidance related to licensing such as, but not limited to, sales-based and usage-based royalties and renewals of license that provide a right to use intellectual property. The Company intends to adopt this standard on January 1, 2018. The Company is evaluating the potential effects of the adoption of this guidance on the Company's Condensed Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, " Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" . ASU 2016-09 changes certain aspects of the accounting for share-based payment awards, including: accounting and cash flow classification for excess tax benefits and deficiencies; income tax withholding obligations; forfeitures; and cash flow classification. ASU 2016-09 is effective for the Company in the first quarter of 2017, with early adoption permitted. As mentioned above, the Company early adopted this guidance effective July 1, 2016, see Note 14 and Note 17 . In February 2016, the FASB issued ASU No. 2016-02, " Leases (Topic 842)" (“ASU 2016-02”). The update is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. This guidance will become effective for interim and annual reporting periods beginning with the year ending December 31, 2019. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its Condensed Consolidated and Combined Financial Statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, " Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, including a provision that requires equity investments (except for investments accounted for under the equity method of accounting) to be measured at fair value, with changes in fair value recognized in current earnings. ASU 2016-01 is effective for the Company in the first quarter of 2018, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-01 will have on its Condensed Consolidated and Combined Financial Statements and related disclosures. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission ("SEC") did not have, or are not believed by management to have, a material impact on the Company's present or future Condensed Consolidated and Combined financial Statements. |
Business Combinations and Inves
Business Combinations and Investments | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Business Combinations and Investments | Business Combinations and Investments 2016 Acquisitions NaviNet, Inc. On November 30, 2015, NantHealth entered into a definitive agreement with 3BE Holdings, LLC (“3BE”) to acquire 100% of the outstanding equity interest of NaviNet, Inc. (“NaviNet”) in exchange for $83,529 in cash, subject to working capital adjustments, 15,513,726 newly issued Series H units with a fair value of $52,500 and contingent arrangements or earnouts of up to $12,250 , which was effective on January 1, 2016. The contingent arrangements or earnouts require the Company to pay up to a total of $12,250 to certain of NaviNet’s former shareholders if NaviNet’s revenues to those former shareholders exceed certain thresholds during the years ended December 31, 2016 and 2017. These contingent amounts or earnouts have been excluded from the purchase price consideration and are accounted for as sales incentives as certain predefined targets are met and are reflected as contra revenue. The cash portion of the acquisition was financed through a promissory note with NantCapital, LLC (“NantCapital”), an affiliate of the Company (See Note 19). In June 2016, the Company paid an additional $455 to 3BE as the final working capital adjustment and accounted for the payment as an increase to the purchase price of NaviNet. The following table summarizes the total purchase consideration for the acquisition , subject to the finalization of the Company's purchase price accounting for the transaction. Amounts Cash paid to seller at closing $ 74,823 Cash paid to option holders after closing 2,580 Cash paid to escrow account 6,126 Working capital settlement payment 455 Fair value of Series H units 52,500 Total consideration $ 136,484 The total consideration was allocated to the net assets acquired based upon their estimated fair values. The Company continues to monitor potential fair value adjustments to property, plant and equipment as well as activity against the escrow account that provide security for any seller indemnifications, obligations, including severance matters: Amounts Cash and restricted cash $ 4,804 Accounts receivable, net 10,693 Property, plant and equipment, net 7,953 Other assets and liabilities, net 3,830 Accounts payable (4,585 ) Accrued expenses (3,488 ) Deferred revenue (2,603 ) Deferred tax liability (19,533 ) Assumed indebtedness (23,324 ) Trade names 3,000 Developed technology 32,000 Customer relationships 52,000 Goodwill 75,737 Total fair value of net assets acquired $ 136,484 The estimated life of the acquired trade names is four years, the estimated life of customer relationships is fifteen years and the estimated life of the developed technology is seven years. The excess of the purchase price over the net tangible and intangible assets of $75,737 was recorded as goodwill, and considered non-deductible for income tax purpose. At the closing of the acquisition, the Company repaid all $23,324 of assumed indebtedness presented in the table above. Immediately prior to the closing, the board of directors of NaviNet approved the acceleration of all unvested stock options of NaviNet. The equity incentive plan governing these stock options stated that NaviNet’s board of directors had the right, at its sole discretion, to accelerate vesting of all outstanding stock options in connection with a change of control. The option holders received a payout of $7,394 immediately following the closing which represented the fair value of all vested and unvested stock options. The Company recognized in its post-acquisition results $4,814 of compensation expense during the nine months ended September 30, 2016 since the Company received post-combination benefits resulting from the accelerated vesting. During the three months ended September 30, 2016 , the Company recognized a $697 measurement period adjustment, which decreased goodwill and increased research and development grant receivable. As a result, during the nine months ended September 30, 2016 , the Company recognized a net increase of $1,361 measurement period adjustments, which increased goodwill. The measurement period adjustments also included a $953 decrease to goodwill related to a decrease in deferred revenue, a $4,234 increase to goodwill related to a deferred tax liability increase due to tax changes, a $455 increase to goodwill for working capital adjustments, and a $1,678 decrease to goodwill, representing the Company’s right to be reimbursed from 3BE for severance benefits if their employment is terminated by the Company without cause or by the employee for good reason within 12 months after the closing date, which is expected to be settled through the escrow account in 2017. 2015 Acquisitions NantCloud On May 31, 2015, NantHealth purchased 100% of the outstanding equity interests in NantCloud Services, LLC ("NantCloud") from NantWorks in exchange for $7,227 in cash, the amount invested in that business by NantWorks without any markup. NantCloud offers a secure cloud infrastructure for hosting sensitive healthcare data as well as information technology security services tailored for the healthcare industry. The Company accounted for its purchase of NantCloud as an arrangement between entities under common control. As a result, the acquisition was recorded and presented at carryover basis and the historical statements of operations and cash flows of NantCloud have been combined with the Company beginning on the date of inception of common control of each respective entity, which started February 10, 2014. Healthcare Solutions from Harris Corporation On June 16, 2015, the Company entered into a definitive agreement with Harris Corporation (“Harris”) to acquire certain assets and assume certain liabilities related to its Healthcare Solutions (“HCS”) business in exchange for $50,556 in cash, subject to working capital adjustments. The acquired assets comprise a business that helps complex healthcare delivery organizations achieve better patient outcomes, clinical and administrative workflow efficiency and stronger collaboration across the continuum of care. The acquisition of HCS closed on July 1, 2015 and furthered the Company’s mission to provide patients with a fully integrated and personalized approach to the delivery of care. The purchase consideration included $7,500 of funds held in escrow for the settlement of net working capital and other indemnifications. In March 2016, and in accordance with the definitive agreements, the Company received $2,494 out of the escrow account for the settlement of the final net working capital adjustment. The following table summarizes the total purchase consideration for the acquisition, including the effects of the final net working capital adjustment: Amounts Cash paid to Harris at closing $ 43,056 Cash paid to escrow account 7,500 Working capital released from escrow (2,494 ) Total consideration $ 48,062 The fair value of the identifiable assets acquired and liabilities assumed for the HCS business is shown in the table below: Amounts Accounts receivable, net $ 13,119 Other liabilities and assets, net (2,205 ) Deferred revenue (16,076 ) Trademarks 2,400 Developed technology 14,400 Customer relationships 8,900 Backlog 3,900 Goodwill 23,624 Total fair value of net assets acquired $ 48,062 The estimated lives of the acquired trademark, customer relationships and backlog are five years and the estimated life of the developed technology is seven years. The excess of the purchase price over the net tangible and intangible assets of $23,624 was recorded as goodwill, and considered deductible for income tax purpose. During the nine months ended September 30, 2016 , the Company recognized $274 , of measurement period adjustments, which increased goodwill. 2015 Investments IOBS On June 16, 2015, the Company invested $1,750 in Innovative Oncology Business Solutions, Inc. (“IOBS”) in exchange for 1,750,000 shares of IOBS’s Series A preferred stock. IOBS offers community oncology practices an alternative medical home model for oncology patients that improves health outcomes, enhances patient care experiences and significantly reduces costs of care. The shares of preferred stock represent 35.0% of the outstanding equity of IOBS on an as-converted basis. The Company applied the cost method to account for its investment because the preferred stock is not considered in-substance common stock, is not considered a debt instrument as the Company cannot unilaterally demand redemption of the preferred stock and the preferred stock does not have a readily determinable fair value. Investment in TRM and sale to NantCRO On September 8, 2015, the Company completed a Contribution Agreement with the members of Translational Research Management, LLC (“TRM”) whereby those members contributed their 54% equity interest in TRM in exchange for $250 in cash and 267,905 of the Company’s Series A units. TRM is a management services organization committed to building a nationwide network of community based medical oncology professionals dedicated to offering research studies to their patients. On June 1, 2016, the Series A units issued to TRM were converted into 44,778 shares of the Company’s common stock. On the same day, the Company sold its 54% equity interest in TRM to NantCRO, LLC, a wholly owned subsidiary of NantOmics, in exchange for $250 in cash and 610,928 of NantOmics’ Series A-2 units, which is equivalent in value to the purchase price paid by the Company. As a result, the Company’s ownership percentage in NantOmics is approximately 14.3% (See Note 10). Pro Forma Financial Information (Unaudited) The historical operating results of neither NaviNet nor HCS have been included in the Company’s historical Condensed Consolidated and Combined operating results prior to the respective acquisition dates. The following financial information presents the combined results of continuing operations for the three and nine months ended September 30, 2015 , as if the acquisitions had been completed on January 1, 2015. There are no pro forma adjustments for the three and nine months ended September 30, 2016 since the results of NaviNet and HCS are included in the Company’s Condensed Consolidated and Combined Financial Statements beginning on January 1, 2016 and July 1, 2015, respectively. The unaudited pro forma results do not reflect any material adjustments, operating efficiencies or potential cost savings that may result from the consolidation of operations. Three Months Ended September 30, Nine Months Ended September 30, 2015 2015 Revenue $ 27,678 $ 93,793 Net loss $ (26,831 ) $ (68,148 ) |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable, net excludes amounts related to PCS and other services that were billed but not yet delivered at each period end. These undelivered services are also excluded from the deferred revenue balances on the accompanying Condensed Consolidated and Combined Balance Sheets. The amount of outstanding and unpaid invoices excluded from both the accounts receivable and deferred revenue balances as of September 30, 2016 and December 31, 2015 was $8,343 and $12,643 , respectively. Accounts receivable are included on the consolidated balance sheets net of the allowance for doubtful accounts. The allowance for doubtful accounts at September 30, 2016 and December 31, 2015 was $1,185 and $956 , respectively. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories, net as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, (Unaudited) Finished goods $ 1,638 $ 2,005 Raw Materials 164 141 Inventories $ 1,802 $ 2,146 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, (Unaudited) Prepaid expenses $ 3,807 $ 2,161 Restricted cash (1) 100 — Deferred offering costs — 3,902 Escrow receivable 1,678 2,494 Other current assets 218 150 $ 5,803 $ 8,707 (1) Additional $250 of non-current restricted cash is included in the Company’s Condensed Consolidated and Combined balance sheets as part of Other assets. |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant and equipment, net as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, (Unaudited) Computer equipment and software $ 28,390 $ 9,865 Furniture and equipment 8,235 6,772 Leasehold and building improvements 4,081 1,433 Internal use software 11,188 1,018 Construction in progress 2,210 1,462 54,104 20,550 Less: accumulated depreciation and amortization (24,692 ) (6,651 ) Property, plant and equipment, net $ 29,412 $ 13,899 Depreciation expense was $1,995 and $5,664 for the three and nine months ended September 30, 2016 , respectively, of which $410 and $686 , respectively related to internal use capitalized software development costs. Depreciation expense was $976 and $2,639 for the three and nine months ended September 30, 2015 , respectively, of which none related to internal use capitalized software development costs. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets, net The Company’s definite-lived intangible assets as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, 2016 Customer Relationships Developed Technologies Software License Intellectual Property Trade Name Total Gross carrying amount $ 65,200 $ 98,930 $ 5,000 $ 2,400 $ 3,000 $ 174,530 Accumulated amortization (6,200 ) (41,272 ) (1,250 ) (600 ) (563 ) (49,885 ) Intangible assets, net $ 59,000 $ 57,658 $ 3,750 $ 1,800 $ 2,437 $ 124,645 December 31, 2015 Customer Relationships Developed Technologies Software License Intellectual Property Trade Name Total Gross carrying amount $ 13,200 $ 66,930 $ 5,000 $ 2,400 $ — $ 87,530 Accumulated amortization (1,680 ) (30,326 ) (313 ) (240 ) — (32,559 ) Intangible assets, net $ 11,520 $ 36,604 $ 4,687 $ 2,160 $ — $ 54,971 Amortization of finite-lived intangible assets is provided over their estimated useful lives on a straight-line basis or the pattern in which economic benefits are consumed, if reliably determinable. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Amortization expense was $5,520 and $17,326 for the three and nine months ended September 30, 2016 , respectively. Amortization expense was $3,649 and $8,228 for the three and nine months ended September 30, 2015 , respectively. During the nine months ended September 30, 2016 , the Company recorded $87,000 of definite-lived intangible assets related to the acquisition of NaviNet (See Note 3). These intangibles are amortized over a period of four to fifteen years. On September 29, 2015, the Company entered into an exclusive license agreement with NorthShore University Health System (“NorthShore”) to further develop their Health Heritage software platform and to license the software to customers. As part of the agreement, the Company paid NorthShore a one-time license fee of $5,000 and will pay royalties of at least $750 annually for the first four years of the agreement. The Company will have no obligation to pay any additional royalties after 7 years or once aggregate royalties reach $5,000 . The estimated future amortization expense over the next five years and thereafter for the intangible assets that exist as of September 30, 2016 is as follows: Amounts 2016 $ 5,519 2017 19,078 2018 18,478 2019 18,166 2020 14,958 Thereafter 48,446 Total $ 124,645 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goodwill activity during the nine months ended September 30, 2016 is shown as follows: Amounts Balance at December 31, 2015 Goodwill $ 63,668 Accumulated impairment losses (6,950 ) Net balance 56,718 Activity during the year (Unaudited): Acquisitions (See Note 3) 74,376 Measurement period adjustments (See Note 3) 1,635 Net activity during the period 76,011 Balance at September 30, 2016 (Unaudited): Goodwill 139,679 Accumulated impairment losses (6,950 ) Net balance $ 132,729 The Company added $75,737 of goodwill related to the acquisition of NaviNet on January 1, 2016 (See Note 3). On July 1, 2015 , the Company added $23,624 of goodwill related to the acquisition of the HCS business (See Note 3). Measurement period adjustments during three and nine months ended September 30, 2016 were a decrease of $697 and an increase of $1,635 , respectively (See Note 3). No measurement period adjustments were recorded during three and nine months ended September 30, 2015 . Goodwill is tested for impairment annually as of October 1 or between annual tests when evidence of potential impairment exists. |
Investment in Related Party
Investment in Related Party | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Related Party | Investment in Related Party On June 19 and June 30, 2015, the Company purchased a total of 168,463,611 Series A-2 units of NantOmics, LLC (“NantOmics”) for an aggregate purchase price of $250,774 . Additionally, NantOmics issued 610,928 of its Series A-2 units to the Company on September 8, 2015 in exchange for NantOmics' subsidiary's purchase of NantHealth’s equity interests in TRM. The Series A-2 units do not have any voting rights and represent approximately 14.3% of NantOmics’ issued and outstanding membership interests. NantOmics is majority owned by NantWorks and delivers molecular diagnostic capabilities with the intent of providing actionable intelligence and molecularly driven decision support for cancer patients and their providers at the point of care. The Company applied the equity method to account for its investment in NantOmics as the interest in the equity is similar to a partnership interest. Further, the Company has the ability to exert significant influence over the operating and financial policies of the entity since NantWorks controls both NantHealth and NantOmics. The difference between the carrying amount of the investment in NantOmics and the Company’s underlying equity in NantOmics’ net assets relate to both definite- and indefinite-lived intangible assets. The Company attributed $28,195 and $14,382 of these differences to NantOmics’ developed technologies and its reseller agreement with the Company, respectively, and the remaining basis differences were attributed to goodwill. The Company amortizes the basis differences related to the definite-lived intangible assets over the assets’ estimated useful lives and records these amounts as a reduction in the carrying amount of its investment and an increase in its equity method loss. The Company reports its share of NantOmics’ income or loss and the amortization of basis differences using a one quarter lag. For the three and nine months ended September 30, 2016 , the Company recognized $2,604 and $7,893 of loss related to this investment, respectively. From the date of the initial investment at June 19, 2015 through September 30, 2015 , the Company recognized $145 of loss related to this investment. The Company used the following summarized financial information for NantOmics for the trailing nine months ended June 30, 2016 to record its equity method losses for the nine months ended September 30, 2016 : Trailing Nine Months Ended June 30, 2016 Sales $ 2,936 Gross loss (3,113 ) Loss from operations (25,693 ) Net loss (21,841 ) Net loss attributable to NantOmics $ (20,273 ) |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities On June 16, 2015, the Company invested $1,750 in IOBS’ Series A preferred stock and therefore has a variable interest in IOBS. The shares of preferred stock represent 35.0% of the outstanding equity of IOBS on an as-converted basis. The Company applied the cost method to account for its investment because the preferred stock is not considered in-substance common stock, is not considered a debt instrument as the Company cannot unilaterally demand redemption of the preferred stock and the preferred stock does not have a readily determinable fair value. As of September 30, 2016 , IOBS was considered a variable interest entity. The Company is not the primary beneficiary of IOBS because it only has the right to elect two of five directors. All major decisions of IOBS require the majority vote by the members of the board of directors, including decisions made to manage the business including hiring and firing of officers and other critical management functions. Therefore, the Company does not consolidate IOBS. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, 2016 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Cash equivalents $ 63,404 $ 63,404 $ — $ — Marketable securities — — — — December 31, 2015 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Cash equivalents $ 630 $ 630 $ — $ — Marketable securities 1,243 1,243 — — The Company’s intangible assets and goodwill are initially measured at fair value and any subsequent adjustment to the initial fair value occurs only if an impairment charge is recognized. The fair values of the Company’s marketable securities and cash equivalents (consisting of mainly money market accounts) are based on quoted market prices in active markets with no valuation adjustment (See Note 8). |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company's principal commitments consist of obligations under its outstanding debt obligations, non-cancelable leases for its office space and certain equipment and vendor contracts to provide research services, and purchase obligations under license agreements and reseller agreements. Lease Arrangements The Company leases both real estate and equipment used in its operations and classifies those leases as either operating or capital leases for accounting purposes. As of September 30, 2016 and December 31, 2015 , the Company had no material capital leases and the remaining lives of its operating leases ranged from one to ten years . Rental expense associated with operating leases is charged to expense in the year incurred and is included in the Condensed Consolidated and Combined Statements of Operations. For the three and nine months ended September 30, 2016 , the rental expense was charged to selling, general and administrative expense in the amount of $1,111 and $3,351 , respectively. For the three and nine months ended September 30, 2015 , rental expense was charged to selling, general and administrative expense in the amount of $686 and $1,475 , respectively. As of September 30, 2016 , the Company’s future minimum rental commitments under its non-cancellable operating leases are as follows: Amounts 2016 $ 1,161 2017 4,246 2018 2,249 2019 650 2020 521 Thereafter 1,643 Total minimum rental commitments $ 10,470 Related Party Promissory Note On January 4, 2016, the Company executed a $112,666 demand promissory note in favor of NantCapital to fund the acquisition of NaviNet, On May 9, 2016, the promissory note with NantCapital was amended to provide that all outstanding principal and accrued interest is due and payable on June 30, 2021, and not on demand (See Note 19). Purchase obligations Under License Agreements and Reseller Agreements In September 2016, the Company entered into a Second Amended and Restated Reseller Agreement for genomic and proteomic sequencing services and related bioinformatics and analysis services with NantOmics, with an effective date of June 19, 2015 (See Note 19). Obligations Under Exclusive License Agreement with Northshore On September 29, 2015, the Company entered into an exclusive license agreement with NorthShore to further develop their Health Heritage software platform ("Health Heritage"), and to license the software to customers (See Note 8). Regulatory Matters The Company is subject to regulatory oversight by the U.S. Food and Drug Administration and other regulatory authorities with respect to the development, manufacturing, and sale of some of the solutions. In addition, the Company is subject to the Health Insurance Portability and Accountability Act (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act and related patient confidentiality laws and regulations with respect to patient information. The Company reviews the applicable laws and regulations regarding effects of such laws and regulations on its operations on an on-going basis and modifies operations as appropriate. The Company believes it is in substantial compliance with all applicable laws and regulations. Failure to comply with regulatory requirements could have a significant adverse effect on the Company’s business and operations. Legal Matters The Company is, from time to time, subject to claims and litigation that arise in the ordinary course of its business. The Company intends to defend vigorously any such litigation that may arise under all defenses that would be available. In the opinion of management, the ultimate outcome of proceedings of which management is aware, even if adverse to them, would not have a material adverse effect on the Company’s Condensed Consolidated and Combined Financial Condition or Results Of Operations. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three and nine months ended September 30, 2016 was $256 of expense and $18,353 of benefit, respectively. The provision for income taxes for the three and nine months ended September 30, 2015 was $1 and $2 , respectively. The 2016 year to date benefit from income taxes consists of three components, income tax provision from January 1 through May 31, 2016 for the corporate subsidiaries of NantHealth; income tax benefit resulting from the LLC conversion of NantHealth on June 1, 2016; and income tax provision for the consolidated group for June to September 2016 based on the annual effective tax rate. The effective tax rates for the three months ended September 30, 2016 and 2015 were a provision of 0.70% and a provision of 0.2% , respectively. The effective tax rates for the nine months ended September 30, 2016 and 2015 were a benefit of 12.88% and a provision of 0.2% , respectively. The effective tax rate for the three and nine months ended September 30, 2016 differed from the federal statutory rate primarily due to the fact that Nant Health, LLC converted from a pass-through entity to a C corporation, NantHealth, Inc., on June 1, 2016. Prior to the LLC Conversion, the tax provision represents that of Nant Health, LLC’s corporate subsidiaries. The effective tax rate for the three and nine months ended September 30, 2015 differed from the Federal statutory rate primarily due to Nant Health LLC’s pass through status. The increase in the Company's effective tax rates for the three and nine months ended September 30, 2016 as compared to the three and nine months ended September 30, 2015 was also attributable to the LLC Conversion (See Note 16). The Company regularly evaluates the likelihood of the realization of the Company's deferred tax assets and reduces the carrying amount of those deferred tax assets by a valuation allowance to the extent the Company believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of the Company's deferred tax assets, including recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income, the carryforward periods available to us for tax reporting purposes and other relevant factors. Significant judgment is required in making this assessment. As a result, the Company establishes a full valuation allowance against its deferred tax assets. One or more of the Company's legal entities file income tax returns in the U.S. Federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. The Company currently is not under any federal, state or foreign income tax audits and is no longer subject to U.S. federal income tax examinations for years ended on or before December 31, 2012, or to California state income tax examinations for years ended on or before December 31, 2012. During the nine months ended September 30, 2016 , the gross amount of the Company’s unrecognized tax benefits (“UTB”) increased by approximately $219 , as a result of tax positions taken during the current year. During the three months ended September 30, 2016 and the three and nine months ended September 30, 2015 , no UTB were recorded. As described in Note 2, the Company early adopted ASU 2016-06, Improvements to Employee Share-Based Payment Accounting, simplifying the accounting for employee share-based payment transactions, including the accounting for income taxes and statutory withholding requirements. Due to the Company’s partnership status prior to June 1, 2016 without any stock based compensation related deferred tax assets or stock windfall-related additional paid in capital pool as of June 30, 2016, the adoption did not result in any increase in retained earnings or deferred tax assets in the Condensed Consolidated and Combined Balance Sheet as of June 30, 2016 related to the prior years' unrecognized excess tax benefits. Because of the Company's current valuation allowance position, the adoption of ASC 2016-09 did not result in current tax expense or benefit related to vested stock awards during the three and nine months ended September 30, 2016 . As a result, the Company did not exclude any excess tax benefits from the calculation of diluted earnings per share three and nine months ended September 30, 2016 , and there was no method change to the cash flow presentation as required by ASU 2016-09. |
Redeemable Series F Units _ Com
Redeemable Series F Units / Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Series F Units/Common Stock | Redeemable Series F Units / Common Stock On June 20, 2014, the Kuwait Investment Office (“KIO”) purchased 53,580,996 Series F units of the Company through a Delaware blocker corporation, KHealth Holdings, Inc. (“KHealth”), at a purchase price of $2.7995 per unit for an aggregate amount of $150,000 . KIO is the London Office of the Kuwait Investment Authority (“KIA”). As part of the investment, KIO had the right and option, but not the obligation, to require NantHealth to redeem 100% of the outstanding shares of KHealth at an amount equal to the original purchase price of $150,000 plus accrued annual interest of 7.0% if the Company had not (i) filed a registration statement on Form S-1 with the Securities and Exchange Commission on or before December 20, 2015 or (ii) had not completed a qualified initial public offering on or before June 20, 2016 (the “Put Right”). KIO did not exercise the Put Right, and it expired as of June 20, 2016. As of December 31, 2015 , the Company determined that the redemption of the Series F units was probable due to the uncertainty of completing a qualified initial public offering under prong (ii) and, as such, accrued $16,042 of interest as a reduction to members’ equity. Prior to December 31, 2015, the Company had concluded that redemption was not probable and had not adjusted the carrying value of such units to redemption value. The Series F units were classified in the Condensed Consolidated and Combined balance sheet as of December 31, 2015 as temporary equity as a result of the contingent redemption feature. As part of the LLC Conversion, the Series F units converted to 10,714,285 shares of redeemable common stock as of June 1, 2016. Since the Put Right expired unexercised on June 20, 2016, the shares of common stock owned by KIO are no longer redeemable and are included in Stockholders’ equity. The change in net carrying amount of the Series F units and common stock owned by KIO for the nine months ended September 30, 2016 consisted of the following: Redeemable Series F Units Redeemable Common Stock Common Stock and Additional-Paid-in-Capital Balance at December 31, 2015 $ 166,042 $ — $ — Accretion to redemption value 4,375 — — Balance at June 1, 2016 pre-LLC Conversion 170,417 — — LLC Conversion (170,417 ) 170,417 — Balance at June 1, 2016 post-LLC Conversion — 170,417 — Accretion to redemption value — 583 — Balance at June 20, 2016 pre expiration of Put Right — 171,000 — Expiration of Put Right at June 20, 2016 — (171,000 ) 171,000 Balance at June 20, 2016 post expiration of Put Right and at September 30, 2016 $ — $ — $ 171,000 Letter Agreement with NantWorks On May 22, 2016, the Company signed a letter agreement with NantWorks whereby NantWorks agreed to purchase directly from KIO all of the outstanding shares of KHealth if KIO had elected to exercise its Put Right. KIO did not exercise its Put Right (which expired by its terms on June 20, 2016) and NantWorks, therefore did not purchase these shares. Stockholders’ Equity Initial Public Offering On June 7, 2016, the Company completed its IPO of 6,500,000 shares of common stock at a public offering price of $14.00 per share. Additionally, on June 9, 2016, the underwriters partially exercised their overallotment option to purchase an additional 400,000 shares of the common stock at $14.00 per share. The Company received $83,566 in proceeds from its IPO, after deducting underwriting discounts and commissions and offering costs of $13,034 . In connection with the pricing of the Company’s IPO on June 1, 2016, $40,590 of principal and accrued interest on the Company’s related party promissory notes with NantOmics was converted into 2,899,297 shares of the Company’s common stock. On July 25, 2016, the Company issued 1,056,689 shares of common stock, after withholding of approximately 538,794 shares to satisfy tax withholding obligations, to participants of the Phantom Unit Plan based in the United States who’s phantom units vested as a result of the IPO. The Company made a cash payment of $5,738 to cover employee withholding taxes upon the settlement of these vested phantom units. The Company also paid $235 on August 9, 2016 to cash-settle 16,818 vested phantom units held by participants of the Phantom Unit Plan at the time of the IPO who were based outside of the United States. LLC Conversion and Reverse Split Upon completion of the LLC Conversion on June 1, 2016, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement (the "LLC Agreement") and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation (the "Amended Certificate of Incorporation") with the Secretary of State of the state of Delaware to effect a 1 -for- 5.5 reverse stock split of its common stock on June 1, 2016. Below is a summary of the number of member units pre LLC Conversion as converted into common shares: Pre Conversion (Units) Former Series A Unit Holders 420,255,676 Former Series B Unit Holders 19,109,603 Former Series C Unit Holders 3,470,254 Former Series D Unit Holders 3,572,066 Former Series E Unit Holders 35,720,664 Former Series G Unit Holders 59,099,908 Former Series H Unit Holders 15,513,726 Total Member Units 556,741,897 The units in the table above were converted to 99,651,444 shares of common stock and 10,462 shares of restricted stock. The members’ equity balance of $525,388 was reclassified into common stock and additional paid-in capital in the Condensed Consolidated and Combined Balance Sheet as of September 30, 2016 . LLC Agreement and Amended Certificate of Incorporation Prior to the LLC Conversion, the Company’s operations were governed by its LLC Agreement. Upon the consummation of the LLC Conversion, the Company converted into a corporation, and the LLC Agreement no longer governs the Company's operations or the rights of its equityholders. The LLC Agreement provided that the board of directors had the power and discretion to manage and control the business, property and affairs of the company, but that certain actions required the consent of certain of the Company's former members. Under the LLC Agreement, the Company had units authorized, including Series A through H units. Each equityholder holding Series A, B, D, E, F, G or H units had one vote for each unit held. Profits interests units awarded under the Nant Health, LLC Profits Interests Plan (the "Profits Interests Plan") took the form of Series C units of the Company. Holders of Series C units did not have the right to vote. The LLC Agreement also set forth the rights of and restrictions on unitholders, including certain rights of first refusal and preemptive and co-sale rights. The LLC Agreement also provided that, upon the LLC Conversion, the allocation of shares of the Company's common stock among the pre-IPO equityholders was dependent upon the IPO price of its common stock, based on the relative rights of the pre-IPO equityholders as set forth in the LLC Agreement. As a result, as part of the LLC Conversion, the Company set the actual allocation of shares among its pre-IPO equityholders based upon the IPO price of its common stock. Concurrently with the consummation of the LLC Conversion, the LLC Agreement was terminated, other than certain provisions relating to certain pre-termination tax matters and certain liabilities. In accordance with the Company’s amended and restated certificate of incorporation, which was filed immediately following the closing of its IPO, the Company is authorized to issue 750,000,000 shares of common stock, with a par value of $0.0001 per share, and 20,000,000 shares of undesignated preferred stock, with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share held on all matters submitted to a vote of its stockholders. Holders of the Company’s common stock have no cumulative voting rights. Further, as of September 30, 2016 , holders of the Company’s common stock have no preemptive, conversion, redemption or subscription rights and there are no sinking fund provisions applicable to the Company’s common stock. Upon liquidation, dissolution or winding-up of the Company, holders of the Company’s common stock are entitled to share ratably in all assets remaining after payment of all liabilities and the liquidation preferences of any outstanding shares of preferred stock. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of the Company’s common stock are entitled to receive dividends, if any, as may be declared from time to time by the Company’s board of directors. As of September 30, 2016 , there were no outstanding shares of preferred stock. 2016 Equity Issuances NaviNet On January 1, 2016, the Company issued 15,513,726 Series H units to 3BE Holdings, LLC for the acquisition of NaviNet at a purchase price of $3.3841 per unit for an aggregate amount of $52,500 . The Series H units had substantially the same rights and preferences as the former Series B, D, E, F and G units that were outstanding at the time. On June 1, 2016, the Series H units issued to 3BE Holdings, LLC were converted into 3,749,998 shares of the Company’s common stock. 2015 Equity Issuances Allscripts Investment On June 29, 2015, the Company issued 59,099,908 Series G units to Allscripts Healthcare Solutions, Inc. (“Allscripts”), at a purchase price of $3.3841 per unit for an aggregate amount of $200,000 . The Series G units had substantially the same rights and preferences as the former Series B, D, E and F units that were outstanding at the time. On June 1, 2016, the Series G units issued to Allscripts were converted into 14,285,714 shares of the Company’s common stock. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Redeemable Series F Units / Common Stock On June 20, 2014, the Kuwait Investment Office (“KIO”) purchased 53,580,996 Series F units of the Company through a Delaware blocker corporation, KHealth Holdings, Inc. (“KHealth”), at a purchase price of $2.7995 per unit for an aggregate amount of $150,000 . KIO is the London Office of the Kuwait Investment Authority (“KIA”). As part of the investment, KIO had the right and option, but not the obligation, to require NantHealth to redeem 100% of the outstanding shares of KHealth at an amount equal to the original purchase price of $150,000 plus accrued annual interest of 7.0% if the Company had not (i) filed a registration statement on Form S-1 with the Securities and Exchange Commission on or before December 20, 2015 or (ii) had not completed a qualified initial public offering on or before June 20, 2016 (the “Put Right”). KIO did not exercise the Put Right, and it expired as of June 20, 2016. As of December 31, 2015 , the Company determined that the redemption of the Series F units was probable due to the uncertainty of completing a qualified initial public offering under prong (ii) and, as such, accrued $16,042 of interest as a reduction to members’ equity. Prior to December 31, 2015, the Company had concluded that redemption was not probable and had not adjusted the carrying value of such units to redemption value. The Series F units were classified in the Condensed Consolidated and Combined balance sheet as of December 31, 2015 as temporary equity as a result of the contingent redemption feature. As part of the LLC Conversion, the Series F units converted to 10,714,285 shares of redeemable common stock as of June 1, 2016. Since the Put Right expired unexercised on June 20, 2016, the shares of common stock owned by KIO are no longer redeemable and are included in Stockholders’ equity. The change in net carrying amount of the Series F units and common stock owned by KIO for the nine months ended September 30, 2016 consisted of the following: Redeemable Series F Units Redeemable Common Stock Common Stock and Additional-Paid-in-Capital Balance at December 31, 2015 $ 166,042 $ — $ — Accretion to redemption value 4,375 — — Balance at June 1, 2016 pre-LLC Conversion 170,417 — — LLC Conversion (170,417 ) 170,417 — Balance at June 1, 2016 post-LLC Conversion — 170,417 — Accretion to redemption value — 583 — Balance at June 20, 2016 pre expiration of Put Right — 171,000 — Expiration of Put Right at June 20, 2016 — (171,000 ) 171,000 Balance at June 20, 2016 post expiration of Put Right and at September 30, 2016 $ — $ — $ 171,000 Letter Agreement with NantWorks On May 22, 2016, the Company signed a letter agreement with NantWorks whereby NantWorks agreed to purchase directly from KIO all of the outstanding shares of KHealth if KIO had elected to exercise its Put Right. KIO did not exercise its Put Right (which expired by its terms on June 20, 2016) and NantWorks, therefore did not purchase these shares. Stockholders’ Equity Initial Public Offering On June 7, 2016, the Company completed its IPO of 6,500,000 shares of common stock at a public offering price of $14.00 per share. Additionally, on June 9, 2016, the underwriters partially exercised their overallotment option to purchase an additional 400,000 shares of the common stock at $14.00 per share. The Company received $83,566 in proceeds from its IPO, after deducting underwriting discounts and commissions and offering costs of $13,034 . In connection with the pricing of the Company’s IPO on June 1, 2016, $40,590 of principal and accrued interest on the Company’s related party promissory notes with NantOmics was converted into 2,899,297 shares of the Company’s common stock. On July 25, 2016, the Company issued 1,056,689 shares of common stock, after withholding of approximately 538,794 shares to satisfy tax withholding obligations, to participants of the Phantom Unit Plan based in the United States who’s phantom units vested as a result of the IPO. The Company made a cash payment of $5,738 to cover employee withholding taxes upon the settlement of these vested phantom units. The Company also paid $235 on August 9, 2016 to cash-settle 16,818 vested phantom units held by participants of the Phantom Unit Plan at the time of the IPO who were based outside of the United States. LLC Conversion and Reverse Split Upon completion of the LLC Conversion on June 1, 2016, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement (the "LLC Agreement") and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation (the "Amended Certificate of Incorporation") with the Secretary of State of the state of Delaware to effect a 1 -for- 5.5 reverse stock split of its common stock on June 1, 2016. Below is a summary of the number of member units pre LLC Conversion as converted into common shares: Pre Conversion (Units) Former Series A Unit Holders 420,255,676 Former Series B Unit Holders 19,109,603 Former Series C Unit Holders 3,470,254 Former Series D Unit Holders 3,572,066 Former Series E Unit Holders 35,720,664 Former Series G Unit Holders 59,099,908 Former Series H Unit Holders 15,513,726 Total Member Units 556,741,897 The units in the table above were converted to 99,651,444 shares of common stock and 10,462 shares of restricted stock. The members’ equity balance of $525,388 was reclassified into common stock and additional paid-in capital in the Condensed Consolidated and Combined Balance Sheet as of September 30, 2016 . LLC Agreement and Amended Certificate of Incorporation Prior to the LLC Conversion, the Company’s operations were governed by its LLC Agreement. Upon the consummation of the LLC Conversion, the Company converted into a corporation, and the LLC Agreement no longer governs the Company's operations or the rights of its equityholders. The LLC Agreement provided that the board of directors had the power and discretion to manage and control the business, property and affairs of the company, but that certain actions required the consent of certain of the Company's former members. Under the LLC Agreement, the Company had units authorized, including Series A through H units. Each equityholder holding Series A, B, D, E, F, G or H units had one vote for each unit held. Profits interests units awarded under the Nant Health, LLC Profits Interests Plan (the "Profits Interests Plan") took the form of Series C units of the Company. Holders of Series C units did not have the right to vote. The LLC Agreement also set forth the rights of and restrictions on unitholders, including certain rights of first refusal and preemptive and co-sale rights. The LLC Agreement also provided that, upon the LLC Conversion, the allocation of shares of the Company's common stock among the pre-IPO equityholders was dependent upon the IPO price of its common stock, based on the relative rights of the pre-IPO equityholders as set forth in the LLC Agreement. As a result, as part of the LLC Conversion, the Company set the actual allocation of shares among its pre-IPO equityholders based upon the IPO price of its common stock. Concurrently with the consummation of the LLC Conversion, the LLC Agreement was terminated, other than certain provisions relating to certain pre-termination tax matters and certain liabilities. In accordance with the Company’s amended and restated certificate of incorporation, which was filed immediately following the closing of its IPO, the Company is authorized to issue 750,000,000 shares of common stock, with a par value of $0.0001 per share, and 20,000,000 shares of undesignated preferred stock, with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share held on all matters submitted to a vote of its stockholders. Holders of the Company’s common stock have no cumulative voting rights. Further, as of September 30, 2016 , holders of the Company’s common stock have no preemptive, conversion, redemption or subscription rights and there are no sinking fund provisions applicable to the Company’s common stock. Upon liquidation, dissolution or winding-up of the Company, holders of the Company’s common stock are entitled to share ratably in all assets remaining after payment of all liabilities and the liquidation preferences of any outstanding shares of preferred stock. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of the Company’s common stock are entitled to receive dividends, if any, as may be declared from time to time by the Company’s board of directors. As of September 30, 2016 , there were no outstanding shares of preferred stock. 2016 Equity Issuances NaviNet On January 1, 2016, the Company issued 15,513,726 Series H units to 3BE Holdings, LLC for the acquisition of NaviNet at a purchase price of $3.3841 per unit for an aggregate amount of $52,500 . The Series H units had substantially the same rights and preferences as the former Series B, D, E, F and G units that were outstanding at the time. On June 1, 2016, the Series H units issued to 3BE Holdings, LLC were converted into 3,749,998 shares of the Company’s common stock. 2015 Equity Issuances Allscripts Investment On June 29, 2015, the Company issued 59,099,908 Series G units to Allscripts Healthcare Solutions, Inc. (“Allscripts”), at a purchase price of $3.3841 per unit for an aggregate amount of $200,000 . The Series G units had substantially the same rights and preferences as the former Series B, D, E and F units that were outstanding at the time. On June 1, 2016, the Series G units issued to Allscripts were converted into 14,285,714 shares of the Company’s common stock. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Stock Based Compensation Profits Interests Plan On December 3, 2013, the Company adopted the Profits Interests Plan under which it had reserved an aggregate of 63,750,000 Series C units for issuance to associates, consultants and contractors of the Company in consideration for bona fide services provided to the Company. The Series C units were considered profits interests of the Company and did not entitle their holders (the “Series C Members”) to receive distributions if the Company were liquidated immediately after the grant. Instead, the Series C Members were entitled to receive an allocation of a portion of the profit and loss of the Company arising after the date of the grant and, subject to vesting conditions, distributions made out of a portion of the profits of the Company arising after the grant date of the Series C units. Grants of the Series C units were either fully vested, partially vested, or entirely unvested at the time of the grant as determined by the Board. Series C Members were not entitled to receive any distributions until the aggregate distributions made by the Company exceeded a hurdle amount applicable to those Series C units. The hurdle amount for each grant was determined by the Board at the date of issuance of such units. After all other members received their applicable hurdle amount, the Series C Members were entitled to receive their percentage interest of such excess distributions. As of December 31, 2015 and through the date of the LLC Conversion, the Company had 3,470,254 Series C units outstanding. Upon the LLC Conversion (See Note 16) on June 1, 2016, the Company issued 28,973 shares of common stock to holders of vested Series C units and 10,462 shares of restricted stock to holders of unvested Series C units. The shares of restricted stock issued to holders of unvested profits interests are subject to forfeiture until becoming fully vested in accordance with the terms of the original Series C unit grant agreements. During the three and nine months ended September 30, 2016 and 2015 , the Company recognized stock based compensation for the Series C units/restricted stock expense of $43 , a benefit of $225 , an expense of $319 and an expense of $1,350 , respectively. Total stock-based compensation expense of $316 is expected to be recognized on a straight-line basis over approximately the next 2 years for the unvested restricted stock outstanding as of September 30, 2016 . The unrecognized stock compensation relates to nonemployees and the awards are being accounted for pursuant to ASC 505-50. Stock compensation expense for the Series C units/restricted stock issued to the nonemployees is calculated based on the fair value of the award on each balance sheet date and the attribution of that cost is being recognized ratably over the vesting period. Phantom Unit Plan On March 31, 2015, the Company approved the Nant Health, LLC Phantom Unit Plan (the “Phantom Unit Plan”). The maximum number of phantom units that may be issued under the Phantom Plan is equal to 11,590,909 minus the number of issued and outstanding Series C units of the Company. As of September 30, 2016 , there were 4,426,171 phantom units outstanding under the Phantom Unit Plan, after giving effect to the 1 -for- 5.5 reverse stock split. Each grant of phantom units made to a participant under the Phantom Unit Plan vests over a defined service period, subject to completion of a liquidity event. The Company’s IPO satisfied the liquidity event condition and the phantom units now entitle their holders to cash or non-cash payments in an amount equal to the number of vested units held by that participant multiplied by the fair market value of one share of the Company’s common stock on the date each phantom unit vests. After the Company’s IPO, the Company will no longer issue any units under the Phantom Unit Plan. The Company intends to settle all vested phantom unit payments held by United States-based participants in shares of the Company’s common stock and classifies these awards as equity awards in its Condensed Consolidated and Combined Balance Sheet. Awards held by participants who are based outside of the United States will be settled in cash and are classified within accrued expenses on the Condensed Consolidated and Combined Balance Sheet as of September 30, 2016 . Stock-based compensation cost related to phantom units is included in the following line items in the accompanying Condensed Consolidated and Combined Statement of Operations and Balance Sheet for and as of the three and nine months ended September 30, 2016 and 2015 : Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of revenue $ 442 $ — $ 7,474 $ — Selling, general and administrative 2,771 — 26,348 — Research and development 1,936 — 15,385 — Total stock-based compensation expense 5,149 — 49,207 — Amount capitalized to internal-use software and deferred implementation costs 1,594 — 1,594 — Total stock-based compensation cost $ 6,743 $ — $ 50,801 $ — The following table summarizes the activity related to the unvested phantom units during the nine months ended September 30, 2016 : Number of Units Weighted Average Grant date value per phantom unit Unvested phantom units outstanding - December 31, 2015 3,653,008 $15.78 Granted 3,094,335 $14.57 Vested (1,612,421 ) $15.71 Forfeited (573,667 ) $15.21 Unvested phantom units outstanding - June 30, 2016 4,561,255 $15.18 Granted — $— Vested (21,651 ) $15.37 Forfeited (113,433 ) $15.12 Unvested phantom units outstanding - September 30, 2016 4,426,171 $15.18 During the nine months ended September 30, 2016 , the Company granted 1,043,450 phantom units to employees of related companies who are providing services to the Company under the shared services agreement with NantWorks (See Note 19) as well as certain consultants of the Company. Stock compensation expense for the phantom units issued to these participants is re-measured at the end of each reporting period until the awards vest. All other grants of phantom units have been made to employees of the Company. The Company uses the accelerated attribution method to recognize expense for all phantom units since the awards’ vesting was subject to the completion of a liquidity event. The grant date fair value of the phantom units granted prior to LLC Conversion was estimated using both an option pricing method and a probability weighted expected return method. As of September 30, 2016 , the Company had $38,942 of unrecognized stock based compensation expense related to phantom units which will be recognized over a weighted-average period of 3.2 years . Of that amount, $33,600 of unrecognized expense is related to employee grants with a weighted-average period of 3.2 years and $5,342 of unrecognized expense is related to non-employee grants with a weighted-average period of 3.5 years . During the three and nine months ended September 30, 2016 , the Company issued 1,071,647 shares of common stock to participants of the Phantom Unit Plan based in the United States, after withholding approximately 545,485 shares to satisfy tax withholding obligations. The Company made a cash payment of $5,822 to cover employee withholding taxes taxes upon the settlement of these vested phantom units. During the three and nine months ended September 30, 2016 the Company also paid $235 to cash-settle 16,818 vested phantom units held by participants of the Phantom Unit Plan based outside of the United States. As described in Note 2, the Company early adopted ASU 2016-06 Improvements to Employee Share-Based Payment Accounting related to stock based compensation. The new standard simplifies the accounting for employee share-based payment transactions, including the accounting for forfeitures. The adoption of this standard had no material effect to the Company's Condensed Consolidated and Combined Financial Statements. 2016 Equity Incentive Plan In May and June of 2016, the Company’s Board of Directors adopted and the Company’s stockholders approved the 2016 Equity Incentive Plan (“the 2016 Plan”) in connection with the Company’s IPO. The 2016 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants. A total of 6,000,000 shares of common stock are reserved for issuance pursuant to the 2016 Plan. The Company issued 10,462 shares of restricted stock under the 2016 Plan during the nine months ended September 30, 2016 in connection with the conversion of the Series C units. No awards have been issued during the three months ended September 30, 2016 pursuant to the 2016 Plan. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted net loss per share of common stock and redeemable common stock for the three and nine months ended September 30, 2016 and 2015 : Three Months Ended Nine Months Ended 2016 2015 2016 2015 Common Stock Common Stock Common Stock Redeemable Common Stock Common Stock Loss per share numerator Net loss $ (36,874 ) $ (22,958 ) $ (124,151 ) $ — $ (54,159 ) Accretion to redemption value of series F/redeemable common stock — — (4,958 ) 4,958 — Net (loss)/income for basic/diluted loss per share $ (36,874 ) $ (22,958 ) $ (129,109 ) $ 4,958 $ (54,159 ) Loss per share denominator: Weighted-average shares for basic net loss per share 121,245,440 95,906,797 108,359,973 6,686,653 86,696,282 Effect of dilutive securities — — — — — Weighted-average shares for dilutive net loss per share 121,245,440 95,906,797 108,359,973 6,686,653 86,696,282 Basic & Diluted net loss per share $ (0.30 ) $ (0.24 ) $ (1.19 ) $ 0.74 $ (0.62 ) The net loss per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) that occurred June 1, 2016 prior to the Company’s initial public offering. In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the limited liability company agreement and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company filed an amended certificate of incorporation to effect a 1 -for- 5.5 reverse stock split of its common stock on June 1, 2016. As of December 31, 2015 , the Company determined that the redemption of the Series F units was probable due to the uncertainty of completing a qualified initial public offering and, as such, accrued interest as a reduction to members’ equity. Prior to December 31, 2015 , the Company had concluded that redemption was not probable and had not adjusted the carrying value of such units to redemption value. As of June 1, 2016 as part of the LLC Conversion, the Series F units converted to shares of redeemable common stock. The Put Right on redeemable common stock expired unexercised on June 20, 2016, and as of that date, the shares of common stock owned by KIO are no longer redeemable and are included in common shares (See Note 15). For the three and nine months ended September 30, 2016 , 4,426,171 shares of common stock issuable to holders of unvested phantom units were outstanding at September 30, 2016 , but were not included in the computation of diluted net loss per share applicable to common stockholders because they would have an antidilutive effect on the diluted net loss per share. For the three and nine months ended September 30, 2015 , 3,761,348 shares of common stock issuable to holders of unvested phantom units, respectively were outstanding at September 30, 2015 , but were not included in the computation of diluted net loss per share applicable to common stockholders because they would have an antidilutive effect on the diluted net loss per share. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions NantWorks Shared Services Agreement In October 2012, the Company entered into a shared services agreement with NantWorks that provides for ongoing services from NantWorks in areas such as public relations, information technology and cloud services, human resources and administration management, finance and risk management, environmental health and safety, sales and marketing services, facilities, procurement and travel, and corporate development and strategy (the "Shared Services Agreement"). The Company was billed quarterly for such services at cost, without mark-up or profit for NantWorks, but including reasonable allocations of employee benefits, facilities and other direct or fairly allocated indirect costs that relate to the associates providing the services. The Company incurred $2,106 and $7,692 of expenses during the three and nine months ended September 30, 2016 , respectively, related to selling, general and administrative services provided to the Company by NantWorks and affiliates, net of services provided to NantWorks and affiliates. The Company incurred $2,255 and $7,698 of expenses during the three and nine months ended September 30, 2015 related to selling, general and administrative services provided by NantWorks. Additionally, the Company incurred $204 and $414 of expenses during the three and nine months ended September 30, 2016 , respectively, related to research and development services provided by NantWorks and its subsidiaries. The Company incurred $274 and $937 of expenses during the three and nine months ended September 30, 2015, respectively, related to research and development services provide by NantWorks. Related Party Receivables and Payables As of September 30, 2016 and December 31, 2015 , the Company had related party receivables, net of $2,869 and $2,545 , respectively. The related party receivables, net as of September 30, 2016 and December 31, 2015 primarily consisted of a receivable from Ziosoft KK of $2,126 and $2,150 , respectively, which was related to the sale of Qi Imaging. As of September 30, 2016 and December 31, 2015 the Company had related party payables of $7,530 and $10,166 , respectively. The related party payables, net balances primarily relate to amounts owed to NantWorks pursuant to the Shared Services Agreement and amounts owed to NantOmics under the Second Amended Reseller Agreement (defined below). The balance of the related party receivables and payables represent amounts paid by affiliates on behalf of the Company or vice versa. Amended Reseller Agreement On June 19, 2015, the Company entered into a five and a half year exclusive Reseller Agreement with NantOmics for sequencing and bioinformatics services (the "Original Reseller Agreement"). NantOmics is a majority owned subsidiary of NantWorks and is controlled by the Company's Chairman and CEO. On May 9, 2016, the Company and NantOmics executed an Amended and Restated Reseller Agreement (the “Amended Reseller Agreement”), pursuant to which the Company received the worldwide, exclusive right to resell NantOmics’ quantitative proteomic analysis services, as well as related consulting and other professional services, to institutional customers (including insurers and self-insured healthcare providers) throughout the world. The Company retained its existing rights to resell NantOmics’ genomic sequencing and bioinformatics services. Under the Amended Reseller Agreement, the Company is responsible for various aspects of delivering its sequencing and molecular analysis solutions, including patient engagement and communications with providers such as providing interpretations of the reports delivered to the physicians and resolving any disputes, ensuring customer satisfaction, and managing billing and collections. On September 20, 2016, the Company and NantOmics further amended the Reseller Agreement (the "Second Amended Reseller Agreement"). The Second Amended Reseller Agreement permits the Company to use vendors other than NantOmics to provide any or all of the services that are currently being provided by NantOmics and clarifies that the Company is responsible for order fulfillment and branding. The Second Amended Reseller Agreement grants to the Company the right to renew the agreement (with exclusivity) for up to three renewal terms, each lasting three years , if the Company achieves projected volume thresholds, as follows: (i) the first renewal option can be exercised if the Company completes at least 300 tests between June 19, 2015 and June 30, 2020; (ii) the second renewal option can be exercised if the Company completes at least 570 tests between July 1, 2020 and June 30, 2023; and (iii) the third renewal option can be exercised if the Company completes at least 760 tests between July 1, 2023 and June 30, 2026. If the Company does not meet the applicable volume threshold during the initial term or the first or second exclusive renewal terms, the Company can renew for a single additional three year term, but only on a non-exclusive basis. The Company agreed to pay NantOmics non-cancellable annual minimum fees of $2,000 per year for each of the calendar years from 2016 through 2020 and, subject to the Company exercising at least one of its renewal options described above, the Company is required to pay annual minimum fees to NantOmics of at least $25,000 per year for each of the calendar years from 2021 through 2023 and $50,000 per year for each of the calendar years from 2024 through 2029. As of September 30, 2016 and December 31, 2015 , the Company has $2,009 and $3,111 , respectively, of outstanding related party payables under the Second Amended Reseller Agreement. In January 2015, the Company entered into an agreement to provide certain research related sequencing services to a university which is engaged in researching the genetic causes of certain hereditary diseases. The agreement provides that the university pay the Company $10,000 in exchange for the Company providing sequencing services. At the request of the university, certain public and private charitable 501(c)(3) non-profit organizations provided partial funding for the sequencing and related bioinformatics costs associated with the project. The Company’s Chairman and CEO serves as the CEO and a member of the board of directors of each of the non-profit organizations and by virtue of these positions he may have influence or control over these organizations. The university was not contractually or otherwise required to use the Company’s molecular profiling solutions or any of the Company’s other products or services as part of the charitable gift, however, the university did not have a requirement to order or pay for the services unless it first received private donor funding for the project. As a result, the Company does not classify the fees related to this project as revenue but instead classifies the amounts as deemed capital contributions from the Company's Chairman and CEO. During the three and nine months ended September 30, 2016 , $1,800 and $3,420 , respectively, was recorded as a deemed capital contribution within members' equity or stockholders' equity. During the three and nine months ended September 30, 2015 , $4,300 and $4,790 , respectively, was recorded as a deemed capital contribution within members' equity. During the three and nine months ended September 30, 2016 , $1,080 and $2,052 of costs, respectively, were recorded as other services cost of revenue related to the service performed. During the three and nine months ended September 30, 2015 , $2,580 and $2,874 , respectively of costs were recognized as other services cost of revenue related to the service performed. Related Party Promissory Notes On January 4, 2016, the Company executed a $112,666 demand promissory note in favor of NantCapital to fund the acquisition of NaviNet. The note bears interest at a per annum rate of 5.0% , compounded annually and computed on the basis of the actual number of days elapsed and a year of 365 or 366 days, as the case may be. The unpaid principal and any accrued and unpaid interest on the note was originally due and payable on demand in either (i) cash, (ii) shares of the Company's common stock based on per share price of $18.6126 , (iii) Series A-2 units of NantOmics based on a per unit price of $1.484 to the extent such equity is owned by the Company or (iv) any combination of the foregoing, all at the option of NantCapital. Subject to the preceding sentence, the Company may prepay the outstanding amount at any time, either in whole or in part, without premium or penalty and without the prior consent of NantCapital. On May 9, 2016, the promissory note with NantCapital was amended to provide that all outstanding principal and accrued interest is due and payable on June 30, 2021, and not on demand. No other terms of the promissory note were changed. As of September 30, 2016 , the total principal and interest outstanding on the note amounted to $116,837 . The accrued and unpaid interest on the note is classified as related party interest payable on the Condensed Consolidated and Combined Balance Sheet. The Company can request additional advances subject to NantCapital approval. The NantCapital Note bears interest at a per annum rate of 5.0% compounded annually and computed on the basis of the actual number of days in the year. NantCapital has the option, but not the obligation, to require us to repay any such amount in cash, Series A-2 units of NantOmics (based on a per unit price of $1.484 ) held by us, shares of the Company's common stock based on a per share price of $18.6126 (if such equity exists at the time of repayment), or any combination of the foregoing at the sole discretion of NantCapital. On January 22, 2016, the Company executed a demand promissory note in favor of NantOmics. The principal amount of the initial advance totaled $20,000 . On March 8, 2016, NantOmics made a second advance to the Company for $20,000 . The note bears interest at a per annum rate is 5.0% and is compounded annually. In May and June of 2016, the Company executed amendments to the demand promissory note with NantOmics, which provide that all unpaid principal of each advance owed to NantOmics and any accrued and unpaid interest would convert automatically into shares of the Company’s common stock after pricing of the Company’s IPO and immediately after conversion of the Company from a limited liability company to a corporation. On June 1, 2016, approximately $40,590 of principal and accrued interest under the promissory note with NantOmics was converted into 2,899,297 shares of the Company’s common stock in connection with the IPO. The Company can request additional advances subject to NantOmics approval, and as of September 30, 2016 , there was no outstanding balance on the promissory note. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated and Combined Financial Statements and accompanying notes. Actual results may differ from those estimates. |
Variable Interest Entities | Variable Interest Entities The Company evaluates its ownership interests, contractual rights and other interests in entities to determine if the entities are variable interest entities (“VIEs”), if it has a variable interest in those entities and the nature and extent of those interests. These evaluations are highly complex and involve judgment, the use of estimates and assumptions based on available historical information. In order for the Company to be the primary beneficiary of a VIE, it must have both (1) the power to direct the activities of a VIE that most significantly affect the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that, in either case, could potentially be significant to the VIE. The Company consolidates entities of which it is the primary beneficiary. The Company determines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis. This determination is based upon an analysis of the design of the VIE, including the VIE’s structure and activities, the power to make significant economic decisions held by the Company and by other parties, and the variable interests owned by the Company and other parties. |
Fair Value of Financial Measurements | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following three categories: • Level 1—Quoted prices for identical assets or liabilities in active markets; • Level 2—Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable; and • Level 3—Unobservable inputs that reflect estimates and assumptions. The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable, notes payable, deferred revenue and other current monetary assets and liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. In accordance with this guidance, the Company measures its cash equivalents and marketable securities at fair value. The Company’s cash equivalents and marketable securities are classified within Level 1. Cash equivalents and marketable securities are valued primarily using quoted market prices utilizing market observable inputs. |
Revenue Recognition | Revenue Recognition Revenue represents the consideration received or receivable from clients for solutions and services provided by the Company. The Company’s revenue is generated from the following sources: • Software and hardware— Software and hardware revenue is generated from the sale of the Company’s software, on either a perpetual or term license basis, and the sale of hardware. The software is installed on the client’s site or the client’s designated vendor’s site and is not hosted by the Company or by a vendor contracted by the Company. The Company also sells third-party software and hardware to its clients. Solutions sold are grouped together under the NantOS Interoperability platform (formerly known as cOS) and FusionFX, NantOS, DeviceConX and HBox. • Software-as-a-service (“SaaS”)— SaaS revenue is generated from clients’ access to and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually monthly. In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period. Solutions sold under a SaaS model include the NantOS Interoperability cancer decision support solution (formerly known as eviti), NantOS Interoperability and NaviNet. • Maintenance— Maintenance revenue includes ongoing post contract client support (“PCS”) or maintenance during the paid PCS term. Additionally, PCS includes ongoing development of software updates and upgrades provided to the client on a when and if available basis. • Sequencing and molecular analysis— Sequencing and molecular analysis revenue is generated by the process of performing sequencing and analysis of whole genome DNA, RNA and proteomic results under the Company's reseller agreement with NantOmics, LLC ("NantOmics") (See Note 19). • Other services— Other services includes revenue from professional services provided that are generally complementary to the software and may or may not be required for the software to function as desired by the client. The services are generally provided in the form of training and implementation services during the software license period and do not include PCS. Other services revenue also includes the sale of nursing and therapy services provided to patients in a home care setting and any other services not included in the preceding revenue sources. Revenue is recognized when persuasive evidence of an arrangement exists, services or products have been provided to the client, fees are fixed or determinable, and collectability is reasonably assured. While most of the Company’s arrangements include short-term payment terms, the Company on occasion provides payment terms to clients in excess of one year from the date of contract signing. The Company does not recognize revenue for arrangements containing these extended payment terms until such payments become due. Certain of the Company’s customer arrangements allow for termination for convenience with advanced notice. Such termination rights do not allow for refunds other than prepaid PCS or other services. These provisions do not affect when the Company commences revenue recognition. The Company also has certain arrangements which allow for termination and refunds of fees in the event that software acceptance by the customer has not occurred. In these instances, the Company will defer all revenue until software acceptance has occurred. The Company's sequencing and molecular analysis revenue is primarily generated from payments received from commercial third-party payors, hospitals and other provider networks and patients. The Company reports revenue from arrangements with these customers on a gross basis in accordance with Financial Accounting Standards Board (“ FASB") Accounting Standards Update ("ASC") No. 605-45, Principal Agent Considerations . The Company recognizes revenue from these arrangements when all revenue recognition criteria have been met or on a cash basis when it cannot conclude that the fees are fixed or determinable and collectability is reasonably assured. The Company uses judgment in its assessment of whether the fees are fixed or determinable and whether collectability is reasonably assured in determining when to recognize revenue in the future as it continues to gain payment experience with its customers. Accordingly, the Company expects to recognize revenue on a cash basis when it cannot conclude that the fees from a particular customer are fixed or determinable and collectability is reasonably assured until it has a sufficient history to reliably estimate payment patterns from such customer. The Company engages in various multiple-element arrangements, which may generate revenue across any of the sources noted above. For multiple-element software arrangements that involve the sale of the Company’s proprietary software, PCS and other software-related services, vendor-specific objective evidence (“VSOE”) of fair value is required to allocate and recognize revenue for each element. VSOE of fair value is determined based on the price charged in which each deliverable is sold separately. The Company has established VSOE for PCS on certain of its software solutions using the Stated Renewal Method. In this instance, the Company has determined that its stated renewals are substantive and appropriate for use in the Stated Renewal Method. The Company has not yet established VSOE of fair value for any element other than PCS for a portion of its arrangements. In situations where VSOE of fair value exists for PCS but not a delivered element (typically the software license and services elements), the residual method is used to allocate revenue to the undelivered element equal to its VSOE value with the remainder allocated to the delivered elements. In situations in which VSOE of fair value does not exist for all of the undelivered software-related elements, revenue is deferred until only one undelivered element remains (typically the PCS element) and then recognized following the pattern of delivery of the final undelivered element. The Company’s multiple element arrangements typically provide for renewal of PCS terms upon expiration of the original term. The amounts of these PCS renewals are recognized as revenue ratably over the specified PCS renewal period. For non-software arrangements that include multiple-elements, primarily consisting of the Company’s SaaS agreements, revenue recognition involves the identification of separate units of accounting after consideration of combining and/or segmenting contracts and allocation of the arrangement consideration to the units of accounting on the basis of their relative selling price. The selling price used for each deliverable is based on VSOE of fair value, if available, third party evidence (“TPE”) of fair value if VSOE is not available, or the Company’s best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. In determining the units of accounting for these arrangements, the Company evaluates whether each deliverable has stand-alone value as defined in the FASB’s guidance. The Company’s SaaS arrangements are treated as a single unit of accounting as the professional services do not have standalone value. As a result, the Company recognizes initial system implementation and deployment fees ratably over a period of time from when the system implementation or deployment services are completed and accepted by the customer over the longer of the life of the agreement or the estimated customer life. If an arrangement to deliver software requires significant production, modification or customization of the licensed software, the Company accounts for the arrangement as a construction-type contract. The Company currently recognizes revenue for these arrangements using the completed-contract method as it does not currently have sufficient information to reliably estimate the percentage of completion for these projects. The Company considers these arrangements to be substantially complete upon the clients’ acceptance of the software and related professional services and consistently applies this policy to all contract accounting arrangements. Transaction processing fees are recognized on a monthly basis based on the number of transactions processed and the fee per transaction. Revenue derived from reseller arrangements is recognized when the resellers, in turn, sell the software solution to their clients and installation of the software solution has occurred, provided all other revenue recognition criteria are met. This is commonly referred to as the sell-through method and the Company defers recognition until there is a sell-through by the reseller to an actual end user clients and acceptance by the end user has occurred. |
Investments in Related Parties | Investments in Related Parties Investments in and advances to related parties in which the Company has a substantial ownership interest of approximately 20% to 50% , or for which the Company exercises significant influence but not control over policy decisions, are accounted for by the equity method. Investments in limited liability companies that are similar to partnerships are also accounted for under the equity method if more than minor influence over the operation of the investee exists (generally through more than 3 - 5% ownership). As part of that accounting, the Company recognizes gains and losses that arise from the issuance of stock by a related party that results in changes in the Company’s proportionate share of the dollar amount of the related party’s equity. Investments in related parties are assessed for possible impairment when events indicate that the fair value of the investment may be below the Company’s carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in net loss. In making the determination as to whether a decline is other than temporary, the Company considers such factors as the duration and extent of the decline, the investee’s financial performance, and the Company’s ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the investment’s market value. The new cost basis of investments in these equity investees is not changed for subsequent recoveries in fair value. Differences between the Company’s carrying value of an equity investment and its underlying equity in the net assets of the related party are assigned to the extent practicable to specific assets and liabilities based on the Company’s analysis of the various factors giving rise to the difference. When appropriate, the Company’s share of the related party’s reported earnings is adjusted quarterly to reflect the difference between these allocated values and the related party’s historical book values. |
Business Combinations | Business Combinations Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Management routinely monitors the factors impacting the acquired assets and liabilities. Transaction related costs are expensed as incurred. The operating results of the acquired business are reflected in the Company’s Condensed Consolidated and Combined Financial Statements as of the acquisition date. |
Deferred Revenue | Deferred Revenue The Company records deferred revenue when it receives cash from clients prior to meeting the applicable revenue recognition criteria. The Company uses judgment in determining the period over which the deliverables are recognized as revenue. As of September 30, 2016 and December 31, 2015, current and non-current deferred revenue are comprised of deferrals for fees related to software licenses, SaaS arrangements, PCS services, non-PCS services and other revenue. Non-current deferred revenue is expected to be recognized on or over 12 month period following September 30, 2016 . |
Deferred Implementation Costs | Deferred Implementation Costs The Company provides SaaS and information technology management services under long-term arrangements which require the Company to perform system implementation activities. In some cases, the arrangements either contain provisions requiring customer acceptance of the setup activities prior to commencement of the ongoing services arrangement or the system implementation services do not have separate value from the service revenue. Up-front fees billed during the setup phase for these arrangements are deferred and setup costs that are direct and incremental to the contract are capitalized. The costs deferred consist of employee compensation (including stock based compensation) and benefits for those employees directly involved with performing system implementation or deployment services, as well as other direct and incremental costs. The Company defers costs estimated to be realizable based on contracted implementation revenue and estimated margin from the service contract. The Company periodically reviews the deferred implementation contracts for recoverability. The costs are amortized to cost of revenue ratably over a period of time from when the system implementation or deployment services are completed and accepted to the end of the contract term or the expected customer life, whichever is longer. |
Software Developed for Internal Use | Software Developed for Internal Use The Company accounts for the costs of computer software obtained or developed for internal use in accordance with FASB ASC 350, " Intangibles — Goodwill and Other " ("ASC 350"). Computer software development costs are expensed as incurred, except for internal use software costs that qualify for capitalization as described below, and include employee related expenses, including salaries, benefits and stock-based compensation expenses; costs of computer hardware and software; and costs incurred in developing features and functionality. These capitalized costs are included in property and equipment on the Condensed Consolidated and Combined Balance Sheets. The Company expenses costs incurred in the preliminary project and post implementation stages of software development and capitalizes costs incurred in the application development stage and costs associated with significant enhancements to existing internal use software applications. Software costs are amortized using the straight-line method over an estimated useful life of three years commencing when the software project is ready for its intended use. |
Research and Development Expenses | Research and Development Expenses Research and development (“R&D”) costs incurred to establish the technological feasibility of software to be sold are expensed as incurred. These expenses include the costs of the Company’s proprietary R&D efforts, as well as costs incurred in connection with certain licensing arrangements. Development costs, consisting primarily of employee salaries and benefits, incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any software development costs are capitalized. Costs incurred to acquire or create a computer software product are expensed when incurred as research and development until technological feasibility has been established for the product, at which point such costs are capitalized. Technological feasibility is normally established upon completion of a detailed program design or, in its absence, a working model of the software product. Capitalization of computer software costs ceases when the product is available for general release to customers. As of September 30, 2016 , the Company has not capitalized software costs as no significant costs have been incurred in developing software products and technological feasibility has not been established for new software products and enhancements to existing software. |
Stock Based Compensation | Stock Based Compensation The Company accounts for stock based compensation arrangements granted to employees in accordance with ASC 718, " Compensation: Stock Compensation", by measuring the grant date fair value of the award and recognizing the resulting expense over the period during which the employee is required to perform service in exchange for the award. The Company accounts for stock based compensation arrangements issued to non-employees using the fair value approach prescribed by ASC 505-50, “ Equity-Based Payments to Non-Employees". The value of non-employee stock based compensation is re-measured at the end of each reporting period until the award vests and is recognized as stock based compensation expense over the period during which the non-employee provides the services. Stock based compensation expense for both employee and non-employee awards is recognized on a straight-line basis over the appropriate service period for awards that are only subject to service conditions and is recognized using the accelerated attribution method for awards that are subject to performance conditions. Stock based compensation expense is only recognized for awards subject to performance conditions if it is probable that the performance condition will be achieved. The Company early adopted FASB ASU 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ” (“ASU 2016-09”) related to stock based compensation, beginning July 1, 2016, simplifying the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory withholding requirements, as well as the related classification in the statement of cash flows. All excess tax benefits and tax deficiencies are recognized as income tax benefit or expense in the income statement as discrete items in the reporting period in which they occur, and such tax benefits and tax deficiencies are not included in the estimate of an entity’s annual effective tax rate, applied on a prospective basis. The recognition of excess tax benefits is not deferred until the benefit is realized through a reduction to taxes payable. When the Company applies the treasury stock method, in calculating diluted earnings per share, excess tax benefits, if applicable, are excluded and deficiencies from the calculation of assumed proceeds since such amounts are recognized in the income statement. Excess tax benefits if applicable, are classified as operating activities in the same manner as other cash flows related to income taxes on the statement of cash flows. Per ASU 2016-09, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The Company has elected to account for forfeitures when they occur. Cash paid by the Company when directly withholding shares for tax withholding purposes should be classified as a financing activity in the Statement of Cash Flows (See Note 14 and Note 17). |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, adjusted to give effect to potentially dilutive securities. However, potentially dilutive securities are excluded from the computation of diluted net loss per share to the extent that their effect is anti-dilutive. |
Segment Reporting | Segment Reporting The chief operating decision maker for the Company is its Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a Condensed Consolidated and Combined basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results, or plans for levels or components below the Condensed Consolidated and Combined unit level. Accordingly, management has determined that the Company operates in one reportable segment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, " Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ." This standard update was issued to address diversity in practice in how certain cash receipts and cash payments are presented and classified. The provisions of ASU 2016-15 will be effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's Condensed Consolidated and Combined Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, " Measurement of Credit Losses on Financial Instruments" (“ASU 2016-13”), which changes how companies measure credit losses on most financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Rather than generally recognizing credit losses when it is probable that the loss has been incurred, the revised guidance requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument's contractual life. ASU 2016-13 is effective for fiscal periods beginning after December 15, 2019 and must be adopted as a cumulative effect adjustment to retained earnings. Early adoption is permitted. The Company is evaluating the potential effects of the adoption of this guidance on the Company's Condensed Consolidated and Combined Financial Statement s. In May 2016, the FASB issued ASU No. 2016-12, " Revenue from Contracts with Customers (Topic 606)" . The amendments, which address transition, collectability, non-cash consideration and the presentation of sales and other similar taxes, do not change the core principles of ASU 2014-09, but rather address implementation issues and are intended to result in more consistent application. The Company intends to adopt this standard on January 1, 2018. The Company is evaluating the potential effects of the adoption to the Company's Condensed Consolidated and Combined Financial Statements. In April 2016, the FASB issued ASU No. 2016-10, " Identifying Performance Obligations and Licensing", which amends certain aspects of ASC 606, Revenue from Contracts with Customers. ASU No. 2016-10 amends step two of the new revenue standard’s five-step model to include guidance on immaterial promised goods or services, shipping and handling activities and identifying when promises represent performance obligations. ASU No. 2016-10 also provides guidance related to licensing such as, but not limited to, sales-based and usage-based royalties and renewals of license that provide a right to use intellectual property. The Company intends to adopt this standard on January 1, 2018. The Company is evaluating the potential effects of the adoption of this guidance on the Company's Condensed Consolidated and Combined Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, " Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" . ASU 2016-09 changes certain aspects of the accounting for share-based payment awards, including: accounting and cash flow classification for excess tax benefits and deficiencies; income tax withholding obligations; forfeitures; and cash flow classification. ASU 2016-09 is effective for the Company in the first quarter of 2017, with early adoption permitted. As mentioned above, the Company early adopted this guidance effective July 1, 2016, see Note 14 and Note 17 . In February 2016, the FASB issued ASU No. 2016-02, " Leases (Topic 842)" (“ASU 2016-02”). The update is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. This guidance will become effective for interim and annual reporting periods beginning with the year ending December 31, 2019. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its Condensed Consolidated and Combined Financial Statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, " Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, including a provision that requires equity investments (except for investments accounted for under the equity method of accounting) to be measured at fair value, with changes in fair value recognized in current earnings. ASU 2016-01 is effective for the Company in the first quarter of 2018, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-01 will have on its Condensed Consolidated and Combined Financial Statements and related disclosures. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission ("SEC") did not have, or are not believed by management to have, a material impact on the Company's present or future Condensed Consolidated and Combined financial Statements. |
Business Combinations and Inv30
Business Combinations and Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, Total Purchase Consideration | The following table summarizes the total purchase consideration for the acquisition , subject to the finalization of the Company's purchase price accounting for the transaction. Amounts Cash paid to seller at closing $ 74,823 Cash paid to option holders after closing 2,580 Cash paid to escrow account 6,126 Working capital settlement payment 455 Fair value of Series H units 52,500 Total consideration $ 136,484 The following table summarizes the total purchase consideration for the acquisition, including the effects of the final net working capital adjustment: Amounts Cash paid to Harris at closing $ 43,056 Cash paid to escrow account 7,500 Working capital released from escrow (2,494 ) Total consideration $ 48,062 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The fair value of the identifiable assets acquired and liabilities assumed for the HCS business is shown in the table below: Amounts Accounts receivable, net $ 13,119 Other liabilities and assets, net (2,205 ) Deferred revenue (16,076 ) Trademarks 2,400 Developed technology 14,400 Customer relationships 8,900 Backlog 3,900 Goodwill 23,624 Total fair value of net assets acquired $ 48,062 The total consideration was allocated to the net assets acquired based upon their estimated fair values. The Company continues to monitor potential fair value adjustments to property, plant and equipment as well as activity against the escrow account that provide security for any seller indemnifications, obligations, including severance matters: Amounts Cash and restricted cash $ 4,804 Accounts receivable, net 10,693 Property, plant and equipment, net 7,953 Other assets and liabilities, net 3,830 Accounts payable (4,585 ) Accrued expenses (3,488 ) Deferred revenue (2,603 ) Deferred tax liability (19,533 ) Assumed indebtedness (23,324 ) Trade names 3,000 Developed technology 32,000 Customer relationships 52,000 Goodwill 75,737 Total fair value of net assets acquired $ 136,484 |
Business Acquisition, Pro Forma Information | The following financial information presents the combined results of continuing operations for the three and nine months ended September 30, 2015 , as if the acquisitions had been completed on January 1, 2015. There are no pro forma adjustments for the three and nine months ended September 30, 2016 since the results of NaviNet and HCS are included in the Company’s Condensed Consolidated and Combined Financial Statements beginning on January 1, 2016 and July 1, 2015, respectively. The unaudited pro forma results do not reflect any material adjustments, operating efficiencies or potential cost savings that may result from the consolidation of operations. Three Months Ended September 30, Nine Months Ended September 30, 2015 2015 Revenue $ 27,678 $ 93,793 Net loss $ (26,831 ) $ (68,148 ) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, net | Inventories, net as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, (Unaudited) Finished goods $ 1,638 $ 2,005 Raw Materials 164 141 Inventories $ 1,802 $ 2,146 |
Prepaid Expenses and Other Cu32
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, (Unaudited) Prepaid expenses $ 3,807 $ 2,161 Restricted cash (1) 100 — Deferred offering costs — 3,902 Escrow receivable 1,678 2,494 Other current assets 218 150 $ 5,803 $ 8,707 (1) Additional $250 of non-current restricted cash is included in the Company’s Condensed Consolidated and Combined balance sheets as part of Other assets. |
Property, Plant and Equipment33
Property, Plant and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, net | Property, plant and equipment, net as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, (Unaudited) Computer equipment and software $ 28,390 $ 9,865 Furniture and equipment 8,235 6,772 Leasehold and building improvements 4,081 1,433 Internal use software 11,188 1,018 Construction in progress 2,210 1,462 54,104 20,550 Less: accumulated depreciation and amortization (24,692 ) (6,651 ) Property, plant and equipment, net $ 29,412 $ 13,899 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The Company’s definite-lived intangible assets as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, 2016 Customer Relationships Developed Technologies Software License Intellectual Property Trade Name Total Gross carrying amount $ 65,200 $ 98,930 $ 5,000 $ 2,400 $ 3,000 $ 174,530 Accumulated amortization (6,200 ) (41,272 ) (1,250 ) (600 ) (563 ) (49,885 ) Intangible assets, net $ 59,000 $ 57,658 $ 3,750 $ 1,800 $ 2,437 $ 124,645 December 31, 2015 Customer Relationships Developed Technologies Software License Intellectual Property Trade Name Total Gross carrying amount $ 13,200 $ 66,930 $ 5,000 $ 2,400 $ — $ 87,530 Accumulated amortization (1,680 ) (30,326 ) (313 ) (240 ) — (32,559 ) Intangible assets, net $ 11,520 $ 36,604 $ 4,687 $ 2,160 $ — $ 54,971 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense over the next five years and thereafter for the intangible assets that exist as of September 30, 2016 is as follows: Amounts 2016 $ 5,519 2017 19,078 2018 18,478 2019 18,166 2020 14,958 Thereafter 48,446 Total $ 124,645 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill activity during the nine months ended September 30, 2016 is shown as follows: Amounts Balance at December 31, 2015 Goodwill $ 63,668 Accumulated impairment losses (6,950 ) Net balance 56,718 Activity during the year (Unaudited): Acquisitions (See Note 3) 74,376 Measurement period adjustments (See Note 3) 1,635 Net activity during the period 76,011 Balance at September 30, 2016 (Unaudited): Goodwill 139,679 Accumulated impairment losses (6,950 ) Net balance $ 132,729 |
Investment in Related Party (Ta
Investment in Related Party (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The Company used the following summarized financial information for NantOmics for the trailing nine months ended June 30, 2016 to record its equity method losses for the nine months ended September 30, 2016 : Trailing Nine Months Ended June 30, 2016 Sales $ 2,936 Gross loss (3,113 ) Loss from operations (25,693 ) Net loss (21,841 ) Net loss attributable to NantOmics $ (20,273 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 consisted of the following: September 30, 2016 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Cash equivalents $ 63,404 $ 63,404 $ — $ — Marketable securities — — — — December 31, 2015 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Cash equivalents $ 630 $ 630 $ — $ — Marketable securities 1,243 1,243 — — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | As of September 30, 2016 , the Company’s future minimum rental commitments under its non-cancellable operating leases are as follows: Amounts 2016 $ 1,161 2017 4,246 2018 2,249 2019 650 2020 521 Thereafter 1,643 Total minimum rental commitments $ 10,470 |
Redeemable Series F Units _ C39
Redeemable Series F Units / Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Temporary Equity Disclosure [Abstract] | |
Schedule of Change in Net Carrying Amount of Equity Interests Owned by Buyer | The change in net carrying amount of the Series F units and common stock owned by KIO for the nine months ended September 30, 2016 consisted of the following: Redeemable Series F Units Redeemable Common Stock Common Stock and Additional-Paid-in-Capital Balance at December 31, 2015 $ 166,042 $ — $ — Accretion to redemption value 4,375 — — Balance at June 1, 2016 pre-LLC Conversion 170,417 — — LLC Conversion (170,417 ) 170,417 — Balance at June 1, 2016 post-LLC Conversion — 170,417 — Accretion to redemption value — 583 — Balance at June 20, 2016 pre expiration of Put Right — 171,000 — Expiration of Put Right at June 20, 2016 — (171,000 ) 171,000 Balance at June 20, 2016 post expiration of Put Right and at September 30, 2016 $ — $ — $ 171,000 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Schedule Of Member Units, Pre-Conversion | Below is a summary of the number of member units pre LLC Conversion as converted into common shares: Pre Conversion (Units) Former Series A Unit Holders 420,255,676 Former Series B Unit Holders 19,109,603 Former Series C Unit Holders 3,470,254 Former Series D Unit Holders 3,572,066 Former Series E Unit Holders 35,720,664 Former Series G Unit Holders 59,099,908 Former Series H Unit Holders 15,513,726 Total Member Units 556,741,897 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Stock-based compensation cost related to phantom units is included in the following line items in the accompanying Condensed Consolidated and Combined Statement of Operations and Balance Sheet for and as of the three and nine months ended September 30, 2016 and 2015 : Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of revenue $ 442 $ — $ 7,474 $ — Selling, general and administrative 2,771 — 26,348 — Research and development 1,936 — 15,385 — Total stock-based compensation expense 5,149 — 49,207 — Amount capitalized to internal-use software and deferred implementation costs 1,594 — 1,594 — Total stock-based compensation cost $ 6,743 $ — $ 50,801 $ — |
Schedule of Share-based Compensation, Activity | The following table summarizes the activity related to the unvested phantom units during the nine months ended September 30, 2016 : Number of Units Weighted Average Grant date value per phantom unit Unvested phantom units outstanding - December 31, 2015 3,653,008 $15.78 Granted 3,094,335 $14.57 Vested (1,612,421 ) $15.71 Forfeited (573,667 ) $15.21 Unvested phantom units outstanding - June 30, 2016 4,561,255 $15.18 Granted — $— Vested (21,651 ) $15.37 Forfeited (113,433 ) $15.12 Unvested phantom units outstanding - September 30, 2016 4,426,171 $15.18 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted net loss per share of common stock and redeemable common stock for the three and nine months ended September 30, 2016 and 2015 : Three Months Ended Nine Months Ended 2016 2015 2016 2015 Common Stock Common Stock Common Stock Redeemable Common Stock Common Stock Loss per share numerator Net loss $ (36,874 ) $ (22,958 ) $ (124,151 ) $ — $ (54,159 ) Accretion to redemption value of series F/redeemable common stock — — (4,958 ) 4,958 — Net (loss)/income for basic/diluted loss per share $ (36,874 ) $ (22,958 ) $ (129,109 ) $ 4,958 $ (54,159 ) Loss per share denominator: Weighted-average shares for basic net loss per share 121,245,440 95,906,797 108,359,973 6,686,653 86,696,282 Effect of dilutive securities — — — — — Weighted-average shares for dilutive net loss per share 121,245,440 95,906,797 108,359,973 6,686,653 86,696,282 Basic & Diluted net loss per share $ (0.30 ) $ (0.24 ) $ (1.19 ) $ 0.74 $ (0.62 ) |
Description of Business and B43
Description of Business and Basis of Presentation - Initial Public Offering and LLC Conversion (Details) $ / shares in Units, $ in Thousands | Jun. 09, 2016$ / sharesshares | Jun. 07, 2016USD ($)$ / sharesshares | Jun. 01, 2016 | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Class of Stock [Line Items] | |||||
Reverse stock split, conversion ratio | 0.1818 | ||||
Proceeds from initial public offering, net of offering costs | $ 83,566 | $ 0 | |||
Offering costs for initial public offering | $ 13,034 | ||||
IPO | |||||
Class of Stock [Line Items] | |||||
Issuance of membership interests, shares | shares | 6,500,000 | ||||
Offering price per share (usd per share) | $ / shares | $ 14 | ||||
Proceeds from initial public offering, net of offering costs | $ 83,566 | ||||
Offering costs for initial public offering | $ 13,034 | ||||
Over allotment option | |||||
Class of Stock [Line Items] | |||||
Issuance of membership interests, shares | shares | 400,000 | ||||
Offering price per share (usd per share) | $ / shares | $ 14 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2016segment | |
Finite-Lived Intangible Assets [Line Items] | |
Number of reportable segments | 1 |
Software costs | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated lives of definite-lived intangible assets | 3 years |
Business Combinations and Inv45
Business Combinations and Investments - Narrative (Details) - USD ($) | Jan. 01, 2016 | Sep. 08, 2015 | Jul. 01, 2015 | Jun. 16, 2015 | May 31, 2015 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Nov. 30, 2015 |
Business Acquisition [Line Items] | |||||||||||||
Measurement period adjustments (See Note 3) | $ (697,000) | $ 0 | $ 1,635,000 | $ 0 | |||||||||
Goodwill | $ 132,729,000 | $ 132,729,000 | $ 56,718,000 | ||||||||||
Translational Research Management, LLC (TRM) | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Proceeds from divestiture of investment | $ 250,000 | ||||||||||||
NantOmics | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Number of A-2 units issued to company (in shares) | 610,928 | ||||||||||||
Ownership percentage | 14.30% | 14.30% | |||||||||||
Variable Interest Entity, Not Primary Beneficiary | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
IOBS investment | $ 1,750,000 | ||||||||||||
Number of shares acquired in IOBS | 1,750,000 | ||||||||||||
Percentage of ownership in variable interest entity | 35.00% | ||||||||||||
Conversion of Series A Units to Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Number of shares from conversion of Series A units | 44,778 | ||||||||||||
NaviNet, Inc. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Percentage of voting interest acquired | 100.00% | ||||||||||||
Cash paid in business acquisition | $ 83,529,000 | ||||||||||||
Fair value of units transferred in acquisition | 52,500,000 | ||||||||||||
Contingent arrangements or earnouts, maximum | $ 12,250,000 | ||||||||||||
Working capital settlement payment (released) to/from escrow | 455,000 | $ 455,000 | |||||||||||
Assumed indebtedness repaid at closing of acquisition | 23,324,000 | ||||||||||||
Post-acquisition payout which represented the fair value of stock options | $ 7,394,000 | ||||||||||||
Compensation expense post-acquisition | $ 4,814,000 | ||||||||||||
Measurement period adjustments (See Note 3) | $ (697,000) | (697,000) | |||||||||||
Cumulative measurement adjustments | 1,361,000 | ||||||||||||
Measurement period adjustment, decrease to goodwill related to decrease in deferred revenue | (953,000) | ||||||||||||
Measurement period adjustment, increase to goodwill related to a deferred tax liability increase | 4,234,000 | ||||||||||||
Measurement period adjustment, increase to goodwill related to working capital increase | 455,000 | ||||||||||||
Measurement period adjustment, decrease to goodwill representing the Company's right to reimbursement from seller | (1,678,000) | ||||||||||||
Term of agreement for severance benefits reimbursement | 12 months | ||||||||||||
Funds held in escrow for settlement of net working capital | $ 6,126,000 | ||||||||||||
Goodwill | $ 75,737,000 | ||||||||||||
NaviNet, Inc. | Trade names | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated lives of definite-lived intangible assets | 4 years | ||||||||||||
NaviNet, Inc. | Customer relationships | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated lives of definite-lived intangible assets | 15 years | ||||||||||||
NaviNet, Inc. | Developed technology | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated lives of definite-lived intangible assets | 7 years | 7 years | |||||||||||
NaviNet, Inc. | Series H units | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Number of shares issued in acquisition | 15,513,726 | ||||||||||||
Fair value of units transferred in acquisition | $ 52,500,000 | ||||||||||||
NantCloud Services, LLC | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Percentage of voting interest acquired | 100.00% | ||||||||||||
Cash paid in business acquisition | $ 7,227,000 | ||||||||||||
Healthcare Solutions (HCS) | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash paid in business acquisition | $ 50,556,000 | ||||||||||||
Working capital settlement payment (released) to/from escrow | $ (2,494,000) | $ 2,494,000 | |||||||||||
Measurement period adjustments (See Note 3) | $ 274,000 | ||||||||||||
Funds held in escrow for settlement of net working capital | 7,500,000 | ||||||||||||
Goodwill | $ 23,624,000 | ||||||||||||
Healthcare Solutions (HCS) | Customer relationships | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated lives of definite-lived intangible assets | 5 years | ||||||||||||
Healthcare Solutions (HCS) | Trademarks | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated lives of definite-lived intangible assets | 5 years | ||||||||||||
Healthcare Solutions (HCS) | Backlog | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated lives of definite-lived intangible assets | 5 years | ||||||||||||
Translational Research Management, LLC (TRM) | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Percentage of voting interest acquired | 54.00% | ||||||||||||
Cash paid in business acquisition | $ 250,000 | ||||||||||||
Translational Research Management, LLC (TRM) | Former Series A Unit Holders | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Number of shares issued in acquisition | 267,905 |
Business Combinations and Inv46
Business Combinations and Investments - Summary of Purchase Consideration (Details) - USD ($) $ in Thousands | Jan. 01, 2016 | Jul. 01, 2015 | Jun. 30, 2016 | Mar. 31, 2016 |
NaviNet, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash paid to seller at closing | $ 74,823 | |||
Cash paid to option holders after closing | 2,580 | |||
Cash paid to escrow account | 6,126 | |||
Working capital settlement payment (released) to/from escrow | 455 | $ 455 | ||
Fair value of units transferred in acquisition | 52,500 | |||
Total consideration | $ 136,484 | |||
Healthcare Solutions (HCS) | ||||
Business Acquisition [Line Items] | ||||
Cash paid to seller at closing | $ 43,056 | |||
Cash paid to escrow account | 7,500 | |||
Working capital settlement payment (released) to/from escrow | (2,494) | $ 2,494 | ||
Total consideration | $ 48,062 |
Business Combinations and Inv47
Business Combinations and Investments - Allocation of Total Consideration to Net Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jan. 01, 2016 | Dec. 31, 2015 | Jul. 01, 2015 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 132,729 | $ 56,718 | ||
NaviNet, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash and restricted cash | $ 4,804 | |||
Accounts receivable, net | 10,693 | |||
Property, plant and equipment, net | 7,953 | |||
Other assets and liabilities, net | 3,830 | |||
Accounts payable | (4,585) | |||
Accrued expenses | (3,488) | |||
Deferred revenue | (2,603) | |||
Deferred tax liability | (19,533) | |||
Assumed indebtedness | (23,324) | |||
Goodwill | 75,737 | |||
Total fair value of net assets acquired | 136,484 | |||
NaviNet, Inc. | Trade names | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | 3,000 | |||
NaviNet, Inc. | Developed technology | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | 32,000 | |||
NaviNet, Inc. | Customer relationships | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | $ 52,000 | |||
Healthcare Solutions (HCS) | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable, net | $ 13,119 | |||
Other liabilities, net | (2,205) | |||
Deferred revenue | (16,076) | |||
Goodwill | 23,624 | |||
Total fair value of net assets acquired | 48,062 | |||
Healthcare Solutions (HCS) | Trademarks | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | 2,400 | |||
Healthcare Solutions (HCS) | Developed technology | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | 14,400 | |||
Healthcare Solutions (HCS) | Customer relationships | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | 8,900 | |||
Healthcare Solutions (HCS) | Backlog | ||||
Business Acquisition [Line Items] | ||||
Definite-lived intangible assets | $ 3,900 |
Business Combinations and Inv48
Business Combinations and Investments - Pro Forma Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Business Combinations [Abstract] | ||
Revenue | $ 27,678 | $ 93,793 |
Net loss | $ (26,831) | $ (68,148) |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Outstanding and unpaid invoices excluded from accounts receivable and deferred revenue | $ 8,343 | $ 12,643 |
Allowance for doubtful accounts | $ 1,185 | $ 956 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,638 | $ 2,005 |
Raw Materials | 164 | 141 |
Inventories | $ 1,802 | $ 2,146 |
Prepaid Expenses and Other Cu51
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 3,807 | $ 2,161 |
Restricted cash | 100 | 0 |
Deferred offering costs | 0 | 3,902 |
Escrow receivable | 1,678 | 2,494 |
Other current assets | 218 | 150 |
Prepaid expenses and other current assets | 5,803 | $ 8,707 |
Non-current restricted cash | $ 250 |
Property, Plant and Equipment52
Property, Plant and Equipment, net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 54,104,000 | $ 54,104,000 | $ 20,550,000 | ||
Less: accumulated depreciation and amortization | (24,692,000) | (24,692,000) | (6,651,000) | ||
Property, plant, and equipment, net | 29,412,000 | 29,412,000 | 13,899,000 | ||
Depreciation expense | 1,995,000 | $ 976,000 | 5,664,000 | $ 2,639,000 | |
Computer equipment and software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 28,390,000 | 28,390,000 | 9,865,000 | ||
Furniture and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 8,235,000 | 8,235,000 | 6,772,000 | ||
Leasehold and building improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 4,081,000 | 4,081,000 | 1,433,000 | ||
Internal use software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 11,188,000 | 11,188,000 | 1,018,000 | ||
Depreciation expense | 410,000 | $ 0 | 686,000 | $ 0 | |
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 2,210,000 | $ 2,210,000 | $ 1,462,000 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Definite-Lived Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 174,530 | $ 87,530 |
Accumulated amortization | (49,885) | (32,559) |
Intangible assets, net | 124,645 | 54,971 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 65,200 | 13,200 |
Accumulated amortization | (6,200) | (1,680) |
Intangible assets, net | 59,000 | 11,520 |
Developed Technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 98,930 | 66,930 |
Accumulated amortization | (41,272) | (30,326) |
Intangible assets, net | 57,658 | 36,604 |
Software License | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 5,000 | 5,000 |
Accumulated amortization | (1,250) | (313) |
Intangible assets, net | 3,750 | 4,687 |
Intellectual Property | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 2,400 | 2,400 |
Accumulated amortization | (600) | (240) |
Intangible assets, net | 1,800 | 2,160 |
Trade Name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 3,000 | 0 |
Accumulated amortization | (563) | 0 |
Intangible assets, net | $ 2,437 | $ 0 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) | Sep. 29, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization expense | $ 5,520,000 | $ 3,649,000 | $ 17,326,000 | $ 8,228,000 | |
NaviNet, Inc. | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Definite-lived intangible assets related to acquisition | $ 87,000,000 | ||||
NaviNet, Inc. | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Estimated lives of definite-lived intangible assets | 4 years | ||||
NaviNet, Inc. | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Estimated lives of definite-lived intangible assets | 15 years | ||||
Licensing agreement | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
License fee | $ 5,000,000 | ||||
Annual royalty expense for first four years on license agreement | $ 750,000 | ||||
Number of years minimum royalties to be paid on license agreement | 4 years | ||||
Maximum period royalties paid on license agreement | 7 years | ||||
Licensing agreement | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Aggregate royalties for license agreement | $ 5,000,000 |
Intangible Assets - Schedule 55
Intangible Assets - Schedule of Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2,016 | $ 5,519 | |
2,017 | 19,078 | |
2,018 | 18,478 | |
2,019 | 18,166 | |
2,020 | 14,958 | |
Thereafter | 48,446 | |
Intangible assets, net | $ 124,645 | $ 54,971 |
Goodwill - Goodwill Activity (D
Goodwill - Goodwill Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 63,668,000 | |||
Accumulated impairment losses, beginning balance | (6,950,000) | |||
Net balance, beginning balance | 56,718,000 | |||
Acquisitions (See Note 3) | 74,376,000 | |||
Measurement period adjustments (See Note 3) | $ (697,000) | $ 0 | 1,635,000 | $ 0 |
Net activity during the period | 76,011,000 | |||
Goodwill, ending balance | 139,679,000 | 139,679,000 | ||
Accumulated impairment losses, ending balance | (6,950,000) | (6,950,000) | ||
Net balance, ending balance | $ 132,729,000 | $ 132,729,000 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) - USD ($) | Jan. 01, 2016 | Jul. 01, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Goodwill [Line Items] | |||||||
Goodwill added during period | $ 74,376,000 | ||||||
Measurement period adjustments | $ (697,000) | $ 0 | 1,635,000 | $ 0 | |||
Impairment charges | $ 0 | ||||||
NaviNet, Inc. | |||||||
Goodwill [Line Items] | |||||||
Goodwill added during period | $ 75,737,000 | ||||||
Measurement period adjustments | $ (697,000) | (697,000) | |||||
Healthcare Solutions (HCS) | |||||||
Goodwill [Line Items] | |||||||
Goodwill added during period | $ 23,624,000 | ||||||
Measurement period adjustments | $ 274,000 |
Investment in Related Party - N
Investment in Related Party - Narrative (Details) - USD ($) $ in Thousands | Sep. 08, 2015 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Schedule of Equity Method Investments [Line Items] | |||||||
Investments in unconsolidated related parties | $ 0 | $ 150,816 | |||||
Loss from related party equity method investment | $ 2,604 | $ 0 | $ 7,893 | 145 | |||
NantOmics | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Number of A-2 units purchased (in shares) | 168,463,611 | ||||||
Investments in unconsolidated related parties | $ 250,774 | ||||||
Number of A-2 units issued to company (in shares) | 610,928 | ||||||
Ownership percentage | 14.30% | 14.30% | |||||
Difference between the carrying value and equity, intangible assets | 28,195 | $ 28,195 | 28,195 | ||||
Difference between the carrying value and equity, goodwill | $ 14,382 | 14,382 | $ 14,382 | ||||
Loss from related party equity method investment | $ 2,604 | $ 145 | $ 7,893 |
Investment in Related Party - S
Investment in Related Party - Summarized Financial Information (Details) - NantOmics $ in Thousands | 9 Months Ended |
Jun. 30, 2016USD ($) | |
Schedule of Equity Method Investments [Line Items] | |
Sales | $ 2,936 |
Gross loss | (3,113) |
Loss from operations | (25,693) |
Net loss | (21,841) |
Net loss attributable to NantOmics | $ (20,273) |
Variable Interest Entities (Det
Variable Interest Entities (Details) - Variable Interest Entity, Not Primary Beneficiary $ in Thousands | Jun. 16, 2015USD ($) | Sep. 30, 2016director |
Variable Interest Entity [Line Items] | ||
IOBS investment | $ | $ 1,750 | |
Percentage of ownership in variable interest entity | 35.00% | |
Number of directors NantHealth has right to elect | 2 | |
Number of directors on IOBS board | 5 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 63,404 | $ 630 |
Marketable securities | 0 | 1,243 |
Quoted price in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 63,404 | 630 |
Marketable securities | 0 | 1,243 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Marketable securities | 0 | 0 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Marketable securities | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Operating Leased Assets [Line Items] | |||||
Rental expense charged to selling, general and administrative expense | $ 1,111 | $ 686 | $ 3,351 | $ 1,475 | |
Minimum | |||||
Operating Leased Assets [Line Items] | |||||
Remaining lives of operating leases | 1 year | 1 year | |||
Maximum | |||||
Operating Leased Assets [Line Items] | |||||
Remaining lives of operating leases | 10 years | 10 years |
Commitments and Contingencies63
Commitments and Contingencies - Future Minimum Rental Commitments (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,016 | $ 1,161 |
2,017 | 4,246 |
2,018 | 2,249 |
2,019 | 650 |
2,020 | 521 |
2021 and thereafter | 1,643 |
Total minimum rental commitments | $ 10,470 |
Commitments and Contingencies64
Commitments and Contingencies - Related Party Promissory Note (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jan. 04, 2016 | Dec. 31, 2015 |
Related Party Transaction [Line Items] | |||
Related party promissory note | $ 112,666 | $ 0 | |
Affiliated Entity | Promissory Notes With NantCapital | |||
Related Party Transaction [Line Items] | |||
Related party promissory note | $ 116,837 | $ 112,666 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Provision for (benefit from) income taxes | $ 256 | $ 1 | $ (18,353) | $ 2 |
Effective tax rate | 0.70% | 0.20% | 12.88% | 0.20% |
Unrecognized tax benefits increase | $ 219 |
Redeemable Series F Units _ C66
Redeemable Series F Units / Common Stock - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 01, 2016 | Jun. 20, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Redeemable Noncontrolling Interest [Line Items] | |||||
Accretion to redemption value | $ 4,958 | $ 0 | $ 16,042 | ||
Redeemable Series F Units | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Number of units sold in private placement, units | 53,580,996 | ||||
Offering price per share (usd per share) | $ 2.7995 | ||||
Aggregate amount received in private placement | $ 150,000 | ||||
Private placement, interest payable, percent | 7.00% | ||||
Number of shares as a result of conversion of units, shares | 10,714,285 |
Redeemable Series F Units _ C67
Redeemable Series F Units / Common Stock - Schedule of Redeemable Series F Units (Details) - USD ($) $ in Thousands | Jun. 20, 2016 | Jun. 01, 2016 | Jun. 20, 2016 | May 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Redeemable Noncontrolling Interest, Equity, Redemption Value [Roll Forward] | |||||||
Accretion to redemption value | $ 4,958 | $ 0 | $ 16,042 | ||||
Redeemable common stock put right expiration | 171,000 | $ 0 | |||||
Redeemable Series F Units | |||||||
Redeemable Noncontrolling Interest, Equity, Redemption Value [Roll Forward] | |||||||
Beginning balance, Redeemable Series F units and common stock | $ 170,417 | $ 166,042 | 166,042 | ||||
Accretion to redemption value | $ 4,375 | ||||||
LLC Conversion | (170,417) | ||||||
Ending balance, Redeemable Series F units and common stock | $ 170,417 | $ 166,042 | |||||
Redeemable Common Stock | |||||||
Redeemable Noncontrolling Interest, Equity, Redemption Value [Roll Forward] | |||||||
Beginning balance, Redeemable Series F units and common stock | 170,417 | ||||||
Accretion to redemption value | 583 | ||||||
LLC Conversion | 170,417 | ||||||
Redeemable common stock put right expiration | $ (171,000) | ||||||
Ending balance, Redeemable Series F units and common stock | 171,000 | 170,417 | $ 171,000 | ||||
Common Stock Including Additional Paid in Capital | |||||||
Redeemable Noncontrolling Interest, Equity, Redemption Value [Roll Forward] | |||||||
LLC Conversion | $ 525,388 | ||||||
Redeemable common stock put right expiration | $ 171,000 | ||||||
Ending balance, Redeemable Series F units and common stock | $ 171,000 |
Stockholders_ Equity - Narrativ
Stockholders’ Equity - Narrative (Details) $ / shares in Units, $ in Thousands | Aug. 09, 2016USD ($)shares | Jul. 25, 2016USD ($)shares | Jun. 09, 2016$ / sharesshares | Jun. 07, 2016USD ($)$ / sharesshares | Jun. 01, 2016USD ($)shares | Jan. 01, 2016USD ($)$ / sharesshares | Jun. 29, 2015USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($) |
Class of Stock [Line Items] | ||||||||||
Proceeds from initial public offering, net of offering costs | $ | $ 83,566 | $ 0 | ||||||||
Offering costs for initial public offering | $ | 13,034 | |||||||||
Amount of principal and interest under promissory note converted to shares | $ | 40,590 | 0 | ||||||||
Tax payments related to stock issued | $ | $ 5,822 | $ 0 | ||||||||
Reverse stock split, conversion ratio | 0.1818 | |||||||||
Common stock authorized (shares) | 750,000,000 | 750,000,000 | ||||||||
Common stock, par value (usd per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||
Preferred stock authorized (shares) | 20,000,000 | 20,000,000 | ||||||||
Preferred stock, par value (usd per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||
NaviNet, Inc. | ||||||||||
Class of Stock [Line Items] | ||||||||||
Fair value of units transferred in acquisition | $ | $ 52,500 | |||||||||
Series H units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Conversion of members' interests, shares | 3,749,998 | |||||||||
Series H units | NaviNet, Inc. | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of shares issued in acquisition | 15,513,726 | |||||||||
Acquisition, purchase price, (usd per share) | $ / shares | $ 3.3841 | |||||||||
Fair value of units transferred in acquisition | $ | $ 52,500 | |||||||||
Series G units | Allscripts Healthcare Solutions, Inc. | ||||||||||
Class of Stock [Line Items] | ||||||||||
Offering price per share (usd per share) | $ / shares | $ 3.3841 | |||||||||
Conversion of members' interests, shares | 14,285,714 | |||||||||
Number of units sold in private placement, units | 59,099,908 | |||||||||
Aggregate amount received in private placement | $ | $ 200,000 | |||||||||
Common stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Issuance of membership interests, shares | 6,900,000 | |||||||||
Shares of common stock issued for vested phantom units | 1,071,647 | |||||||||
Conversion of members' interests, shares | 99,651,444 | 99,651,444 | ||||||||
Conversion of members' interests | $ | $ 10 | |||||||||
Common Stock Including Additional Paid in Capital | ||||||||||
Class of Stock [Line Items] | ||||||||||
Conversion of members' interests | $ | $ 525,388 | |||||||||
Equity Method Investee | Promissory Notes With NantOmics | ||||||||||
Class of Stock [Line Items] | ||||||||||
Amount of principal and interest under promissory note converted to shares | $ | $ 40,590 | |||||||||
Number of shares related party promissory note converted | 2,899,297 | |||||||||
IPO | ||||||||||
Class of Stock [Line Items] | ||||||||||
Issuance of membership interests, shares | 6,500,000 | |||||||||
Offering price per share (usd per share) | $ / shares | $ 14 | |||||||||
Proceeds from initial public offering, net of offering costs | $ | $ 83,566 | |||||||||
Offering costs for initial public offering | $ | $ 13,034 | |||||||||
Over allotment option | ||||||||||
Class of Stock [Line Items] | ||||||||||
Issuance of membership interests, shares | 400,000 | |||||||||
Offering price per share (usd per share) | $ / shares | $ 14 | |||||||||
Phantom units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares of common stock issued for vested phantom units | 1,056,689 | |||||||||
Shares withheld to satisfy tax withholding obligations | 538,794 | |||||||||
Tax payments related to stock issued | $ | $ 5,738 | |||||||||
Restricted stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Conversion of members' interests, shares | 10,462 | |||||||||
Phantom Unit Plan Outside United States | Phantom units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares of common stock issued for vested phantom units | 16,818 | 16,818 | ||||||||
Amount of cash paid to settle vested phantom units | $ | $ 235 | $ 235 |
Stockholders_ Equity - Units Co
Stockholders’ Equity - Units Converted to Shares (Details) | Jun. 01, 2016shares |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 556,741,897 |
Former Series A Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 420,255,676 |
Former Series B Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 19,109,603 |
Former Series C Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 3,470,254 |
Former Series D Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 3,572,066 |
Former Series E Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 35,720,664 |
Former Series G Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 59,099,908 |
Former Series H Unit Holders | |
Capital Unit [Line Items] | |
Number of member units converted to common shares, units | 15,513,726 |
Stock Based Compensation - Expe
Stock Based Compensation - Expense (Details) - Phantom units - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 5,149 | $ 0 | $ 49,207 | $ 0 |
Amount capitalized to internal-use software and deferred implementation costs | 1,594 | 0 | 1,594 | 0 |
Stock-based compensation cost | 6,743 | 0 | 50,801 | 0 |
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | 442 | 0 | 7,474 | 0 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | 2,771 | 0 | 26,348 | 0 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 1,936 | $ 0 | $ 15,385 | $ 0 |
Stock Based Compensation - Acti
Stock Based Compensation - Activity of Phantom Units (Details) - Phantom units - $ / shares | 3 Months Ended | 6 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | |
Number of Units | |||
Unvested phantom units outstanding, beginning balance (in units) | 4,561,255 | 3,653,008 | 3,653,008 |
Granted (in units) | 0 | 3,094,335 | |
Vested (in units) | (21,651) | (1,612,421) | |
Forfeited (in units) | (113,433) | (573,667) | |
Unvested phantom units outstanding, ending balance (in units) | 4,426,171 | 4,561,255 | 4,426,171 |
Weighted Average Grant date value per phantom unit | |||
Unvested phantom units outstanding, beginning balance (usd per unit) | $ 15.18 | $ 15.78 | $ 15.78 |
Granted (usd per unit) | 0 | 14.57 | |
Vested (usd per unit) | 15.37 | 15.71 | |
Forfeited (usd per unit) | 15.12 | 15.21 | |
Unvested phantom units outstanding, ending balance (usd per unit) | $ 15.18 | $ 15.18 | $ 15.18 |
Stock Based Compensation - Narr
Stock Based Compensation - Narrative (Details) $ in Thousands | Aug. 09, 2016USD ($)shares | Jul. 25, 2016USD ($)shares | Jun. 01, 2016shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)shares | Sep. 30, 2015USD ($) | Dec. 31, 2015shares | Mar. 31, 2015shares | Dec. 03, 2013shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Reverse stock split, conversion ratio | 0.1818 | |||||||||
Tax payments related to stock issued | $ | $ 5,822 | $ 0 | ||||||||
Stock compensation plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares as a result of conversion of units, shares | 28,973 | |||||||||
Restricted stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares as a result of conversion of units, shares | 10,462 | |||||||||
Phantom units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense | $ | $ 5,149 | $ 0 | 49,207 | 0 | ||||||
Stock-based compensation expense expected to be recognized | $ | 38,942 | $ 38,942 | ||||||||
Period for recognition of compensation cost not yet recognized | 3 years 2 months 12 days | |||||||||
Units granted to employees of related companies for providing services | 1,043,450 | |||||||||
Shares of common stock issued for vested phantom units | 1,056,689 | |||||||||
Shares withheld to satisfy tax withholding obligations | 538,794 | |||||||||
Tax payments related to stock issued | $ | $ 5,738 | |||||||||
Phantom units | Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense expected to be recognized | $ | 33,600 | $ 33,600 | ||||||||
Period for recognition of compensation cost not yet recognized | 3 years 2 months 12 days | |||||||||
Phantom units | Nonemployee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense expected to be recognized | $ | 5,342 | $ 5,342 | ||||||||
Period for recognition of compensation cost not yet recognized | 3 years 6 months | |||||||||
Series C units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Units outstanding | 3,470,254 | 3,470,254 | ||||||||
Series C units | Restricted stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense | $ | 43 | $ 319 | $ (225) | $ 1,350 | ||||||
Stock-based compensation expense expected to be recognized | $ | $ 316 | $ 316 | ||||||||
Period for recognition of compensation cost not yet recognized | 2 years | |||||||||
Profits Interests Plan | Series C units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Aggregate units authorized for issuance | 63,750,000 | |||||||||
Phantom Unit Plan | Phantom units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Aggregate units authorized for issuance | 11,590,909 | |||||||||
Number of shares available for grant | 4,426,171 | 4,426,171 | ||||||||
Shares of common stock issued for vested phantom units | 1,071,647 | |||||||||
Amount of cash paid to settle vested phantom units | $ | $ 157 | |||||||||
Shares withheld to satisfy tax withholding obligations | 545,485 | |||||||||
Phantom Unit Plan in United States | Phantom units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares of common stock issued for vested phantom units | 1,071,647 | |||||||||
Amount of cash paid to settle vested phantom units | $ | $ 6,303 | |||||||||
Shares withheld to satisfy tax withholding obligations | 545,485 | |||||||||
Tax payments related to stock issued | $ | $ 5,822 | |||||||||
Phantom Unit Plan Outside United States | Phantom units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares of common stock issued for vested phantom units | 16,818 | 16,818 | ||||||||
Amount of cash paid to settle vested phantom units | $ | $ 235 | $ 235 | ||||||||
The 2016 Equity Incentive Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Aggregate units authorized for issuance | 6,000,000 | 6,000,000 | ||||||||
The 2016 Equity Incentive Plan | Restricted stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares as a result of conversion of units, shares | 10,462 |
Net Loss Per Share - Reconcilia
Net Loss Per Share - Reconciliations of the Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |||||
Loss per share numerator | |||||||||
Net loss | $ (36,874) | $ (22,958) | $ (124,151) | $ (54,159) | |||||
Accretion to redemption value of series F/redeemable common stock | 0 | (4,958) | |||||||
Accretion to redemption value of Series F / redeemable common stock | 4,958 | 0 | $ 16,042 | ||||||
Net (loss)/income for basic/diluted loss per share | $ (36,874) | $ (22,958) | $ (129,109) | $ (54,159) | |||||
Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Weighted-average shares for basic net loss per share (shares) | 121,245,440 | 95,906,797 | 108,359,973 | 86,696,282 | |||||
Effect of dilutive securities (shares) | 0 | 0 | 0 | 0 | |||||
Weighted-average shares for dilutive net loss per share (shares) | 121,245,440 | 95,906,797 | 108,359,973 | 86,696,282 | |||||
Basic & Diluted net loss per share (usd per share) | $ (0.30) | [1] | $ (0.24) | [1] | $ (1.19) | $ (0.62) | [2] | ||
Redeemable Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Weighted-average shares for basic net loss per share (shares) | 6,686,653 | ||||||||
Effect of dilutive securities (shares) | 0 | ||||||||
Weighted-average shares for dilutive net loss per share (shares) | 6,686,653 | ||||||||
Basic & Diluted net loss per share (usd per share) | [1] | $ 0.74 | |||||||
[1] | The net loss per share and weighted-average shares outstanding have been computed to give effect to the LLC Conversion (See Note 16) that occurred on June 1, 2016, prior to the Company’s initial public offering ("IPO"). In conjunction with the LLC Conversion, (a) all of the Company’s outstanding units automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders as set forth in the Company's limited liability company agreement and (b) the Company adopted and filed a certificate of incorporation with the Secretary of State of the state of Delaware and adopted bylaws. The Company adopted and filed an amendment to its certificate of incorporation with the Secretary of State of the state of Delaware to effect a 1-for-5.5 reverse stock split of its common stock on June 1, 2016. See Note 18 for the calculation of net loss per share for common stock and redeemable common stock for the nine months ended September 30, 2016. | ||||||||
[2] | The net loss per share for the common stock for the nine months ended September 30, 2016 reflects $4,958 in accretion value allocated to the redeemable common stock. The redeemable common stock contained a put right, which expired unexercised on June 20, 2016. As a result of and as of that date, the shares were no longer redeemable and were included in common stock. |
Net Loss Per Share - Narrative
Net Loss Per Share - Narrative (Details) | Jun. 01, 2016 |
Earnings Per Share [Abstract] | |
Reverse stock split, conversion ratio | 0.1818 |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Phantom units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (shares) | 4,426,171 | 3,761,348 | 4,426,171 | 3,761,348 |
Related Party Transactions (Det
Related Party Transactions (Details) $ / shares in Units, $ in Thousands | Jun. 01, 2016USD ($)shares | Mar. 08, 2016USD ($) | Jan. 22, 2016USD ($) | Jan. 04, 2016USD ($)$ / shares | Jun. 19, 2015USD ($)termtest | Jan. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Related Party Transaction [Line Items] | |||||||||||
Related party receivables | $ 2,869 | $ 2,869 | $ 2,545 | ||||||||
Related party payables, net | 7,530 | 7,530 | 10,166 | ||||||||
Amount university to pay in exchange for NantHealth providing sequencing services | $ 10,000 | ||||||||||
Deemed capital contribution from Chairman and CEO | 1,800 | $ 4,300 | 3,420 | $ 4,790 | |||||||
Other services cost of revenue | 6,564 | 6,725 | 17,621 | 10,402 | |||||||
Related party promissory note | 112,666 | 112,666 | 0 | ||||||||
Amount of principal and interest under promissory note converted to shares | 40,590 | 0 | |||||||||
Reseller agreement | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Term of agreement with related party | 5 years 6 months | ||||||||||
Other services cost of revenue | 1,080 | 2,580 | 2,052 | 2,874 | |||||||
Affiliated Entity | Shared services agreement | NantWorks | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Net selling, general, and administrative service expenses incurred related to services provided by related parties | 2,106 | 2,255 | 7,692 | 7,698 | |||||||
Affiliated Entity | Research and development services | NantWorks | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Net expenses incurred related to services provided by related parties | 204 | $ 274 | 414 | $ 937 | |||||||
Affiliated Entity | Receivable from Ziosoft KK related to sale of Qi Imaging | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party receivables | 2,126 | 2,126 | 2,150 | ||||||||
Affiliated Entity | Promissory Notes With NantCapital | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party promissory note | $ 112,666 | $ 116,837 | $ 116,837 | ||||||||
Note interest rate | 5.00% | 5.00% | |||||||||
Interest bearing on related promissory note | 5.00% | ||||||||||
Per share price of stock shares to repay debt (usd per share) | $ / shares | $ 18.6126 | ||||||||||
Per share price of shares to settle debt (usd per share) | $ / shares | $ 1.484 | ||||||||||
Equity Method Investee | Reseller agreement | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party payables | $ 2,009 | $ 2,009 | $ 3,111 | ||||||||
Number of renewals | term | 3 | ||||||||||
Renewal term | 3 years | ||||||||||
Number of tests to qualify for first renewal option | test | 300 | ||||||||||
Number of tests to qualify for second renewal option | test | 570 | ||||||||||
Number of tests to qualify for third renewal option | test | 760 | ||||||||||
Renewal option if threshold unmet, nonexclusive, number of years | 3 years | ||||||||||
Annual minimum fees, tier one | $ 2,000 | ||||||||||
Annual minimum fees, tier two | 25,000 | ||||||||||
Annual minimum fees, tier three | $ 50,000 | ||||||||||
Equity Method Investee | Promissory Notes With NantOmics | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party promissory note | $ 20,000 | ||||||||||
Interest bearing on related promissory note | 5.00% | ||||||||||
Additional advance on related party promissory note | $ 20,000 | ||||||||||
Amount of principal and interest under promissory note converted to shares | $ 40,590 | ||||||||||
Number of shares related party promissory note converted | shares | 2,899,297 |