Q1 2021 NantHealth Inc Earnings Call

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Ladies and gentlemen, thank you for standing by and the welcome to the NAV, How 2021 first quarter financial results Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. The ask a question. During this time, we will need to press Star then the number one on your telephone keypad.

And for your question and there has been answered and you would like to withdraw your question press the pound key thank you.

I would like to turn it over to Mr. Robert Jaffe.

That's the relation at Manhattan, you May begin the conference Sir.

Welcome everyone and thank you for joining us today and to discuss net until it's <unk>.

And in 'twenty, one first quarter financial results.

On the call today of non Lukes, Chief operating officer, and Bob Petrou, Chief Financial Officer.

This call is being broadcast live at Www Dot and health Dot com.

That will be available for three months on the until its web site.

And I'd like to make the cautionary statement and remind everyone. The all of the information discussed on todays call ill cover the under the Safe Harbor provisions of the Litigation Reform Act.

The company's discussion today will include forward looking information.

And the managements 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 the until the press release announcing its full 2021 first quarter financial results for the company's 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 and the company's earnings press release issued earlier today.

And the 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.

And then open the call for questions with the.

That said I will now turn the call over to Ron Louks Ron.

Thanks, Robert Good afternoon, everyone and welcome the net House 2021 first quarter financial results conference call and we.

And we hope all of you and your families remain safe and well.

I'll begin with a brief review of our financial results.

The all of our total revenue of $16 $2 million was software related revenue and our gross margin for the quarter was 56%.

R&D expense increased to $5 million and $3 6 billion as we continued our investments and further developing our SaaS offerings, expanding our data and AI capabilities and our recently acquired up and invest business Bob discuss of financials in more detail shortly.

Turning to our capital structure.

The weeks ago, we completed $177 $5 million of financing transactions. The benefits of this transaction include extending the maturity of our debt 2026 from 2021.

And providing out of capital to allow for broad investments and our existing business.

We are obviously very pleased with this transaction and let's see.

Discuss the software and services business.

And with the revenue business during the quarter, we launched Debbie connect eight four which included new functionality that enables drug customization and provides added flexibility and new payer communication capability, the reduces delays and treatment planning review.

Earlier this week, we announced a major milestone revenue connect our payer solution for oncology and lots of equity connect product and diseases, which represent the first expansion for avid connect beyond oncology.

Autoimmune diseases affect more than 50 million people and the U S alone and give us an important new area of forever the business on it.

Related note. We also announced that we have developed the new flexible platform that will allow us to expand and additional disease further extending the applications revenue net.

Also in May and it's and that's the one of the Med Tech Breakthrough award for Best overall Med Tech software. This is the prestigious award which recognizes that of any connection innovative the ability to breakthrough digital health and medical technology markets, and streamline processes that aid payers and providers and optimize and patient outcomes.

Turning to payer engagement channel.

With the recently launched population health management tools and Q1, we secured three multiyear customer renewal of contracts that are secured and $700000 by the end of contract value.

All payer or direct to provider solution and recorded its seventh consecutive quarter of growth.

We enhanced NAV and had the central workflows to support automation of promote greater use of ability and we lost population health management, and a new product offering and inger.

And it's multiple data sources into one platform, providing a more complete view of the patient.

Turning to our recently acquired network monitoring business open and the diverse we deployed a solution for global energy customer that skills of monitoring analysis of the network communications by aggregating the data the streets.

And that flow and we initiated the service pilot for zero touch apply and solution with the large national retailer.

To sum up we announced and importantly financing and which we will retire existing convertible notes the financing significantly extend the maturity of our debt and provides additional resources to support our growth and initiatives.

And expand our average connect solution into a new disease state and overtime, we expect to expand and an additional diseases and we continue to invest and our SaaS offerings data services and cloud capabilities with that overview or of business I'll turn the call over to Bob to discuss our financial results in more detail Bob.

Thank you Ron for Q1, and 2021 total revenue was $16 2 million compared with $18 2 million and Q1 of the prior year.

The decrease was expected and mainly due to the completion of the amortization on the higher value of NAV and that professional service projects and 2020 versus Q1 2021.

Gross profit was $9 1 million of 56% of revenue a decrease from the 11 million of 60% for the same quarter and the prior year.

The decline in gross margin percentage is tied to the lower revenue and the quarter.

Gross margin will remain under pressure until higher revenue generated to offset the cost base required to manage our product offerings.

Total operating expenses increased 10% to $18 5 million from $16 8 billion of the prior year first quarter.

Mainly driven by our continued investments and data and open the NMS the.

Total operating expenses of $18 5 million were only marginally higher than the last two quarters, which were $18 1 million and $18 2 million respectfully.

We expect the small growth and cost to continue as we continue to build on new products and offerings.

For Q1, 2021 net loss from continuing operations attributable to net health was $15 4 million or <unk> 14 per share. This is compared with $8 9 million or <unk> <unk> per share and the prior year first quarter.

On the non-GAAP basis net loss from continuing operations attributable to net health and Q1 'twenty 'twenty. One was $9 6 million of <unk> per share. This is compared with $6 1 million or <unk> <unk> per share and for the first quarter of last year.

Finally, cash and cash equivalents were $10 8 million at March 31, 2021, compared with $22 eight the only not the end of 2020 net usage of cash was approximately $12 million, which was mainly driven by our investments here and the IP costs and the other front and loaded uses of cash.

Subsequent to Q1 close we were able to close on additional financing, which will be reflected in our Q2 cash balance with that I will now turn the call back over to Robert.

Thanks, Bob.

Operator, we will now.

Entertain questions from from folks.

Certainly sir at this time I would like to remind everyone. If you would like to ask a question you can press Star then the number one on your telephone keypad.

And then that are and then the number one on your telephone keypad to ask a question for Paul.

And that's for a moment to compile the Q&A roster.

We don't have any questions at this time Sir.

Okay. Thanks, everyone for joining for joining US today, we look forward to sharing our progress on our next scheduled conference call. Thanks again for joining us today.

And this concludes today's conference call and thank you all for participating you may now disconnect.

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Non-GAAP.

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