Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 06, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37792 | |
Entity Registrant Name | NantHealth, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-3019889 | |
Entity Address, Address Line One | 9920 Jefferson Blvd. | |
Entity Address, City or Town | Culver City, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90232 | |
City Area Code | 310 | |
Local Phone Number | 883-1300 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | NH | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 111,214,133 | |
Entity Central Index Key | 0001566469 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 25,908 | $ 5,243 |
Accounts receivable, net | 4,195 | 6,179 |
Related party receivables, net | 1,577 | 823 |
Prepaid expenses and other current assets | 4,460 | 19,341 |
Current assets of discontinued operation | 0 | 6,327 |
Total current assets | 36,140 | 37,913 |
Property, plant, and equipment, net | 14,232 | 14,985 |
Goodwill | 98,333 | 97,307 |
Intangible assets, net | 50,202 | 51,848 |
Investment in related party | 0 | 31,702 |
Related party receivable, net of current | 612 | 1,108 |
Operating lease right-of-use assets | 7,604 | 8,470 |
Other assets | 1,856 | 1,818 |
Noncurrent assets of discontinued operation | 0 | 21,336 |
Total assets | 208,979 | 266,487 |
Current liabilities | ||
Accounts payable | 2,151 | 3,377 |
Accrued and other current liabilities | 14,833 | 31,988 |
Deferred revenue | 3,276 | 7,098 |
Related party payables, net | 4,606 | 4,120 |
Notes payable | 1,065 | 238 |
Current liabilities of discontinued operation | 0 | 10,680 |
Total current liabilities | 25,931 | 57,501 |
Deferred revenue, net of current | 715 | 1,129 |
Related party liabilities | 29,365 | 24,227 |
Related party promissory note | 112,666 | 112,666 |
Related party convertible note, net | 9,268 | 8,864 |
Convertible notes, net | 89,023 | 84,648 |
Deferred income taxes, net | 1,697 | 1,669 |
Operating lease liabilities | 8,508 | 9,728 |
Other liabilities | 24,135 | 21,542 |
Noncurrent liabilities of discontinued operation | 0 | 1,649 |
Total liabilities | 301,308 | 323,623 |
Commitments and Contingencies (Note 14) | ||
Stockholders' deficit | ||
Common stock, $0.0001 par value per share, 750,000,000 shares authorized; 111,214,133 and 110,619,678 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 11 | 11 |
Additional paid-in capital | 890,590 | 889,955 |
Accumulated deficit | (983,108) | (946,884) |
Accumulated other comprehensive loss | (283) | (218) |
Total NantHealth stockholders' deficit | (92,790) | (57,136) |
Noncontrolling interests | 461 | 0 |
Total stockholders' deficit | (92,329) | (57,136) |
Total liabilities and stockholders' deficit | $ 208,979 | $ 266,487 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (shares) | 750,000,000 | 750,000,000 |
Common stock issued (shares) | 111,214,133 | 110,619,678 |
Common stock outstanding (shares) | 111,214,133 | 110,619,678 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |||
Revenue | ||||||
Revenue | $ 18,765 | $ 18,604 | $ 54,530 | $ 58,865 | ||
Cost of Revenue: | ||||||
Total cost of revenue | 7,519 | 7,364 | 22,033 | 26,348 | ||
Gross Profit | 11,246 | 11,240 | 32,497 | 32,517 | ||
Operating Expenses | ||||||
Selling, general and administrative | 12,442 | 13,708 | 36,864 | 42,843 | ||
Research and development | 4,681 | 3,262 | 12,446 | 10,503 | ||
Amortization of acquisition-related assets | 958 | 1,054 | 2,691 | 3,162 | ||
Impairment of intangible asset | 0 | 0 | 0 | 3,977 | ||
Total operating expenses | 18,081 | 18,024 | 52,001 | 60,485 | ||
Loss from operations | (6,835) | (6,784) | (19,504) | (27,968) | ||
Interest expense, net | (4,861) | (4,556) | (14,291) | (13,443) | ||
Other income (expense), net | 747 | (3,586) | (2,550) | (5,022) | ||
Loss from related party equity method investment | 0 | (1,983) | (31,702) | [1] | (6,401) | [1] |
Loss from continuing operations before income taxes | (10,949) | (16,909) | (68,047) | (52,834) | ||
Provision for (benefit from) income taxes | 77 | (529) | 174 | (659) | ||
Net loss from continuing operations | (11,026) | (16,380) | (68,221) | (52,175) | ||
(Loss) income from discontinued operations, net of tax attributable to NantHealth | (16) | 3 | 31,955 | 1,162 | ||
Net loss | (11,042) | (16,377) | (36,266) | (51,013) | ||
Net loss attributable to noncontrolling interests | (42) | 0 | (42) | 0 | ||
Net loss attributable to NantHealth | $ (11,000) | $ (16,377) | $ (36,224) | $ (51,013) | [1] | |
Basic and diluted net income (loss) per share attributable to NantHealth: | ||||||
Continuing operations - common stock (in dollars per share) | $ (0.10) | $ (0.15) | $ (0.62) | $ (0.47) | ||
Discontinued operations - common stock (in dollars per share) | 0 | 0 | 0.29 | 0.01 | ||
Total net income (loss) per share - common stock (in dollars per share) | $ (0.10) | $ (0.15) | $ (0.33) | $ (0.46) | ||
Weighted average shares outstanding | ||||||
Basic and diluted - common stock (shares) | 110,929,357 | 110,619,905 | 110,859,611 | 110,261,279 | ||
Total software-related revenue | ||||||
Revenue | ||||||
Revenue | $ 18,716 | $ 18,328 | $ 54,358 | $ 54,421 | ||
Cost of Revenue: | ||||||
Total cost of revenue | 7,303 | 6,902 | 21,206 | 20,811 | ||
Software-as-a-service related | ||||||
Revenue | ||||||
Revenue | 18,355 | 18,328 | 53,997 | 54,421 | ||
Cost of Revenue: | ||||||
Total cost of revenue | 5,935 | 5,638 | 17,552 | 17,004 | ||
Maintenance | ||||||
Revenue | ||||||
Revenue | 299 | 0 | 299 | 0 | ||
Cost of Revenue: | ||||||
Total cost of revenue | 131 | 121 | 131 | 288 | ||
Professional services | ||||||
Revenue | ||||||
Revenue | 62 | 0 | 62 | 0 | ||
Cost of Revenue: | ||||||
Total cost of revenue | 15 | 0 | 15 | 0 | ||
Amortization of developed technologies | ||||||
Cost of Revenue: | ||||||
Total cost of revenue | 1,222 | 1,143 | 3,508 | 3,519 | ||
Sequencing and molecular analysis | ||||||
Revenue | ||||||
Revenue | 49 | 276 | 172 | 1,581 | ||
Cost of Revenue: | ||||||
Total cost of revenue | 216 | 462 | 827 | 4,066 | ||
Home health care services | ||||||
Revenue | ||||||
Revenue | 0 | 0 | 0 | 2,863 | ||
Cost of Revenue: | ||||||
Total cost of revenue | $ 0 | $ 0 | $ 0 | $ 1,471 | ||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (11,042) | $ (16,377) | $ (36,266) | $ (51,013) |
Share in related party equity investment - other comprehensive loss | 0 | (155) | 0 | (7) |
Other comprehensive income (loss) from foreign currency translation | 133 | (82) | (65) | (93) |
Total other comprehensive income (loss) | 133 | (237) | (65) | (100) |
Comprehensive loss | (10,909) | (16,614) | (36,331) | (51,113) |
Comprehensive loss attributable to NantHealth | $ (10,909) | $ (16,614) | $ (36,331) | $ (51,113) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Parent | |
Beginning balance (in shares) at Dec. 31, 2018 | 109,491,277 | |||||||
Beginning balance at Dec. 31, 2018 | $ 2,831 | $ 11 | $ 887,289 | $ (884,122) | $ (347) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 707 | 707 | ||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 430,370 | |||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (53) | (53) | ||||||
Assignment of NantHealth Labs (see Note 19) | 20 | 20 | ||||||
Other comprehensive loss | 55 | 55 | ||||||
Net income (loss) | (19,923) | (19,923) | ||||||
Ending balance (in shares) at Mar. 31, 2019 | 109,921,647 | |||||||
Ending balance at Mar. 31, 2019 | (16,363) | $ 11 | 887,963 | (904,045) | (292) | |||
Beginning balance (in shares) at Dec. 31, 2018 | 109,491,277 | |||||||
Beginning balance at Dec. 31, 2018 | 2,831 | $ 11 | 887,289 | (884,122) | (347) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (51,013) | |||||||
Other comprehensive loss | (100) | |||||||
Net income (loss) | [1] | (51,013) | ||||||
Ending balance (in shares) at Sep. 30, 2019 | 110,619,906 | |||||||
Ending balance at Sep. 30, 2019 | (46,577) | $ 11 | 888,994 | (935,135) | (447) | |||
Beginning balance (in shares) at Mar. 31, 2019 | 109,921,647 | |||||||
Beginning balance at Mar. 31, 2019 | (16,363) | $ 11 | 887,963 | (904,045) | (292) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 707 | 707 | ||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 532,860 | |||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (209) | (209) | ||||||
Other comprehensive loss | 82 | 82 | ||||||
Net income (loss) | (14,713) | (14,713) | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 110,454,507 | |||||||
Ending balance at Jun. 30, 2019 | (30,496) | $ 11 | 888,461 | (918,758) | (210) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 535 | 535 | ||||||
Net loss | (16,377) | |||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 165,399 | |||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (2) | (2) | ||||||
Other comprehensive loss | (237) | (237) | ||||||
Net income (loss) | (16,377) | (16,377) | ||||||
Ending balance (in shares) at Sep. 30, 2019 | 110,619,906 | |||||||
Ending balance at Sep. 30, 2019 | (46,577) | $ 11 | 888,994 | (935,135) | (447) | |||
Ending balance (in shares) at Jun. 30, 2020 | 110,929,357 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Total stockholders' deficit | (57,136) | $ 11 | 889,955 | (946,884) | (218) | $ 0 | $ (57,136) | |
Beginning balance (in shares) at Dec. 31, 2019 | 110,619,678 | |||||||
Beginning balance at Dec. 31, 2019 | (57,136) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 668 | 668 | 668 | |||||
Net loss | 23,065 | 23,065 | 23,065 | |||||
Other comprehensive loss | (188) | (188) | (188) | |||||
Ending balance (in shares) at Mar. 31, 2020 | 110,619,678 | |||||||
Beginning balance (in shares) at Dec. 31, 2019 | 110,619,678 | |||||||
Beginning balance at Dec. 31, 2019 | (57,136) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (36,266) | |||||||
Other comprehensive loss | (65) | |||||||
Net income (loss) | (36,224) | |||||||
Ending balance (in shares) at Sep. 30, 2020 | 111,214,133 | |||||||
Ending balance at Sep. 30, 2020 | (92,790) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Total stockholders' deficit | (33,591) | $ 11 | 890,623 | (923,819) | (406) | 0 | (33,591) | |
Beginning balance (in shares) at Mar. 31, 2020 | 110,619,678 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 408 | 408 | 408 | |||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 309,679 | |||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | (739) | (739) | (739) | |||||
Other comprehensive loss | (10) | (10) | (10) | |||||
Net income (loss) | (48,289) | (48,289) | (48,289) | |||||
Ending balance (in shares) at Jun. 30, 2020 | 110,929,357 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Total stockholders' deficit | (82,221) | $ 11 | 890,292 | (972,108) | (416) | 0 | (82,221) | |
Stock-based compensation expense | 656 | 656 | 656 | |||||
Net loss | (11,042) | (11,000) | (42) | (11,000) | ||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes (in shares) | 284,776 | |||||||
Shares issued in connection with employee stock plans, net of shares withheld for employee taxes | 171 | 171 | 171 | |||||
Assignment of NantHealth Labs (see Note 19) | (26) | (529) | 503 | (529) | ||||
Other comprehensive loss | 133 | 133 | 133 | |||||
Net income (loss) | (11,000) | |||||||
Ending balance (in shares) at Sep. 30, 2020 | 111,214,133 | |||||||
Ending balance at Sep. 30, 2020 | (92,790) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Total stockholders' deficit | $ (92,329) | $ 11 | $ 890,590 | $ (983,108) | $ (283) | $ 461 | $ (92,790) | |
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | ||
Cash flows from operating activities: | |||
Net loss | $ (36,266) | $ (51,013) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
(Gain) loss on sale of businesses | [1] | (32,211) | 582 |
Depreciation and amortization | [1] | 12,602 | 17,543 |
Amortization of debt discounts and deferred financing offering cost | [1] | 4,779 | 4,207 |
Impairment of goodwill and other intangible assets | [1] | 0 | 3,977 |
Change in fair value of derivatives liability | [1] | 7 | 0 |
Change in fair value of Bookings Commitment | [1] | 3,070 | 4,664 |
Stock-based compensation | [1] | 1,684 | 1,849 |
Deferred income taxes, net | [1] | (181) | (549) |
Provision for bad debt expense | [1] | 118 | 17 |
Loss from related party equity method investment | [1] | 31,702 | 6,401 |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | [1] | 3,879 | 3,202 |
Inventories | [1] | (18) | 294 |
Related party receivables, net | [1] | (258) | 542 |
Prepaid expenses and other current assets | [1] | 14,493 | (19,986) |
Deferred implementation costs | [1] | 0 | 14 |
Accounts payable | [1] | (1,671) | 1,259 |
Accrued and other current liabilities | [1] | (17,881) | 20,096 |
Deferred revenue | [1] | (4,944) | (2,411) |
Related party payables, net | [1] | 5,416 | 3,766 |
Change in operating lease right-of-use assets and liabilities | [1] | (228) | (297) |
Other assets and liabilities | [1] | (77) | (605) |
Net cash used in operating activities | [1] | (15,985) | (6,448) |
Cash flows from investing activities: | |||
Net proceeds from sale of businesses | [1] | 46,401 | 300 |
Assignment of OpenNMS, net of cash acquired (see Note 19) | [1] | (5,475) | 0 |
Purchases of property and equipment, including internal-use software | [1] | (4,281) | (3,495) |
Net cash provided by (used in) investing activities | [1] | 36,645 | (3,195) |
Cash flows from financing activities: | |||
Proceeds from insurance promissory note | [1] | 1,855 | 1,647 |
Repayments of insurance promissory note and notes payable | [1] | (1,045) | (701) |
Proceeds from exercises of stock options | [1] | 171 | 0 |
Tax payments related to stock issued, net of stock withheld, for vested equity awards | [1] | (739) | (270) |
Net cash provided by financing activities | [1] | 242 | 676 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | [1] | 2 | (12) |
Net increase (decrease) in cash, cash equivalents and restricted cash | [1] | 20,904 | (8,979) |
Cash, cash equivalents and restricted cash, beginning of period | [1],[2] | 6,379 | 19,441 |
Cash, cash equivalents and restricted cash, end of period | [1],[2] | 27,283 | 10,462 |
Supplemental disclosure of cash flow information: | |||
Income taxes paid | 151 | 3 | |
Interest paid | 2,961 | 2,958 | |
Noncash investing and financing activities: | |||
Purchases of property and equipment including internal use software | $ 297 | $ 105 | |
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). | ||
[2] | Cash and cash equivalents included restricted cash of $1,136 and $1,375 at December 31, 2019 and September 30, 2020, respectively, and $1,136 and $1,136 at December 31, 2018 and September 30, 2019, respectively. Restricted cash is included in other assets and consists of funds that are contractually restricted as to usage or withdrawal related to the Company's security deposits in the form of standby letters of credit for leased facilities and funds held in an escrow account related to the sale of the Connected Care Business (see Note 4). No amounts have been drawn upon the letters of credit as of September 30, 2020. |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Cash Flows [Abstract] | ||||
Restricted Cash | $ 1,375 | $ 1,136 | $ 1,136 | $ 1,136 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
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 IT company converging science and technology. The Company works to transform clinical delivery with actionable clinical intelligence at the moment of decision, enabling clinical discovery through real-time machine learning systems. The Company markets certain of its solutions as a comprehensive integrated solution that includes its molecular sequencing and analysis services, clinical decision support, and payer engagement solutions. The Company also markets molecular sequencing and analysis services, clinical decision support, and payer engagement solutions on a stand-alone basis. 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 by and are led by Dr. Patrick Soon-Shiong. On June 7, 2019, the Company sold its home health care services business (see Note 4). On February 3, 2020, the Company sold certain of its assets related to its Connected Care Business (see Note 4). These divestitures will enable the Company to focus on its core competencies of genomic sequencing, clinical decision support, payer engagement, and data analytics. On July 22, 2020, the Company acquired The OpenNMS Group, Inc. ("OpenNMS") pursuant to an assignment agreement with Cambridge Equities, L.P. ("Cambridge"), a related party (see Note 19). The Company intends to integrate OpenNMS with NantHealth’s software portfolio and service offerings, as well as expand the Company’s capabilities in cloud, SaaS, and AI technologies, providing customers with services to maintain reliable network connections for critical data flows that enable patient data collaboration and decision making at the point of care. At the same time, this transaction will allow the Company to expand penetration of OpenNMS services in the healthcare industry. As of September 30, 2020, the Company conducted the majority of its operations in the United States, Canada, and the United Kingdom. COVID-19 Pandemic In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) a pandemic. In the same month, the President of the United States declared a State of National Emergency due to the COVID-19 outbreak. Many jurisdictions, particularly in North America (including the United States), Europe and Asia, as well as U.S. states in which the Company operates, including California, have adopted or are considering laws, rules, regulations or decrees intended to address the COVID-19 outbreak, including implementing travel restrictions, closing non-essential businesses and/or restricting daily activities. In addition, many communities have limited, and are considering to further limit, social mobility and gathering. To date, there has been no material adverse impact to the Company's business from the COVID-19 pandemic. Given the unprecedented and evolving nature of the pandemic, the future impact of these changes and potential changes on the Company and its contractors, consultants, customers, resellers and partners is unknown at this time. However, in light of the uncertainties regarding economic, business, social, health and geopolitical conditions, the Company’s revenues, earnings, liquidity, and cash flows could be adversely affected, whether on an annual or quarterly basis. Continued impacts of the COVID-19 pandemic could materially adversely affect the Company’s current and long-term accounts receivable collectibility, as its negatively impacted customers from the pandemic may request temporary relief, delay, or not make scheduled payments. In addition, the deployment of the Company’s solutions may represent a large portion of its customers' investments in software technology. Decisions to make such an investment are impacted by the economic environment in which the customers operate. Uncertain global geopolitical, economic and health conditions and the lack of visibility or the lack of financial resources may cause some customers to reduce, postpone or terminate their investments, or to reduce or not renew ongoing paid services, adversely impacting the Company’s revenues or timing of revenue. Health conditions in some geographic areas where the Company’s customers operate could impact the economic situation of those areas. These conditions, including the COVID-19 pandemic, may present risks for health and limit the ability to travel for Company employees, which could further lengthen the Company’s sales cycle and delay revenue and cash flows in the near-term. For information on the CARES Act, refer to Note 15. Basis of Presentation and Principles of Consolidation The accompanying unaudited Consolidated Financial Statements include the accounts of NantHealth and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") 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 operations. In accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the Securities and Exchange Commission ("SEC"), these Consolidated Financial Statements do not include all of the information and disclosures required by GAAP for complete financial statements. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2019. The results of operations of the entities disposed of are included in the unaudited Consolidated Financial Statements up to the date of disposal and, where appropriate, these operations have been reflected as discontinued operations. The accompanying Consolidated Balance Sheet as of December 31, 2019 has been derived from the audited Consolidated Financial Statements at that date. Assets and liabilities of the discontinued operations are presented separately in the asset and liability sections of the prior period balance sheet. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The Company believes its existing cash, cash equivalents, and its ability to borrow from affiliated entities will be sufficient to fund operations through at least 12 months following the issuance date of the financial statements. The Company continues to have its Chairman and CEO’s intent and ability to support the Company’s operations with additional funds as required. The Company may also seek to sell additional equity, through one or more follow-on public offerings or in separate financings, or sell additional debt securities, or obtain a credit facility. However, the Company may not be able to secure such financing in a timely manner or on favorable terms. The Company may also consider selling off components of its business. Without additional funds, the Company may choose to delay or reduce its operating or investment expenditures. Further, because of the risk and uncertainties associated with the commercialization of the Company's existing products as well as products in development, the Company may need additional funds to meet its needs sooner than planned. To date, the Company's primary sources of capital have been the private placement of membership interests prior to its IPO, debt financing agreements, including the promissory note with Nant Capital, LLC (“NantCapital”) and its convertible notes, its IPO, and proceeds from the sale of components of its business. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies 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 on the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. Revenue from Contracts with Customers Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is recognized net of sales taxes collected from customers, which are subsequently remitted to governmental authorities. The Company acquired OpenNMS on July 22, 2020 (see Note 19). OpenNMS sells products and services directly to end-users and through resellers and generates revenue from the following sources: • Maintenance - Maintenance revenue includes technical support and maintenance on OpenNMS software during the contract term. Revenue is recognized over the maintenance or support term. The Company’s networking monitoring solutions typically consist of a term-based subscription to the OpenNMS software license and maintenance, which entitle customers to unspecified software updates and upgrades on a when-and-if-available basis. The Company has determined that its promises to transfer the software license and the related maintenance ar e not separately identifiable because the licensed software and the software updates and upgrades are highly interdependent and highly interrelated, working together to deliver a continuously updated networking monitoring solution. The Company therefore considers the software license and related maintenance obligations to represent a single, combined performance obligation with revenue recognized over the subscription period. • Professional services - Professional services revenue is generated from consulting services to help customers install, integrate and optimize OpenNMS, sponsored development, and training to assist customers deploy and use OpenNMS solutions. Sponsored development relates to professional services to build customer specific functionality, features, and enhancements into the OpenNMS open source platform. Revenue is recognized for most of our contracts over time as performance obligations are satisfied, as the Company is continuously transferring control to the customer. Typically, revenue is recognized over time using direct labor hours as a measure of progress. If any significant obligations to the customer remain post-delivery, typically involving obligations relating to acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled. Customers are generally billed as the Company satisfies its performance obligations. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones. Management assesses whether contracts entered into at, or near, the same time, should be combined, based on evaluation of the commercial objectives of the contracts. Contracts with Multiple Promises for Goods and Services The Company engages in various contracts with promises for multiple goods and services. In certain contracts, the Company recognizes software license, technical support, maintenance, consulting services, sponsored development services, and training as distinct performance obligations. Standalone selling prices (“SSP”) are required to be allocated and revenue recognized for each distinct performance obligation within each contract. Judgment is required to determine the SSP for each distinct performance obligation. The SSP for each performance obligation is determined by considering contracts in which the good or service is sold separately and other factors, including market conditions and the Company’s experience selling similar goods and services, as well as costs and margins achieved. In some cases, to estimate the SSP, the Company first estimates the selling price of each performance obligation for which an SSP is observable and then estimates the SSP of the remaining performance obligation as the residual contractual amount. Generally, consulting and sponsored development professional services do not involve significant integration or customization of the OpenNMS software. As such, consulting and sponsored development are considered distinct performance obligations. The Company has reseller arrangements with gross revenue presentation due to the Company’s control of goods and services before transfer to the customer. The Company assesses control in terms of relevant indicators of performance and pricing risk, such as which party negotiates pricing with the end customer and which party is ultimately responsible for fulfilling services, transferring goods and services, and ensuring support. 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 consolidated 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 consolidated unit level. Ac cordingly, management has determined that the Company operates in one reportable segment. Recently Adopted Accounting Pronouncements Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Value Measurement (“ASU 2018-13”) , which modifies the disclosure requirements on fair value measurements. The adoption of this guidance has no impact on the Consolidated Financial Statements. Effective January 1, 2020, the Company adopted, on a prospective basis, ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the requirement for capitalizing implementation costs incurred by a customer in a cloud clouding arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , to simplify the accounting for income taxes. The new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. This ASU is effective for the Company's annual and interim periods beginning in January 1, 2021, and early adoption is permitted. The Company early adopted, on a prospective basis, this ASU in the first quarter of 2020. One of the provisions in this ASU is the change from the intraperiod tax allocation exception in ASC 740-20-45-7 to the incremental approach when there is a current period loss from continuing operations. ASU No. 2019-12 removed this exception, which impacted the Company's tax provision for (benefit from) income taxes between continuing operations and discontinued operations. Upcoming Accounting Standard Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) . This update simplifies the accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature models which require separate accounting for embedded conversion features. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. ASU No. 2020-06 is effective for fiscal periods beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the effects of this ASU. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , 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 No. 2016-13 is effective for fiscal periods beginning after December 15, 2022 and must be adopted as a cumulative effect adjustment to retained earnings. Early adoption is permitted. The Company is still evaluating the effects of this ASU. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not have, nor are believed by management to have, a material impact on the Company's present or future Consolidated Financial Statements. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Contract Balances The Company records deferred revenue when cash payments are received, or payment is due, in advance of its fulfillment of performance obligations. During the three months ended September 30, 2020 and 2019, there were revenues of $2,089 and $1,760 recognized, respectively, that were included in the deferred revenue balance at the beginning of the period. During the nine months ended September 30, 2020 and 2019, there were revenues of $5,633 and $5,905 recognized, respectively. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs to obtain a contract with a customer, where the stated contract term, with expected renewals, is longer than one year. The Company amortizes these assets over the expected period of benefit. These costs are generally employee sales commissions, with amortization of the balance recorded in selling, general and administrative expenses. The value of these assets was $858 at September 30, 2020 and $1,455 at December 31, 2019. During the three months ended September 30, 2020 and 2019, the Company recorded amortization of $233 and $190, respectively. During the nine months ended September 30, 2020 and 2019, the Company recorded amortization of $701 and $558, respectively. Performance Obligations As of September 30, 2020, the Company has allocated a total transaction price of $4,769 to unfulfilled performance obligations that are expected to be fulfilled within nine years. Excluded from this amount are contracts of less than one year and variable consideration that relates to the value of services provided. |
Discontinued Operations and Div
Discontinued Operations and Divestitures | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Divestitures | Discontinued Operations and Divestitures Discontinued Operations Sale of Connected Care Business On January 13, 2020, the Company entered into an asset purchase agreement (the “Purchase Agreement”) with Masimo Corporation (“Masimo”), VCCB Holdings, Inc., a wholly owned subsidiary of Masimo (collectively with Masimo, the “Purchaser”), and, solely with respect to certain provisions of the Purchase Agreement, NantWorks, LLC, an affiliate of the Company. Pursuant to the Purchase Agreement, the Company agreed to sell to the Purchaser certain of its assets related to its Connected Care business, including the products known as DCX (formerly DeviceConX), VCX (formerly VitalsConX), HBox and Shuttle Cable (collectively, the “Connected Care Business”). On February 3, 2020, the Company completed the sale of the Connected Care Business for $47,250 of cash consideration in exchange for assets primarily related to the Connected Care Business (as defined under the terms of the Purchase Agreement). The cash consideration is subject to adjustment based upon the final amount of working capital as of the closing date. The sale of the Connected Care Business qualified as a discontinued operation because it comprised operations and cash flows that could be distinguished, operationally and for financial reporting purposes, from the rest of the Company. The disposal of the Connected Care Business, which represented the Company's medical device interoperability solutions, represented a strategic shift in the Company’s operations as the sale enables the Company to focus on genomic sequencing, clinical decision support, and payer engagement. The total gain on sale of the Connected Care Business consisted of the following: Cash received as consideration $ 47,250 Less: Carrying value of net assets sold (14,190) Less: Costs to sell (849) Gain on sale of the Connected Care Business $ 32,211 The carrying amounts of the major classes of assets and liabilities of the Company's discontinued operation as of December 31, 2019 were as follows: December 31, Accounts receivable, net $ 4,739 Inventories 798 Prepaid expenses and other current assets 790 Current assets of discontinued operation 6,327 Property, plant, and equipment, net 1,110 Goodwill 18,623 Operating lease right-of-use assets 1,603 Total assets of discontinued operation $ 27,663 Accounts payable $ 574 Accrued and other current liabilities 456 Deferred revenue 9,650 Current liabilities of discontinued operation 10,680 Deferred revenue, net of current 157 Deferred income taxes, net 210 Operating lease liabilities $ 1,282 Total liabilities of discontinued operation $ 12,329 The operating results of the Company's discontinued operation are as follows: Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Major classes of line items constituting pretax income (loss) of discontinued operations Net revenue $ — $ 3,752 $ 1,165 $ 12,906 Cost of revenue — (1,008) (467) (3,130) Selling, general and administrative 1 (1,428) (525) (4,259) Research and development (18) (1,306) (601) (3,729) Other expense, net — (2) (5) (17) Pretax income (loss) from discontinued operations related to major classes of pretax income (loss) (17) 8 (433) 1,771 Pretax gain on sale of the Connected Care Business — — 32,211 — Total pretax income (loss) from discontinued operations (17) 8 31,778 1,771 Provision for (benefit from) income taxes (1) 2 (217) 491 Total income (loss) from discontinued operations, net of tax $ (16) $ 6 $ 31,995 $ 1,280 The significant operating and investing cash and noncash items of the discontinued operation included on the Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended 2020 2019 Cash flows from operating activities: Depreciation and amortization $ 10 $ 352 Gain on sale of the Connected Care Business 32,211 — Cash flows from investing activities: Net proceeds from sale of the Connected Care Business $ 46,401 $ — Purchases of property and equipment, including internal-use software 76 152 Divestitures Sale of Home Health Care Services Business On June 7, 2019, the Company completed the divestiture of its home health care services business in exchange for cash proceeds of $300, which resulted in a loss on sale of business of $582. The home health care services business does not qualify as a discontinued operation as its divestiture does not represent a strategic shift that has had a major impact on the Company's operations or financial results. |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are included on the Consolidated Balance Sheets, net of the allowance for doubtful accounts. The allowance for doubtful accounts at September 30, 2020 and December 31, 2019 was $113 and $95, respectively. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets and Accrued and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Other Current Assets And Other Current Liabilities [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets and Accrued and Other Current Liabilities Prepaid expenses and other current assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Prepaid expenses $ 3,624 $ 1,794 Securities litigation insurance receivable 242 16,627 Other current assets 594 920 Prepaid expenses and other current assets $ 4,460 $ 19,341 Accrued and other current liabilities as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Payroll and related costs $ 6,566 $ 8,106 Bookings Commitment (see Note 12) 1,625 1,122 Securities litigation expense payable 242 17,127 Interest payable 1,619 274 Operating lease liabilities 1,703 1,617 Other accrued and other current liabilities 3,078 3,742 Accrued and other current liabilities $ 14,833 $ 31,988 |
Accrued and Other Current Liabilities | Prepaid Expenses and Other Current Assets and Accrued and Other Current Liabilities Prepaid expenses and other current assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Prepaid expenses $ 3,624 $ 1,794 Securities litigation insurance receivable 242 16,627 Other current assets 594 920 Prepaid expenses and other current assets $ 4,460 $ 19,341 Accrued and other current liabilities as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Payroll and related costs $ 6,566 $ 8,106 Bookings Commitment (see Note 12) 1,625 1,122 Securities litigation expense payable 242 17,127 Interest payable 1,619 274 Operating lease liabilities 1,703 1,617 Other accrued and other current liabilities 3,078 3,742 Accrued and other current liabilities $ 14,833 $ 31,988 |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant and equipment, net as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Computer equipment and software $ 13,771 $ 12,144 Furniture and equipment 1,325 2,292 Leasehold and building improvements 4,258 7,160 Property, plant, and equipment, excluding internal-use software 19,354 21,596 Less: Accumulated depreciation and amortization (13,911) (17,078) Property, plant and equipment, excluding internal-use software, net 5,443 4,518 Internal-use software 35,945 33,278 Construction in progress - Internal-use software 3,263 2,973 Less: Accumulated depreciation and amortization, internal-use software (30,419) (25,784) Internal-use software, net 8,789 10,467 Property, plant, and equipment, net $ 14,232 $ 14,985 Depreciation and amortization expense from continuing operations was $1,885 and $5,692, respectively, for the three and nine months ended September 30, 2020, of which $1,489 and $4,545, respectively, related to internal-use software costs. Depreciation and amortization expense from continuing operations was $3,104 and $9,954, respectively, for the three and nine months ended September 30, 2019, of which $2,174 and $7,122, respectively, related to internal-use software costs. Amounts capitalized to internal-use software for the three months ended September 30, 2020 and 2019 were $520 and $1,011, respectively. Amounts capitalized to internal-use software for the nine months ended September 30, 2020 and 2019 were $2,673 and $2,907, respectively. |
Intangible Assets, net
Intangible Assets, net | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net | Intangible Assets, net The Company’s definite-lived intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Customer relationships $ 53,000 $ 52,000 Developed technologies 34,500 32,000 Trade name 3,300 3,000 Installed user base 1,400 — 92,200 87,000 Less: Accumulated amortization (41,998) (35,152) Intangible assets, net $ 50,202 $ 51,848 Amortization of definite-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 definite-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 from continuing operations for the three months ended September 30, 2020 and 2019 was $2,180 and $2,197, respectively. Amortization expense from continuing operations for the nine months ended September 30, 2020 and 2019 was $6,199 and $6,681, respectively. At July 22, 2020, the Company recorded $5,200 of definite-lived intangible assets and accumulated amortization of $647 related to the assignment of OpenNMS (see Note 19). These intangible assets are amortized over a period of 4 to 6 years. During the three months ended June 30, 2019, the Company identified an indicator of impairment with respect to the NantHealth Labs, Inc. definite-lived intangible assets given the decline in sales and the Company's decision to cease commercial sales of its liquid biopsy test offering to focus on performing a study to measure the clinical utility of the AR-V7 analyte for informing treatment in patients with castration-resistant prostate cancer. Although the Company will continue this study while also pursuing other strategically aligned clinical studies that support its liquid biopsy platform, the Company determined that the assets were not recoverable given the significant amount of costs required to further build evidence of clinical utility while also ceasing commercial sales of the Liquid GPS product. Therefore, the Company fully impaired the intangible assets as of June 30, 2019 and recorded an impairment loss of $3,977 within operating expenses. The estimated future amortization expense over the next five years and thereafter for the intangible assets that exist as of September 30, 2020 is as follows: Amounts Remainder of 2020 $ 2,232 2021 8,930 2022 8,930 2023 4,346 2024 4,283 2025 4,147 Thereafter 17,334 Total future intangible amortization expense $ 50,202 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goodwill as of September 30, 2020 and December 31, 2019 was $98,333 and $97,307, resp ectively, net of goodwill allocated to the discontinued operation of $18,623. The goodwill allocated to the discontinued operation was based on the fair value of the Connected Care Business as a percentage of the total fair value of the Connected Care Business and the Company that remains after the sales transaction (see Note 4). On July 22, 2020, the Company rec ognized $1,026 of good will related to the assignment of OpenNMS (see Note 19). Goodwill acquired in a business combination is tested for impairment annually as of October 1, or between annual tests when an impairment indicator exists. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | Investments Equity method investment Investment in NantOmics In 2015, the Company purchased a total of 169,074,539 Series A-2 units of NantOmics, LLC (“NantOmics”), a related party of the Company, for an aggregate purchase price of $250,774. The Series A-2 units do not have any voting rights and, at the time of purchase, represented approximately 14.28% 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 applies 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. At the time of the purchase, the Company attributed $28,195 and $14,382 of these differences to NantOmics’ developed technologies and its reseller agreement with the Company, respectively, prior to the application of developed technology intangibles included in NantOmics net assets, 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. At February 28, 2018, the Company transferred 9,088,362 of the Series A-2 units to NantOmics as consideration for the assignment of NantHealth Labs, Inc. (see Note 19). An additional 564,779 units were transferred by May 31, 2018. This reduced NantHealth's ownership of NantOmics to approximately 13.58%. At June 30, 2020, the Company determined that an other-than-temporary-impairment of $28,227, the full remaining carrying value of the Company's investment in NantOmics, had occurred, predominantly attributed to (i) limited progress by NantOmics in completing revenue generating transactions for paid molecular analysis services for the research and pharmaceutical industries; (ii) limited progress in completing licensing transactions for proprietary molecular analysis technologies and/or intellectual property of NantOmics; and (iii) the Company's decision to shift future laboratory operations in-house related to the GPS Cancer and Omics Core products to better control the supply chain and CMS reimbursement process, which the Company expects to result in reduced fees to NantOmics. The other-than-temporary-impairment was based on judgments and estimates that were forward looking in nature and it is reasonably possible that the estimates could change in the near term. The Company believes the assumptions on projected financial information are reasonable. However, actual results may differ materially from those projections. Pertaining to the Company's share of NantOmics' income or loss, amortization of basis differences, and other-than-temporary impairments, for the nine months ended September 30, 2020, the Company recognized losses of $31,702. For the three and nine months ended September 30, 2019, the Company recognized losses of $1,983 and $6,401, respectively. The Company did not recognize any income or losses during the three months ended September 30, 2020. The Company reports its share of NantOmics’ income or loss and the amortization of basis differences using a one quarter lag. As the Company's equity method investment in NantOmics was reduced to zero during the second quarter of 2020, the Company discontinued to apply the equity method to record additional losses until NantOmics subsequently reports net income and that net income equals the share of net losses not recognized during the period the equity method was suspended. For the three months ended September 30, 2020, NantOmics continued to generate a net loss. The Company used the following summarized financial information for NantOmics for the nine months ended June 30, 2020, and the three and nine months ended June 30, 2019, to record its equity method losses for the nine months ended September 30, 2020 and the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended 2019 2020 2019 Revenues $ 847 $ 349 $ 3,913 Gross loss (1,239) (1,641) (2,573) Loss from operations (4,436) (7,806) (17,541) Impairment on equity investments — — (12,265) Net loss (3,333) (2,618) (26,263) Net loss attributable to NantOmics (3,296) (2,559) (26,005) |
Convertible Notes
Convertible Notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes | Convertible Notes In December 2016, the Company entered into the Purchase Agreement with J.P. Morgan Securities LLC and Jefferies LLC, as representatives of the several initial purchasers named therein (collectively, the “Initial Purchasers”), to issue and sell $90,000 in aggregate principal amount of its 5.50% senior convertible notes due 2021 ("Convertible Notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons pursuant to Regulation S under the Securities Act. In December 2016, the Company entered into a purchase agreement (the “Cambridge Purchase Agreement”) with Cambridge, an entity affiliated with Dr. Patrick Soon-Shiong, the Company’s Chairman and Chief Executive Officer, to issue and sell $10,000 in aggregate principal amount of the Convertible Notes in a private placement pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. In December 2016, pursuant to the exercise of the overallotment by the Initial Purchasers, the Company issued an additional $7,000 principal amount of the Convertible Notes. The total net proceeds from this offering were approximately $102,714, comprised of $9,917 from Cambridge and $92,797 from the Initial Purchasers, after deducting the Initial Purchasers’ discount and debt issuance costs of $4,286 in connection with the Convertible Notes offering. On December 21, 2016, the Company entered into an indenture, relating to the issuance of the Convertible Notes (the “Indenture”), by and between the Company and U.S. Bank National Association, as trustee (the “Trustee”). The interest rates are fixed at 5.50% per year, payable semi-annually on June 15th and December 15th of each year, beginning on June 15, 2017. The Convertible Notes will mature on December 15, 2021, unless earlier repurchased by the Company or converted pursuant to their terms. In connection with the offering of the Convertible Notes, on December 15, 2016, the Company entered into a Second Amended and Restated Promissory Note which amended and restated the Amended and Restated Promissory Note, dated May 9, 2016, between the Company and NantCapital, to, among other things, extend the maturity date of the promissory note to June 15, 2022 and to subordinate such promissory note in right of payment to the Convertible Notes (see Note 19). The initial conversion rate of the Convertible Notes is 82.3893 shares of common stock per $1 principal amount of Convertible Notes (which is equivalent to an initial conversion price of approximately $12.14 per share). Prior to the close of business on the business day immediately preceding September 15, 2021, the Convertible Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after March 31, 2017 (and only during such calendar quarter), if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 120% of the conversion price on such trading day; (2) during the five business day period after any five consecutive trading day period in which, for each day of that period, the trading price per $1 principal amount of the Convertible Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions as described in the Indenture agreement. Upon conversion, the Convertible Notes will be settled in cash, shares of the Company’s common stock or any combination thereof at the Company’s option. Upon the occurrence of a fundamental change (as defined in the Indenture), holders may require the Company to purchase all or a portion of the Convertible Notes in principal amounts of $1 or an integral multiple thereof, for cash at a price equal to 100% of the principal amount of the Convertible Notes to be purchased plus any accrued and unpaid interest to, but excluding, the fundamental change purchase date. The conversion rate will be subject to adjustment upon the occurrence of certain specified events. On or after the date that is one year after the last date of original issuance of the Convertible Notes, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending within the five trading days immediately preceding a conversion date is greater than or equal to 120% of the conversion price on each applicable trading day, the Company will make an interest make-whole payment to a converting holder (other than a conversion in connection with a make-whole fundamental change in which the conversion rate is adjusted) equal to the sum of the present values of the scheduled payments of interest that would have been made on the Convertible Notes to be converted had such Convertible Notes remained outstanding from the conversion date through the earlier of (i) the date that is three years after the conversion date and (ii) the maturity date if the Convertible Notes had not been so converted. The present values of the remaining interest payments will be computed using a discount rate equal to 2.0%. The Company may pay any interest make-whole payment either in cash or in shares of its common stock, at the Company’s election as described in the Indenture. The Company accounts for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) by recording the liability and equity components of the convertible debt separately. The liability component is computed based on the fair value of a similar liability that does not include the conversion option. The liability component includes both the value of the embedded interest make-whole derivative and the carrying value of the Convertible Notes. The equity component is computed based on the total debt proceeds less the fair value of the liability component. The equity component is also recorded as debt discount and amortized as interest expense over the expected term of the Convertible Notes. The liability component of the Convertible Notes on the date of issuance was computed as $83,079, consisting of the value of the embedded interest make-whole derivative of $1,499 and the carrying value of the Convertible Notes of $81,580. Accordingly, the equity component on the date of issuance was $23,921. If the debt is considered current at the balance sheet date, the liability component of the convertible notes will be classified as current liabilities and presented in current portion of convertible notes debt and the equity component of the convertible debt will be considered a redeemable security and presented as redeemable equity on the Company's Consolidated Balance Sheet. Offering costs of $4,286 related to the issuance of the Convertible Notes were allocated to the liability and equity components in proportion to the allocation of the proceeds and accounted for as deferred financing offering costs and equity issuance costs, respectively. Approximately $972 of this amount was allocated to equity and the remaining $3,314 was capitalized as deferred financing offering costs. The debt discounts and deferred financing offering costs on the Convertible Notes are being amortized to interest expense over the contractual terms of the Convertible Notes, using the effective interest method at an effective interest rate of 12.82%. As of September 30, 2020, the remaining life of the Convertible Notes is approximately 15 months. The following table summarizes how the issuance of the Convertible Notes is reflected in the Company's Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019. Related Party Others Total Balance as of September 30, 2020 Gross proceeds $ 10,000 $ 97,000 $ 107,000 Unamortized debt discounts and deferred financing offering costs (732) (7,977) (8,709) Net carrying amount $ 9,268 $ 89,023 $ 98,291 Balance as of December 31, 2019 Gross proceeds $ 10,000 $ 97,000 $ 107,000 Unamortized debt discounts and deferred financing offering costs (1,136) (12,352) (13,488) Net carrying amount $ 8,864 $ 84,648 $ 93,512 The following tables set forth the Company's interest expense recognized in the Company's Consolidated Statements of Operations: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Related Party Others Total Related Party Others Total Accrued coupon interest expense $ 138 $ 1,333 $ 1,471 $ 412 $ 4,001 $ 4,413 Amortization of debt discounts 135 1,318 1,453 393 3,834 4,227 Amortization of deferred financing offering costs 4 187 191 11 541 552 Total convertible notes interest expense $ 277 $ 2,838 $ 3,115 $ 816 $ 8,376 $ 9,192 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Related Party Others Total Related Party Others Total Accrued coupon interest expense $ 137 $ 1,334 $ 1,471 $ 411 $ 4,002 $ 4,413 Amortization of debt discounts 120 1,160 1,280 350 3,372 3,722 Amortization of deferred financing offering costs 3 163 166 9 476 485 Total convertible notes interest expense $ 260 $ 2,657 $ 2,917 $ 770 $ 7,850 $ 8,620 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Liabilities Bookings Commitment $ 24,553 $ — $ — $ 24,553 Interest make-whole derivative 7 — — 7 December 31, 2019 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Liabilities Bookings Commitment $ 21,983 $ — $ — $ 21,983 Interest make-whole derivative — — — — 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. Level 3 Inputs Bookings Commitment On August 3, 2017, the Company entered into an asset purchase agreement (the “APA”) with Allscripts Healthcare Solutions, Inc. (“Allscripts”), pursuant to which the Company agreed to sell to Allscripts substantially all of the assets of the Company’s provider/patient engagement solutions business, including the Company’s FusionFX solution and components of its NantOS software connectivity solutions (the “Business”). On August 25, 2017, the Company and Allscripts completed the sale of the Business (the "Disposition") pursuant to the APA. Concurrent with the closing of the Disposition and as contemplated by the APA, (a) the Company and Allscripts modified the amended and restated mutual license and reseller agreement dated June 26, 2015, which was further amended on December 30, 2017, such that, among other things, the Company committed to deliver a minimum of $95,000 of total bookings over a ten-year period (“Bookings Commitment”) from referral transactions and sales of certain Allscripts products; (b) the Company and Allscripts each licensed certain intellectual property to the other party pursuant to a cross license agreement; (c) the Company agreed to provide certain transition services to Allscripts pursuant to a transition services agreement; and (d) the C ompany licensed certain software and agreed to sell certain hardware to Allscripts pursuant to a software license and supply agreement. The Company agreed that Allscripts shall receive at least $500 per year in payments from bookings (the “Annual Minimum Commitment”). If the total payments received by Allscripts from bookings during such period are less than the Annual Minimum Commitment, the Company shall pay to Allscripts the difference between the Annual Minimum Commitment and the total amount received by Allscripts from bookings during such period. A s of September 30, 2020 and December 31, 2019, the accrued Annual Minimum Commitment was $1,200 and $700, respectively. In the event of a Bookings Commitment shortfall at the end of the ten-year period, the Company may be obligated to pay 70% of the shortfall, subject to certain credits. The Company will earn 30% commission from Allscripts on each software referral transaction that results in a booking with Allscripts. The Company accounts for the Bookings Commitment at its estimated fair value over the life of the agreement. The Company values the Bookings Commitment using a Monte Carlo Simulation model to calculate average payments due under the Bookings Commitment, based on management's estimate of its performance in securing bookings and resulting annual payments, discounted at the cost of debt based on a yield curve. The cost of debt used for discounting was between 15% and 16% at September 30, 2020 and between 15% and 17% at December 31, 2019. The change in fair value is recorded within other income (expense), net in the Company's Consolidated Statements of Operations. The fair value of the Bookings Commitment is dependent on management's estimate of the probability of success on individual opportunities and the cost of debt applied in discounting the liability. The higher the probability of success on each opportunity, the lower the fair value of the Bookings Commitment liability. The lower the cost of debt applied, the higher the value of the liability. Management believes the assumptions used on projected financial information is reasonable, but those assumptions require judgment and are forward looking in nature. However, actual results may differ materially from those projections. The fair value of the Bookings Commitment is most sensitive to management's estimate of the discount rate applied to present value the liability. If the discount rate applied was 2% lower at September 30, 2020, the fair value of the liability would increase by $3,312. Convertible Note derivative liability In December 2016, the Company issued $107,000 in aggregate principal amount of Convertible Notes due December 15, 2021, of which $10,000 issued to a related party (see Note 11). The Convertible Notes include an interest make-whole feature whereby if a noteholder converts any of the Convertible Notes one year after the last date of original issuance of the Convertible Notes, they are entitled, in addition to the other consideration payable or deliverable in connection with such conversion, to an interest make-whole payment equal to the sum of the present values of the scheduled payments, computed using a discount rate equal to 2.0%, of interest that would have been made on the Convertible Notes to be converted had such Convertible Notes remained outstanding from the conversion date through the earlier of (i) the date that is three years after the conversion date and (ii) the maturity date if the Convertible Notes had not been so converted. The Company may pay any interest make-whole payment either in cash or in shares of its common stock, at the Company’s election as described in the Indenture. The Company has determined that this feature is an embedded derivative and have recognized the fair value of this derivative as a liability in the Company's Consolidated Balance Sheets, with subsequent changes to fair value recorded through earnings at each reporting period in the Company's Consolidated Statements of Operations as change in fair value of derivative liability. The fair value of the derivative liability includes the estimated volatility and risk-free rate. The higher/lower the estimated volatility, the higher/lower the value of the liability. The higher/lower the risk-free interest rate, the higher/lower the value of the liability. The fair market value for level 3 securities may be highly sensitive to the use of unobservable inputs and subjective assumptions. Generally, changes in significant unobservable inputs may result in significantly lower or higher fair value measurements. The following tables set forth a summary of changes in the fair value of Level 3 liabilities for the three and nine months ended September 30, 2020: June 30, 2020 Transfers in (out) (1) Change in fair value recognized in earnings September 30, 2020 Liabilities Interest make-whole derivative - related party and others $ 63 $ — $ (56) $ 7 Bookings Commitment 25,710 (500) (657) 24,553 $ 25,773 $ (500) $ (713) $ 24,560 December 31, 2019 Transfer in (out) (1) Change in fair value recognized in earnings September 30, 2020 Liabilities Interest make-whole derivative - related party and others $ — $ — $ 7 $ 7 Bookings Commitment 21,983 (500) 3,070 24,553 $ 21,983 $ (500) $ 3,077 $ 24,560 (1) Transfers out of the Bookings Commitment fair value liability relates to the Annual Minimum Commitment, which was recorded in Accrued and other current liabilities. Fair Value of Convertible Notes held at amortized cost As of September 30, 2020 and December 31, 2019, the fair value and carrying value of the Company's Convertible Notes were: Fair Value Carrying Value Face Value 5.5% convertible senior notes due December 15, 2021: Balance as of September 30, 2020 Related party $ 9,255 $ 9,268 $ 10,000 Others 89,774 89,023 97,000 $ 99,029 $ 98,291 $ 107,000 Balance as of December 31, 2019 Related party $ 6,727 $ 8,864 $ 10,000 Others 65,257 84,648 97,000 $ 71,984 $ 93,512 $ 107,000 The fair value shown above represents the fair value of the debt instrument, inclusive of both the debt and equity components, but excluding the derivative liability. The carrying value represents only the carrying value of the debt component. The fair value of the Convertible Notes was determined by using unobservable inputs that are supported by minimal non-active market activity and that are significant to determining the fair value of the debt instrument. The fair value is level 3 in the fair value hierarchy. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for corporate offices, data centers, and certain equipment. The Company's leases have lease terms of 1 year to 11 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. NantWorks, a related party, subleases one of the Company's data centers on the same terms the Company agreed with the lessor. Options to extend are included in the lease term where the Company is reasonably certain to exercise the options. Variable payments on the Company's leases are expensed as incurred, as they do not depend on an index, or rate. The Company concluded certain leases for data centers had a term of less than 1 year at inception, as arrangements are only renewed following marketplace assessments and negotiations with vendors. The Company's leases do not indicate the rate implicit in the lease. As such, the Company has used its incremental borrowing rate, determined based on market indications of the rate at which the Company could borrow, adjusted for the term, value and payment schedule of individual leases, at the effective date for ASC 842 or at the lease commencement date for leases entered into after January 1, 2019. Lease expense, charged to selling, general and administrative expense, for the three and nine months September 30, 2020 and 2019 consisted of: Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Operating lease cost $ 604 $ 594 $ 1,814 $ 1,788 Short-term lease cost 257 252 768 804 Variable cost 104 77 353 172 Sublease income (52) (52) (156) (156) Total lease cost $ 913 $ 871 $ 2,779 $ 2,608 Other information regarding the Company's leases: Nine Months Ended September 30, 2020 2019 Operating cash flows for operating leases $ (2,056) $ (1,828) Right-of-use assets obtained in exchange for new operating lease liabilities $ 110 $ — Operating lease liabilities arising from obtaining right-of-use assets $ 110 $ — Weighted average remaining lease term - operating leases 5.3 years 6.2 years Weighted average discount rate - operating leases 11 % 11 % As of September 30, 2020 and December 31, 2019, the Company had no material finance leases. The remaining lives of its operating leases ranged from one Future minimum lease payments under the Company's operating leases at September 30, 2020 were: Maturity Analysis Amounts Remainder of 2020 $ 685 2021 2,621 2022 2,662 2023 2,673 2024 2,519 2025 666 Thereafter 1,687 Total future minimum lease payments 13,513 Less: imputed interest (3,302) Total $ 10,211 As reported on the Consolidated Balance Sheet Accrued and other current liabilities $ 1,703 Operating lease liabilities 8,508 $ 10,211 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company's principal commitments consist of obligations under its outstanding debt obligations, noncancelable leases for its office space, data centers and certain equipment and vendor contracts to provide research services, and purchase obligations under license agreements and reseller agreements. 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 and December 15, 2016, the Promissory Note with NantCapital was amended to provide that all outstanding principal and accrued interest is due and payable on June 15, 2022, and not on demand and the Company subordinated the Promissory Note in right of payment to the Convertible Notes (see Note 11). Indenture Obligations Under Convertible Notes On December 21, 2016, the Company entered into the Indenture relating to the issuance of the $107,000 Convertible Notes, by and between the Company and U.S. Bank National Association the Trustee. The interest rates are fixed at 5.50% per year, payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2017. The Convertible Notes will mature on December 15, 2021, unless earlier repurchased by the Company or converted pursuant to their terms (see Note 11). 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). 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. Except as discussed below, in the opinion of management, the ultimate outcome of proceedings of which management is aware, even if adverse to the Company, would not have a material adverse effect on the Company’s consolidated 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. Securities and Derivative Litigation In March 2017, a number of putative class action securities complaints were filed in U.S. District Court for the Central District of California, naming as defendants the Company and certain of our current or former executive officers and directors. These complaints have been consolidated with the lead case captioned Deora v. NantHealth, Inc., 2:17-cv-01825 ("Deora"). In June 2017, the lead plaintiffs filed an amended consolidated complaint, which generally alleges that defendants violated federal securities laws by making material misrepresentations in NantHealth’s IPO registration statement and in subsequent public statements. In particular, the complaint refers to various third-party articles in alleging that defendants misrepresented NantHealth’s business with the University of Utah, donations to the university by non-profit entities associated with the Company's founder Dr. Patrick Soon-Shiong, and orders for GPS Cancer. The lead plaintiffs seek unspecified damages and other relief on behalf of putative classes of persons who purchased or acquired NantHealth securities in the IPO or on the open market from June 1, 2016 through May 1, 2017. In March 2018, the court largely denied Defendants’ motion to dismiss the consolidated amended complaint. On July 30, 2019, the court certified the case as a class action. On October 23, 2019, the parties notified the court that they had reached a settlement in principle to resolve the action on a class wide basis in the amount of $16,500, which was included in accrued and other current liabilities on the Consolidated Balance Sheet at December 31, 2019. The court granted preliminary approval of the settlement on January 31, 2020. A hearing for final approval of the settlement was scheduled for June 15, 2020, but on June 5, 2020, the Court decided to take the final approval motion on submission, and on July 17, 2020, the Court directed Plaintiff’s counsel to submit evidence substantiating all costs incurred. The $16,500 settlement was paid into a settlement fund prior to the payment deadline of March 2, 2020. The majority of the settlement amount was funded by the Company’s insurance carriers, and a portion was funded by the Company. On September 10, 2020, the court entered an order granting final approval of the settlement, and the order and settlement are now final. In May 2017, a putative class action complaint was filed in California Superior Court, Los Angeles County, asserting claims for violations of the Securities Act based on allegations similar to those in Deora. That case is captioned Bucks County Employees Retirement Fund v. NantHealth, Inc., BC 662330. The parties agreed to stay the case. At a status conference on October 30, 2020, the court scheduled a status conference for February 4, 2021, to enable the plaintiff to decide whether to voluntarily dismiss, following the finalization of the Deora settlement. The Company believes that the claims lack merit and intends to vigorously defend the litigation. In April 2018, two putative shareholder derivative actions-captioned Engleman v. Soon-Shiong, Case No. 2018-0282-AGB, and Petersen v. Soon-Shiong, Case No. 2018-0302-AGB were filed in the Delaware Court of Chancery. The plaintiff in the Engleman action previously filed a similar complaint in California Superior Court, Los Angeles County, which was dismissed based on a provision in the Company’s charter requiring derivative actions to be brought in Delaware. The Engleman and Petersen complaints contain allegations similar to those in Deora but assert causes of action on behalf of NantHealth against various of the Company’s current or former executive officers and directors for alleged breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment. The Company is named solely as a nominal defendant. In July 2018, the court issued an order consolidating the Engleman and Petersen actions as In re NantHealth, Inc. Stockholder Litigation, Lead C.A. No. 2018-0302-AGB, appointing Petersen as lead plaintiff, and designating the Petersen complaint as the operative complaint. On September 20, 2018, the defendants moved to dismiss the complaint. In October 2018, in response to the motion to dismiss, Petersen filed an amended complaint, which asserts claims for breach of fiduciary duty, waste of corporate assets (which Petersen subsequently withdrew), and unjust enrichment. In November 2018, the defendants moved to dismiss the amended complaint. A hearing on the defendants’ motion was held on September 25, 2019. On January 14, 2020, the court issued an order granting in part and denying in part the defendants’ motion to dismiss. The court dismissed all claims except one claim against Dr. Patrick Soon-Shiong for breach of fiduciary duty. Dr. Soon-Shiong and the Company filed answers to the amended complaint on March 30, 2020. Discovery is now proceeding. In April 2018, a putative shareholder derivative action captioned Shen v. Soon-Shiong was filed in U.S. District Court for the District of Delaware. The complaint contains allegations similar to those in Deora but asserts causes of action on behalf of NantHealth against various of the Company’s current or former executive officers and directors for alleged breaches of fiduciary duty and unjust enrichment, as well as alleged violations of the federal securities laws based on alleged misstatements or omissions in the Company’s 2017 proxy statement. The parties agreed to stay the case pending a decision on defendants’ motion to dismiss in the derivative action in the Delaware Court of Chancery. The stay has been lifted due to the Delaware Court of Chancery's January 14, 2020 decision granting in part and denying in part the motion to dismiss. On October 5, 2020, an amended complaint was filed which brings claims only against Dr. Soon-Shiong for alleged violations of the federal securities laws and breach of fiduciary duty, and drops the prior claims against other current or former executive officers and directors of NantHealth. The deadline for defendants' response to the amended complaint is December 4, 2020. Real Estate Litigation On March 9, 2018, PayPal, Inc. (“PayPal”) commenced an action against the Company in the Superior Court Department of the Trial Court of the Commonwealth of Massachusetts, for Suffolk County. The action was originally captioned PayPal, Inc. v. NantHealth, Inc., Civil Action No. 18-0780-E. On April 10, 2018, the Superior Court transferred the case to its Business Litigation Section, where it is currently pending and captioned as PayPal, Inc. v. NantHealth, Inc., Civil Action No. 18-0780-BLS1. This action arises out of a Sublease Agreement that PayPal and the Company entered into on or about November 30, 2017. The Sublease Agreement pertained to commercial real estate that PayPal leased at One International Place in Boston, Massachusetts. On January 25, 2018, the Company notified PayPal that we were electing to terminate the Sublease Agreement. In its Verified Complaint, and a contemporaneous notice of default that the Company disputed, PayPal alleges that the Company breached the Sublease Agreement. In addition, PayPal asserts claims for breach of the covenant of good faith and fair dealing, and violations of Massachusetts General Laws, Chapter 93A, sections 2 and 11, and seeks a declaratory judgment recognizing and enforcing the terms of the Sublease Agreement. Among other relief, PayPal seeks damages, treble damages, interest, costs, and attorneys’ fees. On April 12, 2018, the Company filed its answer and jury demand in the action, denying liability. On August 2, 2018, PayPal requested a status conference with the court in order to discuss PayPal’s potential filing of a motion for partial judgment on the pleadings pursuant to Mass. R. Civ. P. 12(c). A Rule 16 Litigation Control Conference (“Rule 16 Conference”) was held on August 22, 2018. During the Rule 16 Conference, the court denied PayPal’s request for leave to file a motion for partial judgment on the pleadings. Following the Rule 16 Conference, the court issued a tracking order setting deadlines and other procedures that would apply to this action. On September 26, 2018, the Company filed its Assented to Motion for Leave to Amend Its Answer. The court granted the Company's motion on October 3, 2018. On October 9, 2018, the Company filed and served its amended answer and jury demand. That jury demand was later withdrawn by stipulation dated September 17, 2020. On January 8, 2019, the parties filed a joint motion to extend certain of the tracking order deadlines, which motion the court granted by endorsed order dated January 9, 2019. On April 4, 2019, PayPal filed a motion to add NantWorks, LLC as a defendant in the litigation, which motion was filed together with PayPal’s supporting memorandum, the Company’s opposition to that motion and PayPal’s reply. In its memorandum supporting that motion, PayPal stated that “PayPal’s damages are in excess of $3M,” without further explanation as to its damages calculations. The court denied PayPal's motion on April 16, 2019. PayPal served a motion for summary judgment on June 5, 2019. In that motion, PayPal asserted that its actual damages are in excess of $2,300, which it suggested the court should treble pursuant to the provisions of Massachusetts General Laws, Chapter 93A. The Company served its opposition on July 12, 2019. PayPal responded with a reply to the Company’s opposition on July 18, 2019 and the fully briefed motion for summary judgment was filed that same day. The parties completed fact discovery on May 10, 2019 and completed expert discovery on August 22, 2019. A hearing on PayPal’s motion for summary judgment was held on October 17, 2019. At the hearing, the court indicated its intention to issue a written decision (1) granting PayPal’s motion for summary judgment regarding its claim for breach of the Sublease Agreement, as to liability only and not as to damages; (2) denying PayPal’s motion for summary judgment regarding its claim for unfair and deceptive trade practices in violation of Massachusetts General Laws, Chapter 93A, sections 2 and 11; and (3) finding PayPal’s claim for breach of the covenant of good faith and fair dealing to be irrelevant or moot and denying its motion for summary judgment as to that claim. At the October 17, 2019 hearing, PayPal orally withdrew its claim for attorneys’ fees on its breach of the Sublease Agreement claim only and left uncertain whether it intends to pursue its claim for a declaratory judgment. On December 6, 2019, PayPal served a motion seeking a preliminary injunction that would enjoin and restrain the Company, its officers, agents, attorneys and employees from transferring, conveying, or encumbering, or in any way attempting to pass out of their control any of the Company’s assets or property other than in the ordinary course of business, including but not limited to cash, bonuses, and dividends. In the papers submitted in support of that motion, PayPal asserted that it has a strong likelihood of success in seeking to recover over $2,900 on its claim for breach of the Sublease Agreement, inclusive of pre-judgment interest at the statutory rate. On January 3, 2020, the Company served its opposition to PayPal’s motion for preliminary injunction. On January 9, 2020, PayPal served its reply in support of its motion for preliminary injunction and filed all motion papers with the court. On January 23, 2020, the court issued its written Decision and Order regarding PayPal’s motion for summary judgment. In the Decision and Order, which was docketed on January 27, 2020, the court (1) granted PayPal’s motion for summary judgment regarding its claim for breach of the Sublease Agreement, as to liability only and not as to damages; (2) denied PayPal’s motion for summary judgment regarding its claim for unfair and deceptive trade practices in violation of Massachusetts General Laws, Chapter 93A, sections 2 and 11; (3) denied PayPal’s motion for summary judgment regarding its claim for breach of the covenant of good faith and fair dealing, finding there was no need or basis to impose any additional liability on the Company for conduct that does not give rise to a cause of action independent of the underlying breach of contract claim; and (4) denied PayPal’s motion for summary judgment regarding its request for a declaratory judgment because it added little or nothing of substance to the relief PayPal is entitled to obtain, if at all. The court’s January 23, 2020 Decision and Order left the issue of damages on PayPal’s claim for breach of the Sublease Agreement to be determined. The Company asserted, among other things, that PayPal failed to mitigate any damages that PayPal claims the Company owes. PayPal’s claim for unfair and deceptive practices in violation of Massachusetts General Laws, Chapter 93A, sections 2 and 11, and its requests for treble damages and attorneys’ fees on that claim, as well as its requests for interest and costs on the breach of the Sublease Agreement and Chapter 93A claims, also were left to be determined. A hearing on PayPal’s motion for preliminary injunction was held on January 30, 2020. At the hearing, the court took the motion for preliminary injunction under advisement and scheduled the following: (1) a status conference on September 9, 2020; (2) a final trial conference on January 6, 2021; and (3) a trial start date on January 12, 2021. On February 24, 2020, the Company filed a Petition for Interlocutory Relief. The petition sought relief from the Decision and Order granting PayPal’s motion for summary judgment regarding its claim for breach of the Sublease Agreement as to liability only. On March 2, 2020, a single justice of the Massachusetts Appeals Court denied the Company’s Petition for Interlocutory Relief. Starting in late January 2020, P ayPal and its attorneys and brokers began producing additional documents that had not been produced during the fact discovery period. These supplemental productions continued through September 2020. On August 28, 2020, the Company served its motion to sanction PayPal for failing to produce numerous responsive documents until after the fact discovery period expired and after the Superior Court granted partial summary judgment to PayPal. The Company requested that the Court enter an order: (1) requiring PayPal to reimburse the Company for all fees and costs it incurred to investigate and address PayPal’s discovery deficiencies; (2) requiring PayPal, its brokers, and its attorneys to produce witnesses for depositions by the Company with PayPal to bear all of the Company’s fees and costs incurred in preparing for and conducting these depositions; and (3) authorizing the Company to conduct additional third-party depositions at PayPal’s sole expense. On September 17, 2020, PayPal served its opposition and cross-motion for sanctions, seeking its fees and costs incurred in defending against the Company’s motion for sanctions. The Company responded with a reply to PayPal’s opposition and an opposition to PayPal’s cross-motion on October 13, 2020, and the fully briefed motion to sanction PayPal and the cross-motion for sanctions were filed that same day. On September 25, 2020, the Company and PayPal participated in a mediation. The parties were unable to resolve the litigation during the mediation. On or about October 20, 2020, the Company and PayPal reached an agreement in principle to settle the litigation for a payment by the Company to PayPal of $1,600, subject to the negotiation, execution and delivery of a formal settlement agreement. By letter from the Company’s counsel dated October 23, 2020, the parties requested that the Court hold all pending motions in abeyance, pending receipt of a stipulation of dismissal or further notice from the parties. On October 27, 2020, the Court issued notices canceling both the January 6, 2021 final trial conference and January 12, 2021 trial start date. On November 4, 2020, the Company and PayPal executed a settlement and release agreement pursuant to which the parties agreed to settle, without any admission of liability, all claims, issues, disputes and differences relating to this litigation in consideration by the Company of $1,600 to PayPal (the “Settlement A mount”), which was accrued for as of September 30, 2020. The Settlement Amount is due within 30 days after the execution date, i.e., by December 4, 2020. The mutual releases included in the settlement and release agreement shall be effective upon the Company’s payment of the Settlement Amount. The agreement provides that, immediately after the Company’s payment of the Settlement Amount, the Company’s and PayPal’s counsel will file a stipulation of dismissal with prejudice with the Suffolk Superior Court, without attorneys’ fees or costs, and waiving all rights to appeal. Insurance Recoveries The Company has reflected its right to insurance recoveries, limited to the extent of incurred or probable losses, as a receivable when such recoveries have been agreed to with the Company’s third-party insurers and receipt is deemed probable. This includes instances where the Company’s third-party insurers have agreed to pay, on the Company’s behalf, certain legal defense costs and settlement amounts directly to applicable law firms and a settlement fund. The amount of such receivable related to the securities litigation recorded at September 30, 2020 and December 31, 2019 was $242 and $16,627, respectively, and is included in prepaid expenses and other current assets on the Consolidated Balance Sheets . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three and nine months ended September 30, 2020 from continuing operations was $77 and $174, respectively. The benefit from income taxes for the three and nine months ended September 30, 2019 from continuing operations was $529 and $659, respectively. The tax provision for (benefit from) income taxes for the three and nine months ended September 30, 2020 and 2019 from continuing operations included an income tax provision for the consolidated group based on an estimated annual effective tax rate. The effective tax rates for the three and nine months ended September 30, 2020 were a provision from continuing operations of 0.70% and 0.26%, respectively. The effective tax rates for the three and nine months ended September 30, 2019 were a benefit from continuing operations of 3.13% and 1.25%, respectively. The effective tax rates for the three and nine months ended September 30, 2020 and 2019 differed from the U.S. federal statutory rates of 21% primarily as a result of a reduction to the deferred tax liability related to an indefinite-lived intangible asset, an increase of purchase accounting deferred tax liabilities that cannot be absorbed by the deferred tax assets, nondeductible expenses, state income taxes, foreign income tax rate differential and the impact of valuation allowance on the Company's deferred tax assets. The Company has evaluated all available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized in the U.S. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against substantially all deferred tax assets. If/when the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period(s) such determination is made. The Company files income tax returns in the U.S. Federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. The Company has recently completed an IRS audit for the tax year 2016 with no adjustments. The Company is no longer subject to income tax examination by the U.S. federal, state or local tax authorities for years ended December 31, 2014 or prior, however, its tax attributes, such as net operating loss (“NOL”) carryforwards and tax credits, are still subject to examination in the year they are used. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (the CARES Act). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the Company's financial statements include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. Consistent with prior years, the Company expects to continue to generate net losses for the foreseeable future. The Company currently has significant federal and state deferred tax assets attributed to prior net operating losses and research and experimentation tax credits. These deferred tax assets are fully reserved. As the Company has never generated taxable income, the CARES Act feature allowing NOLs originating in 2018, 2019 or 2020 to be carried back five years is not expected to have a significant impact. Management does not expect any other provisions of the CARES Act to have a material impact in 2020. On June 29, 2020, the State of California, as part of the budget package, enacted Assembly Bill 85 (AB 85). The bill contains several tax changes to help with the budget deficit. Notably, AB 85 contains two major tax changes: (1) it suspends the usage of NOLs; and (2) it limits certain business tax credits for tax years 2020, 2021, and 2022. Management is evaluating the impact of these tax changes and does not expect any material impact in 2020. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Amended Certificate of Incorporation 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, 2020 and December 31, 2019, 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, 2020, and December 31, 2019, there were no outstanding shares of preferred stock. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The following table reflects the components of stock-based compensation expense recognized in the Company's Consolidated Statements of Operations: Three Months Ended Nine Months Ended September 30, 2020 2019 2020 2019 Phantom units: Cost of revenue $ — 9 $ 27 $ 25 Selling, general and administrative — 12 (23) 39 Research and development — 18 36 11 Total phantom units stock-based compensation expense — 39 40 75 Stock options: Cost of revenue 27 — 55 — Selling, general and administrative 483 75 947 90 Research and development 75 — 118 — Total stock options stock-based compensation expense 585 75 1,120 90 Restricted stock units: Cost of revenue — 6 9 11 Selling, general and administrative 50 377 571 1,580 Research and development — 24 23 41 Total restricted stock units stock-based compensation expense 50 407 603 1,632 Discontinued operations — 5 (79) 52 Total stock-based compensation expense 635 526 1,684 1,849 Amount capitalized to internal-use software 23 14 71 105 Total stock-based compensation cost $ 658 $ 540 $ 1,755 $ 1,954 Phantom Unit Plan The following table summarizes the activity related to the unvested phantom units during the three and nine months ended September 30, 2020: Number of Units Weighted- Average Grant Date Value Per Phantom Unit Unvested phantom units outstanding - December 31, 2019 120,562 $ 11.49 Forfeited (5,454) $ 14.24 Unvested phantom units outstanding - March 31, 2020 115,108 $ 11.38 Vested (111,699) $ 11.32 Forfeited (3,409) $ 14.30 Unvested phantom units outstanding - June 30, 2020 — $ — Unvested phantom units outstanding - September 30, 2020 — $ — During the nine months ended September 30, 2020, the Company issued 64,048 shares of common stock to participants of the Phantom Unit Plan based in the United States. 2016 Equity Incentive Plan Stock Options The following table summarizes the activity related to stock options during the three and nine months ended September 30, 2020: Number of Shares Weighted-Average Exercise Price Stock options outstanding - December 31, 2019 5,815,724 $ 0.56 Forfeited (270,000) $ 0.55 Stock options outstanding - March 31, 2020 5,545,724 $ 0.56 Granted 300,000 $ 2.52 Forfeited (265,000) $ 0.55 Stock options outstanding - June 30, 2020 5,580,724 $ 0.67 Granted 4,895,000 $ 3.84 Exercised (190,000) $ 0.55 Forfeited (135,000) $ 2.01 Stock options outstanding - September 30, 2020 10,150,724 $ 2.18 Stock options exercisable - September 30, 2020 2,860,724 $ 0.57 As of September 30, 2020, the Company had $12,524 of unrecognized stock-based compensation expense related to the stock options. This cost is expected to be recognized over a weighted-average period of 3.0 years. The Company settles all exercised stock options by issuing shares of the Company's common stock without netting down the portion related to payroll withholding tax obligations. Restricted Stock Units The following table summarizes the activity related to the unvested restricted stock units during the three and nine months ended September 30, 2020: Number of Units Weighted-Average Grant Date Fair Value Unvested restricted stock units outstanding - December 31, 2019 705,415 $ 2.68 Granted 179,558 $ 1.81 Forfeited (10,954) $ 3.39 Unvested restricted stock units outstanding - March 31, 2020 874,019 $ 2.49 Vested (540,711) $ 3.10 Forfeited (80,000) $ 1.14 Unvested restricted stock units outstanding - June 30, 2020 253,308 $ 1.64 Unvested restricted stock units outstanding - September 30, 2020 253,308 $ 1.64 Unrecognized compensation expense related to unvested restricted stock units was $326 at September 30, 2020, which is expected to be recognized as expense over the weighted-average period of 1.0 year. During the nine months ended September 30, 2020, the Company issued 391,738 shares of common stock to participants of the 2016 Plan based in the United States. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic and diluted net income (loss) per common share is computed by dividing net income (loss) attributable to NantHealth by the weighted-average number of common shares outstanding during the respective periods, without consideration of common stock equivalents. If there is a net loss from continuing operations attributable to NantHealth, diluted net income (loss) per share is computed in the same manner as basic net income (loss) per share is computed, even if the Company reports net income as a result of discontinued operations attributable to NantHealth. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted net loss per share of common stock for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Common Stock Common Stock Common Stock Common Stock Net income (loss) per share numerator: Net loss from continuing operations $ (11,026) $ (16,380) $ (68,221) $ (52,175) Net loss attributable to noncontrolling interests (42) — (42) — Net loss from continuing operations attributable to NantHealth (10,984) (16,380) (68,179) (52,175) Net (loss) income from discontinued operations attributable to NantHealth (16) 3 31,955 1,162 Net loss attributable to NantHealth for basic and diluted net loss per share $ (11,000) $ (16,377) $ (36,224) $ (51,013) Weighted-average shares for basic net income (loss) per share 110,929,357 110,619,905 110,859,611 110,261,279 Effect of dilutive securities — — — — Weighted-average shares for dilutive net income (loss) per share 110,929,357 110,619,905 110,859,611 110,261,279 Basic and diluted net income (loss) per share attributable to NantHealth: Continuing operations - common stock $ (0.10) $ (0.15) $ (0.62) $ (0.47) Discontinued operations - common stock $ — $ — $ 0.29 $ 0.01 Total net loss per share - common stock $ (0.10) $ (0.15) $ (0.33) $ (0.46) The following number of potential common shares at the end of each period were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented: September 30, 2020 2019 Unvested restricted stock — 1 Unvested phantom units — 121,244 Unvested restricted stock units 253,308 1,868,224 Unexercised stock options 10,150,724 710,892 Convertible notes 8,815,655 8,815,655 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
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 is 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. NantHealth also bills NantWorks and affiliates for services such as information technology and cloud services, finance and risk management, and facilities management, on the same basis. During the three and nine months ended September 30, 2020, the Company had income of $34 and incurred expense of $56, respectively, recognized in selling, general and administrative expenses for services provided to the Company by NantWorks and affiliates, net of services provided to NantWorks and affiliates. During the three and nine months ended September 30, 2019, the Company incurred $20 and $834, respectively, of expenses recognized in selling, general and administrative expenses for services provided to the Company by NantWorks and affiliates, net of services provided to NantWorks and affiliates. Related Party Receivables and Payables As of September 30, 2020 and December 31, 2019, the Company had related party receivables, net of $2,189 and $1,931, respectively, primarily consisting of a receivable from Ziosoft KK of $1,477 and $1,658, respectively, which was related to the sale of Qi Imaging. As of September 30, 2020 and December 31, 2019, respectively, the Company had related party payables, net and related party liabilities of $33,971 and $28,347, which primarily relate to amounts owed to NantWorks pursuant to the Shared Services Agreement, amounts owed to NantOmics under the Second Amended Reseller Agreement (defined below), and interest payable. The balance of the related party receivables and payables represent amounts paid by affiliates on behalf of the Company or vice versa. Assignment of The OpenNMS Group, Inc. On July 22, 2020, the Company entered into an assignment agreement (the “Assignment Agreement”) with Cambridge to acquire approximately 91% of The OpenNMS Group, Inc. for $5,577 in cash. Contemporaneously with the closing of the Assignment Agreement, OpenNMS issued call options to the Company consisting of, when exercised, cash payment of $278 and issuance of 56,769 shares of the Company's common stock in exchange for the 9% of the shares of OpenNMS common stock held by the remaining shareholders. These call options expired unexercised on September 30, 2020. As the Company and Cambridge are controlled by the Company's Chairman and CEO, the acquisition was treated as a transaction between entities under common control. The Company recognized the assets and liabilities transferred under the Assignment Agreement at their carrying amounts on July 22, 2020 based on Cambridge's historical cost, including the effects of purchase accounting from the November 1, 2019 acquisition of OpenNMS by Cambridge. The transaction did not cause a material change in the reporting entity, and the Company has not retrospectively adjusted its previously issued financial statements. The consolidation of OpenNMS at July 22, 2020 increased the Company's revenue and net loss by $361 and $467, respectively, during the three months ended September 30, 2020. The intangible assets acquired are amortized over the weighted-average useful life of 5.9 years. These definite-lived intangible assets include developed technology of $2,500 (6-year useful life), installed user base of $1,400 (6-year useful life), customer relationship of $1,000 (6-year useful life), and trade name of $300 (4-year useful life). Amounts Total cash consideration $ 5,577 Assets and liabilities of OpenNMS at assignment: Cash and cash equivalents 102 Goodwill 1,026 Intangible asset, net 4,553 Other assets 1,097 Other liabilities assumed (1,227) Net assets acquired at assignment 5,551 Noncontrolling interests (503) Recorded as distribution from additional paid-in capital $ 529 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 Amended 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 300,000 tests between June 19, 2015 and June 30, 2020; (ii) the second renewal option can be exercised if the Company completes at least 570,000 tests between July 1, 2020 and June 30, 2023; and (iii) the third renewal option can be exercised if the Company completes at least 760,000 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 noncancelable 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. On December 18, 2017, the Company and NantOmics executed Amendment No. 1 to the Second Amended Reseller Agreement. The Second Amended Reseller Agreement was amended to allow fee adjustments with respect to services completed by NantOmics between the amendment effective date of October 1, 2017 to June 30, 2018. On April 23, 2019, the Company and NantOmics executed Amendment No. 2 to the Second Amended Reseller Agreement. The Second Amended Reseller Agreement was amended to set a fixed fee with respect to services completed by NantOmics between the amendment effective date and the end of the Initial Term, December 31, 2020. As of September 30, 2020 and December 31, 2019, the Company had $3 and $197, respectively, of outstanding related party payables under the Second Amended Reseller Agreement. During the three and nine months ended September 30, 2020, direct costs of $3 and $48, respectively, were recorded as cost of revenue related to the Second Amended Reseller Agreement. During the three and nine months ended September 30, 2019, direct costs of $105 and $1,852, respectively, were recorded as cost of revenue related to the Second Amended Reseller Agreement. Cambridge Purchase Agreement On December 15, 2016, the Company entered into the Cambridge Purchase Agreement with Cambridge, an entity affiliated with the Company's Chairman and CEO, Dr. Patrick Soon-Shiong, to issue and sell $10,000 in aggregate principal amount of the Convertible Notes in a private placement pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. The Cambridge Purchase Agreement includes customary representations, warranties and covenants by the Company and customary closing conditions (see Note 11). The accrued and unpaid interest on the Convertible Notes held by Cambridge was $162 and $24 at September 30, 2020 and December 31, 2019, respectively, as part of current related party payables, net on the Consolidated Balance Sheets. Liquid Tumor Profiling Services Agreements In March 2018, NantHealth Labs, a wholly-owned subsidiary of the Company, and NantKwest, Inc. ("NantKwest"), an affiliate, entered into agreements whereby NantHealth Labs is providing liquid tumor profiling services to NantKwest for clinical trials, on an annual, stand-ready, basis from the date of the first test of each participant, with revenues recognized ratably over time for the period of the stand-ready obligation. In June 2018, NantHealth Labs entered into similar agreements to provide liquid tumor profiling services to Altor BioScience ("Altor"), ImmunityBio, Inc. ("ImmunityBio", formerly NantCell, Inc.), and NantBioScience, Inc. ("NantBio"), all affiliates of the Company. During the three and nine months ended September 30, 2020, the Company did not record any revenue under these agreements. During the three and nine months ended September 30, 2019, the Company recorded revenues of $43 and $459, respectively, under these agreements. As of both September 30, 2020 and December 31, 2019, the Company had $110 of accounts receivable from related parties due to these agreements. 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 were 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. On December 15, 2016, in connection with the offering of the Convertible Notes, the Company entered into a Second Amended and Restated Promissory Note which amends and restates the Amended and Restated Promissory Note, dated May 9, 2016, between the Company and NantCapital, to, among other things, extend the maturity date of the promissory note to June 15, 2022 and to subordinate the promissory note in right of payment to the Convertible Notes (see Note 11). No other terms of the promissory note were changed. As of September 30, 2020 and December 31, 2019, the total principal and interest outstanding on the promissory note amounted to $142,030 and $136,893, respectively. The accrued and unpaid interest on the promissory note as of September 30, 2020 and December 31, 2019 was $29,364 and $24,227, respectively, included as part of noncurrent related party liabilities on the Consolidated Balance Sheets. The Company can request additional advances subject to NantCapital approval. NantCapital has the option, but not the obligation, to require the Company to repay any such amount in cash, Series A-2 units of NantOmics (based on a per unit price of $1.484) held by the Company, 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 of 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. As of September 30, 2020, there was no outstanding balance on the promissory note. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of ConsolidationThe accompanying unaudited Consolidated Financial Statements include the accounts of NantHealth and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") 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 operations. In accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the Securities and Exchange Commission ("SEC"), these Consolidated Financial Statements do not include all of the information and disclosures required by GAAP for complete financial statements. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the fiscal year ended December 31, 2019. The results of operations of the entities disposed of are included in the unaudited Consolidated Financial Statements up to the date of disposal and, where appropriate, these operations have been reflected as discontinued operations. The accompanying Consolidated Balance Sheet as of December 31, 2019 has been derived from the audited Consolidated Financial Statements at that date. Assets and liabilities of the discontinued operations are presented separately in the asset and liability sections of the prior period balance sheet. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. |
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 on the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. |
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 consolidated 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 consolidated unit level. Ac cordingly, management has determined that the Company operates in one reportable segment. |
Recently Adopted and Upcoming Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Value Measurement (“ASU 2018-13”) , which modifies the disclosure requirements on fair value measurements. The adoption of this guidance has no impact on the Consolidated Financial Statements. Effective January 1, 2020, the Company adopted, on a prospective basis, ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the requirement for capitalizing implementation costs incurred by a customer in a cloud clouding arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , to simplify the accounting for income taxes. The new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. This ASU is effective for the Company's annual and interim periods beginning in January 1, 2021, and early adoption is permitted. The Company early adopted, on a prospective basis, this ASU in the first quarter of 2020. One of the provisions in this ASU is the change from the intraperiod tax allocation exception in ASC 740-20-45-7 to the incremental approach when there is a current period loss from continuing operations. ASU No. 2019-12 removed this exception, which impacted the Company's tax provision for (benefit from) income taxes between continuing operations and discontinued operations. Upcoming Accounting Standard Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) . This update simplifies the accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature models which require separate accounting for embedded conversion features. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. ASU No. 2020-06 is effective for fiscal periods beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the effects of this ASU. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , 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 No. 2016-13 is effective for fiscal periods beginning after December 15, 2022 and must be adopted as a cumulative effect adjustment to retained earnings. Early adoption is permitted. The Company is still evaluating the effects of this ASU. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not have, nor are believed by management to have, a material impact on the Company's present or future Consolidated Financial Statements. |
Revenue from Contract with Customer | Revenue from Contracts with Customers Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is recognized net of sales taxes collected from customers, which are subsequently remitted to governmental authorities. The Company acquired OpenNMS on July 22, 2020 (see Note 19). OpenNMS sells products and services directly to end-users and through resellers and generates revenue from the following sources: • Maintenance - Maintenance revenue includes technical support and maintenance on OpenNMS software during the contract term. Revenue is recognized over the maintenance or support term. The Company’s networking monitoring solutions typically consist of a term-based subscription to the OpenNMS software license and maintenance, which entitle customers to unspecified software updates and upgrades on a when-and-if-available basis. The Company has determined that its promises to transfer the software license and the related maintenance ar e not separately identifiable because the licensed software and the software updates and upgrades are highly interdependent and highly interrelated, working together to deliver a continuously updated networking monitoring solution. The Company therefore considers the software license and related maintenance obligations to represent a single, combined performance obligation with revenue recognized over the subscription period. • Professional services - Professional services revenue is generated from consulting services to help customers install, integrate and optimize OpenNMS, sponsored development, and training to assist customers deploy and use OpenNMS solutions. Sponsored development relates to professional services to build customer specific functionality, features, and enhancements into the OpenNMS open source platform. Revenue is recognized for most of our contracts over time as performance obligations are satisfied, as the Company is continuously transferring control to the customer. Typically, revenue is recognized over time using direct labor hours as a measure of progress. If any significant obligations to the customer remain post-delivery, typically involving obligations relating to acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled. Customers are generally billed as the Company satisfies its performance obligations. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones. Management assesses whether contracts entered into at, or near, the same time, should be combined, based on evaluation of the commercial objectives of the contracts. Contracts with Multiple Promises for Goods and Services The Company engages in various contracts with promises for multiple goods and services. In certain contracts, the Company recognizes software license, technical support, maintenance, consulting services, sponsored development services, and training as distinct performance obligations. Standalone selling prices (“SSP”) are required to be allocated and revenue recognized for each distinct performance obligation within each contract. Judgment is required to determine the SSP for each distinct performance obligation. The SSP for each performance obligation is determined by considering contracts in which the good or service is sold separately and other factors, including market conditions and the Company’s experience selling similar goods and services, as well as costs and margins achieved. In some cases, to estimate the SSP, the Company first estimates the selling price of each performance obligation for which an SSP is observable and then estimates the SSP of the remaining performance obligation as the residual contractual amount. Generally, consulting and sponsored development professional services do not involve significant integration or customization of the OpenNMS software. As such, consulting and sponsored development are considered distinct performance obligations. The Company has reseller arrangements with gross revenue presentation due to the Company’s control of goods and services before transfer to the customer. The Company assesses control in terms of relevant indicators of performance and pricing risk, such as which party negotiates pricing with the end customer and which party is ultimately responsible for fulfilling services, transferring goods and services, and ensuring support. |
Discontinued Operations and D_2
Discontinued Operations and Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedules of Discontinued Operations | The total gain on sale of the Connected Care Business consisted of the following: Cash received as consideration $ 47,250 Less: Carrying value of net assets sold (14,190) Less: Costs to sell (849) Gain on sale of the Connected Care Business $ 32,211 The carrying amounts of the major classes of assets and liabilities of the Company's discontinued operation as of December 31, 2019 were as follows: December 31, Accounts receivable, net $ 4,739 Inventories 798 Prepaid expenses and other current assets 790 Current assets of discontinued operation 6,327 Property, plant, and equipment, net 1,110 Goodwill 18,623 Operating lease right-of-use assets 1,603 Total assets of discontinued operation $ 27,663 Accounts payable $ 574 Accrued and other current liabilities 456 Deferred revenue 9,650 Current liabilities of discontinued operation 10,680 Deferred revenue, net of current 157 Deferred income taxes, net 210 Operating lease liabilities $ 1,282 Total liabilities of discontinued operation $ 12,329 The operating results of the Company's discontinued operation are as follows: Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Major classes of line items constituting pretax income (loss) of discontinued operations Net revenue $ — $ 3,752 $ 1,165 $ 12,906 Cost of revenue — (1,008) (467) (3,130) Selling, general and administrative 1 (1,428) (525) (4,259) Research and development (18) (1,306) (601) (3,729) Other expense, net — (2) (5) (17) Pretax income (loss) from discontinued operations related to major classes of pretax income (loss) (17) 8 (433) 1,771 Pretax gain on sale of the Connected Care Business — — 32,211 — Total pretax income (loss) from discontinued operations (17) 8 31,778 1,771 Provision for (benefit from) income taxes (1) 2 (217) 491 Total income (loss) from discontinued operations, net of tax $ (16) $ 6 $ 31,995 $ 1,280 The significant operating and investing cash and noncash items of the discontinued operation included on the Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 were as follows: Nine Months Ended 2020 2019 Cash flows from operating activities: Depreciation and amortization $ 10 $ 352 Gain on sale of the Connected Care Business 32,211 — Cash flows from investing activities: Net proceeds from sale of the Connected Care Business $ 46,401 $ — Purchases of property and equipment, including internal-use software 76 152 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets and Accrued and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Current Assets And Other Current Liabilities [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Prepaid expenses $ 3,624 $ 1,794 Securities litigation insurance receivable 242 16,627 Other current assets 594 920 Prepaid expenses and other current assets $ 4,460 $ 19,341 |
Schedule of Accrued and Other Current Liabilities | Accrued and other current liabilities as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Payroll and related costs $ 6,566 $ 8,106 Bookings Commitment (see Note 12) 1,625 1,122 Securities litigation expense payable 242 17,127 Interest payable 1,619 274 Operating lease liabilities 1,703 1,617 Other accrued and other current liabilities 3,078 3,742 Accrued and other current liabilities $ 14,833 $ 31,988 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment, net | Property, plant and equipment, net as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Computer equipment and software $ 13,771 $ 12,144 Furniture and equipment 1,325 2,292 Leasehold and building improvements 4,258 7,160 Property, plant, and equipment, excluding internal-use software 19,354 21,596 Less: Accumulated depreciation and amortization (13,911) (17,078) Property, plant and equipment, excluding internal-use software, net 5,443 4,518 Internal-use software 35,945 33,278 Construction in progress - Internal-use software 3,263 2,973 Less: Accumulated depreciation and amortization, internal-use software (30,419) (25,784) Internal-use software, net 8,789 10,467 Property, plant, and equipment, net $ 14,232 $ 14,985 |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The Company’s definite-lived intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Customer relationships $ 53,000 $ 52,000 Developed technologies 34,500 32,000 Trade name 3,300 3,000 Installed user base 1,400 — 92,200 87,000 Less: Accumulated amortization (41,998) (35,152) Intangible assets, net $ 50,202 $ 51,848 |
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, 2020 is as follows: Amounts Remainder of 2020 $ 2,232 2021 8,930 2022 8,930 2023 4,346 2024 4,283 2025 4,147 Thereafter 17,334 Total future intangible amortization expense $ 50,202 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The Company used the following summarized financial information for NantOmics for the nine months ended June 30, 2020, and the three and nine months ended June 30, 2019, to record its equity method losses for the nine months ended September 30, 2020 and the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended 2019 2020 2019 Revenues $ 847 $ 349 $ 3,913 Gross loss (1,239) (1,641) (2,573) Loss from operations (4,436) (7,806) (17,541) Impairment on equity investments — — (12,265) Net loss (3,333) (2,618) (26,263) Net loss attributable to NantOmics (3,296) (2,559) (26,005) |
Convertible Notes (Tables)
Convertible Notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Debt | The following table summarizes how the issuance of the Convertible Notes is reflected in the Company's Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019. Related Party Others Total Balance as of September 30, 2020 Gross proceeds $ 10,000 $ 97,000 $ 107,000 Unamortized debt discounts and deferred financing offering costs (732) (7,977) (8,709) Net carrying amount $ 9,268 $ 89,023 $ 98,291 Balance as of December 31, 2019 Gross proceeds $ 10,000 $ 97,000 $ 107,000 Unamortized debt discounts and deferred financing offering costs (1,136) (12,352) (13,488) Net carrying amount $ 8,864 $ 84,648 $ 93,512 |
Schedule of Interest Expense | The following tables set forth the Company's interest expense recognized in the Company's Consolidated Statements of Operations: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Related Party Others Total Related Party Others Total Accrued coupon interest expense $ 138 $ 1,333 $ 1,471 $ 412 $ 4,001 $ 4,413 Amortization of debt discounts 135 1,318 1,453 393 3,834 4,227 Amortization of deferred financing offering costs 4 187 191 11 541 552 Total convertible notes interest expense $ 277 $ 2,838 $ 3,115 $ 816 $ 8,376 $ 9,192 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Related Party Others Total Related Party Others Total Accrued coupon interest expense $ 137 $ 1,334 $ 1,471 $ 411 $ 4,002 $ 4,413 Amortization of debt discounts 120 1,160 1,280 350 3,372 3,722 Amortization of deferred financing offering costs 3 163 166 9 476 485 Total convertible notes interest expense $ 260 $ 2,657 $ 2,917 $ 770 $ 7,850 $ 8,620 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Liabilities Bookings Commitment $ 24,553 $ — $ — $ 24,553 Interest make-whole derivative 7 — — 7 December 31, 2019 Total fair value Quoted price in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Liabilities Bookings Commitment $ 21,983 $ — $ — $ 21,983 Interest make-whole derivative — — — — |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables set forth a summary of changes in the fair value of Level 3 liabilities for the three and nine months ended September 30, 2020: June 30, 2020 Transfers in (out) (1) Change in fair value recognized in earnings September 30, 2020 Liabilities Interest make-whole derivative - related party and others $ 63 $ — $ (56) $ 7 Bookings Commitment 25,710 (500) (657) 24,553 $ 25,773 $ (500) $ (713) $ 24,560 December 31, 2019 Transfer in (out) (1) Change in fair value recognized in earnings September 30, 2020 Liabilities Interest make-whole derivative - related party and others $ — $ — $ 7 $ 7 Bookings Commitment 21,983 (500) 3,070 24,553 $ 21,983 $ (500) $ 3,077 $ 24,560 (1) Transfers out of the Bookings Commitment fair value liability relates to the Annual Minimum Commitment, which was recorded in Accrued and other current liabilities. Fair Value of Convertible Notes held at amortized cost As of September 30, 2020 and December 31, 2019, the fair value and carrying value of the Company's Convertible Notes were: Fair Value Carrying Value Face Value 5.5% convertible senior notes due December 15, 2021: Balance as of September 30, 2020 Related party $ 9,255 $ 9,268 $ 10,000 Others 89,774 89,023 97,000 $ 99,029 $ 98,291 $ 107,000 Balance as of December 31, 2019 Related party $ 6,727 $ 8,864 $ 10,000 Others 65,257 84,648 97,000 $ 71,984 $ 93,512 $ 107,000 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Lease, Cost | Lease expense, charged to selling, general and administrative expense, for the three and nine months September 30, 2020 and 2019 consisted of: Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Operating lease cost $ 604 $ 594 $ 1,814 $ 1,788 Short-term lease cost 257 252 768 804 Variable cost 104 77 353 172 Sublease income (52) (52) (156) (156) Total lease cost $ 913 $ 871 $ 2,779 $ 2,608 Other information regarding the Company's leases: Nine Months Ended September 30, 2020 2019 Operating cash flows for operating leases $ (2,056) $ (1,828) Right-of-use assets obtained in exchange for new operating lease liabilities $ 110 $ — Operating lease liabilities arising from obtaining right-of-use assets $ 110 $ — Weighted average remaining lease term - operating leases 5.3 years 6.2 years Weighted average discount rate - operating leases 11 % 11 % |
Operating Lease Maturities | Future minimum lease payments under the Company's operating leases at September 30, 2020 were: Maturity Analysis Amounts Remainder of 2020 $ 685 2021 2,621 2022 2,662 2023 2,673 2024 2,519 2025 666 Thereafter 1,687 Total future minimum lease payments 13,513 Less: imputed interest (3,302) Total $ 10,211 As reported on the Consolidated Balance Sheet Accrued and other current liabilities $ 1,703 Operating lease liabilities 8,508 $ 10,211 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table reflects the components of stock-based compensation expense recognized in the Company's Consolidated Statements of Operations: Three Months Ended Nine Months Ended September 30, 2020 2019 2020 2019 Phantom units: Cost of revenue $ — 9 $ 27 $ 25 Selling, general and administrative — 12 (23) 39 Research and development — 18 36 11 Total phantom units stock-based compensation expense — 39 40 75 Stock options: Cost of revenue 27 — 55 — Selling, general and administrative 483 75 947 90 Research and development 75 — 118 — Total stock options stock-based compensation expense 585 75 1,120 90 Restricted stock units: Cost of revenue — 6 9 11 Selling, general and administrative 50 377 571 1,580 Research and development — 24 23 41 Total restricted stock units stock-based compensation expense 50 407 603 1,632 Discontinued operations — 5 (79) 52 Total stock-based compensation expense 635 526 1,684 1,849 Amount capitalized to internal-use software 23 14 71 105 Total stock-based compensation cost $ 658 $ 540 $ 1,755 $ 1,954 |
Schedule of Share-based Compensation, Activity | The following table summarizes the activity related to the unvested phantom units during the three and nine months ended September 30, 2020: Number of Units Weighted- Average Grant Date Value Per Phantom Unit Unvested phantom units outstanding - December 31, 2019 120,562 $ 11.49 Forfeited (5,454) $ 14.24 Unvested phantom units outstanding - March 31, 2020 115,108 $ 11.38 Vested (111,699) $ 11.32 Forfeited (3,409) $ 14.30 Unvested phantom units outstanding - June 30, 2020 — $ — Unvested phantom units outstanding - September 30, 2020 — $ — |
Activity related to unvested stock options | The following table summarizes the activity related to stock options during the three and nine months ended September 30, 2020: Number of Shares Weighted-Average Exercise Price Stock options outstanding - December 31, 2019 5,815,724 $ 0.56 Forfeited (270,000) $ 0.55 Stock options outstanding - March 31, 2020 5,545,724 $ 0.56 Granted 300,000 $ 2.52 Forfeited (265,000) $ 0.55 Stock options outstanding - June 30, 2020 5,580,724 $ 0.67 Granted 4,895,000 $ 3.84 Exercised (190,000) $ 0.55 Forfeited (135,000) $ 2.01 Stock options outstanding - September 30, 2020 10,150,724 $ 2.18 Stock options exercisable - September 30, 2020 2,860,724 $ 0.57 |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the activity related to the unvested restricted stock units during the three and nine months ended September 30, 2020: Number of Units Weighted-Average Grant Date Fair Value Unvested restricted stock units outstanding - December 31, 2019 705,415 $ 2.68 Granted 179,558 $ 1.81 Forfeited (10,954) $ 3.39 Unvested restricted stock units outstanding - March 31, 2020 874,019 $ 2.49 Vested (540,711) $ 3.10 Forfeited (80,000) $ 1.14 Unvested restricted stock units outstanding - June 30, 2020 253,308 $ 1.64 Unvested restricted stock units outstanding - September 30, 2020 253,308 $ 1.64 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Common Stock Common Stock Common Stock Common Stock Net income (loss) per share numerator: Net loss from continuing operations $ (11,026) $ (16,380) $ (68,221) $ (52,175) Net loss attributable to noncontrolling interests (42) — (42) — Net loss from continuing operations attributable to NantHealth (10,984) (16,380) (68,179) (52,175) Net (loss) income from discontinued operations attributable to NantHealth (16) 3 31,955 1,162 Net loss attributable to NantHealth for basic and diluted net loss per share $ (11,000) $ (16,377) $ (36,224) $ (51,013) Weighted-average shares for basic net income (loss) per share 110,929,357 110,619,905 110,859,611 110,261,279 Effect of dilutive securities — — — — Weighted-average shares for dilutive net income (loss) per share 110,929,357 110,619,905 110,859,611 110,261,279 Basic and diluted net income (loss) per share attributable to NantHealth: Continuing operations - common stock $ (0.10) $ (0.15) $ (0.62) $ (0.47) Discontinued operations - common stock $ — $ — $ 0.29 $ 0.01 Total net loss per share - common stock $ (0.10) $ (0.15) $ (0.33) $ (0.46) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following number of potential common shares at the end of each period were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented: September 30, 2020 2019 Unvested restricted stock — 1 Unvested phantom units — 121,244 Unvested restricted stock units 253,308 1,868,224 Unexercised stock options 10,150,724 710,892 Convertible notes 8,815,655 8,815,655 |
Related Party Disclosures (Tabl
Related Party Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Assignment of OpenNMS | Amounts Total cash consideration $ 5,577 Assets and liabilities of OpenNMS at assignment: Cash and cash equivalents 102 Goodwill 1,026 Intangible asset, net 4,553 Other assets 1,097 Other liabilities assumed (1,227) Net assets acquired at assignment 5,551 Noncontrolling interests (503) Recorded as distribution from additional paid-in capital $ 529 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies Narrative (Details) | 9 Months Ended |
Sep. 30, 2020business_activitysegment | |
Accounting Policies [Abstract] | |
Number of business activities | business_activity | 1 |
Number of reportable segments | segment | 1 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||||
Revenue recognized | $ 2,089 | $ 1,760 | $ 5,633 | $ 5,905 | |
Capitalized contract cost | 858 | 858 | $ 1,455 | ||
Amortization of contract costs | $ 233 | $ 190 | $ 701 | $ 558 |
Revenue Recognition Performance
Revenue Recognition Performance Obligations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Unfulfilled performance obligations | $ 4,769 |
Description of timing of performance obligations | expected to be fulfilled within nine years |
Discontinued Operations and D_3
Discontinued Operations and Divestitures - Narrative (Details) - USD ($) $ in Thousands | Feb. 03, 2020 | Jun. 07, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Loss on sale of business | [1] | $ (32,211) | $ 582 | ||
Connected Care Business | Discontinued Operations, Disposed of by Sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash received as consideration | $ 47,250 | ||||
Home health care services | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash received as consideration | $ 300 | ||||
Loss on sale of business | $ 582 | ||||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Discontinued Operations and D_4
Discontinued Operations and Divestitures - Schedule of Gain on Sale of Connected Care Business (Details) - Connected Care Business - Discontinued Operations, Disposed of by Sale - USD ($) $ in Thousands | Feb. 03, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash received as consideration | $ 47,250 | ||||
Less: Carrying value of net assets sold | (14,190) | ||||
Less: Costs to sell | $ (849) | ||||
Gain on sale of the Connected Care Business | $ 0 | $ 0 | $ 32,211 | $ 0 |
Discontinued Operations and D_5
Discontinued Operations and Divestitures - Schedule of Major Classes of Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Current assets of discontinued operation | $ 0 | $ 6,327 |
Goodwill | 18,623 | 18,623 |
Current liabilities of discontinued operation | $ 0 | 10,680 |
Connected Care Business | Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Accounts receivable, net | 4,739 | |
Inventories | 798 | |
Prepaid expenses and other current assets | 790 | |
Current assets of discontinued operation | 6,327 | |
Property, plant, and equipment, net | 1,110 | |
Goodwill | 18,623 | |
Operating lease right-of-use assets | 1,603 | |
Total assets of discontinued operation | 27,663 | |
Accounts payable | 574 | |
Accrued and other current liabilities | 456 | |
Deferred revenue | 9,650 | |
Current liabilities of discontinued operation | 10,680 | |
Deferred revenue, net of current | 157 | |
Deferred income taxes, net | 210 | |
Operating lease liabilities | 1,282 | |
Total liabilities of discontinued operation | $ 12,329 |
Discontinued Operations and D_6
Discontinued Operations and Divestitures - Schedule of Operating Results of Discontinued Operations (Details) - Connected Care Business - Discontinued Operations, Disposed of by Sale - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net revenue | $ 0 | $ 3,752 | $ 1,165 | $ 12,906 |
Cost of revenue | 0 | (1,008) | (467) | (3,130) |
Selling, general and administrative | 1 | (1,428) | (525) | (4,259) |
Research and development | (18) | (1,306) | (601) | (3,729) |
Other expense, net | 0 | (2) | (5) | (17) |
Pretax income (loss) from discontinued operations related to major classes of pretax income (loss) | (17) | 8 | (433) | 1,771 |
Gain on sale of the Connected Care Business | 0 | 0 | 32,211 | 0 |
Total pretax income (loss) from discontinued operations | (17) | 8 | 31,778 | 1,771 |
Provision for (benefit from) income taxes | (1) | 2 | (217) | 491 |
Total income (loss) from discontinued operations, net of tax | $ (16) | $ 6 | $ 31,995 | $ 1,280 |
Discontinued Operations and D_7
Discontinued Operations and Divestitures - Schedule of Significant Operating and Investing Cash and Noncash Items (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Cash flows from investing activities: | |||||
Net proceeds from sale of the Connected Care Business | [1] | $ 46,401 | $ 300 | ||
Connected Care Business | Discontinued Operations, Disposed of by Sale | |||||
Cash flows from operating activities: | |||||
Depreciation and amortization | 10 | 352 | |||
Gain on sale of the Connected Care Business | $ 0 | $ 0 | 32,211 | 0 | |
Cash flows from investing activities: | |||||
Net proceeds from sale of the Connected Care Business | 46,401 | 0 | |||
Purchases of property and equipment, including internal-use software | $ 76 | $ 152 | |||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Allowance for doubtful accounts | $ 113 | $ 95 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets and Accrued and Other Current Liabilities Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Other Current Assets And Other Current Liabilities [Abstract] | ||
Prepaid expenses | $ 3,624 | $ 1,794 |
Securities litigation insurance receivable | 242 | 16,627 |
Other current assets | 594 | 920 |
Prepaid expenses and other current assets | $ 4,460 | $ 19,341 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets and Accrued and Other Current Liabilities Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Other Current Assets And Other Current Liabilities [Abstract] | ||
Payroll and related costs | $ 6,566 | $ 8,106 |
Bookings Commitment | 1,625 | 1,122 |
Securities litigation expense payable | 242 | 17,127 |
Interest payable | 1,619 | 274 |
Operating lease liabilities | 1,703 | 1,617 |
Other accrued and other current liabilities | 3,078 | 3,742 |
Accrued and other current liabilities | $ 14,833 | $ 31,988 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment, net | $ 14,232 | $ 14,232 | $ 14,985 | ||
Depreciation expense | 1,885 | $ 3,104 | 5,692 | $ 9,954 | |
Amount capitalized to internal use software | 520 | 1,011 | 2,673 | 2,907 | |
Property, plant, and equipment, excluding internal-use software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment | 19,354 | 19,354 | 21,596 | ||
Less: Accumulated depreciation and amortization | (13,911) | (13,911) | (17,078) | ||
Property, plant, and equipment, net | 5,443 | 5,443 | 4,518 | ||
Computer equipment and software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment | 13,771 | 13,771 | 12,144 | ||
Furniture and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment | 1,325 | 1,325 | 2,292 | ||
Leasehold and building improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment | 4,258 | 4,258 | 7,160 | ||
Internal-use software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment | 35,945 | 35,945 | 33,278 | ||
Construction in progress - Internal-use software | 3,263 | 3,263 | 2,973 | ||
Less: Accumulated depreciation and amortization | (30,419) | (30,419) | (25,784) | ||
Property, plant, and equipment, net | 8,789 | 8,789 | $ 10,467 | ||
Depreciation expense | $ 1,489 | $ 2,174 | $ 4,545 | $ 7,122 |
Intangible Assets, net Schedule
Intangible Assets, net Schedule of Definite-Lived Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 92,200 | $ 87,000 |
Less: Accumulated amortization | (41,998) | (35,152) |
Intangible assets, net | 50,202 | 51,848 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 53,000 | 52,000 |
Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 34,500 | 32,000 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 3,300 | 3,000 |
Installed user base | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 1,400 | $ 0 |
Intangible Assets, net Narrativ
Intangible Assets, net Narrative (Details) - USD ($) $ in Thousands | Jul. 22, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization expense | $ 2,180 | $ 2,197 | $ 6,199 | $ 6,681 | ||
Impairment of intangible asset | $ 0 | $ 0 | $ 3,977 | $ 0 | $ 3,977 | |
OpenNMS Assignment | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Finite lived intangible asset acquired in assignment | $ 5,200 | |||||
Accumulated amortization of intangible asset | $ (647) | |||||
Minimum | OpenNMS Assignment | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated lives of definite-lived intangible assets | 4 years | |||||
Maximum | OpenNMS Assignment | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated lives of definite-lived intangible assets | 6 years |
Intangible Assets, net Schedu_2
Intangible Assets, net Schedule of Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2020 | $ 2,232 | |
2021 | 8,930 | |
2022 | 8,930 | |
2023 | 4,346 | |
2024 | 4,283 | |
2025 | 4,147 | |
Thereafter | 17,334 | |
Intangible assets, net | $ 50,202 | $ 51,848 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jul. 22, 2020 | Dec. 31, 2019 |
Acquired Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 98,333 | $ 97,307 | |
Discontinued operations, goodwill | $ 18,623 | $ 18,623 | |
OpenNMS Assignment | Equity Method Investee | |||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 1,026 |
Investments Narrative (Details)
Investments Narrative (Details) - USD ($) $ in Thousands | Feb. 28, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | May 31, 2018 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2015 | Dec. 31, 2019 | ||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Loss from related party equity method investment | $ 0 | $ 1,983 | $ 31,702 | [1] | $ 6,401 | [1] | |||||
Investment in related party | 0 | 0 | $ 31,702 | ||||||||
NantOmics | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Number of A-2 units purchased (in shares) | 9,088,362 | 564,779 | 169,074,539 | ||||||||
Aggregate purchase price | $ 250,774 | ||||||||||
Ownership percentage | 13.58% | 14.28% | |||||||||
Difference between the carrying value and equity, intangible assets | $ 28,195 | ||||||||||
Difference between the carrying value and equity, goodwill | $ 14,382 | ||||||||||
Other-than temporary impairment | $ 28,227 | ||||||||||
Loss from related party equity method investment | $ 0 | $ 1,983 | $ 31,702 | $ 6,401 | |||||||
Investment in related party | $ 0 | ||||||||||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Investments Summarized Financia
Investments Summarized Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | ||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Gross loss | $ 11,246 | $ 11,240 | $ 32,497 | $ 32,517 | |||||||
Loss from operations | (6,835) | (6,784) | (19,504) | (27,968) | |||||||
Net loss attributable to NantOmics | (11,000) | $ (48,289) | (16,377) | $ (14,713) | $ (19,923) | (36,224) | (51,013) | [1] | |||
Net loss | $ (11,042) | $ 23,065 | $ (16,377) | $ (36,266) | $ (51,013) | ||||||
NantOmics | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Revenues | 847 | $ 349 | $ 3,913 | ||||||||
Gross loss | (1,239) | (1,641) | (2,573) | ||||||||
Loss from operations | (4,436) | (7,806) | (17,541) | ||||||||
Impairment on equity investments | 0 | 0 | (12,265) | ||||||||
Net loss attributable to NantOmics | (3,296) | (2,559) | (26,005) | ||||||||
Net loss | $ (3,333) | $ (2,618) | $ (26,263) | ||||||||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Convertible Notes - Narrative (
Convertible Notes - Narrative (Details) | Dec. 21, 2016USD ($)Day$ / shares | Dec. 31, 2016USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||
Remaining life of convertible notes | 15 months | |||
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Face value of debt | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 |
Interest rate on debt | 5.50% | 5.50% | ||
Proceeds from issuance of convertible notes, net of offering costs | $ 102,714,000 | |||
Initial purchasers' discount and debt issuance costs | $ 4,286,000 | 4,286,000 | ||
Conversion rate of convertible debt | 82.3893 | |||
Conversion price of convertible debt (usd per share) | $ / shares | $ 12.14 | |||
Threshold of trading days | Day | 20 | |||
Threshold consecutive trading days | Day | 30 | |||
Threshold percentage of stock price trigger | 120.00% | |||
Business day period trading price evaluated | Day | 5 | |||
Number of consecutive trading days trading price evaluated | Day | 5 | |||
Threshold percentage of principal amount | 98.00% | |||
Percent of principal | 100.00% | |||
Period after conversion date to trigger interest make-whole feature | 3 years | |||
Total liability component of convertible notes on date of issuance | $ 83,079,000 | |||
Interest make-whole derivative on date of issuance | 1,499,000 | |||
Carrying value of convertible notes on date of issuance | 81,580,000 | $ 98,291,000 | $ 93,512,000 | |
Conversion option reported in equity as additional paid-in capital | 23,921,000 | |||
Purchasers' initial discount | 972,000 | |||
Deferred financing offering costs | $ 3,314,000 | |||
Effective interest rate | 12.82% | |||
Convertible Debt | Initial Purchasers Agreement | ||||
Debt Instrument [Line Items] | ||||
Face value of debt | 90,000,000 | |||
Proceeds from issuance of convertible notes, net of offering costs | 92,797,000 | |||
Convertible Debt | Cambridge Purchase Agreement | ||||
Debt Instrument [Line Items] | ||||
Face value of debt | 10,000,000 | |||
Proceeds from issuance of convertible notes, net of offering costs | 9,917,000 | |||
Convertible Debt | Pursuant to the exercise of the overallotment by the Initial Purchasers | ||||
Debt Instrument [Line Items] | ||||
Face value of debt | $ 7,000,000 | |||
Convertible Debt | Measurement Input, Discount Rate | ||||
Debt Instrument [Line Items] | ||||
Discount rate | 2.00% |
Convertible Notes - Summary of
Convertible Notes - Summary of Issuance of Convertible Debt (Details) - Convertible Debt - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 21, 2016 |
Debt Instrument [Line Items] | |||
Gross proceeds | $ 107,000 | $ 107,000 | |
Unamortized debt discounts and deferred financing offering costs | (8,709) | (13,488) | |
Net carrying amount | 98,291 | 93,512 | $ 81,580 |
Related Party | |||
Debt Instrument [Line Items] | |||
Gross proceeds | 10,000 | 10,000 | |
Unamortized debt discounts and deferred financing offering costs | (732) | (1,136) | |
Net carrying amount | 9,268 | 8,864 | |
Others | |||
Debt Instrument [Line Items] | |||
Gross proceeds | 97,000 | 97,000 | |
Unamortized debt discounts and deferred financing offering costs | (7,977) | (12,352) | |
Net carrying amount | $ 89,023 | $ 84,648 |
Convertible Notes - Interest Ex
Convertible Notes - Interest Expense Incurred (Details) - Convertible Debt - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | ||||
Accrued coupon interest expense | $ 1,471 | $ 1,471 | $ 4,413 | $ 4,413 |
Amortization of debt discounts | 1,453 | 1,280 | 4,227 | 3,722 |
Amortization of deferred financing offering costs | 191 | 166 | 552 | 485 |
Total convertible notes interest expense | 3,115 | 2,917 | 9,192 | 8,620 |
Related Party | ||||
Debt Instrument [Line Items] | ||||
Accrued coupon interest expense | 138 | 137 | 412 | 411 |
Amortization of debt discounts | 135 | 120 | 393 | 350 |
Amortization of deferred financing offering costs | 4 | 3 | 11 | 9 |
Total convertible notes interest expense | 277 | 260 | 816 | 770 |
Others | ||||
Debt Instrument [Line Items] | ||||
Accrued coupon interest expense | 1,333 | 1,334 | 4,001 | 4,002 |
Amortization of debt discounts | 1,318 | 1,160 | 3,834 | 3,372 |
Amortization of deferred financing offering costs | 187 | 163 | 541 | 476 |
Total convertible notes interest expense | $ 2,838 | $ 2,657 | $ 8,376 | $ 7,850 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Liabilities | ||
Bookings Commitment | $ 1,625 | $ 1,122 |
Recurring basis | ||
Liabilities | ||
Bookings Commitment | 24,553 | 21,983 |
Interest make-whole derivative | 7 | 0 |
Recurring basis | Quoted price in active markets for identical assets (Level 1) | ||
Liabilities | ||
Bookings Commitment | 0 | 0 |
Interest make-whole derivative | 0 | 0 |
Recurring basis | Significant other observable inputs (Level 2) | ||
Liabilities | ||
Bookings Commitment | 0 | 0 |
Interest make-whole derivative | 0 | 0 |
Recurring basis | Significant unobservable inputs (Level 3) | ||
Liabilities | ||
Bookings Commitment | 24,553 | 21,983 |
Interest make-whole derivative | $ 7 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | Dec. 30, 2017 | Dec. 21, 2016 | Dec. 31, 2016 | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Minimum booking commitments | $ 95,000 | ||||
Bookings commitment period | 10 years | ||||
Bookings commitment annual minimum | $ 500,000 | ||||
Booking commitments current annual accrual | $ 1,200,000 | $ 700,000 | |||
Percentage of shortfall payable | 70.00% | ||||
Commission percentage | 30.00% | ||||
Impact of adverse change in discount rate | $ 3,312,000 | ||||
Sensitivity analysis, adverse change in discount rate | 2.00% | ||||
Convertible Debt | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Face value of debt | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 | 107,000,000 | |
Period to lapse to trigger interest make-whole feature | 1 year | ||||
Threshold period used to compute interest payment | 3 years | ||||
Convertible Debt | Measurement Input, Discount Rate | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Discount rate | 2.00% | ||||
Convertible Debt | Convertible Debt, Related Party | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Face value of debt | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | ||
Minimum | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Cost of debt range used for discounting | 15.00% | 15.00% | |||
Maximum | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Cost of debt range used for discounting | 16.00% | 17.00% | |||
Derivative Financial Instruments, Liabilities | Measurement Input, Discount Rate | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Discount rate | 2.00% |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in the Fair Value of Level 3 Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 25,773 | $ 21,983 |
Transfers in (out) | (500) | (500) |
Change in fair value | (713) | 3,077 |
Ending balance | 24,560 | 24,560 |
Interest make-whole derivative - related party and others | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 63 | 0 |
Transfers in (out) | 0 | 0 |
Change in fair value | (56) | 7 |
Ending balance | 7 | 7 |
Bookings Commitment | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 25,710 | 21,983 |
Transfers in (out) | (500) | (500) |
Change in fair value | (657) | 3,070 |
Ending balance | $ 24,553 | $ 24,553 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Debt (Details) - Convertible Debt - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2016 | Dec. 21, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Face Value | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 |
Interest rate on debt | 5.50% | 5.50% | ||
Fair Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair Value | 99,029,000 | 71,984,000 | ||
Carrying Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair Value | 98,291,000 | 93,512,000 | ||
Related Party | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Face Value | 10,000,000 | 10,000,000 | $ 10,000,000 | |
Related Party | Fair Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair Value | 9,255,000 | 6,727,000 | ||
Related Party | Carrying Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair Value | 9,268,000 | 8,864,000 | ||
Others | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Face Value | 97,000,000 | 97,000,000 | ||
Others | Fair Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair Value | 89,774,000 | 65,257,000 | ||
Others | Carrying Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair Value | $ 89,023,000 | $ 84,648,000 |
Leases Narrative (Details)
Leases Narrative (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Term for option to terminate leases | 1 year |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Original lease term | 1 year |
Remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Original lease term | 11 years |
Remaining lease term | 9 years |
Leases Lease Expense (Details)
Leases Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 604 | $ 594 | $ 1,814 | $ 1,788 |
Short-term lease cost | 257 | 252 | 768 | 804 |
Variable cost | 104 | 77 | 353 | 172 |
Sublease income | (52) | (52) | (156) | (156) |
Total lease cost | $ 913 | $ 871 | $ 2,779 | $ 2,608 |
Leases Additional Operating Lea
Leases Additional Operating Lease Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating cash flows for operating leases | $ (2,056) | $ (1,828) |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 110 | $ 0 |
Weighted average remaining lease term - operating leases | 5 years 3 months 18 days | 6 years 2 months 12 days |
Weighted average discount rate - operating leases | 11.00% | 11.00% |
Operating Lease Liability Created By Obtaining Right-Of-Use Assets | $ 110 | $ 0 |
Leases Operating Lease Maturity
Leases Operating Lease Maturity Analysis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remainder of 2020 | $ 685 | |
2021 | 2,621 | |
2022 | 2,662 | |
2023 | 2,673 | |
2024 | 2,519 | |
2025 | 666 | |
Thereafter | 1,687 | |
Total future minimum lease payments | 13,513 | |
Less: imputed interest | (3,302) | |
Total | 10,211 | |
Current operating lease liabilities | 1,703 | $ 1,617 |
Noncurrent operating lease liabilities | $ 8,508 | $ 9,728 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Nov. 05, 2020 | Oct. 20, 2020 | Dec. 06, 2019 | Oct. 23, 2019 | Jun. 05, 2019 | Apr. 04, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2016 | Dec. 21, 2016 | Jan. 04, 2016 |
Related Party Transaction [Line Items] | |||||||||||
Related party promissory note | $ 112,666,000 | $ 112,666,000 | |||||||||
Litigation settlement | $ 16,500,000 | ||||||||||
Damages sought | $ 2,900,000 | $ 2,300,000 | $ 3,000,000 | ||||||||
Insurance recoveries | 242,000 | 16,627,000 | |||||||||
Subsequent Event | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Litigation settlement | $ 1,600,000 | $ 1,600,000 | |||||||||
Affiliated Entity | Promissory Notes With NantCapital | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party promissory note | 142,030,000 | 136,893,000 | $ 112,666,000 | ||||||||
Convertible Debt | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Face value of debt | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 | $ 107,000,000 | |||||||
Interest rate on debt | 5.50% | 5.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Provision for (benefit from) income taxes | $ (77) | $ 529 | $ (174) | $ 659 |
Effective tax rate | 0.70% | (3.13%) | 0.26% | (1.25%) |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) | 9 Months Ended | |
Sep. 30, 2020vote$ / sharesshares | Dec. 31, 2019$ / sharesshares | |
Equity [Abstract] | ||
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 | |
Preferred stock, par value (usd per share) | $ / shares | $ 0.0001 | |
Number of votes per unit held | vote | 1 | |
Preferred stock outstanding (in shares) | 0 | 0 |
Stock-Based Compensation Compon
Stock-Based Compensation Components of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Amount capitalized to internal-use software | $ 23 | $ 14 | $ 71 | $ 105 |
Total stock-based compensation cost | 658 | 540 | 1,755 | 1,954 |
Phantom units: | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 39 | 40 | 75 |
Phantom units: | Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 9 | 27 | 25 |
Phantom units: | Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 12 | (23) | 39 |
Phantom units: | Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 18 | 36 | 11 |
Stock options | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 585 | 75 | 1,120 | 90 |
Stock options | Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 27 | 0 | 55 | 0 |
Stock options | Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 483 | 75 | 947 | 90 |
Stock options | Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 75 | 0 | 118 | 0 |
Restricted stock units: | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 50 | 407 | 603 | 1,632 |
Restricted stock units: | Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 6 | 9 | 11 |
Restricted stock units: | Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 50 | 377 | 571 | 1,580 |
Restricted stock units: | Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 24 | 23 | 41 |
Discontinued operations | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 0 | 5 | (79) | 52 |
Continuing and Discontinued Operations | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 635 | $ 526 | $ 1,684 | $ 1,849 |
Stock-Based Compensation Narrat
Stock-Based Compensation Narrative (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)shares | |
Unvested phantom units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock issued (in shares) | shares | 64,048 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized stock based compensation | $ | $ 12,524 |
Weighted average period of recognition for stock based compensation expense recognition (in years) | 3 years |
Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized stock based compensation | $ | $ 326 |
Weighted average period of recognition for stock based compensation expense recognition (in years) | 1 year |
The 2016 Equity Incentive Plan | Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock issued (in shares) | shares | 391,738 |
Stock-Based Compensation Activi
Stock-Based Compensation Activity of Phantom Units (Details) - Unvested phantom units - $ / shares | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Number of Units | ||||
Unvested units outstanding, beginning balance (in units) | 115,108 | 120,562 | ||
Vested (in units) | (111,699) | |||
Forfeited (in units) | (3,409) | (5,454) | ||
Unvested units outstanding, ending balance (in units) | 0 | 115,108 | ||
Weighted- Average Grant Date Value Per Phantom Unit | ||||
Unvested restricted stock units outstanding, ending balance (in dollars per unit) | $ 0 | $ 11.38 | $ 0 | $ 11.49 |
Vested (in dollars per unit) | 11.32 | |||
Forfeited (in dollars per unit) | 14.30 | 14.24 | ||
Unvested restricted stock units outstanding, beginning balance (in dollars per unit) | $ 0 | $ 11.38 | $ 0 | $ 11.49 |
Stock-Based Compensation Acti_2
Stock-Based Compensation Activity of Stock based Compensation Units (Details) - $ / shares | 3 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Number of Shares | |||
Stock options outstanding, beginning balance (in shares) | 5,580,724 | 5,545,724 | 5,815,724 |
Granted (in shares) | 4,895,000 | 300,000 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 0.55 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | (190,000) | ||
Forfeited (in shares) | (135,000) | (265,000) | (270,000) |
Stock options outstanding, ending balance (in shares) | 10,150,724 | 5,580,724 | 5,545,724 |
Stock options exercisable - September 30, 2020 (in shares) | 2,860,724 | ||
Weighted-Average Exercise Price | |||
Stock options outstanding, beginning balance (in dollars per share) | $ 0.67 | $ 0.56 | $ 0.56 |
Granted (in dollars per share) | 3.84 | 2.52 | |
Forfeited (in dollars per share) | 2.01 | 0.55 | 0.55 |
Stock options outstanding, ending balance (in dollars per share) | 2.18 | $ 0.67 | $ 0.56 |
Stock options exercisable - September 30, 2020 (in dollars per share) | $ 0.57 |
Stock-Based Compensation Acti_3
Stock-Based Compensation Activity of Restricted Stock Units (Details) - Restricted Stock Units - $ / shares | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Number of Units | ||||
Unvested units outstanding, beginning balance (in units) | 874,019 | 705,415 | ||
Granted (in units) | 179,558 | |||
Vested (in units) | (540,711) | |||
Forfeited (in units) | (80,000) | (10,954) | ||
Unvested units outstanding, ending balance (in units) | 253,308 | 874,019 | ||
Weighted-Average Grant Date Fair Value | ||||
Unvested restricted stock units outstanding, ending balance (in dollars per unit) | $ 1.64 | $ 2.49 | $ 1.64 | $ 2.68 |
Granted (usd per units) | 1.81 | |||
Forfeited (in dollars per unit) | 1.14 | 3.39 | ||
Vested (in dollars per unit) | 3.10 | |||
Unvested restricted stock units outstanding, beginning balance (in dollars per unit) | $ 1.64 | $ 2.49 | $ 1.64 | $ 2.68 |
Net Income (Loss) Per Share Rec
Net Income (Loss) Per Share Reconciliations of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Net income (loss) per share numerator: | ||||||||
Net loss from continuing operations | $ (11,026) | $ (16,380) | $ (68,221) | $ (52,175) | ||||
Net loss attributable to noncontrolling interests | (42) | 0 | (42) | 0 | ||||
Net loss from continuing operations attributable to NantHealth | (10,984) | (16,380) | (68,179) | (52,175) | ||||
Net (loss) income from discontinued operations attributable to NantHealth | (16) | 3 | 31,955 | 1,162 | ||||
Net loss attributable to NantHealth for basic and diluted net loss per share | $ (11,000) | $ (48,289) | $ (16,377) | $ (14,713) | $ (19,923) | $ (36,224) | $ (51,013) | [1] |
Weighted Average Number of Shares | ||||||||
Weighted-average shares for basic net income (loss) per share (in shares) | 110,929,357 | 110,619,905 | 110,859,611 | 110,261,279 | ||||
Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted-average shares for dilutive net income (loss) per share (in shares) | 110,929,357 | 110,619,905 | 110,859,611 | 110,261,279 | ||||
Basic and diluted net income (loss) per share attributable to NantHealth: | ||||||||
Continuing operations - common stock (in dollars per share) | $ (0.10) | $ (0.15) | $ (0.62) | $ (0.47) | ||||
Discontinued operations - common stock (in dollars per share) | 0 | 0 | 0.29 | 0.01 | ||||
Total net income (loss) per share - common stock (in dollars per share) | $ (0.10) | $ (0.15) | $ (0.33) | $ (0.46) | ||||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Net Income (Loss) Per Share Ant
Net Income (Loss) Per Share Antidilutive Securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Unvested restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 1 |
Unvested phantom units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 121,244 |
Unvested restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 253,308 | 1,868,224 |
Unexercised stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 10,150,724 | 710,892 |
Convertible notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 8,815,655 | 8,815,655 |
Related Party Transactions (Det
Related Party Transactions (Details) | Jul. 22, 2020USD ($) | Aug. 08, 2018USD ($) | Jun. 01, 2016USD ($)shares | Mar. 08, 2016USD ($) | Jan. 22, 2016USD ($) | Jan. 04, 2016USD ($)$ / shares | Jun. 19, 2015USD ($)testterm | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2016USD ($) | Dec. 21, 2016USD ($) | Dec. 15, 2016USD ($) | ||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Related party receivables | $ 2,189,000 | $ 2,189,000 | $ 1,931,000 | |||||||||||||||||
Related party payables, net of receivables balances including related party liabilities | 33,971,000 | 33,971,000 | 28,347,000 | |||||||||||||||||
Accrued and unpaid interest on convertible notes | 1,619,000 | 1,619,000 | 274,000 | |||||||||||||||||
Related party promissory note | 112,666,000 | 112,666,000 | 112,666,000 | |||||||||||||||||
Revenue | 18,765,000 | $ 18,604,000 | 54,530,000 | $ 58,865,000 | ||||||||||||||||
Net loss attributable to NantHealth for basic and diluted net loss per share | (11,000,000) | $ (48,289,000) | (16,377,000) | $ (14,713,000) | $ (19,923,000) | (36,224,000) | (51,013,000) | [1] | ||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | [1] | 5,475,000 | 0 | |||||||||||||||||
OpenNMS Assignment | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Finite lived intangible asset acquired in assignment | $ 5,200,000 | |||||||||||||||||||
Convertible Debt | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Face value of debt | 107,000,000 | 107,000,000 | 107,000,000 | $ 107,000,000 | $ 107,000,000 | |||||||||||||||
Equity Method Investee | OpenNMS Assignment | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Finite lived intangible asset acquired in assignment | 4,553,000 | |||||||||||||||||||
Cash paid in business acquisition | $ 5,577,000 | |||||||||||||||||||
Percentage of voting interest acquired | 91.00% | |||||||||||||||||||
Revenue | 361,000 | |||||||||||||||||||
Net loss attributable to NantHealth for basic and diluted net loss per share | (467,000) | |||||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years 10 months 24 days | |||||||||||||||||||
Business Acquisition, Percentage Owned By Noncontrolling Interest | 9.00% | |||||||||||||||||||
Equity Method Investee | OpenNMS Assignment | Call Option | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 56,769 | |||||||||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | 278,000 | |||||||||||||||||||
Equity Method Investee | OpenNMS Assignment | Developed technology | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Finite lived intangible asset acquired in assignment | $ 2,500,000 | |||||||||||||||||||
Estimated lives of definite-lived intangible assets | 6 years | |||||||||||||||||||
Equity Method Investee | OpenNMS Assignment | Installed user base | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Finite lived intangible asset acquired in assignment | $ 1,400,000 | |||||||||||||||||||
Estimated lives of definite-lived intangible assets | 6 years | |||||||||||||||||||
Equity Method Investee | OpenNMS Assignment | Customer relationships | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Finite lived intangible asset acquired in assignment | $ 1,000,000 | |||||||||||||||||||
Estimated lives of definite-lived intangible assets | 6 years | |||||||||||||||||||
Equity Method Investee | OpenNMS Assignment | Trade name | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Finite lived intangible asset acquired in assignment | $ 300,000 | |||||||||||||||||||
Estimated lives of definite-lived intangible assets | 4 years | |||||||||||||||||||
Receivable from Ziosoft KK related to sale of Qi Imaging | Affiliated Entity | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Related party receivables | 1,477,000 | 1,477,000 | 1,658,000 | |||||||||||||||||
Reseller agreement | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Related Party Transaction, Agreement Term | 5 years 6 months | |||||||||||||||||||
Reseller agreement | Equity Method Investee | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Number of renewals | term | 3 | |||||||||||||||||||
Renewal term | 3 years | |||||||||||||||||||
Number of tests to qualify for first renewal option | test | 300,000 | |||||||||||||||||||
Number of tests to qualify for second renewal option | test | 570,000 | |||||||||||||||||||
Number of tests to qualify for third renewal option | test | 760,000 | |||||||||||||||||||
Annual minimum fees, tier one | $ 2,000,000 | |||||||||||||||||||
Annual minimum fees, tier two | 25,000,000 | |||||||||||||||||||
Annual minimum fees, tier three | $ 50,000,000 | |||||||||||||||||||
Related party payables | 3,000 | 3,000 | 197,000 | |||||||||||||||||
Cost of revenue | 3,000 | 105,000 | 48,000 | 1,852,000 | ||||||||||||||||
Cambridge Purchase Agreement | Affiliated Entity | Convertible Debt | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Face value of debt | $ 10,000,000 | |||||||||||||||||||
Accrued and unpaid interest on convertible notes | 162,000 | 162,000 | 24,000 | |||||||||||||||||
Liquid Tumor Profiling Services Agreement | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Related party receivables | 110,000 | 110,000 | 110,000 | |||||||||||||||||
Revenue from related parties | 0 | 43,000 | 0 | 459,000 | ||||||||||||||||
Promissory Notes With NantCapital | Affiliated Entity | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Accrued and unpaid interest on convertible notes | 29,364,000 | 29,364,000 | 24,227,000 | |||||||||||||||||
Related party promissory note | $ 112,666,000 | 142,030,000 | 142,030,000 | $ 136,893,000 | ||||||||||||||||
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 | |||||||||||||||||||
Promissory Notes With NantOmics | Equity Method Investee | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Related party promissory note | $ 20,000,000 | 0 | 0 | |||||||||||||||||
Interest bearing on related promissory note | 5.00% | |||||||||||||||||||
Additional advance on related party promissory note | $ 20,000,000 | |||||||||||||||||||
Amount of principal and interest under promissory note converted to shares | $ 40,590,000 | |||||||||||||||||||
Number of shares related party promissory note converted (in shares) | shares | 2,899,297 | |||||||||||||||||||
Promissory Note 9.75%, Due June 15, 2022 | Affiliated Entity | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Related party promissory note | $ 100,000,000 | |||||||||||||||||||
Interest bearing on related promissory note | 9.75% | |||||||||||||||||||
Maximum advances available through March 2019 | $ 10,000,000 | |||||||||||||||||||
Maximum advances available after March 2019 until maturity | $ 20,000,000 | |||||||||||||||||||
Percentage profit measure deviation allowed | 25.00% | |||||||||||||||||||
NantWorks | Shared services agreement | Affiliated Entity | ||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||
Income from related parties | $ (34,000) | |||||||||||||||||||
Net selling, general, and administrative service expenses incurred related to services provided by related parties | $ 20,000 | $ 56,000 | $ 834,000 | |||||||||||||||||
[1] | The statements for the nine months ended September 30, 2020 and 2019 include the Connected Care Business (see Note 4). |
Related Party Transactions - Op
Related Party Transactions - Open NMS Assignment (Details) - USD ($) $ in Thousands | Jul. 22, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | |||
Goodwill | $ 98,333 | $ 97,307 | |
OpenNMS Assignment | |||
Related Party Transaction [Line Items] | |||
Intangible asset, net | $ 5,200 | ||
OpenNMS Assignment | Equity Method Investee | |||
Related Party Transaction [Line Items] | |||
Total cash consideration | 5,577 | ||
Cash and cash equivalents | 102 | ||
Goodwill | 1,026 | ||
Intangible asset, net | 4,553 | ||
Other assets | 1,097 | ||
Other liabilities assumed | (1,227) | ||
Net assets acquired at assignment | 5,551 | ||
Noncontrolling interests | (503) | ||
Recorded as distribution from additional paid-in capital | $ 529 |
Uncategorized Items - nh-202009
Label | Element | Value |
Phantom Share Units (PSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber | 0 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber | 253,308 |