This story has been updated from a previous version to include comments made by NantHealth executives during the company's earnings call.
NEW YORK – NantHealth said Thursday after the close of the market that its revenues in the second quarter increased 17 percent to $25.7 million from $22.0 million in Q2 2018.
NantHealth reported a gain of 23 percent in software-related revenue to $23.9 million from $19.5 million in Q2 2018. Revenues from sequencing and molecular analysis dipped 47 percent to $491,000 from $924,000 a year earlier. In home healthcare services, Q2 sales totaled just short of $1.3 million, a dip of 22 percent from $1.6 million in the same period in 2018.
Notably in Q2, NantHealth's software business, which makes up the bulk of its revenue, became profitable for the first time, Chairman and CEO Patrick Soon-Shiong said Thursday in an earnings call.
Overall, the Culver City, California-based company lowered its net loss by 37 percent during the quarter to $14.7 million, or $.13 per share, from $23.4 million, or $.21 per share, in the same period a year earlier. On an adjusted basis, net loss was $.04 per share.
NantHealth recorded 136 second quarter orders for its GPS molecular diagnostic tests, including 86 GPS Cancer tests and 50 Liquid GPS panels. That continued an intentional downward trend, thanks to a company policy instituted early this year of restricting access to GPS Cancer and Liquid GPS without the promise of insurance reimbursement or direct patient payments.
"The lower number of GPS tests was expected," COO Ron Louks said.
Chairman and CEO Patrick Soon-Shiong has long bemoaned the lack of Medicare and commercial reimbursement for the GPS products. NantHealth is working to get US Food and Drug Administration clearance for these molecular tests to increase the chance of gaining Medicare coverage.
The company is seeking FDA clearance on the fast-track Class II regulatory pathway, similar to the 510(k) pathway, predicated on Memorial Sloan Kettering Cancer Center's MSK-IMPACT next-generation sequencing assay. However, what Soon-Shiong calls the NantHealth "omics core" differs from MSK-IMPACT in that it sequences the entire human exome rather than a small subset, and offers information about tumor mutation burden.
Soon-Shiong said Thursday that the company recently had another meeting with the FDA on the tumor mutation burden issue.
"The FDA so far is very supportive of our filing. They asked us to provide more information, which we have," he said.
Soon-Shiong added that he hopes to have "good news" from the FDA in the next quarter or so.
NantHealth also said that SG&A expenses decreased by 17 percent in Q2 to $15.2 million from $18.4 million a year earlier. R&D costs fell 22 percent to $4.6 million from the previous year's $5.9 million.
As of June 30, NantHealth had $7.1 million in cash and equivalents, reflecting a cash burn of $5.3 million in Q2. The company has not had to draw on a $100 million line of credit granted last year by sister company NantCapital, and CFO Bob Petrou said that it would remain that way at least through the current quarter, if not for the rest of 2019.
NantHealth had faced a July 15 date for being delisted from the Nasdaq Stock Market because its stock price has mostly languished below $1 per share since late last year. Shares got as high as $1.33 in March, but did not remain above the threshold for the necessary 10 consecutive business days.
The company said in a regulatory filing last month that it now has until Dec. 23 to comply with Nasdaq's requirement that the market value of all publicly held shares top $15 million for 10 business days. According to Yahoo Finance, NantHealth has about 21.5 million shares not held by insiders, so the threshold price now is $.70.