Beset with losses in the year since it went public, NantHealth plans to cut about one-third of its workforce—300 jobs—through layoffs and transfers of employees to one of its investors, Allscripts Healthcare Solutions, which will buy some of the company’s assets.
NantHealth—a personalized healthcare company founded by Patrick Soon-Shiong, M.D.—did not say how many of the employees would be laid off, though a published report claimed that number would be about 130, with the rest transferring to Allscripts.
As of December 31, 2016, NantHealth had 922 full-time employees in the U.S., Canada, the U.K. (including Great Britain and Ireland), Singapore and India, according to its Form 10-K annual report for 2016, filed March 31. That staff included “446 associates in operations, including engineering, 13 in product management, 226 in client services, 83 serving in a clinical function, 70 in sales and business development, and 84 in general and administrative functions.”
The job cuts and asset selloff, NantHealth said, were part of a restructuring intended to refocus the company on its core businesses of delivering precision medicine by integrating novel diagnostics with large-scale, biometric and phenotypic data to track cancer patient outcomes.
To that end, NantHealth will integrate into the company multiple acquisitions and its partnership with NantOmics, another entity of Dr. Soon-Shiong’s NantWorks umbrella of companies created to provide a comprehensive molecular profile of a patient’s cancer. The integration with NantOmics, NantHealth said, will enable it to focus on cancer machine learning systems and artificial intelligence.
NantOmics’ offerings include Eviti Clinical Decision Support, which serves 23.4 million patients with connected care and provider/payer engagement services; and GPS Cancer™ ProteoGenomic Molecular Profiling Solution, a CLIA-CAP machine learning diagnostic assay that the company says is the only one of its kind in the nation.
GPS Cancer integrates whole genome (DNA) sequencing, whole transcriptome (RNA) sequencing, and quantitative proteomics, with the goal of providing to oncologists a detailed molecular profile of a patient’s cancer to form the basis of personalized treatment.
GPS Cancer compares a patient’s tumor genome to their normal genome, and includes whole genome sequencing of over 20,000 genes and 3 billion base pairs—as well as whole transcriptome sequencing of over 200,000 RNA transcripts.
Driving Engagement for GPS Cancer
“We remain focused on extending coverage and driving physician engagement for our GPS Cancer solution around the world,” Dr. Soon-Shiong, M.D., who is NantHealth’s CEO and Chairman, said in a statement yesterday. “We strongly believe that GPS will result in extended and improved quality of life.”
Dr. Soon-Shiong has been at the center of news stories in recent months focused on the awarding of grants from his Chan Soon-Shiong NantHealth Foundation to entities he controlled, as well as the promotion of GPS Cancer through his Cancer MoonShot 2020 initiative launched last year with the aim of speeding up cancer immunotherapy development. He has insisted he has not done anything wrong.
Cancer MoonShot 2020 was created last year by pharma and biotech giants, major academic cancer centers, and community oncologists who joined with Independence Blue Cross and Bank of America to launch the coalition.
NantHealth said it will sell the provider/payer engagement business to Allscripts, including the FusionFX solution and components of its NantOS software connectivity solutions.
Allscripts bought a 10% stake in NantHealth two years ago for $200 million cash.
The deal, according to NantHealth, will allow it to deploy its remaining engineering teams for cancer profiling, for 15 million NantHealth shares previously purchased by Allscripts.
At $4.05 a share at the close of trading yesterday, the shares are valued at a total $60.75 million. The sale to Allscripts is expected to close in the third quarter, subject to customary closing conditions, NantHealth said.
NantHealth said the restructuring will generate annual cost savings of $70 million. The company finished the second quarter with a net loss of $70.064 million, up from a $54.132 million net loss in Q2 2016. Total net revenue slipped nearly 17%, to $26.23 million compared with $31.49 million in the second quarter of 2016. The company blamed its revenue decline on a $5.2 million decrease in sales of services outside its core businesses.
For the first half of this year, NantHealth posted a net loss of $111.179 million, 27% higher than the net loss of $87.277 million for January-June 2016. NantHealth also ended 2016 with a net loss of $184.1 million, compared with $72 million for 2015.
The losses have caused NantHealth’s shares to plummet from the $14 price of the company’s initial public offering last year, when it sold 6.5 million shares, and generated $83.2 million in net proceeds. The IPO was No. 6 on GEN’s list of the “Top 20 IPOs of January-June 2016.”