Q4 2019 Earnings Call
Our in listen only mode. After the speaker presentation. There will be a question answer session asking question. During the session. Please press star one on your telephone. Please be advised that today's conference is being recorded you acquire any further assistance. Please press star Zero I would now like Panda conference over to your Speaker today, Robert Jaffe Investor Relations for NAND health.
Please go ahead Sir.
[music] welcome everyone and thank you for joining us today to discuss that helps 2019 fourth quarter and full year financial results.
On the call today are Dr., Patrick since young Chief Executive Officer, Ron looks Chief operating Officer, Bob Petro Chief Financial Officer, and Dr., Sandeep ready, our Chief Medical Officer.
This call is being broadcast live at Www Dot net <unk> dot com.
Playback will be available for three months on that helps website.
I'd like to make the cautionary statement I remind everyone that all 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 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 maybe different from non-GAAP financial measures used by other companies.
Investors are encouraged to review Nantel press release announcing its full 2019 fourth quarter and full year financial results.
Companies reasons for including those non-GAAP financial measures.
And 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 lines.
Hi, Bob who will discuss the financial results in more detail.
Well then open the call for questions with that said I will now turn the call over to Ron.
Uh huh.
Thanks, Robert Good afternoon, everyone and welcome and handheld 2019 fourth quarter and full year financial results Conference call.
We're very pleased with significant improvement toward 2019 financial results for both the 2019 full year in fourth quarter. We grew total revenue gross profit dollars and gross margin percentage ball Sterling operating expenses. These results speak to the dedicated efforts and the entire handheld team rallied around initiatives to grow our business and drive down expenses compared.
In the 2019 full year to the 2018 full year total revenue was $96 million, an increase of 7% from 2018 or SaaS revenue increased 11% 72.8 million over the prior year.
Gross profit declined to 57.5 million for $45.2 million and gross margin rose to 60% of total revenue from 51% in total revenue.
Turning to 2019 pork works the prior year fourth quarter total revenues $24.2 million to an increase of 6% or SaaS revenue also increased 6% 18.4 million, where the prior year fourth quarter.
Gross profit for the quarter con $15.2 million equal to 63% of total revenue for $11.5 million or 50% of total revenue for the prior year fourth quarter.
Further discussion financial results in more detail shortly.
Turning briefly to our balance sheet at December 31st our cash position was $5.2 million. This amount does not include the proceeds from the sale early this month, we're connected care business for $47.25 billion I'll discuss this transaction more detail shortly.
Turning to our shopper and service business.
And our clinical decision support division, we presented new breast cancer research findings at the San Antonio breast cancer Symposium.
The study results indicate that simultaneous presentation publication of oncology data is an effective method for relaying practice changing clinical data, which enables oncologists to quickly just treatment patterns and regiments elections, we deployed three significant berchtold enhancements to the have any plans for the first multi payer access is a significant time saving tool it simplifies.
Work flow by allowing user with multiple payers to toggle quickly between payer dashboards. The second configuration for appeals allows payers to sellers configure the appeals function within their account.
And the third patient match unattached automatically associates provider submitted medical records to the appropriate treatment plan limiting the manual processes and helping speed up treatment plan review.
As previously announced we signed an agreement with Wexford Health services, one of the nations largest correctional health care companies.
We completed the implementation early in the first quarter 2020.
Also in January we expanded to any connect programs for the first one a leading U.S. health insurance company extended they successfully to state pilot program to 13 states after seeing a significant improvement in the U.S. The evidence based medicine for member oncology care and for the other one of the largest nonprofit world health plans in the country, we signed a three year renew.
No agreement to continue providing high quality high value care for its members turning to an Avenue apparently agent solution now and that's direct to provide a revenues in the fourth quarter 2019 increased 25% compared with Q4 2018.
In January 2020, we signed an agreement with the health plan a large managed care organization. We're now that opened will help decreased administrative costs improved provider networks communication and collaboration for the plan in West Virginia in Ohio.
Implemented several enhancements the NAV that open platform. These include claims appeal new application that allows payers offered electronic channel for appeals submission, which enable stronger collaboration with the payer for claim resolution and streamlined the manual analog process for both the provider and payer. The second enhancement is now well within our claim investigation work.
Well it provides users the ability to easily submit the required documentation to our portal to payer partners. This eliminates the need to send supporting documentation through manual processes and saves time when reviewing in resolving inquiries.
And third we have introduced new open authorization enhancements that enable payers and providers demands complex prior authorization request through electronic submissions.
This reduces manual work flows based on facts or phone submissions.
And for a connected care product line as I mentioned earlier, we completed the sale of are connected care assets to Massimo a global leader Noninvasive monitoring technologies to $47.25 million included in the sale were assets related to our Dcs device connectivity software product for me. It on this device Connex DCIX patients vital software, formerly known as Vitals kinetics.
Eight bucks connectivity hub and shuttle interface cable I.
Im pleased to report as part of the transaction that handheld team and employees associated with access to care business joined Massimo.
Turning towards sequencing and molecular analysis business, we announced an FDA five 10-K clearance for on which core nations first tumor normal mutation profiling of overall tumor mutational burden or TMB from whole exome sequencing in solid tumors Danbury TMB as an emerging biomarker that fixed response checkpoint therapy and identify tumors and they benefit.
Immunotherapy.
In January 2020, we presented GPS cancer platform data at the 2020 gastrointestinal cancers symposium sponsored by the American Society of clinical oncology at ASCO. The data not only revealed increased opportunities for her two directed therapy in colorectal cancer patients, but also showed that up to 40% more patients may be eligible for her two directed therapies.
Which has implications for drug development clinical trials also in January net help Nandonet presented a novel artificial intelligence platform Brady pathologists and image based lung cancer Subtyping at the society for imaging Science and Technology Center Nash imposed on electronic imaging 2020. This double machine vision software platform accurately sub types.
Lung cancer pathology energy, so I couldn't cards with analysis performed by train medical pathologists and in February 2014, and health and Anthony's announced the publication appear in each study in breast cancer research a spring Internet nature Journal on a novelty I technique in breast cancer setting reports on our novel Deep learning system, a digital pathology images.
No its data used together to more precisely identify mechanisms therapy resistance to sum up we reported strong fourth quarter and full year financial results largely due to growth or high margin SaaS business.
Last month, we completed the sale of assets related are connected care business for $47.25 billion. The transaction has improved our capital position and financial flexibility and allows us to explore growth opportunities. We continue to enhance our product offering at new customers and expand our existing customer agreements, we received FDA marketing authorization for only score.
And our team continues to present important medical and scientific conference around the world without over your business I will turn the call the Bob discussion financial results more detail.
Thank you Ron as Ron mentioned earlier for the fourth quarter of 2019 revenue increased to 24.2 million from 22.9 million in same quarter the prior year.
As a reminder, we divested our home health business at the end of 2019 second quarter. Consequently, we did not record any revenues for this business in the current year fourth quarter on an apples to apples comparison, which excludes revenues from the home health business from last year's fourth quarter revenues grew 14% from.
21.2 million in the fourth quarter of 2018.
For the full year 2019 revenue from all categories excluded in home health and sequencing was up over 11 million or 14% from 2018.
SaaS revenues increased 6% to 18.4 million from 17.3 million then last year's fourth quarter. The primary drivers for the improved performance, where the addition of key contracts and partners as mentioned in previous quarters for the full year 2019, SaaS revenues grew 11% for 2018.
Q4 sequence in a molecular analysis revenue was approximately 152000 down from 622000 and same quarter prior year.
Although we received FDA clearance as we have reference in the past we expect to continue to see a decline in sequence in revenue until we receive a positive coverage determination from CMS.
Q4 revenue from our connected care products increased 75% to 5.6 million from 3.2 million in the fourth quarter of 2018.
As previously noted we sold this business line in early 2020, and we'll have limited revenue of connected care. After the sale finalized in early February.
Q4, gross profit grew to 15.2 million or 63% of revenue, which was a substantial increase compared with 11.5 million or 50% of revenue in the same quarter year ago.
The gross margin improvement was primarily due to changes in product mix specifically the continued growth of our software related businesses for the full year 2019 gross profit grew to 57.5 billion or 60% of revenue compared with 45.2 million or 50.5% of total revenue in 2000.
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Q4, total operating expenses decreased 4% to 19.8 million from 20.7 million in the prior year fourth quarter, reflecting our continued cost management efforts for the full year 2019 total operating expenses decreased by 7.6 million representing an 8%.
Improvement year on year.
For the fourth quarter net loss from continuing operations was 11.7 million or 11 cents per share.
A significant improvement from 49.2 million or 45 cents per share in the prior year fourth quarter.
For the full year 2019, net loss was 62.8 billion versus a 192.2 million in 2018, representing a 65% improvement year on year.
On the non-GAAP basis that loss from continuing operations was 4.9 billion or four cents per share down from 9 million or eight cents per share for the fourth quarter last year for the full year non-GAAP net loss was 25 cents per share down from 41 cents per share in 2018 equal to 39 per se.
An improvement year on year.
Finally, cash and cash equivalents were 5.2 million at December 30, Onest 2019, compared with 9.3 million at the end of the our third quarter, representing a net use of cash affordability in in Q4 to 4 million was primarily used for various semiannual interest payments.
Excluding those interest payments that use of cash in the quarter would have been less than $1 million.
We remain focused on prudently manage our cash and we have not drawn on our 100 million dollar line of credit and with the proceeds from the sale of connected care, we did not Percy having to use this in the near term with that I will now turn the call back over to Robert.
Thanks, Bob Operator, we've completed the prepared remarks, we're now open to questions.
Thank you as a reminder to ask a question you'll need to press star 100 telephone.
Question Press the pound Keith please stand by we compile the Kuni roster.
Our first question comes from.
Charles Rhyee with Cowen you May proceed with your question.
Hi, it's actually chains on for Charles.
Can you give us an update on the FTC review of GPS cancer.
Maybe anything you could tell us regarding your dialogue with the FDA and any updates regarding timing.
Hi, This is Patrick good James.
I think weve.
You've announced.
How long ago, we announced the if you.
Turning to prove fruitful and maybe going through knows all them go was that about two quarters a quarter gunboat November November.
So thats been.
Both rise where we go through no is getting a CPT code and working on though.
Reimbursement.
And Thats why so.
Go ahead, so Jim.
And then.
Go ahead.
No. So so the process of applying for the reimbursement is.
Okay.
Applying for the code.
And code is the comprehensive test rather than the targeted therapy test.
Okay and is there anything you could tell us regarding.
That process and your expectations on timing on.
That reimbursement code.
Yes, so we we personally I personally went to meet and present ourselves to.
The.
Both rising organizations and.
We submitted the.
And tie application.
Thats going through the review they have very set.
Committee meeting dates.
We've met those dates and I think we up for the next meeting which.
I don't have the exact data that next meeting but.
Dissipate.
This to be whatever the timeframe, but they've communicated back to us with regard to.
Allocation and it looks like we will sit for the next meeting.
Okay.
Can we maybe talk about the sales pipeline across.
70 in Avnet, and what that looks like currently.
It's Bob your Ah, Yes, the sales pipelines is pretty strong we've got.
Significant opportunities that we are working towards through this fiscal year.
With the view that the sales cycle for the SaaS business is considerably longer than some of the other sales cycles that we have in.
Some of the past product line so.
The ultimately our pipeline is significant as you've seen from the announces we've made with respect to deals that we've just recently closed as as well as other deals through late last year, and we expect to continue that progress through.
This year and like I said ultimately the pipeline as large as just the sales cycle for closing those deals is.
Considerable and therefore, we just need to manage accordingly.
I think the number of covered lives, we know as ever to level as though hits.
It it's growing what we expect to get to through this year is in the 30 million ranged from where we are now of.
Mid.
Mid to high Twentys, So again, our covered lives on the equity platform revenues this role.
And with all these contracts that we continue to.
Signed through late last year and into this year.
Okay and can you give some color on maybe.
And with the proceeds.
Hello.
Second our business.
Okay.
So as far as really the.
Go ahead.
Okay.
Hey, sorry, it's Ron Jason.
So I think right now what we're doing as we're looking at your exploring different growth opportunities both.
Internally and externally.
Okay, and we organically do some things on the software to help grow the SaaS business or we looked at partnering or external.
And just one last question is can you give us some details.
Financial metrics of connected care, just silicon adjuster model for divestiture.
Well DAK was filed.
Early February so all the information that.
Is available is available through that filing a several weeks ago. So I think you can use that as leverage to what what the business as as much as we could because we have one reporting segment is able to.
Got it looks like.
Okay. Thank you.
Thank you. Our next question comes from Brendan cooler.
Jefferies. You May proceed with your question.
Thanks, Good afternoon.
The first I'll, just say recipes koby I know you fetch Glenn if he were somewhat close.
Bob just in terms of.
We think about how we set in terms of setting our models for 2000 or any color you can share with us as far as kind of opex expectations.
The divestiture, how you sort of foresee those progressing over the balance of the year.
Well I think in the short term, we're still driving.
Opportunities, where we can to reduce those costs, but again I think we also need to be cognizant that we need to invest in the right areas and rate opportunities to ensure that we continue to grow the topline so.
In the very near term I think we'll still have a bit of a tailwind from the connected care business.
Some incremental cost that.
Not amortized over the broader organization.
But I would give it somewhat of a flat to up marginally in.
In the short term and again, obviously in the long term as we stabilize and drive efficiencies, we will continue to drive improvements and reductions, but right now I would I would ultimately go of flat to up slightly.
Any chance you might be able to split out how much opex is consumed for the GPS business.
Again, I think we spoke about this previously where we purposely.
You know slowed down the GPS activity until.
We.
Get the appropriate coverage and so in the current state the GPS business isn't consuming significant amount of cost.
Through late last year into the beginning of this year, but as we move forward with.
Our ourselves modeling and the whole activity that Dr., Patrick and Bobby reference with respect to codes and.
And and those things that cost will ramp up.
But in the current state, where we sit with Q4 in early part of 2020, those costs are minimal less than a million dollars.
So Brian this is Patrick fiscal thank you for those comments made koby, but with regard to the.
GPS I think weve.
Committed ourselves that until we get this reimbursement.
In place.
And make it a sustainable growth business, we not.
Good to be continuing.
The pace that we had before with regard to the tested we were doing.
Okay Thats it from me thank you.
Alright, thank thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to management for any further remarks.
Hi, This is Robert just want us to everyone. Thanks.
During the call today's sharing.
The point sharing our progress.
Paul Thank you again for joining us today.
Okay.
Thank you ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.
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