Bleeding Money, Patrick Soon-Shiong’s NantHealth Restructures and Lays Off 300
Published: Aug 14, 2017
August 11, 2017
By Mark Terry, BioSpace.com Breaking News Staff
After losing $111 million in the first six months of this y ear, NantHealth , one of billionaire Patrick Soon-Shiong’s biotech companies, plans to reorganize and lay off 300 people. Approximately half of those people laid off will transfer to Allscripts.
NantHealth calls itself a next-generation, evidence-based, personalized healthcare company. Its primary product is the GPS Cancer ProteoGenomic Molecular Profiling Solutions, which is the only CLIA-CAP machine learning diagnostic assay. It also has Eviti Clinical Decision Support.
The company indicates it plans to focus on its core competencies, primarily artificial intelligence, and integrate the various acquisitions and partnerships with another of Soon-Shiong’s companies, NantOmics.
It has also inked a deal with Allscripts to sell its provider/patient engagement assets. This, it says, will allow it to integrate the remaining engineering teams at NantHealth to focus on cancer. This is expected to result in major reductions in operating losses. As part of that sale of assets, there will be a “conveyance of 15 million NantHealth shares previously purchased by Allscripts. Between synergies and the transfer of some number of personnel to Allscripts together with NantHealth’s internal consolidation, headcount will be reduced by approximately 300 staff.” All of these efforts are projected to create more than $70 million in annualized cost savings.
John Carroll, writing for Endpoints News, notes, “There have been several reports spotlighting questionable business activities at NantHealth, with STAT and Politico highlighting evidence that Soon-Shiong had used his charitable activities to pump up the numbers at NantHealth on its GPS Cancer diagnostic tests. STAT has also essentially accused Soon-Shiong of using his much ballyhooed cancer moon shot program to market the tests.
“Soon-Shiong has vehemently denied the charges, though, referring to them as ‘maliciously false.’”
None of which has helped the company’s stock. It is currently at $4.05. It traded at $15.35 on September 15, 2016.
In 2015, Allscripts invested in NantHealth, and within a matter of weeks, NantHealth bought Harris Healthcare Solutions. Allscripts took a 10 percent stake in NantHealth for $200 million. The acquisition of Harris gave NantHealth control of FuxionFX, which bolstered its healthcare informatics endeavors. With the new reorganization, Allscripts used its 15 million shares in NantHealth to buy FusionFX and some additional assets. NantHealth’s shares are trading around $4, making the current deal worth around $60 million.
NantHealth, on its part, indicates that the GPS adoption is still growing and that July was the largest month of orders to date. In the second quarter, 379 GPS commercial tests were ordered with 264 delivered, and that it added 6,300 Covered Lives under a new regional agreement with the International Association of Fire Fighters at the end of the first quarter.
“We remain focused on extending coverage and driving physician engagement for our GPS Cancer solution around the world,” Soon-Shiong said in a statement. “We strongly believe that GPS will result in extended and improved quality of life. Internationally, we are pursuing opportunities through partnerships with locally based resellers and we have added a seasoned sales executive to aid our efforts. Post quarter end, Sistemas Medicos Nacionales became the first international payer to cover GPS Cancer for patients, bringing a new standard of care to Mexico. On the domestic front, our efforts include introducing pilot programs with commercial insurance and self-insured payers to accelerate coverage adoption.”