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NantHealth, Inc. (NHIQ)·Q2 2022 Earnings Summary

Executive Summary

  • Q2 2022 net revenue was $16.5M, the third consecutive quarter of top-line growth; gross margin was 55% and GAAP net loss per share improved sequentially to $(0.11) while non-GAAP net loss per share was $(0.10) .
  • Year over year, revenue grew modestly (+2.5%) while gross margin ticked down 100 bps; SG&A and R&D rose on continued product and platform investments .
  • Cash and cash equivalents fell to $5.7M from $16.1M in Q1 and $29.1M in Q4 2021, highlighting liquidity risk absent additional financing or improved cash generation .
  • No formal financial guidance was issued; product milestones (delegated entity approvals, new payer line-of-business, OpenNMS releases) and “third consecutive quarter of growth” were key narrative drivers for stock reaction focus .

What Went Well and What Went Wrong

What Went Well

  • “Third consecutive quarter of top-line growth” with Q2 revenue at $16.5M and gross margin of 55%, underscoring steady topline and margin stability; “overall gross margin has remained relatively steady over the last three years” (Ron Louks) .
  • Strategic wins: Delegated Entity status approved in MS, VA, IA; new site-of-service functionality in Eviti Autoimmune; and a new line of business with a major healthcare payer expected to go live in H2 .
  • OpenNMS released Horizon 30, Helm 8.0, ALEC 2.0, and Plugin API 1.0—advancing network monitoring and AI correlation capabilities .

What Went Wrong

  • Gross margin slipped 100 bps YoY (56% → 55%), while SG&A rose to $14.0M and R&D to $5.9M YoY on continued product and platform investments, compressing operating results .
  • Liquidity declined materially: cash fell to $5.7M at Q2-end from $16.1M in Q1 and $29.1M in Q4 2021, elevating near-term financing and cash management concerns .
  • Non-GAAP net loss increased YoY to $(11.4)M (vs $(9.0)M), driven by higher operating expenses despite modest revenue growth; non-GAAP EPS $(0.10) vs $(0.08) YoY .

Financial Results

Trend by Quarter (oldest → newest)

MetricQ4 2021Q1 2022Q2 2022
Total Net Revenue ($USD Millions)$16.0 $16.373 $16.498
Gross Margin (%)57% 56% 55%
Gross Profit ($USD Millions)$9.104 $9.194 $9.151
SG&A Expense ($USD Millions)$14.784 $14.980 $14.017
R&D Expense ($USD Millions)$5.197 $5.715 $5.861
GAAP Net Loss per Share ($)$(0.14) $(0.14) $(0.11)
Non-GAAP Net Loss per Share ($)$(0.10) $(0.11) $(0.10)
Cash & Equivalents ($USD Millions, period-end)$29.084 $16.078 $5.711

YoY Comparison (Q2 2021 vs Q2 2022)

MetricQ2 2021Q2 2022
Total Net Revenue ($USD Millions)$16.090 $16.498
Gross Margin (%)56% 55%
Gross Profit ($USD Millions)$9.081 $9.151
SG&A Expense ($USD Millions)$11.837 $14.017
R&D Expense ($USD Millions)$4.849 $5.861
GAAP Net Loss per Share ($)$(0.13) $(0.11)
Non-GAAP Net Loss per Share ($)$(0.08) $(0.10)

Revenue Mix

Revenue Type ($USD Millions)Q4 2021Q1 2022Q2 2022
SaaS-related$15.262 $15.771 $15.861
Maintenance$0.515 $0.464 $0.428
Professional Services$0.250 $0.138 $0.208
Total Software-related$16.027 $16.373 $16.497
Total Net Revenue$16.030 $16.373 $16.498

Results vs Consensus (Q2 2022)

MetricConsensusActualSurprise
Revenue ($USD Millions)N/A$16.498 N/A
GAAP EPS ($)N/A$(0.11) N/A
Non-GAAP EPS ($)N/A$(0.10) N/A
Note: Wall Street consensus via S&P Global was unavailable for NHIQ for Q2 2022.

Non-GAAP Adjustments (Q2 2022)

  • Notable items: Change in fair value of Bookings Commitment reduced GAAP loss by $2.594M; intangible amortization $2.233M; stock-based compensation $1.263M; noncash interest expense $0.036M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Overall Financial GuidanceFY/Q3 forward——No formal guidance provided in the Q2 press release or call materials

Earnings Call Themes & Trends

TopicQ4 2021 (Prior-2)Q1 2022 (Prior-1)Q2 2022 (Current)Trend
AI/Technology initiativesOpenNMS Minion appliance; Horizon 29; security enhancements Expansion of cloud and data analytics; new apps on new cloud platform OpenNMS Horizon 30, Helm 8.0, ALEC 2.0, Plugin API 1.0 released Steady platform advancement
Regulatory/CertificationsUtilization management certification added in KY, FL, MA HITRUST certification for NaviNet Open; strong security posture Delegated Entity status approvals in MS, VA, IA Building regulatory credentials
Product performance (Eviti)Autoimmune program live with MPC; oncology expansion Multi-year oncology renewal with expanded scope; Autoimmune expansion Autoimmune: more diseases/drugs; site-of-service functionality; upcoming IVIG Broadening clinical coverage
Payer engagementNew TPA multi-year agreement; alliances (Change Healthcare, PriorAuthNow) Partner Portal launch; authorization workflow improvements New line of business with a major payer to go live in H2; Open Authorizations enhancements Growing payer footprint
Operating investmentsHigher SG&A/R&D vs PY SG&A/R&D up; continued product investments Opex up 15% YoY; driven by product/platform build-out Ongoing investment pressure

Management Commentary

  • “For the 2022 second quarter, we reported net revenue of $16.5 million, representing the third consecutive quarter of top-line growth…our overall gross margin was a solid 55 percent for the quarter and has remained relatively steady over the last three years.” — Ron Louks, COO .
  • “Operationally, we are committed to further enhancing our products and services…expanding our pipeline of pilot programs for The OpenNMS Group, as well as for our Artificial Intelligence (AI) and Quadris businesses.” — Ron Louks, COO .
  • “Eviti Connect for Autoimmune Diseases customers are already realizing meaningful savings; we expect those savings to grow as we expand the product’s coverage.” — Ron Louks, COO .
  • On opex: total operating expenses increased 15% YoY to $20.9M due to continued investments in product portfolios and platform/infrastructure build-out (call narrative) .

Q&A Highlights

  • The publicly available transcript emphasizes topline growth and margin stability, alongside continued investment in products and platform; no explicit financial guidance was provided .
  • Management reiterated focus areas: payer engagement expansion (new line of business), Eviti Autoimmune coverage growth, and OpenNMS technology releases .
  • Tone remained constructive on operational milestones but acknowledged higher opex as the driver of YoY expense growth .

Estimates Context

  • S&P Global consensus estimates were unavailable for NHIQ for Q2 2022; as a result, we cannot quantify revenue or EPS beats/misses versus Wall Street expectations at this time. Values retrieved from S&P Global were unavailable.
  • Given the modest YoY revenue growth and slight gross margin compression, we would expect estimate revisions (if any) to focus on opex intensity and cash runway rather than topline, but this requires consensus data to confirm .

Key Takeaways for Investors

  • Topline stability: Q2 revenue of $16.5M marks the third straight quarter of growth; SaaS remains ~96% of total revenue, underpinning recurring mix .
  • Margin steady but pressured: gross margin at 55% (down 100 bps YoY) amid higher opex from strategic investments; watch operating leverage as product launches mature .
  • Liquidity risk rising: cash declined to $5.7M at Q2-end; absent improved operating cash flow or financing, near-term liquidity is a key monitoring point for PMs .
  • Product/market catalysts: delegated entity approvals in new states, new payer line-of-business slated for H2, and multiple OpenNMS releases could support deal flow and retention .
  • Non-GAAP dynamics: Q2 non-GAAP net loss $(11.4)M reflects adjustments (e.g., Bookings Commitment fair value change, intangible amortization, SBC); understand quality of loss drivers .
  • No guidance: with no formal financial guidance, stock may trade on execution updates (payer go-lives, Eviti Autoimmune expansion, OpenNMS pilots) and liquidity developments .
  • Near-term trading: event-driven catalysts include H2 customer go-lives and product milestones; medium-term thesis hinges on converting pipeline into durable revenue while managing opex and strengthening the balance sheet .