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NextGen Healthcare, Inc. Reports Fiscal 2021 First Quarter Results
July 30, 2020 at 4:05 PM EDT

IRVINE, Calif.--(BUSINESS WIRE)--Jul. 30, 2020-- NextGen Healthcare, Inc. (Nasdaq: NXGN), the leading provider of ambulatory-focused healthcare technology solutions, announced today its fiscal 2021 first quarter ended June 30, 2020 operating results.

Fiscal 2021 First Quarter Highlights

Revenue for the fiscal 2021 first quarter was $130.9 million compared to $131.9 million a year-ago. On a GAAP basis, net loss for the fiscal 2021 first quarter was $0.8 million compared with net income of $1.2 million in the fiscal 2020 first quarter. On a GAAP basis, fully diluted net loss per share was $0.01 in the fiscal 2021 first quarter compared to net income per share of $0.02 per share for the same period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2021 first quarter was $0.21 versus $0.16 reported in the first quarter a year ago.

Cash flow from operations was $17.7 million in the fiscal 2021 first quarter compared to $17.0 million for the same period a year ago. Free cash flow was $11.4 million compared to $8.6 million in the same period a year ago. Ending cash balance was $192 million with $179 million outstanding against revolving credit facility.

“In the face of unprecedented conditions, NextGen delivered an exceptional performance by minimizing revenue impact, preserving earnings, and generating free cash when patient visit volume was significantly reduced,” said Rusty Frantz, president and chief executive officer of NextGen Healthcare. “As we move through the quarter, our attention has turned back to innovation, commercial execution, and growth based on our differentiated, future-facing ambulatory platform that is purpose built to engage patients in their wellness journey.”

Fiscal 2021 Financial Outlook

Given the continued uncertainty in the market, the Company is not providing annual guidance. As the market stabilizes and there is more confidence in the macro environment, the Company will evaluate returning to guidance.

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2021 first quarter operating results on Thursday, July 30, 2019 at 5:00 PM ET (2:00 PM PT). 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 4192842 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 28, 2020.

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 and financial markets in light of the evolving COVID-19 pandemic; 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 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 (LOSS)

(In thousands, except per share data)

(Unaudited)

 

Three Months Ended June 30,

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

Recurring

$

119,522

 

 

$

119,447

 

Software, hardware, and other non-recurring

 

11,357

 

 

 

12,414

 

Total revenues

 

130,879

 

 

 

131,861

 

Cost of revenue:

 

 

 

 

 

 

 

Recurring

 

50,429

 

 

 

50,540

 

Software, hardware, and other non-recurring

 

6,041

 

 

 

6,278

 

Amortization of capitalized software costs and acquired intangible assets

 

9,899

 

 

 

8,413

 

Total cost of revenue

 

66,369

 

 

 

65,231

 

Gross profit

 

64,510

 

 

 

66,630

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

40,737

 

 

 

40,128

 

Research and development costs, net

 

18,222

 

 

 

22,051

 

Amortization of acquired intangible assets

 

1,112

 

 

 

865

 

Impairment of assets

 

 

 

 

489

 

Restructuring costs

 

2,562

 

 

 

1,707

 

Total operating expenses

 

62,633

 

 

 

65,240

 

Income from operations

 

1,877

 

 

 

1,390

 

Interest income

 

6

 

 

 

79

 

Interest expense

 

(1,107

)

 

 

(472

)

Other income (expense), net

 

16

 

 

 

(133

)

Income before provision for (benefit of) income taxes

 

792

 

 

 

864

 

Provision for (benefit of) income taxes

 

1,616

 

 

 

(380

)

Net income (loss)

$

(824

)

 

$

1,244

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

(0.01

)

 

$

0.02

 

Diluted

$

(0.01

)

 

$

0.02

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

66,296

 

 

 

65,015

 

Diluted

 

66,296

 

 

 

65,353

 

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

June 30, 2020

 

 

March 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

192,323

 

 

$

138,012

 

Restricted cash and cash equivalents

 

 

8,032

 

 

 

2,307

 

Accounts receivable, net

 

 

76,851

 

 

 

80,006

 

Contract assets

 

 

13,740

 

 

 

12,529

 

Income taxes receivable

 

 

579

 

 

 

856

 

Prepaid expenses and other current assets

 

 

25,899

 

 

 

26,305

 

Total current assets

 

 

317,424

 

 

 

260,015

 

Equipment and improvements, net

 

 

18,525

 

 

 

19,836

 

Capitalized software costs, net

 

 

37,853

 

 

 

37,004

 

Operating lease assets

 

 

29,280

 

 

 

31,004

 

Deferred income taxes, net

 

 

10,604

 

 

 

10,620

 

Contract assets, net of current

 

 

2,878

 

 

 

3,007

 

Intangibles, net

 

 

51,561

 

 

 

57,809

 

Goodwill

 

 

267,165

 

 

 

267,165

 

Other assets

 

 

34,516

 

 

 

33,656

 

Total assets

 

$

769,806

 

 

$

720,116

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,199

 

 

$

10,521

 

Contract liabilities

 

 

51,160

 

 

 

56,786

 

Accrued compensation and related benefits

 

 

22,454

 

 

 

23,792

 

Income taxes payable

 

 

1,373

 

 

 

148

 

Operating lease liabilities

 

 

10,669

 

 

 

10,619

 

Other current liabilities

 

 

43,616

 

 

 

41,352

 

Total current liabilities

 

 

138,471

 

 

 

143,218

 

Deferred compensation

 

 

5,988

 

 

 

5,300

 

Line of credit

 

 

179,000

 

 

 

129,000

 

Operating lease liabilities, net of current

 

 

36,135

 

 

 

38,823

 

Other noncurrent liabilities

 

 

6,570

 

 

 

3,281

 

Total liabilities

 

 

366,164

 

 

 

319,622

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding
66,669 and 66,134 shares at June 30, 2020 and March 31, 2020,
respectively

 

 

667

 

 

 

661

 

Additional paid-in capital

 

 

286,836

 

 

 

282,857

 

Accumulated other comprehensive loss

 

 

(2,156

)

 

 

(2,143

)

Retained earnings

 

 

118,295

 

 

 

119,119

 

Total shareholders' equity

 

 

403,642

 

 

 

400,494

 

Total liabilities and shareholders' equity

 

$

769,806

 

 

$

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 June 30,

 

 

2020

 

 

2019

 

Income before provision for income taxes - GAAP

$

792

 

 

$

864

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition costs, net

 

120

 

 

 

 

Amortization of acquired intangible assets

 

6,248

 

 

 

5,153

 

Amortization of deferred debt issuance costs

 

177

 

 

 

177

 

Impairment of assets

 

 

 

 

489

 

Restructuring costs

 

2,562

 

 

 

1,707

 

Securities litigation defense costs and settlement, net of insurance

 

1,026

 

 

 

37

 

Share-based compensation

 

5,393

 

 

 

4,891

 

Other non-run-rate expenses*

 

1,311

 

 

 

90

 

Total adjustments to GAAP income before provision for income taxes:

 

16,837

 

 

 

12,544

 

Income before provision for income taxes - Non-GAAP

 

17,629

 

 

 

13,408

 

Provision for income taxes

 

3,526

 

 

 

2,950

 

Net income - Non-GAAP

$

14,103

 

 

$

10,458

 

Diluted net income per share - Non-GAAP

$

0.21

 

 

$

0.16

 

Weighted-average shares outstanding (diluted):

 

66,296

 

 

 

65,353

 

 

 

 

 

 

 

 

 

* 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.

 

Other non-run-rate expenses for the three months ended June 30, 2019 consist primarily of excess lease-related expense for vacated locations.

 

 

Media:
NextGen Healthcare
Tami Stegmaier
O: (949) 237-6083
tstegmaier@nextgen.com

or

Investors:
Westwicke Partners
Bob East or Asher Dewhurst
Westwicke Partners
443-213-0500

Source: NextGen Healthcare, Inc.