NantHealth, Inc. (NH) Q4 2021 Earnings Call Transcript

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NantHealth, Inc. (NH 100.26%)
Q4 2021 Earnings Call
Feb 24, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, ladies and gentlemen, and welcome to the NantHealth 2021 fourth quarter financial results conference call. [Operator instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Robert Jaffe, investor relations for NantHealth. Thank you, sir.

Please go ahead. Mr. Jaffe, please go ahead.

Robert Jaffe -- Investor Relations

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 three months on NantHealth's website. I'd 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 fourth quarter and full year financial results for the company's reasons for including those non-GAAP financial measures in its financial results announcement.

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 discuss the business, followed by Bob who will discuss the financial results. 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 the NantHealth's 2021 fourth quarter and full year financial results conference call. We hope all of you have been safe and well since our last call.

I'd like to start today with some comments about the company's recent past and then share a few comments on the upcoming year. For some time, we have been working to position NantHealth for sustainable growth. These efforts have included refocusing our business on software and services; divesting non-core assets; acquiring the complementary business, the OpenNMS Group; and reducing costs throughout the organization when and where appropriate. At the same time, however, we continue to build out our capabilities and invested in product development, regularly launching new and enhanced products and services.

Importantly, last April, we also completed a major refinancing, which provided financial flexibility, and more recently, we expanded and strengthened our senior management team. As a result, we believe we are now positioned for top-line growth and excited about the opportunities and prospects across our entire portfolio. Turning briefly to our fourth quarter financial results. As expected, revenue and gross margins increased in Q4 from Q3 levels.

Revenue in Q4 was approximately $16 million, which was a return to our average quarterly run rate for 2021. We are pleased to have ended the year on a high note, which includes recording the highest quarterly revenue contribution from OpenNMS Group in a short time as part of the NantHealth family. Now let's discuss our software and services business, beginning with our Eviti business. In the fourth quarter, we signed and went live with Eviti Connect for autoimmune diseases with Maryland Physicians Care.

The autoimmune diseases program is the first application for Eviti Connect beyond oncology. And as we said previously, development is underway for additional disease states. We continue to expand Eviti Connect for oncology with the addition of the largest customer-owned health insurer in the U.S. We expanded utilization management and certification to include three new states.

Eviti Connect customers from Kentucky, Florida and Massachusetts now have access to fully delegated end-to-end services. And we signed a new partner agreement to provide product offerings that improve the management of care logistics for complex high-risk and chronic diseases. Turning to payer engagement. 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 recorded 17% year-over-year growth for NaviNet AllPayer Advantage, our direct-to-provider solution. We launched a new NantHealth partner portal, which offers payer customers self-service and on-demand access to interactive reporting on workflows, trends, analytics and insights. And we enhanced NaviNet Open authorizations, which helps guide users through its submission of clinical criteria information and supporting documentation. We entered into an alliance agreement with Change Healthcare to integrate the InterQual Connect automation solution with NaviNet Open.

This allows NaviNet payer customers to leverage InterQual medical review criteria in our NaviNet-based electronic prior authorization workflow. And we signed an agreement with PriorAuthNow, which enables -- PriorAuthNow to automate the streamlined prior authorization requests for its clients. Turning to our network monitoring business, OpenNMS. We partnered with a Fortune 500 managed service provider to offer OpenNMS Meridian monitoring for more than 150 of its customers.

We released OpenNMS Horizon 29, featuring support from persisting flow data to Cortex and improve streaming analytics for flows at scale. We launched OpenNMS Minion virtual appliance and cloud-enabled service to help organizations quickly, reliably and securely deploy OpenNMS Minion collectors to remote or adjacent private networks. And finally, on an expedited basis, we delivered updates to address the global Log4j vulnerability, collaborating closely with the OpenNMS open-source community. To sum up, we signed and went live with Eviti Connect for autoimmune diseases with a key customer.

This is the first application for Eviti Connect beyond oncology, and customer interest in this new offering is strong. We have and will continue to develop and expand our capabilities and invest and launch new and enhanced products and services across our offering. And we have built a strong foundation for our company, and we're excited about the opportunities and prospects for each of our businesses. We believe 2022 will be a year of top-line growth.

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, Ron. For Q4 2021, total revenue was $16 million compared with $18.6 million in the prior-year fourth quarter. For the full year 2021, total revenue was $62.6 million compared with $73.2 million in the prior year. The quarter-on-quarter decline and the year-over-year decline as referenced in the past was mostly tied to reduction in amortization of professional services that impacted all of 2021.

Gross profit for the quarter was $9.1 million or 57%, which is a decrease from $11.4 million or 61% for the same quarter in the prior year. The decline is tied to the lower revenue in the quarter compared to previous year but do expect gross margin to get back to normalized levels in 2022 as revenue grows. Total operating expenses increased 15.1% to $20.9 million from our $18.2 million in the prior-year fourth quarter, which is driven by our continued investment in our products and service offerings. Year over year, total operating expenses increased 7.9% to $75.7 million from $70.2 million in the prior year, driven by the acquisition of OpenNMS in Q3 of 2020 as we now had a full year of OpenNMS expenses in 2021.

For Q4 2021, net loss from continuing operations was $16.7 million or $0.14 per share, as compared with $20.1 million or $0.18 per share in the prior-year fourth quarter. For the full year 2021, net loss from continuing operations was $58.3 million or $0.51 per share, which is compared with $88.3 million or $0.80 per share in the prior year. On a non-GAAP basis, net loss from continuing operations in Q4 2021 was $11.8 million or $0.10 per share, which is compared to $6.2 million or $0.06 per share for the fourth quarter last year. For the full year, on a non-GAAP basis, net loss from continuing operations in 2021 was $41.9 million or $0.37 per share.

This compared with $27 million or $0.24 per share in the last year, which is mainly tied to our lower revenue in 2021. Finally, cash and cash equivalents were approximately $29 million at December 31, 2021, which is compared to $45.5 million at September 30, 2021. Usage of cash was approximately $16.4 million, which was driven by the final $9.5 million payment of our convertible notes from 2016 and then the remaining other working capital needs. With that, I will now turn the call back over to Robert.

Robert Jaffe -- Investor Relations

Thanks, Bob. Operator, that completes our prepared portion of today's call. We're now -- please open up the call to questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] We're showing no questions in queue at this time. I'd like to turn the floor back over for closing comments.

Ron Louks -- Chief Operating Officer

Well, thank you, all, for joining us today. We look forward to sharing our progress on our next scheduled conference call. Have a good day.

Operator

[Operator signoff]

Duration: 14 minutes

Call participants:

Robert Jaffe -- Investor Relations

Ron Louks -- Chief Operating Officer

Bob Petrou -- Chief Financial Officer

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