NantHealth
Overview
NantHealth (NH) is a leading next-generation, evidence-based, personalized healthcare company focused on enabling its clients to fundamentally change the diagnosis, treatment and pharmacoeconomics of cancer and other critical illnesses. The company believe a molecular-driven, systems-based approach to making clinical treatment decisions based on large-scale, real time biometric and phenotypical data will become the standard of care initially for patients with cancer and, ultimately, other critical illnesses. The company derive revenue from selling GPS Cancer (our Genomic Proteomic Spectrometry Cancer test, a unique, comprehensive molecular test and decision support solution that measures the proteins present in the patient's tumor tissue, combined with whole genomic and transcriptomic sequencing of tumor & normal samples), to which the company obtained exclusive access from an affiliate, and from selling software solutions to healthcare payors, self-insured employers and healthcare systems.1
The company market certain of its solutions as a comprehensive integrated solution that includes GPS Cancer, Clinical Decision Support, and Payer Engagement solutions. The company also market its GPS Cancer, Clinical Decision Support, Payer Engagement and Connected Care solutions on a stand-alone basis. To accelerate its commercial growth and enhance its competitive advantage, the company intend to continue to:
- introduce new marketing, education and engagement efforts and foster relationships across the oncology community to drive adoption of GPS Cancer;
- pursue reimbursement of GPS Cancer from regional and national third-party payors and government payors;
- publish scientific and medical advances;
- strengthen its commercial organization to increase its NantHealth solutions client base and to broaden usage of its solutions by existing clients; and
- develop new features and functionality for NantHealth solutions to address the needs of current and future healthcare provider and payor, self-insured employer and biopharmaceutical company clients.
Since its inception, NantHealth has devoted substantially all of its resources to the development and commercialization of NantHealth solutions, as well as the commercial launch of its GPS Cancer business. To complement its internal growth and expertise, NantHealth has made several strategic acquisitions of companies, products and technologies. NantHealth has incurred significant losses since its inception, and as of September 30, 2017 its accumulated deficit was approximately $671.6 million. The company expect to continue to incur operating losses over the near term as the company drive adoption of GPS Cancer, expand its commercial operations, and invest further in NantHealth solutions.
The company plan to 
continue investing in its infrastructure, including but not limited to solution development, sales and marketing, implementation and support, (ii) continue efforts to make infrastructure investments within an overall context of maintaining reasonable expense discipline, (iii) add new clients through maintaining and expanding sales, marketing and solution development activities, (iv) expand its relationships with existing clients through delivery of add-on and complementary solutions and services and (v) continue its commitment of service in support of its client satisfaction programs.
2017 Asset Purchase Agreement with Allscripts
On August 3, 2017, the company entered into an asset purchase agreement, which the company refer to as the "APA," with Allscripts Healthcare Solutions, Inc., or “Allscripts”, pursuant to which the company agreed to sell to Allscripts substantially all of the assets of its provider/patient engagement solutions business, including its FusionFX solution and components of its NantOS software connectivity solutions (the “Business”). On August 25, 2017, the company and Allscripts completed the sale pursuant to the APA.
Allscripts conveyed to it 15,000,000 shares of its common stock at par value of $0.0001 per share that were previously owned by Allscripts as consideration for the transaction. The company retired the shares of stock. Allscripts also paid $1.7 million of cash consideration to it as an estimated working capital payment, and such amount is subject to adjustment based upon the final amount of working capital as of the closing date. NantHealth is responsible for paying Allscripts for fulfilling certain customer service obligations of the business post-closing, and the company may be entitled to receive from Allscripts up to an additional $1.1 million cash consideration if Allscripts receives such amounts from certain customers .
Concurrent with the closing, (a) the company and Allscripts modified the amended and restated mutual license and reseller agreement dated June 26, 2015, as amended, such that, among other things, the company committed to deliver a minimum dollar amount of total bookings over a ten year period; (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 company licensed certain software and agreed to sell certain hardware to Allscripts pursuant to a software license and supply agreement.
The sale of the Business qualified as a discontinued operations 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 Business represented a strategic shift in the Company’s operations as the sale enables the Company to focus on genomic sequencing, clinical decision support, connected care and payer engagement.
The consummation of the transactions contemplated by the APA is reflected in the Condensed Consolidated Financial Statements.
2017 Corporate Restructuring Plan
In August 2017, the company committed to and began implementation of a comprehensive restructuring plan that includes a wide range of organizational efficiency initiatives and other cost reduction opportunities. The plan will allow it to focus on its core competencies of genomic sequencing, clinical decision support, connected care and payer engagement. The company incurred charges from this restructuring related to severance and other cash expenditures and recognized the majority of the expenses related to this restructuring in the quarter ended September 30, 2017. 2016 Developments and Acquisition
On June 7, 2016, the company completed its IPO, whereby the company sold 6,500,000 shares of its common stock at a public offering price of $14.00 per share. Additionally, on June 9, 2016, the underwriters partially exercised their overallotment option to purchase an additional 400,000 shares of its common stock at $14.00 per share.
The company received a total of $83.6 million in net proceeds from its IPO, after deducting underwriting discounts and commissions and offering costs of $13.0 million. The offering was registered under the Securities Act of 1933, as amended, on a registration statement on Form S-1 (Registration No. 333-211196), as amended.
In December 2016, the company issued convertible notes to a related party and others for net proceeds of $9.9 million and $92.8 million, respectively, after deducting underwriting discounts and commissions and other offering costs of $4.3 million. Please see Note 12 of the Notes to accompanying Condensed Consolidated Financial Statements for further discussion of these convertible notes.
The company made a significant acquisition in 2016, which has expanded the features and functionality of NantHealth solutions. In January 2016 the company acquired NaviNet, which provides a secure collaboration network connecting approximately 36 health plans and which is estimated to be utilized in more than 70% of the nation’s physicians’ offices during the fourth quarter of 2016. NaviNet Open will serve as a nationwide scalable and secure web-based portal for patients and providers.
