NantHealth Inc (NH) 2021 Q3 法說會逐字稿

Welcome, everyone, and thank you for joining us today to discuss NantHealth's 2021 Third Quarter Financial Results. On the call today are Ron Louks, Chief Operating Officer; and Bob Petrou, our Chief Financial Officer.

This call is being broadcast live at www.nanthealth.com. A playback will be available for 3 months on NantHealth's website.

I would like to make the cautionary statement and remind everyone that all of the information discussed on today's call is covered under the safe harbor provisions of the Litigation Reform Act. The company's discussion today will include forward-looking information reflecting management's current forecast of certain aspects of the company's future, and actual results could differ materially from those stated or implied.

In addition, during the course of this call, we may refer to non-GAAP financial measures that are not prepared in accordance with U.S. generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review NantHealth's press release announcing its full 2021 third quarter financial results for the company's reasons for including those non-GAAP financial measures in its financial results announcement. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is also contained in the company's earnings press release issued earlier today.

In a moment, Ron will provide a brief overview of the quarter and discuss the business, followed by Bob, who will discuss the financial results in more detail. We will then open the call for questions.

With that said, I will now turn the call over to Ron Louks. Ron?

Thanks, Robert. Good afternoon, everyone, and welcome to NantHealth's 2021 Third Quarter Financial Results Conference Call. We hope all of you and your families are safe and well.

I'd like to start today by welcoming 3 new members to our senior leadership team. With the addition of Jerry Magin as Senior Vice President of Global Sales and Marketing; Neil Carpenter as Senior Vice President of Strategy; and Arlyn Small as Senior Vice President of Human Resources, we have strengthened our team with highly experienced and talented executives to head up these strategic functions. We're excited to have them on board as we look to leverage our investments, build out our capabilities and enter our next phase of growth.

Our financial updates will be highlighted by Bob later on. Now let's discuss our Software and Services business. I'll begin with our Eviti business.

On recent calls, we discussed our efforts to develop applications for Eviti Connect beyond oncology. I'm very pleased to report that during the third quarter, we signed and are preparing to launch the first Eviti Connect program for autoimmune diseases. We are seeing strong customer interest in the autoimmune program, which is especially encouraging as we continue to develop additional applications for Eviti Connect beyond oncology.

Also during the quarter, we continued the expansion of our client base, adding 2 health plans through a channel partner, a leading clinical solutions provider. We expect to continue expanding our base in the fourth quarter with the addition of a large multistate customer-owned health insurer. We signed an agreement with Care Continuity, Inc., a leader in network integrity and care navigation. Together, we have worked to improve care logistics management for complex, high-risk and chronic diseases, initially focusing on extending care pathways for Eviti Connect customers and their members followed by NaviNet care pathway opportunities. And we launched Eviti Connect 8.6, which includes more robust savings and ROI visualizations for payer customers via expanded reporting that is enabled by our Quadris data analytics capabilities.

Turning to payer engagement. In October, we signed a multiyear agreement with a new third-party administrator that will use NaviNet Open to enhance the services it provides to self-insured health plan customers. We signed a 3-year renewal with a long-term partner and leading provider of drug authorizations, enabling electronic submission of prior authorization for any drug under any plan, including Medicare and Medicaid. And we introduced new Authorization Submission APIs that allow our providers to automate and streamline prior authorization requests to connected NaviNet payer customers.

Turning to our recently acquired network monitoring business, OpenNMS. We renewed agreements with 12 key customers and expanded services with one of the largest telecom providers in the U.S. And we continued development in preparation for fourth quarter launch of zero-touch appliances.

To sum up, we expanded the senior team with 3 seasoned experienced executives in sales, strategy and human resources. All are highly experienced and key additions as we begin the next stage of our growth and development. We initiated the first implementation of our Eviti Connect solution into a new disease state, autoimmune, with a key customer. Importantly, we are seeing strong customer interest in this offering. And we believe the investments we are making to build out our capabilities, products and services are laying the foundation for new growth opportunities.

With that overview of our business, I'll turn the call over to Bob to discuss our financial results in more detail. Bob?

Thank you, Ron.

For Q3 2021, total revenue was $14.4 million compared with $18.8 million in the prior year third quarter. The decline was primarily due to the lower amortization for professional services as previously discussed and the timing differences between the expiration of certain contracts and the initiation of others through Q3 2021. Q4 revenue is expected to return closer to our average run rate for the first half of 2021.

Gross profit was $7.5 million or 52% of revenue, a decrease from $11.2 million or 60% of revenue for the same quarter in the prior year. The decline is tied to the lower revenue in the quarter. Gross margin will improve in Q4 as revenue will recover.

Total operating expenses increased 3% to $18.6 million from $18.1 million in the prior year third quarter. This is driven by our continued investment in our products and the acquisition of OpenNMS in 2020. Quarter-on-quarter, total operating expenses increased as we continue to fund the development of our OpenNMS business and other product offerings. We anticipate continued marginal growth in operating expenses as our investments continue over the next quarter and into 2022.

For Q3 2021, net loss from continuing operations was $10.8 million or $0.09 per share compared with $11 million or $0.10 per share in the prior year third quarter. On a non-GAAP basis, net loss from continuing operations in Q3 2021 was $11.5 million or $0.10 per share compared with $7.2 million or $0.07 per share in the third quarter of last year.

Finally, cash and cash equivalents were approximately $45.5 million at September 30, 2021, compared with $52 million at June 30, 2021. Usage of cash was approximately $6.4 million in the quarter.

With that, I will now turn the call back over to Robert.

Thanks, Bob. Operator, we've completed our prepared remarks, and we'd now like to open up the call to questions.

(Operator Instructions)

We have no questions. I'll now turn the call back to management for any closing remarks.

Thanks, Kevin. We look forward to sharing our progress on our next scheduled conference call. Thank you all for joining us today.