SEC Filing | NextGen Healthcare, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

nxgn-10q_20201231.htm

UNITED STATES

SECURITIES and EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-12537

NEXTGEN HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

California

(State or other jurisdiction of incorporation or organization)

95-2888568

(IRS Employer Identification No.)

18111 Von Karman Avenue, Suite 800, Irvine, California

(Address of principal executive offices)

92612

(Zip Code)

(949) 255-2600

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 Par Value	NXGN	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Small reporting company ☐
	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the Registrant’s common stock as of January 25, 2021 was 67,002,554 shares.

NEXTGEN HEALTHCARE, INC.

TABLE OF CONTENTS

FORM 10-Q

FOR THE THREE MONTHS ENDED DECEMBER 31, 2020

	Item	Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020	3
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2020 and 2019	4
	Unaudited Statements of Condensed Consolidated Stockholders’ Equity for the nine months ended December 31, 2020 and 2019	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2020 and 2019	6
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	39
Item 4.	Controls and Procedures.	39
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings.	40
Item 1A.	Risk Factors.	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	40
Item 3.	Defaults Upon Senior Securities.	40
Item 4.	Mine Safety Disclosure.	40
Item 5.	Other Information.	40
Item 6.	Exhibits.	41
	Signatures	42

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

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 (Note 16)
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

The accompanying notes are an integral part of these condensed consolidated financial statements.

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE 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
Other comprehensive income:
Foreign currency translation, net of tax		171			(103	)		260			(192	)
Comprehensive income	$	635		$	4,312		$	10,355		$	11,548
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

The accompanying notes are an integral part of these condensed consolidated financial statements.

NEXTGEN HEALTHCARE, INC.

STATEMENTS OF CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Nine Months Ended December 31, 2020
					Additional						Accumulated Other			Total
	Common Stock				Paid-in			Retained			Comprehensive			Shareholders'
	Shares		Amount		Capital			Earnings			Loss			Equity
Balance, March 31, 2020		66,134		661		282,857			119,119			(2,143	)		400,494
Common stock issued under stock plans, net of shares withheld for taxes		535		6		(1,414	)		—			—			(1,408	)
Stock-based compensation		—		—		5,393			—			—			5,393
Components of other comprehensive income:
Translation adjustments		—		—		—			—			(13	)		(13	)
Net income (loss)		—		—		—			(824	)		—			(824	)
Balance, June 30, 2020		66,669		667		286,836			118,295			(2,156	)		403,642
Common stock issued under stock plans, net of shares withheld for taxes		65		—		(45	)								(45	)
Stock-based compensation						5,437									5,437
Components of other comprehensive income:
Translation adjustments												102			102
Net income									10,455						10,455
Balance, September 30, 2020		66,734		667		292,228			128,750			(2,054	)		419,591
Common stock issued under stock plans, net of shares withheld for taxes		268		3		(450	)								(447	)
Stock-based compensation						5,933									5,933
Components of other comprehensive income:
Translation adjustments												171			171
Net income									464						464
Balance, December 31, 2020		67,002		670		297,711			129,214			(1,883	)		425,712

	Nine Months Ended December 31, 2019
					Additional					Accumulated Other			Total
	Common Stock				Paid-in			Retained		Comprehensive			Shareholders'
	Shares		Amount		Capital			Earnings		Loss			Equity
Balance, March 31, 2019		64,838		648		264,908			111,621		(1,231	)		375,946
Common stock issued under stock plans, net of shares withheld for taxes		545		6		(1,311	)		—		—			(1,305	)
Stock-based compensation		—		—		4,891			—		—			4,891
Components of other comprehensive income:
Translation adjustments		—		—		—			—		54			54
Net income		—		—					1,244		—			1,244
Balance, June 30, 2019		65,383		654		268,488			112,865		(1,177	)		380,830
Common stock issued under stock plans, net of shares withheld for taxes		53		—		44			—		—			44
Stock-based compensation		—		—		4,316			—		—			4,316
Components of other comprehensive income:
Translation adjustments		—		—		—			—		(143	)		(143	)
Net income		—		—					6,081		—			6,081
Balance, September 30, 2019		65,436		654		272,848			118,946		(1,320	)		391,128
Common stock issued under stock plans, net of shares withheld for taxes		265		3		(308	)		—		—			(305	)
Stock-based compensation		—		—		4,621			—		—			4,621