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NantHealth, Inc. Common Stock (NH) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribing – Aug 6, 2021 at 12:31AM

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NH earnings call for the period ending June 30, 2021.

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NantHealth, Inc. Common Stock (NH)
Q2 2021 Earnings Call
Aug 05, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings, and welcome to the NantHealth 2021 second-quarter financial results conference call. [Operator instructions] As a reminder, this call is being recorded today, Thursday, August 5, 2021. I would now like to turn the call over to Robert Jaffe, investor relations for NantHealth. Please go ahead.

Robert Jaffe -- Investor Relations

Welcome, everyone, and thank you for joining us today to discuss NantHealth's 2021 second-quarter financial results. On the call today are Ron Louks, chief operating officer; and Bob Petrou, our chief financial officer. The call is being broadcast live at www.nanthealth.com. A playback will be available for three 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.

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Investors are encouraged to review NantHealth's press release announcing its full 2021 second-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?

Ron Louks -- Chief Operating Officer

Thanks, Robert. Good afternoon, everyone, and welcome to NantHealth's 2021 second-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 Dr.

Tiffany Avery as our new chief medical officer. Tiffany takes over for Dr. Bobby Reddy who has left NantHealth to join our sister company, ImmunityBio. We wish Bobby well.

Dr. Avery has been with NantHealth for two and a half years as our medical director of oncology. She would be responsible to providing clinical strategic direction and guiding development and deployment of our products and initiatives. Turning to our financial highlights.

Total revenue was $16.1 million, and our gross margin for the quarter was 56%, which is mostly flat quarter on quarter. R&D expense increased to $4.8 million from $4.2 million as we continued our investments in enhancing our products and services and further developing our capabilities. We believe these investments will pay dividends in the form of top line growth in mid to late next year. During the second quarter, we completed $137.5 million financing transaction and used a portion of the proceeds to pay off nearly all of our 2016 notes.

As a result of the transaction, the maturity of our debt has been significantly extended, and our cash position increased to $52 million at June 30. Bob will discuss our financials in more detail shortly. Now, let's discuss our software and services business. I'll begin with our Eviti business.

During the quarter, we expanded Eviti Connect beyond oncology to include autoimmune disease. As a reminder, autoimmune diseases affect more than 50 million people in the U.S. alone, making this an important new area for Eviti business. We are currently working with a customer to launch later this year, a tailored pilot program for autoimmune diseases.

At the same time, we continue to develop Eviti Connect for autoimmune diseases, including the creation of a completely new CMS library application. Eviti Connect has now achieved a significant milestone. For the last 10 years, Eviti Connect has played an important role in assisting oncology practices and health plans to provide high-quality and high-value patient care. More than 345,000 members have received evidence-based cancer treatment protocols, and more than 6,900 medical practices across the U.S.

have used Eviti Connect. Over the same period, I'm proud to say that we have launched more than 80 major product releases and continue to update the regimen library clinical trials database. Turning to payer engagement, which now includes our recently launched population health management tools, AllPayer. Our direct to provider solution recorded its eighth consecutive quarter of growth.

We consolidated all payers' pricing tiers into one simplified plan and released a new Medicare eligibility and benefits API. Turning to our recently acquired network monitoring business, OpenNMS. We debuted an updated visual identity, including a new logo and website. We announced a new reseller, Software Information Resource Corporation, and secured a five-year renewal from a major government agency.

We delivered hardware appliances for beta testing of secure distributed monitoring with a Fortune 500 consumer electronics company, and we released Meridian 2021 to enterprise OpenNMS users and Horizon 28.0, which enables users to visualize and filter traffic flows by quality of service. To sum up, we completed a new financing, which significantly extended the maturity of our debt and increased our cash position after repaying our 2016 notes, we expanded our Eviti Connect solution into a new disease state autoimmune and expect to launch a tailored program later this year, and we continue to invest in further development of our products and services capabilities. With that overview of business, I'll turn the call over to Bob to discuss our financial results in more detail. Bob?

Bob Petrou -- Chief Financial Officer

Thank you, Ron. For Q2 2021, total revenue was 16.1 million compared with 17.6 million in the prior-year second quarter. The decline was expected mainly related to the amortization of services related to expired or renewal contracts, as we have mentioned previously. Total revenue of 16.1 million in the quarter was flat to previous quarter.

Gross profit was 9.1 million or 56% of revenue, a decrease from 10.3 million or 58% of revenue for the same quarter in the prior year. The majority of the decline is tied to the lower revenue in the quarter. Gross margin will remain under pressure until higher revenue is generated to offset the cost base required to manage our product offerings. Total operating expenses increased 3.5% to 17.7 million from 17.1 million in the prior-year second quarter.

This is driven by our continued investment in our products and the acquisition of OpenNMS in Q2 of 2020. Quarter on quarter, total operating expenses declined, so we expect opex to increase as we continue to fund the development of our OpenNMS product lines and other product offerings. For Q2 2021, net loss from continuing operations attributable to NantHealth was 15.3 million or $0.13 per share. This is compared with 48.3 million or $0.44 per share in the prior-year second quarter.

On a non-GAAP basis, net loss from continuing operations attributable to NantHealth in Q2 2021 was 8.8 million or $0.08 per share. This is compared with 7.5 million or $0.07 per share for the second quarter of last year. Finally, cash and cash equivalents were approximately 52 million at June 30, 2021. This is compared with 10.8 million as of March quarter end.

Not including convertible note funding and associated expenses, usage of cash was approximately 6.5 million. With the majority of the 2016 convertible notes behind us, available cash on hand will allow for the continued investment in our products and offerings for future growth we expect. With that, I will now turn the call back over to Robert.

Robert Jaffe -- Investor Relations

Thanks, Bob. Dave, we've completed the prepared portion of the conference. We're ready to open up the call to questions.

Questions & Answers:


Operator

Certainly, and thank you very much. [Operator instructions] And there appear to be no questions at present time. I'll turn the call back to management for final comments. Thank you.

Robert Jaffe -- Investor Relations

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

Operator

[Operator signoff]

Duration: 9 minutes

Call participants:

Robert Jaffe -- Investor Relations

Ron Louks -- Chief Operating Officer

Bob Petrou -- Chief Financial Officer

More NH analysis

All earnings call transcripts

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