NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of
innovative, cloud-based healthcare technology solutions, today
announced its operating results for the fiscal first quarter ended
June 30, 2022.
Fiscal 2023 First Quarter Highlights
- Total revenue was $153.3 million compared to $146.1 million for
the same period a year ago, or 5% growth.
- Recurring revenue was $139.8 million compared to $132.4 million
for the same period a year ago, or 6% growth. Recurring revenue
accounted for 91% of total revenue.
- Subscription services revenue was $42.8 million compared to
$38.3 million for the same period a year ago, or 12% growth. This
growth reflects solid demand for NextGen Office, Mobile,
Telehealth, and other services.
- Bookings, which reflects annual contract value, was $39.2
million compared to $34.3 million for the same period a year ago,
or 14% growth.
- Fully diluted net income per share was $0.02 compared to $0.04
for the same period a year ago.
- On a non-GAAP basis, fully diluted earnings per share was $0.16
compared to $0.25 for the same period a year ago.
“Fiscal first quarter results reflect continued solid execution
and strong overall demand, as reflected in both bookings growth and
subscription services revenue growth,” said David Sides, President
and Chief Executive Officer of NextGen Healthcare. “We continue to
invest prudently in each of our three domains; Enterprise, Office
and Insights, and are on track with our long-term goals. In
addition, our focused efforts in corporate development and
portfolio management are moving forward as we recently sold
certain, non-strategic, dental-related assets. NextGen Healthcare
has started off the fiscal year with positive momentum and is well
positioned to execute on our growth agenda.”
After giving effect for the sale of select dental assets, our
outlook for fiscal 2023 is now as follows:
- Revenue is between $621 million and $633 million, from between
$628 million and $640 million
- Adjusted EBITDA is between $109 million and $114 million, from
between $111 million and $116 million
- Non-GAAP earnings per share is between $0.92 and $0.98, from
between $0.95 and $1.01
Conference Call Information
NextGen Healthcare will host a conference call today at 5:00
p.m. EST to discuss operating results from its fiscal 2023 first
quarter. Shareholders and interested participants may listen to a
live broadcast of the call by dialing 800-225-9448 or 203-518-9708
for international callers and referencing participant code NXGNQ123
approximately 15 minutes prior to the call. A recording of the live
webcast will be available on investor.nextgen.com after the call.
It will be archived for 90 days.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including but not limited to statements we make regarding our
fiscal year 2023 outlook, financial and operating results,
strategic priorities, growth initiatives and expected capital
expenditures. These forward-looking statements are based on the
current beliefs, expectations, and assumptions of the Company's
management relating to the future (including, without limitation,
statements concerning revenue, net income, and earnings per share).
The words “positioned,” “proposed,” “potential,” “project,”
“expect,” “anticipate,” “intend,” “plan,” “goal,” “seek,”
“believe,” “estimate, “strategy,” “expectations,” “future,”
“likely,” “may,” “should,” “will,” variations thereof or similar
expressions are intended to identify such forward-looking
statements.
Risks and uncertainties exist that may cause the results to
differ materially from those set forth in these forward-looking
statements, including but not limited to: changes in laws and
regulations applicable to our business; changes in market
conditions and receptivity to our services and offerings; strategic
actions, including acquisitions and dispositions and our success in
integrating acquired businesses; our ability to maintain and expand
our business with existing clients or effectively transition
clients to newer products; our ability to attract new partners and
successfully capture new opportunities; our ability to develop and
grow partner relationships; our ability to attract and retain key
employees; our ability to anticipate or respond quickly to market
changes, execute our strategy and manage growth; the impact of
litigation and governmental and regulatory agency investigations;
the impact of governmental and regulatory agency investigations;
the development by competitors of new or superior technologies; the
timing, cost and success or failure of new product and service
introductions, development and product upgrade releases; the impact
of the COVID-19 pandemic on our operations and demand for our
services; impact of breaches or failures of the Company’s
information security measures or unauthorized access to a
customer’s data; disruptions caused by acquisitions of companies,
products, or technologies; and general economic conditions.
Additional discussion of these and other risks, uncertainties and
factors affecting our business is contained in our filings with the
SEC, including our most recent Annual Report on Form 10-K and
subsequently filed Quarterly Reports on Form 10-Q.
A significant portion of the Company's quarterly sales of
software product licenses and computer hardware is concluded in the
last month of a fiscal quarter, generally with a concentration of
such revenues earned in the final ten business days of that month.
Due to these and other factors, the Company's revenues and
operating results are very difficult to forecast. A major portion
of the Company's costs and expenses, such as personnel and
facilities, are of a fixed nature and, accordingly, a shortfall or
decline in quarterly and/or annual revenues typically results in
lower profitability or losses. As a result, comparison of the
Company's period-to-period financial performance is not necessarily
meaningful and should not be relied upon as an indicator of future
performance. These forward-looking statements speak only as of the
date hereof. The Company undertakes no obligation to publicly
update any forward-looking statements, whether as a result of new
information, future events or otherwise.
USE OF NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP (Generally Accepted
Accounting Principles) financial measures, which are provided only
as supplemental information. Investors should consider these
non-GAAP financial measures only in conjunction with the comparable
GAAP financial measures. These non-GAAP measures are not in
accordance with or a substitute for U.S. GAAP. Pursuant to the
requirements of Regulation G, the Company has provided a
reconciliation of non-GAAP financial measures to the most directly
comparable financial measure in the accompanying financial tables.
Other companies may calculate non-GAAP measures differently than
NextGen Healthcare, Inc., which limits comparability between
companies. The Company believes that its presentation of non-GAAP
diluted earnings per share provides useful supplemental information
to investors and management regarding the Company's financial
condition and results. The presentation of non-GAAP financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, financial information prepared and
presented in accordance with GAAP.
The Company calculates non-GAAP diluted earnings per share by
excluding net acquisition costs, amortization of acquired
intangible assets, amortization of deferred debt issuance costs,
impairment of assets, restructuring costs, shareholder disputes and
related costs, net of insurance, which include net securities
litigation defense and related costs, share-based compensation, and
other non-run-rate expenses from GAAP income before provision for
income taxes.
The Company utilizes a normalized non-GAAP tax rate to provide
better consistency across the interim reporting periods within a
given fiscal year by eliminating the effects of non-recurring and
period-specific items, which can vary in size and frequency, and
which are not necessarily reflective of the Company’s longer-term
operations. The normalized non-GAAP tax rate expected to be applied
to each quarter of fiscal year 2023 is 20.0%. The determination of
this rate is based on the consideration of both historic and
projected financial results. The Company may adjust its non-GAAP
tax rate as additional information becomes available and in
conjunction with any other significant events occur that may
materially affect this rate, such as merger and acquisition
activity, changes in business outlook, or other changes in
expectations regarding tax regulations.
The Company calculates free cash flow as total net cash provided
by operating activities, net of cash used for the additions of
capitalized software costs and equipment and improvements. The
Company calculates net debt as line of credit less cash and cash
equivalents. The Company calculates non-GAAP adjusted EBITDA by
excluding net acquisition costs, amortization of acquired
intangible assets, impairment of assets, restructuring costs,
shareholder disputes and related costs, net of insurance, which
include net securities litigation defense and related costs,
share-based compensation, and other non-run-rate expenses from GAAP
income from operations and then adding back amortization of
capitalized software costs and depreciation as presented within the
condensed consolidated statements of cash flows. Non-GAAP adjusted
EBITDA margin is calculated as non-GAAP adjusted EBITDA divided by
total revenues. The Company calculates Rule of 40 as annual revenue
growth rate plus non-GAAP adjusted EBITDA margin.
The Company’s future period guidance in this release includes
adjustments for items not indicative of the Company’s core
operations. Such adjustments are generally expected to be of a
nature similar to those adjustments applied to the Company’s
historic GAAP financial results in the determination of the
Company’s non-GAAP diluted earnings per share. Such adjustments,
however, may be affected by changes in ongoing assumptions and
judgments as to the items that are excluded in the calculation of
non-GAAP adjusted net income and adjusted diluted earnings per
share, as described in this release. The exact amount and probable
significance of these adjustments, including net acquisition costs,
impairment of assets, restructuring costs, shareholder disputes and
related costs, and other non-run-rate expenses, are not currently
determinable without unreasonable efforts, but may be significant.
These items cannot be reliably quantified or forecasted due to the
combination of their historic and expected variability. It is
therefore not practicable to reconcile this non-GAAP guidance to
the most comparable GAAP measures.
About NextGen Healthcare, Inc.
NextGen Healthcare, Inc. (Nasdaq: NXGN) is a leading provider of
innovative technology solutions. We are reimagining ambulatory
healthcare with award-winning solutions that enable high-performing
practices to create healthier communities. We partner with medical,
behavioral and dental providers in their journey toward whole
person health and value-based care. Our highly integrated,
intelligent and interoperable solutions go beyond EHR and Practice
Management to increase clinical quality and productivity, enrich
the patient experience and drive superior financial performance. We
are on a quest to achieve better healthcare outcomes for all. Learn
more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn,
YouTube and Instagram.
NEXTGEN HEALTHCARE,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended June
30,
2022
2021
Revenues:
Recurring
$
139,759
$
132,381
Software, hardware, and other
non-recurring
13,543
13,703
Total revenues
153,302
146,084
Cost of revenue:
Recurring
62,244
57,160
Software, hardware, and other
non-recurring
10,676
7,497
Amortization of capitalized software costs
and acquired intangible assets
7,134
8,084
Total cost of revenue
80,054
72,741
Gross profit
73,248
73,343
Operating expenses:
Selling, general and administrative
49,034
48,486
Research and development costs, net
21,795
19,321
Amortization of acquired intangible
assets
705
881
Impairment of assets
524
382
Restructuring costs
—
539
Total operating expenses
72,058
69,609
Income from operations
1,190
3,734
Interest income
46
12
Interest expense
(330
)
(317
)
Other expense, net
(5
)
(22
)
Income before provision for (benefit of)
income taxes
901
3,407
Provision for (benefit of) income
taxes
(247
)
559
Net income:
$
1,148
$
2,848
Net income per share:
Basic
$
0.02
$
0.04
Diluted
$
0.02
$
0.04
Weighted-average shares outstanding:
Basic
67,588
67,175
Diluted
68,283
67,799
NEXTGEN HEALTHCARE,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
data)
(Unaudited)
June 30, 2022
March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
40,361
$
59,829
Restricted cash and cash equivalents
8,054
6,918
Accounts receivable, net
77,279
76,057
Contract assets
25,464
25,157
Income taxes receivable
7,367
6,507
Prepaid expenses and other current
assets
34,011
37,102
Total current assets
192,536
211,570
Equipment and improvements, net
8,326
9,120
Capitalized software costs, net
47,602
43,958
Operating lease assets
9,707
11,316
Deferred income taxes, net
19,187
19,259
Contract assets, net of current
1,729
1,910
Intangibles, net
21,817
24,303
Goodwill
267,212
267,212
Other assets
39,879
39,026
Total assets
$
607,995
$
627,674
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
15,042
$
9,125
Contract liabilities
63,094
61,280
Accrued compensation and related
benefits
25,967
48,736
Income taxes payable
363
99
Operating lease liabilities
7,946
8,089
Other current liabilities
45,187
53,533
Total current liabilities
157,599
180,862
Deferred compensation
7,181
7,230
Operating lease liabilities, net of
current
9,794
11,934
Other noncurrent liabilities
4,562
4,570
Total liabilities
179,136
204,596
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; authorized
100,000 shares; issued and outstanding 68,064 and 67,075 shares at
June 30, 2022 and March 31, 2022, respectively
704
692
Treasury stock, at cost, 2,318 shares and
2,170 shares at June 30, 2022 and March 31, 2022, respectively
(38,379
)
(35,874
)
Additional paid-in capital
337,071
329,917
Accumulated other comprehensive loss
(1,937
)
(1,909
)
Retained earnings
131,400
130,252
Total shareholders' equity
428,859
423,078
Total liabilities and shareholders'
equity
$
607,995
$
627,674
NEXTGEN HEALTHCARE,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended June
30,
2022
2021
Cash flows from operating activities:
Net income
$
1,148
$
2,848
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of capitalized software
costs
5,354
5,866
Amortization of debt issuance costs
127
127
Amortization of other intangibles
2,486
3,099
Deferred income taxes
—
28
Depreciation
1,292
2,108
Excess tax benefit from share-based
compensation
(411
)
(176
)
Impairment of assets
524
382
Loss on disposal of equipment and
improvements
41
38
Loss on foreign currency exchange
rates
6
—
Non-cash operating lease costs
914
1,628
Provision for bad debts
241
639
Share-based compensation
8,766
6,412
Changes in assets and liabilities:
Accounts receivable
(1,464
)
3,407
Contract assets
(126
)
(919
)
Accounts payable
5,829
(4,334
)
Contract liabilities
1,814
(582
)
Accrued compensation and related
benefits
(22,668
)
(21,964
)
Income taxes
(191
)
464
Deferred compensation
(49
)
743
Operating lease liabilities
(2,085
)
(2,676
)
Other assets and liabilities
(6,193
)
3,175
Net cash provided by (used in) operating
activities
(4,645
)
313
Cash flows from investing activities:
Additions to capitalized software
costs
(8,998
)
(5,538
)
Additions to equipment and
improvements
(455
)
(1,002
)
Net cash used in investing activities
(9,453
)
(6,540
)
Cash flows from financing activities:
Proceeds from issuance of shares under
employee plans
2,068
671
Repurchase of common stock
(2,505
)
—
Payments for taxes related to net share
settlement of equity awards
(3,668
)
(2,969
)
Net cash used in financing activities
(4,105
)
(2,298
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(129
)
—
Net decrease in cash, cash equivalents,
and restricted cash
(18,332
)
(8,525
)
Cash, cash equivalents, and restricted
cash at beginning of period
66,747
78,575
Cash, cash equivalents, and restricted
cash at end of period
$
48,415
$
70,050
NEXTGEN HEALTHCARE,
INC.
SUPPLEMENTAL FINANCIAL
INFORMATION
(In thousands)
The following table presents our revenues disaggregated by
our major revenue categories and by occurrence:
Three Months Ended June
30,
2022
2021
Recurring
revenues:
Subscription services
$
42,759
$
38,284
Support and maintenance
39,138
38,486
Managed services *
30,645
27,908
Transactional and data services *
27,217
27,703
Total recurring revenues
139,759
132,381
Software, hardware,
and other non-recurring revenues:
Software license and hardware
6,199
7,214
Other non-recurring services
7,344
6,489
Total software, hardware and other
non-recurring revenues
13,543
13,703
Total revenues
$
153,302
$
146,084
Recurring revenues as a percentage of
total revenues
91.2
%
90.6
%
* Beginning in fiscal year 2023, to align
the presentation of disaggregated revenue with the manner in which
management reviews such information, the presentation of
disaggregated revenues by major revenue categories was revised to
reclassify revenues related to patient pay services and certain
other services from the managed services category into the
transactional and data services category, which replaced the prior
EDI and data services category. The prior period presentation of
revenues disaggregated by major revenue categories and by
occurrence in the tables below have been reclassified to conform
with current period presentation.
Refer to our Investor Relations website at
http://investor.nextgen.com for the revised tables of revenue
disaggregated by major revenue categories and by occurrence for
each interim reporting period within the fiscal years ended March
31, 2022 and 2021.
NEXTGEN HEALTHCARE,
INC.
NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share
data)
RECONCILIATION OF
NON-GAAP DILUTED EARNINGS PER SHARE
Three Months Ended June
30,
2022
2021
Income before provision for income taxes -
GAAP
$
901
$
3,407
Non-GAAP adjustments:
Amortization of acquired intangible
assets
2,486
3,099
Amortization of deferred debt issuance
costs
127
127
Impairment of assets
524
382
Restructuring costs
—
539
Shareholder disputes and related costs,
net of insurance
121
4,858
Share-based compensation
8,766
6,412
Other non-run-rate expenses*
407
2,719
Total adjustments to GAAP income before
provision for income taxes:
12,431
18,136
Income before provision for income taxes -
Non-GAAP
13,332
21,543
Provision for income taxes
2,666
4,309
Net income - Non-GAAP
$
10,666
$
17,234
Diluted net income per share -
Non-GAAP
$
0.16
$
0.25
Weighted-average shares outstanding
(diluted):
68,283
67,799
* Other non-run-rate expenses for the
three months ended June 30, 2022 consist of $257 excess
lease-related expense for vacated facilities and $150 of
professional services costs not related to core operations.
Other non-run-rate expenses for the three
months ended June 30, 2021 consist primarily of $470 excess
lease-related expense for vacated facilities, lease termination
costs, and other costs, including retention bonuses, related to the
restructuring plan and $2,249 of severance and other costs related
to the departure of the former Chief Executive Officer.
RECONCILIATION OF FREE CASH
FLOW
Three Months Ended June
30,
2022
2021
Net cash provided by (used in) operating
activities
$
(4,645
)
$
313
Additions to capitalized software
costs
(8,998
)
(5,538
)
Additions to equipment and
improvements
(455
)
(1,002
)
Free cash flow
$
(14,098
)
$
(6,227
)
NEXTGEN HEALTHCARE,
INC.
NON-GAAP FINANCIAL
MEASURES
(In thousands)
RECONCILIATION OF
ADJUSTED EBITDA
Three Months Ended June
30,
2022
2021
Income from operations - GAAP
$
1,190
$
3,734
Non-GAAP adjustments:
Amortization of acquired intangible
assets
2,486
3,099
Impairment of assets
524
382
Restructuring costs
—
539
Shareholder disputes and related costs,
net of insurance
121
4,858
Share-based compensation
8,766
6,412
Other non-run-rate expenses*
407
2,719
Total adjustments to GAAP income from
operations
12,304
18,009
Income from operations - Non-GAAP
13,494
21,743
Amortization of capitalized software
costs
5,354
5,866
Depreciation
1,292
2,108
Depreciation and Amortization -
Non-GAAP
6,646
7,974
Adjusted EBITDA - Non-GAAP
$
20,140
$
29,717
Total revenues
$
153,302
$
146,084
Adjusted EBITDA margin - Non-GAAP
13.1
%
20.3
%
* Other non-run-rate expenses for the
three months ended June 30, 2022 consist of $257 excess
lease-related expense for vacated facilities and $150 of
professional services costs not related to core operations.
Other non-run-rate expenses for the three
months ended June 30, 2021 consist primarily of $470 excess
lease-related expense for vacated facilities, lease termination
costs, and other costs, including retention bonuses, related to the
restructuring plan and $2,249 of severance and other costs related
to the departure of the former Chief Executive Officer.
A reconciliation of adjusted EBITDA for each interim reporting
period within the fiscal years ended March 31, 2022 and 2021 may be
accessed through our Investor Relations website at
http://investor.nextgen.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726005807/en/
Media Relations Contact Tami Andrade (949) 237-6083
tandrade@nextgen.com
Investor Relations Contact Matthew Scalo (415) 370-9202
mscalo@nextgen.com
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