Raises Fiscal 2023 Financial Guidance
NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of
innovative, cloud-based healthcare technology solutions, today
announced its operating results for the fiscal second quarter ended
September 30, 2022.
Fiscal 2023 Second Quarter Highlights
- Total revenue was $159.4 million compared to $149.3 million for
the same period a year ago, an increase of 7%.
- Recurring revenue was $143.5 million compared to $135.6 million
for the same period a year ago, an increase of 6%.
- Non-recurring revenue was $15.9 million compared to $13.7
million for the same period a year ago, an increase of 17%.
- Bookings, which reflects annual contract value, was $37.4
million and included several deals greater than $1.0 million.
- Fully diluted net income per share was $0.20 compared to a net
loss of $0.10 for the same period a year ago.
- On a non-GAAP basis, fully diluted earnings per share was $0.25
compared to $0.29 for the same period a year ago.
- Board authorized new share repurchase program under which the
Company may repurchase up to an additional $100 million of its
outstanding shares of common stock through March 2025.
“We are pleased with the team’s consistent performance and solid
execution, which has resulted in exceeding our initial growth
targets and increasing financial guidance for the remainder of the
year,” said David Sides, President and Chief Executive Officer of
NextGen Healthcare. “Notably, we’ve seen expanded adoption of our
integrated solutions and are continuing to develop next generation
improvements that will further enhance the patient and provider
experience.”
Based on the first half performance and updated view of the
business, our revised guidance for fiscal 2023 is now as
follows:
- Revenue is expected between $630 million and $640 million, from
between $621 million and $633 million.
- Adjusted EBITDA is expected between $110 million and $115
million, from between $109 million and $114 million.
- Non-GAAP earnings per share is expected between $0.93 and
$0.99, from between $0.92 and $0.98.
Conference Call Information
NextGen Healthcare will host a conference call today at 5:00
p.m. EDT to discuss operating results from its fiscal 2023 second
quarter. Shareholders and interested participants may listen to a
live broadcast of the call by dialing 800-343-5172 or 203-518-9848
for international callers and referencing participant code NXGNQ223
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 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,
gain on disposition of Commercial Dental assets, impairment of
assets, restructuring costs, shareholder disputes and related
costs, net of insurance, which include net securities litigation
defense, proxy contest, 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 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, proxy contest, 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, which include net securities litigation defense,
proxy contest, 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 healthcare 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 (LOSS)
(In thousands, except per share
data)
(Unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Revenues:
Recurring
$
143,503
$
135,609
$
283,262
$
267,990
Software, hardware, and other
non-recurring
15,940
13,677
29,483
27,380
Total revenues
159,443
149,286
312,745
295,370
Cost of revenue:
Recurring
65,039
57,119
127,283
114,279
Software, hardware, and other
non-recurring
10,797
7,610
21,473
15,107
Amortization of capitalized software costs
and acquired intangible assets
6,744
7,969
13,878
16,053
Total cost of revenue
82,580
72,698
162,634
145,439
Gross profit
76,863
76,588
150,111
149,931
Operating expenses:
Selling, general and administrative
44,886
63,891
93,920
112,377
Research and development costs, net
20,857
18,518
42,652
37,839
Amortization of acquired intangible
assets
705
881
1,410
1,762
Impairment of assets
805
1,195
1,329
1,577
Restructuring costs
321
—
321
539
Total operating expenses
67,574
84,485
139,632
154,094
Income (loss) from operations
9,289
(7,897
)
10,479
(4,163
)
Interest income
74
17
120
29
Interest expense
(325
)
(320
)
(655
)
(637
)
Other income (expense), net
10,292
(12
)
10,287
(34
)
Income (loss) before provision for
(benefit of) income taxes
19,330
(8,212
)
20,231
(4,805
)
Provision for (benefit of) income
taxes
5,707
(1,441
)
5,460
(882
)
Net income (loss)
$
13,623
$
(6,771
)
$
14,771
$
(3,923
)
Net income (loss) per share:
Basic
$
0.20
$
(0.10
)
$
0.22
$
(0.06
)
Diluted
$
0.20
$
(0.10
)
$
0.22
$
(0.06
)
Weighted-average shares outstanding:
Basic
67,806
67,406
67,698
67,291
Diluted
68,422
67,406
68,353
67,291
NEXTGEN HEALTHCARE,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
data)
(Unaudited)
September 30, 2022
March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
70,728
$
59,829
Restricted cash and cash equivalents
7,580
6,918
Accounts receivable, net
76,948
76,057
Contract assets
25,474
25,157
Income taxes receivable
3,052
6,507
Prepaid expenses and other current
assets
34,363
37,102
Total current assets
218,145
211,570
Equipment and improvements, net
7,398
9,120
Capitalized software costs, net
49,791
43,958
Operating lease assets
5,197
11,316
Deferred income taxes, net
19,128
19,259
Contract assets, net of current
1,595
1,910
Intangibles, net
19,739
24,303
Goodwill
267,212
267,212
Other assets
38,933
39,026
Total assets
$
627,138
$
627,674
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
12,414
$
9,125
Contract liabilities
62,498
61,280
Accrued compensation and related
benefits
28,113
48,736
Income taxes payable
172
99
Operating lease liabilities
7,095
8,089
Other current liabilities
58,320
53,533
Total current liabilities
168,612
180,862
Deferred compensation
6,981
7,230
Operating lease liabilities, net of
current
5,147
11,934
Other noncurrent liabilities
4,556
4,570
Total liabilities
185,296
204,596
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; authorized
100,000 shares; 70,351 shares and 69,245 shares issued at September
30, 2022 and March 31, 2022, respectively; 67,605 shares and 67,075
shares outstanding at September 30, 2022 and March 31, 2022,
respectively
704
692
Treasury stock, at cost, 2,746 shares and
2,170 shares at September 30, 2022 and March 31, 2022,
respectively
(45,752
)
(35,874
)
Additional paid-in capital
343,809
329,917
Accumulated other comprehensive loss
(1,942
)
(1,909
)
Retained earnings
145,023
130,252
Total shareholders' equity
441,842
423,078
Total liabilities and shareholders'
equity
$
627,138
$
627,674
NEXTGEN HEALTHCARE,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Cash flows from operating activities:
Net income (loss)
$
13,623
$
(6,771
)
$
14,771
$
(3,923
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Amortization of capitalized software
costs
5,371
5,751
10,725
11,617
Amortization of debt issuance costs
127
127
254
254
Amortization of other intangibles
2,078
3,099
4,564
6,198
Deferred income taxes
—
1
—
29
Depreciation
1,354
1,673
2,646
3,781
Excess tax deficiency (benefit) from
share-based compensation
(23
)
816
(434
)
640
Gain on disposition of Commercial Dental
assets
(10,296
)
—
(10,296
)
—
Impairment of assets
805
1,195
1,329
1,577
Loss on disposal of equipment and
improvements
33
39
74
77
Loss on foreign currency exchange
rates
1
—
7
—
Non-cash operating lease costs
768
1,459
1,682
3,087
Provision for bad debts
359
40
600
679
Share-based compensation
8,687
5,223
17,453
11,635
Changes in assets and liabilities:
Accounts receivable
(63
)
1,467
(1,527
)
4,874
Contract assets
124
(136
)
(2
)
(1,055
)
Accounts payable
(2,676
)
5,442
3,153
1,108
Contract liabilities
(75
)
1,225
1,739
643
Accrued compensation and related
benefits
2,246
5,643
(20,422
)
(16,321
)
Income taxes
4,125
(9,788
)
3,934
(9,324
)
Deferred compensation
(200
)
(88
)
(249
)
655
Operating lease liabilities
(2,012
)
(2,684
)
(4,097
)
(5,360
)
Other assets and liabilities
14,085
6,433
7,892
9,608
Net cash provided by operating
activities
38,441
20,166
33,796
20,479
Cash flows from investing activities:
Additions to capitalized software
costs
(9,418
)
(6,175
)
(18,416
)
(11,713
)
Additions to equipment and
improvements
(971
)
(683
)
(1,426
)
(1,685
)
Proceeds from disposition of Commercial
Dental assets
11,253
—
11,253
—
Net cash provided by (used in) investing
activities
864
(6,858
)
(8,589
)
(13,398
)
Cash flows from financing activities:
Proceeds from issuance of shares under
employee plans
507
438
2,575
1,109
Repurchase of common stock
(7,373
)
—
(9,878
)
—
Payments for taxes related to net share
settlement of equity awards
(2,456
)
(2,232
)
(6,124
)
(5,201
)
Net cash used in financing activities
(9,322
)
(1,794
)
(13,427
)
(4,092
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(90
)
—
(219
)
—
Net increase in cash, cash equivalents,
and restricted cash
29,893
11,514
11,561
2,989
Cash, cash equivalents, and restricted
cash at beginning of period
48,415
70,050
66,747
78,575
Cash, cash equivalents, and restricted
cash at end of period
$
78,308
$
81,564
$
78,308
$
81,564
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 September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Recurring
revenues:
Subscription services
$
43,416
$
41,139
$
86,175
$
79,423
Support and maintenance
38,150
39,004
77,288
77,490
Managed services
31,055
28,207
61,700
56,115
Transactional and data services
30,882
27,259
58,099
54,962
Total recurring revenues
143,503
135,609
283,262
267,990
Software, hardware,
and other non-recurring revenues:
Software license and hardware
7,916
8,068
14,115
15,282
Other non-recurring services
8,024
5,609
15,368
12,098
Total software, hardware and other
non-recurring revenues
15,940
13,677
29,483
27,380
Total revenues
$
159,443
$
149,286
$
312,745
$
295,370
Recurring revenues as a percentage of
total revenues
90.0
%
90.8
%
90.6
%
90.7
%
NEXTGEN HEALTHCARE,
INC.
NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share
data)
RECONCILIATION OF
NON-GAAP DILUTED EARNINGS PER SHARE
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Income (loss) before provision for income
taxes - GAAP
$
19,330
$
(8,212
)
$
20,231
$
(4,805
)
Non-GAAP adjustments:
Acquisition costs, net
225
—
225
—
Amortization of acquired intangible
assets
2,078
3,100
4,564
6,199
Amortization of deferred debt issuance
costs
127
127
254
254
Gain on disposition of Commercial Dental
assets
(10,296
)
—
(10,296
)
—
Impairment of assets
805
1,195
1,329
1,577
Restructuring costs
321
—
321
539
Shareholder disputes and related costs,
net of insurance
224
22,134
345
26,992
Share-based compensation
8,687
5,223
17,453
11,635
Other non-run-rate expenses*
205
1,309
612
4,028
Total adjustments to GAAP income before
provision for income taxes:
2,376
33,088
14,807
51,224
Income before provision for income taxes -
Non-GAAP
21,706
24,876
35,038
46,419
Provision for income taxes
4,342
4,975
7,008
9,284
Net income - Non-GAAP
$
17,364
$
19,901
$
28,030
$
37,135
Diluted net income per share -
Non-GAAP
$
0.25
$
0.29
$
0.41
$
0.55
Weighted-average shares outstanding
(diluted):
68,422
67,699
68,353
67,734
* Other non-run-rate expenses for the
three months ended September 30, 2022 consist of $205 excess
lease-related expense for vacated facilities.
Other non-run-rate expenses for the three
months ended September 30, 2021 consist primarily of $353 excess
lease-related expense for vacated facilities, lease termination
costs, and other costs, $458 of executive transition costs, and
$498 of incremental costs and penalties primarily due to the
cancellation of certain events directly associated with the
COVID-19 pandemic.
Other non-run-rate expenses for the six
months ended September 30, 2022 consist of $462 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 six
months ended September 30, 2021 consist primarily of $823 excess
lease-related expense for vacated facilities, lease termination
costs, and other costs, including retention bonuses, related to the
restructuring plan, $2,707 of executive transition costs, including
severance and other costs related to the departure of the CEO, and
$498 of incremental costs and penalties primarily due to the
cancellation of certain events directly associated with the
COVID-19 pandemic.
RECONCILIATION OF
FREE CASH FLOW
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Net cash provided by operating
activities
$
38,441
$
20,166
$
33,796
$
20,479
Additions to capitalized software
costs
(9,418
)
(6,175
)
(18,416
)
(11,713
)
Additions to equipment and
improvements
(971
)
(683
)
(1,426
)
(1,685
)
Free cash flow
$
28,052
$
13,308
$
13,954
$
7,081
NEXTGEN HEALTHCARE,
INC.
NON-GAAP FINANCIAL
MEASURES
(In thousands)
RECONCILIATION OF ADJUSTED
EBITDA
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Income (loss) from operations - GAAP
$
9,289
$
(7,897
)
$
10,479
$
(4,163
)
Non-GAAP adjustments:
Acquisition costs, net
225
—
225
—
Amortization of acquired intangible
assets
2,078
3,100
4,564
6,199
Impairment of assets
805
1,195
1,329
1,577
Restructuring costs
321
—
321
539
Shareholder disputes and related costs,
net of insurance
224
22,134
345
26,992
Share-based compensation
8,687
5,223
17,453
11,635
Other non-run-rate expenses*
205
1,309
612
4,028
Total adjustments to GAAP income from
operations
12,545
32,961
24,849
50,970
Income from operations - Non-GAAP
21,834
25,064
35,328
46,807
Amortization of capitalized software
costs
5,371
5,751
10,725
11,617
Depreciation
1,354
1,673
2,646
3,781
Depreciation and Amortization -
Non-GAAP
6,725
7,424
13,371
15,398
Adjusted EBITDA - Non-GAAP
$
28,559
$
32,488
$
48,699
$
62,205
Total revenues
$
159,443
$
149,286
$
312,745
$
295,370
Adjusted EBITDA margin - Non-GAAP
17.9
%
21.8
%
15.6
%
21.1
%
* Other non-run-rate expenses for the
three months ended September 30, 2022 consist of $205 excess
lease-related expense for vacated facilities.
Other non-run-rate expenses for the three
months ended September 30, 2021 consist primarily of $353 excess
lease-related expense for vacated facilities, lease termination
costs, and other costs, $458 of executive transition costs, and
$498 of incremental costs and penalties primarily due to the
cancellation of certain events directly associated with the
COVID-19 pandemic.
Other non-run-rate expenses for the six
months ended September 30, 2022 consist of $462 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 six
months ended September 30, 2021 consist primarily of $823 excess
lease-related expense for vacated facilities, lease termination
costs, and other costs, including retention bonuses, related to the
restructuring plan, $2,707 of executive transition costs, including
severance and other costs related to the departure of the CEO, and
$498 of incremental costs and penalties primarily due to the
cancellation of certain events directly associated with the
COVID-19 pandemic.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221025005950/en/
Media Relations Contact Tami Andrade (949) 517-2380
tandrade@nextgen.com
Investor Relations Contact James Hammerschmidt (949)
237-6112 jhammerschmidt@nextgen.com
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