nxgn-8k_20201022.htm
false 0000708818 0000708818 2020-10-22 2020-10-22

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report

(Date of earliest event reported):

October 22, 2020

 

NEXTGEN HEALTHCARE, INC.

(Exact name of Registrant as Specified in Its Charter)

 

California

001-12537

95-2888568

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

 

 

18111 Von Karman Avenue, Suite 800

Irvine, California

 

92612

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (949) 255-2600

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (Par Value $0.01)

 

NXGN

 

NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 


 

Item 2.02   Results of Operations and Financial Condition.

On October 22, 2020, NextGen Healthcare, Inc. (the “Company”) issued a press release announcing its financial performance for the period ended September 30, 2020. A copy of the press release is attached to this Form 8-K as Exhibit 99.1, and is incorporated herein by reference.

The information in this Item 2.02 of this Form 8-K, as well as Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01   Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.

 

Description

99.1

104

 

Press Release dated October 22, 2020.

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

 

 

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: October 22, 2020

NEXTGEN HEALTHCARE, INC.

 

 

 

 

By:

/s/ James R. Arnold, Jr.

 

 

James R. Arnold, Jr.

 

 

Chief Financial Officer

 

 

 

nxgn-ex991_6.htm

Exhibit 99.1

 

 

NextGen Healthcare, Inc. Reports Fiscal 2021 Second Quarter Results

IRVINE, Calif.— Oct. 22, 2020 -- NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of ambulatory-focused healthcare technology solutions, today announced its fiscal 2021 second quarter ended September 30, 2020 operating results.

Fiscal 2021 Second Quarter Highlights

Revenue for the fiscal 2021 second quarter was $140.0 million compared to $134.3 million a year-ago. On a GAAP basis, net income for the fiscal 2021 second quarter was $10.5 million compared to $6.1 million in the fiscal 2020 second quarter. On a GAAP basis, fully diluted net income per share was $0.16 in the fiscal 2021 second quarter compared to $0.09 per share for the same period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2021 second quarter was $0.30 versus $0.24 reported in the second quarter a year ago.

Cash flow from operations was $30.4 million in the fiscal 2021 second quarter compared to $23.8 million for the same period a year ago. Free cash flow was $23.7 million compared to $17.1 million in the same period a year ago. The ending cash balance was $103.4 million with $64.0 million outstanding against the revolving credit facility.  

“We delivered strong Q2 performance across almost every operational metric and showed solid growth in subscription services,” said Rusty Frantz, president and chief executive officer of NextGen Healthcare. “NextGen Healthcare offers a premium client experience in the independent ambulatory market and this differentiator is showing up in our commercial wins both inside and outside the base. We intend to further capitalize on the success of our integrated solution by migrating our client base onto our Spring ‘21 release which leverages our new patient experience platform – opening up additional long-term market opportunities. With better visibility and confidence in the back half of the year, we are resuming annual guidance.”

Fiscal 2021 Financial Outlook

Based on improved market conditions, the Company is reinstating annual guidance. For fiscal 2021, the Company now expects revenue of between $535 and $551 million and non-GAAP earnings per share between $0.83 and $0.93.

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2021 second quarter operating results on Thursday, Oct. 22, 2020 at 5:00 p.m. Eastern time (2:00 p.m. Pacific 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 1092337 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 January 20, 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.

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

 

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

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Six Months Ended September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

$

125,691

 

 

$

120,589

 

 

$

245,213

 

 

$

240,036

 

Software, hardware, and other non-recurring

 

14,311

 

 

 

13,667

 

 

 

25,668

 

 

 

26,081

 

Total revenues

 

140,002

 

 

 

134,256

 

 

 

270,881

 

 

 

266,117

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

52,906

 

 

 

50,328

 

 

 

103,335

 

 

 

100,868

 

Software, hardware, and other non-recurring

 

6,083

 

 

 

6,563

 

 

 

12,124

 

 

 

12,841

 

Amortization of capitalized software costs and acquired intangible assets

 

9,961

 

 

 

8,843

 

 

 

19,860

 

 

 

17,256

 

Total cost of revenue

 

68,950

 

 

 

65,734

 

 

 

135,319

 

 

 

130,965

 

Gross profit

 

71,052

 

 

 

68,522

 

 

 

135,562

 

 

 

135,152

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

41,950

 

 

 

39,046

 

 

 

82,687

 

 

 

79,174

 

Research and development costs, net

 

17,692

 

 

 

19,789

 

 

 

35,914

 

 

 

41,840

 

Amortization of acquired intangible assets

 

1,112

 

 

 

865

 

 

 

2,224

 

 

 

1,730

 

Impairment of assets

 

 

 

 

1,916

 

 

 

 

 

 

2,405

 

Restructuring costs

 

 

 

 

175

 

 

 

2,562

 

 

 

1,882

 

Total operating expenses

 

60,754

 

 

 

61,791

 

 

 

123,387

 

 

 

127,031

 

Income from operations

 

10,298

 

 

 

6,731

 

 

 

12,175

 

 

 

8,121

 

Interest income

 

12

 

 

 

36

 

 

 

18

 

 

 

115

 

Interest expense

 

(1,135

)

 

 

(387

)

 

 

(2,242

)

 

 

(859

)

Other income (expense), net

 

(18

)

 

 

210

 

 

 

(2

)

 

 

77

 

Income before provision for (benefit of) income taxes

 

9,157

 

 

 

6,590

 

 

 

9,949

 

 

 

7,454

 

Provision for (benefit of) income taxes

 

(1,298

)

 

 

509

 

 

 

318

 

 

 

129

 

Net income

$

10,455

 

 

$

6,081

 

 

$

9,631

 

 

$

7,325

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.16

 

 

$

0.09

 

 

$

0.14

 

 

$

0.11

 

Diluted

$

0.16

 

 

$

0.09

 

 

$

0.14

 

 

$

0.11

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

66,688

 

 

 

65,401

 

 

 

66,493

 

 

 

65,209

 

Diluted

 

66,689

 

 

 

65,560

 

 

 

66,493

 

 

 

65,445

 



NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

 

September 30, 2020

 

 

March 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,440

 

 

$

138,012

 

Restricted cash and cash equivalents

 

 

5,405

 

 

 

2,307

 

Accounts receivable, net

 

 

75,102

 

 

 

80,006

 

Contract assets

 

 

15,714

 

 

 

12,529

 

Income taxes receivable

 

 

1,900

 

 

 

856

 

Prepaid expenses and other current assets

 

 

23,361

 

 

 

26,305

 

Total current assets

 

 

224,922

 

 

 

260,015

 

Equipment and improvements, net

 

 

16,720

 

 

 

19,836

 

Capitalized software costs, net

 

 

39,234

 

 

 

37,004

 

Operating lease assets

 

 

30,804

 

 

 

31,004

 

Deferred income taxes, net

 

 

10,647

 

 

 

10,620

 

Contract assets, net of current

 

 

2,303

 

 

 

3,007

 

Intangibles, net

 

 

45,577

 

 

 

57,809

 

Goodwill

 

 

267,212

 

 

 

267,165

 

Other assets

 

 

34,993

 

 

 

33,656

 

Total assets

 

$

672,412

 

 

$

720,116

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,822

 

 

$

10,521

 

Contract liabilities

 

 

48,442

 

 

 

56,786

 

Accrued compensation and related benefits

 

 

32,140

 

 

 

23,792

 

Income taxes payable

 

 

50

 

 

 

148

 

Operating lease liabilities

 

 

11,061

 

 

 

10,619

 

Other current liabilities

 

 

38,887

 

 

 

41,352

 

Total current liabilities

 

 

137,402

 

 

 

143,218

 

Deferred compensation

 

 

6,140

 

 

 

5,300

 

Line of credit

 

 

64,000

 

 

 

129,000

 

Operating lease liabilities, net of current

 

 

36,380

 

 

 

38,823

 

Other noncurrent liabilities

 

 

8,899

 

 

 

3,281

 

Total liabilities

 

 

252,821

 

 

 

319,622

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding 66,734 and 66,134 shares at September 30, 2020 and March 31, 2020, respectively

 

 

667

 

 

 

661

 

Additional paid-in capital

 

 

292,228

 

 

 

282,857

 

Accumulated other comprehensive loss

 

 

(2,054

)

 

 

(2,143

)

Retained earnings

 

 

128,750

 

 

 

119,119

 

Total shareholders' equity

 

 

419,591

 

 

 

400,494

 

Total liabilities and shareholders' equity

 

$

672,412

 

 

$

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 September 30,

 

 

Six Months Ended September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Income before provision for income taxes - GAAP

$

9,157

 

 

$

6,590

 

 

$

9,949

 

 

$

7,454

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

 

142

 

 

 

739

 

 

 

262

 

 

 

739

 

Amortization of acquired intangible assets

 

5,984

 

 

 

5,152

 

 

 

12,232

 

 

 

10,305

 

Amortization of deferred debt issuance costs

 

178

 

 

 

178

 

 

 

355

 

 

 

355

 

Impairment of assets

 

 

 

 

1,916

 

 

 

 

 

 

2,405

 

Restructuring costs

 

 

 

 

175

 

 

 

2,562

 

 

 

1,882

 

Securities litigation defense costs and settlement, net of insurance

 

3,233

 

 

 

339

 

 

 

4,259

 

 

 

376

 

Share-based compensation

 

5,437

 

 

 

4,316

 

 

 

10,830

 

 

 

9,207

 

Other non-run-rate expenses*

 

1,154

 

 

 

815

 

 

 

2,465

 

 

 

905

 

Total adjustments to GAAP income before provision for income taxes:

 

16,128

 

 

 

13,630

 

 

 

32,965

 

 

 

26,174

 

Income before provision for income taxes - Non-GAAP

 

25,285

 

 

 

20,220

 

 

 

42,914

 

 

 

33,628

 

Provision for income taxes

 

5,057

 

 

 

4,448

 

 

 

8,583

 

 

 

7,398

 

Net income - Non-GAAP

$

20,228

 

 

$

15,772

 

 

$

34,331

 

 

$

26,230

 

Diluted net income per share - Non-GAAP

$

0.30

 

 

$

0.24

 

 

$

0.52

 

 

$

0.40

 

Weighted-average shares outstanding (diluted):

 

66,689

 

 

 

65,560

 

 

 

66,493

 

 

 

65,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other non-run-rate expenses for the three months ended September 30, 2020 consist primarily of $664 excess lease-related expense for vacated facilities and other costs, including retention bonuses, related to the restructuring plan, $462 of professional services costs not related to core operations, and $28 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, 2020 consist primarily of $1,427 excess lease-related expense for vacated facilities and other costs, including retention bonuses, related to the restructuring plan, $939 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 six months ended September 30, 2019 consist primarily of excess lease-related expense for vacated facilities and other costs, including retention bonuses, related to the restructuring plan.