NantHealth Reports 2019 First-Quarter Financial Results

NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based,
personalized healthcare company, today reported financial results for
its first quarter ended March 31, 2019.

“We had an excellent start to fiscal 2019,” said Bob Petrou, Chief
Financial Officer of NantHealth. “Our solid 2019 first quarter results
were driven by higher total revenue combined with an improved gross
margin. Our SaaS business, which comprises the largest portion of our
operations, continued its sequential quarterly topline growth, and with
the recent signing of a multi-year contract for our Eviti clinical
decision support solution, we expect to continue to see further revenue
growth.”

Software and Services Highlights:

• Clinical Decision Support (Eviti):
  • In Q2, signed a three-year partnership with a leading nonprofit
    multi-state health plan, expanding Eviti Connect’s total covered
    lives to over 25 million
  • In Q1, released versions 7.6 and 7.7, with the following
    enhancements:
    • Added features that alert payers when a patient begins
      treatment before eligibility is determined
    • Clinical content teams can now publish regimens more
      efficiently and effectively to meet client needs
    • Payer medical management groups can now customize warnings and
      deviations for their clinically equivalent programs
    • Payers are now provided with superior insights into member
      eligibility and treatment timeframes
• Payer Engagement (NaviNet):
  • In Q1, implemented refreshed pricing for NaviNet AllPayer
    services, which is expected to drive enhanced SaaS financial
    performance in 2019
  • In Q1, enhanced new workflow capabilities within the
    Authorizations applications to support functionality in submission
    workflow, and updated the Authorization Appeals application to
    better support users
  • In Q1, upgraded the Claim Status Inquiry tool to allow for better
    visibility of actions taken within NaviNet for non-NaviNet Claims,
    increasing utility of the NaviNet solution beyond current payer
    partners
  • In Q1, provided health plans/payers greater efficiency by allowing
    enhanced customization to Open Claim attachment metadata,
    improving automated file retrieval and processing on their backend
• Connected Care (DeviceConX):
  • In Q1, participated in Healthcare Information and Management
    Systems Society (HIMSS) Conference in Orlando, FL, showcasing the
    DeviceConX solution’s ability to successfully deliver GE
    Healthcare device data and the company’s collaborations with Dell
    Boomi, Baxter and other kidney dialysis treatment solutions
  • In Q1, significantly increased connectivity license sales, driving
    improved recurring maintenance revenue on a go forward basis, as
    previously announced
  • In Q1, as previously announced, deployed DeviceConX Version 5.15
    upgrade, with the ability to push OS security patches directly to
    HBox Connected Care hardware devices
  • In April, the company presented its VitalsConX technology at the
    American Nursing Informatics Association (ANIA) Annual Conference,
    demonstrating the ease of collecting, inputting and integrating
    patient data into electronic health records (EHRs)
• Sequencing and Molecular Analysis – Highlights
  • In Q1, total GPS orders were 820, comprised of GPS Cancer of 428
    and Liquid GPS of 392
  • In Q1, scientific teams from NantHealth and NantOmics presented
    five posters at the American Society of Clinical Oncology’s (ASCO)
    Gastrointestinal Cancers Symposium and two posters at the ASCO’s
    Genitourinary Cancers Symposium. The research presented focused on
    the significance of RNA expression, in tissue and blood, and
    individual biomarkers in determining why some patients do not
    respond to targeted cancer therapies based on DNA genomic
    profiling alone

Business and Financial Highlights

For the 2019 first quarter, total net revenue was $23.7 million,
compared with $22.3 million in 2018 first quarter. Gross profit was
$12.4 million, or 52% of total net revenue, compared with $11.2 million,
or 50% of total net revenue, for the prior year period. Selling, general
and administrative expenses declined to $16.8 million, from $20.7
million in 2018 first quarter. Research and development expenses
decreased to $5.1 million from $5.2 million.

Financial results for the first quarter of 2019 included non-cash
charges for loss from related party equity method investment and
Allscripts liability of $4.7 million. Net loss from continuing
operations, net of tax, was $19.8 million, or $0.18 per share, compared
with $22.0 million, or $0.20 per share, for the 2018 first quarter. Net
loss was $19.9 million, or $0.18 per share, compared with $22.2 million,
or $0.20 per share, for 2018 first quarter.

For the 2019 first quarter, on a non-GAAP basis, adjusted net loss from
continuing operations was $10.7 million, or $0.10 per share, compared
with $13.5 million, or $0.12 per share, for the 2018 first quarter.

Conference Call Information and Forward-Looking Statements

Later today, the company will host a conference call at 1:30 p.m. PT
(4:30 p.m. ET) to review its results of operations for the first quarter
ended March 31, 2019. The conference call will be available to
interested parties by dialing 844-309-3709 from the U.S. or Canada, or
281-962-4864 from international locations, passcode 6159197. The call
will be broadcast via the Internet at www.nanthealth.com.
Listeners are encouraged to visit the website at least 10 minutes prior
to the start of the scheduled presentation to register, download and
install any necessary audio software. A playback of the call will be
archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking
statements regarding topics such as the company’s financial status and
performance, regulatory and operational developments, and other comments
the company may make about its future plans or prospects in response to
questions from participants on the conference call.

Use of Non-GAAP Financial Measures

This news release contains references to Non-GAAP financial measures,
including adjusted net loss and adjusted net loss per share, which are
financial measures that are not prepared in conformity with United
States generally accepted accounting principles (U.S. GAAP). The
Company’s management believes that the presentation of Non-GAAP
financial measures provides useful supplementary information regarding
operational performance, because it enhances an investor’s overall
understanding of the financial results for the Company’s core business.
Additionally, it provides a basis for the comparison of the financial
results for the Company’s core business between current, past and future
periods. Other companies may define these measures in different ways.
Non-GAAP financial measures should be considered only as a supplement
to, and not as a substitute for or as a superior measure to, financial
measures prepared in accordance with U.S. GAAP. Non-GAAP per share
numbers are calculated based on one class of common stock and do not
incorporate the effects, if any, of using the two-class method.

About NantHealth

NantHealth, a member of the NantWorks ecosystem of companies, provides
leading solutions across the continuum of care for physicians, payers,
patients and biopharmaceutical organizations. NantHealth enables the use
of cutting-edge data and technology towards the goal of empowering
clinical decision support and improving patient outcomes. NantHealth’s
comprehensive product portfolio combines the latest technology in
payer/provider platforms that exchange information in near-real time
(NaviNet and Eviti), connected care solutions (DeviceConX and
VitalsConX) that deliver Medical Device Interoperability (MDI) and
molecular analysis through its GPS Cancer® and Liquid GPS^SM
profiling solutions. For more information, please visit www.nanthealth.com
or follow us on Twitter,
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and LinkedIn.

This news release contains certain statements of a forward-looking
nature relating to future events or future business performance. Forward-looking
statements can be identified by the words “expects,” “anticipates,”
“believes,” “intends,” “estimates,” “plans,” “will,” “outlook” and
similar expressions. Forward-looking statements are based on
management’s current plans, estimates, assumptions and projections, and
speak only as of the date they are made. Risks and uncertainties
include, but are not limited to: our ability to successfully integrate a
complex learning system to address a wide range of healthcare issues;
our ability to successfully amass the requisite data to achieve maximum
network effects; appropriately allocating financial and human resources
across a broad array of product and service offerings; raising
additional capital as necessary to fund our operations; achieving
significant commercial market acceptance for our sequencing and
molecular analysis solutions; establish relationships with, key thought
leaders or payers’ key decision makers in order to establish GPS Cancer
and Liquid GPS as a standard of care for patients with cancer; our
ability to grow the market for our Systems Infrastructure, and
applications; successfully enhancing our Systems Infrastructure and
applications to achieve market acceptance and keep pace with
technological developments; customer concentration; competition;
security breaches; bandwidth limitations; our ability to continue our
relationship with NantOmics; our ability to obtain regulatory approvals;
dependence upon senior management; the need to comply with and meet
applicable laws and regulations; unexpected adverse events; clinical
adoption and market acceptance of GPS Cancer and Liquid GPS; and
anticipated cost savings. We undertake no obligation to update any
forward-looking statement in light of new information or future events,
except as otherwise required by law. Forward-looking statements involve
inherent risks and uncertainties, most of which are difficult to predict
and are generally beyond our control. Actual results or outcomes may
differ materially from those implied by the forward-looking statements
as a result of the impact of a number of factors, many of which are
discussed in more detail in our reports filed with the Securities and
Exchange Commission.

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