Losses at NantHealth Inc (NASDAQ:NH) continue to mount as the company’s share price spirals. To change this trajectory, the company has announced restructuring efforts that will slash its workforce by as many as 300.
NantHealth announced underwhelming second-quarter results this week. Revenue plunged nearly 17% year-over-year to $26.2 million. The company reported a net loss of $70.1 million, or $0.58 per share, a significant increase over the second-quarter 2016 loss of $54.1 million, or $0.54 per share.
Investors have not responded favorably. NantHealth’s share price is trading near $3.60 and has lost 75% of its value since its initial public offering in June 2016.
Hemorrhaging money has also forced the company to rethink its business strategy. To remedy the situation, NantHealth said it is focusing the business on its core competencies of artificial intelligence and cancer care. This means cutting its workforce by up to 300 through layoffs and the sale of assets to Allscripts Healthcare Solutions, Inc. The cull represents one-third of the company’s headcount. The restructuring will trim $70.0 million a year from NantHealth’s expenses.
Those who have followed Dr. Patrick Soon-Shiong’s Wall Street career will sense a pattern. Soon-Shiong took Nantkwest Inc (NASDAQ:NK) public in July 2015, securing a $2.6-billion market cap despite a flimsy track record.
Soon-Shiong is the CEO and executive chairman of both companies. While he doesn’t take a paycheck from NantHealth, he does take one from Nantkwest.
In 2015, he earned a whopping $147.6 million. His compensation comprised a $1.00 base salary, a $368,301 bonus, $15.0 million worth of stock awards, and $132.2 million worth of option awards. At the time, Nantkwest’s market cap was only $703.0 million.
Since Nantkwest went public, the company’s share price has lost 77% of its value.
The billionaire cancer physician plans to merge a number of other pharmaceutical startups under the NantBio brand and take the company public in 2018. The new venture will be valued at more than $8.0 billion and be made up of NantBioscience Inc., NantOmics, LLC, and NantCell, Inc.
Nantkwest and NantHealth will remain separate.
“NantHealth Reports 2017 Second Quarter Financial Results,” NantHealth Inc, August 10, 2017.
“As losses mount, Soon-Shiong’s NantHealth to lay off dozens, reduce headcount by 300,” StatNews, August 10, 2017.
“14A,” United States Securities and Exchange Commission, last accessed August 11, 2017.
“Soon-Shiong Plans Nant IPO,” LA Business Journal, May 15, 2017.