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NextGen Healthcare, Inc. Reports Fiscal 2021 Third Quarter Results

1/27/2021 4:15:00 PM

IRVINE, Calif.--(BUSINESS WIRE)--Jan. 27, 2021-- NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of ambulatory-focused healthcare technology solutions, today announced its fiscal 2021 third quarter ended December 31, 2020 operating results.

Fiscal Third Quarter 2021 Highlights

On a GAAP basis, revenue for the fiscal 2021 third quarter was $141.8 million compared to $137.7 million in the fiscal 2020 third quarter.

On a GAAP basis, net income for the fiscal 2021 third quarter was $0.5 million compared to $4.4 million in the fiscal 2020 third quarter.

On a GAAP basis, fully diluted net income per share was at $0.01 in the fiscal 2021 third quarter compared to $0.07 for the same period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2021 third quarter was $0.26 compared to $0.23 in the third quarter a year ago.

Cash flow from operations was $27.9 million in the fiscal 2021 third quarter compared to $23.6 million for the same period a year ago. Free cash flow was $20.3 million in fiscal 2021 third quarter compared to $17.0 million in the same period a year ago.

“Our solid fiscal third quarter results demonstrate that our strategy is working – both within our client base and with increasing new client bookings. This success reflects the strength of our integrated platform and client experience,” said Rusty Frantz, president and chief executive officer of NextGen Healthcare. “As we look forward, we expect to continue to drive revenue growth as well as investing in opportunities to expand that growth in the future.”

Fiscal Year 2021 Financial Outlook

The Company is reiterating its outlook for fiscal 2021 and expects:

  • Revenue between $547 and $555 million
  • Non-GAAP earnings per share range between $0.92 and $0.98

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2021 third quarter operating results on Wednesday, January 27, 2021 at 5:00 p.m. Eastern Time. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 866-750-8947 or 720-405-1352 for international callers and referencing participant code 8675815 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 until April 27, 2021.

About NextGen Healthcare, Inc. 

We empower the transformation of ambulatory care—partnering with medical, behavioral and oral health providers in their journey to value-based care to make healthcare better for everyone. We go beyond EHR and PM. Our integrated solutions help increase clinical productivity, enrich the patient experience, and ensure healthy financial outcomes. We believe in better. Learn more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn, YouTube and Instagram.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements within the meaning of the federal securities laws, including but not limited to, statements regarding future events including but not limited to the COVID-19 pandemic, developments in the healthcare sector and regulatory framework, the Company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue, net income, and earnings per share). Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements and additional risks and uncertainties are set forth in Part I, Item A of our most recent Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, including but not limited to: volatility and uncertainty in the global economy, financial markets and on our customers in light of the continuing COVID-19 pandemic, including the potential (i) slowdown or shutdown of preventive and elective medical procedures, (ii) delay in the contracting for additional products and services by our customers and (iii) delay in the sales cycle for new customers; the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; uncertainties related to the future impact of U.S. tax reform; 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; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company's ability or inability to attract and retain qualified personnel; possible regulation of the Company's software by the U.S. Food and Drug Administration; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; disruptions caused by acquisitions of companies, products, or technologies; the extent to which the COVID-19 pandemic and measures taken in response thereto could adversely affect our financial condition and results of operations; and general economic conditions. 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 free cash flow by 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 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, net securities litigation defense costs and settlement, share-based compensation, impairment of assets, 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 2020 was 22.0%. The normalized non-GAAP tax rate expected to be applied to each quarter of fiscal year 2021 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’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, net securities litigation defense 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.

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

$

128,243

 

 

$

124,787

 

 

$

373,456

 

 

$

364,823

 

Software, hardware, and other non-recurring

 

13,509

 

 

 

12,953

 

 

 

39,177

 

 

 

39,034

 

Total revenues

 

141,752

 

 

 

137,740

 

 

 

412,633

 

 

 

403,857

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

54,204

 

 

 

52,197

 

 

 

157,539

 

 

 

153,065

 

Software, hardware, and other non-recurring

 

6,800

 

 

 

6,975

 

 

 

18,924

 

 

 

19,816

 

Amortization of capitalized software costs and acquired intangible assets

 

9,320

 

 

 

8,963

 

 

 

29,180

 

 

 

26,219

 

Total cost of revenue

 

70,324

 

 

 

68,135

 

 

 

205,643

 

 

 

199,100

 

Gross profit

 

71,428

 

 

 

69,605

 

 

 

206,990

 

 

 

204,757

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

48,972

 

 

 

42,841

 

 

 

131,659

 

 

 

122,015

 

Research and development costs, net

 

18,197

 

 

 

20,026

 

 

 

54,111

 

 

 

61,866

 

Amortization of acquired intangible assets

 

1,112

 

 

 

964

 

 

 

3,336

 

 

 

2,694

 

Impairment of assets

 

2,215

 

 

 

1,948

 

 

 

2,215

 

 

 

4,353

 

Restructuring costs

 

 

 

 

546

 

 

 

2,562

 

 

 

2,428

 

Total operating expenses

 

70,496

 

 

 

66,325

 

 

 

193,883

 

 

 

193,356

 

Income from operations

 

932

 

 

 

3,280

 

 

 

13,107

 

 

 

11,401

 

Interest income

 

9

 

 

 

30

 

 

 

27

 

 

 

145

 

Interest expense

 

(631

)

 

 

(435

)

 

 

(2,873

)

 

 

(1,294

)

Other income (expense), net

 

(15

)

 

 

137

 

 

 

(17

)

 

 

214

 

Income before provision for (benefit of) income taxes

 

295

 

 

 

3,012

 

 

 

10,244

 

 

 

10,466

 

Provision for (benefit of) income taxes

 

(169

)

 

 

(1,403

)

 

 

149

 

 

 

(1,274

)

Net income

$

464

 

 

$

4,415

 

 

$

10,095

 

 

$

11,740

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.01

 

 

$

0.07

 

 

$

0.15

 

 

$

0.18

 

Diluted

$

0.01

 

 

$

0.07

 

 

$

0.15

 

 

$

0.18

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

66,943

 

 

 

65,493

 

 

 

66,644

 

 

 

65,304

 

Diluted

67,140

 

 

 

65,664

 

 

 

66,649

 

 

 

65,516

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

 

December 31, 2020

 

 

March 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

89,523

 

 

$

138,012

 

Restricted cash and cash equivalents

 

 

4,208

 

 

 

2,307

 

Accounts receivable, net

 

 

76,741

 

 

 

80,006

 

Contract assets

 

 

17,404

 

 

 

12,529

 

Income taxes receivable

 

 

3,397

 

 

 

856

 

Prepaid expenses and other current assets

 

 

26,074

 

 

 

26,305

 

Total current assets

 

 

217,347

 

 

 

260,015

 

Equipment and improvements, net

 

 

15,009

 

 

 

19,836

 

Capitalized software costs, net

 

 

41,090

 

 

 

37,004

 

Operating lease assets

 

 

26,268

 

 

 

31,004

 

Deferred income taxes, net

 

 

10,662

 

 

 

10,620

 

Contract assets, net of current

 

 

2,190

 

 

 

3,007

 

Intangibles, net

 

 

40,121

 

 

 

57,809

 

Goodwill

 

 

267,212

 

 

 

267,165

 

Other assets

 

 

36,000

 

 

 

33,656

 

Total assets

 

$

655,899

 

 

$

720,116

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,817

 

 

$

10,521

 

Contract liabilities

 

 

48,655

 

 

 

56,786

 

Accrued compensation and related benefits

 

 

40,002

 

 

 

23,792

 

Income taxes payable

 

 

65

 

 

 

148

 

Operating lease liabilities

 

 

12,398

 

 

 

10,619

 

Other current liabilities

 

 

51,104

 

 

 

41,352

 

Total current liabilities

 

 

160,041

 

 

 

143,218

 

Deferred compensation

 

 

6,624

 

 

 

5,300

 

Line of credit

 

 

29,000

 

 

 

129,000

 

Operating lease liabilities, net of current

 

 

29,291

 

 

 

38,823

 

Other noncurrent liabilities

 

 

5,231

 

 

 

3,281

 

Total liabilities

 

 

230,187

 

 

 

319,622

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding 67,002 and 66,134 shares at December 31, 2020 and March 31, 2020, respectively

 

 

670

 

 

 

661

 

Additional paid-in capital

 

 

297,711

 

 

 

282,857

 

Accumulated other comprehensive loss

 

 

(1,883

)

 

 

(2,143

)

Retained earnings

 

 

129,214

 

 

 

119,119

 

Total shareholders' equity

 

 

425,712

 

 

 

400,494

 

Total liabilities and shareholders' equity

 

$

655,899

 

 

$

720,116

 

NEXTGEN HEALTHCARE, INC.

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE

 

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Income before provision for income taxes - GAAP

$

295

 

 

$

3,012

 

 

$

10,244

 

 

$

10,466

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

 

118

 

 

 

1,636

 

 

 

380

 

 

 

2,375

 

Amortization of acquired intangible assets

 

5,456

 

 

 

5,646

 

 

 

17,688

 

 

 

15,951

 

Amortization of deferred debt issuance costs

 

177

 

 

 

177

 

 

 

532

 

 

 

532

 

Impairment of assets

 

2,215

 

 

 

1,948

 

 

 

2,215

 

 

 

4,353

 

Restructuring costs

 

 

 

 

546

 

 

 

2,562

 

 

 

2,428

 

Securities litigation defense costs and settlement, net of insurance

 

5,955

 

 

 

717

 

 

 

10,214

 

 

 

1,093

 

Share-based compensation

 

5,933

 

 

 

4,621

 

 

 

16,763

 

 

 

13,828

 

Other non-run-rate expenses*

 

1,669

 

 

 

799

 

 

 

4,134

 

 

 

1,704

 

Total adjustments to GAAP income before provision for income taxes:

 

21,523

 

 

 

16,090

 

 

 

54,488

 

 

 

42,264

 

Income before provision for income taxes - Non-GAAP

 

21,818

 

 

 

19,102

 

 

 

64,732

 

 

 

52,730

 

Provision for income taxes

 

4,363

 

 

 

4,203

 

 

 

12,946

 

 

 

11,601

 

Net income - Non-GAAP

$

17,455

 

 

$

14,899

 

 

$

51,786

 

 

$

41,129

 

Diluted net income per share - Non-GAAP

$

0.26

 

 

$

0.23

 

 

$

0.78

 

 

$

0.63

 

Weighted-average shares outstanding (diluted):

 

67,140

 

 

 

65,664

 

 

 

66,649

 

 

 

65,516

 

* Other non-run-rate expenses for the three months ended December 31, 2020 consist primarily of $1,204 excess lease-related expense for vacated facilities, lease termination costs, and other costs, including retention bonuses and severance expense, related to the restructuring plan and $465 of professional services costs not related to core operations. Other non-run-rate expenses for the nine months ended December 31, 2020 consist primarily of $2,631 excess lease-related expense for vacated facilities, lease termination costs, and other costs, including retention bonuses and severance expense, related to the restructuring plan, $1,404 of professional services costs not related to core operations, and $99 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 three and nine months ended December 31, 2019 consist primarily of excess lease-related expense for vacated facilities and other costs, including retention bonuses, related to the restructuring plan. Other non-run-rate expenses for the three and nine months ended December 31, 2018 consist primarily of severance and other employee-related costs.

RECONCILIATION OF FREE CASH FLOW

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net cash provided by operating activities

$

27,946

 

 

$

23,607

 

 

$

75,978

 

 

$

64,371

 

Additions to capitalized software costs

 

(6,831

)

 

 

(4,884

)

 

 

(18,914

)

 

 

(14,785

)

Additions to equipment and improvements

 

(782

)

 

 

(1,758

)

 

 

(1,546

)

 

 

(6,951

)

Free cash flow

$

20,333

 

 

$

16,965

 

 

$

55,518

 

 

$

42,635

 

 

Media Contact:
NextGen Healthcare
Tami Stegmaier
O: (949) 237-6083
tstegmaier@nextgen.com
or
Investor Contact:
Westwicke Partners
Bob East or Asher Dewhurst
Westwicke Partners
443-213-0500

Source: NextGen Healthcare, Inc.