2016 IPO Prospects: NantHealth Testing the IPO Markets, Yet Again

According to a recent report by Grand View Research Inc., the global molecular diagnostics market size is expected to reach $8.02 billion by 2020 driven by the increasing prevalence of infectious and cardiovascular diseases along with rising geriatric population.

NantHealth’s Offerings

Culver City-based NantHealth is a transformational healthcare firm that has successfully integrated biomolecular medicine and bioinformatics with advanced technology capabilities to improve the healthcare system. It was founded in 2007 by Dr. Patrick Soon-Shiong, an Los Angeles-based billionaire medical entrepreneur. Prior to founding his portfolio of Nant companies, Soon-Shiong was an oncologist and an entrepreneur who sold two drug companies: APP Pharmaceuticals Inc. in 2008 and Abraxis BioScience Inc. in 2010 to achieve his billionaire status.

In 2011 Soon-Shiong founded NantWorks, an ecosystem of companies focused on integrating healthcare related information with technical prowess to improve healthcare offerings. NantHealth is a part of this umbrella of companies and offers systems-based solutions that help deliver personalized healthcare solutions to patients based on their specific molecular profiles. It integrates the patient’s molecular data with large-scale, real-time biometric signal and phenotypic data to track patient outcomes and deliver precision medicine.

Its adaptive learning system called Comprehensive Learning Integrated NantHealth Intelligent Clinical System (CLINICS) is a unique combination of software, middleware, and hardware systems. It collects, indexes, analyzes, and interprets billions of molecular, clinical, operational, and financial data points derived from multiple sources. It then uses the data thus collected to continuously improve decision-making capabilities and optimizes decision algorithms over time.

In simple terms, NantHealth stores detailed medical records in the cloud and then analyzes genetic information to help doctors find the best available treatment. The company claims that it can analyze the genetic data from a tumor within 47 seconds and transfer its analysis electronically to a doctor who can then follow up with a more informed treatment.

Besides its analytic engine, NantHealth also owns a molecular diagnostic tool called Genomic Proteomic Spectrometry Cancer or GPS Cancer that is expected to be released this quarter. The tool helps in predicting how a patient will respond to different treatments by measuring the whole genome and proteome of a patient.

As healthcare providers migrate from fee-for-service to value-based remuneration models, NantHealth’s solutions are able to accelerate the availability of evidence-based clinical practice.

NantHealth’s Financials

NantHealth currently operates as a wholly owned subsidiary of parent company NantWorks. But that is about to change soon. Earlier this month, NantHealth filed, yet again, to go public. The company had filed for an IPO last year, but had withdrawn those plans citing market conditions. Last year, the Nasdaq Biotechnology Index had taken a beating primarily due to the tighter government regulations on drug pricing. After touching a 52-week high in July last year, the Index had fallen 15% by November, causing NantHealth to withdraw its IPO plans. The Index may not have recovered since, but that hasn’t stopped NantHealth from going back to the market to raise funds.

Earlier this month, it filed for an IPO under the JOBS Act. It plans to raise $92 million from the IPO. Initial filing suggests that the company earned revenues of $58.3 million with net loss of $72 million in 2015. Revenues have grown from $33.9 million and losses have reduced marginally from $84.4 million recorded in 2014.

So far, NantHealth is venture funded with $680 million raised from investors including Allscripts, Celgene, Kuwait Investment Authority, Sovereign Wealth Funds, and Verizon Ventures. Its last round of funding was held in July 2015 when it raised $200 million in a private equity round with investment from Allscripts. The funding had valued NantHealth at $2 billion.

Molecular diagnostics is still a very young industry and NantHealth is not alone in assisting providers to deliver the right treatment. Besides hospital research laboratories, there are other companies such as Foundation Medicine, Caris Life Sciences, and Personal Genome Diagnostics that are developing tools for molecular testing. For healthcare industries, a lot rides on investment in Research and Development and to add to it, there is a long waiting time to see results. NantHealth is no different.

This segment is a part in the series : 2016 IPO Prospects