NantHealth is cutting its headcount by 300 through layoffs and the sale of assets to Allscripts. The reduction, which amounts to about one-third of NantHealth’s headcount, will lower costs at the Patrick Soon-Shiong-helmed company after a quarter in which it lost $70 million.
The hemorrhaging of money has forced NantHealth to rethink its business, particularly given that the dire performance of its stock has dented its ability to raise cash to add to its current $93 million pile. The result is cuts and asset sales intended to trim $70 million a year from NantHealth’s outgoings and focus its efforts on its cancer platform.
About 300 people are leaving the company. According to an anonymous source quoted by STAT, a little more than half of them will transfer to Allscripts along with certain healthcare informatics assets. The remaining 130 people will be looking for new jobs.
The reorganization effectively undoes two deals NantHealth struck in the summer of 2015, when within the space of a few weeks it landed investment from Allscripts and bought Harris Healthcare Solutions. The investment saw Allscripts take a 10% stake in Nanthealth in return for $200 million. The Harris buyout gave NantHealth control of FusionFX to further its healthcare informatics ambitions.
Now, Allscripts has used its 15 million NantHealth shares to buy FusionFX and some other assets. With NantHealth trading at about $4 a share following a precipitous post-IPO decline, the deal is valued at $60 million.
The catastrophic performance of NantHealth’s stock has mirrored that of its immuno-oncology sister, NantKwest. Soon-Shiong took NantKwest public first, securing an eye-popping $2.6 billion market cap and raising $207 million as investors overlooked the biotech’s slender track record. And Soon-Shiong repeated the trick one year later, pulling off an insider-dominated IPO for NantHealth.
NantKwest is down 82% since the IPO. NantHealth is down 78%. Soon-Shiong plans to roll up a clutch of his other biotech-focused “Nant” entities under the NantBio brand and take it public next year.
Form an orderly queue, investors.