NextGen Healthcare Reports Fiscal 2024 Second Quarter Results
NextGen Healthcare, Inc. reported its operating results for Q2 2023, with total revenue of $176.4 million, a 10.6% increase YoY. Recurring revenue increased by 12.4% YoY to $161.3 million. Fully diluted net income per share was $0.07 compared to $0.20 a year ago. Adjusted EBITDA was $34.4 million, a $5.8 million increase YoY. Bookings were $40.8 million, including four deals greater than $1.0 million.
Positive
NextGen Healthcare's Q2 2023 results show a 10.6% increase in total revenue to $176.4 million, driven by a 12.4% increase in recurring revenue to $161.3 million. Adjusted EBITDA also increased by $5.8 million YoY to $34.4 million. Bookings were $40.8 million, including four significant deals.
10/24/2023 - 04:05 PM
REMOTE-FIRST COMPANY/NEW YORK --(BUSINESS WIRE)--
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 ending September 30, 2023.
Fiscal 2024 Second Quarter Highlights
Total revenue was $176.4 million $159.4 million 10.6% .
Recurring revenue was $161.3 million $143.5 million 12.4% .
Non-recurring revenue was $15.1 million $15.9 million 5.3% .
Fully diluted net income per share was $0.07 $0.20
On a non-GAAP basis, fully diluted earnings per share was $0.31 $0.25
Adjusted EBITDA was $34.4 million $28.6 million
Bookings, which reflects annual contract value excluding renewals, were $40.8 million $1.0 million
“The team produced solid financial and operational results this quarter as we look forward to the next chapter in the company’s history,” said David Sides, president and chief executive officer of NextGen Healthcare. “I would like to thank our shareholders for their support over the past 40 years as a public company.”
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, which include net securities litigation defense, proxy contest, other regulatory and litigation matters, and related costs, net of insurance, 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 expected to be applied to each quarter of fiscal year 2024 is 21.0% . 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 and convertible senior notes less cash and cash equivalents and marketable securities. 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, which include net securities litigation defense, proxy contest, other regulatory and litigation matters, and related costs, net of insurance, 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.
About NextGen Healthcare, Inc.
NextGen Healthcare, Inc. (Nasdaq: NXGN) is a leading provider of innovative healthcare technology and data solutions. We are reimagining ambulatory healthcare with award-winning EHR, practice management and surround solutions that enable providers to deliver whole-person health and value-based care. Our highly integrated, intelligent, and interoperable solutions increase clinical quality and productivity, enrich the patient experience and drive superior financial performance. We are on a relentless quest to achieve better healthcare outcomes for all. Learn more at nextgen.com , and follow us on Facebook , X , LinkedIn , YouTube , and Instagram .
NEXTGEN HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
Six Months Ended
2023
2022
2023
2022
Revenues:
Recurring
$
161,316
$
143,503
$
324,690
$
283,262
Software, hardware, and other non-recurring
15,102
15,940
29,935
29,483
Total revenues
176,418
159,443
354,625
312,745
Cost of revenue:
Recurring
75,585
65,039
154,806
127,283
Software, hardware, and other non-recurring
12,031
10,797
24,205
21,473
Amortization of capitalized software costs and acquired intangible assets
7,181
6,744
14,172
13,878
Total cost of revenue
94,797
82,580
193,183
162,634
Gross profit
81,621
76,863
161,442
150,111
Operating expenses:
Selling, general and administrative
54,175
44,886
102,368
93,920
Research and development costs, net
18,020
20,857
38,945
42,652
Amortization of acquired intangible assets
1,189
705
2,377
1,410
Impairment of assets
166
805
525
1,329
Restructuring costs
15
321
105
321
Total operating expenses
73,565
67,574
144,320
139,632
Income from operations
8,056
9,289
17,122
10,479
Interest income
1,520
74
3,189
120
Interest expense
(3,310
)
(325
)
(6,549
)
(655
)
Other income, net
430
10,292
1,480
10,287
Income before provision for income taxes
6,696
19,330
15,242
20,231
Provision for income taxes
1,641
5,707
4,031
5,460
Net income
$
5,055
$
13,623
$
11,211
$
14,771
Net income per share:
Basic
$
0.08
$
0.20
$
0.17
$
0.22
Diluted
$
0.07
$
0.20
$
0.17
$
0.22
Weighted-average shares outstanding:
Basic
67,074
67,806
66,749
67,698
Diluted
67,690
68,422
67,280
68,353
NEXTGEN HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
September 30, 2023
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
53,867
$
98,719
Restricted cash and cash equivalents
4,914
7,269
Marketable securities
146,432
139,612
Accounts receivable, net
89,277
88,498
Contract assets
20,489
19,561
Income taxes receivable
8,134
5,248
Prepaid expenses and other current assets
39,684
42,916
Total current assets
362,797
401,823
Equipment and improvements, net
4,939
6,421
Capitalized software costs, net
59,875
54,516
Operating lease assets
2,615
3,335
Deferred income taxes, net
29,210
29,472
Contract assets, net of current
5,616
5,572
Intangibles, net
24,480
28,968
Goodwill
322,001
321,756
Other assets
46,217
44,238
Total assets
$
857,750
$
896,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
10,467
$
12,022
Contract liabilities
45,932
61,601
Accrued compensation and related benefits
28,407
36,241
Income taxes payable
604
622
Operating lease liabilities
3,471
3,826
Other current liabilities
54,997
83,799
Total current liabilities
143,878
198,111
Contract liabilities, net of current
2,809
10,310
Deferred compensation
8,722
8,033
Convertible senior notes, net, noncurrent
267,565
266,843
Operating lease liabilities, net of current
2,464
4,095
Other noncurrent liabilities
9,037
8,274
Total liabilities
434,475
495,666
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01
719
709
Treasury stock, at cost, 4,849 shares and 4,849 shares at September 30, 2023 and March 31, 2023, respectively
(85,752
)
(85,752
)
Additional paid-in capital
371,080
359,342
Accumulated other comprehensive loss
(1,581
)
(1,462
)
Retained earnings
138,809
127,598
Total shareholders' equity
423,275
400,435
Total liabilities and shareholders' equity
$
857,750
$
896,101
NEXTGEN HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended September 30,
Six Months Ended
2023
2022
2023
2022
Cash flows from operating activities:
Net income
$
5,055
$
13,623
$
11,211
$
14,771
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized software costs
6,125
5,371
12,061
10,725
Amortization of debt issuance costs
536
127
976
254
Amortization of other intangibles
2,244
2,078
4,488
4,564
Net amortization (accretion) of premiums/discounts on marketable securities
(983
)
—
(1,956
)
—
Change in fair value of contingent consideration
300
—
400
—
Depreciation
946
1,354
2,064
2,646
Excess tax deficiency (benefit) from share-based compensation
(41
)
(23
)
170
(434
)
Impairment of assets
166
805
171
1,329
Loss on disposal of equipment and improvements
37
33
37
74
Loss on foreign currency exchange rates
16
1
100
7
Non-cash operating lease costs
371
768
763
1,682
Provision for bad debts
951
359
1,826
600
Realized loss on marketable securities
734
—
734
—
Share-based compensation
9,466
8,687
17,422
17,453
Gain on disposition of Commercial Dental assets
—
(10,296
)
—
(10,296
)
Changes in assets and liabilities, net of amounts acquired:
Accounts receivable
(6,106
)
(63
)
(2,606
)
(1,527
)
Contract assets
708
124
(972
)
(2
)
Accounts payable
(1,701
)
(2,676
)
(1,571
)
3,153
Contract liabilities
(1,859
)
(75
)
(23,170
)
1,739
Accrued compensation and related benefits
5,572
2,246
(7,802
)
(20,422
)
Income taxes
(4,781
)
4,125
(2,825
)
3,934
Deferred compensation
(113
)
(200
)
689
(249
)
Operating lease liabilities
(912
)
(2,012
)
(1,979
)
(4,097
)
Other assets and liabilities
(26,149
)
14,085
(27,746
)
7,892
Net cash provided by (used in) operating activities
(9,418
)
38,441
(17,515
)
33,796
Cash flows from investing activities:
Additions to capitalized software costs
(9,195
)
(9,418
)
(17,420
)
(18,416
)
Additions to equipment and improvements
(401
)
(971
)
(854
)
(1,426
)
Proceeds from disposition of Commercial Dental assets
—
11,253
—
11,253
Proceeds from sales of marketable securities
8,599
—
15,457
—
Proceeds from maturities and redemptions of marketable securities
22,111
—
42,871
—
Purchases of marketable securities
(28,316
)
—
(63,942
)
—
Net cash provided by (used in) investing activities
(7,202
)
864
(23,888
)
(8,589
)
Cash flows from financing activities:
Proceeds from issuance of shares under employee plans
780
507
1,430
2,575
Repurchase of common stock
—
(7,373
)
—
(9,878
)
Payments for taxes related to net share settlement of equity awards
(3,206
)
(2,456
)
(7,104
)
(6,124
)
Net cash used in financing activities
(2,426
)
(9,322
)
(5,674
)
(13,427
)
Effect of exchange rate changes on cash and cash equivalents
(78
)
(90
)
(130
)
(219
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(19,124
)
29,893
(47,207
)
11,561
Cash, cash equivalents, and restricted cash at beginning of period
77,905
48,415
105,988
66,747
Cash, cash equivalents, and restricted cash at end of period
$
58,781
$
78,308
$
58,781
$
78,308
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
Six Months Ended
2023
2022
2023
2022
Recurring revenues:
Subscription services
$
50,263
$
43,416
$
102,761
$
86,175
Support and maintenance
37,561
38,150
76,070
77,288
Managed services
35,063
31,055
69,822
61,700
Transactional and data services
38,429
30,882
76,037
58,099
Total recurring revenues
161,316
143,503
324,690
283,262
Software, hardware, and other non-recurring revenues:
Software license and hardware
5,521
7,916
10,492
14,115
Other non-recurring services
9,581
8,024
19,443
15,368
Total software, hardware and other non-recurring revenues
15,102
15,940
29,935
29,483
Total revenues
$
176,418
$
159,443
$
354,625
$
312,745
Recurring revenues as a percentage of total revenues
91.4
%
90.0
%
91.6
%
90.6
%
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
2023
2022
2023
2022
Income before provision for income taxes - GAAP
$
6,696
$
19,330
$
15,242
$
20,231
Non-GAAP adjustments:
Acquisition costs, net
8,372
225
8,705
225
Amortization of acquired intangible assets
2,244
2,078
4,488
4,564
Amortization of deferred debt issuance costs
536
127
976
254
Gain on disposition of Commercial Dental assets
—
(10,296
)
—
(10,296
)
Impairment of assets
166
805
525
1,329
Restructuring costs
15
321
105
321
Shareholder disputes, other regulatory and litigation matters, and related costs, net of insurance
(1,059
)
224
(527
)
345
Share-based compensation
9,466
8,687
17,422
17,453
Other non-run-rate expenses*
92
205
186
612
Total adjustments to GAAP income before provision for income taxes:
19,832
2,376
31,880
14,807
Income before provision for income taxes - Non-GAAP
26,528
21,706
47,122
35,038
Provision for income taxes
5,571
4,342
9,896
7,008
Net income - Non-GAAP
$
20,957
$
17,364
$
37,226
$
28,030
Diluted net income per share - Non-GAAP
$
0.31
$
0.25
$
0.55
$
0.41
Weighted-average shares outstanding (diluted):
67,690
68,422
67,280
68,353
* Other non-run-rate expenses for the three and six months ended September 30, 2023 consist of $92 $186 $205 $462 $150
RECONCILIATION OF FREE CASH FLOW
Three Months Ended September 30,
Six Months Ended
2023
2022
2023
2022
Net cash provided by (used in) operating activities
$
(9,418
)
$
38,441
$
(17,515
)
$
33,796
Additions to capitalized software costs
(9,195
)
$
(9,418
)
(17,420
)
(18,416
)
Additions to equipment and improvements
(401
)
$
(971
)
(854
)
(1,426
)
Free cash flow
$
(19,014
)
$
28,052
$
(35,789
)
$
13,954
NEXTGEN HEALTHCARE, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)
RECONCILIATION OF ADJUSTED EBITDA
Three Months Ended
Six Months Ended
2023
2022
2023
2022
Income from operations - GAAP
$
8,056
$
9,289
$
17,122
$
10,479
Non-GAAP adjustments:
Acquisition costs, net
8,372
225
8,705
225
Amortization of acquired intangible assets
2,244
2,078
4,488
4,564
Impairment of assets
166
805
525
1,329
Restructuring costs
15
321
105
321
Shareholder disputes, other regulatory and litigation matters, and related costs, net of insurance
(1,059
)
224
(527
)
345
Share-based compensation
9,466
8,687
17,422
17,453
Other non-run-rate expenses*
92
205
186
612
Total adjustments to GAAP income from operations
19,296
12,545
30,904
24,849
Income from operations - Non-GAAP
27,352
21,834
48,026
35,328
Amortization of capitalized software costs
6,125
5,371
12,061
10,725
Depreciation
946
1,354
2,064
2,646
Depreciation and Amortization - Non-GAAP
7,071
6,725
14,125
13,371
Adjusted EBITDA - Non-GAAP
$
34,423
$
28,559
$
62,151
$
48,699
Total revenues
$
176,418
$
159,443
$
354,625
$
312,745
Adjusted EBITDA margin - Non-GAAP
19.5
%
17.9
%
17.5
%
15.6
%
* Other non-run-rate expenses for the three and six months ended September 30, 2023 consist of $92 $186 $205 $462 $150
View source version on businesswire.com: https://www.businesswire.com/news/home/20231024308175/en/
Media Relations Contact
tandrade@nextgen.com
Investor Relations Contact
jhammerschmidt@nextgen.com
Source: NextGen Healthcare, Inc.
NextGen Healthcare reported total revenues of $176.4 million for Q2 2023.
Recurring revenue for NextGen Healthcare increased by 12.4% YoY to $161.3 million in Q2 2023.
NextGen Healthcare's adjusted EBITDA for Q2 2023 was $34.4 million.
NextGen Healthcare's bookings for Q2 2023 were $40.8 million, including four deals greater than $1.0 million.
