NantHealth, Inc. Common Stock (NH) Q3 2021 Earnings Call Transcript

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NantHealth, Inc. Common Stock (NH 7.61%)
Q3 2021 Earnings Call
Nov 04, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the NantHealth Inc. 2021 third quarter financial results conference call. [Operator instructions] As a reminder this conference is being recorded, Thursday, November 4th, 2021. I would now like to turn the conference 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 2021 third quarter financial results. On the call, today are Ron Louks, chief operating officer; and Bob Petrou, chief financial officer. its call is being broadcast live at www.nanthealth.com. This 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 a 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 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, 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 NantHealth 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 three new members to our senior leadership team.

With the addition of Jerry Magin, senior vice president, global sales marketing; Neil Carpenter, senior vice president of strategy; and Arlyn Small, senior vice president, human resources. We have strengthened our team with highly experienced and solid executives to head up these strategic concepts. We're excited to have him on board as we look to leverage our investments and other capabilities and enter our next phase of growth. Our financial updates will be highlighted by Bob later on.

Now let's discuss the software services business. I'll begin with our Eviti business. On recent calls, we discuss 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're 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 continue the expansion of our client base adding two 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 multi-state customer own health insurer.

We sign in and agree with Care Continuity Incorporated, a leader in network integrity and care navigation. Together we'll work to improve care logistics management for complex high-risk and chronic diseases. Initially focusing on extending care pathways to Eviti Connect customers and their members followed by navigating care pathway opportunities. And we launched Eviti Connect 8.6, which includes more robust savings in ROI visualizations for payer customers via expanded reporting that is enabled by our Quadris data analytics capabilities.

During the payer engagement, in October we signed a multi-year agreement with a new third-party administrator that we use NaviNet Open to enhance the services it provides to self-insured health plan customers. We signed a three-year renewal with a long-term partner and lead provider of drug authorizations and enabling electronic submission of prior authorization for any drug under any plan including Medicare, Medicaid. And we introduced new authorizations submission API, a lot of providers to automate and streamline prior authorization requests to connected NaviNet payer customers. Turning to our recently acquired network monitoring business opened in a mess.

We renewed our agreement with 12 key customers and expanded services with one of the largest telecom providers in the U.S. And we continued development preparation for fourth quarter launched a zero-touch appliance. To sum up, we expanded the senior team with three seasoned experienced executives in sales, strategy, and key resources. All our highly experienced and key additions as we begin the next stage of our growth and develop.

We initiated the first implementation or early next solution to do 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're making to build 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?

Bob Petrou -- Chief Financial Officer

Thank you, Rod. 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 to closer to our average gross 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 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 are 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 to 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.

Robert Jaffe -- Investor Relations

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

Questions & Answers:

Operator

[Operator instructions] We have no question. I will now turn the call back to the management for any closing remarks.

Robert Jaffe -- Investor Relations

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

Duration: 9 minutes

Call participants:

Robert Jaffe -- Investor Relations

Ron Louks -- Chief Operating Officer

Bob Petrou -- Chief Financial Officer

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