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NextGen Healthcare, Inc. Reports Fiscal 2020 Second Quarter

October 23, 2019

IRVINE, Calif.--(BUSINESS WIRE)--Oct 23, 2019--

NextGen Healthcare, Inc. (NASDAQ: NXGN), a leading provider of ambulatory-focused healthcare technology solutions, announced today its fiscal 2020 second quarter ended September 30, 2019 operating results.

Fiscal 2020 Second Quarter Highlights

On a GAAP basis, revenue for the fiscal 2020 second quarter was $134.3 million compared to $130.3 million a year ago.

On a GAAP basis, net income for the fiscal 2020 second quarter was $6.1 million compared with net income of $13.1 million in the fiscal 2019 second quarter.

On a GAAP basis, fully diluted net income per share was $0.09 in the fiscal 2020 second quarter compared to net income per share of $0.20 per share for the same period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2020 second quarter remained at $0.24 compared to the second quarter a year ago.

Cash flow from operations was $23.8 million in the fiscal 2020 second quarter compared to $11.9 million for the same period a year ago. Free cash flow was $17.1 million compared to $5.5 million in the same period a year ago.

“I’m pleased to report a solid second quarter in which we delivered revenue growth and positive free cash flow, as well as strong bookings bolstered by cross-selling, RCM traction, multiple ‘all-in’ deals, and competitive displacements. Immediately after quarter end, we completed the acquisition of Topaz Information Solutions, which expands our capabilities to better serve behavioral health providers and enables our planned growth in this important market. Halfway through our fiscal year, we are confident that our current position will enable us to deliver on our full year outlook,” said Rusty Frantz, president and chief executive officer of NextGen Healthcare.

Fiscal 2020 Financial Outlook

The Company is reiterating their outlook for fiscal 2020 and expects:

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2020 second quarter operating results on Wednesday, October 23, 2019 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 7179172 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 22, 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
September 30,

 

 

Six Months Ended
September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

$

120,589

 

 

$

116,317

 

 

$

240,036

 

 

$

236,324

 

Software, hardware, and other non-recurring

 

13,667

 

 

 

14,004

 

 

 

26,081

 

 

 

27,197

 

Total revenues

 

134,256

 

 

 

130,321

 

 

 

266,117

 

 

 

263,521

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

50,328

 

 

 

47,172

 

 

 

100,868

 

 

 

95,325

 

Software, hardware, and other non-recurring

 

6,563

 

 

 

7,022

 

 

 

12,841

 

 

 

14,176

 

Amortization of capitalized software costs and acquired intangible assets

 

8,843

 

 

 

6,924

 

 

 

17,256

 

 

 

13,468

 

Total cost of revenue

 

65,734

 

 

 

61,118

 

 

 

130,965

 

 

 

122,969

 

Gross profit

 

68,522

 

 

 

69,203

 

 

 

135,152

 

 

 

140,552

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

39,046

 

 

 

34,229

 

 

 

79,174

 

 

 

78,865

 

Research and development costs, net

 

19,789

 

 

 

18,371

 

 

 

41,840

 

 

 

40,499

 

Amortization of acquired intangible assets

 

865

 

 

 

1,121

 

 

 

1,730

 

 

 

2,289

 

Impairment of assets

 

1,916

 

 

 

 

 

 

2,405

 

 

 

 

Restructuring costs

 

175

 

 

 

 

 

 

1,882

 

 

 

 

Total operating expenses

 

61,791

 

 

 

53,721

 

 

 

127,031

 

 

 

121,653

 

Income from operations

 

6,731

 

 

 

15,482

 

 

 

8,121

 

 

 

18,899

 

Interest income

 

36

 

 

 

40

 

 

 

115

 

 

 

69

 

Interest expense

 

(387

)

 

 

(769

)

 

 

(859

)

 

 

(1,499

)

Other income, net

 

210

 

 

 

237

 

 

 

77

 

 

 

611

 

Income before provision for income taxes

 

6,590

 

 

 

14,990

 

 

 

7,454

 

 

 

18,080

 

Provision for income taxes

 

509

 

 

 

1,896

 

 

 

129

 

 

 

2,338

 

Net income

$

6,081

 

 

$

13,094

 

 

$

7,325

 

 

$

15,742

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.09

 

 

$

0.20

 

 

$

0.11

 

 

$

0.25

 

Diluted

$

0.09

 

 

$

0.20

 

 

$

0.11

 

 

$

0.24

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

65,401

 

 

 

64,265

 

 

 

65,209

 

 

 

64,143

 

Diluted

 

65,560

 

 

 

64,857

 

 

 

65,445

 

 

 

64,362

 

 

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

September 30, 2019

 

 

March 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

42,930

 

 

$

33,079

 

Restricted cash and cash equivalents

 

 

7,501

 

 

 

1,443

 

Accounts receivable, net

 

 

83,708

 

 

 

87,459

 

Contract assets

 

 

11,973

 

 

 

13,242

 

Inventory

 

 

58

 

 

 

120

 

Income taxes receivable

 

 

3,272

 

 

 

3,682

 

Prepaid expenses and other current assets

 

 

20,612

 

 

 

20,826

 

Total current assets

 

 

170,054

 

 

 

159,851

 

Equipment and improvements, net

 

 

22,049

 

 

 

21,404

 

Capitalized software costs, net

 

 

39,076

 

 

 

37,855

 

Operating lease assets

 

 

38,230

 

 

 

 

Deferred income taxes, net

 

 

6,166

 

 

 

6,194

 

Contract assets, net of current

 

 

3,175

 

 

 

3,747

 

Intangibles, net

 

 

42,290

 

 

 

52,595

 

Goodwill

 

 

218,771

 

 

 

218,771

 

Other assets

 

 

33,017

 

 

 

32,478

 

Total assets

 

$

572,828

 

 

$

532,895

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,837

 

 

$

5,432

 

Contract liabilities

 

 

54,101

 

 

 

56,009

 

Accrued compensation and related benefits

 

 

21,825

 

 

 

25,663

 

Income taxes payable

 

 

 

 

 

64

 

Operating lease liabilities

 

 

9,947

 

 

 

 

Other current liabilities

 

 

41,545

 

 

 

41,064

 

Total current liabilities

 

 

132,255

 

 

 

128,232

 

Deferred compensation

 

 

5,933

 

 

 

5,905

 

Line of credit

 

 

 

 

 

11,000

 

Operating lease liabilities, net of current

 

 

41,622

 

 

 

 

Other noncurrent liabilities

 

 

1,890

 

 

 

11,812

 

Total liabilities

 

 

181,700

 

 

 

156,949

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding 65,436 and 64,838 shares at September 30, 2019 and March 31, 2019, respectively

 

 

654

 

 

 

648

 

Additional paid-in capital

 

 

272,848

 

 

 

264,908

 

Accumulated other comprehensive loss

 

 

(1,320

)

 

 

(1,231

)

Retained earnings

 

 

118,946

 

 

 

111,621

 

Total shareholders' equity

 

 

391,128

 

 

 

375,946

 

Total liabilities and shareholders' equity

 

$

572,828

 

 

$

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
September 30,

 

 

Six Months Ended
September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Income before provision for income taxes - GAAP

$

6,590

 

 

$

14,990

 

 

$

7,454

 

 

$

18,080

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

 

739

 

 

 

315

 

 

 

739

 

 

 

1,949

 

Amortization of acquired intangible assets

 

5,152

 

 

 

5,409

 

 

 

10,305

 

 

 

10,865

 

Amortization of deferred debt issuance costs

 

178

 

 

 

178

 

 

 

355

 

 

 

355

 

Impairment of assets

 

1,916

 

 

 

 

 

 

2,405

 

 

 

 

Restructuring costs

 

175

 

 

 

 

 

 

1,882

 

 

 

 

Securities litigation defense costs and settlement, net of insurance

 

339

 

 

 

(5,715

)

 

 

376

 

 

 

(5,436

)

Share-based compensation

 

4,316

 

 

 

4,135

 

 

 

9,207

 

 

 

7,251

 

Other non-run-rate expenses*

 

815

 

 

 

691

 

 

 

905

 

 

 

2,639

 

Total adjustments to GAAP income before provision for income taxes:

 

13,630

 

 

 

5,013

 

 

 

26,174

 

 

 

17,623

 

Income before provision for income taxes - Non-GAAP

 

20,220

 

 

 

20,003

 

 

 

33,628

 

 

 

35,703

 

Provision for income taxes

 

4,448

 

 

 

4,401

 

 

 

7,398

 

 

 

7,855

 

Net income - Non-GAAP

$

15,772

 

 

$

15,602

 

 

$

26,230

 

 

$

27,848

 

Diluted net income per share - Non-GAAP

$

0.24

 

 

$

0.24

 

 

$

0.40

 

 

$

0.43

 

Weighted-average shares outstanding (diluted):

 

65,560

 

 

64,857

 

 

 

65,445

 

 

 

64,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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. Other non-run-rate expenses for the three and six months ended September 30, 2018 consist primarily of severance and other employee-related costs.

View source version on businesswire.com:https://www.businesswire.com/news/home/20191023005823/en/

CONTACT: Media Contact:

NextGen Healthcare

Cynthia Ragland

(949) 255-2600 x 75416

cragland@nextgen.com

or

Investor Contact:

Westwicke Partners

Bob East or Asher Dewhurst

Westwicke Partners

443-213-0500

KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: MEDICAL SUPPLIES FINANCE GENERAL HEALTH HEALTH MENTAL HEALTH MEDICAL DEVICES PROFESSIONAL SERVICES DENTAL

SOURCE: NextGen Healthcare, Inc.

Copyright Business Wire 2019.

PUB: 10/23/2019 04:05 PM/DISC: 10/23/2019 04:05 PM

http://www.businesswire.com/news/home/20191023005823/en