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NextGen Healthcare Reports Fiscal 2022 First Quarter Results

7/29/2021 4:05:00 PM

Raises Fiscal 2022 Revenue Guidance

ATLANTA--(BUSINESS WIRE)--Jul. 29, 2021-- NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of ambulatory-focused technology solutions, today announced its operating results for the fiscal first quarter ended June 30, 2021.

Fiscal 2022 First Quarter Highlights

  • Total revenue for the fiscal 2022 first quarter was $146.1 million compared to $130.9 million for the same period a year ago, or 12 percent growth.
  • Recurring revenue accounted for 91 percent of total revenue, or $132.4 million, growing 11 percent over the year ago period.
  • Subscription services revenue in the fiscal first quarter generated $38.3 million, or 8 percent growth over the prior year period, driven by demand for patient experience-related solutions.
  • Managed services, which includes revenue cycle management and cloud services, generated revenue of $29.4 million, a 31 percent growth over fiscal 2021 first quarter as patient volumes rebounded.
  • Fiscal 2022 first quarter bookings, which reflects annual contract value, was $34.3 million, 34 percent higher than the prior year period.
  • Fully diluted net income per share in the fiscal 2022 first quarter was $0.04 compared to a net loss of $0.01 per share the same period a year ago.
  • On a non-GAAP basis, fully diluted earnings per share for the fiscal 2022 first quarter was $0.25 compared to $0.21 for the same period a year ago.

“NextGen Healthcare has started the fiscal year with strong momentum and is well positioned to execute its operational and strategic objectives. Making moderate but intentional incremental investments to drive sustainable growth at an increasing rate, while also maintaining operational excellence, continues to be the Company’s emphasis,” said Chairman, Jeff Margolis. “The Board looks forward to supporting our solid executive leadership team to execute on these plans and deliver significant value for our shareholders.”

“NextGen Healthcare delivered another quarter of strong financial performance reflecting growing demand for our expansive offerings,” said Executive Leadership Committee Member and Chief Financial Officer, Jamie Arnold. “We remain focused on the business and clinical success of our clients across a spectrum of primary care and focused medical specialties in ambulatory care. Notably, NextGen continues to gain new clients because of the advantages of our comprehensive and integrated offering and our leadership team is committed to advancing our long-term growth strategy by expanding the breadth of our product offering and enhancing our commercial capabilities. We are well positioned to achieve our corporate growth goals.”

NextGen Healthcare updates its fiscal year 2022 financial guidance as follows:

  • Increase revenue to between $576 and $586 million, from between $574 and $584 million prior, and
  • Reaffirm non-GAAP earnings per share range between $0.89 and $0.95

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal year 2022 first quarter operating results today at 5:00 p.m. Eastern time. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 866-342-8591 or 203-518-9713 for international callers and referencing participant code NXGNQ122 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 October 30, 2021.

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; a determination by the jury that the Company has liability in litigation advanced by a former director and shareholder; 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 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 2022 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.

About NextGen Healthcare, Inc. 

NextGen Healthcare, Inc. (Nasdaq: NXGN) is a leading provider of ambulatory-focused technology solutions. We are empowering the transformation of ambulatory care—partnering with medical, behavioral and dental 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.

NEXTGEN HEALTHCARE, INC.

PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended June 30,

 

2021

 

2020

Revenues:

 

 

 

 

 

Recurring

$

132,381

 

 

$

119,522

 

Software, hardware, and other non-recurring

 

13,703

 

 

 

11,357

 

Total revenues

 

146,084

 

 

 

130,879

 

Cost of revenue:

 

 

 

 

 

Recurring

 

57,160

 

 

 

50,429

 

Software, hardware, and other non-recurring

 

7,497

 

 

 

6,041

 

Amortization of capitalized software costs and acquired intangible assets

 

8,084

 

 

 

9,899

 

Total cost of revenue

 

72,741

 

 

 

66,369

 

Gross profit

 

73,343

 

 

 

64,510

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative

 

48,486

 

 

 

40,737

 

Research and development costs, net

 

19,321

 

 

 

18,222

 

Amortization of acquired intangible assets

 

881

 

 

 

1,112

 

Impairment of assets

 

382

 

 

 

 

Restructuring costs

 

539

 

 

 

2,562

 

Total operating expenses

 

69,609

 

 

 

62,633

 

Income from operations

 

3,734

 

 

 

1,877

 

Interest income

 

12

 

 

 

6

 

Interest expense

 

(317

)

 

 

(1,107

)

Other income (expense), net

 

(22

)

 

 

16

 

Income before provision for income taxes

 

3,407

 

 

 

792

 

Provision for income taxes

 

559

 

 

 

1,616

 

Net income (loss)

$

2,848

 

 

$

(824

)

Net income (loss) per share:

 

 

 

 

 

Basic

$

0.04

 

 

$

(0.01

)

Diluted

$

0.04

 

 

$

(0.01

)

Weighted-average shares outstanding:

 

 

 

 

 

Basic

 

67,175

 

 

 

66,296

 

Diluted

 

67,799

 

 

 

66,296

 

NEXTGEN HEALTHCARE, INC.

PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

 

June 30, 2021

 

 

March 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,002

 

 

$

73,295

 

Restricted cash and cash equivalents

 

 

7,048

 

 

 

5,280

 

Accounts receivable, net

 

 

73,495

 

 

 

77,541

 

Contract assets

 

 

20,446

 

 

 

19,481

 

Income taxes receivable

 

 

765

 

 

 

765

 

Prepaid expenses and other current assets

 

 

29,434

 

 

 

31,282

 

Total current assets

 

 

194,190

 

 

 

207,644

 

Equipment and improvements, net

 

 

13,476

 

 

 

14,539

 

Capitalized software costs, net

 

 

41,146

 

 

 

41,474

 

Operating lease assets

 

 

16,442

 

 

 

18,446

 

Deferred income taxes, net

 

 

19,446

 

 

 

19,474

 

Contract assets, net of current

 

 

1,930

 

 

 

1,976

 

Intangibles, net

 

 

33,601

 

 

 

36,700

 

Goodwill

 

 

267,212

 

 

 

267,212

 

Other assets

 

 

37,121

 

 

 

37,021

 

Total assets

 

$

624,564

 

 

$

644,486

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,213

 

 

$

11,378

 

Contract liabilities

 

 

52,281

 

 

 

52,863

 

Accrued compensation and related benefits

 

 

28,410

 

 

 

50,374

 

Income taxes payable

 

 

872

 

 

 

584

 

Operating lease liabilities

 

 

12,002

 

 

 

12,735

 

Other current liabilities

 

 

54,284

 

 

 

52,699

 

Total current liabilities

 

 

155,062

 

 

 

180,633

 

Deferred compensation

 

 

7,363

 

 

 

6,620

 

Operating lease liabilities, net of current

 

 

16,423

 

 

 

18,453

 

Other noncurrent liabilities

 

 

7,148

 

 

 

7,136

 

Total liabilities

 

 

185,996

 

 

 

212,842

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding 67,362 and 67,069 shares at June 30, 2021 and March 31, 2021, respectively

 

 

674

 

 

 

671

 

Additional paid-in capital

 

 

308,374

 

 

 

304,263

 

Accumulated other comprehensive loss

 

 

(1,962

)

 

 

(1,924

)

Retained earnings

 

 

131,482

 

 

 

128,634

 

Total shareholders' equity

 

 

438,568

 

 

 

431,644

 

Total liabilities and shareholders' equity

 

$

624,564

 

 

$

644,486

 

NEXTGEN HEALTHCARE, INC.

PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

$

2,848

 

 

$

(824

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Amortization of capitalized software costs

 

5,866

 

 

 

4,763

 

Amortization and write-off of debt issuance costs

 

127

 

 

 

177

 

Amortization of other intangibles

 

3,099

 

 

 

6,248

 

Change in fair value of contingent consideration

 

 

 

 

25

 

Deferred income taxes

 

28

 

 

 

16

 

Depreciation

 

2,108

 

 

 

1,996

 

Excess tax deficiency (benefit) from share-based compensation

 

(176

)

 

 

867

 

Impairment of assets

 

382

 

 

 

 

Loss on disposal of equipment and improvements

 

38

 

 

 

 

Non-cash operating lease costs

 

1,628

 

 

 

1,683

 

Provision for bad debts

 

639

 

 

 

869

 

Share-based compensation

 

6,412

 

 

 

5,393

 

Changes in assets and liabilities, net of amounts acquired:

 

 

 

 

 

Accounts receivable

 

3,407

 

 

 

2,286

 

Contract assets

 

(919

)

 

 

(1,082

)

Accounts payable

 

(4,334

)

 

 

(1,391

)

Contract liabilities

 

(582

)

 

 

(5,626

)

Accrued compensation and related benefits

 

(21,964

)

 

 

(1,338

)

Income taxes

 

464

 

 

 

635

 

Deferred compensation

 

743

 

 

 

688

 

Operating lease liabilities

 

(2,676

)

 

 

(2,596

)

Other assets and liabilities

 

3,175

 

 

 

4,883

 

Net cash provided by operating activities

 

313

 

 

 

17,672

 

Cash flows from investing activities:

 

 

 

 

 

Additions to capitalized software costs

 

(5,538

)

 

 

(5,612

)

Additions to equipment and improvements

 

(1,002

)

 

 

(616

)

Net cash used in investing activities

 

(6,540

)

 

 

(6,228

)

Cash flows from financing activities:

 

 

 

 

 

Proceeds from line of credit

 

 

 

 

50,000

 

Proceeds from issuance of shares under employee plans

 

671

 

 

 

426

 

Payments for taxes related to net share settlement of equity awards

 

(2,969

)

 

 

(1,834

)

Net cash provided by (used in) financing activities

 

(2,298

)

 

 

48,592

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

(8,525

)

 

 

60,036

 

Cash, cash equivalents, and restricted cash at beginning of period

 

78,575

 

 

 

140,319

 

Cash, cash equivalents, and restricted cash at end of period

$

70,050

 

 

$

200,355

 

NEXTGEN HEALTHCARE, INC.

PRELIMINARY 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,

 

 

2021

 

 

2020

 

Recurring revenues:

 

 

 

 

 

 

 

Subscription services

$

38,284

 

 

$

35,360

 

Support and maintenance

 

38,486

 

 

 

38,547

 

Managed services

 

29,431

 

 

 

22,493

 

Electronic data interchange and data services

 

26,180

 

 

 

23,122

 

Total recurring revenues

 

132,381

 

 

 

119,522

 

 

 

 

 

 

 

 

 

Software, hardware, and other non-recurring revenues:

 

 

 

 

 

 

 

Software license and hardware

 

7,214

 

 

 

4,740

 

Other non-recurring services

 

6,489

 

 

 

6,617

 

Total software, hardware and other non-recurring revenues

 

13,703

 

 

 

11,357

 

 

 

 

 

 

 

 

 

Total revenues

$

146,084

 

 

$

130,879

 

 

 

 

 

 

 

 

 

Recurring revenues as a percentage of total revenues

 

90.6

%

 

 

91.3

%

NEXTGEN HEALTHCARE, INC.

PRELIMINARY NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

 

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE

 

Three Months Ended June 30,

 

 

2021

 

 

2020

 

Income before provision for income taxes - GAAP

$

3,407

 

 

$

792

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition costs, net

 

 

 

 

120

 

Amortization of acquired intangible assets

 

3,099

 

 

 

6,248

 

Amortization of deferred debt issuance costs

 

127

 

 

 

177

 

Impairment of assets

 

382

 

 

 

 

Restructuring costs

 

539

 

 

 

2,562

 

Securities litigation defense and related costs

 

4,858

 

 

 

1,026

 

Share-based compensation

 

6,412

 

 

 

5,393

 

Other non-run-rate expenses*

 

2,719

 

 

 

1,311

 

Total adjustments to GAAP income before provision for income taxes:

 

18,136

 

 

 

16,837

 

Income before provision for income taxes - Non-GAAP

 

21,543

 

 

 

17,629

 

Provision for income taxes

 

4,309

 

 

 

3,526

 

Net income - Non-GAAP

$

17,234

 

 

$

14,103

 

Diluted net income per share - Non-GAAP

$

0.25

 

 

$

0.21

 

Weighted-average shares outstanding (diluted):

 

67,799

 

 

 

66,296

 

 

 

 

 

 

 

 

 

* 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 Chief Executive Officer.

 

Other non-run-rate expenses for the three months ended June 30, 2020 consist primarily of $762 excess lease-related expense for vacated facilities and other costs, including retention bonuses, related to the restructuring plan, $478 of professional services costs not related to core operations, and $71 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 June 30,

 

2021

 

2020

Net cash provided by operating activities

$

313

 

 

$

17,672

 

Additions to capitalized software costs

 

(5,538

)

 

 

(5,612

)

Additions to equipment and improvements

 

(1,002

)

 

 

(616

)

Free cash flow

$

(6,227

)

 

$

11,444

 

 

Media Relations Contact
Tami Stegmaier
(949) 237-6083
tstegmaier@nextgen.com

Investor Relations Contact
Matthew Scalo
(415) 370-9202
mscalo@nextgen.com

Source: NextGen Healthcare, Inc.