NH - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the NantHealth 2018 Fourth Quarter Financial Results Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference, Mr. Robert Jaffe, Investor Relations for NantHealth. Sir, you may begin.

Robert Jaffe

Welcome and thank you for joining us today to discuss NantHealth's 2018 fourth quarter and full year financial results.

are today call the Dr. On Executive Patrick Officer; Louks, Operating Ron Petrou, Soon-Shiong, Interim Chief Bob Financial Chief Dr. Officer; Officer; and Sandeep Officer. Chief our Reddy, Medical is call being live www.nanthealth.com. This broadcast at NantHealth's be three available A playback months will on website. for I the that of is Litigation everyone covered Reform would and the safe today's discussed all like Act. cautionary the make statement to harbor remind on under information call the provisions of and of actual reflecting discussion could management's forward-looking current the today company's certain of company's from future The materially information, aspects results implied. differ those will forecast or include stated

the by fourth reasons may may U.S. and during are companies. quarter company's to encouraged for other XXXX generally financial press addition, not course to those that the used principles accounting be In Investors announcing financial of are different this we non-GAAP A measures its NantHealth's Bob, with quarter for including in full measures will is in accepted financial non-GAAP press the discuss GAAP the review provide more financial today. refer Ron the from a company's call, of results prepared directly non-GAAP results release accordance in measures lines, non-GAAP release also business will of its financial to overview brief measures contained Shortly earnings discuss results by announcement. the in most earlier comparable issued and reconciliation followed financial financial the measures who detail. financial

said, With Ron then will will Louks. We that turn I the the questions. for over Ron? call now call to open

Ron Louks

welcome XXXX conference to fourth NantHealth's quarter Robert. results Thanks, call. afternoon, everyone, financial and Good

and We of progress excellent burn. on grew course number the Over made cash we revenues, costs lowered our XXXX fronts. reduced of a

fourth fourth last increased $XX.X million XXXX from year's million to the $XX.X revenue in quarter quarter. For

from perform Our well, million X% QX continued SaaS to an increase of contributing QX. in business $XX.X

our and Service business. Turning to Software

messages, risk this decision display with care configuration enhances new new deviation unique costs, associated support a users cell an quality custom with key as factors, a that that partners/resellers growth new of that compliance to regimen enables updated this product, X.X medical we white process. report release payer as blood assurance factor their internal multiple with well and clinical deployed with include drug that analyzer supports Our is Eviti to features policy a value-based QA assists guidelines, deviation driver

mapping portal all We are store treatment also and Precision presentation presented enables the of enhanced trends plan a the this and understanding our portal enables user, drug in include the to Insights help plans a to the ability recommendation improvement that the Precision to save library. care to which for based the in Eviti to of the treatment of analytics features plans enhance users, the portal, drug to align comparison of management Insights and recommended standard drugs evidence

completed plans over total engagement we these key introduced XX we provides Open, document which for in payer XX health enhanced exchange, the XXXX. users. revenues our in Also QX of two projects include to features features NaviNet document product, a more for NaviNet in For implementation routing fourth control quarter for

and detailed Precision Plans Face led a Transformation December Medicine Health view the the Payers payer Challenges Healthcare the delivered Assembly Looking all we the with discussion health at appeals, a of Care. is feature authorization by Alliance, of which in Based hosted and met entitled, NaviNet the to In the report. Value allows activity second plan Millennium groups subscribers roundtable monthly user The at with Open a for to Convergence

of Australia, GE implementation Asia first place we we revenue. collaborated in QX HIMSS things capabilities. completed ongoing previously included in upgrade at Conference. the a based demonstrate Braun of in now Interoperability at deployed OS be of drives have as the In medical Also maintenance an that a and waveform connected Sweden, we took conversations QX, deployment pushed event. products DeviceConX. we directly data Care among sales, discussions records which ongoing DeviceConX to Also between increased at Pacific the connectivity The Healthcare recurring result, sales initiated iProcedures Showcase in hardware devices announced, on for security our other our license a XXXX, this QX, DeviceConX exchange And which patches HBox patient and devices. we significantly number As with to Connected to physiological B. upgraded allows QX,

a for contract Liquid contract number Sequencing we results signed new reimbursement from employer in and fourth net Cancer expanded on total and trust. interactions. GPS additional In provide insights one business. and Analysis a X,XXX and potential GPS Cancer molecular included the of ago. Cancer were Cancer, employee GPS and/or Benefits Liquid tests an analysis Liquid toxicity quarter, Molecular the we Northwest to These reimbursement into reporting with expanded provide profile. test both drug information patient's GPS QX, fire/police XXX Liquid total in Trust our to with quarter GPS of to QX, ordered The GPS Turning Also tests. include XX% coverage GPS an existing and we this GPS XXX pharmacogenomic city Firefighters increased

of patient. Breast three Cancer individual science the to On oncologists enable along the presented the our investigations, cancer NantOmics NantHealth at of which sister findings front, theme the insights each examine with San treatment in medical providing Symposium, December and tailored of characteristics company the XXXX, with to Antonio

turn like over to in to say, even Bob, Before XXXX. an progress I'd We anticipate made we XXXX. call excellent better I the

well capabilities, With that lines, I'll and for we deep While company software FDA Bob? more our pipeline we the business which call ultimately, forward. to discuss the to financial going had for for detail. results of overview over business molecular prospects CMS bodes the healthy push our continue to our in turn Bob believe coverage approval analysis and

Bob Petrou

you, only financial I results, new note the revenue will everyone. Hello, Please values. Ron. Thank present standard that include

press the new recognition previous the be release filed in see to Exchange results our with the and financial Commission. XX-K between our revenue Form today's For and and standard, information Securities and additional in included reconciliations of tables

to Turning results. our

$XX.X X.X% quarter Compared from X.X%. of grew revenue to QX fourth approximately the reported XXXX, For to XXXX, year. same million or million of quarter prior the the $XXX,XXX $XX.X grew in revenue

For year, revenue to million grew the $XX.X X.X% XXXX. with compared full

for business million XXXX, fourth For grew $XX.X ago. category, of the $XX.X our approximately year SaaS, revenue from a largest quarter XX% to million

and the SaaS change by revenue in same in non-contracted from For This continued showed with year. from $XXX,XXX quarter X% product improvement collection analysis and the full performed of in approximately timing of on mix molecular year-on-year. the QX payers. year, $XXX,XXX primarily a X% our sequencing to business driven growth grew prior was increase reimbursed over tests

GPS of to portion to the subscription-based results the from of XXXX. sponsored since period, service, live from QX million XX-month was sequencing million analysis XX% NANT-affiliated pricing $X.X sequencing the in to grow has which year. in related the $X.X revenue our molecular the For grew revenue were clinical analysis the delivered to from March molecular molecular declined which our beginning and $X.X new of Liquid revenue financial of in services quarter significant products continued went Care $X.X Included million our analysis in XXXX. proprietary from trials, GPS fourth and for model million for A group to year. Connected Liquid prior revenue

XXXX, sequencing was Connected varies mentioned quarter-to-quarter million, from As profit Care GPS of XX% and $XX.X completion Liquid due revenue in we QX million, of or of cost the of In to of the had fee in decline services item due gross revenue revenue, XXXX. to line and same of gross XX% ago. was ago of margin implementation. the The before, paid often from lower addition NantOmics primarily compared quarter timing QX $XX.X or with for year from this to year revenue

consistent gross year cost throughout total XXXX. million million the declined year of is XX% fourth quarter, $XX.X QX XX% our our to management with prior full reflecting results in margin prior from Our operating efforts. $XX.X expenses continued current and

loss For quarter, loss as $XX.X NantOmics, have million per year. million investment in QX our non-cash the per basis, including financial investment, to $XX.X The share, net million loss share showing million a the fourth continuing $XX.X which year. changes from $X.XX net including included related continuing party for million $XX.X last year charge $XX was loss impairment share, per of On with or Without Bookings or impairment the related charges, XXXX, loss compared our of our liability. our and losses net fair for due per been among other full in share the non-cash non-GAAP equity excluded operations from full and in million per XXXX $X.XX Commitment share from from which million well related would of $X.X these as million operations quarter XXXX improvement $XX.X $X.XX unrealized operations operations was to net $X.XX continuing $X equity value Commitment a the strong or from or in million from loss in non-GAAP party Bookings compared things $XX.X with was or the $X.XX results. fourth continuing our

the a $XX.X quarter compared at representing XXXX, $X.X our December of cash million and cash million equivalents $XX.X XX, were end Finally, with of at million. net third usage

NantHealth's we $XXX and call drawn With back turn yet We of now that, cash on I over will our to manage million not to have line Robert. continue position the credit.

Robert Jaffe

call we've to up prepared completed our the remarks. And ready Bob. Operator, we're Thanks, to open questions.

Operator

Charles Rhyee with first Understood. question [Operator Our from Cowen. Instructions] comes

is line Your open. now

Charles Rhyee

I guys. Yes. is question it's for a us revenues. here of, that It orders secondly starting Cancer How revenue are had under about in you've way sense are some in sequential for of on because this GPS a we Hey, give reimbursed our saying terms also here. that better up. about you're test subscription talked of what going is that, adding paid the for of Liquid point? because – a really the maybe function orders see statement Now accounting on income or service, the you're then the of the sequencing question accounted the GPS declines accounts – we the like that increase is is of an being the model. though thanks that here? is even to are for a sort It in at are number And reimbursed recording that where us sounds we

Bob Petrou

receive From revenue contracted generate here. on perspective, perspective recognition overall we revenue only an Bob we based It's or when cash. a

side. on commercial challenges or some for So, recognized And the the reimbursement some level on therefore reimbursement a quarterly increased grown actual GPS. seen driving reduction in on not we've and of again, ultimately revenue has basis

Patrick Soon-Shiong

This is Patrick.

Patrick – think I So, Soon-Shiong.

for waiting we've So, last the this filing, to then the always public we FDA just always that the in I conundrum be sorted that's approval. reimbursement until I news question think the is we've that has the reimbursement and with filed we're this we've think the now going been now, out, But that struggle. made get now

on Just of pathway everybody we device. to by view we give the II which the is the background, predicate a of call the is the OMICS a CORE, and FDA this this virtue predicate again, regulatory background call as test the impact Sloan-Kettering Class and

So, all it we've genes, XX,XXX took a all sequence through we suppressors. and because us oncogenes this tumor done to what get while is, including the

reports and and because test all However, so within that still the device obviously the we impact so which on the patient. it's the genes. is us report Sloan-Kettering of the panel. XXX only important XX,XXX a will received XX,XXX and genes, genes We data feel record reimbursement XXX for that approval valuable Sloan-Kettering, from to But those has to

the order be XX,XXX that that we So even will at genes with that think, which though is to day I I XXX you occurs, genes, we're solved, conundrum the least inferior known. still hopeful as on, report said, feel partly reimbursement having the will

Sloan-Kettering you give any side a But this thing the mutational have if regard we important to relates really, that. information Bob, provide of and can burden, will note, mutational so with is more tumor questions the to As the which it the burden on from immunotherapy. CORE concept today's of tumor however, as differentiate more details, and we'll OMICS it called study impact you

Charles Rhyee

as is the when a when us of to so timing submitted can FDA starting And remind point think this us for and about sort we give a sense you to the just decision? on Thanks. was

Patrick Soon-Shiong

Yes.

on So, they was the while, because was very genes took FDA we validity and this NantHealth had measuring recently. to strategy, XX,XXX and all submitted because come XXX. an agreement wanted We analytical were a to

submitted, was this completely So, probably… now

Bob Petrou

in QX.

Patrick Soon-Shiong

In QX.

on the the we'll timing the it a regulatory at obviously of pathway. FDA, just behest the with is of So, device II – but the predicate now Class

Charles Rhyee

If on topic, – it? I – a fairly pathway it's in a if that it's I recall general, faster correctly, isn't

Patrick Soon-Shiong

Right. It's XXX(k), XXX(k) basically revised pathway. a a

is that as the Sloan-Kettering So, we submitted ourselves predicate already against a approved.

on XXX based process. that product, product that's called and a even filed approved already and only as a we the took the Sloan-Kettering's it's genes – impact it's product So comparator against it and that though product, was XXX(k)

Charles Rhyee

cash a we great. are that the my Should year, think the in have we out as think Okay, – on are line where as And credit of of… of cash sort uses of of, you sense – down be sort this get we well. to flow, we you uses expect there? terms question us I of cash year – understanding cash, like, can would if sources us terms XXXX sense can give of last in we of burn how on of sort about give for the we Do or know we draw terms of a in

Bob Petrou

Yes.

term. managing very results, we've financial recent So, diligently you as the the see can been over from cash

And some may reassess on. where have determine how ultimately determine we're to We expect burn at to and through QX, in we much QX and we'll continue QX. then cash to draw

but is have to and we not appropriate that? not on expectation Our liquidity to, QX, QX within draw still

Charles Rhyee

Thank Great. you.

Patrick Soon-Shiong

that think and clearly were over how I But flow. made of the reimbursement thing There's thing think is the we'll without and the other also where on doing right do managing is was a announcing of we the is good much policy, job we've we're good do, we job it regard the We behalf changing managing thought I decision lot that this in to issue. getting GPS. the time with of without cash patient. the be so that now but just team some some to Ron a the can doing reimbursement

Charles Rhyee

I'm the sorry. mean, the expect When of to that? hear policy how we will we sort I about we provide are on testing? changing

Patrick Soon-Shiong

Yes.

pays a think I is were internally important patient, this insurance the patient, or test publicly I difficult we're most doing as a out the that think we it. on difficult, is believe behalf I without whether I best team. very reimbursement, the test information, The nobody a And of it's the test. company is company, working if the the it's for amongst patients; very patient. but from the this continue gives conundrum from Unfortunately, mean, traded to

will we this internal now the to perspective So, timing have discussion approval unpredictable of it's light from in have the status. of

Charles Rhyee

you. Thank Okay.

Operator

with Jefferies. next comes from our question And Brandon you. Thank Couillard

Your open. line is now

Brandon Couillard

of as GPS business as explains as Bob users in behind far to If sequential the afternoon. Good in orders kind – coming the or quarter, in Thanks. in to growth, view expansion step-up existing as the fourth get is from there's your some docs quarter. that in bit same user moderate if orders, of that that kind is whereas that as liquid there's Maybe, to terms the a far is of store, of there, the base? anything the like type fourth seem the more GPS in as curious which reaccelerated the something of cancer sequentially, Cancer orders if perhaps it growth

Bob Petrou

Yes. you, Brandon. Thank

have I that a reasonable Actually drive of factors that there we that. growth. year-over-year a combination is So, think

just the value of not drugs. class on the had expensive look growth is that brings the XX% mutation if you you where If it's that on ASCO Tumor better find always at fact a growth of burden presentation on a wouldn't think just, a accuracy of of been user We the of the in evolution we it's data. in a made, there's space a present in enough go impact look volume year-over-year it's the a when silencing, you it, Patrick have in demonstrated a in context at respect there's where the very importance the not decision presentations this our had immunotherapy and in base, RNA natural much volume. Q-over-Q, a making the this I RNA TMB, of with there's Burden but We to terms in enough and as the time earlier, of And the we had presentation tumor just the referenced of product a time, Mutation the not. XX% we year and total mutation, but I

So of And they that and an see them think we're actual don't reorderer. finding then I once that theirs, patient to work. prescribing drugs in reinforces that doctors become real that for

about a process I I it's talked and it to So and slow have continues just itself. on before that you think build

Brandon Couillard

I seeing coverage coverage draft and but CMS? appreciate you and there stand a you we competitors the the process test Thanks you Guardant's favorable to the stand like around all where CMS earlier, get comments decision just with update out are FDA other on just process with with where XXX can

Sandeep Reddy

Yes.

it's So to spoke had to the about – FDA. mean, what we earlier respect not with I dissimilar

We than a with follow well. coverage to approval are will product gateway the going to after pathway we be FDA similar and as liquid CMS

Brandon Couillard

A in Understood. in dollars for trials. how the sustainable for you that one, you elaborate GPS test might Number SG&A, be the can from going down step Nant-related think Bob. secondly, And the quarter-on-quarter that drove couple fourth you of sort stems the that revenues and what do forward? quarter could on quantify

Bob Petrou

With revenue. total inter-party respect was test, the $XXX,XXX amount to was the of GPS related approximately testing there which

to respect grow we ensure So R&D where to prospects we're will exact with grow want our proper welcome invest we the business. SG&A, the the have SG&A see to where will but in we we're assessing sustain We improvement the it we invest so headed and can do significant expectation business future. of in growth I at where that we've top SG&A for in of XXXX. the in about investment within I in invest areas parts to revisited and dollars as that don't for XXX,XXX. with the think stage again, in to will that other was line And And invest, XXXX we and and we need continue

Sandeep Reddy

made those We mentioned, of investments. already some

Brandon Couillard

Maybe signed Eviti number like last implemented year. of generating and new a Ron, Okay. fair NaviNet a revenues? sounds Are couple it for over now all of the in you've deals those

Ron Louks

lot There's one, still over done implementations. of different this No. schedule We've on customers. year year. obviously implementations their for a of a is full pipeline have side some each the They well. Each as on the based preparation work

Brandon Couillard

Very good.

there? a Patrick. and one, with far CFO share as maybe status Any fill Okay, permanent couple in us update for finding the you as the last of can search

Patrick Soon-Shiong

it, I to soon. think maybe is Bob we've on with done think found the officially we and here, announce will our acting it on so he honest fantastic you, I be has call CFO. surprised but see was to I a we job that earnings but comfortable I'm that should

Brandon Couillard

Thanks. good. Very

Operator

Thank further back the company time, remarks. to turn any you. showing questions for call the to And At in like closing this I'm no queue. I'd the

Robert Jaffe

Thanks, our progress forward joining sharing next scheduled Thanks the We call. you today. for look operator. on us to again conference

Operator

for your may you Ladies you day. participation and in have does conference. all disconnect. today's conclude gentlemen, thank your and Everyone program great This a

NantHealth (NHIQ) 28 Mar 192018 Q4 Earnings call transcript