Nan­tHealth to trim jobs, as­sets

Los Angeles Times - - BUSINESS - By Sa­man­tha Ma­sunaga sa­man­tha. ma­sunaga @la­times.com

Cul­ver City firm will cut 300 jobs and sell some as­sets as it looks to fo­cus on ar­ti­fi­cial in­tel­li­gence for can­cer treat­ment.

Los Angeles bil­lion­aire Pa­trick Soon-Shiong’s Nan­tHealth Inc. said it would cut about 300 em­ploy­ees and sell some as­sets as the biotech com­pany looks to fo­cus on ar­ti­fi­cial in­tel­li­gence for can­cer treat­ment.

The Cul­ver City com­pany said Thurs­day that it signed an agree­ment to sell its provider and pa­tient en­gage­ment as­sets to Chicagob­ased health­care in­for­ma­tion tech­nol­ogy firm Allscripts Health­care So­lu­tions Inc., al­low­ing Nan­tHealth to “in­te­grate the re­main­ing en­gi­neer­ing teams to fo­cus on can­cer.”

Nan­tHealth said the as­set sale, in­te­gra­tion of ac­quired busi­nesses and other moves are ex­pected to re­sult in an­nual cost sav­ings of more than $70 mil­lion.

On Thurs­day, the com­pany re­ported a net loss for the quar­ter that ended June 30 of $70.1 mil­lion. Its net rev­enue fell 17% from a year ear­lier to $26.2 mil­lion.

Nan­tHealth spokes­woman Jen Hod­son said in a state­ment Fri­day that the com­pany’s moves could help it be­come “one of, if not the lead­ing can­cer com­pany driv­ing 21st cen­tury de­liv­ery of care.”

How­ever, the com­pany’s share price fell sharply, down 13.8% to $3.49.

Bran­don Couil­lard, an eq­uity an­a­lyst at Jefferies, re­marked in a note to clients that Nan­tHealth had grown “im­mensely com­plex” af­ter it ac­quired a num­ber of com­pa­nies prior to its stock mar­ket de­but last sum­mer.

Be­tween “syn­er­gies,” trans­fer­ring a num­ber of work­ers to Allscripts and in­ter­nal con­sol­i­da­tion, the com­pany said it ex­pected to shed about 300 work­ers.

One of Nan­tHealth’s key prod­ucts is a ge­netic test known as GPS Can­cer, which helps on­col­o­gists de­ter­mine in­di­vid­u­al­ized can­cer treat­ments. Soon-Shiong, the com­pany’s CEO, is the sec­ond-largest share­holder of Los Angeles Times owner Tronc Inc.

Soon-Shiong an­nounced a re­search ini­tia­tive last year called Can­cer MoonShot 2020 fo­cused on de­vel­op­ing can­cer treat­ments.

Nan­tHealth touted sales of its GPS Can­cer com­mer­cial tests in the sec­ondquar­ter earn­ings re­port. The com­pany said that it had its “largest month of or­ders to date” in July, and that 379 GPS Can­cer com­mer­cial tests were or­dered in the sec­ond quar­ter, with 264 de­liv­er­ies.

But in the note to clients, Couil­lard said that com­mer­cial up­take of the GPS Can­cer test re­mained “lack­lus­ter” as or­ders and tests com­pleted were essen­tially flat com­pared with the pre­vi­ous quar­ter and that GPS test rev­enue fig­ures were un­changed from the pre­vi­ous two quarters.

The com­pany’s stock traded as high as $18.59 last year. But its share price has tum­bled since then, es­pe­cially af­ter health­care pub­li­ca­tion Stat re­ported in March that Soon-Shiong and his char­i­ta­ble foun­da­tion do­nated $12 mil­lion to the Univer­sity of Utah for ge­netic-dis­ease re­search, and the univer­sity paid Nan­tHealth $10 mil­lion for ge­netic anal­y­sis.

Nan­tHealth has said the univer­sity was free to choose any ven­dor and dis­puted the as­ser­tion that the do­na­tion was made to ben­e­fit SoonShiong’s com­mer­cial in­ter­ests.

“We re­main fo­cused on ex­tend­ing cov­er­age and driv­ing physi­cian en­gage­ment for our GPS Can­cer so­lu­tion around the world,” Soon-Shiong said in a state­ment Thurs­day. “We strongly be­lieve that GPS will re­sult in ex­tended and im­proved qual­ity of life.”

Dar­ren McCollester Getty Im­ages for Nan­tHealth

NAN­THEALTH is led by Dr. Pa­trick Soon-Shiong. The Cul­ver City com­pany will cut 300 em­ploy­ees and sell its provider and pa­tient en­gage­ment as­sets to Chicago-based health­care IT firm Allscripts.

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