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Share Name | Share Symbol | Market | Type |
---|---|---|---|
NextGen Healthcare Inc | NASDAQ:NXGN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 23.94 | 23.91 | 23.94 | 0 | 01:00:00 |
Raises Fiscal 2023 Financial Guidance
NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of innovative, cloud-based healthcare technology solutions, today announced its operating results for the fiscal second quarter ended September 30, 2022.
Fiscal 2023 Second Quarter Highlights
“We are pleased with the team’s consistent performance and solid execution, which has resulted in exceeding our initial growth targets and increasing financial guidance for the remainder of the year,” said David Sides, President and Chief Executive Officer of NextGen Healthcare. “Notably, we’ve seen expanded adoption of our integrated solutions and are continuing to develop next generation improvements that will further enhance the patient and provider experience.”
Based on the first half performance and updated view of the business, our revised guidance for fiscal 2023 is now as follows:
Conference Call Information
NextGen Healthcare will host a conference call today at 5:00 p.m. EDT to discuss operating results from its fiscal 2023 second quarter. Shareholders and interested participants may listen to a live broadcast of the call by dialing 800-343-5172 or 203-518-9848 for international callers and referencing participant code NXGNQ223 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our fiscal year 2023 outlook, financial and operating results, strategic priorities, growth initiatives and expected capital expenditures. These forward-looking statements are based on the current beliefs, expectations, and assumptions of the Company's management relating to the future (including, without limitation, statements concerning revenue, net income, and earnings per share). The words “positioned,” “proposed,” “potential,” “project,” “expect,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate, “strategy,” “expectations,” “future,” “likely,” “may,” “should,” “will,” variations thereof or similar expressions are intended to identify such forward-looking statements.
Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements, including but not limited to: changes in laws and regulations applicable to our business; changes in market conditions and receptivity to our services and offerings; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; our ability to maintain and expand our business with existing clients or effectively transition clients to newer products; our ability to attract new partners and successfully capture new opportunities; our ability to develop and grow partner relationships; our ability to attract and retain key employees; our ability to anticipate or respond quickly to market changes, execute our strategy and manage growth; the impact of litigation and governmental and regulatory agency investigations; 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; the impact of the COVID-19 pandemic on our operations and demand for our services; impact of breaches or failures of the Company’s information security measures or unauthorized access to a customer’s data; disruptions caused by acquisitions of companies, products, or technologies; and general economic conditions. Additional discussion of these and other risks, uncertainties and factors affecting our business is contained in our filings with the SEC, including our most recent Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q.
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 non-GAAP diluted earnings per share by excluding net acquisition costs, amortization of acquired intangible assets, amortization of deferred debt issuance costs, gain on disposition of Commercial Dental assets, impairment of assets, restructuring costs, shareholder disputes and related costs, net of insurance, which include net securities litigation defense, proxy contest, 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 applied to each quarter of fiscal year 2023 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 calculates free cash flow 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 adjusted EBITDA by excluding net acquisition costs, amortization of acquired intangible assets, impairment of assets, restructuring costs, shareholder disputes and related costs, net of insurance, which include net securities litigation defense, proxy contest, and related costs, share-based compensation, and other non-run-rate expenses from GAAP income from operations and then adding back amortization of capitalized software costs and depreciation as presented within the condensed consolidated statements of cash flows. Non-GAAP adjusted EBITDA margin is calculated as non-GAAP adjusted EBITDA divided by total revenues. The Company calculates Rule of 40 as annual revenue growth rate plus non-GAAP adjusted EBITDA margin.
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, shareholder disputes and related costs, which include net securities litigation defense, proxy contest, and related 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 innovative healthcare technology solutions. We are reimagining ambulatory healthcare with award-winning solutions that enable high-performing practices to create healthier communities. We partner with medical, behavioral and dental providers in their journey toward whole person health and value-based care. Our highly integrated, intelligent and interoperable solutions go beyond EHR and Practice Management to increase clinical quality and productivity, enrich the patient experience and drive superior financial performance. We are on a quest to achieve better healthcare outcomes for all. Learn more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn, YouTube and Instagram.
NEXTGEN HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
Six Months Ended September 30,
2022
2021
2022
2021
Revenues:
Recurring
$
143,503
$
135,609
$
283,262
$
267,990
Software, hardware, and other non-recurring
15,940
13,677
29,483
27,380
Total revenues
159,443
149,286
312,745
295,370
Cost of revenue:
Recurring
65,039
57,119
127,283
114,279
Software, hardware, and other non-recurring
10,797
7,610
21,473
15,107
Amortization of capitalized software costs and acquired intangible assets
6,744
7,969
13,878
16,053
Total cost of revenue
82,580
72,698
162,634
145,439
Gross profit
76,863
76,588
150,111
149,931
Operating expenses:
Selling, general and administrative
44,886
63,891
93,920
112,377
Research and development costs, net
20,857
18,518
42,652
37,839
Amortization of acquired intangible assets
705
881
1,410
1,762
Impairment of assets
805
1,195
1,329
1,577
Restructuring costs
321
—
321
539
Total operating expenses
67,574
84,485
139,632
154,094
Income (loss) from operations
9,289
(7,897
)
10,479
(4,163
)
Interest income
74
17
120
29
Interest expense
(325
)
(320
)
(655
)
(637
)
Other income (expense), net
10,292
(12
)
10,287
(34
)
Income (loss) before provision for (benefit of) income taxes
19,330
(8,212
)
20,231
(4,805
)
Provision for (benefit of) income taxes
5,707
(1,441
)
5,460
(882
)
Net income (loss)
$
13,623
$
(6,771
)
$
14,771
$
(3,923
)
Net income (loss) per share:
Basic
$
0.20
$
(0.10
)
$
0.22
$
(0.06
)
Diluted
$
0.20
$
(0.10
)
$
0.22
$
(0.06
)
Weighted-average shares outstanding:
Basic
67,806
67,406
67,698
67,291
Diluted
68,422
67,406
68,353
67,291
NEXTGEN HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
September 30, 2022
March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
70,728
$
59,829
Restricted cash and cash equivalents
7,580
6,918
Accounts receivable, net
76,948
76,057
Contract assets
25,474
25,157
Income taxes receivable
3,052
6,507
Prepaid expenses and other current assets
34,363
37,102
Total current assets
218,145
211,570
Equipment and improvements, net
7,398
9,120
Capitalized software costs, net
49,791
43,958
Operating lease assets
5,197
11,316
Deferred income taxes, net
19,128
19,259
Contract assets, net of current
1,595
1,910
Intangibles, net
19,739
24,303
Goodwill
267,212
267,212
Other assets
38,933
39,026
Total assets
$
627,138
$
627,674
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
12,414
$
9,125
Contract liabilities
62,498
61,280
Accrued compensation and related benefits
28,113
48,736
Income taxes payable
172
99
Operating lease liabilities
7,095
8,089
Other current liabilities
58,320
53,533
Total current liabilities
168,612
180,862
Deferred compensation
6,981
7,230
Operating lease liabilities, net of current
5,147
11,934
Other noncurrent liabilities
4,556
4,570
Total liabilities
185,296
204,596
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; authorized 100,000 shares; 70,351 shares and 69,245 shares issued at September 30, 2022 and March 31, 2022, respectively; 67,605 shares and 67,075 shares outstanding at September 30, 2022 and March 31, 2022, respectively
704
692
Treasury stock, at cost, 2,746 shares and 2,170 shares at September 30, 2022 and March 31, 2022, respectively
(45,752
)
(35,874
)
Additional paid-in capital
343,809
329,917
Accumulated other comprehensive loss
(1,942
)
(1,909
)
Retained earnings
145,023
130,252
Total shareholders' equity
441,842
423,078
Total liabilities and shareholders' equity
$
627,138
$
627,674
NEXTGEN HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended September 30,
Six Months Ended September 30,
2022
2021
2022
2021
Cash flows from operating activities:
Net income (loss)
$
13,623
$
(6,771
)
$
14,771
$
(3,923
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of capitalized software costs
5,371
5,751
10,725
11,617
Amortization of debt issuance costs
127
127
254
254
Amortization of other intangibles
2,078
3,099
4,564
6,198
Deferred income taxes
—
1
—
29
Depreciation
1,354
1,673
2,646
3,781
Excess tax deficiency (benefit) from share-based compensation
(23
)
816
(434
)
640
Gain on disposition of Commercial Dental assets
(10,296
)
—
(10,296
)
—
Impairment of assets
805
1,195
1,329
1,577
Loss on disposal of equipment and improvements
33
39
74
77
Loss on foreign currency exchange rates
1
—
7
—
Non-cash operating lease costs
768
1,459
1,682
3,087
Provision for bad debts
359
40
600
679
Share-based compensation
8,687
5,223
17,453
11,635
Changes in assets and liabilities:
Accounts receivable
(63
)
1,467
(1,527
)
4,874
Contract assets
124
(136
)
(2
)
(1,055
)
Accounts payable
(2,676
)
5,442
3,153
1,108
Contract liabilities
(75
)
1,225
1,739
643
Accrued compensation and related benefits
2,246
5,643
(20,422
)
(16,321
)
Income taxes
4,125
(9,788
)
3,934
(9,324
)
Deferred compensation
(200
)
(88
)
(249
)
655
Operating lease liabilities
(2,012
)
(2,684
)
(4,097
)
(5,360
)
Other assets and liabilities
14,085
6,433
7,892
9,608
Net cash provided by operating activities
38,441
20,166
33,796
20,479
Cash flows from investing activities:
Additions to capitalized software costs
(9,418
)
(6,175
)
(18,416
)
(11,713
)
Additions to equipment and improvements
(971
)
(683
)
(1,426
)
(1,685
)
Proceeds from disposition of Commercial Dental assets
11,253
—
11,253
—
Net cash provided by (used in) investing activities
864
(6,858
)
(8,589
)
(13,398
)
Cash flows from financing activities:
Proceeds from issuance of shares under employee plans
507
438
2,575
1,109
Repurchase of common stock
(7,373
)
—
(9,878
)
—
Payments for taxes related to net share settlement of equity awards
(2,456
)
(2,232
)
(6,124
)
(5,201
)
Net cash used in financing activities
(9,322
)
(1,794
)
(13,427
)
(4,092
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(90
)
—
(219
)
—
Net increase in cash, cash equivalents, and restricted cash
29,893
11,514
11,561
2,989
Cash, cash equivalents, and restricted cash at beginning of period
48,415
70,050
66,747
78,575
Cash, cash equivalents, and restricted cash at end of period
$
78,308
$
81,564
$
78,308
$
81,564
NEXTGEN HEALTHCARE, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
The following table presents our revenues disaggregated by our major revenue categories and by occurrence:
Three Months Ended September 30,
Six Months Ended September 30,
2022
2021
2022
2021
Recurring revenues:
Subscription services
$
43,416
$
41,139
$
86,175
$
79,423
Support and maintenance
38,150
39,004
77,288
77,490
Managed services
31,055
28,207
61,700
56,115
Transactional and data services
30,882
27,259
58,099
54,962
Total recurring revenues
143,503
135,609
283,262
267,990
Software, hardware, and other non-recurring revenues:
Software license and hardware
7,916
8,068
14,115
15,282
Other non-recurring services
8,024
5,609
15,368
12,098
Total software, hardware and other non-recurring revenues
15,940
13,677
29,483
27,380
Total revenues
$
159,443
$
149,286
$
312,745
$
295,370
Recurring revenues as a percentage of total revenues
90.0
%
90.8
%
90.6
%
90.7
%
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,
2022
2021
2022
2021
Income (loss) before provision for income taxes - GAAP
$
19,330
$
(8,212
)
$
20,231
$
(4,805
)
Non-GAAP adjustments:
Acquisition costs, net
225
—
225
—
Amortization of acquired intangible assets
2,078
3,100
4,564
6,199
Amortization of deferred debt issuance costs
127
127
254
254
Gain on disposition of Commercial Dental assets
(10,296
)
—
(10,296
)
—
Impairment of assets
805
1,195
1,329
1,577
Restructuring costs
321
—
321
539
Shareholder disputes and related costs, net of insurance
224
22,134
345
26,992
Share-based compensation
8,687
5,223
17,453
11,635
Other non-run-rate expenses*
205
1,309
612
4,028
Total adjustments to GAAP income before provision for income taxes:
2,376
33,088
14,807
51,224
Income before provision for income taxes - Non-GAAP
21,706
24,876
35,038
46,419
Provision for income taxes
4,342
4,975
7,008
9,284
Net income - Non-GAAP
$
17,364
$
19,901
$
28,030
$
37,135
Diluted net income per share - Non-GAAP
$
0.25
$
0.29
$
0.41
$
0.55
Weighted-average shares outstanding (diluted):
68,422
67,699
68,353
67,734
* Other non-run-rate expenses for the three months ended September 30, 2022 consist of $205 excess lease-related expense for vacated facilities.
Other non-run-rate expenses for the three months ended September 30, 2021 consist primarily of $353 excess lease-related expense for vacated facilities, lease termination costs, and other costs, $458 of executive transition costs, and $498 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, 2022 consist of $462 excess lease-related expense for vacated facilities and $150 of professional services costs not related to core operations.
Other non-run-rate expenses for the six months ended September 30, 2021 consist primarily of $823 excess lease-related expense for vacated facilities, lease termination costs, and other costs, including retention bonuses, related to the restructuring plan, $2,707 of executive transition costs, including severance and other costs related to the departure of the CEO, and $498 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 September 30,
Six Months Ended September 30,
2022
2021
2022
2021
Net cash provided by operating activities
$
38,441
$
20,166
$
33,796
$
20,479
Additions to capitalized software costs
(9,418
)
(6,175
)
(18,416
)
(11,713
)
Additions to equipment and improvements
(971
)
(683
)
(1,426
)
(1,685
)
Free cash flow
$
28,052
$
13,308
$
13,954
$
7,081
NEXTGEN HEALTHCARE, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)
RECONCILIATION OF ADJUSTED EBITDA
Three Months Ended September 30,
Six Months Ended September 30,
2022
2021
2022
2021
Income (loss) from operations - GAAP
$
9,289
$
(7,897
)
$
10,479
$
(4,163
)
Non-GAAP adjustments:
Acquisition costs, net
225
—
225
—
Amortization of acquired intangible assets
2,078
3,100
4,564
6,199
Impairment of assets
805
1,195
1,329
1,577
Restructuring costs
321
—
321
539
Shareholder disputes and related costs, net of insurance
224
22,134
345
26,992
Share-based compensation
8,687
5,223
17,453
11,635
Other non-run-rate expenses*
205
1,309
612
4,028
Total adjustments to GAAP income from operations
12,545
32,961
24,849
50,970
Income from operations - Non-GAAP
21,834
25,064
35,328
46,807
Amortization of capitalized software costs
5,371
5,751
10,725
11,617
Depreciation
1,354
1,673
2,646
3,781
Depreciation and Amortization - Non-GAAP
6,725
7,424
13,371
15,398
Adjusted EBITDA - Non-GAAP
$
28,559
$
32,488
$
48,699
$
62,205
Total revenues
$
159,443
$
149,286
$
312,745
$
295,370
Adjusted EBITDA margin - Non-GAAP
17.9
%
21.8
%
15.6
%
21.1
%
* Other non-run-rate expenses for the three months ended September 30, 2022 consist of $205 excess lease-related expense for vacated facilities.
Other non-run-rate expenses for the three months ended September 30, 2021 consist primarily of $353 excess lease-related expense for vacated facilities, lease termination costs, and other costs, $458 of executive transition costs, and $498 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, 2022 consist of $462 excess lease-related expense for vacated facilities and $150 of professional services costs not related to core operations.
Other non-run-rate expenses for the six months ended September 30, 2021 consist primarily of $823 excess lease-related expense for vacated facilities, lease termination costs, and other costs, including retention bonuses, related to the restructuring plan, $2,707 of executive transition costs, including severance and other costs related to the departure of the CEO, and $498 of incremental costs and penalties primarily due to the cancellation of certain events directly associated with the COVID-19 pandemic.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221025005950/en/
Media Relations Contact Tami Andrade (949) 517-2380 tandrade@nextgen.com
Investor Relations Contact James Hammerschmidt (949) 237-6112 jhammerschmidt@nextgen.com
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