Annual Report
NantHealth provides enterprise solutions that help businesses transform complex data into actionable LQVLJKWV %\ RIIHULQJ HI¿FLHQW ZD\V WR PRYH interpret, and visualize complex and highly sensitive information, NantHealth enables customers in healthcare, life sciences, logistics, telecommunications and other industries to automate, understand and act on data while keeping it secure and scalable. For more information, visit nanthealth.com.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37792 NantHealth, Inc. (Exact name of registrant as specified in its charter) Delaware 27-3019889 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3000 RDU Center Drive, Suite 200 27500 Morrisville, North Carolina (Zip Code) (Address of principal executive offices) (855) 949-6268 Registrant’s telephone number, including area code ____________________________________________________________________ 9920 Jefferson Blvd. Culver City, California 90232 (Former name, former address and former fiscal year, if changed since last report) ____________________________________________________________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.0001 per share NH The NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☐No☒ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes☐ No☒ Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒No☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES☐ NO☒ The aggregate market value of the voting and non-voting common stock held by non-affiliates of the Registrant on June 30, 2021, based on a closing price $2.32 per share of common stock on the NASDAQ Global Select Market was approximately $99.0 million. The number of shares of Registrant’s common stock, $0.0001 par value per share, outstanding as of February 24, 2022 was 115,520,244. DOCUMENTS INCORPORATED BY REFERENCE As noted herein, the information called for by Part III is incorporated by reference to specified portions of the Registrant’s definitive proxy statement to be filed in conjunction with the Registrant’s 2022 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the Registrant’s fiscal year ended December 31, 2021.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K, or this Annual Report, including, without limitation, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 1A, “Risk Factors,” contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “might,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “should,” “would,” “project,” “plan,” “outlook,” “target,” “expect,” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include, but are not limited to, statements concerning the following: • the structural change in the market for healthcare in the United States, including uncertainty in the healthcare regulatory framework and regulatory developments in the United States and foreign countries; • any impact of the COVID-19 pandemic, or responses to the pandemic, on our operations or personnel, or on commercial activity or demand across our and our customers’ businesses; ◦ physician, payer and pharmaceutical business needs for clinical decision support, payer/provider collaboration and data analytics solutions and any perceived advantage of our solutions over those of our competitors, including the ability of our platforms to help physicians treat their patients; ◦ our ability to increase the commercial success and to accelerate commercial growth of our clinical decision support, payer/provider collaboration, network monitoring and management, and data analytics solutions and our other products and services; ◦ our plans or ability to develop, implement and commercialize a cloud/SaaS-based version of our network monitoring and management solutions; ◦ our ability to effectively implement, offer and manage delegated entity services to health plans in a compliant and timely manner in connection with our decision support solutions; ◦ our ability to effectively manage our growth, including the rate and degree of market acceptance of our solutions; ◦ our ability to offer new and innovative products and services, including new features and functionality for our existing products and services; ◦ our ability to attract new partners and customers and our ability to retain or renew contracts with partners and customers; ◦ our ability to estimate the size of our target market; ◦ our ability to maintain and enhance our reputation and brand recognition; ◦ consolidation in the healthcare industry; ◦ competition which could limit our ability to maintain or expand market share within our industry; ◦ restrictions and penalties as a result of privacy and data protection laws; ◦ our use of “open source” software; ◦ our ability to use, disclose, de-identify or license data and to integrate third-party technologies; ◦ data loss or corruption due to failures or errors in our systems and service disruptions at our data centers; ◦ breaches or failures of our security measures; ◦ our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our users; ◦ risks related to future acquisition opportunities; ◦ the requirements of being a public company; ◦ our ability to attract and retain key personnel; ◦ our ability to obtain and maintain intellectual property protection for our solutions and not infringe upon the intellectual property of others; ◦ our financial performance expectations, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in research and development, sales and marketing and general and administrative expenses, and our ability to achieve and maintain future profitability; and ◦ our expectations regarding our ability to comply with Nasdaq continued listing standards. We caution you that the foregoing list does not contain all of the forward-looking statements made in this Annual Report. - 3 -
These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. These statements are within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements appear throughout this Annual Report and are statements regarding our intent, belief, or current expectations, primarily based on our current assumptions, expectations and projections about future events and trends that may affect our business, financial conditions, operating results, cash flows or prospects, as well as related industry developments. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described in Part I, Item 1A, “Risk Factors,” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report. We undertake no obligation to update any forwardlooking statements for any reason to conform these statements to actual results or to changes in our expectations, except as required by law. - 4 -
Form 10-K For the year ended December 31, 2021 Table Of Contents Page PART I. 6 Item 1. Business 6 Item 1A. Risk Factors 23 Item 1B. Unresolved Staff Comments 70 Item 2. Properties 70 Item 3. Legal Proceedings 70 Item 4. Mine Safety Disclosures 71 PART II. 72 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 72 Item 6. Reserved 72 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 73 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91 Item 8. Financial Statements and Supplementary Data 92 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139 Item 9A. Controls and Procedures 139 Item 9B. Other Information 140 Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 140 PART III. 141 Item 10. Directors, Executive Officers and Corporate Governance 141 Item 11. Executive Compensation 141 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 141 Item 13. Certain Relationships and Related Transactions, and Director Independence 141 Item 14. Principal Accounting Fees and Services 141 PART IV 142 Item 15. Exhibits, Financial Statement Schedules 142 Exhibits index 143 Signatures 146 We own or have rights to trademarks and service marks that we use in connection with the operation of our business. NantHealth, Inc. and our logo as well as other brands such as NaviNet, Eviti, NaviNet Open, Eviti | Connect, OpenNMS, Quadris and other marks relating to our product lines are used in this Annual Report on Form 10-K. Solely for convenience, the trademarks and service marks referred to in this Annual Report on Form 10-K are listed without the (sm) and (TM) symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. Additionally, we do not intend for our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. NantHealth, Inc. - 5 -
PART I Item 1. Business Overview NantHealth, Inc. (“NantHealth” or the “Company”) provides enterprise solutions that help businesses transform complex data into actionable insights. By offering efficient ways to move, interpret, and visualize complex and highly sensitive information, we help our customers in healthcare, life sciences, logistics, telecommunications, and other industries, to automate, understand, and act on data while keeping it secure and scalable. NantHealth’s product portfolio comprises the latest technology in payer/provider collaboration platforms for real-time coverage decision support (Eviti and NaviNet) and data solutions that include multi-data analysis, reporting and professional services offerings (Quadris). In addition, The OpenNMS Group, Inc. ("OpenNMS"), a NantHealth subsidiary, helps businesses monitor and manage network health and performance. Altogether, we generally derive revenue from software as a service ("SaaS') subscription fees, support services, professional services, and revenue sharing through collaborations with complementary businesses. We believe we are uniquely positioned to benefit from multiple significant market opportunities as healthcare providers and payers transition from fee-for-service to value-based reimbursement models. They need solutions that increase operational efficiency, manage costs, improve care collaboration and accelerate their pursuit of evidence-based clinical practice. We also believe that our core business lines enable opportunities to create data analytics services and assets which further drive value and efficiency for our customers. We are investing to further integrate big data and automated intelligence technologies within our core business lines and to create new product and service offerings. On July 22, 2020, NantHealth entered into an assignment agreement with Cambridge Equities, L.P. ("Cambridge") to acquire approximately 91% of OpenNMS. In August 2021, NantHealth purchased the remaining 9% of outstanding OpenNMS common stock that it previously did not purchase on July 22, 2020. The acquisition of OpenNMS, an enterprise-grade open-source network monitoring company, expands and diversifies NantHealth’s software portfolio and service offerings, adding AI technologies, and enhancing cloud and SaaS capabilities. We believe OpenNMS will provide NantHealth customers with a new set of services to maintain reliable network connections for critical data flows that enable patient data collaboration and decision making at the point of care. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. We Are Uniquely Positioned to Address Transformative Shifts across the Healthcare Continuum The shift to digital transformation. The proliferation of data is well-known across all industries, and this is particularly true in healthcare. Every medical device, network and platform is creating and consuming data at a staggering rate. We believe this presents both a challenge and an opportunity. The abundance of data makes it overwhelming to manage, and an even greater challenge is to extract business value embedded in data. Turning data into something businesses can use to their advantage can be a complex, manual task, and the time, effort and energy required can zero out the benefits. If businesses are unable to extract meaning, then data continues to accumulate, becoming a hindrance to business efficiency and effectiveness. It is precisely because it is challenging to make data actionable, that it becomes an opportunity for businesses to build competitive advantage. We believe we possess six key capabilities needed to help our customers unlock the value that resides in their data to deliver the right care at the right time and place. NantHealth has the ability to: 1) move data efficiently, 2) interpret it accurately, 3) visualize it intuitively while keeping the data 4) safe, 5) secure and 6) scalable. That is what we do at NantHealth. We provide enterprise solutions that help businesses transform complex data into actionable insights. These capabilities are delivered through a comprehensive suite of products and services unique to NantHealth. In addition to the acquisition of OpenNMS, which added network monitoring to our solutions catalog, we are expanding our data science capabilities and AI competencies to drive further innovation across our existing product lines and to explore new product and service offerings in the data analytics field. The shift to value-based care and evidence-based medicine. The efficiency and effectiveness of the current healthcare system is often hindered by the complex, dynamic interplay of three uncoordinated and segregated domains: the knowledge domain, the care delivery domain, and the payer domain. The disparate nature of these domains, and their often-inconsistent incentives and conflicting priorities, can inhibit interoperability and coordination. We believe three simultaneous, transformative shifts are highlighting these critical deficiencies of the current healthcare environment: - 6 -
1. A rapid evolution from traditional fee-for-service to patient-centered and patient-empowered, value-based models driven by quantifiable measures of outcomes relative to cost. Unsustainable escalating healthcare costs, which we believe are due to broken fee-for-service models, are driving many stakeholders and governments toward alternative delivery models. Despite significant investments in electronic health records ("EHRs") and other technologies designed to enable the transition to more value-based care, we believe that, in a fee-for-service model, the economic incentives generally discourage coordination among healthcare stakeholders and encourage volume-driven (rather than outcomes-driven) decision-making. This model results in healthcare and financial data that remains largely segregated into “walled gardens.” Thus, patient data often remains static and cannot be easily shared or interpreted due to siloed legacy proprietary platforms that lack interoperability. 2. The rise of evidence-based care to ensure patients receive the most effective care at the most appropriate cost. As drug prices soar and the overall expense of cancer and autoimmune care increases, unnecessary or inappropriate therapy has never been more costly. We believe leveraging the ever-evolving body of evidence-based standards of care can drive better and more efficient outcomes for members. Evidence-based care eliminates unwarranted variability by applying nationally accepted treatment standards at the moment of clinical prescribing, ensuring that compliance takes place at the front-end of care as opposed to the back-end review after treatment has begun. Evidence-based treatment that offers the best-expected outcome at a better cost than a competing therapy also supports the transformative shift to value-based care that benefits all parties. 3. Growing focus on health equity and the personalized care path members and patients need. Recent events, including the disproportionate impact of COVID-19 on communities of color, have raised awareness of the healthcare industry’s need to move towards a care delivery system that views members holistically. For example, we understand a cancer patient’s journey may be impacted by factors outside of the care system, like socioeconomic status – the neighborhoods and environments in which they work and live, and barriers such as internet, transportation, and healthy food availability. Access to information and social trust of patients differ, and those differences are too often put aside in the current standard of care thinking. We believe these shifts, and the associated challenges, require advanced technology systems and data expertise that our customers cannot quickly and easily develop on their own. Our unique portfolio of technology solutions allows us to collect, interpret and deliver data insights that help our customers improve their businesses, provide decision support with a comprehensive knowledge base of evidence-based treatment options, and help both payers and providers effectively transition to value-based care. Given the magnitude of these shifts and the difficulty involved in addressing the associated challenges, we believe our solution platforms serve to position NantHealth at the forefront of multiple market opportunities. We have invested significant capital, software development, data and healthcare expertise over a decade to develop, acquire and integrate the components that we believe address many of the challenges faced by stakeholders across the continuum of care. Our Strategy Our goal is to become the leading provider of solutions that enable enterprises to leverage actionable data insights. In the healthcare space, we seek to facilitate payer and provider collaboration, and to leverage clinical data and knowledge towards delivering improved patient outcomes and more effective treatment decisions for critical illnesses. To accomplish this goal, we plan to deploy NantHealth solutions designed to address and accelerate the transformational shifts occurring in healthcare (empowering the extraction of value from the growing abundance of data and supporting the evolution from traditional fee-forservice to value-based models), while also expanding our network monitoring solution capabilities to support the underlying infrastructure necessary to enable transformational shifts in healthcare and other industries. The key elements of our strategy include: • Leveraging NantHealth's key capabilities delivered through a comprehensive suite of solutions to unlock value from data. NantHealth’s solution capabilities include: • SaaS-based platforms: our enterprise-grade platforms are designed for automation, security, ease-of-use and scalability; • Evidence-based support: our robust database and analysis of FDA-approved treatment options improves decision support while reducing waste; • Real-world enabled insights: our solutions can provide real-world evidence that demonstrates effectiveness, safety and value; • Network performance: our OpenNMS services provide a highly scalable, reliable, and extensible platform for network monitoring; and • Interoperability: we connect and normalize data for real-time collaboration and information exchange. - 7 -
• Increasing sales of NantHealth solutions to healthcare payers, providers, and self-insured employers. We are marketing NantHealth solutions to healthcare payers and providers transitioning from fee-for-service reimbursement models to value-based care models in pursuit of improved patient outcomes and lower costs. We believe we are positioning NantHealth as a next-generation payer intermediary and partner with healthcare payers and self-insured employers as they roll out value-based model partnerships and transition to value-based precision care. • Growing the market for open source-based network monitoring services across industries and across sites of care within the health care sector. We are working to grow the on-premise install base for the OpenNMS network monitoring platform and expand sales of OpenNMS maintenance, support and professional service offerings. We are also expanding the OpenNMS service suite to include SaaS based monitoring services and easier to manage “no-touch” remote appliance services (including home-based devices). • Developing new features and functionality for NantHealth solutions. We are continuing to make significant R&D investments to create new features and functionality within NantHealth’s solutions. For example, we are exploring the expansion of our Eviti decision support product line to cover additional diseases and chronic conditions and are furthering the integration of artificial intelligence/machine learning (AI/ML)-based analytics into our network monitoring solutions to provide insights into alarm/event correlation, anomaly detection, and root cause analysis (RCA). We are also continuing the development of data analytics capabilities and assets so that we can expand the products and services offered to our healthcare customers and partners. • Complementing internal growth with strategic acquisitions. We believe opportunities exist for us to enhance our competitive position by acquiring additional companies with complementary products and technologies and/or acquiring rights to proprietary products or technologies from third parties. Our Industry Today, the explosion in the quantity, frequency and complexity of data and the ability to measure data in terms of outcomes relative to cost, demands mature, specialized software platforms, and expertise to address transformative shifts and challenges. Every device, network and platform is creating and consuming data at a staggering rate, making it overwhelming to manage, and extract business value embedded in the data. Nearly 100% of C-level executives surveyed by PricewaterhouseCoopers said they see data on customers as “critical or important” to getting an edge on competitors in the years ahead. Businesses must learn how to uncover actionable insights hidden in their data, or risk being left behind. But turning bits and bytes of data into something businesses can use to their advantage can be a complex, manual task that involves the ability to: • Connect systems • Normalize data • Interpret outputs • Make it actionable Developing the capabilities needed for businesses to undertake the challenge of managing, analyzing, and interpreting data is difficult. Those able to tap the insights hidden within their data and make it actionable for their employees, stakeholders and customers will unearth a new source of value and differentiation. In the U.S. healthcare industry, a rapid evolution from traditional fee-for-service to patient-centered and patientempowered, value-based models driven by quantifiable measures of outcomes relative to cost. In response to the rising cost of healthcare, government and private payers and providers are introducing value-based care models. In value-based models, providers assume increased levels of clinical and financial responsibility for patient outcomes, instead of being reimbursed strictly based on the quantity of services provided. We believe that healthcare platforms that efficiently assist healthcare stakeholders to transition to these value-based models will be best positioned to capture this opportunity. - 8 -
Challenges associated with the adoption of value-based models The healthcare continuum can be viewed as an aggregation of three distinct domains: • The knowledge domain, including academic centers, scientific institutions and companies that discover and commercialize medical and scientific knowledge; • The care delivery domain, including hospitals, community practices, physicians and other constituents that deliver healthcare to patients; and • The payer domain, including insurers, governments and self-insured employers that administer and provide funding to the healthcare system. The disparate and fragmented nature of these domains and economic incentives under traditional fee-for-service models frequently result in overtreatment, high costs and suboptimal patient outcomes. Fee-for-service models are as a general matter inherently site-centric, volume driven, reactive in nature and uncoordinated. In contrast, value-based models are generally more patient-centric, outcomes-focused, proactive and coordinated across the care continuum. Despite a clear need, the design and implementation of next-generation interoperable systems has been limited due to reliance on legacy, site-specific, fee-for-service technology systems and infrastructure. Since the passage of the Health Information Technology for Economic and Clinical Health (“HITECH”) Act in 2009, providers and payers have made significant investments in EHRs, and other technologies meant to enable the transition to value-based care. Despite extensive investment and coordination, the introduction of value-based models has been limited due to the shortcomings of legacy, proprietary systems and the reliance on unstructured data that hinders interoperability and cannot be sufficiently shared or manipulated to produce actionable findings. Value-based models require collection and analysis of longitudinal treatment, outcomes and financial data at the patient level, regardless of treatment site. Critically, these systems must also securely safeguard patient data in compliance with stringent Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and other privacy regulations. We believe that there is a significant need for interoperability platforms that dynamically access, normalize, integrate and update information from disparate sources across the healthcare continuum in real time. Secure interoperability platforms can allow for more comprehensive solutions development that proactively connect, deliver business and clinical intelligence and enable enhanced provider and patient engagement. Managing massive volumes of data requires specialized infrastructure, and making data meaningful and actionable requires it to be processed by advanced systems operating in scalable and reliable environments. The network monitoring market is moving away from corporate managed, on-premise solutions towards hybrid and cloud solutions with a focus on platform services expansion and AI/ML-based analytics to provide intelligent alarm/event management. Key trends include: • Expansion of the network edge to include internet of things components and the migration of the network core to the cloud requires that network performance monitoring and diagnostics tools provide visibility in hybrid environments, including edge and cloud network monitoring. • Implementation of cloud native applications and microservices for platform management and orchestration to optimize performance and cost in the cloud. • Increasing appetite for flexible deployment models include SaaS and on-demand pricing, and use of virtual machines, software appliances, and hardware appliances to enable these deployments. • Evolution of traditional network monitoring platforms beyond the basic levels of infrastructure monitoring, and incorporating APIs for easy extension of additional services such as Digital Experience Monitoring, flows/flowlogs, and other applications that support business users and understanding of end-user experience. • Increasing focus on AI/ML advanced analytics to support artificial intelligence for IT operations ("AIOps") (e.g., for anomaly detection and event correlation and RCA). • Focus on network security and alignment between network operations and security operations. With our highly scalable, reliable, and extensible platform solution for network monitoring, OpenNMS is well positioned to address these market trends. Our zero touch appliance solution enables remote monitoring of edge components and enables additional hybrid and cloud integrations. Our traffic analysis (flows) and route monitoring solutions provide deep understanding of network performance. Our Architecture for Learning Enabled Correlation (ALEC) AI/ML solution provides valuable insights and visualizations for interpreting complex faults/alerts. - 9 -
Our Market Opportunity We believe the increasing focus on managing, analyzing and interpreting the large amounts of generated data, and on value-based reimbursement models and evidence-based, personalized medicine will drive validation and adoption of NantHealth solutions. Proliferation of Data: Over 44T gigabytes of data have been amassed by companies as of 2020, with a projected 581% increase in new data by 2025. Given the challenges and specialized capabilities required to manage, analyze, and derive insights from the vast amounts of data, we believe we are uniquely positioned to address this market need. Cost of Cancer Care: Recent statistics show that 39.5% of Americans will be diagnosed with cancer at some point in their lives, resulting in an estimated cost of $246 billion by 2030. As the cost of cancer care continues to grow, there will be an ongoing need to balance cost efficiency with improved outcomes. Our evidence-based decision support solutions can help providers and payers better manage oncology care for the patients and members they serve. Transition to Digital: Reports show that medical communications are still reliant on faxes, phone calls, emails and other manual channels. Recent research suggests that around 70% of health-care organizations still use faxes. Our payer/ provider collaboration platforms can significantly improve the efficient, accurate and timely exchange of information. Management of Complex Networks: Today's enterprise requires insights and analytics regarding network performance and availability in order to maintain uptime across multiple environments, geographies and devices. Focus on Security: Government buyers continue to have a very strong interest in products incorporating zero trust network access due to the executive order on improving the nation’s cybersecurity. In the private sector, interest in zero trust grew more than 230% in 2020. To meet this need, OpenNMS is adopting zero trust architecture principles for its suite of products. Open Platform: Due to the rapid pace of innovation and the changing nature of enterprise networks due to the pandemic, buyers are looking to leverage technologies and technology platforms that are open and extensible. This allows them to plan and respond to the increasing number of changes and additional complexities of their environments. As an extensible and open network monitoring platform, OpenNMS offers a highly scalable solution that can be incorporated into existing technical architecture. We believe the potential addressable market for our solutions will continue to grow in relation to the market-share gains of valuebased models, the continuing transition to digital only clinical communications and collaboration and the adoption of precision medicine. NantHealth Solutions Our NantHealth solutions comprise a highly differentiated, integrated model for the application of data insights and the delivery of healthcare, comprised of our unique software-as-a-service platforms, data management, analysis and interpretation solutions and network monitoring solutions., enabling value-based care and evidence-based clinical practice. Our platforms and our multi-domain solutions are designed to address some of the most pressing cross-domain challenges across the healthcare continuum. Our solutions are single-domain and cross-domain offerings that can be utilized, for example, by a provider organization or hospital system and a commercial insurance provider in an Accountable Care Organization, ("ACO"), crossing multiple domains. We believe our unique systems-based approach positions us as a next-generation intermediary and partner that facilitates payment for value, improved patient outcomes and more efficient communication and collaboration among systems and industry participants. • Payer Solutions. Our NantHealth payer SaaS solutions, including NaviNet Open and Eviti Connect, establish daily access to the clinical practice and caregiver and leverage the data available on our systems infrastructure to facilitate reduction in overall administrative costs and payment for value. We believe our position between the payer and the provider allows us to align incentives as a next-generation payer intermediary, to help payers ensure consistent evidence-based treatment pathways and to accelerate pre-adjudication and lower administrative overhead for providers. This can ultimately drive quality of care and streamline workflows while improving control over the administrative and operating costs associated with eligibility and benefits, claims processing, referrals, authorizations, information exchange and review utilization. Our multi-payer collaboration solution, NaviNet Open, offers provider end users a uniform set of workflows and services across many or all the payers with whom they routinely collaborate. This multi-payer experience benefits payers and providers alike. Providers can benefit from a - 10 -
uniform experience and toolset across multiple payer relationships, and the payer can benefit from the uniform application of best practices, tools, and options, as well as the reduction in costly errors and phone-based interactions that can stem from a non-uniform end-user experience. • Provider Solutions. Our provider SaaS solutions, comprised of NaviNet AllPayer and Eviti Advisor, leverage the data available on our systems infrastructure to enable patient-centered engagement and coordination across care locations. These solutions include clinical and administrative workflows, including eligibility and benefits, claims, referrals and authorizations management solutions. • Network Management Solutions. Our OpenNMS service offerings provide a reliable, scalable, comprehensive fault, performance, and traffic monitoring solution that easily integrates with core business applications and workflows to monitor and visualize everything in the network. The OpenNMS open-source platform monitors some of the largest networks in the Fortune 500, covering the healthcare, technology, energy, finance, government, education, retail and industrial sectors, including many with tens of thousands of networked devices. • Data Solutions (Quadris). Our data product and service offerings enable customers to leverage real-world data, AI/ML to optimize commercial spend, demonstrate ongoing safety and value, improve clinical development, speed drug delivery. We designed our NantHealth solutions to enable providers, payers, and pharma and self-insured employers to overcome challenges encountered across the knowledge, care delivery, and payer domains within the healthcare continuum. Product Overviews Eviti Connect and Eviti Advisor The rapid advancement of molecular and biometric medicine is overwhelming many physicians’ cognitive ability, while uncoordinated, non-evidence-based treatment plans are increasing costs and reducing the quality of care. Eviti, our decision support platform, provides evidence-based clinical decision support, which is a critical element to ensure optimal treatment regimens. Eviti is a SaaS-based clinical decision support solution that centralizes clinical content, treatment cost data from Medicare reimbursements and treatment toxicity data. The clinical content is curated by our dedicated team of clinicians, including oncologists and nurses, who convert published literature and clinical trials into structured information that can be used for decision support. The Eviti Connect product is sold to health plans and utilizes the platform to offer preauthorization automation that helps payers and providers navigate the complexities of cancer care, making it easier to identify and validate oncology treatment regimens suited to each patient. The Eviti Advisor product is offered to providers and allows physicians to access the Eviti platform’s comprehensive library of evidence-based treatment standards and protocols to better inform treatment decisions and readily stay abreast of the latest advances in cancer care. Eviti provides value to our customers through its access to over 8,900 federally-registered clinical trials updated weekly and over 4,500 evidence-based treatment regimens for the treatment of cancer arising from over 40 different anatomical locations. Over the past ten years, Eviti has saved health plan customers several hundred million dollars by directing providers to evidence-based protocols at the point of prescribing. Unique to the care delivery domain, physicians also benefit from improved claim processing by using the Eviti Connect product, which issues a pre-authorization “Eviti code” when the physician chooses an approved evidence-based clinical pathway, thereby validating appropriate treatment and pre-adjudicating the claim. This is an important step in that payers and providers are collaborating on high-value, evidence-based clinical pathways as opposed to non-value-added reimbursements and denials of payments. Eviti Connect is typically sold to health plans on a per member (or life) per month basis. These health plans sponsor the solution and provide Eviti free of charge to oncologists and their staffs. As Eviti evolves, we expect to expand the platform’s capacity beyond regimen decisions to help providers and payors deliver the right care, in the right time and in the right place across the cancer patient's entire life cycle of care. In addition, we have already expanded the Eviti platform to another disease state, autoimmune. As one pharmacy benefit manager ("PBM") studied data on its 15 million commercially insured members in 2019 and 2020, it found that fewer than 1% of members had an inflammatory autoimmune condition such as psoriasis, rheumatoid arthritis, ulcerative colitis or Crohn's disease. However, drugs treating these conditions accounted for nearly 20% of drug spend in the medical and pharmacy benefit. (source: Drugs for autoimmune disorders account for a growing part of pharmacy spend: Prime Therapeutics | FierceHealthcare). - 11 -
NantHealth has achieved delegated entity licensure/certification for utilization management in 10 states, enabling the expansion of Eviti Connect to include fully delegated services in these jurisdictions and others that do not require special licensure. Offering this service helps our payer customers reduce operational costs and increase efficiency by centralizing activities related to utilization management reviews and communications. We will continue to pursue delegated entity status in additional states as we expand the value Eviti brings to our customers. The snapshot of our system below illustrates how different cancer treatment options for a patient is presented to compare treatments across a variety of metrics, including expected treatment outcome, plan compliance and costs. By providing the oncologist with this comparison, we believe Eviti drives compliance and a greater number of treatments to be in accordance with evidence-based medicine. NaviNet NaviNet is a suite of SaaS-based solutions enabling payers and providers to streamline communication and consolidate information, while gaining access to a richer set of data to improve patient care. The NaviNet solutions include clinical and administrative workflow, eligibility and benefits, claims, and referral management solutions. NaviNet Open NaviNet Open is a leading payer-provider collaboration platform, enhancing communication between health plans and providers to increase operating efficiency, lower costs, improve provider satisfaction and enable expansion. As organizations develop more value-based product lines to support the transition to value-based care, provider alignment and actionable data prior to care delivery becomes critical. To enable these capabilities, health plans and providers need a flexible, extensible infrastructure that fosters collaboration and encourages interoperability. NaviNet Open delivers vital administrative and clinical information to providers in real-time, so they can quickly and easily communicate across multiple health plans. As of December 31, 2021, NaviNet Open has over 375,000 registered users who performed more than 33 million online interactions per month with over 1,000 health plans. - 12 -
NaviNet Open solutions include: • Plan Central: Provides our health plan partners with the ability to deliver a branded custom-content experience to their provider networks, allowing plans to own and manage their communications to users in support of their business. Plan Central is valued by our partners as a single access point for all provider and end-user communications, transactions, and content, delivering ease of use and increased provider satisfaction. • Eligibility and Benefits: Delivers membership verification, insurance coverage, and payment information, such as co-payments, deductibles, and benefit intelligence to provider offices in real-time; information that is highly valued by providers and members alike. Provider offices can verify insurance and benefit coverage at the time of a patient visit or as part of the billing cycle. • Claims Status Inquiry: Permits provider offices access to detailed financial and claim status information in realtime; automating the delivery of claim receipt confirmation, adjudication status, and payment details. This eliminates the need for provider offices to call health plans directly to maintain a healthy revenue cycle and improves provider satisfaction. • Claims Management: A collection of powerful claim applications that consist of Claim Submission, pre- and postadjudication Corrections and Adjustments, Claim Attachments, Claim Investigation, Claim Appeals and a multipayer Claims Log where users manage their claim submissions. Our integrated Claims Management solution simplifies payment efforts by eliminating phone calls, costly paper claims, and other manual processes associated with claims follow-up, correction, and resubmission. Providers now gain access to a powerful set of claim tools, augmenting provider systems with self-service access, or without needing a sophisticated EHR or practice management system at all. • Referrals: Lets provider offices submit and access referrals in real-time, guiding patients to the best specialist at the most affordable cost. Referrals empowers provider staff with more referral information - such as benefit tiers, preferred providers, and patient payment implications. Administrative staff becomes better equipped to navigate complex sub-networks, while health plans optimize in-network referrals to reduce leakage and lower costs. • Authorizations: Lets provider offices submit authorizations to health plans and access real-time authorization information, such as status updates and approvals. The authorizations workflow is optimized to make it simple for health plans to configure fields and add additional business logic and links to third party applications. Providers can upload any documents needed for authorization processing, further streaming workflows and lowering costs. • Document Exchange: Modernizes communication between health plans and providers by transmitting administrative and clinical information in real-time. This application lets health plans and providers share risk adjustment information, quality measurement data, and performance reports, among other data. Providers are notified of care gaps within their existing workflows, making it easy to upload supporting documents. NaviNet Open Document Exchange enables health plans and providers to thrive in a world of value-based care by providing realtime access to critical information at the point of care. • API Capabilities: A series of secure Application Programming Interfaces (APIs) offer provider and revenue cycle organizations connectivity to payers via the NaviNet Open platform. The APIs enable faster information retrieval and easier payer access through a secure real-time, HIPAA compliant gateway to payers. The workflows include Eligibility & Benefits, Claim Status Inquiry, Authorizations, and Referrals. NaviNet also offers APIs for payers to access the secure and flexible NaviNet Open Document Exchange platform. NaviNet AllPayer NaviNet AllPayer provides standard eligibility, benefit, and claim status information to provider offices for over 1,000 commercial and government plans and Centers for Medicare and Medicaid Services ("CMS") for Medicare beneficiaries through the NaviNet portal. Building on the rich, multi-payer experience of NaviNet Open, NaviNet AllPayer allows provider offices, and payer Coordination of Benefits ('COB") and Payment Integrity teams, to quickly find the information they need, without having to jump between portals or spend unnecessary time on the phone with health plans. - 13 -
OpenNMS OpenNMS is an open-source network monitoring solution for enterprise-grade networks. It empowers businesses to monitor, manage, maintain, and visualize their networks to better understand health and performance for faster remediation. OpenNMS solutions monitor system alerts and events and other key performance indicators in IT infrastructure. Advanced network traffic flows and routing analysis capability ensures critical data flows at scale. OpenNMS users include some of the largest networks in existence, covering the healthcare, technology, energy, finance, government, education, retail and industrial sectors, many with tens of thousands of networked devices. OpenNMS solutions are delivered as two different, completely open-source distributions: Horizon and Meridian. Both distributions are built from the same open source code base; however, the release cycle and the support options available vary for each: • Horizon (Community): Horizon is freely available to download and follows the “release early, release often” model. OpenNMS Horizon contains the newest features that are developed for the platform and updated on a rapid release schedule. • Meridian (Enterprise): OpenNMS Meridian is made available via a subscription service that provides access to an optimized and very stable version of OpenNMS that maximizes the platform’s value and minimizes the effort required to maintain it. Features that have proven to be stable and effective in Horizon are merged into Meridian. The following are some of the key features that provide scalability and analytics capability into the OpenNMS platform: • Architecture for Learning Enabled Correlation (ALEC) is our AI/ML-based analytics solution that provides insights into alarm/event correlation, anomaly detection, and RCA. • Minion is a vertically scalable application that acts as “eyes and ears” for the core OpenNMS application by extending the platform reach into remote and disparate edges of the network. • Sentinel is a horizontally scalable application that scales the platform capacity by offloading memory and CPU workloads from the core OpenNMS application. • Application Perspective Monitoring (APM) enables remote polling of network components by using remote minion applications to look at other parts of the network from “the outside in”, enabling improved understanding of availability and latency. Quadris NantHealth’s Quadris is a comprehensive analytics and insights service that will leverage both enriched and optimized realworld data, automated surveillance and research collaboration tools. The solution/service will include a configurable user experience enabling a range of intuitive, market specific insights such as commercial spend, longitudinal patient journey analysis and improved clinical development efficiency. Quadris insights are informed by data and analytics optimized by proprietary machine learning, natural language processing and AI methods. NantHealth Systems Infrastructure to Enable NantHealth Solutions: Our unique interoperable systems infrastructure has been built over the last decade to address the knowledge, care delivery and payer domains. We host our applications and serve all our clients from four redundant data centers in geographically diverse locations. These infrastructure-hosting services also include capabilities such as secure server and application hosting, secure offsite backup, disaster recovery and business continuity solutions. We are expanding our infrastructure using a hybrid-cloud model to leverage the flexibility and scalability available at commercial cloud providers. Due to the sensitive nature of our customers’ data, we have a heightened focus on data security and protection. We have implemented healthcare IT industry-standard processes, policies and tools through all levels of our software development and network administration, including regularly scheduled vulnerability scanning and third-party penetration testing to reduce the risk of vulnerabilities in our system. Our Eviti clinical decision support platform achieved initial full URAC accreditation in Health Utilization Management ("HUM"), during September 2010 and subsequently re-accredited every three years – the most recent during August 2019 for another three-year period. - 14 -
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