Publicly traded precision medicine company NantHealth more than doubled its net loss in the third quarter as its CEO said the company is struggling to get reimbursed for its genetic cancer tests.
Culver City, Calif.-based NantHealth's net loss was $97.5 million in the quarter that ended Sept. 30, up from $42.4 million at the same period in 2017. Total net revenue was $22.3 million in the quarter, up 2.4% from the prior year, in which it was $21.8 million. The company's gross profit in the quarter was about half of that, at $11.1 million, up nearly 8% from $10.3 million in the prior-year period.
NantHealth wrote in its earnings report that the company is seeing "continued sequential quarterly growth" in the number of physicians ordering its tests designed to yield genetic profiles of cancers. Providers ordered 930 of its GPS Cancer and Liquid GPS tests in the third quarter, according to its report.
But NantHealth CEO Dr. Patrick Soon-Shiong said on the company's call with investors Thursday afternoon it's been providing the tests largely without reimbursement.
"While reimbursement was important, for us it was more important to get to the molecular truth of the cancer," he said.
The report said NantHealth was able to expand its reimbursement contract with a large, national employer in the healthcare industry for the Liquid GPS test in the third quarter. The report didn't name the employer.
Bob Petrou, NantHealth's interim chief financial officer, attributed the higher revenue on the call to an increased contribution from its software as a service, or SaaS, division, to overall revenue, as well as operational efficiencies.
NantHealth also reported lower expenses in the quarter: $22.9 million, down about 13% compared with $26.3 million at the same time in 2017, which Petrou said reflected continued cost management efforts. The company's loss from operations was $11.8 million in the quarter, down 26% from $16 million in the third quarter of 2017.
In August 2017, NantHealth sold its provider and patient engagement assets to Allscripts, which the company said was part of an effort to focus on its core competencies and accelerate its plan to achieve profitability. The company also laid off about a third of its employees around that time after reporting a steep net loss, with some of those workers going to Allscripts.
Soon-Shiong announced in June he was planning an initial public offering later this year for his technology and biotechnology company, Nant, which is developing a cancer vaccine.
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