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NextGen Healthcare, Inc. Reports Fiscal 2020 Third Quarter
January 23, 2020 at 4:05 PM EST

IRVINE, Calif.--(BUSINESS WIRE)--Jan. 23, 2020-- NextGen Healthcare, Inc. (NASDAQ: NXGN), a leading provider of ambulatory-focused healthcare technology solutions, announced today its fiscal 2020 third quarter ended December 31, 2019 operating results.

Fiscal 2020 Third Quarter Highlights

On a GAAP basis, revenue for the fiscal 2020 third quarter was $137.7 million compared to $130.9 million a year ago.

On a GAAP basis, net income for the fiscal 2020 third quarter was $4.4 million compared with net income of $4.8 million in the fiscal 2019 third quarter.

On a GAAP basis, fully diluted net income per share remained at $0.07 in the fiscal 2020 third quarter compared to the same period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2020 third quarter was $0.23 compared to $0.20 in the third quarter a year ago.

Cash flow from operations was $23.6 million in the fiscal 2020 third quarter compared to $18.4 million for the same period a year ago. Free cash flow was $17.0 million compared to $12.7 million in the same period a year ago.

“Our third fiscal quarter of FY20 was another solid operating quarter which saw further enhancements in client satisfaction, two significant and successful client events, and three acquisitions which position us well to own the patient experience and drive growth in behavioral health,” said Rusty Frantz, president and chief executive officer of NextGen Healthcare.

Fiscal 2020 Financial Outlook

The Company is narrowing their outlook for fiscal 2020 and now expects:

  • Revenue of between $541 million and $547 million versus the previous range of $540 million to $550 million
  • Non-GAAP EPS of between $0.80 and $0.84 versus the previous range of $0.79 to $0.85

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2020 third quarter operating results on Thursday, January 23, 2020 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 9868886 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 23, 2020.

About NextGen Healthcare, Inc

We empower 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 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, 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: 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; 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, 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 2019 was 22.0% and is expected to remain at 22.0% for each quarter of fiscal year 2020. 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, restructuring costs, net securities litigation defense costs, impairment of assets, 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,

 

 

   

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

   

$

124,787

 

 

$

117,446

 

 

$

364,823

 

 

$

353,770

 

Software, hardware, and other non-recurring

   

 

12,953

 

 

 

13,421

 

 

 

39,034

 

 

 

40,618

 

Total revenues

   

 

137,740

 

 

 

130,867

 

 

 

403,857

 

 

 

394,388

 

Cost of revenue:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

   

 

52,197

 

 

 

47,997

 

 

 

153,065

 

 

 

143,322

 

Software, hardware, and other non-recurring

   

 

6,975

 

 

 

6,576

 

 

 

19,816

 

 

 

20,752

 

Amortization of capitalized software costs and acquired intangible assets

   

 

8,963

 

 

 

7,098

 

 

 

26,219

 

 

 

20,566

 

Total cost of revenue

   

 

68,135

 

 

 

61,671

 

 

 

199,100

 

 

 

184,640

 

Gross profit

   

 

69,605

 

 

 

69,196

 

 

 

204,757

 

 

 

209,748

 

Operating expenses:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

   

 

42,841

 

 

 

41,304

 

 

 

122,015

 

 

 

120,169

 

Research and development costs, net

   

 

20,026

 

 

 

20,682

 

 

 

61,866

 

 

 

61,181

 

Amortization of acquired intangible assets

   

 

964

 

 

 

1,027

 

 

 

2,694

 

 

 

3,316

 

Impairment of assets

   

 

1,948

 

 

 

 

 

 

4,353

 

 

 

 

Restructuring costs

   

 

546

 

 

 

 

 

 

2,428

 

 

 

 

Total operating expenses

   

 

66,325

 

 

 

63,013

 

 

 

193,356

 

 

 

184,666

 

Income from operations

   

 

3,280

 

 

 

6,183

 

 

 

11,401

 

 

 

25,082

 

Interest income

   

 

30

 

 

 

44

 

 

 

145

 

 

 

113

 

Interest expense

   

 

(435

)

 

 

(720

)

 

 

(1,294

)

 

 

(2,219

)

Other income (expense), net

   

 

137

 

 

 

(227

)

 

 

214

 

 

 

384

 

Income before provision for (benefit of) income taxes

   

 

3,012

 

 

 

5,280

 

 

 

10,466

 

 

 

23,360

 

Provision for (benefit of) income taxes

   

 

(1,403

)

 

 

456

 

 

 

(1,274

)

 

 

2,794

 

Net income

   

$

4,415

 

 

$

4,824

 

 

$

11,740

 

 

$

20,566

 

Net income per share:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

   

$

0.07

 

 

$

0.07

 

 

$

0.18

 

 

$

0.32

 

Diluted

   

$

0.07

 

 

$

0.07

 

 

$

0.18

 

 

$

0.32

 

Weighted-average shares outstanding:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

   

 

65,493

 

 

 

64,637

 

 

 

65,304

 

 

 

64,308

 

Diluted

   

 

65,664

 

 

 

64,776

 

 

 

65,516

 

 

 

64,499

 

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

 

 

December 31, 2019

 

 

March 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

26,790

 

 

$

33,079

 

Restricted cash and cash equivalents

 

 

 

5,696

 

 

 

1,443

 

Accounts receivable, net

 

 

 

79,731

 

 

 

87,459

 

Contract assets

 

 

 

12,488

 

 

 

13,242

 

Inventory

 

 

 

75

 

 

 

120

 

Income taxes receivable

 

 

 

5,485

 

 

 

3,682

 

Prepaid expenses and other current assets

 

 

 

23,101

 

 

 

20,826

 

Total current assets

 

 

 

153,366

 

 

 

159,851

 

Equipment and improvements, net

 

 

 

22,004

 

 

 

21,404

 

Capitalized software costs, net

 

 

 

39,678

 

 

 

37,855

 

Operating lease assets

 

 

 

34,424

 

 

 

 

Deferred income taxes, net

 

 

 

5,088

 

 

 

6,194

 

Contract assets, net of current

 

 

 

3,427

 

 

 

3,747

 

Intangibles, net

 

 

 

64,394

 

 

 

52,595

 

Goodwill

 

 

 

266,741

 

 

 

218,771

 

Other assets

 

 

 

33,773

 

 

 

32,478

 

Total assets

 

 

$

622,895

 

 

$

532,895

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

9,411

 

 

$

5,432

 

Contract liabilities

 

 

 

52,905

 

 

 

56,009

 

Accrued compensation and related benefits

 

 

 

25,309

 

 

 

25,663

 

Income taxes payable

 

 

 

 

 

 

64

 

Operating lease liabilities

 

 

 

10,323

 

 

 

 

Other current liabilities

 

 

 

38,931

 

 

 

41,064

 

Total current liabilities

 

 

 

136,879

 

 

 

128,232

 

Deferred compensation

 

 

 

6,198

 

 

 

5,905

 

Line of credit

 

 

 

37,000

 

 

 

11,000

 

Operating lease liabilities, net of current

 

 

 

39,297

 

 

 

 

Other noncurrent liabilities

 

 

 

3,765

 

 

 

11,812

 

Total liabilities

 

 

 

223,139

 

 

 

156,949

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding 65,701 and 64,838 shares at December 31, 2019 and March 31, 2019, respectively

 

 

 

657

 

 

 

648

 

Additional paid-in capital

 

 

 

277,161

 

 

 

264,908

 

Accumulated other comprehensive loss

 

 

 

(1,423

)

 

 

(1,231

)

Retained earnings

 

 

 

123,361

 

 

 

111,621

 

Total shareholders' equity

 

 

 

399,756

 

 

 

375,946

 

Total liabilities and shareholders' equity

 

 

$

622,895

 

 

$

532,895

 

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,

 

 

   

2019

 

 

2018

 

 

2019

 

 

2018

 

Income before provision for income taxes - GAAP

   

$

3,012

 

 

$

5,280

 

 

$

10,466

 

 

$

23,360

 

Non-GAAP adjustments:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

   

 

1,636

 

 

 

109

 

 

 

2,375

 

 

 

2,058

 

Amortization of acquired intangible assets

   

 

5,646

 

 

 

5,315

 

 

 

15,951

 

 

 

16,180

 

Amortization of deferred debt issuance costs

   

 

177

 

 

 

177

 

 

 

532

 

 

 

532

 

Impairment of assets

   

 

1,948

 

 

 

 

 

 

4,353

 

 

 

 

Restructuring costs

   

 

546

 

 

 

 

 

 

2,428

 

 

 

 

Securities litigation defense costs and settlement, net of insurance

   

 

717

 

 

 

29

 

 

 

1,093

 

 

 

(5,407

)

Share-based compensation

   

 

4,621

 

 

 

4,698

 

 

 

13,828

 

 

 

11,949

 

Other non-run-rate expenses*

   

 

799

 

 

 

1,340

 

 

 

1,704

 

 

 

3,979

 

Total adjustments to GAAP income before provision for income taxes:

   

 

16,090

 

 

 

11,668

 

 

 

42,264

 

 

 

29,291

 

Income before provision for income taxes - Non-GAAP

   

 

19,102

 

 

 

16,948

 

 

 

52,730

 

 

 

52,651

 

Provision for income taxes

   

 

4,203

 

 

 

3,729

 

 

 

11,601

 

 

 

11,584

 

Net income - Non-GAAP

   

$

14,899

 

 

$

13,219

 

 

$

41,129

 

 

$

41,067

 

Diluted net income per share - Non-GAAP

   

$

0.23

 

 

$

0.20

 

 

$

0.63

 

 

$

0.64

 

Weighted-average shares outstanding (diluted):

   

 

65,664

 

 

 

64,776

 

 

 

65,516

 

 

 

64,499

 

* 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.

 

Source: NextGen Healthcare, Inc.

Media Contact:
NextGen Healthcare
Monica Golden
O: (949) 237-6082
C: (949) 547-3864
mgolden@nextgen.com
or
Investor Contact:
Westwicke Partners
Bob East or Asher Dewhurst
Westwicke Partners
443-213-0500