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NantHealth's Q1 Revenues Rise 15 Percent

NEW YORK (360Dx) – NantHealth reported after the close of the market on Wednesday a 15 percent year-over-year jump in revenues for the first quarter.

For the three months ended March 31, the firm posted a total of $22.5 million in revenues, up from $19.5 million in the year-ago period, but far short of the analysts' average estimate of $29.1 million. 

On a conference call after the release of the firm's financial results, NantHealth CFO Paul Holt said that revenue growth was driven by growth across the firm's software-as-a-service business; other services revenues, and the firm's GPS Cancer test, which recorded $500,000 in revenues for the quarter.

Recognized GPS revenue came from three sources, Holt added — the company's international distributors; cash received from payors who don't have agreements with NantHealth; and payments from patients covered by payors with agreements with the firm. 

During Q1 2017, there were 365 commercial orders of NantHealth's GPS Cancer test, up from 326 in Q4 2016. The firm delivered 266 GPS Cancer tests, up from 233 in the prior quarter.

Holt said that a substantial majority of the 266 delivered GPS tests were for patients with insurers that don't have agreements with NantHealth.

During Q1 2017, the firm added two payers for a total of 10 payer contracts. The estimated number of patients with cancer covered by a payer for GPS testing was about 327,000, the company said. 

The firm has been battling the fallout from a news report in March saying a contract associated with a $12 million donation by the company's founder to the University of Utah forced the school to purchase $10 million in services from NantHealth in return.

The deal provided the company with valuable data that was used to build a product for evaluating a patient's risk for rare and inherited disease, and made it possible for NantHealth to inflate the number of test orders for its GPS Cancer test that were reported to investors in late 2016, according to the report from Stat.

After the report was published, a number of class action lawsuits were filed against the company, alleging it made false statements in connection with its initial public offering.

In a statement accompanying the first quarter results, NantHealth Chairman and CEO Patrick Soon-Shiong said that the firm is focused on extending coverage for the GPS test in the commercial health insurance and self-employed payor markets.

On Wednesday, the firm announced the appointment of Sandeep Reddy as CMO, and Soon-Shiong added that Ron Louks has joined NantHealth as its chief operating officer.

The company increased its R&D spending 25 percent to $13.4 million in Q1 2017 from $10.7 million in Q1 2016, but cut its SG&A costs 24 percent year over year to $20.9 million from $27.4 million.

NantHealth's net loss for the recently completed quarter was $41.1 million, or $.34 per share, compared to a net loss of $33.1 million, or $.36 per share, a year ago. Non-GAAP loss per share was $.24, which missed the consensus Wall Street estimate of a loss of $.20 per share.

The company exited Q1 2017 with $124.9 million in cash and cash equivalents. 

In early morning trading on Thursday, shares of NantHealth on the Nasdaq were down about 8 percent at $3.18.